Last year's employment rebound mirrors trends in U.S. health spending, economists said. Spending has been increasing slowly since the recession but appears to have accelerated this year. An Altarum Institute analysis shows healthcare hiring accelerated as 2014 progressed, a trend also apparent in early estimates of spending for healthcare services, such as hospital and clinic visits.
Healthcare added an average of 25,000 jobs and 15,000 jobs per month during the second and first quarters, respectively. All figures are seasonally adjusted. December and November figures are preliminary and could be revised.
Turner credited the growth to fewer uninsured Americans, which she attributed to the nation's overall economic improvement and increased numbers of the newly insured under the Patient Protection and Affordable Care Act. “It's not unexpected that would translate into higher health spending and higher employment through the sector throughout the year,” she said. However, an Altarum employment analysis through October found no correlation between healthcare job growth and states that expended Medicaid.
Hospitals saw no employment growth in 2013 but ended 2014 with growth of 1%, near the average annual rate of 1.2%. The subsector added 7,000 jobs in December and 47,300 jobs for the year, to end 2014 with total employment of 4.8 million workers. Hospital hiring growth has been weak during the past five years, with the exception of 2010, when it was roughly average.
The economic recovery was clearly a factor driving some health-system hiring, executives and consultants said. “There are regional patterns,” said George Whetsell, a managing partner at healthcare consulting firm Prism Healthcare Partners. Hiring is weaker where the “population is stagnant and the economy is drifting” he said, compared with regions experiencing a stronger recovery.
North Dakota's robust employment market, thanks to its oil boom, has Sanford Health scrambling to recruit entry-level workers from food service to clerical hiring to housekeeping, said Evan Burkett, the Sioux Falls, S.D.-based system's chief human capital officer. Registered nurses are also in demand in North Dakota's tight labor market, where oil companies have “consumed the available workforce,” he said.
Sanford Health also has seen a surge in demand for medical care, which has added to staffing stress and labor costs. The system is offering additional incentives to entice its workers to take more shifts. It's also started contacting health systems across the country that have announced layoffs, to seek potential recruits. “We're doing some things we've never done before,” Burkett said.
But hospitals still face continued pressure to hold down costs to protect their margins from continued Medicare rate reductions, competition in the private market and sluggish demand for hospital care in recent years, consultants say. That pressure has intensified efforts to better manage hospital labor, which accounts for roughly half of expenses.
That necessity led some to buck last year's healthcare hiring trend. At Sentara Healthcare, hiring slowed last year as the system worked to cut its expenses in response to reduced reimbursement, said Pat Evans, the system's vice president of recruitment and workforce planning. The Norfolk, Va.-based system eliminated jobs through attrition or delayed hires, she said. Sentara typically hires 3,700 to 4,000 workers each year but hired fewer than 3,000 in 2014. However, Evans said she expects a rebound “closer to normal” in the coming year.
Merger and acquisition activity prompted one of the largest U.S. health systems to end last year with news that it would cut 1,500 jobs by the end of January. Rapid growth and poor financial performance led Denver-based Catholic Health Initiatives to plan a 2% reduction in its workforce.
Pressure to hold down health spending also has accelerated strategies to provide more care in less-costly ambulatory settings when possible. “There is a clear and logical shift to the outpatient setting,” said John Klare, managing for Navigant Consulting's healthcare delivery innovation and performance improvement practice.
Ambulatory care, healthcare's largest sector, also grew most quickly last year. The subsector—which includes physician offices, outpatient-care centers, home care and other outpatient settings—added 16,200 jobs in December and 230,300 jobs for the year. Ambulatory care's 3.5% growth last year was on par with its 3.6% annual average since 1990, following five years of below-average growth.
Ambulatory care ended the year with 6.8 million jobs. Within the subsector, physician office hiring rebounded last year, adding an above-average number of jobs but nonetheless experiencing below-average growth of 2.4%, compared with 4.1% annual average growth since 1990.
Hiring rebounded in 2014 from the prior year among nursing homes and residential care, the remaining healthcare subsector. Nursing homes and residential-care hiring surged in December, adding 10,900 jobs to end the year with an increased employment of 33,400 workers. Last year's growth of 1% for nursing homes and residential care was below the 23-year average of 2.3%.
The coming year is expected to bring accelerated health spending with the continued economic recovery and the second year of health-plan enrollment under the Affordable Care Act.
Follow Melanie Evans on Twitter: @MHmevans
