Hospital job losses shrink in May, a positive sign for recovery
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June 05, 2020 09:20 AM

Hospital job losses shrink in May, a positive sign for recovery

Tara Bannow
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    Federal employment data show the healthcare industry is entering a promising recovery. While hospitals still lost jobs in May, they did so at about one-fifth the level of the prior month.

    Hospitals shed 26,700 jobs last month, preliminary data from the Bureau of Labor Statistics show. While far from normal, it's not nearly as steep as the BLS' estimate that they lost 135,000 jobs at the height of the COVID-19 pandemic in April. Several health systems, including UW Medicine in Seattle and Cape Cod Health Care in Massachusetts, announced new furloughs in May and others, including Essentia Health in Minnesota, laid off workers.

    The U.S. healthcare industry added an estimated 312,400 jobs in May, a dramatic upswing after having lost 1.4 million jobs in April, with all of last month's job growth taking place in the ambulatory sector.

    "I was a bit surprised by that much growth given the extent of the full shutdown that we saw in the segment," said Ash Shehata, KPMG's national sector leader for healthcare & life sciences. "But it is also a reminder: As we start to forecast the recovery, we probably need to forecast a different recovery for healthcare."

    The jobs data highlights healthcare's resiliency relative to other industries and suggests it might see a V-shaped recovery marked by a sharp decline and a rapid bounce back, Shehata said.

    April contains most of the economic damage from the pandemic, as many providers stopped performing non-emergent procedures in late March and resumed them in May. A Kaufman Hall analysis found April was the worst month ever for hospital operating margins.

    This economic downturn was unique in that healthcare did something it's never done before: Providers reallocated inpatient beds, cleared out capacity and shut down outpatient procedures, resulting in unprecedented volume declines, Shehata said.

    "That is far more than what we've ever seen in a normal recessionary period," he said.

    Within healthcare, the ambulatory sector added 375,700 new jobs in May.

    Dentists' offices saw the strongest recovery, having added 244,800 jobs. Dentists' offices across the country largely closed in March and April due to stay-at-home orders and were the hardest hit healthcare sector in April, losing half a million jobs that month alone. As states begin to re-open, dentists have been at the front of that wave, often with significantly increased personal protective equipment requirements.

    This week, 77% of dental offices report they are fully paying their staff, compared with just 10% in April, preliminary data from the American Dental Association show.

    Offices of other healthcare practitioners added 73,100 jobs in May. Physicians' offices added 51,300 jobs, a rebound after having lost 243,000 jobs in April. Home health care shrunk by 3,000 jobs, even after shedding 93,600 in April.

    Employment in nursing care facilities fell by 18,000 jobs in May, and by 10,800 jobs in residential mental health facilities. Community care facilities for the elderly declined by 8,300 jobs.

    The pace of healthcare's recovery will vary by state. A recent Jefferies analysis found hospital traffic in California had only recovered 10% as of May 31 from its lowest point on April 12. Texas hospital traffic, by contrast, was up 40% at the end of May from its April 11 trough.

    May's report also highlighted a broader economic recovery, with 2.5 million jobs added and the unemployment rate falling to 13.3%, from 14.7% in April. The BLS said that's because of the resumption of limited economic activity that had been curtailed in March and April because of the pandemic.

    More than 15 million people reported being on temporary layoff in May, or about 73% of the unemployed. That's compared to 78% of unemployed reporting being on temporary layoff in April.

    Leisure and hospitality, which includes hotels, restaurants, bars and entertainment, saw far and away the biggest comeback last month, having added 1.2 million jobs. Construction topped healthcare's new jobs, having added 464,000 jobs in May, and retail made 368,000 new hires.

    States' reopenings raises the possibility of a resurgence of COVID-19 cases, which could throw a wrench in healthcare's recovery. Shehata said he thinks the more important factor will be providers' ability to convince patients it's safe to come back.

    "Health systems have to step up and make a strong point to consumers that they are leading the way, preparing for this and doing everything possible to keep their population safe and healthy through this pandemic," he said. "That could be the biggest indicator of whether we're a V, U or W-shaped recovery in healthcare."

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