Growth in Health Care Jobs Slowing as Economic Problems Affect Hospitals

The pace of job growth in the health care industry has "slowed sharply" this year, as hospitals, pharmaceutical firms and health insurers experience trouble related to the continuing recession, the Wall Street Journal reports. In each of the first three months of 2009, the health care sector added an average of 17,000 jobs, less than half the rate of increase for 2008. According to federal data, the number of mass hospital layoffs in February 2009 was twice what it was in February 2008.

The health care sector and the federal government are the only two major industries still adding jobs, according to the Journal. Since December 2007, when the recession began, the health care jobs and social assistance sector added 500,000 jobs. Health care, unlike other industries, is thought to be able to handle economic downturns better than other industries because consumers typically forgo other types of spending first, the Journal reports.

However, the scale of the current recession has had an effect on consumers' health care spending and purchasing behavior. Many hospitals have experienced losses in their investment portfolios, a rise in uninsured patients and a decline in elective surgeries. Industry officials expect economic problems to continue as states introduce new budget cuts and federal lawmakers mull health care reform.

Beth Israel Deaconess Medical Center CEO Paul Levy said, "To the extent that health care might have been recession-proof, it is no longer."

Once the recession ends, health care is expected to grow, particularly with "enormous advances in medical technology, ... Americans' strong appetite for health care" and President Obama emphasizing health care as "one of his three pillars of the future U.S. economy," the Journal reports. Health spending has more than tripled in the past 50 years to about 16% of the gross domestic product, and CMS predicts it will increase to 20% within 10 years.

Robert Fogel, a Nobel laureate and professor at the University of Chicago Booth School of Business, said, "It's a long-term shift reflecting changes in technology and what consumers want. Health care is the growth industry of the 21st century" (Johnson/Evans, Wall Street Journal, 4/13).

Nursing Shortage
In related news, the national shortage of nurses is expected to grow, but "thanks to the recession, the nursing shortage appears to be waning, at least temporarily," according to the Journal. The shortage was about 125,000 last summer, based on vacancies at hospitals and long-term care facilities. An American Hospital Association survey found that of 658 hospitals, more than half had negative profit margins in the fourth quarter of 2008, leading many to believe more layoffs will be announced.

The Journal reports that, although "there is still a need to replace the profession's aging work force and meet the growing demand of health care" in the long term, the shortage is decreasing slightly as many "former nurses are re-entering the work force after a spouse loses a job." Bob Livonius, CEO of staffing firm Medfinders, said of the recession, "It's caused the otherwise severe nursing shortage to abate somewhat." He noted that his firm, which in the past typically has filled 70% to 80% of employers' openings, is now filling "in the 90s" (Evans, Wall Street Journal, 4/13)