Health-Care Field Sees Growth Spurt in Jobs
The technology sector is in tatters, and assembly line work is dwindling. But in hospitals, doctors’ offices and other medical facilities across America, a new job is born every two minutes.
If any industry can claim to have whipped the recession, it’s health care. Over the last 12 months, as the overall U.S. economy shed 1.2 million jobs, health services added 297,000 positions.
The sector has not only held its ground during the downturn, the rate of job creation has gradually accelerated. The hiring binge has softened the recession’s blow, providing work for people who otherwise might do without. Fueled by powerful demographic and technological forces, health-care employment has become one of the few engines of growth in the U.S. economy.
For Rebeca Sanchez, it may be the ticket to a new life. A 30-year-old single mother in San Diego, Sanchez was laid off in October by a struggling Latino telecommunications firm. On Jan. 25, she graduated from a program that trains foreign-born workers with limited English skills to become certified nursing assistants. There’s a CNA position waiting for her at the Magnolia Special Care Center, a nursing home in El Cajon, Calif.
“It’s good for me, and for my family,” said Sanchez, who hopes health care will provide the financial stability and career opportunities she has sought. “I want to go farther. I think I need only a little more time.”
But there are limits to the industry’s ability to provide the jobs the rest of the economy can’t. Despite all the recent hires, hospitals and other health-care employers face acute shortages of nurses, pharmacists, technicians and other highly trained medical personnel. The fierce competition for job candidates is driving up costs and limiting the industry’s ability to keep up with increasing demand for its services.
“We are facing work force shortages that are expected to dramatically worsen in the next five to 10 years,” American Hospital Assn. Vice President Carmela Coyle said. “While we’re hiring more, we need even more than we can hire.”
In addition, part of the industry’s recent expansion is attributable to a consumer backlash against managed care and the partial restoration of Medicare funds previously cut by Congress. With the recession pinching employer profits and government revenues, both windfalls could prove temporary.
“Only about a third of hospitals in this country are financially sound,” said Gary Mecklenburg, chief executive of Northwestern Memorial Health Care in Chicago and chairman of the hospital association’s National Workforce Commission. “If you don’t have the revenue, you can’t hire and pay the people.”
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Aging Baby Boomers Will Fuel More Growth
If not for the financial squeeze, Mecklenburg said, the industry could grow even faster.
Demand for health services is rising inexorably in response to a growing population of elderly Americans and to dramatic advances in medical technology and therapies. Spending on health care totaled $1.3 trillion last year, accounting for 13% of the entire U.S. economy.
“We have an ever-expanding health-care system on which we’re spending ever more money, and the only issue is how fast it will grow,” said Drew Altman, president of the Kaiser Family Foundation, a nonprofit research group. “The managed-care movement put a damper on that for a while, and now the lid’s off again.”
The importance of health care to the U.S. economy will grow even greater as the massive baby boom generation enters its golden years. Although the first wave of boomers are just in their 50s, they are beginning to suffer the indignities of heart disease and high blood pressure.
“We’re just beginning to get the front end of the baby boomers into ages where they start to get chronic diseases,” said Alan M. Garber, director of Stanford University’s Center for Health Policy. “That’s going to increase the demand for all kinds of health services.”
Other trends are contributing to the industry’s growth spurt. Millions of Americans who enrolled in HMOs and other managed-care organizations became increasingly resentful of the limits placed on their access to health care. Many abandoned HMOs for less restrictive plans, increasing demand for medical procedures and hospital services.
The backlash prompted insurers and employers to ease up on restrictions. Health-care spending increased, and providers used some of the funds to hire more people.
“The ongoing fight between the consumers and the gatekeepers tilted a little bit toward the consumer,” said economist Jared Bernstein of the Economic Policy Institute, a labor-oriented think tank. “People are accessing the kinds of treatments that a few years ago insurers might have managed to keep them from getting.”
About the same time, Congress restored a portion of the Medicare funding it had taken away in 1997 to help balance the federal budget, and cracked down on abuses in the government health plan that were costing taxpayers. Slightly opening the spigot helped shore up hospital finances after several years of painful cost cutting.
The health-care industry “went through its own sort of mini-recession in 1999 and 2000,” said economist Mark Zandi of Economy.com, a consulting firm in West Chester, Pa. “It had to restructure and downsize and consolidate. The industry rationalized itself, and the remaining players are much stronger.”
Finally, the industry’s ability to hire new workers actually was enhanced by the broader recession. The collapse of the technology industry, successive waves of corporate layoffs and the shock waves from the Sept. 11 attacks on the World Trade Center and the Pentagon increased interest in health- care jobs that previously went unfilled.
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Retired Nurses Reentering Work Force
The crossover effect has been greatest among nonprofessionals such as administrative aides, admissions clerks, housekeepers and food service workers.
But the economic slump also has helped health-care providers address the shortages of trained personnel. Although dot-com refugees can’t be transformed into radiology technicians overnight, the downturn has caused some retired nurses to reenter the work force and some part timers to go on full-time schedules. In many cases, it is because their spouses have become victims of the recession.
“It’s a good rule of thumb: The supply of health-care professionals is inversely related to the state of the economy,” said Michael D. Israel, CEO of Duke University Hospital in Durham, N.C.
“But it’s a two-edged sword. More people are getting laid off, therefore there are going to be more health professionals available,” Israel said. “Here’s the bad news: Because all those other people got laid off, those health professionals are going to be treating people who no longer have insurance coverage.”
Although many of the new hires are lower-wage workers--taking positions they had spurned as undesirable during the good economy--industry officials say at least a few are highly trained personnel who left health care during the boom days of the late 1990s for more lucrative, or less stressful, positions in technology and other industries.
“We’ve been able to hire a lot of those people in the last year or 15 months; well-qualified people who weren’t available to us a year ago because the dot-coms were alive,” said David Levinsohn, chief executive of Sherman Oaks Hospital. “Those people have lost their jobs and they’re now seeking jobs in health care.”
“In the late ‘90s, no one would work for hospitals, because if you could breathe at all, you could go to a dot-com company and they would give you stock options,” Princeton University health-care economist Uwe Reinhardt said. “When there was a lunatic industry that would pay you a lot for just standing vertically, why work in a hospital as a critical care nurse?”
The need for employees is creating intense competition among potential employers. Hospitals are hosting job fairs, offering $5,000 signing bonuses and bidding up wage scales. The median annual salary of registered nurses across the country has risen to nearly $42,000, from the mid-$30,000 range just a few years ago, according to one study. In the San Francisco Bay Area, some RNs are being offered as much as $65,000 a year.
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Acute Shortages in Some Health-Care Fields
“There’s a shortage in San Diego, there’s one in Los Angeles, there’s one in Atlanta and New York and Chicago,” said Lee Johnson, owner of Casa Palmera nursing home in Del Mar, Calif. “Call San Francisco. Call Omaha. Call Milwaukee. It’s the same all over.”
Like the nearby Magnolia Special Care center, Casa Palmera is paying former minimum-wage workers about $7 an hour while they train to become CNAs.
“They promised us that if we graduate and pass the board exam, we’ll jump up to $10,” said Albert Ruivivar, who enrolled in the Casa Palmera program after he was laid off by a San Diego firm that makes shafts for golf clubs.
But there is a long way to go to alleviate acute shortages of health- care personnel.
A survey by the American Hospital Assn. found that 168,000 positions were unfilled in mid-2001. Of those, 126,000 were for RNs, who are chronically in short supply.
High vacancy rates also were reported for hospital pharmacists, radiology technologists and laboratory technologists.
A separate study by the American Health Care Assn. found that the nation’s nursing homes have more than 100,000 unfilled job slots: about 16,200 for RNs, 25,500 for licensed practical nurses and 65,000 for CNAs.
“Five and six months ago, when the economy was robust, we had members who were giving people a $500 bonus if they’d stay for a year, a round-trip ticket to Hawaii if they stayed six months, and $50 if they would bring a friend in just to fill out an application,” said Betsy Hite, public affairs director for the California Assn. of Health Facilities, which represents 1,600 nursing homes. “Our classes for new recruits are filling up more quickly now.”
The staff shortages have been exacerbated by demographic trends within the industry itself. The average age of nurses is rising along with that of the people they treat, and there are not enough young people entering the profession to take their places.
Even with the partial restoration of the 1997 Medicare cuts, many hospitals are losing money.
For “safety-net” institutions that care for large numbers of indigent patients, the outlook is particularly grim: The recession is forcing many states to curtail spending on Medicaid, the health-care program for the poor.
In fact, some experts fear that Congress may be unintentionally setting up the industry for another fall by failing to help the states avert big cuts in Medicaid.
“It’s a huge threat,” said Northwestern Memorial’s Mecklenburg, who just stepped down as chairman of the American Hospital Assn. “When demand for health care for the indigent is rising because of a bad economy, it’s one of the worst times to cut back funding.”
