The powerful drivers of demand for healthcare services and workers have been chugging along unseen by most.
At the end of 2017, healthcare industry analysts predicted that job growth would level off and hospital jobs would decline. Prevailing beliefs held that demand for services would decrease because healthcare policy was in turmoil, sign-ups for Obamacare had settled, and value-based medicine would reduce hospital admissions.
The opposite happened. Healthcare employment, including ambulatory care and hospital jobs, grew at a powerful pace in 2018 and have soared so far in 2019, according to the U.S. Bureau of Labor Statistics (BLS). The biggest three months in the last ten years were December, January, and March, with December surpassing 50,000 in job growth.
In particular, hospital jobs, which were supposed to take the biggest hit due to policy and regulatory changes, increased every month in 2018 and in 2019, for a total of about 109,000 new jobs in the last 12 months. Over the same period, ambulatory care added 253,000 jobs. Healthcare is a jobs steamroller with no signs of slowing down, now the nation’s largest employer at about 16.3 million jobs.
Why did the healthcare analysts get it wrong?
Overthe last couple of years, public attention has focused on the politics of healthcare policy, especially the future of Obamacare. Industry discussions revolved around the transition from volume- to value-based care, leading to speculation that changing reimbursement incentives could empty out hospital beds. It seemed like the healthcare industry was about to change to less demand for services due to greater efficiency and care coordination. But these changes are not dampening the rising demand for services.
The real forces driving demand for healthcare services and the workforce that provides them -an aging population, retirement wave among healthcare workers, low unemployment, and improving economy-were strong enough to overwhelm the effects of policy and regulation.
The dominant driver of healthcare employment is the steady aging of the U.S. population. In 2016, there were 49 million Americans 65 and older; in 2035, there will be 78 million; and by 2060, there will be 95 million, according to the U.S. Census Bureau. The number of older people will outnumber children by the 2030s.
Compared to younger populations, older people use healthcare services much more. They are much more likely to experience illnesses, both acute and chronic, and to have multiple illnesses. And the services to diagnose and treat their illnesses are covered, to a significant extent, by Medicare, so there is a steady source of funding for this growing demand for services. Rising demand for services directly correlates with rising demand for nurses, physicians, allied professionals, and others to perform those services.
Another potent force is that number of total jobs is projected to increase by 11.5 million from 2016 to 2026, according to the BLS. More jobs mean more jobs with healthcare coverage and more money in people’s pockets to pay for healthcare.
However, as this demand increases, the supply of healthcare workers is not keeping pace. A retirement wave of baby boomer nurses, physicians, and other healthcare professionals is cresting. One BLS survey shows about a half million unfilled jobs in healthcare. For every healthcare job hire, there are twice as many job openings.
This super-heater healthcare jobs environment is creating its own demand vortex, with hospitals, health systems, and other healthcare organizations in intensifying competition to find the quality professionals they need.
This situation likely will worsen in the future. The population will continue to age. Overall job creation will fluctuate but continue to trend upward. Baby boomer healthcare workers will all retire, and since their generation is larger in size than succeeding generations, there will be a smaller pool to replace them.
There’s no single solution to this crisis-certainly no quick fix. We need more healthcare professionals graduating from educational and training programs and more residency slots. We need to maximize the roles of permanent and temporary staff at healthcare organizations. We need a virtual revolution in technology-enabled workforce solutions to optimize existing staff. But the first thing we need to do is recognize that rising demand for healthcare services and healthcare workers has become acute and chronic. It’s the biggest problem our healthcare system faces today and in the future.
Ralph Henderson is president of professional services and staffing at AMN Healthcare.