On June 28, 1894, Congress passed the law designating the first Monday in September as Labor Day—a day set aside to celebrate America’s working-class population. It came as a result of organized protests by hourly workers in New York City and Chicago as our economy was shifting from family farms to assembly lines and manufacturing.
Today’s workforce looks much different than it did at the turn of the 20th century. Our economy has moved from bricks to clicks. Amazon, Facebook, Google, Microsoft, Alphabet, Twitter and others have replaced Exxon, GM and GE as America’s industry stalwarts. Every industry has been forced to adapt and every job has been impacted.
As of 2018, for the first time in our nation’s history, the healthcare industry is our nation’s biggest employer. In 2000, there were 7 million more workers in manufacturing than in healthcare; in 2009, there were 2.4 million more workers in retail than healthcare. In 2017, healthcare surpassed both.
Today, 21 million (13%) of the 160 million in our civilian workforce are employed in healthcare. Six in seven is paid hourly. One in four is older than 55 years of age. One in five is an administrative position. One in six is a licensed caregiver. One in 25 is a physician.
It’s a complex workforce. Median annual wages across the industry are almost twice those in all other industries. Demand for talent is soaring. But for the rank and file, most are unhappy and worried.
They’re unhappy because…
· They believe corporate profits are more important to boards of directors than patient care/member services.
· They feel executive compensation and administrative overhead are wasteful and excessive. The gap between the best paid and the rest is widening.
· They think public policies about healthcare developed by bureaucrats and academics are unworkable because their creators have no work experience in the settings they oversee.
· They feel underpaid, over-worked and unappreciated. They think physicians aren’t the only workers who experience burnout.
They’re worried because...
· They believe consolidation in every sector means lost jobs for workers and centralization of decision-making “somewhere else.”
· They believe the politics of U.S. healthcare have become more important to policymakers and elected officials than policies to address access, financing and delivery appropriately.
· They see growing public dissatisfaction about the health system.
· They worry about the affordability of healthcare, since 40% of their patients and a third of their workforce peers can’t afford care for themselves and their families.
The healthcare workforce will continue to increase: it’s simple math. Per the Census Bureau, the number of people over 65 will increase to 84 million in 2050—16% of the population today to 21%. Adults over age 65 experience three times as many hospital days and those over 75 experience four times as many compared to the general population. More than two of three older Americans have multiple chronic conditions, requiring complex care delivery. This growing older population is Medicare eligible and those over 75 are more likely to utilize skilled nursing and assisted living services. Thus, the Congressional Budget Office anticipates healthcare spending will increase at 5.7% annually for the next decade.
For the healthcare workforce, it’s a good news/bad news scenario: the good news is that the industry will grow: it adds 24,000 to its ranks monthly. Profits for the 85 largest investor-owned healthcare corporations hit a record $47 billion in the second quarter of 2018—a record. Job opportunities that enable cost reduction via technology, outsourcing and process re-engineering are golden. And innovations in personalized therapeutics, alternative health, the integration of physical and behavioral health, attention to social determinants of health and consumer-directed health mean more opportunities.
The bad news is, the fact that individuals, employers and some regulators are demanding greater transparency, demonstrated results and cost constraint. They’re not content to absorb health costs that exceed costs of living. Some sectors, like hospitals, are feeling the pressure: Moody’s found hospital revenue growth (4.6% in ’17 vs. 6.1% in ’16) offset by higher expense growth (5.7% in ’17 vs. 7.1% in ’16). Many in the rank and file workforce are change-resistant: productivity gains have been lethargic in many sectors, leveraging technologies and decision-support data has been slow and in some work-groups, conflicts over roles and work-rules are intense. As a result, pay increases for the workforce have been modest if at all.
The reality is this: healthcare in the U.S. is big and messy. Each sector competes for a piece of a growing pie. Each makes its own rules including how it recruits, trains and engages its workforce. Each seeks advantage at the expense of the other through vigorous intramural competition. Each believes its purpose more noble than others. And the workforces in each are relatively well-informed about their own sector and their roles therein and poorly informed about others.
Might the healthcare workforce push back? An Occupy Healthcare movement is likely, especially among rank and file employees and employed physicians who think things are heading the wrong way. Just as teachers in West Virginia, Oklahoma, Arizona, and Kentucky pushed back against wage policies they found unacceptable, the healthcare workforce is poised to become activists. In the process, they’ll garner sympathetic coverage from media and widespread attention in social media.
Leaders of healthcare organizations in every sector—whether owned by corporate conglomerates or operated as a community not for profit—must take a fresh look at looming issues in the healthcare workforce. Compensation, benefits and recognition strategies need fresh ideas. While the spotlight is on value-based purchasing, market consolidation and lowering costs, attention must be given to each organization’s workforce strategies.
The healthcare workforce is at a tipping point. They’re not happy and they’re worried.
P.S. Sixty-four days from today, we’ll elect 36 Governors, 35 Senators and 435 Members of the House of Representatives. It’s a consequential election for the 21 million who work in healthcare. Healthcare will be a key issue. Last week, Reuters released a poll that found 70% favor “Medicare for All” including 51% of Republicans and 85% of Democrats. Most voters are not satisfied with the status quo. Most think it’s complicated, expensive and profitable. But voter passion is not matched by voter awareness: most are easily duped by soundbites and simple promises made by aspiring candidates of both parties. Educating voters about healthcare trends, issues and tradeoffs would seem a high priority for the industry that employs 13% of the civilian workforce, consumes 29% of the federal budget and directly impacts every person in our country.
Fact file: Healthcare Workforce
Employment growth: healthcare employment is projected to grow 18% from 2016 to 2026, much faster than the average for all occupations, adding about 2.4 million new jobs—more than any other occupational groups. US Department of Labor
Job openings: Long-range demand for healthcare services and workers is which is projected to increase by 11.5 million from 2016 to 2026. There are 1.26 million total healthcare jobs openings per year. Including 204,000 nurses and 624,000 technical occupations. One-third of today’s active physicians turn 65 within the next ten years creating a shortage of more than 100,000 physicians through 2030. American Association of Medical Colleges/ AAMC
Wages in healthcare vs. other industries: The median annual wage for healthcare practitioners and technical occupations (such as registered nurses, physicians and surgeons, and dental hygienists) was $64,770 in May 2017—higher than the median annual wage for all occupations in the economy of $37,690. But Healthcare support occupations (home health aides, occupational therapy assistants, medical transcriptionists et al) had a median annual wage of $28,710 in May 2017—ower than the median annual wage for all occupations in the economy. US Department of Labor
Current healthcare employment (Bureau of Labor Statistics’ North American Industry Classification System/NAICS)
Millennials job interest: Five of the most popular jobs among millennials are in healthcare with millennial % of total employment and median annual wage: Phlebotomists 50%/ $33,670; Emergency medical technicians and paramedics 49.8%/ $33,380; Physician assistants: 48.3%/$104,860; Medical assistants 48.1%/$32,480; Dental assistants: 45.5%/$37,630 LiveCareer.com
Highest-Paying Healthcare Jobs with $100K+ Salaries: No. 1 -- Physician: $195,842; No. 2 -- Pharmacy manager: $146,412; No. 3 -- Pharmacist: $127,120; No. 7 -- Physician assistant: $108,761; No. 9 -- Nurse practitioner: $106,962 Glassdoor
Wage increases: Emergency medical technicians and paramedics were the only healthcare positions named on a list of jobs most likely to provide a pay raise website finder.com.
Wage Gap—Hospital Executives and Doctors: Over the past decade, salaries for hospital CEOs have risen much faster than for surgeons, physicians and nurses. Adjusted for inflation, average compensation for CEOs at major medical centers increased from $1.6 million in 2005 to $3.1 million in 2015—a 93% increase. During the same period, compensation rose by 26% for orthopedic surgeons, 15% for pediatricians (reflecting the higher and lower ends of doctor salaries) and 3% for registered nurses. Clinical Orthopaedics and Related Research
Productivity: Physician compensation increased 0.89% in 2017, marking the first year that provider salaries have grown less than 2% in over a decade, AMGA recently reported. Overall, physician productivity declined by a weighted average of 1.63%, based on data from 270 large, multispecialty medical groups and integrated health systems, representing more than 105,000 clinical providers. The percentage of medical professionals reporting hospital employment or medical group participation rose from 58% in 2017 to 64% in 2018. 31st annual AMGA Medical Group Compensation and Productivity Survey
Nurse Practitioner Salaries on the Rise: NPs reported an average salary of $113,900, an increase of 6.6% over last year's average reported salary of $106,000. 5% of NPs reported earning more than $150,000 in 2017. 12% of respondents reported receiving a sign-on bonus for their current role, up from 11% in the previous year's survey. 15% PAs and NPs with less than 10 years of experience were paid a sign-on bonus, compared to 8% of PAs and NPs with more than 20 years of experience. The average sign-on bonus was $7,200. 86% of PAs and NPs reported being satisfied, to some degree, with their income level PracticeMatch
Hospital finances: Annual expense growth for nonprofit and public hospitals outpaced annual revenue growth in fiscal year 2017 per Moody's. The median annual expense growth rate was 5.7% in fiscal 2017, down from 7.1% in fiscal 2016. However, the annual revenue growth rate declined faster, falling from 6.1% in fiscal 2016 to 4.6% in fiscal 2017. "This is the second consecutive year expenses have topped revenues and this will remain the largest strain on NFP hospital profitability through 2019," Moody's said. The lower revenue growth was attributable to several factors, including the shift to outpatient care, increased ambulatory competition and lower reimbursement rates. The lower expense rate was largely due to better control of supply and labor costs, according to Moody's. Moody's expects nonprofit hospital margins will continue to be suppressed through 2018 after median operating margins and cash flow margins fell to all-time lows of 1.6% and 8.1%, respectively, in fiscal 2017. Moody’s Investor Service
Profits in healthcare: As of Aug. 2, 2018, 85 publicly traded health care companies have amassed $47 billion of global profit on $545 billion of global revenue in the second quarter-- higher than the $45.6 billion the 118 health care companies posted in the first quarter of this year, and it's higher than anything recorded in the past year. Fatter profits are due in part to growing sales of prescription drugs, medical devices, tests and procedures reflecting both higher prices and more quantities sold in addition to tax cuts that lowered expenses. Axios Health Earnings Tracker