Healthcare Jobs Continue to Grow Despite Recession

Last Updated Jan 11, 2010 6:42 PM EST

Healthcare continues to defy the odds by adding jobs even as most other sectors of the economy lose them. While the U.S. lost 85,000 positions in December, the healthcare industry added 22,000 jobs that month, including 9,000 in physician offices and 8,000 in home care agencies. Since the recession began, 631,000 new healthcare positions have been created. Some healthcare professions, such as nursing, are predicted to be among the strongest job generators in coming years.

An economist interviewed for a Kaiser Health News article said that healthcare continues to do well, despite the economic crunch, because people would rather buy healthcare than a new car or some other product. In addition, he noted, the baby boomers are starting to enroll in Medicare. Meanwhile, the federal government is spending more on Medicaid and is subsidizing COBRA coverage for those recently laid off.

These factors may explain why hospitals are doing so well: The average hospital had a profit margin of 8.4 percent in the second quarter, the most recent period for which there is national data. According to a recent survey mentioned in CMS' annual report on U.S. healthcare spending, about half of physicians report seeing a drop in office visits. Nevertheless, demand for medical office space is still strong. That, plus the stepped-up hiring of practice staff, suggests that some physicians are enjoying robust business.

President Obama, meanwhile, has returned to an early theme of his campaign for healthcare reform. In his weekend radio address, Obama said reform would help build a "new foundation for our economy to create the good, lasting jobs and shared prosperity of tomorrow."

He's right about the short-term effect of the reform legislation, after most of it kicks in a few years from now. Adding 34 million people-the latest estimate from the CMS of the Senate bill's impact-to the ranks of the insured will stimulate healthcare revenues and employment. But the long-range impact is doubtful. If reform manages to bend the cost curve, the growth in healthcare jobs will slow and perhaps even reverse. If costs are not contained, the system will crash and lots of jobs will be lost, among other things. (That would also happen, by the way, if reform legislation failed to pass Congress.)

Healthcare is like military spending in an important respect: The money to fund it comes, ultimately, from the goods and services that the nation produces. While healthcare contributes its share to the GDP and the tax base, an economy based on healthcare is not sustainable. Only when we figure out how to make the entire economy grow again will there be enough jobs for everybody, whether or not they work in healthcare.

  • Ken Terry

    Ken Terry, a former senior editor at Medical Economics Magazine, is the author of the book Rx For Health Care Reform.