Viewpoint: US can't trim healthcare costs without moderating job growth

Efforts to lower healthcare costs are not likely to succeed as long as job growth in the sector remains strong, according to a viewpoint article published in JAMA.

Jonathan Skinner, PhD, from the department of economics at Hanover, N.H.-based Dartmouth College Geisel School of Medicine, and Amitabh Chandra, PhD, from the Kennedy School of Government at Cambridge, Mass.-based Harvard University, co-authored the article. The authors wrote as healthcare costs increased to 18 percent of gross domestic product in November 2017, healthcare jobs continued to increase by 2.1 percent annually. Between December 2007 and December 2017, healthcare added 2.8 million jobs, representing almost a third of new U.S. jobs.

"It is not surprising that employment growth should be a bellwether for rising healthcare expenditures because salaries and wages account for an average 55 percent of operating expenses for hospitals, physician offices, and outpatient care, and nearly 70 percent of hospital expenses," the authors wrote. "The problem is that the United States cannot reduce growth of healthcare costs without a corresponding moderation in the growth of healthcare employment."

The authors pointed to nonprofit hospitals as one example of where an association between healthcare jobs and healthcare spending is strong. While for-profit industries cut employment and return profits to shareholders, nonprofits can't do this, and instead expand their services, which may include hiring nurses or other staff. In addition, while healthcare is ripe with technological advances, ones like widespread EHR adoption have been labor-intensive, adding extra costs that are passed down to payers and consumers through hospitals' pricing powers.

"Unlike retail and manufacturing industries in which technology changes enhance labor productivity, electronic health records (EHRs) have added to the required human workload, whether this involves physicians and nurses spending many more hours entering information into the EHR, hiring scribes to accompany clinicians to enter this information, or paying support staff for EHR infrastructure investments," the authors wrote. 

Systemwide change, then, may come from trimming healthcare employment, the authors claim. The "focus should be on restraining overall hiring by right-sizing jobs to employees who can best perform them at the lowest cost or by closing inefficient facilities. Similarly, the urge to expand employment using unexpectedly healthy profit margins should be resisted because it is easier to create new positions than it is to lay off workers in a less sanguine future," they wrote.

For the full viewpoint, including the authors' breakdown of supporting research, click here.

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