Blog Post

Health care sector saw slowest jobs growth since 1999

February 7, 2014

    Dan Diamond, Managing Editor

    Down. Up. Up. Down.

    So goes the monthly jobs report, at least for health care. The Bureau of Labor Statistics keeps saying that the health sector has lost jobs, only to reverse itself in subsequent reports.

    Friday's report is the latest example: The BLS said that health care hadn't lost jobs in December after all. (Instead, the sector gained a slender 2,400 jobs.) But January was another negative month, with an initial estimate of 400 lost jobs.

    The ongoing flirting with a negative month is striking because—as you can see in the chart above—health care hadn't suffered any monthly loss in the jobs report dating back to 2003. Based on labor data available, economists say that's an unparalleled streak of job creation.

    And whether or not BLS ends up revising the latest negative number, one thing is clear: The health sector is showing signs of weakness that it hasn't in more than a decade.

    A closer look

    Health care gained about 204,000 jobs in 2013, per the latest BLS estimate. That number isn't final—the agency will tweak its figures at least one more time. (And for context, every other industry would be thrilled to gain several hundred thousand jobs in a year.) 

    But barring a big upward revision, it looks like last year will be the slowest year of total health care jobs growth since 1999.

    And that’s mostly attributable to a stall-out in hospital hiring.

    Although hospitals had been averaging about 40,000 new jobs per year, the industry actually lost 400 jobs in 2013. Admittedly, that's an incredibly slim margin, yet it's eye-catching because the hospital sector hadn't had a negative year since 1994. It also stands out because other sectors within health care continued to grow at a strong pace: home health gained 54,500 jobs last year, and outpatient care centers added almost 39,000 jobs.

    There were signs of this trend starting last summer, when I wrote about a slowdown in hospital hiring and its potential causes. Economists and other experts generally thought there were three key drivers:

    • Carnegie Mellon's Martin Gaynor walked through the ongoing care shift from the inpatient setting to the outpatient setting, which has understandable effects for hospitals. 
    • Harvard's Amitabh Chandra pointed to a slew of mega-mergers within the hospital industry, given that consolidation often leads to downsizing.
    • My colleague John Workman of the HR Investment Center cited benchmarking data on hospital turnover and vacancy rates that suggested executives were standing pat on hiring decisions, wary of the economic climate. 

    What's missing from the above list? The Affordable Care Act. While Obamacare often gets cited as the reason why hospitals (or other businesses) are shedding jobs, the health law tends to be more convenient scapegoat than an actual culprit, economists told me. 

    How to get frontline staff to be more productive

    Hospitals’ ability to improve cost and quality performance depends on staff at every level within the organization. But there is a troubling disconnect between expectations for the organization and those for frontline staff, Steven Berkow remarks.

    Providers are increasingly held to an 'A for outcomes' standard, but continue to hand out 'A's for effort' to their frontline staff, Berkow says. So what's most successful way to align individual behavior with organizational strategy? Instill accountability—rather than hold staff accountable.

    Watch Steven's video to learn four key levers for driving shared responsibility and staff commitment to organizational success, then visit the frontline accountability topic page to browse the latest best practice research, expert guidance, webconferences, and more from across the Advisory Board.

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