The Healthcare Job Creation Problem

The U.S. Bureau of Labor Statistics came out with its June jobs report this week and, consistent with usual trends, healthcare jobs are booming. In June 2013 there were approximately 20,000 new healthcare jobs in the U.S., 75% of which were in the ambulatory care sector and 25% of which were in hospitals. 

The June growth in healthcare jobs matches up to the average 19,000 new healthcare jobs we have seen created in each of the prior months of 2013 and the 12% job growth we have seen over the last five years. In a country where new jobs are viewed as even better than baseball, apple pie and mom herself, these new jobs should elicit a huge round of applause, or at least a stadium-style wave, right?

Or should they?

Change the channel and a different set of policy makers, employers and industry experts will tell you that the only way to save our economy from ruin is to cut healthcare costs. Cutting healthcare costs means making the people who work within the system vastly more efficient, eliminating unnecessary medical care (and thus reducing the labor that goes along with it), and helping empower consumers to do things for themselves.

Yet if we succeed in achieving any or all of these three clear goals of current healthcare system improvement, then by definition fewer people should be needed to do them. In other words, we would need fewer healthcare jobs. And while that would be great for those focused on reducing healthcare costs, or at least healthcare inflation, it’s not going to make for a very happy jobs report. 

So what’s it going to be: more jobs or lower healthcare costs? Whoever said “you can have it all” must have been from the marketing department, not finance.

Everywhere on earth employers know that the fastest way to improve profitability is to get greater amounts of work done with the same or fewer numbers of people, yet in healthcare we have not quite got the message. For every healthcare IT entrepreneur building an analytics tool to reduce unnecessary care or expand the number of patients one caregiver can treat, there is a hospital cutting a ribbon on a new wing. 

Granted, healthcare is a more personal and person-intensive field of work than, say, manufacturing or farming or retail. Bob Kocher, M.D., points out in a 2011 New England Journal of Medicine article about healthcare non-productivity that 56% of U.S. healthcare costs are directly related to labor.  But we all know that if we are honest with ourselves we could do more with better technology and fewer humans. Despite rampant rhetoric to the contrary, I am one of more than a few people who believe we do not have a doctor shortage, but a dispersion of doctors problem. There are lots of them in large urban areas and too few in rural areas.

The real solution to lack of access to physicians is figuring out how to use technology to transport doctors or equivalent skills to where they are needed or to use nurses and pharmacists and others who are already here and well-trained to offload the work. This “load-leveling” of work is often used in other industries. But doctors can’t practice across state lines and telemedicine is barely covered. Clinicians who might be perfectly capable of performing certain clinical tasks are not allowed to legally do so in many states.

But instead we erect legal barriers to accessible, efficient patient care and work hard to keep them standing; in so doing we layer unnecessary cost onto a healthcare system that might just take up 100% of the national budget if we keep at it.

And thank God we create these barriers and nurture these inefficiencies or we wouldn’t be creating enough jobs to fuel the economic recovery that is so hampered by our inefficient healthcare system. In his New England Journal of Medicine article, Bob Kocher cited a McKinsey Global Institute study that says that for the United States to return to full employment, as many as 22.5 million jobs would need to be created, with 5.2 million, or 23%, in the healthcare sector.

In other words, make healthcare more efficient and we blow our job creation plan. Let a million healthcare jobs bloom and we will have built a healthcare cost monster that will crush us for sure. Did I just blow your mind? Does your head hurt like mine does? 

Lisa Suennen is co-founder of Psilos, a venture capital firm focused on healthcare. A version of this article originally appeared in the Health Care Blog.