Good news! Healthcare is now the U.S.' largest employer. Bad news – 60 percent of healthcare jobs are administration and management.
Last week, The Atlantic reported that, according to research from the Federal Reserve Economic Data, healthcare has surpassed both manufacturing and retail sectors to become the largest source of jobs in the U.S. For those of us in the industry it’s not terribly surprising that healthcare now employs more than any other sector in the economy. In fact, Derek Thompson, senior editor at The Atlantic and the author of the article, notes that healthcare’s ascension to the top spot in the U.S. economy was nearly inevitable, though it has come sooner than expected.
Thompson makes three great points in his article to explain healthcare’s rise to the top:
- Americans are getting older.
- Healthcare is publicly subsidized.
- Globalization and automation are largely missing in healthcare.
America is getting older!
An aging population has driven increasing need for healthcare, and thus the need for more workers in healthcare. But, it’s not just driving need, it also means that healthcare has an aging workforce that is getting less productive. Hold on to that thought – productivity is a theme that is going to come up again.
Healthcare is publicly subsidized in a number of ways.
Approximately 50 percent of all healthcare in the U.S. is paid for by the federal government, not to mention additional monetary incentives to private employers via tax breaks. The effect? Healthcare employment not only weathered the economic recession of 2007-2012, but as The Atlantic article notes, healthcare employment actually increased every month during the recession. Everyone talks a great game about doing more with less, about higher productivity, yet healthcare continues to hire more and more employees to handle growth in need, rather than invest to become more efficient.
Globalization and automation, which have dramatically affected manufacturing and retail, have had little impact on healthcare.
Even among national players in the healthcare provider and insurance space, healthcare is delivered and administered locally, and automation lags dramatically. Thompson writes, “health care is substantially resistant to both.” While globalization and automation usually drive economies of scale through productivity, healthcare has largely shrugged off these drivers, which has pushed increased employment in the sector.
Let’s talk about productivity.
Healthcare’s employment growth is largely in administrative and management jobs – not the delivery of care. One review of reports from the Bureau of Labor Statistics reveals that 60 percent of healthcare labor is now nonclinical, and that projections through the year 2026 show this category will grow at a rate of 23.2 percent, a growth rate that is far faster than any other major occupation group in any sector, not just healthcare.
Not only is the employment growth contributing to the cost issue that has dogged the healthcare industry for decades, it exacerbates another embarrassing issue – errors. People make errors; more people make more errors. According to a report by ReferralMD, 86 percent of healthcare errors are administrative… the very employment category we are growing the most.
So, how do we make improvements?
Robotics! But it’s not what you might think. Even though Thompson mentions robotics in his article, he makes a common mistake – thinking of robotics only as a complete replacement of employees via a physical robot. Think differently. Software robots are designed to specifically reduce rote tasks, particularly across administrative work. A recent report from KPMG advised that software robotics can already replace 60-80 percent of manual tasks performed by support staff, regardless of industry.
Healthcare needs to deploy software robotics to make hundreds of thousands of employees more efficient and to reduce errors. We don’t need to be hiring more healthcare support staff; we need to help our staff do their job better.
Learn More: See how robotics is being used today by Florida Blue to discover, manage, and automate work.