Economists are divided about whether the ongoing hospital hiring surge will fuel accelerating healthcare spending in the coming years.


July 18—Hiring by hospitals in recent years was driven by efforts to add physician and IT employees, according to a recent report by Congress’s leading Medicare advisors.

From 2010 through 2014, hospitals’ physician and surgeon employment surged 26 percent while employment of computer and math science pros jumped 18 percent, according to a recent report from the Medicare Payment Advisory Commission (MedPAC).

The MedPAC analysis of U.S. Labor Department statistics noted that the changes came during a period when overall hospital employment increased by 1.7 percent.

“Growth in the overall number of hospital-employed physicians suggests that hospitals have been more active in recent years in hiring physicians directly,” the report noted.

One indicator of the physician hiring trend was the finding that the number of physicians who are vertically consolidated with hospitals increased from 95,612 in 2007 to 181,787 in 2013, according to a Government Accountability Office report. That reflected the shift seen elsewhere, including a 2014 national survey by the Physicians Foundation, in which 53 percent of physicians self-identified as employees, compared with 44 percent who did so in 2012.

Regarding IT employees, the report stated: “Growth in computer and math science positions may reflect hospitals’ efforts to implement electronic health record systems.”

The federal electronic health record incentive program, established by the 2009 stimulus law, had made $34.7 billion in meaningful use incentive payments as of May 2016, according to a recent report by the Centers for Medicare & Medicaid Services (CMS). Of that total, $20.6 billion has gone to hospitals, $9.6 billion to Medicare and Medicaid physicians, and about $500 million to Medicare Advantage organizations.

Other hospital positions that grew rapidly during the period covered by the MedPAC report included:

  • Physical and social science positions (16.5 percent)
  • Pharmacists (12.5 percent)
  • Business and finance positions (10.9 percent)

Conversely the number of lower-level nurses fell 30 percent, office and administrative functions declined 6 percent, and clinical laboratory technicians dropped 2.2 percent.

The decline in the number of nurses with less education came as hospital employment of registered nurses in the same period increased by 2.6 percent, or about 39,000 nurses. The split trend indicated “a continued shift toward employing nurses with a higher level of training,” according to the MedPAC report.

Changing Trend

Although the latest MedPAC jobs data was somewhat dated, there were indications that some of the trends it identified have continued.

One trend that has sharply differed is the acceleration in hospital hiring. For instance, in 2015 more than one-third (36 percent) of all new healthcare sector jobs were in hospitals, which added 172,000 positions, according to an Altarum Institute report. That hiring spree more than quadrupled the 42,000 jobs that hospitals added in 2014.

However, as Ani Turner, co-director of Altarum Institute's Center for Sustainable Health Spending, noted recently, timely national data says little about what kinds of jobs are being created.

Among the preliminary findings of her ongoing examination of occupational employment statistics data: The latest hires include increases in the hiring of advance practice nurses, physician assistants, and physicians. Also increasing were some support roles, including “technology-driven” positions such as radiology technicians. IT jobs were found to be “growing significantly.”

Among the positions in decline were “transcriptionists and other sorts of activities that are becoming automated.”

“It’s not true that all of the jobs that are being created are the lower-paying, less-educated” kind, Turner said at a recent Washington, D.C., policy briefing.

The latest Altarum figures tracked some other data, include Bureau of Labor Statistics (BLS) union membership figures. Two categories of healthcare jobs tracked by BLS showed divergent trends in union membership during 2015. Healthcare practitioner and technical occupation positions added 82,000 union members, while healthcare support occupations lost 26,000.

Significance of the Data

Economists are divided about the significance and consequences of the ongoing hiring surge, which included 15,000 seasonally adjusted jobs added by hospitals in June, according to the latest BLS figures.

Charles Roehrig, PhD, a fellow and founding director at the Center for Sustainable Health Spending, argued in a recent interview that the hiring surge was a temporary jump stemming from the one-time historic coverage expansions of the Affordable Care Act.

“You would expect jobs to go up,” Roehrig said.

The hiring surge should abate, Roehrig said, as should the increase in national healthcare expenditures from recent lows to increases of more than 5 percent in 2014 and 2015 as seen in recent CMS data. Roehrig said he would be “shocked” if such accelerated spending continues for the next two years.

In contrast, Tom Getzen, former executive director of the International Health Economics Association, said at the Altarum event that the newest spending data indicated that the slowdown in healthcare spending following the last recession had ended.

Going forward, Fitch Ratings expected the pace of physician alignment and employment to slow from very strong levels over the past few years, given that most physicians have consolidated.

“Future employment growth likely will be driven by recent graduates, with further alignment activity focused on clinical integration by developing and aligning primary care networks,” stated a Fitch report in January.

Additionally, a 2016 outlook from Moody’s Investor Services warned that the continued acquisitions of low-margin physician practices could produce large operating losses during the initial phase.


Rich Daly is a senior writer/editor in HFMA’s Washington, D.C. office. Follow Rich on Twitter: @rdalyhealthcare

Publication Date: Monday, July 18, 2016