Healthcare Staffing Report: Aug. 8, 2013


Healthcare job growth slows during past three months

Following several years of sustained upward trajectory as we emerged from the Great Recession, growth in healthcare employment has shown a surprising and marked deceleration in recent months. According to our analysis of data issued by the U.S. Bureau of Labor Statistics, every segment of the healthcare industry has experienced slower job growth over the last three months as compared to the last 12, with the exception of “outpatient care centers” which has remained stable. The preliminary overall healthcare employment growth reported for July is the lowest in a decade.

Click chart below to enlarge.

The 2 percent across-the-board cuts to Medicare that went into effect April 1 with the budget sequestration are clearly restraining growth in the industry. This effect was predicted by healthcare consultancy Tripp Umbach in a September 2012 report which pegged the direct job losses for the industry resulting from sequester at 211,756 in 2013, rising to 330,127 by 2021. Notably, the impact of these “uniform” cuts is not being felt uniformly at all. For example, because nursing homes typically use Medicare payments to help offset the losses they incur providing care to Medicaid patients, they have been hit particularly hard, experiencing not just decelerating growth in hiring, but net losses in employment.

Moreover, it is not just the impact sequester has had on Medicare that is creating headwinds for the industry. The Food and Drug Administration’s budget authority has been cut by roughly $209 million, which has likely protracted the approval process for new pharmaceuticals and medical devices. Grants provided by the National Institutes of Health, whose funding has been reduced by approximately $1.55 billion, are critical to medical schools, teaching hospitals and other organizations employing healthcare workers. Each of these factors could very well be creating a chilling effect on hiring plans, if not directly resulting in layoffs.

Even if a budget deal is reached and the sequester is lifted, it will not necessarily mean relief for the industry. In fact, both the proposals offered by the Obama administration and those of congressional Republicans during the deficit reduction negotiations would result in even larger cuts to Medicare. Though implementation of the Affordable Care Act is anticipated to create increased demand for healthcare overall, it will also bring cost reduction measures that are designed to drive efficiency, but may prevent hiring from rising to the degree anticipated. Close monitoring of the employment data as we approach 2014 will reveal whether the data in recent months has indicated a brief pause, or the start of a secular downtrend.


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