Organizational Restructuring in U.S. Healthcare Systems
Implications for Jobs, Wages, and Inequality
The healthcare sector is one of the most important sources of jobs in the economy. Healthcare spending reached $3.2 trillion in 2015 or 17.8 percent of GDP and accounted for 12.8 percent of private sector jobs. It was the only industry that consistently added jobs during the Great Recession. In 2016, this sector added 381,000 private sector jobs, the most of any industry. It is a particularly important source of employment for workers without a college degree, most of whom, as we document in this report, earn low wages.
This report describes the changing patterns of jobs and wages for healthcare workers. We focus particularly on workers in hospitals and outpatient clinics, where major industry restructuring is occurring in response to financial pressures and regulatory and technological change. Several findings are noteworthy.
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Healthcare Sector Employment Trends
- Private sector healthcare employment grew by 20 percent between 2005 and 2015, when it accounted for 12.8 percent of all private sector jobs (Table 1).
- The healthcare sector includes six major occupational groups that interact with patients in the delivery of care: healthcare professionals, social service workers, medical technicians, health aides and assistants, food service workers, and cleaning service workers. These occupations accounted for 69 percent of all healthcare jobs in 2005 and 74 percent in 2015 — suggesting that the proportion of jobs focused on patient care has increased over the decade (Table 2).
- Healthcare professionals experienced the fastest job growth over the decade (at almost 50 percent), compared to other occupational groups, followed by strong growth (about 20 percent) among social service workers, medical technicians, and health aides and assistants (Table 2).
- The healthcare sector workforce became more demographically diverse over the decade. Jobs held by black workers grew by almost 25 percent, Hispanics by 57 percent, and Asian and other workers by 48 percent. Jobs among white workers, by contrast, grew at 11.5 percent — lower than the industry average. Men increased their workforce participation by 27 percent, but overall, women still held 78 percent of healthcare jobs in 2015 (Table 5).
Hospital Restructuring and the Growth of Outpatient Care Jobs
- This report focuses primarily on the consolidation and restructuring of hospital-based healthcare systems. In response to regulatory reform and financial pressures, healthcare organizations are consolidating into larger healthcare systems while also decentralizing services to lower-cost outpatient (or ambulatory) care settings. Hospitals and outpatient clinics account for about 41 percent of all jobs in healthcare (Table 1).
- Hospitals remain by far the largest employer in this sector, but jobs in hospitals grew by 10 percent between 2005 and 2015 while those in outpatient care facilities grew by 60 percent (Table 1).
- Healthcare professional jobs grew rapidly in both hospitals and outpatient care but at double the rate in outpatient care (60 percent versus 30 percent) (Table 4a, b).
- For workers in nonprofessional occupations (social services, medical technicians, health aides and assistants, food and cleaning services), job growth in hospitals was relatively flat but grew by 61 percent in outpatient centers over the decade (Table 4a, b).
- Job growth in outpatient facilities was disproportionately high for black workers (65 percent growth rate), Hispanic workers (103 percent), and Asian/others (82 percent), and within these groups, women’s job growth outpaced that of men (Table 5).
Real Wage Trends
- In 2015 across the industry as a whole, the median real wage of full-time healthcare professionals (which includes RNs and social workers as well as physicians, specialists, nurse practitioners and physicians’ assistants) was $32.72 per hour. Full-time social service workers earned a median wage of $18.16 per hour, while medical technicians earned $19.63 and health aides and assistants earned $13.25 per hour. The median hourly pay of the lowest paid full-time workers, in food and cleaning services, was $11.14 and $11.78, respectively (Tables 7b, c, d).
- While healthcare jobs in the entire sector grew by 20 percent over the decade, real median earnings for full-time workers fell on average by 2.4 percent over 10 years. But wage trends varied across workplace locations, occupations, and demographic groups. Overall median real hourly wages rose very modestly in hospitals, increasing by 75 cents over the decade from $23.79 to $24.54. This was an increase of 3.2 percent over the decade or less than a third of a percent a year on average. The biggest percentage gain was for Hispanic women, whose median real wage increased 5.7 percent over the decade from $17.84 an hour to $18.85. However, this was an increase of $1.01 or about 10 cents a year on average. White women saw a 5.2 percent increase in pay from $23.79 to $25.03 an hour, an increase of $1.24 or about 12 cents a year. Pay rose 5.4 percent for Asian/Other women from $27.95 to $29.45 an hour or by $1.50 over 10 years, an increase of about 15 cents a year. Other demographic groups saw average annual pay increases of 6 to 10 cents an hour, with pay increasing over the decade by about 65 cents an hour for black women and Hispanic men and by about 95 cents an hour for black, white and Asian/other men. Wages of hospital workers over the 2005 to 2015 period can best be described as ‘stagnant’ (Table 7a).
- Wage trends in outpatient care centers were more negative. Median real wages of full-time workers in these facilities fell by almost 6 percent from $20.81 to $19.63 an hour, a decline of $1.18 over ten years. This pattern of declining real wages held for almost all demographic groups except white males, whose median pay rose by about $1.00 per hour over the decade and for Asian/other women whose earnings were flat. The median real wage fell by 12.6 percent for black men, by about 5 percent for white women and Hispanic men and women, and by less than 1 percent for black women (Table 7a).
- The finding that real wages were stagnant or fell for most healthcare workers during the decade is surprising in light of the fact that educational attainment rose among virtually all occupational groups. These educational trends were very similar in hospitals and outpatient settings. Educational levels in 2015 were actually higher in outpatient care centers than in hospitals. In some healthcare occupations, a college degree does not translate into a solid middle-class wage. For example, in 2015 64 percent of social service workers in hospitals and 78.5 percent in outpatient care had a four-year college degree or more, yet median annual pay for full-time, full-year workers in this occupation was less than $42,000 in hospitals and less than $38,000 in outpatient care (Tables 7b and 8).
- Within hospitals, real wage trends varied by occupational group. Among healthcare professionals and social service workers, pay increased modestly for most demographic groups. But pay declined for most workers in the two largest nonprofessional occupational groups — medical technicians and health aides and assistants (Table 7b, c).
- In outpatient centers, wages for healthcare professionals were essentially stagnant overall, but grew over the decade for black men and white men, while falling sharply for black women and Hispanic and Asian men and women. Among medical technicians and health aides and assistants, it is the pay of black men that fell the most over the decade. Median hourly pay of black male medical technicians fell by almost 30 percent, while that of black male health aides and assistants declined nearly 17 percent (Table 7b, c).
Wage Gaps, Pay Penalties, and Trends in Inequality
- The findings in this report show that the unraveling of hospital-based employment systems is associated with greater wage inequality. In hospitals, the rise in real wages among healthcare professionals and the modest fall in wages for non-professional groups suggest that inequality has increased within hospital settings. Wage trends in outpatient care facilities suggest a different pattern of growing inequality as the pay of black men employed as medical technicians or health aides and assistants fell (Tables 7b, c, and d).
- In separate regressions for each occupation group that control for work location (hospital or outpatient facility), for demographic variables (gender, race/ethnicity, age, nativity), educational attainment, and geographic location (state), we find that some demographic groups are more disadvantaged than others. Substantial gender wage gaps occur in every occupational group except social service workers in both hospitals and outpatient care facilities. Women earn between 7.7 percent and 24.3 percent less than men depending on occupational group and work location (Table 13a).
- Pay penalties for working in outpatient facilities relative to hospitals are prevalent among healthcare professionals and medical technicians. Female healthcare professionals in outpatient care centers earn 20.1 percent less than those in hospitals in 2015; male healthcare professionals in outpatient care centers earn 12.7 percent less than males in hospitals. Among medical technicians, women and men in outpatient care centers earn 13.6 percent less than their counterparts in hospitals (Table 13b).
- In both 2005 and 2015, less educated workers (less than high school or high school degree) received a substantial pay penalty compared to those with some college; while those with a college or advanced degree earned a large pay premium compared to those with only some college. The pay premiums for higher education in most cases were considerably larger in 2015 than in 2005 (Appendix D, Tables 1–6).
- Declining real wages in outpatient services and lower pay for healthcare professionals and medical technicians cannot be explained by factors that often influence wage determination: educational level, age, or the share of workers who are part-time or foreign-born. Educational attainment rose for virtually every occupational group — in some cases, substantially. Similarly, the share of the workforce that is foreign-born rose by only 1 percentage point overall and was lower in the lower-paying outpatient centers than in hospitals. Part-time employment also declined overall in hospitals and in most occupation groups (Tables 8–11).