Federal Reserve Bank of Atlanta

Who will pay for health care? How should it be delivered? Although these topics generate considerable national debate, almost all economic developers agree on one important point: health care creates jobs.

Healthcare professions: a fast-growing sector
Today, ten of the twenty fastest-growing occupations are health care-related, according to the U.S. Bureau of Labor Statistics (BLS). Industry career guide, 2010-2011 edition. The BLS does not expect this growth to slow down any time soon. The agency estimates that between 2008 and 2018, health care will generate 3.2 million new jobs, more than any other industry. This growth rate is fueled by many factors, including the aging of the U.S. population and the need for more health services.

Although the healthcare sector has not been immune to the recession – it has seen a decline in elective surgeries and procedures, for example – the industry as a whole has remained resilient. Unlike most other sectors, employment in the health care sector was positive almost every month between December 2007 and December 2010, when growth in other sectors was stable.

Because of this sector’s strength as a source of new jobs, economic developers are reconsidering their traditional view of the connection between economic development and health care and viewing it in a broader context. Historically, economic developers viewed health care the same way they viewed other supporting infrastructure, so health care was not a significant part of their work. Indeed, businesses have long demanded local access to quality health services for their workers and view health care as an essential part of the infrastructure of the community where they operate or expand. Clearly, the presence of certain medical specialties or a hospital can give one community a competitive advantage over another, in the same way that railroad sidings, an airport with a 5,000-foot runway, a four-lane highway and other critical infrastructure can give a community a competitive advantage. community an advantage over its neighbor when it comes to business retention, expansion and recruitment.

Health care as an economic engine
A March 2010 International Economic Development Council report titled “Creating Quality Jobs: Transforming the Economic Development Landscape” suggests that communities that focus on employment quality rather than a job quantity are more likely to achieve lasting economic benefits. From this perspective, health care jobs make sense: Average earnings for non-supervisory workers in most health care segments are higher than the average for the entire private sector.

For many communities, health care as an economic development strategy is not a new concept. Cleveland and Houston, for example, have long recognized the value of the health care sector as a source of jobs and investment. In fact, many patients come to these medical centers from elsewhere for medical care, which brings in outside money to these communities.

In 2007, the Cleveland Clinic commissioned a study measuring its annual economic impact at $8.9 billion. The study found the clinic was Ohio’s second-largest employer, supporting 71,000 jobs (directly or indirectly), generating $3.2 billion in wages. Additionally, the clinic’s 2007 annual report states that its annual research expenditures were $266 million and annual patient visits were more than 3.2 million. The Texas Medical Center in Houston estimated its annual economic impact for 2009 at $14.0 billion. Additionally, it employed 93,500 people, had annual research expenditures of $1.2 billion, and had 6.0 million patient visits per year.

These numbers clearly demonstrate the significant impact healthcare can have on a community.

A community of support for the local healthcare industry
Many communities are embarking on strategies to better utilize their existing health care infrastructure. In doing so, they are discovering the importance of not only having actual physical facilities, but also developing an appropriate healthcare workforce development pipeline that extends beyond universities and technical colleges focused on traditional medical disciplines . Modern approaches to health care delivery, they learn, rely on other professions, like computer engineers and programmers, for example, who create and support the hardware and software technology supporting health care.

In Atlanta, Morehouse School of Medicine and Emory University have partnered with Georgia Tech (with nationally ranked engineering programs) to allow students to learn in an interdisciplinary environment, a key feature of the evolution of Medicine. And in a rapidly changing health care industry, retraining programs are important because the adoption of new technologies is leading to steep declines in some health care occupations.

Support networks have long been a best practice in economic development. Chamber of Commerce subcommittees and industry councils play a vital role in giving voice to local leaders on the needs of specific industries. The development of such networks around health care is no different. They increase retention, expansion and recruiting efforts and can catalyze new programs.

Workforce Health as a Competitive Advantage
The nation faces increasing rates of chronic disease. In addition to the human toll these chronic illnesses take, they also harm businesses by reducing employee attendance and business productivity and increasing overall costs. Employers recognize that there are significant differences in chronic disease rates between regions of the country, as well as between and within the states themselves. As a result, they increasingly consider how a community considers its health care and well-being when deciding where to locate or expand.

To encourage better health among the local workforce and their families – and thus create more business appeal – community and economic developers are becoming more involved in local policymaking. For example, they sometimes help plan the development of sidewalks, cycle paths and walking paths, or encourage the use of such facilities. They can also facilitate partnerships between employers and organizations that promote better health; such partnerships bring a wide range of economic benefits and improve the quality of life of community residents. As employer health-related costs continue to rise, initiatives like these will become more important to a community’s economic development bottom line.

Challenges and opportunities
Our communities will be increasingly challenged to prepare a workforce for the growing health care industry, especially with changes brought on by new technologies and regulations. Communities will also continue to struggle to improve their health, for many reasons, including the need to provide a healthier workforce for all employers.

However, these challenges also bring enormous opportunities. The demands of our aging population for more and better health care and the increasing prevalence of chronic diseases like diabetes are driving innovation and entrepreneurial activity as well as investment. We can draw inspiration from many models of innovative approaches that organizations are taking to prepare the workforce, such as the collaborative partnership between Morehouse School of Medicine, Emory University and Georgia Tech.

A community with agile and comprehensive workforce development initiatives, innovative partnerships, and a strong understanding of employer workforce needs will stand out. By recognizing opportunities at the intersection of economic development and health care, our communities can thrive.

By Todd Greene, Vice President, Community and Economic Development