Health care employment, costs expected to increase

Health care

Larry Wallis, former president and CEO of CoxHealth, outlined health care’s role in the local economy and looked ahead.

Health care is Springfield’s largest employer. The city’s two health systems employ 16,000 people, and 15 percent of Springfield employment is related to health care, Wallis said.

Health care expenditures now account for about 14 percent of America’s gross domestic product, and according to the U.S. Department of Health and Human Services, they are projected to comprise 17.7 percent of GDP by 2012.

Businesses are increasingly concerned about rising health care costs, which will continue to increase in the future, Wallis said. While health systems continue to seek efficiencies and employers either reduce benefits or shift more cost to employees, Wallis said, many of the drivers of costs are social issues:

• The aging population. By 2050, 20 percent of the population will be seniors, and “we’re all aging into some kind of disease,” Wallis said. Seniors consume health care services at 4.5 times the rate of the rest of the population. That leads to:

• Rising utilization. With the aging of the baby boomers, health care utilization is expected to continue rising until about 2025.

• Cost of staffing. Sixty-three percent of each health care dollar goes to pay health care workers now, Wallis said, and there’s a shortage of nurses and all the major technical positions.

• Technology. New and improved technologies create efficiencies that save money, but also create expensive new treatments that boost costs.

• The uninsured. The cost of caring for the uninsured is paid by everyone else. The number of uninsured is now in excess of 45 million, and is equal to the population of 22 states, Wallis said.

• Malpractice insurance. The cost of coverage adds to the cost of care overall.

• Social trends. Lifestyle drugs in particular are a huge cost driver. Lifestyle drugs are those used to treat the symptoms of chronic, nonlife-threatening conditions and the natural byproducts of aging such as baldness, impotence and wrinkles.

In the local health care sector, Wallis said, look for employment opportunity growth, and more outpatient and fewer inpatient beds. Expect emergency rooms to stay busy, expect costs for labor, technology and pharmaceuticals to continue to rise, and look for premium increases in the 10 percent to 15 percent range.

Health care construction is at its peak, Wallis said, and will continue in preparation for the onslaught of the baby boomers.

Editor’s note: Additional coverage related to the Sept. 30 Economic Outlook Conference will be included in SBJ’s 2005 Economic Outlook issue of Jan. 3. Meanwhile, readers should look for the second annual SBJ Economic Outlook survey, which will be arriving in mailboxes this week.[[In-content Ad]]