Economic Impact of Hospitals and Health Systems in North Carolina Stephanie McGarrah North Carolina Hospital Association August 2017
Overview Health care industry in North Carolina Economic impact of North Carolina s hospitals and health systems Workforce challenges
North Carolina s Health Care Industry
North Carolina s population is projected to continue its rapid growth Source: Carolina Demography from NC OSBM data.
By 2035, more than 1 in 5 residents will be 65 years or older Projected Population Share, US versus NC, 2015-2035 Source: Carolina Demography from US Census Bureau and NC OSBM data.
Employment NC s industry mix has shifted from manufacturing to services, including health care 900,000 800,000 700,000 600,000 Health Care -46% 500,000 400,000 300,000 200,000 100,000 Retail Trade Manufacturing Hotels and Restaurants Administrative Services Professional Services Finance and Insurance 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 Source: Quarterly Census of Employment and Wages by 2-digit NAICS, NC Department of Commerce, LEAD, October 2014.
Real dollars Average weekly wages in most services industries are lower than manufacturing NC Average Weekly Wages by Industry: 1993, 2002, 2013 1,049 956 859 761 630 658 604 488 478 422 432 495 1,339 1993 2003 2013 Manufacturing Health Care Retail Trade Hotels and Restaurants Administrative Services Professional Services Source: Quarterly Census of Employment and Wages by 2-digit NAICS, NC Department of Commerce, LEAD, October 2014.
North Carolina s health care industry is in transition Patient Protection and Affordable Care Act (ACA) was signed into law in March 2010 Transformation to population health is underway Hospitals have joined health systems and more physicians are now employed by or aligned with health systems Move from volume to value-based care hastened by Center for Medicare and Medicaid Services policies ACA repeal and replace creates uncertainty North Carolina has not expanded Medicaid
North Carolina s population is ranked 32 nd in the nation in terms of overall health Map of Public Health Scores for the US, 2016
North Carolina's hospitals and health systems serve all people, including the most vulnerable Source: Community Commons, Vulnerable Populations Footprint, May 2017. Orange represents census tracts with 20% or more of population below poverty level and purple represents tracts with 25% or more of population with less than a high school diploma. Magenta is populations abov e both thresholds.
Factors that Influence Health The health care industry is trying to determine how to address all health factors, including social determinants of health Source: University of Wisconsin, County Health Rankings Model, 2016.
Economic Impact of NC s Hospitals and Health Systems
What information was used? Data collected directly from NCHA members through ANDI (Advocacy Needs Data Initiative): Operating expenses except payroll (2015) Payroll expenses (2015) Capital expenditures (three year average of 2013-2015) Imputed missing data as needed Contextual data included employment, revenues, community benefits, hospital size and location
Hospitals and health systems spend $3 billion per year on payroll in the Triangle district Payroll expenditures by NCHA District, FY2015
Hospitals and health systems spend $3.4 billion per year on operations in the Triangle district Operating Expenditures (excludes payroll, benefits, bad debt and depreciation), FY 2015
North Carolina s hospitals and health systems invested an average of $1.7 billion per year from FY2013-FY2015 Capital Investment by County, Annual Average, FY2013-FY2015
Expenditures per capita demonstrate that North Carolina s hospitals and health systems play a large economic role in rural areas Total Expenditures per Capita by District Source: RTI International, The Economic Impact of Hospitals and Health Systems in North Carolina, May 2017.
NCHA member hospitals and health systems employment and contribution to GDP accounts for 4% and wages account for 6% of the state total Type of Impact Employment Labor Income Gross State Product (Value Added) Direct effect 162,025 $11.2 billion $19.2 billion Indirect effect 121,834 $6.5 billion $9.9 billion Induced effect 110,855 $4.8 billion $8.7 billion Total effect 394,714 $22.4 billion $37.8 billion For context, North Carolina s Gross Domestic Product for 2016 is $517.9 billion; the estimated direct effect of hospitals equals about 4% of the state GDP. North Carolina s total average employment for 2016 was 4,341,675, of which NCHA member hospitals direct employment makes up 3.7%. Total wages for all NC industries was $201.4 billion for 2015; NCHA member hospitals accounts for 5.5% of these wages.
Total Jobs and Average Wages for the U.S. Hospital Sector by Occupation Occupations within the US hospital sector are diverse and most pay above US average wage ($49,630) Source: BLS data, 2016. RTI International, The Economic Impact of Hospitals and Health Systems in North Carolina, May 2017.
North Carolina s hospitals and health systems have a higher than average employment multiplier An employment multiplier of 2.44 means that for every one hospital job, there are 2.44 total jobs in the economy Source: RTI International, The Economic Impact of Hospitals and Health Systems in North Carolina, May 2017.
Hospitals and health systems community benefits totaled $3.6 billion in 2015 Hospitals provide essential services that often go unreimbursed. These include charity care, Medicaid and Medicare losses and bad debt. NCHA Member Unreimbursed Costs, 2015 Source: RTI International, The Economic Impact of Hospitals and Health Systems in North Carolina, May 2017.
Hospitals and health systems have other significant impacts in their communities Engage in local grantmaking Lead and partner in community initiatives Train workers Invest in new technologies and companies (e.g. Rex Health Ventures) Partner in community redevelopment NC s hospitals and health systems engage in significant health-related research: Ranking 8 th in the country, Duke University received nearly $338 million in NIH funding in 2016 UNC-Chapel Hill ranked 15 th in the country and received $268 million from NIH
North Carolina s Health Care Workforce
Several key issues face NC s health care workforce Recruitment of workforce in multiple occupations remains challenging Maldistribution of workers in several occupations exists across North Carolina: nurses, physicians, others Retention of workforce is difficult as turnover is high in all health care occupations (e.g. burnout is a problem) Emphasis on population health and new models of care will change current jobs and create new occupations (e.g. care managers)
Demand is outpacing the supply of health care workers Source: US Bureau of Labor Statistics.
Hospitals across the country have added 338,000 new jobs since July 2014
Many of North Carolina s occupations with greatest projected employment potential are in health care
Physicians are concentrated in urban areas; 2 rural counties have no physicians Physicians per 10,000 population in 2015 Source: UNC Sheps Center, NC Health Professions Data System.
NC s urban counties have higher rates of registered nurses Registered Nurses per 10,000 population in 2015 Source: UNC Sheps Center, NC Health Professions Data System.
Nurse practitioners are more prevalent in urban counties and the western part of NC Nurse Practitioners per 10,000 population in 2015 Source: UNC Sheps Center, NC Health Professions Data System.
Across the United States, hospitals are facing unprecedented turnover across all occupations Hospitals will have to replace 50% of their total workforce every 5 years Key occupations face even higher rates of turnover Source: Leaders for Today, Hospital Staff Hiring and Turnover Survey, May 2017.
Nationwide, 50% of the hospital workforce plans to retire in the next 10 years In a typical industry, 20%-25% of the workforce retires within a 10-year window 22% of hospital workers plan to retire in the next 5 years Health care industry on verge of losing large portion of its knowledge and experience Source: Leaders for Today, Hospital Staff Hiring and Turnover Survey, May 2017.
Percent Between 2005-2015, vacancies increased across nearly all occupations in NC hospitals and health systems Vacancy Rates by Occupation, All NCHA Members, 2005-2015 18 16 14 12 10 8 6 4 2 0 2005 2010 2015 Source: NCHA Advocacy Needs Data Initiative.
Percent Turnover rates remain high (above 8%) for all of these occupations among NCHA members 25 Turnover Rates by Occupation, All NCHA Members, 2005-2015 20 15 10 5 0 Physician Licensed Practicing Nurse Source: NCHA Advocacy Needs Data Initiative. RN - Clinical RN - Advanced Practice RN - Non-Clinical Certified Nursing Assistant 2005 2010 2015 Other Nursing/Patient Support Physical Therapist
As health care transition continues, hospital and health system jobs will change New occupations focused on care management and improving the patient experience More care will likely take place in the outpatient setting As workforce changes, the occupations may also change
Summary
North Carolina s hospitals and health systems are Keeping North Carolina healthy and economically strong; Facing a workforce shortage, but are actively involved in innovative workforce development and training efforts and seeking community partners to help us address that gap; Committed to partnering more closely with the businesses and economic developers in their communities to meet the healthcare needs of the region; Providing care to everyone in our communities, regardless of their ability to pay. However, the more community members that have affordable insurance coverage, the better it is for all members of that community.
Discussion and Questions Stephanie McGarrah, NCHA 919-677-4184 or smcgarrah@ncha.org