The health care industry
The most important measurement: the health of Portland-metro residents
While other Value of Jobs reports started with statistics related to jobs and incomes, this report is different. Hospital beds per 1,000 residents, number of physicians, or number of health care workers are important measurements, but they are not the goal. Rather they are the means to an important end, and that is a healthier population.
A survey of data collected by the U.S. Center for Medicare and Medicaid Services from hospital referral regions (HRRs) throughout the U.S. shows that Portland-metro ranks well below the median in occurrence of chronic medical conditions. In fact, for most of those conditions, Portland-metro ranked in the healthiest 20 percent of all regions surveyed.
This demonstrates that Portlanders are relatively healthy compared to residents of other metro regions. Portland also compared well to Seattle, Denver and Minneapolis on health outcomes, and, in fact, health care is one area where Portland holds pace with those ďaspirationalĒ regions identified in other Value of Jobs reports.
These positive health outcomes undoubtedly are the result of a number of factors including not only a robust, effective and efficient health care industry, but also an intrinsically healthy lifestyle in the Northwest and public policy and industry leaders who started well ahead of the rest of the nation to proactively address the efficient delivery of health care services.
Jobs: A large industry footprint
Health care is a big generator of jobs in Portland-metro. Four of the top 10 employers in the region are health care providers: Oregon Health & Science University (OHSU), Providence Health and Services, Legacy Health and Kaiser Permanente. Together, those four employers support approximately 47,000 jobs. Add in other large health care institutions like Tuality Healthcare, Adventist Medical Center, and Peacehealth Southwest Medical Center; emerging nontraditional players like ZoomCare, the multi-faceted and multi-state health plan provider Moda Health, and the family of health transformation companies under the Cambia Health Solutions umbrella and the jobs number more than doubles. In total, Portland-metroís health care industry employs approximately 113,000 individuals, generating on an annual basis over $6.9 billion in total payroll and over $13.6 billion in revenue.
Portland-metroís health care sector accounts for 13.4 percent of the regionís overall workforce and 15.6 percent of its payroll. Looking across all employers, the sector supports one out of every eight jobs in the region.
Looking at all industries, Portland-metroís health care sector employs more people and pays more payroll than any other sector, including retail trade, wholesale, manufacturing, construction and finance.
But, while the jobs numbers are big, the concentration of health care workers in Portland-metro is lower than expected, given the regionís population and the numbers seen in other major metro areas. Portland would need to add 12,000 additional health care workers Ė a 10 percent increase Ė to be considered ďaverageĒ among major metro areas.
An industryís concentration in a local economy is typically compared to its concentration at the national level. Concentration measures of greater than 1 (see Figure 5) mean the concentration in the local economy is greater than the national average; less than 1 mean the local concentration is less than the national average. Concentrations can be calculated for employment, payroll and other measures.
For this report, the employment concentration of the health care sector of Portlandís economy was calculated and compared with the median concentration for the health care sectors in the top 50 U.S. metro areas, as measured by population. The employment concentration of Portlandís health care sector was less than 1, and it was less than the median for all 50 metro areas. These results show that Portlandís health care industry delivers service with fewer employees compared to other major metro areas.
Average wages in Portlandís health care sector are higher than the average for other metro areas (see Figure 6), with the exception of the nursing residential care subsector. As a whole, the evidence suggests Portland-metro health care industry is delivering positive health outcomes with fewer workers, but, on average, those workers are earning better paychecks than their counterparts in other regions.
These factors point to comparable efficiency in the Portland-metro health care sector, but understanding how the regionís health care costs compare to other regions is difficult because there is not a consistent industry practice for measuring and reporting costs. As the Affordable Care Act is implemented, there are efforts afoot at all levels of government to develop a system to compare costs region to region. Oregon is one of 18 states compiling a data base of medical claims that will be used to analyze the major cost drivers behind health care delivery, as well as the effectiveness of various treatments.
Job growth: Generating much needed middle-wage jobs
As metro regions across the nation, including Portland, struggle with an erosion of middle-income jobs, the Value of Jobs review of the regionís health care industry identified a heartening discovery: health care is an industry that is actually adding important middle-wage jobs at a rate faster than the regional economy as a whole.
Middle-wage jobs Ė careers that pay between $25,000 and $50,000 Ė account for the majority of jobs in Oregon. They are the backbone of the state and regional economy, which is why economists raised concerns when they noted in recent years that most growth in the state and region was occurring in the low-wage (under $25,000/year) and high-wage (more than $50,000) job sectors, rather than in the middle. The resulting income polarization is a concern because middle-wage jobs traditionally have been the path to economic health for most families, particularly those with workers holding less than four-year degrees, which is most Oregonians.
Growing middle-wage jobs
Portlandís health care sector has more than 25 middle-wage job occupations, including:
- Pharmacy aides
- Nursing assistants
- Physical therapist aides
- Medical appliance technicians
- Dental assistants
- Medical transcriptionists
- Emergency medical technicians
- Medical equipment repairers
This study shows the Portland-metro health care sector has bucked that economy-wide trend. Middle-wage jobs in health care are projected to grow faster than low-, mid- or high-wage jobs in the rest of the regional economy. The Oregon Employment Department projects that, between 2012 and 2022, occupations in the regionís health care sector that pay middle-wages will grow approximately 22 percent, compared to a projected 15 percent increase in the rest of the regional economy. Low-wage jobs are projected to grow 16.5 percent in the region as a whole during that timeframe, while high-wage jobs are projected to grow 16.8 percent.
The growth of middle-wage jobs in this sector may reflect the ongoing evolution in the health care industry, as providers adjust services to address affordability. The growth is occurring in many disciplines that require less than a four-year degree, including some areas that have specially designed community college training programs, like pharmacy aides, phlebotomists, emergency medical technicians and medical equipment repairers. As the region looks at the need for effective workforce training, ensuring adequate training programs for these skilled medical disciplines should be a primary focus because of their potential to lead to quality, middle-wage jobs.
Productivity: An efficient system produces healthier outcomes
The most important measurement in any look at the health care system is the health of the regionís population. The next consideration is whether those health care services are being delivered efficiently. A productive sector means better management of health care costs, which impact individuals, businesses and government. And that, in turn, means more money to spend on salaries, education, infrastructure and other critical investments.
According to data collected by the Dartmouth Healthcare Atlas on the efficiency of hospital provided health care services, Portland-metro ranks among the most efficient regions in the nation when it comes to the provision of health care services.
Looking at some of the indicators for the cost of health care, such as hospital re-admittance, end-of-life and surgical cares, Portland ranks at the low end on most metrics compared to other hospital referral regions nationally. Hospitals in Portland-metro are among the lowest in the nation in terms of beds per capita, and they are among the fewest in surgical discharges. Finally, Portland also compares favorably to other regions on the important metrics of hospital re-admittance rates. This has an important impact on regional health care costs, since re-admittance rates are one of the key drivers of increased health care spending nationally.
Traded-sector activity: A growing role for the health care sector
Health care, in most instances, is a local-sector industry. Doctors, hospitals, clinics and insurance companies all provide services that are bought and sold by local consumers and used within the local economy. However, as the delivery of services evolves, and as research in the biotech field and the commercialization of research outcomes become more prevalent, the Portland-metro health care sector has established a growing role as a traded-sector industry; that is, an industry that brings new dollars into the region.
This Value of Jobs research uncovered that the traded-sector component of the regional health care industry is responsible for 16,000 jobs, $1 billion in payroll and $1.9 billion in revenue, and expectations are that the sectorís contribution to the regional traded-sector economy may grow over time.
Portlandís health care sector attracts money from outside the region in a number of ways. First, the regionís sophisticated health care providers offer specialized health services not available in other regions that attract patients from outside the area. This impacts not only large institutions like Providence with its cancer center, but also smaller ones like Tuality, with its geriatric psychiatric center in Forest Grove. Some 17 percent of adults and 25 percent of children treated as inpatients at the regionís hospitals come from outside of the Portland-metro region. Additionally, Portland is home to health solutions headquarter companies like Cambia and Moda, which deliver products and services outside of the region.
The regionís health care industry also attracts a significant amount of research funding from outside Portland-metro. In 2012, for example, OHSU received more than $350 million in National Institutes of Health and other grant funding. But OHSU is not the only health care provider attracting research dollars; Legacy Research Institute, Providence Research and Kaiser Center for Health Research all conduct research funded by outside dollars. That research can lead to the development of new courses or treatment and medical tools, which, in turn, can be commercialized.
Finally, Portland is a major center for health care education and training. These educational facilities attract students and funding from outside the region for both training and research activities.