Can County's Healthcare Industry Help Our Economic Development?

Dr. Bill Trombetta, Cape Issues

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Introduction

Cape Issues is a voluntarily formed citizen group. We focus on issues of importance to the growth of Cape May County. This column addresses the impact of healthcare on our economy. 

Healthcare impact has two components: 1) the direct impact of healthcare jobs and technology on the economy; and 2) the impact of the emerging interest in Social Determinants of Healthcare (SDOH) such as homelessness, jobs, education, transportation, poverty, child care, home healthcare, people released from prison, and food insecurity. 

This first installment deals with the impact of healthcare jobs and technology on the economy.

Quick, name the Number One private employer (non-government) employer in: 

a) The Greater Philadelphia Market Area; 

b) The entire Commonwealth of Pennsylvania; 

c) The State of Maryland; 

If you answered: a) Penn Medicine; b) The University of Pittsburgh Medical Center; c) Johns Hopkins Medical Center; you are correct. 

And these are hospitals. Add in pharmaceutical firms, medical device firms, health plans and insurers, pharmacies, distributors, healthcare consulting and advertising firms, research, administrative (including billing and coding), you arrive at an annual healthcare spend of about $3.5 trillion (about 18 percent of the U.S. economy). No other sector comes close: not education, defense, or housing. 

Cape May County’s (CMC) economic base will continue to be tourism, hospitality, and services. 

Grow or Die

Manufacturing

The U.S. economy (Gross Domestic Product or GDP) has been growing at a rate of about 3% a year. It is possible that healthcare could generate some manufacturing jobs, but such jobs would be light manufacturing, a far cry from the days when the U.S. was the arsenal of democracy in World War II. 

Such manufacturing jobs would be possibly 3-D printing and maybe generic chemical pill drug manufacturing. The latter is sourced from low-wage countries, such as India and China, to the tune of 80% foreign-sourced. API refers to the active product ingredients found in chemical pills. Safety of generic drugs has become a factor as these generic drugs are overwhelmingly imported from foreign countries. 

The average wage for a Chinese worker in manufacturing is $6,000 a year versus about $30,000 a year for an American worker based on the recent GM auto workers strike resolution. 

But Chinese workers are a tenth as productive as American workers. So that wage differential can be offset by American worker productivity. Throw in rising transportation, shipping, and energy costs impacting China and India and the return of manufacturing jobs may be possible. 

Healthcare jobs are growing. They pay above median household wages. Life science jobs pay on average $60,000 a year. Nurses make about $70,000 a year. The nation’s hospitals employ about 6 million people, recently surpassing restaurant employment, according to the American Hospital Association. 

According to the New Jersey Department of Labor, over 85,000 healthcare jobs are projected to be added to the state economy by 2024. The nation’s doctors generate over $1 trillion to our economy according to the American Medical Association. Each doctor supports 14 jobs and more than $2 million in economic input on average according to Medical Economics. 

According to the New Jersey Hospital Association, New Jersey hospitals contributed $23.4 billion to the economy in 2017.

Technology and Innovation

An exciting form of technological healthcare innovation is finding targeted therapeutics that can help predict and intervene for those who are at risk for an illness where one’s immune system can provide the medical treatment. Witness the recent collaboration between Penn Medicine and Children's Hospital of Philadelphia (CHOP) when they partnered to develop CAR-T cancer treatment for children with leukemia. 

According to Modern Healthcare, Humber River Hospital in Toronto, Canada is North America’s first all-digital hospital. Robots sort medications; automated guided vehicles deliver lunch trays; patients are moved out of expensive hospital beds into homes which are the equivalent of satellite care units where nurses monitor patients around the clock via wireless technology. Inspira Health Network is also using this technology.

Cape May County Healthcare Spend

Cape May County spends over $25 million on health benefits for employees, the single largest expenditure other than salaries and wages. According to a 2013 Herald column, the county is investing in Wellness programs to keep people healthy, a key element of the Triple Aim:

Improve healthcare outcomes

Move away from volume (seeing more patients) and toward value-based care aiming to keep patients out of the Emergency Room and expensive hospital beds and unnecessary hospital readmissions for Medicare patients;

Home healthcare represents both an important opportunity and a difficult challenge. As CMC’s population continues to age, home healthcare offers a growing market segment. Keeping people in their homes instead of expensive nursing homes and hospital beds saves money. The downside is the need for many more healthcare workers but home healthcare pays about $10 an hour with few benefits for these workers. But “investing” in-home healthcare saves us money on the back end.

Transfer payments such as unemployment benefits, welfare, and Social Security account for a greater percentage of CMC personal income than either the state or the country. This reliance on transfer payments more than personal or private healthcare insurance will impact healthcare development. 

 a. Lower costs

b. Enhance patient satisfaction with and access to healthcare.

According to the State of N.J. U.S./Labor Records, Healthcare and Social Services are forecast to grow by 12.7 percent over the 2012 – 2022 period.

Conclusion

Healthcare in and of itself will not solve the county’s economic growth challenges. What seems to be emerging across the country is a new appreciation of the potential for healthcare to help an economy grow. 

How the county responds to increasing societal and economic challenges and opportunities associated with healthcare delivery will have a substantial impact on the potential for the county’s economic growth. 

ED.NOTE: The author is a professor of Healthcare Strategy and Marketing, St Joseph’s University, Philadelphia and an attorney. He holds a doctorate in Marketing from The Ohio State University.

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