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Employment in the health care sector has been an anomaly in recent years. While total employment in Los Angeles County has slipped in key industries such as aerospace and manufacturing, local health care employment has continued to expand, keeping employment firms busy recruiting to fill those job openings. Many labor experts predict that, not only will this trend remain steady, but yet another employment boom in the health care industry may likely occur in future months and years.

Employment in health care in Los Angeles County has expanded consistently since 1972. In that year, total L.A. County employment in the health care sector numbered 143,400. Today, that figure stands at 263,100, according to a study conducted by the California Employment Development Department.

And by most accounts, that figure is expected to increase despite the continuing recession in Los Angeles, in addition to the pending health care reforms on the horizon.

According to Thaine H. Allison Jr., an adjunct professor of health economics at USC, employment in health care is a population-driven figure. Los Angeles County continues to increase in population, so one can expect to see further increases in health care employment. Additionally, he asserted that the future of employment in health care will not be negatively burdened by possible reforms on the horizon.

“In a study that I worked on for the (Los Angeles) County Board of Supervisors, we concluded that there are approximately 3 million residents of Los Angeles County that are without health insurance. If those people are given insurance by the reforms, you should see further increases in employment in health care to cover these people,” commented Allison. Other forces also seem to be at work that would contribute to a robust employment outlook for this sector.

A number of local search firms have discovered that servicing the health care sector is saving their businesses, as other industries remain soft and employment in many sectors continues to decline. Many executive recruiters pointed to the growing demand for high-level health care executives as evidence of this trend.

Additionally, many executive recruiters said they see more employment in health care in the future due to the continuing growth of medical technology companies.

In general, 1991 and 1992 were terrible years for local executive search firms. Few saw any increase in earnings because of the stagnant economy in Southern California.

Fifth Congressional District candidates disagreed about the outsourcing of jobs and how to fix the health care crisis, but what really got the debate going between Don Barbieri and Cathy McMorris on Friday was experience.

“I bring 35 years of business experience and creating jobs,” the Democrat said, “and my opponent has spent 11 years as a career politician.”

Not that there’s anything wrong with that, he added later.

“I have been intimately involved in every business issue before the state Legislature,” McMorris responded, adding that her fellow Republicans thought enough of her to elect her House minority leader last year.

So their second debate of the campaign was more about who they are than where they stand on the issues, and, of course, there was another exchange about negative campaign ads.

“I am proud of the fact we have run a very positive campaign,” McMorris said. She said she had nothing to do with the National Republican Congressional Campaign ad that linked Barbieri’s late father to a transit center deal that fell through in the early 1990s.

But pressed on the issue by one of the three journalists questioning them in the KSPS studio, McMorris said she wasn’t at all sure the numbers used by the NRCC were all that incorrect. This prompted Barbieri to scold her for not taking a tougher stand with her party on the issue of negative ads.

Then McMorris had the opportunity to denounce a Barbieri ad criticizing her vote in the Legislature on the outsourcing of jobs going overseas. She said she opposes outsourcing jobs but there were “too many unkowns” about what impact the bill she voted against last session would have had on trade.

The debate also touched on issues that more clearly define them as candidates.

“I agree that marriage should be defined as between a man and a woman,” Barbieri said, but said the church and state should do the defining.

McMorris supports a constitutional amendment banning gay marriage.

“I have proven in Olympia that we can balance the budget without raising taxes,” McMorris said.

Barbieri said he’s been balancing his company’s budget for years. He has also been in the top 2 percent tax bracket and while he supports a middle-class tax break, his bracket doesn’t need a break.

On health care, the Democrat laid out a plan to pool the resources of small businesses and give them a tax credit to provide health insurance to employees. He also called for early enrollment in Medicare on a premium basis.

“I KNOW there are people here who say there’s no health-care crisis,” said President Clinton in his State of the Union address. “Tell it to Richard and Judy Anderson.” Richard Anderson, Mr. Clinton related, lost job and insurance, his wife had a cerebral aneurysm, bills piled up to $120,000, and the Andersons were forced into bankruptcy.

This is a genuinely sad story. But it is neither evidence of a “crisis” nor reason to support the Clinton plan. First, Judy Anderson recovered. Indeed, she got first-rate care despite lacking insurance. Emergency rooms provide care to all comers, and non-profit hospitals–88 per cent of all U.S. hospitals –must by law take any patient needing care. The Andersons’ problem wasn’t with care but with insurance.

Second, the insurance trouble could have been eased by enhancing the “portability” of coverage between jobs–a simple reform that President Clinton would oppose if it were voted on tomorrow. Why? Its salutary effect would undermine sentiment for his more grandiose designs.

Third, according to Ambrose Evans-Pritchard in the London Sunday Telegraph, the Andersons are a bad example. Mr. Evans-Pritchard writes that the hospital where the operation was performed has a $2- to $3-million fund for hardship cases that the Andersons eschewed. “They declared bankruptcy almost immediately, which allowed them to clear older debts that had nothing to do with the illness.”

So we can tell the Andersons there’s no crisis. How about “the 58 million Americans who have no coverage at all for some time each year”? Not too long ago the Clintons talked about “37 million” uninsured. The jump (is this the health-care inflation the Clintons warn about?) comes almost entirely in the phrase “some time each year.”

As Irwin Stelzer points out in Commentary, half the uninsured have insurance again within six months, and only 15 per cent of the uninsured stay that way for more than two years. Try about 5.5 million chronically uninsured. But even that overstates it. About 37 per cent of the uninsured are under the age of 25; for them insurance plans are often a bad buy. Take out all those who choose to go uninsured, and perhaps 3 per cent of the population can’t get insurance (but they can get care). Not a crisis.

Despite the recession, jobs in health care are growing steadily, especially administrative jobs in managed care, according to Los Angeles area search firms.

“All progressive health care people are looking for managed-care people,” said Anthony Pfannkuche, director of the health care practice at Spencer Stuart and Associates, a retained executive search firm. “And all HMOs (health maintenance organizations) are looking for better-trained, more-skilled managers.”

What characteristics are search firms seeking?

People who know how to wheel and deal contracts with hospitals, can comprehend complicated financial issues, understand strategic marketing and represent the interests of physicians, hospitals and patients, search firm executives said.

Managers who meet these qualifications are being compensated well. Pfannkuche said the chief executive of an HMO having more than 150,000 members can make anywhere from $150,000 to $300,000 a year, the equivalent of a head administrator of a large hospital.

Managed care is the future in health care, industry observers said. Already 50 to 60 percent of L.A. County’s insured population is covered through managed-care companies such as Kaiser Permanente, Pacificare, FHP or Health Net.

Under a managed-care system, patients pay a company a monthly fee and that company contracts with a hospital for service. A private-insurance system, on the other hand, reimburses a patient or provider for services the patient gets from any place he or she wants.

Because the managed-care industry is evolving, good managers are hard to find, said Pfannkuche. He said many executives are being enticed from other managed-care companies and taking jobs with companies that offer stock as compensation.

Hospitals, in turn, are firing their CEOs en masse in response to the reddening of the bottom line, said Stu Fishler at Russell Reynolds Associates Inc.

“With the radical changes in reimbursement, CEOs not trained in managed care are getting hit,” he said.

Pfannkuche said the health-care segment of his search firm has increased fivefold in the past five years and now represents 15 percent of the firm’s total U.S. revenues.

Other recruiters concurred that their health-care business is increasing. That growth, they said, is due to the boom in alternative systems of health care, such as HMOs, home health care and medical group management — where doctors get together to provide multi-specialty care.

While a rose may smell as sweet by any other name, the named source of funds from which the state appropriates money for the Oklahoma Health Care Authority can make a difference worth millions of dollars.

During the last legislative session, the authority was appropriated $50 million from the Jobs and Growth Tax Relief Fund, which has the federal government as its funding source.

Because the $50 million originated from a federal source, however, the health care authority is not allowed to use those funds to match Medicaid expenditures. Medicaid is the only program operated by the authority.

The Legislature is expected to swap out that $50 million appropriation with funding from another source sometime early in the next legislative session. The change would allow the authority to obtain $167 million in federal funds.

Spokane County commissioners and local mental health care providers are bracing for drastic cuts.

State and federal cuts have left Spokane County $7.5 million short, about 25 percent of the local regional support network’s annual budget, said Spokane County Commissioner Mark Richard.

Such a shortfall will severely affect local programs, eliminating 150-300 jobs and leaving thousands of mental health patients without adequate treatment, said Richard, who is leading the fight to get the funding restored.

But Washington Department of Social and Health Services officials see the situation differently.

“We just can’t come to terms with that. We can’t see where they’re getting an actual cut,” said Dave Daniels, operations chief for DSHS’s mental health division.

DSHS officials said Spokane County is getting more from the state than it did last year.

“They actually came out about $400,000 ahead,” said Daniels.

Even so, DSHS staff will meet with regional support networks to discuss the situation.

“Gov. Gregoire wants to sort this out and resolve these issues,” said Ed Penhale, spokesman for the governor’s office.

So does DSHS, said MaryAnne Lindeblad, interim director for the mental health division.

“We’re in the middle of that process right now,” Lindeblad said, adding, “We’re trying to understand what’s going on.”

DSHS has scheduled an Aug. 11 meeting with regional support networks to discuss the issue.

But in the meantime, Spokane County mental health care providers said they’re facing a dire situation.

State funding pays for counseling for 525 people at Lutheran Community Services, said Heike Lake, program director for outpatient counseling. About 75 percent of those clients are children.

“About 95 percent of our consumers are coming here because they have experienced some form of traumatic event or events, like sexual assault and domestic violence,” Lake said.

And many of those children are acting out themselves, which means cuts to their care could lead to more victims.

“It’s not an exaggeration to say that this is a crisis to our system,” Lake said.

What both the county and DSHS agree on is that DSHS changed the funding formula outlined in state legislation designed to help local governments address federal funding cuts. As a result, Spokane ended up getting less than it would have had under the original plan passed by the state Legislature.

During the 2001 recession, payroll employment in the Memphis metropolitan area declined as it did in other parts of the country.1 While some sectors were deeply affected (namely, manufacturing and professional and business services), others suffered little if at all. A case in point is the leisure and hospitality sector, which declined only slightly during the recession and has since expanded considerably. The education and health services sector took center stage by adding jobs during the recession and continuing on a strong expansionary path after its conclusion.

Total nonfarm payroll employment in Memphis had been growing steadily prior to March 2001, the official date for the onset of the national recession. Employment grew by 12.4 percent between January 1995 and March 2001. Between March 2001 and November 2001, the official end of the recession, Memphis lost 8,700 jobs, or about 1.4 percent. Just as in the rest of the country, employment continued to decline after the recession was officially over, but by June 2002, Memphis employment was on its way to recovery. As of April 2005, Memphis employment exceeded its prerecession level by about 2,100 jobs.

The brightest spot in the Memphis economy, both during and since the recession, has been the education and health services sector. From March 2001 to April 2005, employment in this sector grew by 13.3 percent. The driving force has been the health services component, which contributed 10.8 percentage points to this increase. Moreover, the expansion in the health sector represents about 59 percent of the net increase of 10,800 nonfarm jobs in Memphis since November 2001.

Manufacturing and professional and business services were the two sectors hit the hardest during the recession. Manufacturing represents approximately 10 percent of total nonfarm employment, and the professional and business services sector represents about 11 percent.

During the recession, manufacturing employment in the Memphis area fell by 4.7 percent and continued to decline long after the national recession was over: Between March 2001 and April 2005, employment in this sector fell by a total of 10 percent. At the national level, manufacturing employment fell by 15.5 percent over the same period.

Experts disagree on how much pressre an employer mandate would put on companies to lay off workers or skimp on wage hikes.

No matter what shape it ultimately takes, reform of the health care system will have a major impact on the U.S. economy and employers’ calculations of worker compensation. In two words: Jobs and wages. Where will the losses and gains occur in both? That question has received renewed attention recently as the health reform debate deepens and as the broad effects of altering one seventh of the U.S. economy begin to sink in.

Exactly what economic effects health reform will have awaits the details of President Clinton’s proposal and its overhaul by Congress over the next year. But many health care groups have begun to speculate over what might happen if, say, employers are required to provide health insurance and pay 50% to 80% of the tab for it, possibly by means of a fixed payroll-based premium.

Small business groups have complained the loudest. The National Federation of Independent 600,000 small business owners and workers, has lobbied against an employer mandate for months, claiming that it will put millions of jobs in jeopardy as companies struggle with–and small businesses potentially buckle under–the burden of paying for health care. The group has noted often in congressional and public briefings that 75% of job growth in the last 15 years has come from companies with fewer than 100 workers.

Study supports projections

A study commissioned by NFIB and released this spring appears to support NFIB’s grim projections–but others find the study less than convincing. Conducted by the CONSAD Research Corp., a Pittsburgh research firm specializing in employment forecasting, the study estimates that between 6.6 million and 16.5 million jobs in companies with fewer than 500 workers would be put “at risk” by an employer mandate. That’s out of a pool of 68.7 million jobs nation-wide in firms that size. (The figure excludes farm workers.)

Health care professional, technical, and support jobs will grow at a combined rate of 27.9% this decade-employing 12.2 million individuals-according to recent projections from the U.S. Bureau of Labor Statistics. Experts project that health care practitioner and technical occupations will add 1.6 million jobs by 2010, including 561,000 new RN positions.

Experts also expect that:

* new and replacement openings for RNs will total more than 1 million.

* health care will add 1.1 million support jobs this decade, making it the fastest-growing service occupation.

The Beth Israel Medical Center and Local 1199 of the Drug, Hospital and Health Care Employees Union negotiated a 40-month collective bargaining agreement, covering about 3,000 hospital workers in New York City. The early settlement, which may influence the union’s upcoming negotiations with the League of Voluntary Hospitals and Homes, called for guaranteed jobs, free medical benefits, and labor-management cooperation in recruitment, training, and patient care.

Beth Israel, a member of the League, which is the bargaining agent for 38 health care institutions in New York City and Long Island, opted to bargain separately from other League members, as the hospital did in the last round of negotiations in 1989. The settlement was a “very new approach and… [was] made possible because of a very specific set of circumstances at Beth Israel Medical Center,” the medical center’s president said. The agreement demonstrated a “commonality of interests… the most productive way to enhance revenues and economize on costs,” he added.

Terms of the agreement provided for:

* guaranteed jobs for all. current and newly hired employees for the term of the agreement;

* establishment of a preferred provider health care plan at the hospital at no cost to employees with medical benefits provided by Beth Israel;

* employer contributions to the union’s child care fund set at O. 2 percent of payroll in July 1992, advancing to 0.3 percent in July 1993 and 0.5 percent in July 1994;

* increasedemployercontributions to the union’s pension fund, if needed, to maintain the current level of pension benefits;

* creation of two joint committees. The first will develop employee training programs and increase employee participation in improving patient care and the structure of health care delivery, and the second panel will examine issues related to a “family-friendly” workplace, and safety and health, housing, and hiring and promotion policies;

* a “me-too” clause that matches the greater of the wage increases that the union may negotiate in contract talks scheduled with the League of Voluntary Hospitals and Homes or the Roman Catholic Archdiocese of New York;

* expedited mediation/arbitration procedures; and

* a pledge of neutrality by the hospital in organizing efforts by Local 1199 at Beth Israel.

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