And it is six of 12 if you count Ohio State University, which is a source of more health care jobs than higher education jobs. Of the university’s 28,241 nonstudent jobs, more than 18,000 are at the OSU Medical Center.
Health care’s dominance is reflected in manufacturing’s decline. A decade ago, only three health care systems ranked in the top 12, while big manufacturers such as General Motors Co. and Delphi Automotive ranked first and third respectively. Today, those former industrial giants are off the list.
The good news for Ohioans is that health care can’t be outsourced as easily as manufacturing.
It could, however, leave the state vulnerable in other ways, some observers say.
“It is a very dangerous phenomenon that demonstrates the need for a broader economic base that can help us pay for health care costs,” said Ned Hill, a Cleveland State University development economist who describes himself as one of the state’s “leading health care grumps.”
“At the end of the day, (health care) reshuffles dollars in the local economic base; it doesn’t necessarily add to them,” Hill said.
Part of health care’s dominance of the top tier of Ohio’s employers can be attributed to industry consolidation, including hospital mergers and affiliations that have created ever-growing health systems. But the sector also has shown remarkable resilience during the economic downturn. Ohio saw overall employment growth of more than 4 percent between late 2007, when the recession began, and the first quarter of 2011.
“Health care is local,” explained Mary Yost, spokeswoman for the Ohio Hospital Association. “Our services aren’t going to be outsourced and moved overseas. We are going to have people who are at the bedside, in the clinics providing care. ... Those people working in Ohio are paying income taxes, they’re buying goods and services in their communities, and the hospitals are as well.”
Rob Nichols, spokesman for Gov. John Kasich, said the state hasn’t “properly leveraged” health care to the extent it can. The administration for the past six months has been pursuing a “medical corridor” along Interstate 71 to do just that, he said.
“How do they (hospitals and health systems) work collaboratively in the name of job creation?” Nichols said. “Heretofore, that hasn’t been part of their mission. (Health care) is a huge part of Ohio’s economy. By working together, we’re going to be able to create a lot of jobs out of it.”
Nichols provided no specific goals or benchmarks for the medical corridor project, either in terms of job creation or the additional value of economic activity. He said the project is still in its early phases but will focus largely on sales, products, research and development.
Ohio still a manufacturing state
Health care surpassed manufacturing as the industrial sector that employs the most people in 2009, and no manufacturers ranked among the state’s 12 largest employers this year. That is in stark contrast to a decade ago, when not only were GM and Delphi on the list, but also General Electric Co. and Ford.
There are even more workers in state and local government in Ohio than in manufacturing, a recent phenomenon that reflects the long, steady downturn.
The manufacturing sector has shrunk from 760,800 jobs in the fourth quarter of 2007 to 634,800 this year, according to an analysis of Ohio labor statistics by Alan Tonelson, an economic policy analyst with the U.S. Business and Industry Council, a business group that has been critical of U.S. trade policy.
Employment, of course, is not the only measure of an employer’s contribution to the economy.
Andrew Doehrel, president and CEO of the Ohio Chamber of Commerce, said the absence of manufacturers from the state’s top tier of employers doesn’t threaten Ohio’s identity. Fewer workers are responsible for greater manufacturing output, Doehrel said, adding that health care hasn’t undergone such automation.
“We are still a manufacturing state,” Doehrel said. And, in fact, manufacturing in 2010 still accounted for 16.2 percent of the state’s gross product, compared with 9 percent for health care. I don’t think we’re so top-heavy in one area that we’re going to fall off a cliff.”
Concerns about health care
Ohio’s health care sector has many factors working in its favor. Ohio’s population is aging — nearly 140,000 baby boomers in the state now turn 65 every year — creating additional demand for health care services. And medical advances have in many cases helped to lengthen life, and improve quality of life.
“We have cancer survivors now that we didn’t have 20 years ago,” said Yost of the hospital association, whose data show the state’s number of hospital employees grew 15 percent in the past five years, reaching 274,840 in 2011.
Growth in the health care sector, though, raises concerns. The public sector funds much of health care, and both federal and state governments are struggling with the costs. Medicare is facing potential cuts in January as the federal government grapples with huge deficits, while Ohio had to overhaul its Medicaid program this year to help close an $8 billion budget gap. Medicaid has grown so quickly it now accounts for 4 percent of Ohio’s economy.
Tonelson, whose U.S. Business and Industry Council is comprised of small and medium-sized domestic manufacturers, predicts the government’s money troubles will “sharply limit at best” how much health care it can afford in the future.
“It’s a real riverboat gamble to reorient your whole state economy around health care,” Tonelson said.
Hill said growth in health care spending can put a drag on job creation, and potentially leave the state at a competitive disadvantage. Health care has become the most high-profile employer in many U.S. cities that suffered the steepest population drops over the past 50 years, he said. Many of those urban communities were once large automotive manufacturing towns, such as Dayton and Detroit.
In Butler County, preliminary estimates for the health care/social assistance sector in the first quarter of 2011 accounted for 17,902 jobs, according to Ohio Department of Job and Family Services Labor Market Information. Estimates for the manufacturing sector the first quarter of 2011 accounted for 19,104 jobs, according to the same information.
Another source of jobs data, Economic Modeling Specialists Inc. (EMSI), estimates higher job numbers for all of this year in the health care and manufacturing industries in Butler County that show health care is larger. According to EMSI, there are an estimated 21,053 health care and social assistance jobs and an estimated 20,383 manufacturing jobs in Butler County this year.
Health care is often the last industry standing in urban communities, where it is often buoyed by unionized retirees who still have good health care benefits, Hill said.
“In some ways, you look at the health care industry as almost being a legacy industry,” he said.
More diversification needed
Along with the decline in manufacturing, the 2001-2011 job figures for Ohio’s largest employers reflect overall growth in the lower-paying service industry. Walmart and Kroger are now numbers one and three for most employees. And while the health care sector has plenty of highly skilled jobs that pay well, the overall picture is more complicated. As a whole, Ohio’s manufacturing sector has better-paying jobs than the health care/social assistance sector, according to U.S. Bureau of Labor Statistics Data. On average, manufacturing jobs paid about 33 percent more than health care jobs in the fourth quarter of 2010, according to that data.
Even hospitals acknowledge they aren’t trying to be their hometown’s chief economic engine. They acknowledge they want their “payer mix” to be diverse. After all, health insurance financed by the private sector subsidizes the nonprofit hospitals’ cost of providing care for Medicare and Medicaid beneficiaries and the indigent.
“We don’t want to be No. 1 for a long period of time,” said Bryan Bucklew, president and CEO of the Greater Dayton Area Hospital Association. The Dayton hospital association’s members include Kettering Health Network and Premier Health Partners, the parent health systems of Atrium Medical Center in Middletown and Fort Hamilton Hospital. “We want to have other industries come in.”
Still, Bucklew and other Ohio hospital trade group representatives noted that high-quality health care is an important business recruitment tool.
“When a new business is looking to locate in the state or in a community, the availability and access to health care is one of the things that they’re going to be looking at for their employees,” Yost said. “I don’t know that they’re going to look at the availability of an automobile manufacturing plant.”
Many of Ohio’s health systems are nonprofits, meaning excess revenues are reinvested in the community and don’t go to shareholders, Yost said. And hospitals increasingly are likely to be paid for the value of services they provide, not volume, a trend that should benefit Ohio’s business community.
“Helping to keep work forces healthier benefits every sector of the economy,” Yost said, “not just the health care sector.”
Contact this reporter at (937) 225-7457 or bsutherly@coxohio.com.
About the Author