Sunday, September 24, 2006

What's Propping Up the Economy

The cover story in this week's edition of Business Week is titled: "What's Really Propping Up the [U.S.] Economy."

The answer? Health care.

As the subtitle notes, "Since 2001, the health-care industry has added 1.7 million jobs. The rest of the private sector? None."

The article highlights Conemaugh Health System in Johnstown (which is not owned by UPMC, but is run by a former executive of Highmark and UPMC). Conemaugh is the biggest employer in Johnstown, with 5,000 workers.

How about the Pittsburgh Region? Although there has been some net job creation in other sectors, the biggest growth in jobs by far has been in health care. Over the past year, 43% of the net new jobs in the Pittsburgh MSA were created in the health care and social assistance sector (hospitals, ambulatory health care, nursing homes, and social services), with a similar percentage over the past two years, as well.

The Business Week article notes that while the job creation in health care has been good for the economy and for workers in the short run, the imbalance between the growth in health care and the growth in other sectors is probably unsustainable in the long run.

This is an issue for the future of the Pittsburgh Region, too. However, the problem could be turned into an opportunity if we pursue it appropriately.

Increasingly, the focus in health care will need to be on improving quality, rather than merely expanding services. If the Pittsburgh Region can become even more of a leader in health care quality (and if health insurers begin supporting a national, rather than local, market for health care), we could attract more patients from other regions, thereby sustaining the growth in employment here, while at the same time reducing health care costs for local employers. Many of the mechanisms for doing this are in place at the Pittsburgh Regional Health Initiative, but the industry (hospitals and doctors) will need to make quality improvement a higher priority in order to achieve success.


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