Hospitals hit bump, but healthcare jobs showed steady growth in July

https://www.healthcaredive.com/trendline/labor/28/#story-1

Image result for hospital job growth

Dive Brief:

  • A total of 30,000 healthcare jobs were added to the U.S. labor rolls in July, representing 18% of all new jobs added during the month, according to the Department of Labor.
  • Virtually all of the healthcare job growth occurred in ambulatory care — that segment accounted for 29,000 new jobs alone.
  • The weak spot was in hospital job growth, which was down by 2,000 jobs from the month before.

Dive Insight:

Hospitals are often the biggest employers in many towns and medium-sized cities, but their job creation has been uneven at best in recent months. According to an analyst note from Jefferies, employment by hospitals dropped by 2,000 on a seasonally adjusted basis, although that grew to a net 1,000 new jobs on an unadjusted basis.

By comparison, hospitals added a seasonally adjusted 9,000 new jobs in June, 25,000 on an unadjusted basis. However, much of that boost was created by the minting of new residents who just graduated from medical schools.

Hospital employment is still growing at a 1.8% annual clip (compared to 1.4% as of July 2018), although that’s down from the 2.1% rate reported in April.

“Overall, healthcare employment growth continues to demonstrate strong momentum, but hospital jobs growth appears to be moderating,” the analysts said. Inpatient providers account for more than 5.2 million jobs nationwide.

However, Jefferies’ analysts believe that healthcare will continue to be a big job engine for the foreseeable future.

“We believe the supply of clinical labor continues to struggle to keep pace with solid demand growth, resulting in tight clinician labor markets and strong demand for healthcare temp staffing services,” they said.

Although healthcare job growth has been extremely robust, wages have been stagnant in recent years, a phenomenon attributed in part to continued consolidation among industry players.

The ambulatory care segment has been growing rapidly in recent years. Its addition of 29,000 new jobs was up from 17,000 in June, and significantly outpaced the year-to-date average monthly growth of 22,000.

Home healthcare services added 11,000 new jobs last month alone — the highest rate since 2017. The segment’s annual growth rate is currently 5.3%, up from 3.2% in July 2018.

The nursing home segment added another 1,000 jobs.

 

 

Not-for-profit hospitals are financially resilient due to strong management, S&P Global Ratings says.

https://www.healthcarefinancenews.com/news/not-profit-hospitals-and-health-systems-have-shown-financial-resilience-due-strong-management?mkt_tok=eyJpIjoiTmpJME5qVTNOVEU1TXpRdyIsInQiOiJDdUIxQ1NKdng1b0FkQ1wvQlwvNFBTc1JIbmVwYUZOeUhCZ3VlNlZzdmhNbkhBQlhnXC9JeTI4c2NDeE80REk0YWJ1Nk1jSzl4QjFDbjFMTkxKdmVCblY1RUlSYTIwUmlhSEJ6VXpkOUZZdytUWDhaV1poaEljcVh5ZFdEOUdVZlQzZyJ9

The broad balance sheet shows hospitals are improving financial strength and flexibility compared to two decades ago.

Not-for-profit hospitals and health systems are financially keeping up with changes in the healthcare landscape, according to a new S&P Global Ratings report.

S&P Global Ratings said it believes the not-for-profit healthcare sector has been incredibly resilient over the past two decades, in large part due to strong management and governance.

The broad balance sheet shows improved financial strength and flexibility compared to two decades ago, as is also the case for maximum annual debt service coverage.

Hospitals have done this throughout a time when changes in government policy, reimbursement and the move to value-based care have been factors in their operating performance and financial position. The report shows more variability in operating revenue and excess margins. 

S&P Global looked at providers rated from BBB+ to AA. The stronger providers have seen margin improvement, while weaker rated providers have been generally stable with some pockets of weakness at the lowest reported rating levels, the report said.

WHY THIS MATTERS

Health system challenges include increasing levels of competition and disruption; consumerism and the heightened focus on quality measures and outcomes; the rapid growth in technology and big data analytics; the rise of population health and changes in payment delivery models; and a fundamental shift in how and where patients are treated.

“To be successful, provider management teams must adapt and adjust or run the risk of being left behind,” the credit analysts said.

A factor benefiting health systems has been the low interest rate environment. This has allowed hospitals to finance strategic capital assets, while keeping carrying costs at very manageable levels.

Industry consolidation has had a favorable impact on enterprise profiles, the report said.  While ample “horizontal” competition exists for both hospitals and health systems, in many markets consolidation has made it more manageable.

But competition between hospitals and health systems and new market entrants seeking to control niche services or some aspect of ambulatory care services is presenting new and rapidly evolving threats to enterprise profiles, the report said.

OUTCOMES

Net patient service revenue has risen across all S&P rated categories for both stand-alone and system providers. This is due to a variety of reasons, including the addition of more business lines such as physician and insurance services, and increased industry consolidation;

Operating and excess margins are more complicated, highlighting the ebb and flow of industry trends, including increased joint venture and affiliation activity and investment market volatility.

Maximum annual debt service coverage has grown in all but the weakest rated levels, highlighting an improving balance between operational performance and debt.

Growth in days’ cash on hand has been a universal success even as capital expenditures remain robust.

Debt levels have been favorable with an improved cushion ratio and declining debt as a percentage of capitalization, both well-established trends.

TREND

Momentum continues to build for major legislative and regulatory changes at both the national and state level.

Many of the hospitals and health systems in S&P Global’s rated portfolio have navigated through numerous changes. Historically, a review of ratios over time demonstrates that providers have responded well to change as a group, although results have varied among individual organizations.

While credit quality can and will change over time,  the majority of the rated portfolio is well-positioned to compete effectively as new strategies are required, the analysts said.

S&P Global Ratings analyzes and publishes not-for-profit healthcare median ratios annually, and has been doing so for over 20 years.

ON THE RECORD

“In our view, senior leadership and management teams have provided guidance and direction through a series of difficult and changing periods and have emerged as generally stronger organizations from a financial profile standpoint,” the credit analysts said. “We believe the vast majority of rated hospitals and health systems have the financial discipline and expertise to navigate the challenges over the next decade and beyond, and while there may be some movement in underlying trends in these key metrics, the overall financial outlook, barring any significant shocks from policy or macroeconomic shifts, should remain generally consistent.”