Sacramento medical jobs to boom as health care law takes effect

Published Sunday, Jul. 29, 2012 - The Sacramento Bee

From hospitals to home health services, Sacramento's medical industry has become an economic powerhouse. It surged when practically every other sector of the economy stalled, and now employs more people here than state government.

And it's poised for an even greater expansion.

President Barack Obama's overhaul of national health care, having survived a challenge in the U.S. Supreme Court, is expected to usher in a fresh demand for health care workers.

Joanne Spetz, a health care economist at the University of California, San Francisco, foresees booming demand for a whole host of occupations: primary care doctors, nurses, physical therapists, home health aides and more. Much of the increase will likely begin in 2014, when major provisions of the Affordable Care Act take effect.

Driving the growth is the law's insurance mandate, which aims to bring a flood of Americans into the health care system, including 4 million Californians.

Simply put, "they're going to need care," Spetz said.

That could mean more hiring at companies like Rx Staffing & Home Care, a Sacramento firm that deploys nurses, home health aides and other caregivers throughout the region.

"There will be business to be had," said Ken Erman, chief executive at Rx.

Critics of the Affordable Care Act say gains in health care jobs are just part of the equation. They argue that the insurance mandate makes the law a massive job killer in the broader economy. The mandate requires businesses with more than 50 full-time equivalent employees to buy health insurance – and taxes them if they don't.

"This mandate has now become a tax on all Americans," said the National Federation of Independent Business, a leading lobbyist for small employers. The NFIB was among the group of plaintiffs seeking to overturn the law in court.

The Bay Area Council, a business-backed advocacy group, studied the issue and concluded the tax will wipe out nearly 55,000 California jobs. But the council said far more jobs will be created in the state because of the billions of dollars in additional spending on medical services. All in all, the law should add 98,000 jobs to the state's economy, the council said.

"Doctors, nurses, medical assistants, all sorts of health care infrastructure," said Micah Weinberg, a co-author of the study.

The hiring will spread beyond the halls of medicine to firms that provide support services to the industry. For instance, Weinberg said, tech consultant Accenture is hiring 225 workers in Sacramento to build the state's online insurance purchasing service, the Health Benefit Exchange.

Health care became a big economic engine in Sacramento long before the Affordable Care Act was signed into law in 2010. It surpassed state government as an employer seven years ago. Today, some 93,000 Sacramentans work in health care, compared with 82,000 state workers.

Since 2007, when the recession began, health care employment has grown by 7 percent in the area. Major expansions by the region's major hospital chains have helped prop up a construction industry that was slammed by the collapse in home building.

One ongoing construction project is literally altering the Sacramento skyline – the $724 million expansion under way at Sutter Medical Center, familiar to motorists on the Capital City Freeway.

"People don't stop getting sick because of the economy," said economist Jeff Michael of the University of the Pacific.

Experts say the demand for health care workers of all kinds will keep growing, with or without the federal law. The reasons include an aging population, and a wave of retirements expected in the next few years in nursing and several other fields.

"We know we're going to be short on doctors, sure, and nurses long term," said Cathy Martin, workforce director at the California Hospital Association.

The Affordable Care Act seeks to address those shortages. Primary care physicians will get higher Medicare and Medicaid reimbursements, particularly those working in underserved rural areas. The law provides millions of dollars to train primary care doctors.

There's more to it than flooding the countryside with doctors, though. The law also offers financial incentives to get more patients treated through "the efficient use of lower-cost providers," said Doug Staiger, a medical economist at Dartmouth College.

That means more treatment by nurses, home health care aides and other non-physicians.

"We're a lot cheaper than a hospital bed or a skilled-nursing (facility) bed," said Rx Staffing's Erman. "Home health is the cheapest delivery system."

Erman, who employs 80 nurses and other caregivers, said he's likely to increase staffing to accommodate more patients. How many more is unclear, partly because there's still lots of uncertainty about how the law will work. Some of the potential new business – related to Medicaid – is likely to be unprofitable.

"I don't think any of us knows how it's going to end up," Erman said.

One thing that is clear: The Affordable Care Act is designed to reduce the nation's dependence on hospitals.

Medicare reimbursements to hospitals will be reduced substantially – falling by $17 billion in California over the next eight years, according to the California Hospital Association.

"A lot of the savings are coming out of the hospitals," said David Auerbach, a health policy analyst at the Rand Corp. think tank.

Hospitals, though, don't plan on disappearing. The aging population, combined with the influx of patients getting health insurance for the first time, will ensure a steady flow of business.

Those factors "affirm the need for … the specialized kind of care that only hospitals can provide," said Bill Gleeson, a spokesman for Sutter Health.

Sutter, which employs more than 12,000 workers in greater Sacramento, was unable to provide an employment forecast. But Gleeson said there's no question Sutter will be hiring.

"Pharmacists, technicians, scientists, lab workers, you name it," he said.

And as the industry evolves, he said, "there will be new positions that aren't even envisioned today."