Commentary: Health care’s ‘productivity paradox’ may be short lived

In 1987, Nobel Prize-winning economist Robert Solow famously quipped: “You can see the computer age everywhere but in the productivity statistics.”

You could say the same thing about health care today.

Spending on health care information technology has risen rapidly over the past decade, but there been little corresponding gain in health care productivity. Instead, the industry’s labor force has been on a growth spurt — creating health care’s version of a productivity paradox.

Between 2003 and 2011, the health care sector nationwide added 2.67 million jobs while the entire rest of the U.S. economy added just 850,000 jobs, according to the numbers from the Bureau of Labor Statistics. In the Washington metropolitan area the percentage of the workforce providing direct health care practitioner and support occupations increased from 5.6 percent to 5.9 percent between 2003 and 2011. In the rest of the country, this number dramatically increased from 7.5 percent to 8.9 percent over the same period.

Health care, in fact, has saved our economy from negative job growth over the past decade.

The boomlet in jobs stands in contrast to the productivity gains occurring in the larger economy. Robot machines are good enough and now cheap enough to replace part of the workforce for large manufacturing enterprises. And it is not just factories: In the transportation industry, for example, the use of radio-tags and license plate identification on cars has made the job of toll collectors obsolete. We are also seeing this effect in work once thought to be the preserves of the highly skilled — in sectors such as language translation and legal research.

This effect may be a reason behind our current anemic recovery from the Great Recession of 2007-2009; the accelerating use of technology as a replacement for labor explains both the significant upturn in corporate profits and flat growth in labor, thus the nomenclature of “jobless recovery.”

The health care sector may be about to experience similar forces.

The 2009 Health Information Technology for Economic and Clinical Health Act and the 2010 Patient Protection and Affordable Care Act have together set in motion the underlying drivers of health care transformation. Government health care reimbursements rates are now dropping, putting a financial squeeze on hospitals and medical clinics. The use of new health care technologies will be critical to drive innovation, reduce overall health care spending and allow hospitals to maintain their operating margins.

As technology is applied to make the health care sector more productive, many health care workers are going to be vulnerable to job obsolescences. New models for lower cost health care delivery will require less labor from expensive health care experts. Technology will enable better sharing of health data so that patients are better informed. The role of the physician will need to change, particularly as their more easily commoditized skills can be delivered by nurses, technicians and even automated clinical decision support systems.

We need to increase our investments in health care information technology in order to catalyze health care changes, drive innovation so that we can deliver more health care with less labor, and improve the overall productivity of our entire health care system. Technology and new delivery processes will get better over time and will disrupt our current health care system labor model; and we shouldn’t expect health care labor growth to dig us out of our next economic downturn.

Roger S. Foster is vice president for Acentia’s federal health sector in Falls Church.

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