Provides Nearly 568,000 Direct Jobs, 219,000 in Hospitals Alone
The Partnership for Michigan’s Health reports healthcare directly employed nearly 568,000 Michigan residents in 2021, demonstrating that healthcare remains the largest private-sector employer in the state despite continued staffing losses attributed to the COVID-19 pandemic. The 2023 release of The Economic Impact of Healthcare in Michigan shows direct healthcare workers in Michigan earned nearly $46 billion that year in wages, salaries and benefits. Hospitals alone employed 219,000 individuals in the state in 2021.
Direct healthcare employment helps create additional jobs that are indirectly related to or induced by healthcare. These indirect, healthcare-supported jobs are held by more than 470,000 people who earned about $28 billion in 2021 in wages, salaries and benefits. Together with their employers, the more than one million workers in healthcare contributed $19.6 billion that year in local, state and federal taxes. These taxes include Social Security, income, motor vehicle, sales, property, corporate and more.
Data from 2021 shows the impact the pandemic had on the healthcare workforce in Michigan. While direct jobs decreased by nearly 4,000 total positions, direct wages increased by 4% year-over-year as labor costs rose due to increased demand. Direct wages in hospitals increased by 6.8%, as many hospitals offered wage adjustments and bonuses to recruit and retain employees, and increased the use of contract labor with staffing agencies. A separate study conducted by the MHA in 2022 showed expenses related to contract labor and recruitment and retention bonuses increased by $516 million from 2020 to 2021. Nursing and Residential Care also experienced a similar trend, as the number of jobs in the category fell by about 8,000 but compensation remained about the same.
The increase in direct wages for hospital employees follows a national trend. A recent American Hospital Association report shows labor costs increased 20.8% between 2019 and 2022. The increase is due in large part to a greater reliance on contract staffing agencies due to staffing challenges and to meet patient demand. Increased labor expenses have a more profound impact on hospitals and health systems, as labor expenses account for more than 50% of total expenses for most hospitals. In addition, healthcare reimbursement is unable to quickly respond to inflationary pressures since rates with commercial payers are negotiated months in advance while Medicare and Medicaid rates are even slower to adjust, presenting additional financial challenges when responding to sudden labor market demand.
The loss of healthcare workers has also had a detrimental impact on physician practices. According to a survey conducted by the Michigan State Medical Society, 86% of participating physician practices experienced a decline in the number of health professionals and administrative staff employed by the practice since the start of the COVID-19 pandemic, including physician assistants, nurse practitioners, registered nurses and medical assistants. In addition, 69% reported staffing shortages led to increased wait times for patients, 55% had to reduce hours or available appointments and 43% experienced an estimated 10-25% reduction in patient revenue.
The report was compiled by the Partnership for Michigan’s Health, which consists of the Michigan Health & Hospital Association, the Michigan State Medical Society and the Michigan Osteopathic Association, all based in the greater Lansing area. It uses 2021 data, which is the most recent available.
“Hospitals rely on many workers in a variety of clinical and non-clinical roles to operate every hour of the day, year-round.,” said Michigan Health & Hospital Association CEO Brian Peters. “This report demonstrates the significant number of people it takes to have a high-quality, functioning healthcare system available to all Michiganders.”
“Healthcare is a key driver of not only physical health, but the economic wellness of Michigan,” said Kris Nicholoff, executive director of the Michigan Osteopathic Association. “The Economic Impact of Healthcare in Michigan shows the extensive value healthcare provides to our state, both as an employer and in providing tax revenue for communities.”
“The same dynamics that are at play in our hospitals affect Michigan’s physician practices, which are also struggling to recruit and maintain physicians and ancillary staff,” said Tom George, MD, Interim Chief Executive Officer of the Michigan State Medical Society. “We encourage students to consider pursuing a profession in healthcare, which offers rewarding and stable careers across a variety of disciplines.”
Demand for healthcare careers remains high. A March survey of Michigan hospitals reported more than 27,000 current job openings, including nearly 8,500 open nursing positions, 4,500 technician openings and 3,000 positions for clinical assistants from the 95% of the MHA membership who participated. The need for healthcare workers is not unique to hospitals, and is shared by physician practices, nursing and residential care facilities, home health services, ambulatory services and other healthcare organizations.
The 18th edition of The Economic Impact of Healthcare in Michigan was compiled using IMPLAN® cloud software to quantify healthcare’s significant economic impact in the state. The data represents direct, indirect[1] and induced[2] healthcare jobs; taxes paid by those workers and their employers; and salaries, wages and benefits earned. The report is an online, interactive tool that allows users to examine these economic impacts from a statewide perspective and by region, county or congressional district. It is available at www.economicimpact.org.
[1] Indirect jobs are those created to support a larger employer or industry (for example, a laundry that cleans linens for a hospital).
[2] Induced jobs are those created by the spending of people who work in the indirect jobs (for example, a restaurant waiter who serves the laundry workers).