Michigan’s Largest Private-sector Employer Remains Healthcare

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).

Healthcare Remains Michigan’s Largest Private-sector Employer Despite Pandemic Losses

Economic Impact in Michigan infographic

Provides Nearly 572,000 Direct Jobs, 224,000 in Hospitals Alone

Economic Impact in Michigan infographicThe Partnership for Michigan’s Health reports healthcare directly employed nearly 572,000 Michigan residents in 2020, demonstrating that healthcare continues to be the largest private-sector employer in the state despite staffing losses attributed to the COVID-19 pandemic. The 2022 release of The Economic Impact of Healthcare in Michigan shows direct healthcare workers in Michigan earned $44.2 billion that year in wages, salaries and benefits. Hospitals alone employed 224,000 individuals in the state in 2020.

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 502,000 people who earned about $28 billion in 2020 in wages, salaries and benefits. Together with their employers, the nearly 1.1 million workers in the healthcare sector contributed almost $15.2 billion that year in local, state and federal taxes. These taxes include Social Security, income, motor vehicle, sales, property, corporate and more.

Data from 2020 shows the early impact the pandemic had on the economic strength of the healthcare sector in Michigan. In particular, the data illustrates the rise in labor costs as many nurses transitioned to contract labor with staffing agencies. Compensation for direct jobs in Nursing and Residential Care rose by about $200 million from 2019 to 2020, although the number of jobs fell by about 11,000. Specific to hospitals, the number of jobs fell by about 7,000 jobs from 2019 to 2020, but total compensation remained about the same.

The loss in jobs represents the initial exit of many healthcare workers due to burnout and stress associated with the pandemic. Both nationally and in Michigan, healthcare experienced a shortage of healthcare employees for several years and the pandemic caused a sudden loss of existing workers. With Medicare beneficiaries in Michigan increasing by more than 8% over the past five years to a total of 2.1 million people, Michigan needs more healthcare workers, now more than ever, to serve the changing needs of the state’s aging population.

The trend of nurses transitioning to contract labor is supported by recent research from the American Hospital Association, which found labor expenses per patient for hospitals increased 19% through 2021 compared to 2019. 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 are negotiated months in advance, presenting additional financial challenges when responding to sudden labor market demand.

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 2019 and 2020 data, which is the most recent available.

“This report demonstrates the unquestionable and significant role healthcare, and specifically hospitals, play in Michigan communities,” said Michigan Health & Hospital Association CEO Brian Peters. “Not only have they played a vital role in the care and treatment of patients, but they remain far and away the leading employers and large drivers of economic activity.”

“Healthcare careers are not only extremely rewarding, but crucial to our society,” said Kris Nicholoff, executive director of the Michigan Osteopathic Association. “While healthcare careers remain in high demand, the data shows there are over a million individuals we owe our gratitude toward for providing care during one of the most trying and tumultuous years in modern history.”

“Physicians are and will continue to remain a key driver of healthcare employment and economic growth,” said Julie L. Novak, CEO of the Michigan State Medical Society. “Investing in physician-led team-based care and healthcare careers is key to the economic vitality and health of our state, local communities and residents. Physician practices, hospitals and other care settings offer good paying and stable jobs in careers that truly improve and save lives.”

Hospitals and healthcare providers remain focused on ensuring these jobs meet the needs of their employees, from offering competitive compensation and benefits to ensuring a safe and supportive work environment. The Partnership for Michigan’s Health joined several other organizations in the Healthcare Workforce Sustainability Alliance to advocate for state funding to support the recruitment, retention and training of healthcare workers. These efforts were successful in Public Act 9 of 2022 which allocates $300 million in state funding to support Michigan’s healthcare workforce.

The 16th and 17th editions of The Economic Impact of Healthcare in Michigan were compiled using IMPLAN® cloud software to quantify healthcare’s significant economic impact in the state. The data represents direct, indirect  and induced  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. The data from both 2019 and 2020 is provided in two separate data tables. It is available at www.economicimpact.org.

Media Recap: Expanding Access to Care, Healthcare Jobs and More

MHA CEO Brian Peters

The MHA received media coverage on a variety of topics during the weeks of Aug. 1 and Aug. 8. Areas of focus included health insurance tax credits from the American Rescue Plan Act (ARPA), healthcare benefits in the Inflation Reduction Act, growing demand for healthcare careers and more.

Laura AppelCrain’s Detroit Business published Aug. 2 a Letter to the Editor on the importance of permanently writing into law ARPA health insurance tax credits that was signed by Laura Appel, executive vice president of government relations and public policy, MHA, along with Dominick Pallone, executive director, Michigan Association of Health Plans; Julie Novak, CEO, Michigan State Medical Society; and Phillip Bergquist, CEO, Michigan Primary Care Association. Together, they describe how the expanded income tax credits helped 67,000 Michigan residents gain access to health insurance.

“Premium tax credits serve as a key that unlocks greater access to this care and the healthier future we need. We must protect them before it’s too late. We call on lawmakers to work with urgency to see that ARPA’s health insurance tax credits are permanently written into law before they expire at the end of this year.”

An article on the fastest growing job opportunities in Michigan through 2030 was also published by Crain’s, which includes several healthcare careers at the top of the list. The article quotes Brian Peters discussing the state funding available for community colleges to partner with a four-year institution to offer a bachelor’s degree in nursing on a community college campus.

MHA CEO Brian Peters“Staffing shortages are impacting Michigan hospitals throughout the state, particularly in the areas of nursing,” said Peters. “This plan will help us get more highly-skilled professionals into the field quickly and increase access to nursing education in more communities across the state.”

Lastly, Crain’s published a story Aug. 12 that includes a quote from the MHA celebrating the federal Inflation Reduction Act including an extension for three years of expanded subsidies to reduce Health Insurance Marketplace premiums and insulin being capped at $35 a month for Medicare patients.

Additional news clips included a statement provided to MiBiz on a Michigan Court of Appeals ruling Aug. 1 that allowed county prosecutors to pursue criminal charges in most abortion cases until an Oakland County circuit court judge granted a temporary restraining order to block local prosecutors from enforcing the law later that same day. Becker’s Hospital Review also published an interview with MHA CEO Brian Peters on a variety of topics in preparation for Peters serving on a panel at Becker’s 10th Annual CEO + CFO Roundtable conference in November.

MHA CEO Report — GME’s Role in the Healthcare Talent Pipeline

MHA Rounds Report - Brian Peters, MHA CEO

“Medical education does not exist to provide students with a way of making a living, but to ensure the health of the community.” ― Rudolf Virchow

MHA Rounds Report - Brian Peters, MHA CEOAs we enter the final two months of the MHA program year, our “all-hands-on-deck” prioritization of the healthcare workforce continues, and I am pleased to share that we have made significant strides in this regard. Included in that progress is work with our partners in higher education, other Michigan healthcare associations, hospital clinical leaders and the Michigan Legislature.

One aspect of our workforce efforts is not new. For many years, the MHA has led a special Graduate Medical Education (GME) Advocacy Day, hosted at our MHA Capitol Advocacy Center (CAC) in downtown Lansing. At this event, medical students, residents from teaching hospitals and academic medical centers, and other key leaders converge on the Capitol and meet with legislators to discuss the vital importance of GME funding in the state budget process.

After a brief hiatus due to the pandemic, we are excited to play host once again for this important in-person event, as we will welcome our colleagues to the CAC on May 5.

When this event began, the primary focus was to express the importance of GME and the national prominence that Michigan has earned in medical education. We have more than 7,200 physician residents currently working in the state, which ranks fourth in the nation. In addition, Michigan is third in the country for student enrollment in public medical schools. The investment Michigan makes in GME is very valuable, as every $1 in GME generates $2.53 in federal funding in fiscal year 2022. While the current rate is enhanced due to the existing public health emergency, there is no question that GME funding for Michigan’s beginning physicians is a wise investment for the future healthcare workforce in our state. GME also improves access to care, as it allows physicians to further their medical education while delivering much-needed care to patients throughout Michigan in teaching hospitals, community clinics and laboratories.

The vital role of GME in filling the talent pipeline is more important today than ever, as Michigan hospitals (and the healthcare delivery system in general) struggle with workforce shortages that have been exacerbated by the COVID-19 pandemic. Those shortages across the state have caused Michigan to lose approximately 1,300 staffed hospital beds over the past 18 months. Nationally, the physician shortage is estimated to be between 37,800 and 124,000 by 2034, including primary care and nonprimary care specialties, as the Association of American Medical Colleges estimates two out of every five active physicians will be 65 or older within the next 10 years.

The participants in our GME Advocacy Day have experienced many of the challenges that we’ve shared with elected officials: stress, burnout, workplace violence, vaccine hesitancy and significant loss of life due to COVID-19 and a host of other medical issues. Their perspective is extremely valuable as we make the case for funding and public policy that ensures the viability of our healthcare infrastructure for years to come. In addition to full funding of the traditional GME pool, there are several related items on the radar screen here in Lansing, including:

  • Included in the state’s Higher Education budget proposal is House Bill 5785, which would provide funding to create a healthcare workforce collaborative between the MHA and Michigan’s public and private post-secondary educational institutions. This partnership would not only provide employers with a better understanding of statewide graduates in health professions, but further improve the knowledge of employment opportunities in healthcare for post-secondary education institutions throughout the state. Included in the collaborative would be the creation of a searchable and accessible repository that allows healthcare employers to understand current educational trends and provides prospective employees easy access to healthcare positions throughout the state.
  • The MHA also supports legislation designed to incentivize more medical school and advanced practice nursing program preceptors by providing new tax credits. Senate Bills 998 and 999 would create a new tax credit for individuals who agree to work as a preceptor for required clinical rotations. We believe this legislation could help increase the capacity for clinical rotations at hospitals across the state, which would also improve the talent pipeline.

As we advocate in support of GME and related issues, we of course greatly appreciate the collaboration of our friends from the Michigan State Medical Society (MSMS) and Michigan Osteopathic Association (MOA). Together, our three associations make up The Partnership for Michigan’s Health, which has a long history of working together on healthcare issues of common interest, including the achievement of major medical liability reforms in the early 1990s, which established the foundation for much of our advocacy work in the Legislature and the courts ever since.

Most recently, the collective voice of our three associations, along with associations representing various other areas of healthcare, led to successfully securing $300 million in state funding for the recruitment, retention and training of healthcare workers. Collectively, the Healthcare Workforce Sustainability Coalition was created to focus on workers already within the healthcare workforce. Gov. Whitmer also recently signed Senate Bill 247 that would decrease wait times for commercial insurance prior authorization requests, a priority for all three associations. We are also united in our opposition to Senate Bill 990 that would create a serious public health risk by licensing naturopathic practitioners and classifying them as physicians. As healthcare associations, the professional careers of our members are dedicated to serving their patients and protecting the health and safety of the public. This opposition is an example of our need to protect the public from a practice that lacks scientifically proven treatment methods and clinical training.

In addition, we have long collaborated with MSMS and MOA to produce The Economic Impact of Healthcare in Michigan Report, which provides a detailed look at the extensive roles hospitals and health systems play in their local economies. Work is underway on the next issue of the report. The MHA Keystone Center Board of Directors has also designated one seat each for the MSMS and the MOA since its inception to ensure physician representation as we strategize on safety and quality improvement issues. And finally, the MHA and the MOA literally got closer last year when the MOA relocated its offices to the MHA headquarters building in Okemos – an arrangement that is unique anywhere in the country.

I’d also be remiss if I didn’t mention the MHA’s new focus on engaging with our physician leaders. For the first time ever, the MHA will be hosting activities dedicated to our physician leaders during our MHA Annual Meeting, including several sessions that will include CME credits. MHA Chief Medical Officer Dr. Gary Roth is leading these efforts, which complement his work throughout the pandemic engaging with our health system chief medical officers to facilitate consistent and reliable dialogue that allowed the MHA to efficiently provide policy updates to our clinicians as well as real-time feedback to policymakers. We’re extremely fortunate to have Dr. Roth, as the MHA is one of just a few state hospital associations with a full-time CMO on its leadership team.

Lastly, in an effort to fully support our physician colleagues (and other caregivers), the MHA Keystone Center is offering the Well-being Essentials for Learning Life-Balance (WELL-B) webinar series to prevent healthcare burnout by delivering weekly webinars on evidence-based well-being topics, including prevalence and severity of burnout, relationship resilience and being present. It is encouraging to see that over 4,000 individuals have already signed up for this innovative program.

As you can see, there is no magic pill that can solve the healthcare staffing crisis overnight. It will take many years and a multitude of public and private solutions to protect access for all of Michigan’s communities. GME is one of those key solutions, and we call on our elected officials – and all Michiganders – to give it the support it deserves.

As always, I welcome your thoughts.