April 19, 2024

Economix Blog: Health Care Aside, Fewer Jobs Than in 2000

CATHERINE RAMPELL

CATHERINE RAMPELL

Dollars to doughnuts.

Uwe Reinhardt had a fascinating post Friday about the buffer that health care spending has provided in the last few years. Health care has provided a steady contribution to gross domestic product even as other sectors cut back dramatically. He also notes that in the last two decades, it has created more jobs on a net basis than any other sector.

I’d like to point out one other important accomplishment of the much-maligned health care industry. Not only has it added more jobs than any other sector, but without it, there would actually be slightly fewer jobs in the United States today than in 2000.

In 2000, the economy had about 121 million non-health-care payroll jobs. Today, on a seasonally adjusted basis, there are 120 million non-health-care jobs. Meanwhile, the health care industry has added about 3.6 million jobs in that time frame, growing about 33 percent (14.5 million health care jobs today versus 10.9 million in 2000).

Source: Bureau of Labor Statistics, via Haver Analytics. January 2013 figures are seasonally adjusted; 2000 figures are annual numbers. Source: Bureau of Labor Statistics, via Haver Analytics. January 2013 figures are seasonally adjusted; 2000 figures are annual numbers.


There have been times since 2000 that the country has had more non-health-care jobs on net than it had at the turn of the millennium, but that has not been true since late 2008. Here’s a look at the longer-term monthly numbers. Note that the vertical axis does not go down to zero to better show the change:

Source: Bureau of Labor Statistics, via Haver Analytics. Note that the vertical axis does not start at zero, better showing the change over time. Source: Bureau of Labor Statistics, via Haver Analytics. Note that the vertical axis does not start at zero, better showing the change over time.

Is it a good thing that the health care industry has been basically keeping the job market afloat? That depends on your perspective.

Health care is a notoriously inefficient industry — in 2008, there were five people performing administrative support for every one doctor — and a lot of the jobs that have been created in recent years probably involve feeding that inefficiency.

Market pressures don’t force streamlining in health care the way they do in other industries. That’s partly because of the way Americans pay for health care and the way the government subsidizes health care consumption. It’s also partly because health care is relatively shielded from international competition, since many medical services are difficult to offshore. It’s hard to have someone draw your blood from India, for example.

In any case, given how weak the economy is right now, it seems unlikely that the health care industry is snatching many workers away from other industries where their skills would be put to more productive use.

Article source: http://economix.blogs.nytimes.com/2013/02/20/health-care-aside-fewer-jobs-than-in-2000/?partner=rss&emc=rss

Square Feet: Changes in Health Care Delivery Prompt Property Deals

The company is now looking to add five new offices in Manhattan. “The demand was immediate, and it has truly been overwhelming,” said Samuel Fisch, the chief executive of MedRite. Douglas Kaiden, the company’s medical director, said, “Eighty percent of our patients are in and out within 30 to 40 minutes — a guy could come in during his lunch break and make it back to the office with spare time to eat his sandwich.”

An aging population and the effects of new government programs are putting pressure on the health care industry to change the way it provides services and does business, and one result has been a flurry of real estate deals. This year there have been 42 such transactions in New York City, including new leases and renewals, totaling more than 1.2 million square feet, according to Cushman Wakefield. That is nearly twice the number of last year, when 25 transactions and 550,700 square feet were leased; in 2009, there were 16 deals and 176,311 square feet leased.

Several factors are driving these real estate deals, including the aging of the baby boom generation, which is creating more demand for health care. There are also several initiatives to stop patients from relying on emergency rooms for treatment and instead have them seek primary care practices, said Marisa Manley, the president of Healthcare Real Estate Advisors.

President Obama’s health care overhaul could also potentially add 32 million people to the roster of the insured, increasing demand for services. Though the ultimate outcome of the overhaul is unclear, Ms. Manley said hospitals and health care providers were taking steps to prepare for a surge in demand.

In November, for example, ColumbiaDoctors, the faculty practice of the Columbia University College of Physicians and Surgeons, signed a 25-year lease for 120,000 square feet at 1290 Avenue of the Americas. The practice will occupy the entire third floor, a small part of the second floor and have a private entrance on the ground floor at 51 West 51st Street. It also has the right of first offer for the remainder of the second floor and parts of the fourth floor, should the current tenants not renew their leases when they expire over the next few years. The practice is moving from a 93,000-square-foot office at 650 Madison Avenue.

“Large medical practices are a sector of the marketplace that is often overlooked, but there is enormous demand there,” said Mark S. Weiss, a vice chairman of the brokerage firm Newmark Knight Frank who represented ColumbiaDoctors.

The space will be built to suit the needs of ColumbiaDoctors’ 1,200 physicians, who will all have access to the offices. For one, it will enable the various specialty practices to change the number of patients’ rooms or other facilities as demand dictates. “Where we are now doesn’t allow for a lot of flexibility,” said Mark McDougle, the chief operating officer of Columbia University Medical Center, “so as we change and grow, it has been hard to adapt the space physically.”

Community health clinics are also expanding, mostly because the weak economy has meant there are more people without health insurance who depend on their free services. Settlement Health, a clinic in East Harlem, is looking to nearly double its square footage.

“Our patient base is growing and so are the demands for our services, because in this economic downturn there are more of the uninsured than ever before,” said Mali Trilla, the chief operating officer of the nonprofit clinic. The center owns a 22,000-square-foot building at 212 East 106th Street and is looking to lease an additional 20,000 square feet. “We had hoped to buy a new building or renovate a building, but it is so expensive and we don’t have the resources,” she said. Instead, the clinic is expanding incrementally by renting a number of smaller spaces.

It can be challenging for doctors who want to expand to find the appropriate real estate, brokers and physicians said. Some landlords can be reluctant to rent space to doctors because of the additional features needed, like bathrooms and sinks, and the foot traffic that comes with a patient-focused business.

It can also be costly. Dr. Hugh D. Melnick runs a fertility practice, Advanced Fertility Services, with 8,000 square feet at 1625 Third Avenue. He is looking to renew his Manhattan lease or possibly relocate to a new location of equal size. “I think that landlords are unrealistic because they keep raising their rent even though most physicians are dependent on insurance reimbursements, which haven’t increased in 15 years,” Dr. Melnick said.

Rents for medical offices on the Upper East Side range from $40 to mid-$80 a square foot, with rents at Dr. Melnick’s building around $65 a square foot, said Ms. Manley, who is helping him search for new office space. Because there is a shortage of medical spaces for doctors, these tenants are sometimes forced to pay their own utilities and can be provided little in tenant improvement allowances, she said.

Some hospitals are also struggling under financial constraints. In one of the year’s largest health care transactions, NYU Langone Medical Center leased 420,000 square feet at 1 Park Avenue, more than doubling its footprint at the building. But while it looks like an expansion, the hospital, which is in early talks with Continuum Health Partners for a possible strategic partnership, “is going through a transformation, so we were hired to consolidate their office space — it was not an expansion,” said Josh Kuriloff, a vice chairman at Cushman Wakefield, who represented the tenant.

Other hospitals are finding ways to grow despite financial pressures. Mount Sinai, for example, recently acquired a 15,000-square-foot parking lot at 14-20 East 103rd Street for $25 million that will be reserved for future development. It is also busy building a Center for Science and Medicine on Madison Avenue at 101st Street that will be completed in the fall and an adjacent 43-story tower at 4 East 102nd Street that will house rental apartments and include some hospital infrastructure.

Some of the city’s largest landlords are beginning to embrace health care as a source of new tenants.

“Office tenants related to the health industry is definitely a growth area,” said Steven M. Durels, executive vice president and director of leasing at the SL Green Realty Corporation. SL Green completed several health care transactions this year, including two renewals at 555 West 57th Street, with Continuum Health Partners for 113,000 square feet and the Greater New York Hospital Association for 104,000 square feet.

Article source: http://feeds.nytimes.com/click.phdo?i=c3d1c69059c0bcc52b11c081b35ddfd4