!Business and Economic Research Center, Jennings A. Jones College of Business | MTSU !!11!Chapter II: Overview of the Core Health Care Industry II. OVERVIEW OF THE CORE HEALTH CARE INDUSTRY The concept of the core health care industry refers to health care service providers classified as such under the NAICS (North American Industrial Classification System): 621 (Ambulatory Services), 622 (Hospitals), and 623 (Nursing and Residential Care Facilities).1 II.1. National Trends Regarding national trends, increasing demand for health care services by the retiring baby boomer generation likely will fuel further growth in core health care industry employment. According to Census Bureau population projections, the percent of people over age 65 will increase to nearly 20 percent by 2030 from 13 percent in 2010. Nationally, the core health care industry has grown significantly faster than nonfarm employment in the past 13 years. !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!1 For a detailed analysis, see the methodology section.!Business and Economic Research Center, Jennings A. Jones College of Business | MTSU !!12!Chapter II: Overview of the Core Health Care Industry Nationally, core health care industry employment grew more than 10 percent between 2004 and 2008, while total nonfarm employment recorded about a 4 percent growth rate. Nonfarm employment excluding health care grew about 3.5 percent in the same period. To give a better perspective on changing employment dynamics in the nation, one in 14 jobs created between 1995 and 2000 was in the health care sector. This has changed dramatically in recent years, as one in 4.35 jobs created between 2004 and 2008 was in the health care sector.2 The growth trend in employment in the health care sector since 2000 is expected to continue through 2018, when core health care industry employment is projected to be the dominant source of employment growth. Health care occupations are projected to add nearly 2.8 million new jobs nationally between 2008 and 2018. In this period, growth in health care occupations is expected to be 24 percent versus 10 percent for all occupations. By 2018, health care occupations’ share in total employment is projected to be 8.63 percent, nearly a percentage-point increase from 2008. Health care occupations will account for one in every six new jobs, and the resulting 2.8 million additional workers will be spread throughout this large and diverse sector from health care practitioners’ offices, outpatient clinics, and hospitals to nursing and residential care facilities.3 According to the Bureau of Labor Statistics, seven health care occupations are projected to be in the top 10 fastest-growing occupations in the U.S. !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!2 This section uses the broader “health care and social services” for the Nashville MSA to allow comparison across geographical units. A detailed breakdown of health care services is not publicly available at the Nashville MSA level due to state disclosure rules. 3 Employment projections are from the U.S. Department of Labor, Bureau of Labor Statistics (www.bls.gov). Occupations include (a) health care practitioners and technicians and (b) health care support occupations.!Business and Economic Research Center, Jennings A. Jones College of Business | MTSU !!13!Chapter II: Overview of the Core Health Care Industry Furthermore, national health care expenditures are expected to reach $4.7 trillion by 2019, representing nearly 19.4 percent of gross domestic product (GDP), up from 16.2 percent in 2008.4 Among national health care sectors, growth in ambulatory services outpaced growth in both nursing care facilities and hospital employment. Hospital and nursing care facilities employment grew 24 percent and 31 percent, respectively, while ambulatory services recorded 50 percent growth between 1995 and 2003. ! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!4 Health expenditure projections are from the Center for Medicare and Medicaid Services (www.cms.hhs.gov).!Business and Economic Research Center, Jennings A. Jones College of Business | MTSU !!14!Chapter II: Overview of the Core Health Care Industry The share of ambulatory services in total national health care employment increased considerably over the past 13 years. For example, ambulatory services accounted for 38 percent of total health care employment, residential care facilities 24 percent, and hospitals 38 percent in 1995. From 1995 to 2008, the share of ambulatory services employment grew (increasing to 42 percent) at the expense of primarily hospital employment, which declined to 35 percent in 2008. II.2. Trends in Tennessee Tennessee’s health care sector demonstrated significant resilience after a slow growth period between 1995 and 2000. As core health care employment grew nearly 16 percent between 2004 and 2008. In the same period, nonfarm employment grew substantially less, just 2.5 percent. From a historical perspective, employment growth in Tennessee shows a reversal of trends between total nonfarm and health care employment. From 1995 to 2000, nonfarm employment shows a rigorous growth trend of nearly 10 percent versus a mere 5 percent for health services employment. However, this early growth pattern has changed dramatically. From 2000 to 2004, health services employment grew nearly 14 percent versus nearly a 1 percent decline in total nonfarm. While the growth in health services employment accelerated from 2004 to 2008, increasing nearly 16 percent, total nonfarm employment recorded an increase of only 2.6 percent, which corresponds to an annual average growth rate of 0.7 percent.!Business and Economic Research Center, Jennings A. Jones College of Business | MTSU !!15!Chapter II: Overview of the Core Health Care Industry As previously noted, the growing share of seniors in the total population is likely to increase the demand for health care services dramatically, and is projected to increase to 19.21 percent of the population in 2030. According to Census Bureau projections, the share of the population older than 65 years old in Tennessee is expected to increase from 13.30 percent in 2010 to 19.21 percent in 2030. Although only three out of the 10 fastest growing occupations in Tennessee are in health care, health care occupations are projected to increase 24.29 percent from 2006