Skip to main content
Faculty Viewpoints

Has Employment Become the Goal of the U.S. Healthcare System?

The United States spends more than any other nation on healthcare, but gets among the worst results among industrialized nations. What explains this paradox? Dr. Greg Licholai writes that the complexity of the healthcare system has generated unexpected incentives—one of which is that we have come to rely on the industry for jobs.

Doctors and nurses in a operating room

U.S. Air Force photo by Senior Airman Benjamin Sutton

  • Greg Licholai
    Lecturer, Yale School of Management; Chief Medical and Chief Innovation Officer, ICON plc

“Every system is perfectly designed to achieve the results it gets.” This pithy and cynical observation, attributed to the engineer W. Edwards Deming, is frequently cited in healthcare circles. It is an apt summary of the disappointing output of lumbering systems that are “designed” over time by many complex forces.

In the U.S., we spend far more than other countries with significantly worse results. U.S. healthcare spending was $3.5 trillion in 2017 and accounted for 17.9% of GDP. Yet we have among the lowest life expectancy, worst access to services, and highest rates of death from preventable disease and complications compared to other industrialized countries.

One way to understand this seeming paradox is to look at healthcare as a complex adaptive system that generates unexpected consequences. One repercussion—and one that makes it challenging to overhaul—is that over the years we’ve grown to rely on it for jobs. In fact, healthcare is now the largest and fastest-growing employment sector in the country.

But it’s a bad way to create either jobs or better health.

Complex adaptive systems

Complexity science is the study of evolving, complex systems that are made up of many smaller interacting elements with numerous agents that operate independently but continuously affect each other. Speaking at MIT’s Sloan School recently, Dr. Susan Abookire, a former aviation engineer and assistant professor at Harvard Medical School, said that healthcare has turned into a textbook case. “The behavior of the system as a whole cannot be predicted by examining the actions of individual parts,” she said.

Hospitals, clinics, nursing homes, rehabilitation units, and even families comprise interlocking networks within the healthcare system. When different networks interact on multiple scales, it produces desired effects as well as unintended consequences. Regulations, protocols, financial incentives, and disease management programs are intended to cut costs and improve outcomes. But the complexity of the healthcare system means that their implementation may lead to unintended and unpredictable consequences, both local—adverse drug reactions, nosocomial infections, rehospitalizations, functional decline—and systemic.

If outcomes and quality are so bad, then it is useful to consider how we could have come to tolerate such as situation as a nation.

The largest employment sector

Last year, healthcare became the largest employment sector in the U.S. The industry provides work to over 20 million people and is expected to add more than 2 million jobs in the next decade, according to the U.S. government. This means that healthcare employment is growing more than twice as fast as all other areas, including services.

We should consider reversing our underinvestment in social determinants of health in order to achieve positive results in both health and employment.

In many U.S. cities health systems have the largest workforce. For example, the Cleveland Clinic is the city’s top employer with 30,000 jobs. In Detroit, healthcare employees now make up nearly a quarter of the workforce, making it the largest segment, and Henry Ford Health System had the greatest growth at 35 percent. Even in job powerhouse Massachusetts, the largest employer is hospital network Partners HealthCare with 60,000 workers. Other cities with significant healthcare employment include Houston, Philadelphia, Baltimore and Denver.

Smarter spending

One clue for the path back to more productive use of our healthcare dollars comes in a study from economist Elizabeth Bradley, formerly of Yale and now the president of Vassar College. Bradley demonstrates that the U.S. is in the middle of the pack when it comes to combined healthcare and social services spending. However, most other countries invest more on social programs such as pensions, disability, unemployment and housing. The U.S. has among the lowest ratio of social service to healthcare expenditures. Bradley concludes that limited attention to the social determinants of health may be a significant contributor to poor outcomes in our country.

Simply spending less on healthcare would cost jobs—and that’s bad for health, Bradley says. But shifting the balance toward social services while maintaining a similar level of overall spending could help us rein in healthcare spending and get better results. In addition to examining expenditures, we should consider reversing our underinvestment in social determinants of health in order to achieve positive results in both health and employment.

The bigger conclusion is that all of us—consumers, policy makers, and physicians—need to think of healthcare as a complex and evolving system, to keep in mind unanticipated incentives that can generate escalating costs and poor outcomes.

Department: Faculty Viewpoints