A Booming Local Health-Care Industry Isn’t Always a Good Thing

(Bloomberg Opinion) -- In midsize (and sometimes larger) cities around the U.S., health care is often viewed with pride as a key local industry. Having good hospitals in the neighborhood is a plus, of course, and highly paid medical personnel are also nice for local economies to have around.

. But very few of these hospitals and medical professionals are attracting patients from faraway cities. Instead, what has been happening is a regional centralization of health care, with rural areas and small towns losing out and health-care activity migrating to population centers. If health care is a really big part of your local economy, it’s often less something to brag about than a sign that there’s not enough else going on in your local economy.

. The Rochester, Minnesota, metropolitan area is the exception that proves the rule here. Its largest employer by far is the famous Mayo Clinic, which attracts deep-pocketed patients from around the world. Of all Rochester-area jobs, 40.1% were in private-sector health care and social assistance in 2018. Nationwide, that share was 13.5%. Divide the first by the second, and you get metro Rochester’s location quotient of 2.97, which means you’re about three times as likely to run into someone who works in health care in metro Rochester as you are in the nation as a whole. Those Rochester-area health-care workers earned 62% more last year than the national average for the sector, in a region with a cost of living that’s below the national average .

. Related: Where Microbrewery Jobs Are Overflowing Financial Jobs Aren’t Just in New York

. In Rochester, then, health care is undeniably an economic boon. The same goes to a lesser extent for Bloomsburg-Berwick, a small (2018 population: 83,696) Pennsylvania metro area that happens to be the home base of Geisinger Health , a regional health-care provider that has 32,000 employees and serves 3 million patients in Pennsylvania and New Jersey. But while I’m sure there are standout hospitals in some of the other metro areas on the above list, what also stands out about them is that they have populations that are especially old, especially poor or both.

. These older and/or poorer areas pay for their many health-care and social-assistance jobs in part with federal funds provided by taxpayers elsewhere in the country and Treasury bond buyers from around the world, so in that sense the sector may still be a net positive for their regional economies. In metro areas that have been attracting retirees from elsewhere, such as Homosassa Springs, Hot Springs and Pittsfield, these people are also bringing in private financial resources to help pay for all that health care. So it’s not necessarily a sign of economic distress if a metro area has a higher-than-average share of health-care jobs. But outside of southeastern Minnesota, it’s not really something to rejoice about, either.

. This is the third in a series of columns based on the Bureau of Labor Statistics’ gloriously granular Quarterly Census of Employment and Wages , fourth-quarter 2018 numbers from which were released earlier this month. There’s more to come, but in the meantime I highly recommend playing around with the data yourself — all that’s required are a web browser and the ability to click on things.

. Coming Monday: The internet is everywhere. Internet jobs are not.

. I’ve grouped health-care and social-assistance jobs together because the Bureau of Labor Statistics’ Quarterly Census of Employment and Wages groups them together, doesn’t have a separate category covering all of health care, and often suppresses local data for narrower industry sectors so as not to divulge information that might be traceable to individual employers. Nationwide, social assistance accounts for about 20% of health-care and social-assistance employment. As best I can tell, areas with high location quotients for social-assistance employment also tend to have high location quotients for health care, so combining the two doesn’t skew things much. The QCEW also doesn't break out government health-care jobs. The monthly BLS jobs report does have employment numbers for federal, state and local government hospitals at the national level; if included, they would increase the health-care and social-assistance employment total by about 7%.

. To contact the editor responsible for this story: Brooke Sample at bsample1@bloomberg.net

. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

. Justin Fox is a Bloomberg Opinion columnist covering business. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”

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A Booming Local Health-Care Industry Isn’t Always a Good Thing

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