News and briefs: Healthcare in need of labor productivity gains

An article published recently in The New England Journal of Medicine calls attention to the stagnant growth in labor productivity in the healthcare industry over the past 20 years. According to the article, in 2010, the US spent about $1.56 trillion on wages for its 16.4 million healthcare workers, yet the industry made no gains in labor productivity (defined as output per worker, or more specifically in healthcare the volume of activity—including all encounters, tests, treatments, and surgeries—per unit of cost.)  The article’s authors suggest three ways to improve the labor structure in healthcare: reducing the number of workers, lowering wages, and increasing productivity.

“It is the final, and realistically most viable, option [increasing productivity] that provides the greatest return,” write the authors. “If the healthcare sector is to achieve even the average improvement in labor productivity seen in the overall U.S. economy, we will need to redesign the care delivery model much more fundamentally to use a different quantity and mix of workers engaging in a much higher value set of activities.”