On June 11, 2021, the Bureau of Labor Statistics (BLS) updated measures of labor productivity and costs for private community hospitals (NAICS 6221,3) through 2018. Data through 2012 were originally released in October 2015 to coincide with the publication of an article in the Monthly Labor Review (MLR).
The healthcare sector (NAICS 621,2,3) makes up a large portion of the U.S. economy. In 2018, 10.7 percent of all nonfarm payroll employment and 6.7 percent of GDP was attributed to healthcare. Hospitals (NAICS 622) provide many of the services in this sector, with 40.9 percent of nominal gross output in 2018 coming from this industry. As the industry continues to grow, labor productivity becomes an increasingly important indicator in assessing how the costs and benefits of hospitals impact our lives.
The development of these productivity measures posed many challenges, particularly in defining appropriate outputs. Because of the variety of services provided at hospitals and the pricing structures attached to each of these services, a standard deflated-value output model was not feasible. More information on overcoming these challenges is available in the 2015 MLR article.
The BLS output measure for private community hospitals (NAICS 6221,3) is a weighted index of inpatient (requiring an overnight stay of one or more days) and outpatient (not requiring an overnight stay) services. Output for both inpatient and outpatient services is based on the quantity of complete courses of treatment, rather than individual medical procedures. Measuring inpatient and outpatient services separately captures the shift in hospital services over time. The indexes of inpatient and outpatient services are aggregated using their respective shares of total hospital revenue as weights.
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Figure 1 illustrates the relationship between labor productivity, output, and hours worked. Labor productivity in private community hospitals declined 1.0 percent in 2018 from 2017, due to an increase in output (0.4 percent) and hours worked (1.5 percent). From 1993 to 2018, labor productivity grew at a compound annual rate of 0.3 percent. Breaking the time series down into sub-periods reveals three trends: an era of productivity growth from 1993 to 2001 (2.0 percent annually) followed by productivity decline from 2001 to 2007 (-1.5 percent annually) and finally a period of moderate productivity growth from 2007-2018 (0.2 percent annually).
Figure 2 shows the rise in total output since 1993. The index of inpatient services is derived using data from the National Inpatient Sample (NIS), Healthcare Cost and Utilization Project (HCUP), Agency for Healthcare Research and Quality (AHRQ). The index of outpatient services combines data from the American Hospital Association (AHA); the and the Medical Expenditure Panel Survey (MEPS), Agency for Healthcare Research and Quality (AHRQ); the National Hospital Ambulatory Medical Care Survey (NHAMCS); Centers for Disease Control and Prevention (CDC); and the Centers for Medicare & Medicaid Services (CMS).
From 1993 to 2006, both inpatient and outpatient services contributed to total output growth. Between 2006 and 2014, growth was driven primarily by outpatient services. From 2015 to 2018, inpatient services once again contributed to industry output growth.
Figure 3 highlights the shift in revenue share from inpatient services to outpatient services since 1993. In 2018, inpatient services accounted for 51 percent of revenue compared to a 49 percent revenue share for outpatient services.
 Information calculated from BLS’s Current Employment Statistics (CES) measure of healthcare employees (Series ID: CEU6562000101 & CEU0000000001)