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Restraining health care prices requires workforce productivity gains, not wage cuts alone

Date:
June 8, 2015
Source:
New York University
Summary:
Cost containment will require not wage reductions alone, but broad productivity gains derived from the use of fewer or less-skilled employees to produce any given service, a new study concludes.
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A new study by NYU Wagner Dean and Professor of Public Service Sherry A. Glied and two additional researchers sees little evidence to support the belief that healthcare workers' wage levels are responsible for the rising cost of health care services in the U.S. Effective cost containment will require not wage reductions alone, but broad productivity gains derived from the use of fewer or less-skilled employees to produce any given service, the study concludes.

Published in the June edition of the peer-reviewed journal Health Affairs, the paper by Glied and NYU Wagner junior research scientist Stephanie Ma and Stanford University student Ivanna Pearlstein examines the question of whether wages paid to health-sector employees are excessive compared to the salaries of workers with similar education and experience in other sectors.

About half of the more-than $2 trillion of spending in U.S. healthcare services is composed of compensation to employees.

The study found that healthcare workers are paid only slightly more overall. Professional health-sector workers -- doctors and nurses -- do earn 50 percent and 40 percent more on average than workers with similar education and experience levels in other sectors. But hospital and nursing home workers and other nonprofessional healthcare employees command the same or less pay than their counterparts in other sectors, it also found.

Therefore, Glied and her research collaborators write that future efforts to reduce the rate of growth of prices paid by consumers of healthcare services "cannot be accommodated primarily through reductions in the pay of health-sector employees." Instead, "such efforts will likely require providers to improve their productivity..." -- a more-complicated policy choice and prescription. "It will require using fewer or less skilled employees to produce a given service," they write.


Story Source:

Materials provided by New York University. Note: Content may be edited for style and length.


Journal Reference:

  1. S. A. Glied, S. Ma, I. Pearlstein. Understanding Pay Differentials Among Health Professionals, Nonprofessionals, And Their Counterparts In Other Sectors. Health Affairs, 2015; 34 (6): 929 DOI: 10.1377/hlthaff.2014.1367

Cite This Page:

New York University. "Restraining health care prices requires workforce productivity gains, not wage cuts alone." ScienceDaily. ScienceDaily, 8 June 2015. <www.sciencedaily.com/releases/2015/06/150608212920.htm>.
New York University. (2015, June 8). Restraining health care prices requires workforce productivity gains, not wage cuts alone. ScienceDaily. Retrieved May 23, 2017 from www.sciencedaily.com/releases/2015/06/150608212920.htm
New York University. "Restraining health care prices requires workforce productivity gains, not wage cuts alone." ScienceDaily. www.sciencedaily.com/releases/2015/06/150608212920.htm (accessed May 23, 2017).

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