Indiana’s overall health care industry grew by 45% between 1995 and 2018 to reach almost 380,000 paid employees in 2018, according to a new Indiana University report. The nonprofit portion of the overall health care industry grew even more rapidly — up by 62% — accounting for 43% of total employment in the industry in 2018.
Nonprofit payroll grew faster still. It more than doubled (up 133%) in constant dollars to $9.6 billion in 2018, by which time it accounted for almost half of the industry’s total payroll of $20.2 billion.
The report, “Nonprofit Paid Employment in Health Care for Indiana,” uses data from the Quarterly Census of Employment and Wages (QCEW) prepared by the Indiana Business Research Center (IBRC) and analyzed by the Indiana Nonprofits Project.
The health care industry is the second largest employer in Indiana (second only to manufacturing) and provides key health-related services such as hospital care, various ambulatory services, and care in nursing and other residential facilities.
According to the report’s findings, the nonprofit portion of health care employment increased faster than for-profit employment (up 55%), while government paid employment decreased by 27%.
Across subindustries within the health care sector, the share of nonprofit employment has mostly grown or been stable. The majority (70% or more) of general hospitals and residential services are provided by nonprofits, as are close to half of services in specialty hospitals, outpatient care centers and institutional care for developmental disabilities. Less than 20% of low-skilled nursing care is provided by nonprofits.
In two other health care subindustries, nonprofits remained a minority despite increasing their share of employment: psychiatric hospitals and offices of physicians, respectively increasing to 26% and 38% in 2018. By contrast, nonprofits lost ground in home health care services (down from 34% to 14% of total employment) and residential care for the elderly (down from 62% to 30%).
“These developments have occurred against the broader backdrop of expansion in the health care industry and ongoing efforts to control costs,” said Kirsten Grønbjerg, Distinguished Professor of Public Affairs at the O’Neill School and the Efroymson Chair in Philanthropy (2001-2020) at the IU Lilly Family School of Philanthropy at IU Indianapolis. “As the need for health care services has grown, nonprofits appear to have met that demand more so than the for-profit sector, particularly for hospitals, specialized ambulatory services and outpatient care.” The report notes that consolidation of health care systems and decentralization of services to lower-cost outpatient or ambulatory care settings may account at least in part for the relatively rapid growth of outpatient care facilities and home health care services.
The data on which the report is based do not extend beyond 2018, but the report notes that COVID-19 will likely have a profound impact on Indiana’s health care industry. The need for COVID-related health care services has escalated, but so have health care operating costs, while demands for non-essential health care services appear to have declined. “The long-term implications of COVID-19 are uncertain,” notes Grønbjerg. “In prior recessions, including the Great Recession of 2008-09, Indiana’s nonprofit sector continued to grow. It remains to be seen whether that will also be the case for the very different recession caused by COVID-19.”
About the briefing
This briefing is the thirteenth in a series of reports from Indiana Nonprofit Employment, produced by the Indiana Nonprofit Sector: Scope and Community Dimensions project, designed to inform local community leaders and policymakers. The analysis is a joint effort of the O’Neill School of Public and Environmental Affairs, the Lilly Family School of Philanthropy and the Indiana Business Research Center. The briefing's co-authors are the director of the project, Kirsten Grønbjerg, and research assistant and IU undergraduate student Anjali Bhatt.
About the O’Neill School of Public and Environmental Affairs
The O’Neill School is a world leader in public and environmental affairs and is the largest school of public administration and public policy in the United States. In the 2019 "Best Graduate Public Affairs Programs" by U.S. News & World Report, the O'Neill School ranks first in the country. Four of its specialty programs are ranked in the top-five listings, including nonprofit management, ranked first.
About the Lilly Family School of Philanthropy
The Indiana University Lilly Family School of Philanthropy at IU Indianapolis is dedicated to improving philanthropy to improve the world by training and empowering students and professionals to be innovators and leaders who create positive and lasting change. The school offers a comprehensive approach to philanthropy — voluntary action for the public good — through its academic, research and international programs and through The Fund-Raising School, Lake Institute on Faith & Giving, Mays Family Institute on Diverse Philanthropy and the Women's Philanthropy Institute.
About the Indiana Business Research Center
The Indiana Business Research Center is an integral unit in the Kelley School of Business at Indiana University. Established in 1925, the IBRC provides and interprets the economic information needed by the state’s business, government and nonprofit organizations, as well as users of such information throughout the nation. The IBRC powers its research (and others) with its vast databases on numerous topics including income, employment, taxes, and a host of other economic indicators for the nation, the state and local areas. In addition, the Center conducts original research to generate needed information when existing data are not available or sufficient.