In a region with a 10.1% unemployment rate, San Diego's health care sector is holding its own. Hospitals have seen a decline in revenue, but employment has mostly held steady, experts say. San Diego's biomedical industry stands out as a leader, continuing to thrive and gain jobs even as the rest of the state experiences losses.
In 2009, California's biomedical industry lost 6,000 jobs, most heavily in Los Angeles and Orange Counties. San Diego, which is home to more than 400 biotechnology companies, gained 678 positions during the same period. That was the finding of a recent report by the California Healthcare Institute, a La Jolla-based not-for-profit public policy research organization for California's biomedical research and development industry. Of the 200 CEOs surveyed for the study, 68% said they planned to expand their California-based work forces during the next two years. The survey was conducted along with PricewaterhouseCoopers and BayBio, a trade group based in San Francisco.
"The data show that the biomedical research and development part of the economy has weathered the storm well and has been resilient and able to hold its own," said David Gollaher, president and CEO of the California Health Institute.
A number of factors contribute to the thriving San Diego biomedical market. It starts with world-class institutions such as UC-San Diego, Scripps Research Institute and Salk Institute, all of which have produced a tremendous amount of intellectual capital, Gollaher says. In addition, San Diego has a sophisticated network of venture capital, as well as a large number of entrepreneurs in the area experienced in creating research and development companies.
NIH grants also have continued to flow into California more than any other state in the country. In 2009, California-based biomedical firms garnered more than $3.2 billion in such grants, representing more than 15% of all grants made throughout the country.
Private investment also has remained active, although the recession has certainly taken its toll, Gollaher says. An impressive $8.9 billion was invested in California-based companies during 2009, but that's a drop from one year before. Throughout the U.S., venture capital investments in biomedical companies were approximately 37% lower in 2009 than in 2008.
"Many firms had a hard time raising their next round of funds because the funds they rely on lost one-third of their portfolios during the crash. And, many university endowments became more conservative," Gollaher said. That trend is likely to turn around if the stock market continues its comeback.
Venture capital activity through the first three quarters of 2010 was stable compared with 2009 -- a cause for optimism. Still, having fared well during the toughest of economic times doesn't mean the industry is out of the woods.
According to Gollaher, most of his organization's member companies say the greatest limiting factor to the industry is FDA, which has become considerably more cautious in approving new drugs and medical devices in reaction to high-profile recalls in the U.S. The net effect is that many products are being launched in Europe rather than in the U.S.
"We're exporting a lot of technology and jobs," Gollaher said.
The institute's report cites poor math and science skills among high school and college graduates as another factor threatening the state's dominance in the field of life sciences. "At the basic education level, there remains the need to interest California's youth in math and science at earlier ages," the report said. New graduates aren't quite up to snuff on reading and writing, either.
Hospitals, Nursing and Allied Professionals
The lack of skills and education is a concern echoed in San Diego's hospital job market. A new report by the California Hospital Association predicts a shortage of allied health care workers that threatens to negatively affect hospital efficiencies and access to care. The report also predicts a growing pool of unskilled applicants.
"Many candidates trying to fill positions don't have good math and science skills," said Steven Escoboza, president and CEO of the Hospital Association of San Diego and Imperial Counties. That's making it difficult to fill important positions in greatest demand, Escoboza said.
In 2007, the state association created a health care work force coalition to tackle the education shortfalls by encouraging health science curricula at University of California campuses, California State Universities and community colleges that align more closely with the needs of employers. The coalition also called for increased funding for health sciences education, standardized courses across institutions of higher learning and innovative approaches to health sciences education.
"The allied work force -- clinical lab scientists, medical lab technicians, cardiovascular technologists and pharmacists -- those are the positions that hospitals feel the need to fill," Escoboza said.
A shortfall could occur during the next five years, and by 2030, the report finds that the hospital work force in California could require as many as one million new allied health workers, making the allied work force the fastest-growing area of health care employment. The combination of health reform and an aging work force are two main causes cited for the predicted shortfall.
Nurses Get Mixed Messages
Similar troubles can be found in the nursing profession, which is also expecting a major long-term shortage as nurses retire, the population ages and health reform extends insurance to an additional 32 million people nationally. Shortages are currently being masked throughout the state, however, because of the poor economic climate, according to Deloras Jones, executive director of the California Institute for Nursing and Health Care.
Nurses who might have otherwise retired are working longer because of the poor economy, Jones said, and experienced nurses are taking jobs that would have traditionally gone to new graduates.
San Diego and Imperial County are home to 13 schools of nursing that graduated 1,062 nurses in 2009. Currently, fewer than 2% of hospital nursing positions remain unfilled in San Diego.
"What that means is that there are a lot of new grads being educated in the San Diego region not able to find jobs in hospitals," said Jones. According to a recent study conducted by the institute, 43% of newly licensed nurses had not found work in California.
As nurses begin to retire in the coming years, the expectation is that hospitals will be left with a slew of positions to fill. Perhaps as an indication of things to come, San Diego hospitals were facing 1,000 nursing vacancies per day before the recession, Escoboza said.
The challenge now, Jones said, is to keep nurses who attended school in San Diego in the area until the hospital job market opens up. Although there are currently positions available in home health, long-term care, mental health and corrections facilities, these sites don't provide the same training opportunities as hospitals.
"With new grads there has to be an investment in a training program to help them make the transition from school to a work environment. We're working on transition-to-work programs that are like residencies to make [graduates] more employable," Jones said. The hope is also that training programs will keep nurses in the area until jobs open up.
Health Reform's Impact on San Diego's Job Market
Health care reform will play a major role in health care job markets around the country, San Diego's included.
Dylan Roby, assistant professor at UCLA's Department of Health Services, said San Diego is likely to fare better than many parts of the state thanks to the appeal of the region.
"It's tough to recruit physicians, especially in specialties, to smaller rural or impoverished areas where there is not a specialty clinic or hospital," he said. "We don't have rural universities in California that are training physicians. So I think you end up with a mismatch in that people are trained in a certain environment and they aren't going to leave it to take a job in a rural area where they're not used to practicing."
The Affordable Care Act provides grants for community health care training programs that will help to build capacity, particularly in primary care.
When it comes to hiring, San Diego hospitals are waiting to see whether the Supreme Court takes up the issue of the reform law's constitutionality, Escoboza said. Many facilities have been holding staffing levels steady during the economic downturn, consolidating jobs in some cases, and sitting on open positions that will be filled once the economy improves and questions surrounding health reform's implementation are answered.
"Working with the colleges and universities is a good place to be right now to plan and develop the curricula. You don't want to be behind the eight ball when demand grows," Escoboza says.
That sentiment is shared by the life sciences industry; like nurses and hospitals, biomedical employers have made a concerted effort to work with California's learning institutions to prepare the work force for the future.