Indiana Nonprofit Employment:
Trends in Health Care, 1995-2011
Nonprofit Employment Report #8
September 2013 (Revised February 2014)
Kirsten A. Grønbjerg, Project Director
Kellie L. McGiverin-Bohan, Lauren Dula, Weston Merrick,
Deb Seltzer, Alexandra Toledo, and Katherine Zilvinskis
A Joint Product of the Indiana University Lilly Family School of Philanthropy, the School of Public and Environmental Affairs at Indiana University, the Indiana Business Research Center at Indiana University's Kelley School of Business, and the Johns Hopkins Center for Civil Society Studies
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Nonprofit organizations make significant contributions to the quality of life for the residents of Indiana by offering health care, access to arts and culture, social assistance, education, and opportunities for civic engagement. They are also a major force in the state’s economy and in the economic health of all regions of the state.
This report presents new information on the size, composition, and distribution of paid nonprofit employment in Indiana’s health care industry. The eighth report in a series of statewide employment analyses, it focuses on trends in nonprofit health care employment from 1995 through 2011. Data over this time period give us insights into how recessions and economic growth periods impact private nonprofit employment in this industry.
Our report provides detailed analysis of major changes in nonprofit employment and wages in the health care industry from 1995 through 2011 with comparisons to corresponding trends in for-profit and government health care establishments. Our analysis also includes trends in major health care sub-industries: hospitals; nursing and residential care facilities; and ambulatory health care services.
Overall Health Care Employment
- In Indiana, the health care industry was overwhelmingly the largest employer in the nonprofit sector. On average from 1995-2011, health care employed 54 percent of all nonprofit employees and provided 62 percent of total nonprofit sector payroll. In comparison, the next largest nonprofit industry, education, employed an average of just 13 percent of all Indiana nonprofit workers and accounted for 13 percent of all nonprofit payroll.
- The nonprofit health care industry grew even during recessions. By 2011, nonprofit health care establishments in Indiana employed 36 percent more workers than in 1995, expanding in all but one year. Even during economic recessions, the nonprofit health industry continued to grow, responding to persistent demand for health care in all types of economic situations.
- Health care nonprofits had the highest annual wages on average ($38,600) during the period compared to all other major nonprofit industries in Indiana. Among nonprofits, the ambulatory health care services sub-industry had the top wages, at $43,000 on average. The hospitals sub-industry followed closely behind at $41,700 annually. The lowest-paying sub-industry, nursing and residential care facilities, barely averaged $23,700, perhaps because many employees in this sub-industry work part-time or in low-paying personal care positions.
- Average annual wages of nonprofit health care workers in Indiana grew 21 percent from 1995-2011, more than those of for-profit workers (1 percent), but less than those of government workers (29 percent). In 2011, nonprofit wages surpassed for-profit wages and averaged $42,100, while for-profit wages were $41,200 and government wages were the highest at $44,600.
- Payroll of health care nonprofits grew 65 percent between 1995 and 2011, faster than overall Indiana payroll. This growth was also larger than health care payroll in the government (5 percent growth) or for-profit (46 percent growth) sectors. Nonprofit health care payroll growth was less than only the nonprofit education industry, “other” nonprofits (i.e., utilities, animal shelters, cooperatives), and social assistance.
- Despite having the largest employment of all major nonprofit industries, health care made up only 15 percent of total nonprofit establishments on average. This pattern reflects the presence of large hospitals and residential facilities requiring entire building complexes instead of small offices. The number of nonprofit health care establishments increased by 27 percent over the time period, with nearly consistent positive growth most years—impressive growth for establishments requiring major capital and construction. Growth in number of both education and social assistance establishments outpaced health care, at 99 percent and 28 percent respectively.
- Health care had the largest average establishment size in the nonprofit sector, averaging 133 employees from 1995-2011. By 2011, the average nonprofit health care establishment had about 45 more employees than the average establishment in the nonprofit education industry and roughly 115 employees more than the average nonprofit establishment in arts, entertainment, and recreation. These patterns confirm the staff-intensive nature of health care establishments, which contribute substantially to overall nonprofit employment.
- The hospitals sub-industry represents the largest employment base in terms of both the nonprofit health care sector and the overall health care industry. On average, 65 percent of hospital employment was in the nonprofit sector and 70 percent of all nonprofit employment in the health industry could be found in hospitals, reinforcing their dominance and importance in this field and Indiana’s economy overall.
- Nonprofit employment in hospitals saw a large increase compared to the rest of the health care industry, adding nearly 24,000 employees from 1995 to 2011, a 34 percent increase. Nonprofit hospital employment was less volatile than in the for-profit sector, with positive growth in all but two years.
- While hospitals had the highest number of employees, they had the fewest establishments. More than 45 percent of all hospitals in Indiana were nonprofits. Nonprofits added 14 new establishments over the time period and on average were considerably larger (by a factor of almost 4.5) than for-profit hospitals. This is largely due to differences in the size of general versus specialty hospitals.
- Of the three health care sub-industries, only hospitals had the majority of their payroll come from nonprofits. Hospitals garnered 75 percent of dollars spent on nonprofit payroll within the health care sector. Nonprofit hospital payroll increased 58 percent over the time period, from $2.7 billion to $4.3 billion. Government payroll in hospitals was the second largest, averaging $1.3 billion. While for-profits had the fastest growing payroll of the three sectors at 240 percent, for-profit payroll was on average only one-eighth the size of nonprofit sector payroll at $442 million.
- Nonprofit hospitals paid higher wages than for-profit hospitals. The average wage for nonprofit hospital employees was $41,700. Government and for-profit hospital wages averaged $40,100 and $37,400, respectively.
Nursing and Residential Care Facilities
- In 2011, 30 percent of workers in nursing and residential care facilities were employed by nonprofits. Nonprofits added approximately 5,000 workers between 1995 and 2011. By comparison, for-profits added more than 10,000 employees, while government establishments lost more than 2,700.
- Nonprofits, on average, had only half as many nursing and residential facilities as the for-profit sector. With just fewer than 400 establishments, nonprofits made up 36 percent of total nursing and residential care establishments and their number of establishments grew just 1 percent through 2011. The most nonprofit growth occurred between 1995 and 1999. In contrast, the number of for-profits grew the most from 2004 to 2011, with a major spike in 2011.
- Nursing and residential care had the smallest payroll of all health care sub-industries (averaging $514 million) within the nonprofit sector and the least growth overall. Payroll in this sub-industry was dominated by the for-profit sector with an average of $1.1 billion.
- Nursing and residential care had the lowest average annual wages of all health care sub-industries. Within this sub-industry, nonprofits were the lowest-paying sector. For-profit wages surpassed nonprofit wages in 1997, and government remained the highest-paying sector throughout the time period. Nonprofit wages only grew 4 percent, from $22,300 in 1995 to $23,200 in 2011.
Ambulatory Health Care Services
- Nonprofit employment in ambulatory health care services increased 63 percent between 1995 and 2011—greater than in nonprofit health care overall. In this sub-industry, for-profit employment increased 45 percent over the time period, while government employment grew 47 percent.
- Nonprofits made up approximately 15 percent of ambulatory health care employment, while for-profits employed around 85 percent. Government facilities employed less than one percent of workers. Overall, ambulatory health care services were the second largest health care employers, employing an average of 34 percent of industry employees and adding 39,400 employees over the time period.
- While ambulatory care accounted for 86 percent of the overall number of health care establishments, it was the sub-industry with the smallest nonprofit presence. Nonprofits accounted for only 5 percent of ambulatory care establishments on average. Largely due to its small base, the number of nonprofit establishments in this sub-industry grew faster than in any other sub-industry (59 percent). The relatively large number of establishments in this sub-industry is due to the smaller operating size of clinics and medical offices as compared to large hospital or residential care infrastructure.
- Ambulatory care had the second largest overall annual payroll, $5.1 billion, of any of the health care sub-industries. This payroll represents 42 percent of the average annual total payroll of all Indiana health care establishments during the period. For-profits held the lion’s share of this sub-industry’s average annual payroll, about 87 percent, compared to 12 percent and less than 1 percent for nonprofits and government respectively.
- Nonprofit ambulatory care wages grew steadily during the period and averaged $43,000. From 1995 to 2006, for-profit employees had the highest wages, averaging over $52,000. While government wages surpassed those of the for-profit sector in 2007, government wages averaged only $46,300 over the entire period.
The report draws on data generated by the Indiana Department of Workforce Development through surveys of Indiana workplaces carried out under the national Covered Employment and Wages (CEW) labor market information program administered by the U.S. Bureau of Labor Statistics as part of the unemployment insurance program. These data, compiled from quarterly reports submitted by employers in compliance with U.S. and Indiana law, were prepared for us by the Indiana Business Research Center at Indiana University's Kelley School of Business under a confidentiality agreement with the state.
For information about the methodology used in this report and for additional tables, please see the Appendices at the bottom of this page. Reports on nonprofit employment for other states are available at Center for Civil Society Studies at Johns Hopkins University.
Our report includes several appendices with supplementary information. They include:
- Appendix A: The ES-202 Unemployment Insurance Labor Market Information Program - Sources of data, scope of coverage, and data processing and cleaning.
- Appendix B: Data Tables - Nonprofit employment and wages in health care and health care subindustries.
- Appendix C: Project Publications and Reports
This report was prepared as part of an ongoing project from the Indiana Nonprofits: Scope and Community Dimensions project made possible by the Efroymson Fund at the Indianapolis Foundation (an affiliate of the Central Indiana Community Foundation) through its support for the Efroymson Chair in Philanthropy; the Indiana University Lilly Family School of Philanthropy through its Indiana Research Fund (supported in part by Lilly Endowment Inc.) and its ongoing support for the Efroymson Chair in Philanthropy; and the School of Public and Environmental Affairs at Indiana University through its ongoing support for the Efroymson Chair in Philanthropy.
We are grateful to Carol O. Rogers, Victoria Nelson, and Jerry Conover at the Indiana Business Research Center for making the data on which this report is based available to us and for very helpful comments on the draft. We thank Kerry S. Brock for her help in preparing the basic framework for our analysis, as well as Kristen Dmytryk, Jacob Knight, Rachel L. Miller, Katherine Novakoski, and Virginia Simpson who assisted in arranging the original data. Finally, we thank members of the Advisory Board for the Indiana Nonprofits: Scope and Community Dimensions project for helpful comments and suggestions.