A tale of two health networks: How health care became the biggest employer in the Lehigh Valley

Lehigh Valley Health Network and St. Luke’s University Health Network are the two biggest employers in the Lehigh Valley. Chances are, if you live in the area, someone you know works for one of these health care giants.

Lehigh Valley Health Network, or LVHN, boasts eight hospital campuses in the Lehigh Valley area and close to 18,000 employees, making it the Valley’s largest employer. St. Luke’s or SLUHN, meanwhile, operates 10 hospitals with 15,000 employees, coming in at a close second.

Put together, the number of employees at both health networks outnumbers the population of the city of Easton, where roughly 27,100 people now live.

And health care isn’t just the biggest employer in the Lehigh Valley, it is one of the biggest sources of jobs in the United States.

Health care dominates employment in 14 states, including Pennsylvania, according to a 2018 Wall Street Journal study, moving past manufacturing and retail, the biggest job engines of the 20th century.

In a phrase especially relevant to the Lehigh Valley, some economists are referring to health care as “the new steel,” a nod to the steel industry’s dominance in the last century.

It only takes one glance at the rusty blast furnaces still towering over South Bethlehem to recognize how important steel once was to the area.

Bethlehem Steel, the company once headquartered in Bethlehem, employed a little over 31,500 people at its Bethlehem plant, and 283,760 nationwide.

Today, the “new steel” of health care, has risen to the top of the Valley’s and the nation’s employment landscape for one big reason: The aging of the population.

“Twenty percent of the U.S. works in health care,” said Robert McDonald, a national health care expert and professor of health care systems engineering at Lehigh University. “That is due to the massive numbers of baby boomers who are reaching retirement age and who need more care. 10,000 people a day are enrolling in Medicare.”

In fact, by 2030, according to the U.S. Census Bureau, all baby boomers will be older than 65, with one in every five U.S. residents being of retirement age.

“Demand for health care is growing locally and nationwide,” said Joel Fagerstrom, executive vice president and COO for St. Luke’s University Health Network, who also credits the aging population with the rising demand. “I have worked in a number of places throughout the country, and in each region the health care sector has been among the largest employers.”

Efforts to reach LVHN for comment were unsuccessful.

The aging population, however, isn’t the only reason for health care’s rise. Manufacturing and retail have taken hits in recent years, leaving health care open to take their place at the top.

About 7.5 million manufacturing jobs have been lost in the United States since 1980, while the retail industry has lost more than 140,000 jobs just since 2017, according to the Bureau of Labor and Statistics, a fact-finding agency for the U.S. Department of Labor.

“Manufacturing went offshore where labor was cheaper,” said health care expert McDonald, “and the big-box stores killed off the mom-and-pop businesses, and then Amazon killed off the big boxes.”

With the decline in manufacturing and retail, and the baby boomers growing older, it doesn’t look like health care will be unseated as top employer anytime soon.

Also according to the Bureau of Labor and Statistics, the entire health care sector is projected to account for a third of all new employment in the next 10 years.

“It’s not ever going to go away,” said Marge Angello, market president with AmeriHealth Caritas Pennsylvania, a Medicaid managed care company headquartered in Harrisburg that serves the Lehigh Valley and works with both LVHN and SLUHN.

“There will always be a need for physicians and nurses and the industry that supports them,” she said.

Both Angello and McDonald also noted health care doesn’t just create a lot of jobs, it creates good ones. The median annual wage for health care workers, for example, is about $65,000, per data from the Bureau of Labor and Statistics. Comparatively, the median annual wage for all occupations in the U.S is roughly $38,000.

 “For the most part, people go into health care because they like taking care of people and it is reasonably well compensated,” said McDonald.  “It is a place where you can often make a good middle-income salary.”

Angello adds that health care is one of the top employers of women, and offers opportunities for growth and advancement.

Indeed, nearly 80 percent of workers in the health care field and 90 percent of registered nurses are women, according to data from the Bureau of Labor and Statistics. In all other industries as a whole, women make up 47 percent of the workforce.

“Everyone is out there trying to find good jobs,” she said, “and health care is one place where you can find them.”

How did two the Valley’s two health systems grow so big?

“Two networks formed because of more and more mergers,” said Angello. “LVHN and SLUHN just kept acquiring more of the smaller private practices and getting larger and larger.”

For McDonald, the answer also lies in the larger health care networks wanting more negotiating power with health insurers. The bigger the health network, the harder the bargain it can drive.

“Health networks needed more reach and more leverage with insurance companies,” he said, “and by acquiring more private practices, and growing their hospitals, they did just that.”

 That reach does not seem to be a problem for health care consumers, according to Angello.

“The patients I talk with are satisfied with the growth of the networks,” she said. “With so much expansion, they don’t have to travel as far to find health care. In my experience, people don’t want to cross that bridge from Bethlehem to Allentown. They appreciate staying right in their own neighborhood.”

But what about employees? Are they dissatisfied with fewer options for employment, now that LVHN and SLUHN represent such a big chunk of the medical industry in the area?

Not according to Angello. “I haven’t seen people leave jobs because they are dissatisfied, but because they want to advance or relocate. And the heath networks are always creating new jobs as people retire or move away.”

When it comes to recruiting, due to the sheer numbers of experienced employees at both health care networks, there are times when St. Luke’s will look to recruit employees who are working for LVHN and vice versa.

“It is probably a good thing that there are two of relatively equal size,” added Lehigh’s McDonald. “They compete with each other and balance each other out. It would be worrisome if there were just one.”

But what about the smaller Lehigh Valley health systems? Is there room for others to succeed and attract good employees in an environment dominated by two giants?

Coordinated Health, a for-profit health system based in South Whitehall, thinks so.

The network’s smaller size, roughly 1,300 employees, and its specialized services in orthopedics are attractive to both consumers and employees, said Grant Hoffman, senior vice president of human resources for Coordinated Health.

“Employees are often attracted to smaller networks like ours where they have the ability to provide input and feedback in a very direct manner,” he said.  “We are small enough that management can meet with all employees … Our culture is such that they feel they have a stake in the future of our organization.”

Whether a smaller network like Coordinated, or a large health system with a small city’s worth of employees, the health care industry looms large in the Lehigh Valley.

Smoke no longer bellows from Bethlehem Steel’s blast furnace. Men in hard hats no longer march with lunch pails into the once busy factory.

Instead, the din of jack hammers and drills announce the construction of another hospital, another outpatient center to dot the Lehigh Valley landscape, where employees in scrubs and suits will soon get to work, caring for the Lehigh Valley.