The Future of Healthcare in Louisville

One of our core principles at Baird is a commitment to community development and betterment. Our firm has a long tradition of investing in the areas where our associates live and work, from the over $5 million in nonprofit contributions in 2021 to the many partnerships with local organizations across the country. Quite simply, we believe that we cannot thrive without the communities we serve thriving, as well.

Throughout the entirety of the COVID-19 pandemic, the healthcare industry has been front and center. The last few years have shone a light on the critical importance of a growing, innovative, and well-funded healthcare infrastructure, and with one of the world’s largest clusters of health and aging innovation companies, Louisville has had a front row seat. Today, healthcare finds itself in a state of precipitous growth and rapid change. To talk through the industry and its importance to the region, we sat down with Tammy York Day, Chief Executive Officer of the Louisville Healthcare CEO Council (LHCC), an organization of local healthcare firms representing over $125 billion in annual revenue and 450,000 employees nationwide.

It's been an interesting few years for healthcare businesses. How should we be thinking about the sector as we move forward past the pandemic?

The pandemic exposed a lot of vulnerabilities in our system that I think we will be much more mindful of going forward. As an example, making sure that we have control of the supply chain for necessary healthcare supplies. On the flip side, I think a silver lining of the pandemic is that it ushered in innovation that may have taken another decade to come about organically (e.g., telehealth). As they say, necessity is the mother of all invention. Going forward, it will be interesting to see what sticks because technology in and of itself is not going to solve the problems of the future. It needs to be the human element applying technology in very different ways across the sector to better answer the call of a rapidly aging nation.

And we are aging. Healthcare is a growth industry simply because of the demographic profile of our country. Twenty years ago, there were 12.1 caregivers per individual that needed care. Now, we've edged forward to 7.2, and by the time we hit 2050, it'll almost 1-to-1 (note: The 65-and-older population grew by over a third, ~14 million, during the past decade). Those are daunting statistics. And through the pandemic, we've seen what the future looks like if we don't have the infrastructure to be able to care for a rapidly aging population. Healthcare consumption is a huge piece of GDP in Kentucky, and that will only become more and more the case.

One of the results of the pandemic has been a rapidly changing and historically tight job market. What does the labor market for healthcare look like?

I'm going use the term “crisis.” (note: the shortage of nurses in Kentucky prompted Governor Andy Beshear to issue a state of emergency last year; per the filing, Kentucky needs 12% to 20% more nursing staff to operate at full capacity.) I think people really don't understand how vulnerable we are, and while we've seen labor issues in all industries, it's an even bigger challenge in healthcare because of how regulated the industry is. For instance, if labor expenses are rising in the food industry, then the cost of your Big Mac goes up. But that’s not a reality in healthcare because your income is so closely tied to reimbursements from Medicare and Medicaid. It makes it really challenging to compete for workers, especially at the entry level, when most other service industries may be able to pay substantially more.

So, we have to ask: What is the scope of the problem? Where are the biggest needs in terms of open positions (note: the July 2022 Jobs and Labor Turnover Survey showed over 11 million job openings in the United States, with roughly 2 million in the healthcare sector alone)? How do we knock down barriers to allow people to get the training needed to enter into a position, even at an entry level, and then ensure proper cultural guidance to keep them in the industry and help them thrive? How does technological innovation help with this? There is such an opportunity for growth in healthcare, but we have to both communicate that and make it accessible.

Zooming in on our region, what makes the Louisville region such a healthcare hub, and can our strength in that industry continue?

Well first, there's kind of an organic history of why we have such a strength in healthcare that goes back to water ports and the routes where people stopped and needed healthcare. Between that and the impact of spinouts from key firms like Humana and Kindred, we’ve ended up with one of the denser clusters of healthcare and aging innovation companies in the country.

Louisville, you know, it's not a tier-one city, and we hear all the different terms – flyover country, etc. – but to us, our innovation and leadership are not a surprise. We have such a concentration of healthcare leaders and if you look at a health journey from the time somebody enters the system, we have something for every step of that path: hospitals and pharmaceuticals, insurance payers, home care, acute care, independent living, nursing homes, and, ultimately, end-of-life hospice care.

Then our CEO council adds a very unique dynamic. There's no other place in the nation that has a healthcare CEO council like ours where competitors are in the same room asking, “How do we change what the future of healthcare looks like?” Combine that with the willingness to share data – which is usually state-owned and deeply protected – and it adds a huge amount of value in deciding where to invest. We're in a distinctive position to lay down data-driven evidence for investment in interventions that can change the face of healthcare and ensure that better outcomes for patients are actually aligned with business outperformance. It’s a really unique strength of our region, and one that will continue to have an impact for years to come.

How do you summarize what the industry means to our city and region’s economic culture?

It’s my personal belief that the economic vibrancy of our city and region is directly tied to the healthcare sector. We have other industries – advanced manufacturing, services, etc. – but if you look at the entire scope of all of those industries together, they don't equal what the healthcare sector means to us from a labor perspective and from a consumption perspective. So, I think understanding that and then getting the legislative and policy support is critically important.

And back to labor, what’s interesting is that there’s a perceived difficulty in recruiting talent to Louisville because we've not communicated fully this whole ecosystem. So, when people are choosing where to work and go to school, they fear that if they come here and if it doesn't work out, then they will have to uproot and move again. And that's not the case. On the flip side, once talent gets here, we keep them. There's a very high retention rate because Louisville is a great place to live, and we have the data to back that up.

Ultimately, no city has a stronger mix of data, research capabilities, or access to the wealth of information about the aging demographic than Louisville. And so, it is my belief that healthcare (and what the healthcare sector means to our region) will determine it whether we slide back or edge forward and become a tier-one city in the future. It’s that important.