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Cleveland's healthcare jobs power shifting from hospitals to research labs
CLEVELAND, Ohio--As it nears the end of a growth era, Cleveland's health care industry may be planting the seeds of tomorrow's jobs.
The $14 billion industry is expected to plateau soon, at about 183,000 jobs in hospitals, doctors' offices and outpatient centers, according to a new report. But economic development specialists are more intrigued by what's happening in research labs.
Investment in medical research and innovations has nearly doubled in the Cleveland-Akron region since 2000, to reach $660 million a year, according to an analysis by Team Northeast Ohio.
That investment coincides with higher rates of patenting, licensing, startup launches and other harbingers of economic expansion.
There is no guarantee that local medical innovations will result in local jobs, Team NEO officials say. But the likelihood becomes higher with each new drug, procedure or medical device introduced.
"Economic development is all about the creation of new goods and services. That's how economies grow," said Tom Waltermire, the chief executive of Team NEO, which is charged with fostering job growth in an 18-county region.
He sees a healthcare industry maturing into a national trendsetter and innovator--and just in time.
Team NEO's quarterly economic report portrays a $197 billion regional economy still struggling to recover from the Great Recession and the immensity of jobs and wealth lost.
The number of people employed in the region rose slightly in the last quarter of 2013, to 1,900,962 workers. It was the 14th straight quarter of economic growth.
But the region remains about 100,000 positions shy of replacing all of the jobs lost in the recession, and Waltermire suspects most of those jobs are gone for good. Manufacturing, the region's largest and most lucrative industry, showed no job gains at all.
New jobs will come from new businesses and innovations, Waltermire said, and the data indicates those are most likely to emerge from the healthcare field.
With this quarterly report, Team NEO took a focused look at the region's healthcare industry, which accounts for 7 percent of the value of the economy and 9 percent of the region's jobs. (Manufacturing, in contrast, accounts for 19 percent of the value of the economy and 13 percent of jobs).
The study found that the medical sector has grown by 20 percent since the turn of the century, adding 177,000 jobs and offsetting losses in other industries. Momentum stalled during the recession but Moody's Economy.com projects the industry will add another 6,000 to 8,000 jobs over the next few years, Team NEO reports.
After that, cost containment pressures are expected to cool the sector and limit its power to directly create jobs. Already, area hospital systems, including the Cleveland Clinic, are trimming budgets and offering early retirement packages.
That puts heightened importance on medical innovations, which can create jobs in many industries, Waltermire said.
Research spending by the region's medical institutions and universities grew from $370 million in 2000 to $660 million in 2012, Team NEO found. Meanwhile, the number of invention disclosures, a precursor to patents, filed by those institutions increased from 179 in 2000 to 530 in 2012, according to the report.
Medical research is largely fueled by federal grants, which are competitive and which reward expertise, said Jacob Duritsky, the director of research at Team NEO.
He said the research efforts in Cleveland are being led by Case Western Reserve University and the Cleveland Clinic, the region's largest employer.
The Clinic's commercialization arm, Cleveland Clinic Innovations, has spun off such job-producing companies as Explorys and Cleveland HeartLab.
The medical imaging innovator QED, meanwhile, came out of a physics lab at CWRU.
University Hospitals and the University of Akron have also deepened their medical research capacity, Duritsky said, as have innovation hubs like the Austen BioInnovation Institute in Akron.
The founding partners of the institute filed a combined 358 invention disclosures in the last three years, compared to 11 from 2001 to 2009, according to an analysis by the Akron Beacon Journal.
"These little companies take a long time to turn into big companies," Waltermire said. "But the more research that's going on, the better your chances of success."