President Trump's executive order this week aiming to limit the number of foreign workers in U.S. jobs could deal a significant blow to both payers and providers that use overseas workers to fill a growing health IT workforce—and further impede efforts to lower healthcare costs.
The executive order, signed on Tuesday, calls for the Secretary of State, the Attorney General, the Secretary of Labor and the Secretary of Homeland Security to suggest reforms to the H-1B visa program to “help ensure that H-1B visas are awarded to the most-skilled or highest-paid petition beneficiaries.”
Reforming the visa program could have a substantial impact on the provider community that used the program to fill roughly 10,500 physician positions last year. Numbers for the health IT industry are much harder to come by, but the H-1B program is overwhelmingly dominated by IT outsourcing companies. Removing that resource could limit supply, add additional tension to an already strained job market and ultimately raise healthcare costs.
According to statistics compiled by the New York Times, IT outsourcing companies made up the top five H-1B visa users in 2014, and received more than 20,000 H-1B visa approvals. A report (PDF) from the Department of Homeland Security indicated that 65% of approved H-1B visas in 2014 and 2015 were for “computer-related occupations.”
“We’re uncertain of the number IT workers that are employed through H-1B program with payers and providers, but it’s a significant number,” Sven Lohse, a research manager for healthcare IT services strategies for IDC Health Insights told FierceHealthcare.
Last month, Lohse and his colleague Xiao-Fei Zhang, researcher director for IDC Global Services Markets and Trends, authored a report outlining several possible changes to the H-1B visa program based on Trump’s campaign promise to bring more jobs back to American workers. They argued that modifications will mostly likely come in the form of a reduction in the overall number of H-1B visas and restricting the number of low-level foreign workers in favor of highly specialized employees.
Days after Trump’s executive order, both Lohse and Zhang stood by their earlier prediction.
“Lost tax revenue or disruption to the industry, or multiple industries, I don’t think is going to weigh the balance against the publicity opportunity in the short term,” Lohse said.
The healthcare industry braced for similar challenges in January after Trump temporarily banned travel from seven countries, an executive order that was ultimately overturned by the courts.
At a broader level, changes to the visa program will ultimately butt heads with the desire to drive down healthcare costs. The IDC report noted that “obtaining foreign specialist labor directly through the H-1B visa program is widespread” among healthcare organizations and health payers.
Federal data show that in nearly 1,500 H-1B visa holders were approved in 2016 for work in health insurance companies. Humana successfully petitioned more than 300 individuals and likely employed more through any number of outsourcing companies.
Removing the option for healthcare providers and insurers to access low-cost IT employees will lead to higher operating costs and economic tension within the industry.
“This is where the economic reality of affordable healthcare runs headlong into the economic reality of the stability of jobs in the American workforce,” Lohse said. “And what's going to happen is they’re going to have to establish and new balance between those competing forces.”
Adding to workforce concerns
Limiting the number of foreign workers available to the healthcare industry could exacerbate health IT’s mounting workforce shortage. According to a HIMSS survey released in February, 30% of providers and an equal percentage of vendors said difficulty recruiting and retaining qualified IT staff led them to scale back on an IT project over the last year, and a lack of homegrown IT talent had forced them to outsource positions. Nearly half of hospitals said workforce challenges negatively impacted an IT project.
During a background briefing on Tuesday, a senior administration official said there are “tens of thousands of tech layoffs” each year, adding that companies should “not use immigration policy as a substitute for training and employing our own workers.”
Niam Yaraghi, a fellow at the Center for Technology Innovation at the Brookings Institution who studies the economics of health information technologies, argued that foreign IT workers on H-1B visas are filling a gap, and usually at a lower cost than what a company would pay an American worker. But, he added, most H-1B visa workers are filling middle-to-upper income jobs, even if it’s at a discounted rate compared to their American counterparts. For example, a foreign worker might take $60,000 for a job where a U.S. citizen demands $100,000.
“That’s the brutal and sad but true reality of capitalism,” he told FierceHealthcare.
Closing off that resource boils down to the simple economics of supply and demand: Cutting back the supply of IT workers will drive up the demand, raising salaries and ultimately driving up healthcare costs.
“You shouldn’t be a Democrat to realize this doesn’t make economic sense,” he told FierceHealthcare. “Any Republican economist would agree—there is no reasonable justification for what they are doing. I think it’s more of a response to what their emotional base is demanding.”
Healthcare organizations may turn to several different solutions to fill those gaps, including automation or artificial intelligence to replace lower-skilled IT positions, some of which may have been headed to automation anyway. But high-skilled workers could leave a significant dent amid growing demands and a thinning talent pool.
“With higher-skilled workers, there could be a potential long-term damage to U.S. IT,” Zhang said.