Altarum Health Sector Trend Report

By July 6, 2017Commentary

Seems like a good time to take a look at the Altarum Institute Center for Sustainable Health Spending’s latest Health Sector Trend Report, which takes a look at health spending, utilization, prices and employment.   (Altarum Report)    Looking at overall health spending by quarter since 2006, before the recession, we see that through the first half of 2008 spending growth hovered around 6%.  In the recession’s wake, spending growth generally dropped, in some quarters to below 3%, but since the second half of 2014, the rate of increase has returned to the 5% to 6% range.  For all of 2016, Altarum’s latest estimate is 5.2% growth, followed by a 5.1% increase in the first quarter of 2017.  The health price component of changes in health spending rose 1.7% in 2016, 2.0% in the first quarter of 2017 and 1.6% in April/May.  But within this prescription drug prices are rising at a much higher rate and physician prices are rising very slowly.  Utilization had climbed significantly in 2014 and 2015, but appears to be slowing as we go through 2017.  Utilization growth, however, has consistently been a larger factor in spending rises than have price increases for the last few years.  The two biggest components of health spending, hospitals and physicians, have shown relatively similar growth rates over the last three years.  The contribution of prices, however, really should be looked at by payer.  Medicare and Medicaid set prices by regulation and consistently have very low rises.  In the commercial sector, provider bargaining leverage results in much higher price increases.  Finally, the health care sector continues to contribute to employment increase, accounting for over 15 million jobs, or around 11% of the total.  And encouragingly, since 2014, productivity appears to be growing in the health sector, after many years of being flat.  This productivity rise is important as it indicates we are perhaps getting some greater efficiency and cost control among providers.

Kevin Roche

Author Kevin Roche

The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry through Roche Consulting, LLC. Mr. Roche is available to assist health care companies through consulting arrangements and may be reached at khroche@healthy-skeptic.com.

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