The Highs and Lows in Healthcare Spending

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The Highs and Lows in Healthcare Spending

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By Marcia Faller, PhD, RN, chief clinical officer and senior vice president, AMN Healthcare

 January 13, 2014 - Recent findings from the Centers for Medicare & Medicaid Services (CMS) show that healthcare spending is growing at a historically low rate. But among the statistics, we see that some areas are growing faster than others, including expenditures on hospitals and physician services. Could that mean that demand for these services is growing?

Health spending grew 3.7 percent to reach $2.8 trillion in 2012 (or approximately $8,915 per person), according to data just released by the CMS Office of the Actuary. This growth rate lagged behind the overall economy, which grew 4.6 percent during the year.

In fact, healthcare spending has now logged four consecutive years of low growth, the Office of the Actuary reported. Many see that as good news, although the efforts to cut healthcare costs are expected to continue. The growth rate in healthcare spending is still higher than the 40-year average for federal spending on healthcare programs of 2.7 percent. And despite today’s “Do more with less” mantra heard across healthcare settings, costs are almost certain to continue rising.

As a September 2013 report from the Congressional Budget Office put it, “Although spending for health care in the United States has grown more slowly in recent years than it had previously, high and rising levels of such spending continue to pose a challenge not only for the federal government’s two major health insurance programs, Medicare and Medicaid, but also for state and local governments, businesses, and households.”

Many expect that health spending will rebound to higher levels when the economy completely rebounds, too. In the meantime, there are signs of increased spending on doctors and hospitals in the 2012 data.

Spending on physician and clinical services increased 4.6 percent to $565 billion in 2012, up from 4.1 percent growth the year before. The CMS data showed that physician services specifically grew by 4 percent in 2012, up from 3.5 percent in 2011. What’s behind the increase? Use and intensity of services increased more quickly in 2012, even though growth in prices slowed slightly.

The country’s spending on clinical services grew by 7.1 percent in 2012, while hospital spending grew by 4.9 percent, pushed by both increased demand and rising prices.

University of South Carolina economist Dana Goldman said in a recent Modern Healthcare article that “The somewhat higher growth in hospital and physician spending could signal an overall healthcare spending rebound after recent efforts to slow those costs.”

As the provisions of the Affordable Care Act continue to be implemented--offering more insurance to more people, while pushing for greater efficiency in spending--it will be interesting to see the actual effects on annualized spending. There are certainly more highs and lows to come.



© 2014. AMN Healthcare, Inc. All Rights Reserved.


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