Hospital prices remain flat, but spending perks up

Hospital prices have remained flat for the past year, with no signs of perking up in the immediate future, although overall spending continues to rise briskly.

The latest price data from the Altarum Institute indicate hospital prices rose 0.4 percent in March compared to March 2014, an increase Altarum referred to as "scant." For the entire healthcare sector, prices rose 1.3 percent year-over-year.

Hospital pricing has crept up only slowly in recent months--between December 2013 and 2014, it rose at its slowest rate in 16 years.

There was little--or even negative--price growth in other facets of healthcare. Physician and related clinical services dropped 0.6 percent. Home healthcare prices were up 1.2 percent.

Pharmaceutical prices appear to have driven much of the sector's overall increase, rising 5.7 percent--the biggest spike in 13 years, according to the report. Pharmaceutical pricing has been on a separate track from other healthcare services for a significant period of time.

The overall medical Consumer Price Index was pegged at a 2.5 percent annual growth rate in March.

Although some healthcare economists believe the era of low healthcare price increases is here to stay, spending trends tell a different story. The company's spending report was up 6.8 percent in March compared to a year ago, according to Altarum. That compares the the 6.6 percent annual increase between February 2014 and 2015.

Hospital spending rose 9.8 percent, and now represents more than $1 trillion of the total annual adjusted spending rate of $3.2 trillion. However, pharmaceutical spending managed to outstrip hospitals, rising 10.7 percent. By comparison, spending on physician and clinical services were up 3.1 percent.

"Though preliminary, these results suggest an end to record-low growth rates in health spending that began in 2009 (3.8%) and continued through 2013," Altarum wrote.

To learn more:
- read the Altarum price report (.pdf)
- check out the Altarum spending report (.pdf)