Mixed data results on direction of healthcare spending

Prior media reports that healthcare spending has resumed a torrid pace after years of moderate growth appear to be premature, Kaiser Health News reported.

Citing data from the U.S. Census Bureau, KHN concluded that healthcare spending continues to be slow. It noted that hospital revenue dropped off during the first quarter of the year compared to the fourth quarter of 2013. It declined to $244.8 billion from $246.6 billion, a decline of about three-quarters of one percent. Revenue at general surgical hospitals fell almost a full percent. The data was not seasonally adjusted.

Altogether, revenue for the healthcare sector climbed 2.9 percent for all of 2013. The numbers were "surprisingly low," Charles Roerhig, director of the Altarum Institute's Center for Sustainable Health Spending, told KHN. Roehrig added that the numbers confirmed his skepticism about previous reports of ramped-up healthcare spending.

Data has been mixed regarding how healthcare spending will trend for the rest of the year. The Bureau of Economic Analysis reported that spending grew at a 5.6 percent annual clip in the fourth quarter of last year. But Roerhig has been more bearish on the probability of a long-term spike in spending.

According to the Altarum Institute's latest data, overall healthcare prices rose 1.6 percent in April 2014 compared to the same time a year ago. Hospital prices were up 2.1 percent, a step up from the 1.3 percent growth rate reported in March 2014.

"Expanded coverage and the economic recovery should be pushing spending up," Roehrig said in a statement issued by the Altarum Institute along with its monthly spending report. "Perhaps these effects will be felt in the second quarter and are evidenced by the current uptick in healthcare prices and employment."

The Census data did not include any figures about prescription drugs, which have been a significant driver of healthcare costs in recent years, according to KHN. Healthcare hiring has been on a recent upswing, according to the article, which indicates that the sector may spend more money in the immediate future. According to the Altarum data, the healthcare sector gained 34,000 jobs in May 2014, more than double the 16,000 monthly job growth seen during the first four months of the year.

To learn more:
- read the Kaiser Health News article
- here's the Altarum Institute price report (.pdf)
- check out the Altarum Institute jobs report (.pdf)
- read the Altarum statement

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