PwC: Health costs to likely go up 6.5% in 2022 as systems invest in supply chain, digital health

Healthcare costs are likely to go up by 6.5% next year as the COVID-19 pandemic is likely to continue to impact spending into 2022, a new report finds.

The report released Wednesday from the PwC Health Research Institute found costs will also rise as health systems are going to make investments in preparedness and virtual care.

“The pandemic’s long tail may increase utilization and healthcare spending in 2022 thanks to the return of some care deferred during the pandemic, the ongoing costs of COVID-19, increased mental health and substance use issues and worsening population health,” the report said.

The institute surveyed consumers in September 2020 and found 15% deferred some care between March and September.

“Consumers were most likely to delay annual preventive visits,” PwC said. “They also were likely to report delaying routine visits for chronic illnesses, laboratory tests, and screenings.”

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Costs for testing, treating patients for COVID-19 and administering vaccinations is also likely to continue into next year.

“Pandemic-related diagnostic testing may be knitted into return-to-work strategies for employers,” PwC said.

At the same time, demand and costs for mental health services have increased because of the pandemic, which will likely also increase spending, the report added.

However, the increase in utilization will not be the only driver of medical costs, which is slightly below the 7% projected trend for 2021.

Health systems are investing in their supply chains to avoid disruptions that emerged due to COVID-19.

The onset of the pandemic forced systems to scramble to get personal protective equipment as the pandemic disrupted manufacturing overseas.

A majority of provider executives surveyed by the institute (81%) said they expected to spend money on predictive modeling in 2021 to anticipate future surges of COVID-19.

But health systems are not just preparing for the next pandemic.

COVID-19 also caused a massive surge in demand for telehealth and virtual care as the federal government loosened restrictions on telehealth reimbursement in Medicare.

Providers are now faced with how to enhance the digital experiences of patients.

“Providers are fine-tuning ‘digital front door’ mobile apps that connect them to their patients, beefing up portals and intensifying use of customer relationship management tools,” the report said. “HRI expects these digital investments in the patient relationship to expand consumer access to care, increasing utilization and medical cost trend in 2022.”

But there are some trends that will likely lead to lower costs, chief among them people going to different sites of care and avoiding the emergency department.

“The share of Americans using health settings outside of the traditional doctor’s office or hospital soared during the pandemic,” the report said. “Some [emergency department visits—especially lower-acuity ones—may never return to pre-pandemic levels.”