Healthcare price growth in August increased by just 1.2% compared to a year ago, which is the lowest health price growth rate in nearly two years and close to an all-time low, according to Altarum's Center for Sustainable Health Spending’s latest Health Sector Economic Indicators report.
Altarum said the stagnant growth is linked to “health policy uncertainty and structural health sector changes.” The slow growth is “a possible signal of relief for healthcare consumers with substantial out-of-pocket expenditures.”
Health spending grew by 4.3% in August compared to a year ago. Spending on home healthcare was the fastest growing sector at 6.5%, while hospitals had the slowest growth with 2.3%.
Hospital price and spending growth continue to lag behind other healthcare sectors. In addition to having the slowest growth rate, year-over-year hospital price growth fell from 1.5% to 1.3%. Meanwhile, physician and clinical services price growth decreased by one-tenth to 0.5%. Also, the annual drug price growth (2.7%) dropped to its lowest level since December 2015.
Though hospital spending was the slowest growing healthcare sector, hospitals still made up 32% of health spending and remain the biggest spending driver in healthcare. Physician and clinical services were second with 20%.
Meanwhile, healthcare job growth remained on a modest upswing. Altarum said healthcare job growth increased by 22,500 new jobs in September, which was slightly less than the year’s average of 25,000 a month. Altarum linked the slow job growth to the impact of the leveling off of expanded health insurance coverage and less health services utilization, especially in hospitals.
“Slower growth in healthcare utilization is reflected in slower growth in health jobs, particularly in the hospital sector,” said Charles Roehrig, founding director of Altarum’s Center for Sustainable Health Spending. “This relatively good news should be tempered by a serious look at whether even this moderate growth is sustainable in the longer term.”
The August numbers come after Altarum reported last month that 1.3% hospital second-quarter spending growth led to overall national health spending growth decreasing in the second quarter.
Hospitals’ slowed growth shouldn’t come as a surprise. Payer efforts and policies have moved more business away from hospitals to less-expensive outpatient services. Both private payers and CMS are looking at ways to cut hospital costs with policies that move care to more affordable locations than hospitals.