Acute-care hospital prices increased in October even as the general economy registered its largest-ever one-month drop in the U.S. Department of Labor's Producer Price Index, which measures the price movement of finished goods. The overall PPI dropped 1.6%, the biggest decline since the government started monitoring inflation in 1947.
While the 1.6% drop applies to finished goods such as fuel, cars and clothing-and does not include services such as healthcare in its calculation-hospitals and physicians still saw rising prices at a time when the lackluster economy is mostly pushing prices down.
"Healthcare has been on an inverse cycle with the rest of the economy," said David Cutler, professor of economics at Harvard University. Medical services "tend to be relatively less cyclical because they're not the kind of purchases people are going to delay a whole lot," he said.
From September to October, wholesale prices for general acute-care hospital services increased 0.3% after three months of no change, according to the Bureau of Labor Statistics, the Labor Department agency that compiles the PPI data. The bureau released the most recent data earlier this month.
The hospital PPI measures changes in net revenue per episode of care, or the money they actually collect. Hospital prices rose 1.9% for the 12-month period.
The 0.3% increase in hospital prices in October compares with the 1.6% drop in the overall PPI, which increased 0.4% in both August and September. Economists cited a possibly looming recession as the reason for the overall drop.
Wholesale prices for physician office services did not change in October but were up 3% for the 12-month period. Prices for home healthcare services increased 0.4% in October and were up 2.5% for the 12-month period.
Healthcare economists say it may be difficult to pinpoint what effects the dichotomy between healthcare prices and the general economy will have on hospitals and consumers.
"The PPI is not a real good indicator of what's likely to happen in healthcare costs," said John Cookson, an actuary with Milliman & Robertson in Philadelphia. "Trying to translate (price indices) into what ultimately affects consumer healthcare prices and insurance rates is very difficult."