Higher hospital prices may be just one component of rising healthcare spending, but they have played a key role in the recent spate of fiscal good news for providers. That trend has continued, according to new data from the federal Bureau of Labor Statistics.
Prices paid to acute-care hospitals rose 0.3%, the largest increase since a 0.6% bump in February, the preliminary Producer Price Index figures from the bureau show. For the 12 months prior to July, the acute-care hospital PPI rose 3.4%, preliminary figures show.
Consumer prices for acute-care hospital services climbed 0.6% in July, according to the bureau's seasonally adjusted Consumer Price Index figures. That's nearly identical to the 0.5% increase for the same month a year ago, but this July's increase in acute-care prices is the largest in three months. In May and June, the acute-care hospital CPI rose 0.2%, the seasonally adjusted figures show.
For the 12 months ended in July, the acute-care hospital CPI increased 5.3%. Twelve-month figures are not seasonally adjusted.
Jon Gabel, vice president of the Center for Studying Health System Change, noted the price increases during the past 12 months don't reflect the 8% to 10% increase seen in health insurance claims expenses. "It just reminds us again that healthcare inflation is much more than simple price inflation," he said. Technology and utilization contribute as well, he said.
Healthcare inflation steadied in 2004 for privately insured patients at 8.2%, according to the center's research (June 27, p. 8).
Higher utilization is a good thing when it comes to how hospitals are viewed by the credit community. New York credit-rating agency Moody's Investors Service said last week that hospitals have benefited from more inpatient visits and more complex patients, which has created a stable credit outlook. In 2004, the median not-for-profit hospital margin increased to 2%, up from 1.4% in prior years among the 545 tax-exempt hospitals and health systems that Moody's rates. The increased utilization and focus on cost-control measures helped boost revenue faster than expenses, the agency said in a report.