Growth in hospital charges will continue to be historically low, pressured by sequestration cuts and declining reimbursement rates, according to a recent analysis from Fitch Ratings.
The Consumer Price Index for hospital and related services has been sluggish in recent years. Reflecting the slowed growth in hospital charges, growth in the hospital price index was 4.8% from 2011 to 2012, falling to 4.4% from 2012 to 2013. That trend appears to be continuing this year.
The sequestration cuts affecting Medicare became effective in April 2013, and according to Fitch, are expected to continue putting downward pressure on hospital charges with an annualized effect of approximately $11 billion across healthcare providers. Additionally, healthcare providers that have a high exposure to Medicare and Medicaid will have limited capacity to use charge increases as a means of offsetting reimbursement pressures from government payers, Fitch says.
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