Inflation in two of healthcare's largest sectors remained weak in November, continuing a trend that has helped check growth in national health spending.
Prices for acute-care hospitals rose 0.1% in November, and climbed 1% during the year that ended last month, a sluggish pace compared with the same 12-month periods in prior years. The year that ended in November 2013 saw acute-care hospital prices increase 2.3%. The year that ended in November 2012 also saw prices increase 2.3%.
Hospitals account for 32% of the nation's health spending (PDF) and physicians and clinics make up another 20%. Tepid price growth is a check on overall health spending. Healthcare prices are under pressure from Medicare, one of the industry's largest payers, and from new health reform-linked markets where highly price-sensitive consumers can shop for insurance.
Health spending grew at a record-low rate of 3.6% last year but is expected to accelerate as demand for medical care grows from those newly insured with subsidized health plans that became available last January under the Patient Protection and Affordable Care Act. Evidence of increased spending has been mixed so far this year. Hospital chains have reported fewer unpaid bills and more insured patients. But national estimates and surveys of spending on healthcare services reported no significant growth in the first half of the year. A third quarter survey released this week was the first to capture an uptick.
Weaker prices also are due in part to low overall inflation despite the economic recovery, said economists at the Altarum Institute in their latest brief (PDF) on healthcare prices. “As we have been pointing out, health care and economy-wide inflation are quite low for this stage of the business cycle recovery,” they wrote.
The Producer Price Index, released monthly by the Bureau of Labor Statistics, is a broad measure of changes to reimbursement paid to providers. The federal agency also tracks changes to rates paid by commercial insurance in the Consumer Price Index. Those figures are expected next Wednesday.
Physician office prices declined 0.1% in November, continuing a streak this year of marginal or no price growth, or slight declines. The year that ended in November saw physician office prices increase 0.6% in the third 12-month period with inflation below 1%. Physician office prices increased 0.3% during the year that ended in November 2013 and 0.5% the prior year. In the years that ended in November between 2004 and 2011, physician office prices increased 1.9%, on average.
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