(This article was updated with a correction on Dec. 30, 2014.)
What the nation spends for hospital care went through something of a slump in 2013, new data reveal. That may be good news for some hospitals, surprisingly.
Hospitals with contracts that reward efforts to hold down healthcare spending may have been heartened to see revenue fall. While such contracts remain limited, they've have multiplied in the last few years with endorsement from Medicare under the health reform law.
Hospitals are the most costly places to receive care. Public policy and healthcare initiatives have prioritized reducing unnecessary hospital visits. New contracts such as Medicare's accountable care program, launched under Obamacare, give hospitals new financial incentives and flexibility to deliver care that will prevent hospital stays. Accountable care and global budgets, such as the one announced earlier this year by Anthem Blue Cross and Los Angeles-area hospitals, allow hospitals that curb spending and save money to keep some of what they save.
That may be one factor contributing to a recent slowdown in hospital use, which in turn, has helped check growth in spending at hospitals.
Whether it will last, and exactly which hospital efforts have contributed to lower healthcare spending, are still very much open to debate, however.
Some would argue that last year's hospital slump resulted from reduced Medicare payment levels and from market forces that will change as the economy continues to rebound.
Hospitals account for roughly 1 out of 3 dollars the U.S. spends on healthcare. The sector's sluggish income growth in 2013 is the primary reason for the record-slow 3.6% growth in total health spending.
“For 2013, hospitals were the largest contributor and accounted for a majority of the deceleration” in U.S. health spending, said Aaron Catlin, deputy director of the national health statistics group for the CMS.
The nation spent more on hospitals last year than the year before, but that spending grew more slowly at 4.3% after an increase of 5.7% in 2012. At the same time, hospital prices grew more slowly at 2.2% last year compared with 2.5% in 2012.
The slow year for hospitals was noticeable in the sector's hiring. Hospitals added no jobs in 2013 even as healthcare overall added 261,000 new jobs. Last year is only the fourth year since 1991 that hospitals failed to add jobs.
Economists agree one reason for the tepid growth is related to the lengthy recovery from the recession. Weak job growth through last year and continued soft economy-wide inflation have depressed both demand for healthcare and the industry's prices.