October 13, 2017

Health care spending in first half of 2017 fell below 4 percent, report finds

Daily Briefing

    Health care spending growth in the second quarter (Q2) of 2017 dropped below 4 percent for the first time since early 2014, according to recent report from the Altarum Institute.  

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    The report, which summarizes key trends in U.S. health care spending, is largely based on the Census Bureau's Quarterly Service Survey and Altarum's Health Sector Economic Indicators.

    Findings

    Overall, the report estimated health care spending grew at a rate of 4.4 percent in the first half of 2017.

    According to the report, health care price growth averaged 1.8 percent in the first half of 2017—the same as economy-wide inflation. Meanwhile, prescription drug prices, not adjusted for rebates, grew at 4.5 percent in the first half of 2017.  

    The report found the Q2 growth rate for health care services spending fell from just over 5 percent in 2016 to 3.5 percent in 2017, while hospital spending grew by 1.3 percent in Q2 and prescription drug spending grew by 5.2 percent in Q2. The report found hospital spending in August 2017 accounted for nearly one-third of all health care spending, while spending on physician and clinical services accounted for 20 percent.

    "Low economy-wide inflation and structural changes in the health sector seem to be putting downward pressure on health care prices, and Affordable Care Act uncertainty also appears to be having a continuing effect," the report stated (Haefner, Becker's Hospital CFO Report, 10/11; Baker, "Vitals," Axios, 10/12; Belliveau, RevCycle Intelligence, 10/12; Altarum Institute report, September 2017).

    New: Quick reads for CFOs on top-of-mind finance topics

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    At the end of every quarter, we compile the research notes we've featured as "CFO guides" in the few preceding months into one document, so you can download them all in one place.

    Click on the following finance topics, such as 2017 Hospital Revenue Cycle Benchmarks and CMS's Proposal for Hospital Outpatient Payments, to find the individual research notes and the bundled briefings we produced each quarter.

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