After five years of slow employer healthcare spending growth, experts predict medical inflation across the U.S. will rise to 6.8 percent in 2015, according to areport from PricewaterhouseCoopers (PwC).
“Medical Cost Trend: Behind the Numbers” shows a growing demand for healthcare will boost spending growth, although not as high as in the 1990s and 2000s–however, it will pass Gross Domestic Product.
More consumer spending due to the economic upswing within the U.S., the emphasis on specialty drugs to treat conditions like hepatitis C, hospitals paying more to acquire physician practices, and health IT integration investments for large-scale hospital integration and mergers, all play a major role in the increase in spending, according to the report. This means hospitals and health systems must focus on productivity, efficiency and delivering the highest-quality care to patients.
There are a number of factors that can keep health spending down, according to the report. Rick Judy, a principal in PwC’s Health Industries Advisory practice, elaborated on those trends and how hospitals can benefit from them:
•Healthcare providers are implementing what PwC refers to as “systemness,” where hospitals and healthcare systems streamline administrative activities and standardize practices to eliminate overlap and lower operating costs. This process is one of the highest priorities on hospitals’ agendas right now, Judy said.
•Consumers are price shopping and more involved with their healthcare. Cost-conscious patients shop around for the best deal, especially with employees shouldering more of their healthcare financial burdens. “Consumers are focused on price transparency,” Judy said, adding that hospitals should continue to invest in tools that allow consumers to choose appropriate facilities and procedures.
•Risk-based contracts hold healthcare provider accountable for patient outcomes, according to the report. “We’re starting to see some strong returns from accountable care organizations and risk-based payments,” Judy said. “I think they’re going to continue to gain momentum in 2015. And providers are really starting to embrace that risk-based payments are going to be a reality in the future and are starting to prepare for that kind of world.”
The report also includes data from PwC’s Health and Well-Being Touchstone Survey, which found more than 60 percent of the 1,200 various employers surveyed either implemented or consider implementing high deductible health plans as the only option, and more than 85 percent have or consider implementing worksite wellness programs.
Healthcare spending grew at a 5.6 percent annual rate in the fourth quarter of 2013. The growth, a 10-year high, was driven in large part by $8 billion more in hospital revenue, which was more than the prior four quarters combined.