Hospital, Employment, and Price Indicators for the Health Care Industry: Fourth Quarter 1995 and Annual Data for 1987-95

By Heffler, Stephen K.; Donham, Carolyn S. et al. | Health Care Financing Review, Summer 1996 | Go to article overview

Hospital, Employment, and Price Indicators for the Health Care Industry: Fourth Quarter 1995 and Annual Data for 1987-95


Heffler, Stephen K., Donham, Carolyn S., Won, Darleen K., Sensenig, Arthur L., Health Care Financing Review


This regular feature of the journal includes a discussion of recess trends in health care spending, employment, and prices. The statistics presented in this article are valuable is their own right and for understanding the relationship between the health care sector and the overall economy. In addition, they allow us to anticipate the direction and magnitude of health care cost changes prior to the availability of more comprehensive data.

KEY 1995 TRENDS

* The hospital industry continued to shed excess capacity in 1995: The number of staffed hospital beds continued to decrease in response to continuing declines in the adult occupancy rate.

* Private sector health services continued to be an important source of job creation in 1995, as the growth in health services employment continued to outpace the private non-farm sector as a whole.

* Although rapid growth in home health care services seen in the early 1990s waned somewhat in 1995, as evidenced by marked deceleration in the growth of jobs in that industry, it is still the fastest growing employment sector in the health care industry.

* According to the Consumer Price Index (CPI), growth in prices for all items less medical care were virtually unchanged in 1995 while growth in medical prices continued to decline, though medical prices are still growing at roughly twice the rate of overall prices.

* Growth in the HCFA prospective payment system (PPS) input price index accelerated in 1995 for the first time in 5 years, the result of increases in non-compensation prices.

INTRODUCTION

This article presents statistics on health care utilization, prices, expenses, employment, and work hours, as well as on national economic activity. These statistics provide an early indication of changes occurring in the health care sector and within the general economy. We rely on indicators such as these to anticipate and predict changes in health care sector expenditures for the most recent year. Other indicators help to identify specific reasons (e.g., increases in price inflation or declines in utilization) for health care expenditure change.

The first eight of the accompanying tables report selected quarterly statistics and the calendar year aggregations of quarterly information for the past 9 years. Unless specifically noted, changes in quarterly statistics are shown from the same period one year earlier. For quarterly information, this calculation permits analysis of data to focus on the direction and magnitude of changes, without interference introduced by seasonal fluctuations. The last four tables in the report show base weights, annual index levels, and annual percent changes in the Input Price Indexes maintained by HCFA. The annual percent changes and the four-quarter moving average percent changes for input prices are calculated using the same procedure, namely averaging the four quarters ending with the fourth calendar quarter of the current year and dividing by the average of the four calendar quarters of the preceding year.

COMMUNITY HOSPITAL STATISTICS

Statistics on community hospital operations from the American Hospital Association (AMA) presented in Tables 1 and 2 show that community hospitals are in transition. Hospitals are reacting to constraints on existing methods of operation, as hospital stays are shortened and more procedures are shifted from inpatient to outpatient settings. In 1995, some measures of hospital utilization, such as the number of admissions and the number of outpatient visits, increased (Figure 1) although other measures such as the number of inpatient days and the adult length-of-stay (LOS) continued to decline. Hospital admissions increased for the third consecutive year in 1995, with admissions for the population under 65 years of age increasing for the second year in a row after many years of decline. These recent increases in total admissions for the under 65, coupled with the smaller decreases in admissions per 1,000 population for this age group, suggest that the ability to reduce hospital admissions for the non-Medicare (primarily the privately insured) population is diminishing. …

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