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US Healthcare Costs Grew 5.28% in 2011

John Commins, for HealthLeaders Media, February 22, 2012

"Since the end of the summer we have generally seen increasing annual growth rates, particularly with healthcare costs covered by commercial plans," Blitzer said in the report. "Last month's data, which was through November 2011, showed a modest deceleration; however, December's data has returned to the accelerated pace and this time it affected all types of healthcare costs.

The S&P Healthcare Economic Indices estimate the per capita change in revenues accrued each month by hospital and professional services facilities for services provided to patients covered under traditional Medicare and commercial health insurance programs.

The annual growth rates are determined by calculating a percent change of the 12-month moving averages of the monthly index levels versus the same month of the prior year.

Blitzer said healthcare costs began to accelerate in May 2009 and peaked in May 2010, before decelerating through the first half of 2011.

"Since then, growth rates started to once again accelerate, most notably for hospital costs and those covered by commercial insurance plans," Blitzer said. "In fact, our Hospital Commercial Index stands out as the one whose annual growth rate, +7.95%, is back to its May 2010 rate. We appear to be entering 2012 witnessing a renewed acceleration in healthcare costs."

Zirkelbach says health insurers should not bear the blame for rising healthcare costs.

"S&P is focusing on the price issue, not utilization," he says. "You're seeing healthcare cost growth not being has high as it used to be but that was due to decreased utilization, not prices. Prices continue to go up."

"As the trend of hospital consolidation continues we are seeing that it results in higher prices as more and more hospital systems attain dominant positions and are able to dictate terms," he says. "That is having a big impact as well."


John Commins is a senior editor with HealthLeaders Media.

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1 comments on "US Healthcare Costs Grew 5.28% in 2011"


Jackie Larson - Avantas (2/22/2012 at 12:21 PM)
A lot of interesting facts and figures presented here. What is not mentioned however are the causes behind the rising costs: Labor. According to the AHA's 2011 Cost of Caring report, "the majority of spending on hospital services goes to caregivers and other hospital workers, and these costs are rising." William Bertschinger, divisional chairman of finance at the Mayo Clinic, at a speech given in January, 2010, at the Symposium on Payment Solutions for Healthcare Providers and Payers in Las Vegas noted that labor accounts for 70 percent of healthcare costs passed along to consumers. Without question, the area that can have the single greatest impact on the rising costs of healthcare is labor. We find that most hospitals can experience labor savings of 3-6% and often greater by implementing some very basic workforce management methodologies and practices. On this scale, the possible savings per hospital is incredibly substantial. On the unit level, this amounts to roughly $100K per unit, per year.