September 8, 2017

ANN ARBOR, MI—Hiring in the health sector moderated in August after rising over the last few months, while July spending growth slowed, according to analysis of health economic indicators released today by Altarum’s Center for Sustainable Health Spending.

Driving low overall spending growth is historically low hospital spending, which, at a revised .8% June growth rate, is the lowest year-over-year monthly growth rate recorded in more than 25 years.

“We have seen private sector reports that indicated slowing hospital utilization, so have been puzzled that the data continued to show high hospital spending growth,” said Paul Hughes-Cromwick, co-director of Altarum’s Center for Sustainable Health Spending. “This month, with these downwardly revised data, we are now seeing historically low hospital spending growth, and overall health care spending growth has dropped to the 4% range reminiscent of the historic slowdown prior to expanded coverage under the ACA.”

After 2 months of unexpectedly robust growth (41,000 in July and 36,000 in June), the health sector only added 20,000 jobs in August, consistent with the slower level of growth seen in the first 5 months of the year. “This makes sense,” said Hughes-Cromwick, “because those higher rates did not align with an overall slowdown in spending growth.”

Hospital hiring is continuing to grow at about two-thirds the 2015 and 2016 pace (6,000 versus 10,000-11,000 new jobs per month). With indications of declining hospital utilization and reports of potential job losses at individual hospitals, further declines in hospital job growth are expected in coming months.

Health Care Spending

At $3.49 trillion, national health spending in July 2017 was 4.1% higher than health spending in July 2016. Spending on home health care grew the fastest, at 6.6%, while spending on hospital care was slowest at 1.1%. The health spending share of GDP fell to 18.0%.

Health Care Labor

Health care job growth in August moderated after an early summer surge. Hospitals gained 6,400 jobs, while ambulatory care settings added 11,000 jobs, and nursing and residential care added 2,800 jobs. The health share of total employment (just barely) reached a new all-time high of 10.77%.

Health Care Prices

Annual health care price growth (1.5%) remains at the lowest rate since May 2016—pushed down by large declines in nursing home care price growth and other professional services. Showing more rapid price growth in July was prescription drugs (4.2%, up from 3.8% in June), though the growth rate is still well below its 20+ year high of 7.0% recorded in November 2016.

Contact Information
Sarah Litton
Manager, Communications and Public Affairs
202-772-5062
press@altarum.org

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Altarum is a national nonprofit whose mission is to create a better, more sustainable future through ideas and action that transform American health and health care.