MEDICAL ECONOMICS: Healthcare Inflation

By Staff Reporters

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Inflation has hit record levels this year as demand for goods and services far outpaced supply, and many companies are still trying to bounce back from the shutdowns of early 2020. Health systems, which have razor-thin operating margins even in the best of times, aren’t an exception.

“In the past, we’ve always said that healthcare was kind of recession-proof because demand for healthcare keeps going, regardless of what’s happening in the economy,” said Tina Wheeler, leader of consulting firm Deloitte’s US healthcare practice.

But in the last year, inflation hovered around 8% for much of the year, while medical-care prices increased by only 4.8%, according to Wheeler. Since medical costs are negotiated between hospitals and payers years in advance, hospitals can’t just raise their prices now to keep up with the pace of inflation, said Gerard Brogan Jr., senior vice president and chief revenue officer at Northwell Health.

READ: https://medicalexecutivepost.com/2022/11/10/the-cpi-and-stock-markets/

Here’s how badly hospitals could be hurting:

  • Inflation could cause an additional $370 billion more in healthcare spending than the expected baseline increase by 2027, according to McKinsey.
  • The national health expenditure could grow at a rate of 7.1% over the next five years, compared to the expected economic growth rate of 4.7%, according to McKinsey.
  • By the end of 2021, total hospital expenses per adjusted discharge were up 20.1% compared to 2019, according to the trade group American Hospital Association.

Rising interest rates also hurt hospitals since their main access to capital is through issuing tax-exempt bonds, Wheeler said. The rising cost of capital limits hospitals’ ability to fund projects, like opening a new oncology center to treat patients, for example. Keep reading here

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ORDER: https://www.amazon.com/Financial-Management-Strategies-Healthcare-Organizations/dp/1466558733/ref=sr_1_3?ie=UTF8&qid=1380743521&sr=8-3&keywords=david+marcinko

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Healthcare NOT a Part of the US Inflation Surge!

WHO KNEW?

By Staff Reporters

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According to Wikipedia, in economics, inflation refers to a general progressive increase in prices of goods and services in an economy.[1] When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reduction in the purchasing power of money.[2][3] The opposite of inflation is deflation, a sustained decrease in the general price level of goods and services. The common measure of inflation is the inflation rate, the annualised percentage change in a general price index.[4]

READ MORE: https://en.wikipedia.org/wiki/Inflation

CITE: https://www.r2library.com/Resource/Title/082610254

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Health Care Price Changes and Per Capita Growth in Medicare | Mercatus  Center

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Healthcare Not a Part of the US Inflation Surge: Who Knew?

However, according to Jeff Goldsmith, overall health spending has only risen by 4.4% since January of 2020, and the percentage of GDP devoted to health has fallen by more than half a percent, from 18.1% pre-pandemic to 17.5% in October.   This is despite four surges of COVID hospitalizations, overflowing ICUs and ERs, labor shortages, and other COVID-related stresses.  Health system staffing levels are still nearly a half-million lower than they were pre-pandemic.  Had the federal government not stepped in through the CARES Act, FEMA funding, and temporary suspensions of Medicare rate cuts, the nations’ hospitals would have been seriously damaged by COVID-related financial stresses, which are far from being over.  

ESSAY: https://thehealthcareblog.com/blog/2021/11/19/healthcare-not-a-part-of-the-us-inflation-surge-who-knew/

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