Tag: "economic data"

GDP: Health Services Are 39 Percent of Growth

BEAToday’s advance release of Q4 GDP showed the production of goods actually shrank in the fourth quarter. As a result, the (annualized) $26.3 billion growth in health services spending accounted for 39 percent of GDP growth of $68.0 billion. It comprised 32 percent of services spending growth and 38 percent of growth in personal consumption expenditure (Table I). This means that health services spending continues to devour more of our budgets. The evidence continues to indicate Obamacare is not bending the cost curve.

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Jan 29, 2016 | Leave a Comment | by

CPI: Prescription Prices Finally Drop Amid General Deflation

BLSMedical prices grew 0.1 percent, versus a decrease of 0.1 percent for all other items, in December’s Consumer Price Index. Prices for prescription drugs actually decreased 0.3 percent, even better than the small price increase in the Producer Price Index (PPI).

Prices for physicians’ services were flat, however, whereas they had jumped in the PPI. Because CPI measures prices as observed by consumers and PPI prices as observed by producers, this suggests that prices paid to physicians by non-consumers (i.e., third parties) have increased more than prices paid by consumers. This supports the principle that when consumers face prices directly, prices go up less than when intermediated by third parties.

Overall, medical care inflation was tame in December. Longer term, it still significantly outpaced the CPI other than medical care, by two percent over the year (Table I).

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Jan 21, 2016 | 5 comments | by

PPI: Physician Prices Jump Amidst Deflation

BLSThe stock market took a hit this morning, as the Producer Price Index turned back to deflation, dropping 0.2 percent in December and 0.1 percent in 2015 (Table I). Health prices are still growing faster than other prices. This is especially true for pharmaceuticals, for which prices increased 8.2 percent last year, versus a 3.7 percent decline in prices for final demand goods. Although political attacks on pharmaceutical prices are misguided, it is likely they will continue as long as this situation persists.

With respect to services, health price inflation is not as extreme. However, the jump of 1.3 percent for physician prices in December is remarkable.

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Jan 15, 2016 | Leave a Comment | by

Health Jobs Pick Up in Booming Jobs Report

BLSToday’s Employment Situation Summary, which came in above strong expectations, also saw faster growth in health services jobs than other nonfarm civilian jobs. In December, health services jobs grew at 0.26 percent, versus only 0.20 percent for other jobs. Health services jobs comprised 13 percent of the 292,000 jobs added in December (Table I).

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Within health services, outpatient care jobs grew much faster than jobs at other facilities. Overall, jobs at ambulatory facilities grew faster than hospital jobs. This is a good development because hospitals are less efficient locations of care.

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Jan 08, 2016 | 2 comments | by

Private Health Construction Leads Slow Building Market

New construction starts turned negative last November, slowing -0.4 percent from September. Health facilities construction shrank only -0.1 percent (Table 1).

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Jan 04, 2016 | Leave a Comment | by

GDP: Health Services Growing Faster Than Personal Consumption Expenditures

BEAReleased on December 22, the third estimate of Gross Domestic Product for the third quarter indicates growth in health services spending is maintaining a disproportionate share of still slow GDP growth.

Spending on health services grew faster (4.8 percent, annualized, in current dollars) than spending on non-health services (3.9 percent) or non-health personal consumption expenditure (4.2 percent) from the second quarter (Table I). The growth in health services spending ($24.8 billion, annualized) accounted for 17 percent of all GDP growth ($146.5 billion), just under one fifth of personal consumption expenditure ($130.6 billion), and 29 percent of all services spending ($84.7 billion).

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Dec 29, 2015 | Leave a Comment | by

What is Driving Health Prices Up?

The recent arrest of Martin Shkreli, former CEO of Turing Pharmaceuticals, for securities fraud, reminds us that high prescription drug prices are today’s whipping boy for the costs of health care. Hillary Clinton and other politicians have promised to impose federal controls on pharmaceutical prices.

However, prescription drugs have not been the fastest growing item in health care since the economy started to enter the Great Recession in 2007. That distinction belongs to health insurance (specifically, medical and hospital insurance, not workers’ compensation, income replacement, or long-term care). Table I shows price indices for various components of personal consumption expenditures, indexed such that 2007 equals 100.

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Dec 18, 2015 | 6 comments | by

CPI: Hospitals Under Pressure As Physician Prices Rise

BLSNovember’s Consumer Price Index (CPI) indicates health prices are moderating, though still increasing higher than non-heath consumer goods. In the third piece of bad news for hospitals (from their perspective, at least, after the Quarterly Services Survey and the Producer Price Index), prices for hospital services actually dropped (See Table I).

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Dec 16, 2015 | 2 comments | by

QSS: Dramatic Drop In Hospital Profitability in 3rd Quarter

The latest Quarterly Services Survey (QSS) showed a dramatic turnaround in hospitals’ fortunes. Quarterly revenues dropped two percent from the 2nd quarter, while offices of physicians and home health services grew over three percent (see Table I). Hospital revenue grew only 5.3 percent from 2014 Q3 to 2015 Q3, but that was still significantly lower than growth for most other health services.

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In the previous QSS, I discussed the healthy rise in hospital margins. That has changed dramatically. The Q3 data is subject to revision. Nevertheless, it indicates a dramatic change in hospitals’ fortunes (see Table 2).

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Dec 15, 2015 | 4 comments | by

PPI: Pharmaceutical Prices Finally Tame In November

BLSNovember’s Producer Price Index (PPI) finally saw a slowdown in pharmaceutical price increases, which increased 0.3 percent, month on month. This was the same as the overall PPI increase. Price increases for health goods and services were very slight, compared to general PPI. Indeed, two categories (X-Ray & electromedical equipment and biological products including diagnostics) actually experienced price deflation (see Table I).

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Dec 15, 2015 | 1 comment | by
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