Health jobs grew more than two thirds faster than non-health jobs in March. Health jobs comprised 37,000 (17 percent) of nonfarm civilian jobs added (215,000). The rate of growth from February was 0.24 percent for health jobs versus only 0.14 percent for non-health jobs (Table I).
Construction of new health facilities enjoyed a boomlet in February, growing 2.0 percent, while other construction shrank 0.6 percent (Table I).
The rate of growth in construction starts was similar for both private and public health facilities, at 2.0 percent and 1.7 percent. However, the relative growth was much larger for public health facilities, because non-health public construction declined much more than non-health private construction (a drop of 1.8 percent versus a drop of 0.2 percent).
This is the first uptick in health facilities construction in a while. Over the last twelve months, health facilities construction starts have lagged other construction starts by 7.2 percent (10.5 percent growth versus 3.3 percent growth). It is too early to say whether February’s boomlet in health facilities construction indicates a downturn. However, it suggests health systems are beginning to be optimistic about their abilities to continue to extract revenue from the system.
Holly Fletcher of The Tennessean has written a very informative feature on the hospital revenue cycle, including a seven-deck slideshow that translates the process into layman’s terms. (The Tennessean is the best daily newspaper for understanding hospitals, because Nashville is home to over for-profit hospital chains which control 60 percent of the beds in that industry, so the journalists know what they are talking about.)
Ms. Fletcher describes an insane system of billing which has been focused on getting dollars out of the byzantine bureaucracies we call health insurers. The main economic reason insurance should be for rare, unforeseen, catastrophic events is that claims processing is expensive. It is not just shuffling paper around, but also managing fraud, waste and abuse. This adds to what is called the “load” of insurance.
When it comes to getting money from patients directly, hospitals are hopeless, with two thirds of their accounts receivable remaining unpaid: “Billing practices are not designed to collect small, incremental payments from hundreds or thousands of patients. They are designed to bill a handful of large entities — insurance companies — not individuals who walk in the door.”
One might think this was a problem that is not too difficult to solve: Just call the supermarket or department store and ask them to recommend a point-of-sale technology vendor.
This morning’s Consumer Price Index corroborates yesterday’s Producer Price Index, which indicated health insurance and certain other health prices increased in a generally deflationary environment. While the CPI for all items dropped 0.2 percent in February, health insurance increased 1.3 percent. Over the last twelve months, CPI has increased just 1.0 percent, while health insurance has increased 6.0 percent.
Prescription drugs continue to stand out, as well, having increased 0.9 percent last month and 3.4 percent over twelve months. However, the increase in prescription prices alone cannot explain the health insurance premium hikes.
Inpatient hospitals services also stand out, having increased 0.6 percent last month and 4.8 percent in the last twelve months. Outpatient services are only slightly better.
February’s CPI confirms that, while nominal increases in health prices are moderate, real price increases are quite high, because we are in a generally deflationary environment.
This morning’s Quarterly Services Survey (QSS) from the Census Bureau showed 2015 was a good year for revenue growth in health services. Overall, fourth quarter revenue grew 1.8 percent on the quarter, 3.7 percent from Q4 2014, and 5.5 percent year on year (Table I).
Revenue growth in psychiatric and substance abuse hospitals really blew the doors off in Q4, increasing 8.2 percent. However, this looks idiosyncratic. Q4 2014 to Q4 2015 growth was only 1.6 percent, and year on year growth was 4.0 percent.
The latest jobs report was greeted as good news, with nonfarm payroll increasing by 242,000 jobs in February. Health services jobs accounted for 38,000 (16 percent) of the growth. Health services jobs accounted for a smaller share of job growth than in previous months. Nevertheless, they grew faster (0.25 percent) than other nonfarm jobs (0.16 percent) (Table I).
Construction of new health facilities remained very weak in January, shrinking 0.1 percent since December, while other construction grew at 1.6 percent (Table I).
The rate of decline in public health facilities continued to be dramatic at 5.0 percent, versus booming 4.8 percent growth in other public construction starts. Private health facilities construction grew 1.3 percent in slow private construction market, which grew just 0.5 percent.
Over the last twelve months, health facilities construction starts have lagged other construction significantly. This suggests health systems are pessimistic about their ability to extract further revenue from the system.
Robert Laszewski is a leading health insurance expert whom I often cite favorably. However, in a recent article praising Ohio governor John Kasich he has made an unforced error. Governor Kasich is one of only three Republican governors who took federal Obamacare money to expand Medicaid dependency. According to Mr. Laszewski:
On Medicaid, the Kasich administration helped 650,000 people whose uncovered health-care costs were being shifted onto and burdening employers and individuals struggling to pay their already-high health insurance costs. The administration enrolled them into a new Ohio Medicaid system that made 38 different reforms over five years. In 2015 alone, it saved Ohio taxpayers $1.9 billion compared with the original state-budget target. It held the program’s per capita cost growth below 3 percent while cutting the state’s uninsured rate in half.
The idea that people who cannot pay their hospitals bills are the major problem in driving American health costs is evidence-free. According to a September 2014 report promoting Obamacare’s benefits, Obamacare’s reduced so-called “uncompensated care” by $5.7 billion in 2014. Health spending in 2014 was $3 trillion, so $5.7 billion is less than one fifth of one percent of national health spending!
This morning‘s tepid jobs report (Employment Situation Summary) was dominated by health services, which added 37,000 jobs in January. That is just one percentage point shy of one quarter of all nonfarm civilian jobs added (Table I).
Within health care, hospitals dominated, accounting for 24,000 of the 37,000 increase – almost two thirds. (This is interesting because there has been a slowdown in health construction starts. So, there must be a lot of slack in already built facilities.) Hospitals are generally inefficient locations of care, so the pickup in employment in January is actually of concern because it likely indicates more expensive care.
Construction of new health facilities collapsed in December, shrinking 3.2 percent since November, while other construction eked out growth of 0.2 percent (Table I).
Most of the decline occurred in public health facilities, for which construction starts shrank 7.3 percent, versus 2.2 percent growth in other public construction starts. Private health facilities construction shrank 1.9 percent in a shrinking private construction market.
Over the last twelve months, health facilities construction starts have lagged other construction significantly. This suggests health systems are pessimistic about their ability to extract further revenue from the system.
