Health Care Spending Projected to Increase by 6.8% Next Year

Health care spending is projected to increase by 6.8 percent in 2015, according to a recent article produced by Modern Healthcare. The analysis was done by PwC’s Health Research Institute where they surveyed more than 1,000 employers from 35 different industries that in total provide health care coverage to approximately 93 million people.

The survey showed four key indicators of why health care spending is estimated to surge beyond the 6.5 percent increase expected to occur this year.

• Economic Recovery and Upswing – Consumers are becoming more confident with their finances, so they will start visiting their doctors. During the recession these visits were often delayed or dropped altogether. In addition, health care spending still outpaces the growth in income or the growth domestic product (GDP).
• Specialty Drugs – New high-cost drugs are being developed and distributed to treat serious health issues and diseases.
• Physician Talent – Physician groups are coming together and joining forces with hospitals, which often adds a cost layer of facility fees. It has also been shown that drugs cost more when administered in a “hospital outpatient” department rather than in a doctor’s office.
• Technology Investment – Integrating health information technology between systems is becoming a necessity, requiring a costly investment to improve the patient/doctor relationship and experience.

Three factors that the survey expects to deflate the spending rate in 2015 include:

• “Systemness” – This term describes integrated health care delivery practices that enable providers to achieve efficiency in their practices and eliminate costs.
• Health care price shopping – High-deductible health plans are now used by many more employers, which encourages many employees to take control of their health care needs by purchasing generic name drugs, visiting lower-cost health care venues, and making fewer visits to doctors.
• Risk-based payments – Savings are estimated to be achieved when participating physicians and health systems take on financial responsibility for patient outcomes.