Health Spending Stays Sluggish; Particularly for Physician Services

Despite the expectation that health care spending growth would increase in 2012, it has not. In fact, according to a study by PricewaterhouseCooper’s Health Research Institute (HRI), health care spending growth will remain slow in 2013.

Since 2009 health care spending in the U.S. has slowed considerably, and HRI is projecting that costs will increase by 7.5% in 2013. That would mean the fourth year of relatively flat growth. And this all may be part of the “new normal.”

Despite expectations that health care spending would bounce back as the economy recovered, the industry is finding something else going on. Instead, behaviors are changing, according to HRI.

“Employers are pushing wellness programs with real enforcement muscle,” the report says. “Health care providers and drug makers are embracing the quest for value. And patients are becoming more cost-conscious medical consumers.”

And if this continues and becomes the normal, then we might be seeing that the medical cost trend has approached a sustainable level.

The area with the slowest cost growth has been physician services, and HRI expects that to continue to be true. Patients are choosing alternatives to the traditional office visit because they are cost sensitive. More and more they are using workplace clinics, retail health clinics, telemedicine and mobile strategies.

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“One study looked at three common conditions and found that retail clinics charged 30% to 40% less than private physician offices — and 80% less than emergency departments,” the report says.

The recession has created a completely new dynamic in the industry, and HRI reports that no one knows just how or if it can be changed.

“I don’t see this economy bouncing back as quickly as it should—people are not aware how long it will take to get jobs back,” Mary Grealy, president of the Healthcare Leadership Council, a coalition of chief executives across the health care system, said in the report. “This recession is different than before.”