Home health spending grew by 9.4% and nursing home care spending grew by 9.2%, placing them among the fastest-growing categories of healthcare spending in January, according to Altarum’s monthly Health Sector Economics Index, released Wednesday. The sectors were outpaced only by dental services, where growth in spending was 10.6%.
The underlying reasons for the spending growth likely differ between nursing homes and home health, Corwin “Corey” Rhyan, MPP, Altarum research director of health economics and policy, told the McKnight’s Business Daily.
“First, the price growth component of the nursing home spending increase was much greater in January (5.2% year-over-year growth) and continued to increase into February (5.6%),” he said. “Conversely, price growth in home healthcare has been relatively moderate (1.9% in January and February), indicating home health spending increases are more driven by increases in utilization.”
“Looking over a longer historical period, since before the pandemic (January 2020), nursing home spending has grown by 9.1%, while home health spending has grown by 17.6%. The first two years of that period, between January 2020 and January 2022, nursing home spending was down 0.2% from the pre-pandemic level, while home health spending was up 7.4%,” said George Miller, PhD, BSE, MSE, fellow and research team leader at Altarum.
“So it appears that the most likely explanation for nursing home spending’s growth in 2022 and January 2023 was largely a belated recovery from the pandemic and includes some significant price level increases, while home health’s 2022 and 2023 spending growth moreso reflects the continued growing utilization of home healthcare settings,” he said.
Overall, personal healthcare spending accelerated in January, according to the Altarum report.
“Spending on personal healthcare increased by 6.3%, but that growth was dampened by a decline in federal government support to public health activities,” according to the brief.
According to the experts, national health spending grew by 4.6% year over year. Health spending in January accounted for 17.2% of nominal gross domestic product. Nominal GDP in January was 7.4% higher than it was in January 2022, as GDP growth continues to outpace health spending growth.”
Overall healthcare price growth has stayed moderate as private prices have increased, according to the report.
Rates for nursing home care (5.6%) grew second fastest, following dental care (6.6%). Home healthcare (1.9%) price growth was the slowest among the healthcare sectors reported.
Healthcare use returned to positive growth in January, up 3.7% year over year., with home healthcare use at 7.5%; the brief did not include nursing care utilization.
Jobs growth that began in 2022 is continuing into 2023, according to Altarum. Healthcare overall added 44,200 jobs in February, of which 13,700 added jobs were in nursing facilities and residential care facilities such as assisted living communities.
Wage growth in healthcare has been declining since mid-2022, according to Altarum. It now sits slightly below economy wide wage growth. In January, healthcare wages grew by 4.2% year over year, whereas total private-sector wages grew by 4.4%.
