Spending for nursing home care at a faster rate than other healthcare sectors in April, increasing by 0.82% in April month over month, according to Altarum’s latest monthly Health Sector Economic Indicators brief, released Wednesday. 

“For the past year, spending on nursing home care has been the fastest-growing category of personal healthcare spending, and growth has peaked in the past two months at around 13%,” Altarum Fellow and Research Team Leader George Miller and Program Director of  Health Economics and Policy Ani Turner told the McKnight’s Business Daily in a joint statement. 

Year-over-year growth without government subsidies was 13.6% (12.9% if subsidies are included).

“The 12.9% year-over-year growth rate in April 2023 was roughly equally attributable to price growth (7%) and utilization growth (5.9%), with both prices and utilization growing faster than for personal health care overall,” Miller and Turner said. “This relatively rapid growth in both prices and utilization in nursing homes suggests a possible continuation of pent-up demand that was observed in the later period of the pandemic.”

Home healthcare spending increased by 11.3% year over year, followed by spending for prescription drugs, hospital care and dental services at 10.1%, 9.9% and 8.3%, respectively. Physician and clinical services spending increased the least within the healthcare industry, at 6.4% year over year.

Overall, Altaurm noted 8.8% growth in personal healthcare spending during this period. Of that, according to the brief, 3.3 percentage points can be attributed to price growth, whereas the remaining 5.5 percentage point growth was associated with increases in utilization.

According to the data, national healthcare spending grew by 5.6% year over year in April and now represents 17.5% of gross domestic product. This is the third consecutive month that personal health spending has exceeded GDP.

Healthcare costs

Among the major healthcare categories, prices for nursing home care (6.9%) and dental care (6.6%) grew fastest, whereas physician and clinical services (0.6%) price growth was the slowest.

According to the Bureau of Labor Statistics, the Consumer Price Index increased at a 4% annual pace in May. That is the lowest reading in more than two years. It is down from April’s 4.9% gain. At the same time, the Health Care Price Index increased by 3.3% year over year in May, which is comparable to April’s percentage.

“The 3.3% year over-year-growth rate is 1.3 percentage points faster than a year ago and tied with the prior month for the fastest overall healthcare price increase since December 2007,” according to Altarum.

Prices for healthcare services paid for by private insurance increased by 3.9% in May, whereas Medicare prices increased 1% year over year, and Medicaid prices increased 4.9%.

“Our implicit measure of healthcare utilization growth increased again, up 4.7% year over year in April, greater than the 4.6% growth a month prior,” Altarum noted.

Jobs growth

Healthcare employers added 52,400 jobs in May, which is consistent with the 12-month average, according to Altarum. As the McKnight’s Business Daily previously reported, 9,000 of those jobs were in nursing and residential care facilities. 

“Nursing and residential care employment has also grown faster than total healthcare employment (4.8% and 3.9% year over year, respectively, in May) but still is 7.2% below its pre-pandemic level in February 2020,” Miller and Turner said.

“Healthcare wage growth in April 2023 continues to be aligned with economywide wage growth at 4.4% year over year,” according to the brief.