Hospitals and Prescription Drugs Leading Health Spending Acceleration


“Prescription drugs grew the fastest, by 10.5%, and hospital spending also rose rapidly at 9.0%.”

APRIL 10, 2015

ANN ARBOR, MI—National health spending grew by 5.2% in 2014, and preliminary estimates show 6.6% growth in February 2015 compared to February 2014. The health spending share of gross domestic product was 17.9% in January, slightly below the 18.0% all-time high rate hit in December 2014. Spending in February 2015, year over year, increased in all major categories. Prescription drugs grew the fastest, by 10.5%, and hospital spending also rose rapidly at 9.0%.

Health care prices in February 2015 were 1.4% higher than in February 2014, barely above the January year-over-year change of 1.2%. The February 2015 12-month moving average held at 1.5%. Year-over-year hospital prices rose a scant 0.4% in February, rebounding from last month’s fall of 0.1% (the only negative reading in this series’ history). Physician and clinical services prices were flat, as in January. Prescription drug prices rose 5.2% and, after the 6.4% growth rate in December and 5.6% in January, are the highest since May 2002.

The health sector added 22,000 jobs in March 2015, close to the 24-month average but below the 12-month average gain of about 30,000. Hospitals added 8,000 jobs in March and are averaging 10,000 new jobs per month in the first quarter of 2015. Ambulatory care settings gained more than 19,000 jobs, close to the 12-month average. However, nursing and residential care lost nearly 5,000 jobs this month and is showing no growth in 2015. The health share of total employment increased slightly to 10.59%, below the high of 10.66% last seen in December 2012. Health job growth is once again exceeding nonhealth growth at 2.5% year over year versus 2.2%.

These data come from the monthly Health Sector Economic IndicatorsSM briefs released by Altarum Institute’s Center for Sustainable Health Spending (

“Our updated estimates show 2014 health spending growth at the highest rate since 2007, with this acceleration apparently continuing into 2015,” said Charles Roehrig, director of the Center. “While data for 2015 are preliminary, the spending increase, especially in the hospital sector, does align with hospital job growth. Our March 25 Health Sector Trend Report provides additional detail on 2014 health spending.”


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Ken Schwartz

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