Return to normalcy?
CPI, PPI numbers return to more typical growth
Hospital and physician price inflation rebounded as the economy hesitantly regained its footing last year. Two measures of hospital and physician prices—the consumer price index and producer price index—largely show prices in 2009 grew at a rate closer to the pace prior to the recession, which began in December 2007 and worsened sharply as 2008 continued.
Indeed, price growth flagged for hospitals as the economy sank during the recession’s first tumultuous year, but the slowdown may have been temporary, judging from figures the Bureau of Labor Statistics released this month.
Hospital prices, as measured by what Medicaid, Medicare and other privately insured patients paid acute-care hospitals, grew 3.7% last year compared with 2.1% in 2008, the bureau’s producer price index found. Meanwhile, consumer hospital prices increased 7.7% for the year that ended in December 2009 from 5.9% the prior year, according to the consumer price index.
On average, hospital prices grew 3.5% and 6.7% per year in the last half of the decade, according to the producer index and consumer index, respectively.
For physicians, the surveys produced mixed results. Prices paid to physicians by public and private insurers rose 2.3% compared with 1.2% the prior year. However, consumer price growth cooled slightly for physician services to 2.5% in 2009 after falling to 2.9% the prior year from 4.1% in 2007.
The average yearly increase to physician prices in the past five years was 2.1%, as measure by the producer index, and 2.8% for the consumer index.
Nevertheless, Spectrum Health, Grand Rapids, Mich., has not seen inflation return in line with federal figures, said Joseph Fifer, vice president of finance for the system’s hospital group. Medicare in October increased the base prices for hospital services by 2.5% but a change to Medicare’s wage index, which adjusts reimbursement for each labor market, left its 969-bed flagship facility—Butterworth Hospital, Grand Rapids—with a decrease in Medicare’s base prices of 3.2% for the final three months of 2009, he said.
Prices paid by private insurers increased 4.5% for the last six months of 2009 (Spectrum Health begins its fiscal year July 1) compared with the 6% growth seen in recent years. Spectrum curbed its price growth, which contributed to the slowdown in inflation for pri-
Fifer: “Every year I say this is the hardest it’s ever been.”