Re­turn to nor­malcy?

CPI, PPI num­bers re­turn to more typ­i­cal growth

Modern Healthcare - - The Week In Healthcare - Me­lanie Evans

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.”

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