Literature DB >> 10110874

Health care indicators.

C A Cowan1, S W Letsch, K R Levit, B T Maple, M W Stewart.   

Abstract

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Year:  1991        PMID： 10110874      PMCID： PMC4193653     

Source DB:  PubMed          Journal:  Health Care Financ Rev        ISSN： 0195-8631


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Community hospital statistics

In 1989, the Nation's hospital care bill grew 10 percent to a level of $232.8 billion. Approximately 86 percent of those expenditures were for services delivered in community (short term, acute care) hospitals. Indicators from the American Hospital Association panel survey of community hospitals depict accelerating growth in hospital expenditures through the third quarter of 1990. These statistics imply that growth in community hospital expenditures for calendar year 1990 rose approximately 1 to 2 percent faster than that which occurred in 1989. Expenses of community hospitals rose 11.7 percent between the third quarter of 1989 and the third quarter of 1990, to $54.9 billion (Tables 1 and 2). Labor costs for 3.2 million full-time equivalent employees comprised 55 percent of all expenses.
Table 1

Selected community hospital statistics: 1987-90

ItemCalendar year1987Q31988Q31989Q31989Q41990Q11990Q21990Q3
198719881989
Operating expenses
Total in millions$161,322$177,770$195,378$40,978$45,011$49,132$50,732$52,471$53,738$54,902
 Labor in millions87,53396,415106,01922,32324,51126,76927,63028,31929,05029,941
 Nonlabor in millions73,79081,35589,35918,65420,50022,36323,10224,15224,68824,961
Inpatient expenses in millions129,814140,475152,13732,73835,31838,03439,37240,70640,96941,645
 Amount per patient day581633691594646705722712760786
 Amount per admission3,8614,1974,5883,8964,2434,6344,7964,7804,9365,097
Utilization
Admissions in thousands33,63433,49633,1768,4038,3248,2078,2108,5168,3008,171
Inpatient days in thousands223,441222,313220,36155,14554,63553,96854,50657,13253,93153,012
Adult length of stay in days6.66.66.66.66.66.66.66.76.56.5
Surgical operations in thousands21,03821,25221,3835,3185,3595,2875,2495,4495,5815,496
Outpatient visits in thousands278,917296,111308,08671,80575,83078,17576,70679,33682,60983,417
Beds in thousands954942930954942927926926924920
Adult occupancy rate164.164.564.962.963.163.264.068.564.162.6
Full-time equivalent (FTE) personnel
Total in thousands3,0773,1123,1623,0813,1193,1733,1893,2123,2263,241
Number per bed3.23.33.43.23.33.43.43.53.53.5
Adjusted patient days2 per FTE90908922222222232222
Adjusted patient days in thousands277,654281,322282,97469,02469,63269,71770,23373,64770,74169,886

Adult occupancy rate is the ratio of average daily census to the average number of beds maintained during the reporting period.

Adjusted patient days is an aggregate figure reflecting the number of days of inpatient care, plus an estimate of the volume of outpatient services, expressed in units equivalent to an inpatient day in terms of level of effort. It is derived by multiplying the number of outpatient visits by the ratio of outpatient revenue per outpatient visit to inpatient revenue per inpatient day, and adding the product to the number of inpatient days.

NOTES: Q designates quarter of year. Quarterly data are not seasonally adjusted.

SOURCE: American Hospital Association: National Hospital Panel Survey Reports. Chicago. Monthly reports for Jan. 1987-Sept. 1990.

Table 2

Percent change in selected community hospital statistics: 1987-90

ItemCalendar year1987Q31988Q31989Q31989Q41990Q11990Q21990Q3
198719881989
Annual percent changePercent change from the same period of previous year
Operating expenses
Total10.510.29.911.89.89.210.710.911.511.7
 Labor9.210.110.010.69.89.210.510.811.511.8
 Nonlabor12.010.39.813.29.99.110.911.011.511.6
Inpatient expenses8.88.28.310.07.97.79.29.29.49.5
 Amount per patient day8.68.89.29.18.99.09.19.310.911.5
 Amount per admission9.48.79.310.38.99.28.69.08.810.0
Utilization
Admissions−0.6−0.4−1.0−0.2−0.9−1.40.60.10.6−0.4
Inpatient days0.2−0.5−0.90.9−0.9−1.20.1−0.1−1.4−1.8
Adult length of stay0.8−0.10.11.10.00.2−0.5−0.2−1.9−1.3
Surgical operations2.91.00.63.00.8−1.31.61.32.14.0
Outpatient visits5.86.24.05.55.63.15.16.05.46.7
Beds−0.9−1.3−1.3−0.7−1.3−1.5−1.1−1.0−0.8−0.8
Adult occupancy rate10.70.40.40.90.20.20.80.6−0.4−0.7
Full-time equivalent (FTE) personnel
Total0.71.11.60.91.21.72.02.42.42.1
Number per bed1.62.53.01.62.53.33.03.43.32.9
Adjusted patient days per FTE1.00.2−1.01.6−0.4−1.6−0.5−0.9−1.9−1.9
Adjusted patient days1.71.30.62.50.90.11.51.50.50.2

Change in rate, rather than percent change.

NOTE: Q designates quarter of year.

SOURCE: American Hospital Association: National Hospital Panel Survey Reports. Chicago. Monthly reports for Jan. 1987-Sept. 1990.

More than three-quarters of all expenses covered services delivered on an inpatient basis. Average inpatient expenses per admission topped $5,000 for the first time in the third quarter of 1990, averaging $5,097. This amount represents a 10-percent increase from the same quarter 1 year ago. The number of admissions fell 0.4 percent between the third quarter of 1989 and 1990, a reversal to the trend of increasing admissions experienced during the prior three quarters. Community hospitals delivered 53 million days of inpatient care during the third quarter of 1990, a decline of 1.8 percent from the same period 1 year ago (Figure 1). The average length of stay remained essentially unchanged from the previous quarter at 6.5 days per admission, but is .1 day lower than the same period 1 year ago.
Figure 1

Percent change in inpatient days, outpatient visits, and surgical operations from the same period of previous year: 1980-90

Activity in outpatient departments, including services delivered in clinics and emergency rooms, remained brisk. Number of visits, 83.4 million in the third quarter of 1990, increased 6.7 percent from the third quarter of 1989. Community hospitals provided the site for 5,496 thousand surgical operations during the third quarter of 1990. Growth in the number of operations performed on both an inpatient and outpatient basis was strong, up 4.0 percent from the same period last year. Community hospitals operated 920,000 beds in the third quarter of 1990; on average, 62.6 percent of these beds were occupied. The number of beds in operation continued to decline during the third quarter, down .8 percent from last year (Figure 2). The decline in beds has failed to keep pace with the decline in inpatient days. As a result, the occupancy rate during the third quarter of 1990 was lower than occupancy rates during the third quarter in any of the previous 3 years.
Figure 2

Percent change in beds and level change in occupancy rates from the same period of previous year: 1980-90

Private health sector: Employment, hours, and earnings

Levels of employment, hours, and earnings in private (nongovernment) health service establishments are shown in Table 3. These data were drawn from the Bureau of Labor Statistics (BLS) “Establishment” survey of the private nonagricultural sector. An average of 8.2 million persons were employed on a full-time or part-time basis in private health service establishments during quarter ending September 1990. These workers comprise 9 percent of all private employment. Nonsupervisory health care sector employees worked a 32.8-hour week and earned $10.47 an hour. Workers in these establishments worked fewer hours per week while earning more per hour than workers in the private economy as a whole. Whereas health care workers consistently worked fewer hours than the average worker in the private economy, only since the fourth quarter of 1988 have the hourly earnings of health workers surpassed those of the average worker.
Table 3

Employment, hours, and earnings in private health service establishments, by selected type of establishment: 1987-90

Type of establishment and measureCalendar year1987Q31988Q31989Q31989Q41990Q11990Q21990Q3
198719881989
Health services (SIC 80)
Total employment in thousands6,805.47,121.07,550.76,859.77,181.37,624.17,735.27,872.18,041.08,208.6
 Nonsupervisory workers:
  Employment in thousands6,052.16,324.36,713.46,101.96,382.66,780.56,873.96,995.47,148.27,297.6
  Average weekly hours32.432.532.532.632.532.632.532.432.532.8
  Average hourly earnings$8.69$9.21$9.82$8.73$9.26$9.90$10.07$10.24$10.31$10.47
Offices and clinics of medical doctors (SIC 801)
Total employment in thousands1,142.31,203.81,288.31,152.91,213.41,303.11,328.41,359.81,396.91,434.2
 Nonsupervisory workers:
  Employment in thousands946.0992.01,064.0954.41,001.41,076.21,095.41,121.91,154.31,185.2
  Average weekly hours31.131.631.931.231.532.032.031.831.531.9
  Average hourly earnings$8.61$9.07$9.78$8.65$9.07$9.85$10.09$10.31$10.46$10.67
Offices and clinics of dentists (SIC 802)
Total employment in thousands470.4484.6502.7472.9487.0506.2510.1514.2520.8526.0
 Nonsupervisory workers:
  Employment in thousands414.7424.5439.9416.8426.4442.9446.4451.0456.9460.9
  Average weekly hours28.328.528.528.328.428.328.428.328.428.5
  Average hourly earnings$8.50$8.82$9.40$8.48$8.87$9.42$9.62$9.88$10.08$10.22
Nursing and personal care facilities (SIC 805)
Total employment in thousands1,285.31,314.31,369.71,294.51,324.81,382.41,397.41,416.51,444.01,472.4
 Nonsupervisory workers:
  Employment in thousands1,161.21,187.01,238.31,170.61,197.81,250.21,262.41,278.61,304.41,329.7
  Average weekly hours31.631.631.932.031.732.231.931.731.932.5
  Average hourly earnings$6.00$6.33$6.79$6.04$6.39$6.84$6.96$7.07$7.18$7.27
Private hospitals (SIC 806)
Total employment in thousands3,143.03,295.03,472.33,168.13,323.13,504.03,540.53,593.43,650.13,715.9
 Nonsupervisory workers:
  Employment in thousands2,866.93,010.83,176.42,890.53,038.63,207.43,237.93,287.83,340.13,403.5
  Average weekly hours34.234.034.034.334.134.234.034.234.234.4
  Average hourly earnings$9.84$10.51$11.21$9.89$10.59$11.31$11.49$11.62$11.66$11.85
All private nonagricultural establishments
Total employment in thousands85,19088,15090,64486,20689,23591,53991,82190,43692,27293,011
 Nonsupervisory workers:
  Employment in thousands68,97671,38373,47469,87372,35474,28974,52873,10474,79175,445
  Average weekly hours34.834.734.635.034.934.934.634.234.534.8
  Average hourly earnings$8.98$9.28$9.66$8.96$9.29$9.67$9.82$9.90$9.97$10.05
Employment in thousands
All hospitals4,437.54,601.04,786.24,471.24,631.64,824.24,870.94,933.25,001.05,078.1
Private hospitals (SIC 806)3,143.03,295.03,472.33,168.13,323.13,504.03,540.53,593.43,650.13,715.9
Federal hospitals249.4240.7225.6252.8238.1226.1226.7227.1227.7228.6
State hospitals438.7446.2450.0440.9448.0450.9451.8452.2454.4454.6
Local hospitals606.4619.0638.3609.4622.5643.2651.9660.5668.8679.0

Excludes hospitals, clinics, and other health-related establishments run by all governments.

NOTES: For the first time, data presented here incorporates conversion to the 1987 Standard Industrial Classification (SIC) and a historical reconstruction of components back to the inception of the series, whenever possible. In addition, data include the annual recalibration of employment and earnings estimates using unemployment insurance reports (ES202). Q designates quarter of year. Quarterly data are not seasonally adjusted.

SOURCE: U.S. Department of Labor, Bureau of Labor Statistics: Employment and Earnings. Washington. U.S. Government Printing Office. Monthly reports for Jan. 1987-Sept. 1990.

Employment in the private health sector grew nearly five times as fast as in the private sector as a whole during the third calendar quarter of 1990: Between the third quarter of 1989 and the third quarter of 1990, growth in employment in the health care sector accelerated to 7.7 percent while growth in employment in all private establishments slowed to 1.6 percent (Table 4). Within the health sector, employment in physicians' offices showed the strongest growth, up 10.1 percent in the third quarter. This is the first double-digit employment growth seen in physicians' offices in the 1980s. Employment in private hospitals and nursing and personal care facilities continued to grow at rates four times faster than the rest of private economy.
Table 4

Percent change in employment, hours, and earnings in private health service establishments, by selected type of establishment: 1987-90

Type of establishment and measureCalendar year1987Q31988Q31989Q31989Q41990Q11990Q21990Q3
198719881989
Annual percent changePercent change from same period of previous year
Health services (SIC 80)
Total employment4.14.66.04.14.76.26.67.07.47.7
 Nonsupervisory workers:
  Employment4.24.56.24.14.66.26.66.97.47.6
  Average weekly hours−0.10.20.10.3−0.30.30.30.00.30.6
  Average hourly earnings4.25.96.74.26.16.96.56.46.45.8
Offices and clinics of medical doctors (SIC 801)
Total employment5.45.47.05.35.27.48.39.09.610.1
 Nonsupervisory workers:
  Employment5.04.97.34.94.97.58.08.89.610.1
  Average weekly hours−0.21.41.00.01.01.60.90.0−0.9−0.3
  Average hourly earnings3.25.37.83.54.98.68.18.18.68.3
Offices and clinics of dentists (SIC 802)
Total employment2.73.03.72.43.03.94.24.43.83.9
 Nonsupervisory workers:
  Employment2.52.43.62.42.33.94.34.64.14.1
  Average weekly hours0.90.8−0.21.40.4−0.4−0.7−0.4−1.00.7
  Average hourly earnings2.83.96.62.54.66.26.56.88.18.5
Nursing and personal care facilities (SIC 805)
Total employment3.12.34.22.62.34.35.25.76.26.5
 Nonsupervisory workers:
  Employment3.12.24.32.62.34.45.25.66.16.4
  Average weekly hours0.50.01.01.3−0.91.60.90.30.60.9
  Average hourly earnings3.55.47.34.05.87.06.96.46.96.3
Private hospitals (SIC 806)
Total employment3.54.85.43.84.95.45.55.85.96.0
 Nonsupervisory workers:
  Employment3.65.05.53.95.15.65.55.86.06.1
  Average weekly hours−0.3−0.50.10.0−0.60.30.60.90.90.6
  Average hourly earnings5.16.86.75.07.06.96.35.95.44.7
All private nonagricultural establishments
Total employment2.83.52.83.03.52.62.32.11.81.6
 Nonsupervisory workers:
  Employment2.93.52.93.13.62.72.42.11.81.6
  Average weekly hours0.1−0.2−0.30.3−0.30.0−0.6−0.3−0.3−0.3
  Average hourly earnings2.53.44.12.63.64.24.03.84.03.9
Employment
All hospitals2.63.74.03.03.64.24.65.05.25.3
Private hospitals (SIC 806)3.54.85.43.84.95.45.55.85.96.0
Federal hospitals1.2−3.5−6.32.9−5.8−5.1−1.80.71.61.1
State hospitals0.11.70.80.51.60.70.80.81.30.8
Local hospitals0.92.13.11.12.13.34.85.55.85.6

Excludes hospitals, clinics, and other health-related establishments run by all governments.

NOTES: For the first time, data presented here incorporates conversion to the 1987 Standard Industrial Classification (SIC) and a historical reconstruction of components back to the inception of the series whenever possible. In addition, data include the annual recalibration of employment and earnings estimates using unemployment insurance reports (ES202). Q designates quarter of year. Quarterly data are not seasonally adjusted.

SOURCE: U.S. Department of Labor, Bureau of Labor Statistics: Employment and Earnings. Washington. U.S. Government Printing Office. Monthly reports for Jan. 1987-Sept. 1990.

Implied nonsupervisory work-hours and payroll growth, developed from the BLS establishment survey data, are composite measures of business activity. The slowdown of the general economy can be seen in deceleration in growth in work-hours (nonsupervisory employment times average weekly hours) in all private establishments. Despite this slowdown, growth in work-hours in private health service establishments has continued to accelerate (Table 5 and Figure 3). Between the third quarter of 1989 and the third quarter of 1990, work-hours in all private establishments increased 1.3 percent, while work-hours in private health service establishments increased 8.3 percent
Table 5

Percent change in implied nonsupervisory payrolls and work-hours in private health service establishments, by selected type of establishment: 1987-90

Type of establishmentCalendar year1987 Q31988 Q31989 Q31989 Q41990 Q11990 Q21990 Q3
198719881989
Annual percent changePercent change from same period of previous year
Private health service establishments (SIC 80)
Payrolls8.510.913.48.910.713.914.014.014.614.4
Work-hours4.14.76.24.54.36.66.96.97.78.3
Offices and clinics of medical doctors (SIC 801)
Payrolls8.112.116.88.511.318.317.917.617.918.9
Work-hours4.96.48.44.95.99.29.18.88.69.8
Offices and clinics of dentists (SIC 802)
Payrolls6.37.110.36.77.210.210.511.311.413.6
Work-hours3.53.23.43.92.73.53.64.23.04.8
Nursing and personal care facilities (SIC 805)
Payrolls7.27.813.08.17.413.213.712.814.114.3
Work-hours3.62.25.33.91.46.06.25.96.87.4
Private hospitals (SIC 806)
Payrolls8.611.712.69.111.812.912.813.012.711.9
Work-hours3.34.55.63.94.55.96.16.76.96.7
All private nonagricultural establishments
Payrolls5.56.86.85.87.16.86.05.55.75.4
Work-hours3.13.32.63.43.32.71.81.81.51.3

Excludes hospitals, clinics, and other health-related establishments run by all governments.

NOTES: For the first time, data presented here incorporates conversion to the 1987 Standard Industrial Classification (SIC) and a historical reconstruction of components back to the inception of the series, whenever possible. In addition, data include the annual recalibration of employment and earnings estimates using unemployment insurance reports (ES202). Q designates quarter of year. Quarterly data are not seasonally adjusted.

SOURCE: U.S. Department of Labor, Bureau of Labor Statistics: Employment and Earnings. Washington. U.S. Government Printing Office. Monthly reports for Jan. 1987-Sept. 1990.

Figure 3

Percent change for nonsupervisory work-hours from the same period of previous year: 1983-90

Nonsupervisory payrolls (nonsupervisory work-hours multiplied by average hourly earnings) increased by 14.4 percent for health service establishments in the third quarter of 1990, while payroll in all private establishments increased 5.4 percent (Figure 4). Within the health sector, payroll of physicians' offices grew the fastest, 18.9 percent, and payrolls of private hospitals grew the slowest, 11.9 percent.
Figure 4

Percent change for nonsupervisory payroll from the same period of previous year: 1983-90

Prices

Consumer prices

Prices paid by consumers of medical care rose 9.3 percent between the third quarter of 1989 and the third quarter of 1990, as measured by the Consumer Price Index (CPI) for all urban consumers. By this measure, overall prices increased by 5.5 percent for the same time period. Since the second quarter of 1981, medical care prices grew faster than the prices of all items (including health); in the first three quarters of 1990, growth in medical care prices accelerated, widening the gap between medical care and all items price inflation (Tables 6 and 7).
Table 6

Selected items of the Consumer Price Index for all urban consumers: 1987-90

ItemCalendar year1987Q31988Q31989Q31989Q41990Q11990Q21990Q3
198719881989
All items113.6118.3124.0114.4119.1124.7125.9128.0129.3131.6
 All items less medical care112.6117.0122.4113.3117.9123.1124.2126.3127.5129.6
  Apparel and upkeep110.6115.4118.6110.0114.4116.7121.3120.8125.2123.3
  Energy88.689.294.392.091.997.193.796.597.3103.8
  Food and beverages113.5118.2124.9113.9119.4125.6126.7130.7131.3132.7
  Housing: shelter121.2127.1132.8122.0128.0133.9135.2136.9138.6141.9
 Medical care130.1138.6149.3131.2139.9150.7153.7157.4160.8164.8
  Medical care services1130.0138.3148.9131.0139.6150.3153.3157.1160.5164.7
   Professional services128.8137.5146.4130.1138.8147.5149.3152.2155.0157.7
    Physicians' services130.4139.8150.0131.7141.3151.4153.2156.5159.8162.6
    Dental services128.8137.5146.0130.1138.6146.9149.1152.3154.4157.1
   Hospital and related services131.6143.9160.5132.8145.7162.6167.3171.5174.5180.3
    Hospital room131.1143.3158.1132.2145.4159.8165.0169.7172.2177.6
    Other inpatient services2103.9114.0128.9104.9115.2130.7134.2136.7139.4144.7
    Outpatient services2103.3112.5124.7104.0113.5126.7129.8134.0136.3140.1
 Medical care commodities130.9139.9150.8132.2141.2152.3155.1158.5162.3165.0
  Prescription drugs140.8152.0165.2142.2153.4167.2170.6175.5180.2183.8
  Nonprescription drugs and medical supplies2103.1108.1114.6104.1109.1115.3117.1118.0120.1121.2
   Internal and respiratory over-the-counter drugs123.9130.8138.7125.2131.9139.4141.7142.6144.9146.4
   Nonprescription medical equipment and supplies119.6123.9131.1120.6124.9132.1134.1135.2138.1138.9

Includes private health insurance (not shown separately).

December 1986 = 100.

NOTES: 1982-84 = 100.0 unless noted. Q designates quarter of year. Quarterly data not seasonally adjusted.

SOURCE: U.S. Department of Labor, Bureau of Labor Statistics: CPI Detailed Report. Washington. U.S. Government Printing Office. Monthly reports for Jan. 1987-Sept. 1990.

Table 7

Percent change in selected items of the Consumer Price Index for all urban consumers: 1987-90

ItemCalendar year1987 Q31988 Q31989 Q31989 Q41990 Q11990 Q21990 Q3
198719881989
Annual percent changePercent change from the same period of previous year
All Items3.74.14.84.24.14.74.65.24.65.5
 All Items less medical care3.43.94.64.04.04.44.45.04.35.3
  Apparel and upkeep4.44.32.84.04.02.01.53.64.65.7
  Energy0.40.85.76.7−0.25.75.08.00.26.8
  Food and beverages4.14.15.73.74.95.25.36.55.45.6
  Housing: shelter4.74.84.54.74.94.64.85.05.26.0
 Medical care6.66.57.76.66.67.78.48.59.09.3
  Medical care services16.66.57.66.56.67.78.48.59.19.6
   Professional services6.66.76.46.96.76.36.46.26.66.9
    Physicians' services7.47.27.37.57.37.17.26.67.37.4
    Dental services6.76.86.27.16.56.06.16.56.36.9
   Hospital and related services6.99.311.57.19.711.611.810.910.810.9
    Hospital room7.29.210.37.610.09.911.111.111.211.1
    Other inpatient servicesNA9.713.1NA9.813.512.510.310.110.7
    Outpatient servicesNA8.910.9NA9.111.611.511.811.210.6
  Medical care commodities6.76.97.86.76.87.88.18.58.38.3
   Prescription drugs8.07.98.77.77.99.09.210.110.09.9
   Nonprescription drugs and medical suppliesNA4.96.0NA4.85.76.05.65.05.1
    Internal and respiratory over-the-counter drugs5.35.56.15.75.45.75.95.34.65.0
    Nonprescription medical equipment and supplies4.03.65.84.33.65.76.25.95.75.2

Includes private health insurance (not shown separately).

NOTES: Q designates quarter of year. NA designates not available.

SOURCE: U.S. Department of Labor, Bureau of Labor Statistics: CPI Detailed Report. Washington. U.S. Government Printing Office. Monthly reports for Jan. 1987-Sept. 1990.

The largest element of medical prices is the medical service component of the index. One segment of the service component, hospital and related services, has risen 10.9 percent from the third quarter of 1989 to the third quarter of 1990. This continues the trend of double digit inflation for hospital and related services that began seven quarters earlier (Figure 5). In contrast to the accelerating price growth in hospital and related services, prices paid for professional services have increased at a more consistent pace.
Figure 5

Percent change for selected items of the Consumer Price Indexes from the same period of previous year: 1980-90

The other major component of medical prices is medical care commodities, which had increased 8.3 percent from the third quarter in 1989 to the third quarter of 1990. Prescription drugs, one element of medical care commodities, has consistently shown the largest growth. Growth between the first three quarters of 1989 and 1990 averaged 10.0 percent, higher than the growth exhibited for the same quarters 1 year ago. Total prescription drug expenditures are primarily driven by price. If this price growth continues into the fourth quarter of 1990, then growth in overall expenditures for prescription drugs is expected to accelerate in 1990. The growth in all items less medical care was 5.3 percent for the period between the third quarter of 1989 and 1990, with energy prices exhibiting strong growth, up 6.8 percent. The full impact of the increases in energy prices, most specifically oil, has yet to be felt, but is expected to have a substantial impact in the last quarter of 1990 as prices are driven by the demand during the cold winter months and the situation in the Persian Gulf.

Background on input price indexes

In 1979, the Health Care Financing Administration (HCFA) developed the hospital input price index. This input price index was designed to measure the pure price changes associated with expenditure changes for hospital services. The skilled nursing facility (SNF) and home health agency (HHA) input price indexes were developed in the early 1980s. These indexes are often referred to as “market baskets” because they price a consistent set of goods and services over time. Since their creation, they have played an important role in helping to set payment percent increases and understanding the contribution of input price increases to growing health expenditures. The input price indexes, or “market baskets,” are Laspeyres or fixed-weight indexes that are constructed in two steps. First, a base period is selected. For example, for the prospective payment system (PPS) hospital input price index, the base period is 1987. Next, a set of cost categories such as food, fuel, and labor are identified and their 1987 expenditure amounts determined. The proportion or share of total expenditures accounted for by specific spending categories is calculated. These porportions are called cost or expenditure weights. There are 28 expenditure categories in the 1987-based hospital PPS input price index. In the next step, a price proxy is selected to match each expenditure category. The purpose of the price proxy is to measure the rate of price increase of the goods or services in that expenditure category. The price proxy index for each spending category is multiplied by the expenditure weight for the category. The sum of these products (weights multiplied by the price index) over all cost categories yields the composite input price index for any given time period, usually a fiscal year or a calendar year. The percent change in the input price index is an estimate of price change over time for a fixed quantity of goods and services purchased by a provider. The input price indexes are estimated on a historical basis and forecasted out several years. The HCFA-chosen price proxies are forecasted under contract with DRI/McGraw-Hill (DRI). Each quarter, 1 month after the end of a calendar quarter, DRI updates its macroeconomic forecasts of wages and prices. DRI bases its new forecasts on updated historical information and revised forecast assumptions. New forecasts and estimates are done in February, May, August, and November. Some of the data in Tables 8 through 13 are forecasted and are expected to change as more recent historical data become available and subsequent quarterly forecasts are received.
Table 8

Percent change in four-quarter averages in the prospective payment system hospital input price index, by expense category: 1988-91

Expense category1Base year weights 19872Four quarters ending
1988Q11988Q21988Q31988Q41989Q11989Q21989Q31989Q41990Q11990Q21990Q31990Q41991Q11991Q21991Q31991Q4
Total100.0004.24.54.75.05.45.65.65.45.14.84.74.85.15.45.85.8
Wages and salaries52.2124.14.34.44.54.84.84.94.94.95.04.94.84.84.85.15.3
Employee benefits9.4974.04.65.46.26.46.66.76.97.57.87.87.77.06.56.26.1
Other professional fees1.6494.24.44.64.54.74.64.54.64.64.74.84.94.95.05.35.5
Energy and utilities2.3703.43.40.6−1.7−0.52.34.87.48.55.65.912.419.128.031.321.1
 Fuel oil, coal, and other fuel0.62515.713.13.2−5.2−4.20.96.213.617.311.313.927.439.756.859.233.1
 Electricity1.143−1.5−1.0−0.30.61.62.42.73.23.12.82.23.96.39.010.69.2
 Natural gas0.343−7.5−4.1−4.3−2.7−0.62.05.66.04.92.1−1.3−0.32.08.115.817.5
 Motor gasoline0.22914.912.54.3−2.4−0.96.09.613.516.37.711.126.742.161.063.137.5
 Water and sewerage maintenance0.0365.45.35.35.55.76.06.06.16.26.46.66.96.97.07.17.2
Professional liability insurance1.43317.318.020.324.222.517.09.70.6−2.2−1.6−0.6−0.1−0.7−1.7−1.81.9
All other32.8394.04.34.75.25.96.46.35.84.94.13.73.84.34.95.55.6
 Other products21.7884.24.55.15.86.67.26.86.14.93.83.33.44.04.85.45.6
  Pharmaceuticals3.8738.88.38.07.98.18.59.09.19.39.59.18.88.48.08.28.6
  Food3.2993.12.93.54.35.05.45.04.53.93.84.14.34.54.44.54.4
   Direct purchase2.1112.62.33.34.55.46.05.24.53.53.33.73.94.23.93.93.8
   Contract service1.1883.83.83.94.04.34.44.54.64.64.74.84.95.25.35.55.5
  Chemicals and cleaning products3.1267.38.210.011.913.914.511.77.52.2−2.0−3.1−1.82.26.59.610.0
  Surgical and medical instruments2.6721.61.31.41.72.33.43.94.13.93.22.82.42.12.12.32.6
  Photographic supplies2.6231.61.71.72.23.95.97.78.88.06.65.34.44.14.54.23.5
  Rubber and plastics2.3232.64.25.66.26.15.44.23.02.01.10.80.81.32.13.13.7
  Paper products1.3994.45.97.69.09.89.58.26.54.62.71.81.41.82.73.54.1
  Apparel1.1421.11.62.43.02.72.32.02.12.52.93.02.62.22.02.02.3
  Minor machinery and equipment0.4971.61.82.22.62.93.23.53.73.63.43.12.72.62.83.13.5
  Miscellaneous products0.8332.62.42.32.53.34.34.85.15.24.54.55.56.17.27.76.2
 Other services11.0513.63.93.94.14.54.85.15.14.94.64.44.54.85.25.65.6
  Business services3.8454.14.64.54.44.24.55.15.55.85.85.45.35.35.25.35.0
  Computer and data processing1.9926.26.87.06.76.86.97.27.47.16.56.26.16.57.17.37.4
  Transportation and shipping1.2334.64.64.03.13.34.34.75.05.13.83.94.65.06.36.76.6
  Telephone0.987−0.9−0.7−0.6−0.4−0.30.00.81.01.21.10.91.52.02.83.53.8
  Blood services0.5880.6−2.0−2.41.24.77.98.05.53.11.10.61.02.02.83.13.3
  Postage0.3720.03.46.810.113.59.86.33.10.00.00.00.00.73.46.18.8
  Other—labor intensive1.2332.72.62.93.43.84.03.93.73.63.73.73.73.94.04.44.7
  Other—nonlabor intensive0.8004.14.14.14.14.34.64.84.84.94.85.15.65.86.26.15.3

Data sources used to estimate the input price index relative weights and choice of price proxies were taken from the Federal Register (1990).

Category weights may not sum to total due to rounding.

NOTES: Data for 1988 and 1989 are historical. Data for 1990 are partly historical and partly forecasted. Data for 1991 are forecasted. Q designates quarter of year. Percent change data shown are four-quarter moving averages. The following is an example of how this computation is done: Use the quarterly index levels shown in Tables 9, 11, and 13. Choose the four-quarter period ending for which you would like to calculate the percent change (e.g., year-end 1990: Quarter 3). Count back three quarters so that you have a total of four (e.g., 1990: Quarter 3; 1990: Quarter 2; 1990: Quarter 1; 1989: Quarter 4). Average these four quarters (add the index levels and divide by 4). Now, take the four quarters previous to the four quarters that you just used (e.g., 1989: Quarter 3; 1989: Quarter 2; 1989: Quarter 1; 1988: Quarter 4). Average these four quarters. Finally, compute a percent change using the two averages.

SOURCES: Health Care Financing Administration, Office of the Actuary: Data from the Office of National Health Statistics, Division of Health Cost Analysis. Forecasts created by DRI/McGraw-Hill are for the fourth quarter, 1990.

Table 13

Quarterly index levels of the home health agency input price index, by expense category: 1988-91

Expense category1Base year weights 197621988 Q11988 Q21988 Q31988 Q41989 Q11989 Q21989 Q31989 Q41990 Q11990 Q21990 Q31990 Q41991 Q11991 Q21991 Q31991 Q4
Total100.00228.4231.6235.4239.4242.9245.3249.9253.4256.8258.4262.7267.1271.0273.4277.8281.8
Wages and salaries65.14235.6239.1243.5248.3252.1254.0259.9263.9266.9268.3273.5278.6282.9285.0290.1294.6
Employee benefits7.90224.0225.9228.6231.1233.4235.9238.2241.1245.8249.2252.4256.2259.6262.8265.8268.9
Transportation4.87193.9195.9198.6200.6202.5209.7207.8208.6212.5213.7214.6215.8219.0219.9222.7225.5
Office costs2.79237.5240.2243.0246.0249.2251.9255.0258.1262.1265.3268.4271.4274.8278.3281.8285.2
Rent1.35206.5207.6210.1212.2214.0215.6218.3221.0222.6224.6228.3229.2230.4232.5235.2237.8
Nonrental space occupancy1.17221.8223.8223.3222.5228.2230.6230.9236.9251.7240.3237.9241.5244.3247.8251.7255.7
Medical and nursing supplies and equipment2.81199.9203.9206.4208.7210.9215.9218.2221.6223.3228.4231.0234.6238.9244.3247.0250.3
Contract services6.87228.5231.6235.4239.5242.9245.4249.9253.5256.9258.4228.7231.4234.0236.5239.1241.7
Miscellaneous7.10204.4206.6209.1211.4214.2217.3218.9221.0225.4227.2262.8267.2271.1273.4277.8281.9

Data sources used to estimate the input price index relative weights and choice of price proxies were taken from Federal Register (1988).

Category weights may not sum to total due to rounding.

NOTE: Data for 1988 and 1989 are historical. Data for 1990 are partly historical and partly forecasted. Data for 1991 are forecasted. Q designates quarter of year.

SOURCE: Health Care Financing Administration, Office of the Actuary: Data from the Office of National Health Statistics, Division of Health Cost Analysis. Forecasts created by DRI/McGraw-Hill are for the fourth quarter, 1990.

The methodology and price proxy definitions used in the input price indexes are described in the Federal Register notices that accompany the revisions of the PPS, HHA, and SNF cost limits. A description of the current PPS input price index was published September 4, 1990 (Federal Register). The latest HHA regulatory input price index was published October 18, 1988 (Federal Register), and the latest SNF input price index was published October 2, 1987 (Federal Register).

Current data

Each input price index is presented in two tables: The first is a percent-change table, and the second provides the actual index numbers from which the percentages were computed. The hospital input price index for PPS is in Tables 8 and 9. The SNF input price index is in Tables 10 and 11. The HHA input price index is in Tables 12 and 13.
Table 9

Quarterly index levels of the prospective payment system hospital input price index, by expense category: 1988-91

Expense category1Base year weights 198721988Q11988Q21988Q31988Q41989Q11989Q21989Q31989Q41990Q11990Q21990Q31990Q41991Q11991Q21991Q31991Q4
Total100.000103.8105.4107.1108.4110.0111.3112.6113.6115.3116.4117.8119.6122.1123.3124.9126.1
Wages and salaries52.212103.6104.9106.4107.5108.9109.9111.6112.8114.4115.5116.7118.0120.1121.2123.3124.7
Employee benefits9.497105.0106.3108.0109.2111.6113.4115.8117.4120.9122.4124.3125.6128.1129.6131.9133.4
Other professional fees1.649103.8105.1106.7107.3108.8109.6111.4112.3114.1114.9116.7118.0119.9120.8123.5124.9
Energy and utilities2.37097.4100.5102.998.8101.5111.0110.2106.7110.2110.2119.3142.6149.8148.1145.6140.7
 Fuel oil, coal, and other fuel0.62598.6103.3101.997.9103.4123.1113.9115.9124.0120.7138.7198.0208.8198.7189.2177.2
 Electricity1.14396.799.2105.198.899.5102.4108.7102.1102.2104.2110.1112.4114.9117.2118.5118.0
 Natural gas0.34396.996.293.697.2102.4102.7101.7100.3103.798.496.5107.4114.2119.1121.2122.4
 Motor gasoline0.22996.7105.3108.3102.1102.7133.4119.3112.7121.1127.9146.6197.3219.6210.9201.2183.4
 Water and sewerage maintenance0.036104.1105.7108.3109.1110.7112.1114.5115.9118.1119.7122.2124.2126.4128.4130.9133.4
Professional liability insurance1.433115.8124.0132.6141.2130.7126.2129.4130.3130.8132.0131.4122.0127.8132.5132.5133.3
All other32.839103.8105.4107.2108.9111.0112.4112.8113.6114.9116.0116.9118.9121.3122.8123.8125.0
 Other products21.788104.0105.9108.0109.8112.2113.6113.7114.5115.7116.7117.5119.5122.0123.5124.5125.5
  Pharmaceuticals3.873107.0109.3111.0113.5116.4119.0121.7123.9127.6130.4131.6133.8137.7140.9143.3146.7
  Food3.299102.3104.0106.5106.9108.5109.3110.1110.9112.4114.3114.9115.9117.6118.8120.3120.9
   Direct purchase2.111101.7103.8107.0106.9108.8109.3109.8110.4112.0114.1114.4114.9116.7117.7119.1119.2
   Contract service1.188103.3104.4105.7106.7108.0109.2110.6111.7113.0114.7115.8117.7119.2120.8122.4124.0
  Chemicals and cleaning products3.126107.5111.6116.8120.5125.2125.0121.0119.6118.7118.4120.0125.0131.5132.4133.3132.9
  Surgical and medical instruments2.672101.2101.4102.3103.7104.9106.6106.4107.4108.2109.0108.7109.4110.7111.5111.9112.5
  Photographic supplies2.623100.9102.1102.9105.2109.3111.4112.6113.8115.2115.5117.0119.0120.2121.3120.4121.0
  Rubber and plastics2.323104.8106.5108.3109.0110.0110.7110.5110.4110.9111.1111.0112.2113.7115.2116.3116.6
  Paper products1.399106.3108.9111.8114.0116.2117.8117.6118.1118.0118.7119.2120.5121.9123.4124.7126.0
  Apparel1.142102.1103.2103.5103.4104.0104.6105.7106.6107.5107.8108.2108.3109.3110.4110.9111.0
  Minor machinery and equipment0.497102.0102.5103.3104.1105.4106.3107.3107.9108.9109.4109.8110.5111.9113.2114.0114.9
  Miscellaneous products0.833101.4102.6103.7104.8106.6108.7108.6109.9112.1112.3113.8119.2120.8121.1121.6122.2
 Other services11.051103.4104.4105.5107.1108.7110.2111.0112.0113.5114.6115.9117.8119.8121.3122.5124.1
  Business services3.845104.8104.8105.6107.0109.4110.8112.1113.3115.4116.9117.5119.6121.7122.6123.6125.2
  Computer and data processing1.992106.2107.4109.0111.6114.0115.8117.4119.5120.7122.1125.0127.4129.7131.6134.1136.2
  Transportation and shipping1.233102.9104.0105.4106.4107.4111.3110.3110.7112.7113.4115.6118.3119.7121.7123.0126.0
  Telephone0.98799.499.698.899.599.7100.6100.8100.1100.9101.1102.1103.0104.1105.2106.1107.2
  Blood services0.58896.997.4101.2104.8105.8105.6105.4105.5105.5105.9107.3107.9109.4109.5110.6111.1
  Postage0.372100.0113.5113.5113.5113.5113.5113.5113.5113.5113.5113.5113.5116.5125.9125.9125.9
  Other—labor intensive1.233102.3103.3104.6105.8106.5107.1108.1109.6110.5111.6111.7113.2115.9116.6117.2118.2
  Other—nonlabor intensive0.800103.3104.6106.0107.1108.3110.0110.9112.0113.9115.2117.3119.6120.8122.2123.6124.3

Data sources used to estimate the input price index relative weights and choice of price proxies were taken from the Federal Register (1990).

Category weights may not sum to total due to rounding.

NOTES: Data for 1988 and 1989 are historical. Data for 1990 are partly historical and partly forecasted. Data for 1991 are forecasted. Q designates quarter of year.

SOURCES: Health Care Financing Administration, Office of the Actuary: Data from the Office of National Health Statistics, Division of Health Cost Analysis. Forecasts created by DRI/McGraw-Hill are for the fourth quarter, 1990.

Table 10

Percent change in four-quarter averages in the skilled nursing facility input price index, by expense category: 1988-91

Expense category1Base year weights 19772Four quarters ending
1988Q11988Q21988Q31988Q41989Q11989Q21989Q31989Q41990Q11990Q21990Q31990Q41991Q11991Q21991Q31991Q4
Total100.003.94.34.65.05.76.26.46.56.36.26.26.36.36.66.96.8
Wages and salaries63.024.04.54.95.46.37.07.37.47.06.86.66.46.36.56.97.2
Employee benefits7.603.33.84.55.15.04.84.54.34.64.95.35.85.95.85.75.3
Food9.743.32.93.54.35.15.85.55.24.84.64.74.74.44.14.03.9
 Direct purchase4.932.62.33.34.55.46.05.24.53.53.33.84.04.44.14.14.0
 Contract service4.813.83.43.74.14.95.75.85.86.05.65.55.34.44.03.93.8
Fuel and other energy4.272.22.92.21.01.21.52.33.95.86.06.89.910.814.316.511.7
 Electricity1.210.30.91.01.41.62.12.82.83.12.92.52.63.03.75.46.0
 Natural gas0.91−3.8−3.0−2.1−0.61.22.43.02.82.11.20.41.33.58.815.618.5
 Fuel oil and coal1.666.97.95.00.2−0.8−1.00.34.710.211.514.622.322.528.128.313.2
 Water and sewerage maintenance0.495.45.35.35.55.76.06.06.16.26.46.66.96.97.07.17.2
All other15.374.94.94.94.95.15.45.55.65.75.65.86.16.26.36.36.0
 Drugs1.508.88.38.07.98.18.59.09.19.39.59.18.88.48.08.28.6
 Supplies3.284.14.14.14.14.34.64.84.84.94.85.15.65.86.26.15.3
 Health services1.217.27.17.07.27.47.47.47.37.17.17.27.47.87.97.97.7
 Other business services4.594.24.34.44.64.74.84.94.95.05.15.15.35.35.45.45.3
 Miscellaneous4.794.14.14.14.14.34.64.84.84.94.85.15.65.86.26.15.3

Data sources used to estimate the input price index relative weights and choice of price proxies were taken from the Federal Register (1987).

Category weights may not sum to total due to rounding.

NOTES: Data for 1988 and 1989 are historical. Data for 1990 are partly historical and partly forecasted. Data for 1991 are forecasted. Q designates quarter of year. Percent change data shown are four-quarter moving averages. The following is an example of how this computation is done: Use the quarterly index levels shown in Tables 9, 11, and 13. Choose the four-quarter period ending for which you would like to calculate the percent change (e.g., year-end 1990: Quarter 3). Count back three quarters so that you have a total of four (e.g., 1990: Quarter 3; 1990: Quarter 2; 1990: Quarter 1; 1989: Quarter 4). Average these four quarters (add the index levels and divide by 4). Now, take the four quarters previous to the four quarters that you just used (e.g., 1989: Quarter 3; 1989: Quarter 2; 1989: Quarter 1; 1988: Quarter 4). Average these four quarters. Finally, compute a percent change using the two averages.

SOURCES: Health Care Financing Administration, Office of the Actuary: Data from the Office of National Health Statistics, Division of Health Cost Analysis. Forecasts created by DRI/McGraw-Hill are for the fourth quarter, 1990.

Table 11

Quarterly index levels in the skilled nursing facility input price index, by expense category: 1988-91

Expense category1Base year weights 197721988Q11988Q21988Q31988Q41989Q11989Q21989Q31989Q41990Q11990Q21990Q31990Q41991Q11991Q21991Q31991Q4
Total100.00190.6192.8196.8199.8203.5205.8208.9212.3216.2218.9221.7226.1229.4235.3238.0239.9
Wages and salaries63.02188.7190.9195.7199.2203.4205.6209.4213.0216.4219.8222.7225.6229.2237.2240.0241.7
Employee benefits7.60201.7203.4205.9208.2210.2212.4214.6217.1221.3224.4227.3230.7233.8236.7239.4242.2
Food9.74161.6164.2168.0169.6172.1173.9174.8177.1180.6182.3183.0184.9187.0188.9190.7192.4
 Direct purchase4.93147.9150.8154.9156.0158.1158.7158.9161.2162.7165.7166.0167.9169.8171.5173.0174.3
 Contract service4.81175.7177.9181.5183.5186.4189.5191.2193.4198.9199.3200.4202.3204.6206.8208.9210.9
Fuel and other energy4.27196.9198.2198.1198.7202.4204.3204.7211.4222.8212.6218.4250.8252.5252.0253.0252.8
 Electricity1.21194.1194.6194.8198.8198.5201.3200.7203.7205.0206.9203.3210.0214.9218.0220.0221.6
 Natural gas0.91216.6217.2217.8223.0227.3222.8221.7227.5231.5220.9218.9239.9255.1266.9276.7280.7
 Fuel oil and coal1.66182.1183.7181.4176.7183.0187.5188.2199.3224.0201.2218.3283.9275.2263.7258.1252.7
 Water and sewerage maintenance0.49217.4220.6226.1227.8231.1234.0239.0241.9246.5249.9255.1259.2263.8268.0273.2278.4
All other15.37209.2212.1214.9217.6220.9224.3226.9229.5233.8237.0240.6244.8248.4251.9255.1257.8
 Drugs1.50249.5255.0259.0264.8271.5277.7283.8289.1297.6304.3307.0312.1321.1328.7334.4342.3
 Supplies3.28191.5193.9196.5198.5200.7204.0205.7207.7211.2213.6217.5221.8223.9226.6229.2230.5
 Health services1.21232.9237.2241.5244.2250.9254.5258.7261.8267.5273.2278.4283.0289.5294.6299.1303.6
 Other business services4.59221.0223.3225.9228.8231.9234.4237.1240.0243.8246.7249.6253.3256.8260.0263.2266.1
 Miscellaneous4.79191.5193.9196.5198.5200.7204.0205.7207.7211.2213.6217.5221.8223.9226.6229.2230.5

Data sources used to estimate the input price index relative weights and choice of price proxies were taken from the Federal Register (1987).

Category weights may not sum to total due to rounding.

NOTES: Data for 1988 and 1989 are historical. Data for 1990 are partly historical and partly forecasted. Data for 1991 are forecasted. Q designates quarter of year.

SOURCE: Health Care Financing Administration, Office of the Actuary: Data from the Office of National Health Statistics, Division of Health Cost Analysis. Forecasts created by DRI/McGraw-Hill are for the fourth quarter, 1990.

Table 12

Percent change in four-quarter averages in the home health agency input price index, by expense category: 1988-91

Expense category1Base year weights 19762Four quarters ending
1988Q11988Q21988Q31988Q41989Q11989Q21989Q31989Q41990Q11990Q21990Q31990Q41991Q11991Q21991Q31991Q4
Total100.005.05.45.86.06.26.26.26.15.55.45.45.55.65.65.65.6
Wages and salaries65.145.56.06.56.87.06.86.86.65.75.65.65.86.06.06.06.0
Employee benefits7.903.33.84.55.15.04.84.54.35.35.85.95.85.75.35.75.3
Transportation4.874.64.64.03.13.34.34.75.03.53.42.93.23.33.63.33.6
Office costs2.794.24.34.44.64.74.84.94.95.25.25.15.05.05.05.05.0
Rent1.353.83.83.83.83.83.83.83.94.24.14.03.83.43.53.43.5
Nonrental space occupancy1.172.22.92.21.01.21.62.44.06.04.81.51.21.92.91.92.9
Medical and nursing supplies and equipment2.813.73.73.53.64.34.95.45.85.95.86.16.46.76.96.76.9
Contract services6.875.45.86.06.26.26.26.16.15.55.45.45.55.65.65.65.6
Miscellaneous7.104.14.14.14.14.34.64.74.84.74.74.44.34.34.24.34.2

Data sources used to estimate the input price index relative weights and choice of price proxies were taken from the Federal Register (1988).

Category weights may not sum to total due to rounding.

NOTES: Data for 1988 and 1989 are historical. Data for 1990 are partly historical and partly forecasted. Data for 1991 are forecasted. Q designates quarter of year. Percent change data shown are four-quarter moving averages. The following is an example of how this computation is done: Use the quarterly index levels shown in Tables 9, 11, and 13. Choose the four-quarter period ending for which you would like to calculate the percent change (e.g., year-end 1990: Quarter 3). Count back three quarters so that you have a total of four (e.g., 1990: Quarter 3; 1990: Quarter 2; 1990: Quarter 1; 1989: Quarter 4). Average these four quarters (add the index levels and divide by 4). Now, take the four quarters previous to the four quarters that you just used (e.g., 1989; Quarter 3; 1989: Quarter 2; 1989: Quarter 1; 1988: Quarter 4). Average these four quarters. Finally, compute a percent change using the two averages.

SOURCE: Health Care Financing Administration, Office of the Actuary: Data from the Office of National Health Statistics, Division of Health Cost Analysis. Forecasts created by DRI/McGraw-Hill are for the fourth quarter, 1990.

Data highlight

The PPS input price index has been revised, and a new base year of 1987 has been selected (Tables 8 and 9). Effective October 1, 1990, the new PPS input price index was used to set the fiscal year 1991 market basket value for the update of the prospective payment rates. This revision also includes changes in certain variables used for price proxies. Periodically, the various input price indexes are revised so that the cost weights will reflect changes in the mix of goods and services that providers purchase.

National economic indicators

To put health-related economic trends into perspective, this section shifts focus to discuss national indicators of output, employment, and inflation. During the first three quarters of 1990, the gross national product (GNP) and employment grew at slower rates than in the past and the unemployment rate began to rise. In the medical care sector, however, growth in employment remained strong (Figure 6). Growth in prices paid for medical care goods and services accelerated; the gap in growth between prices paid for medical care and for all items widened (Figure 7). These indicators point to aggregate health care costs continuing their upward climb. As growth in the Nation's output slows, the share of the Nation's resources devoted to health care will increase sharply: The share of GNP devoted to health is expected to grow at an accelerated rate.
Figure 6

Percent change in measures of employment from the same period of previous year: 1980-90

Figure 7

Percent change in measures of price inflation from the same period of previous year: 1980-90

Output and income

GNP, the most widely used measure of the Nation's output, was $5.5 trillion during the third calendar quarter of 1990 (seasonally adjusted at annual rates). The growth of “real” GNP (also called “constant dollar” or “price-deflated” GNP) rose to 1.1 percent for the third quarter of 1990. For the fourth consecutive quarter, “real” growth fell below 2 percent. These are the lowest growth rates since the first quarter of 1983. Personal income rose to $4.7 trillion during the third quarter of 1990, up 6.3 percent from the same quarter of 1989. Disposable personal income (personal income net of taxes) grew 6.1 percent during the same period, reaching a level of $4.0 trillion. The portion of disposable income that was saved rather than spent (personal saving rate) was 4.1 percent.

Employment, unemployment, and earnings

The slowdown in the real economic growth during the first three quarters of 1990, is beginning to have an effect on the unemployment rate. From the third quarter of 1989 to the second quarter of 1990, the unemployment rate held constant at 5.3 percent. During the third calendar quarter of 1990, the unemployment rate for all workers was 5.6 percent, an increase of 0.3 percentage points from the same period a year ago. Private nonagricultural workers occupied 93.0 million jobs in the third quarter of 1990, an increase of 1.6 percent from the third quarter in 1989. In contrast, total jobs held by health service workers expanded 7.7 percent, to 8.2 million, between the third quarter of 1989 and the third quarter of 1990.

Prices

The GNP fixed-weight price index, the most comprehensive measure of pure price inflation, grew 4.6 percent between the third quarters of 1989 and 1990. The GNP implicit price deflator (which reflects changes in the composition of output as well as in price inflation) rose 4.3 percent between the third quarter of 1989 and that of 1990. A more limited measure of price change covers only the purchases of consumer goods. This measure, the CPI for all items, increased to 5.5 percent between the third quarters of 1989 and 1990 (Tables 14 and 15). While all price measures displayed growth when compared with the previous year, medical care prices increased at almost twice the pace exhibited by the other measures.
Table 14

Selected national economic indicators: 1987-90

IndicatorCalendar year1987Q31988Q31989Q31989Q41990Q11990Q21990Q3
198719881989
Gross national product
Billions of dollars$4,516$4,874$5,201$4,552$4,918$5,239$5,289$5,375$5,443$5,521
Billions of 1982 dollars$3,845$4,017$4,118$3,859$4,032$4,130$4,133$4,151$4,155$4,173
Implicit price deflator (1982 = 100.0)117.4121.3126.3118.0122.0126.8128.0129.5131.0132.3
Employment, hours, and earnings
Unemployment rate, all workers6.25.55.36.05.55.35.35.35.35.6
Private nonagricultural workers:
 Total employment in thousands85,19088,15090,64486,20689,23591,53991,82190,43692,27293,011
 Average weekly hours34.834.734.635.034.934.934.634.234.534.8
 Average hourly earnings$8.98$9.28$9.66$8.96$9.29$9.67$9.82$9.90$9.97$10.05
Health service workers:
 Total employment in thousands6,8057,1217,5516,8607,1817,6247,7357,8728,0418,209
 Average weekly hours32.432.532.532.632.532.632.532.432.532.8
 Average hourly earnings$8.69$9.21$9.82$8.73$9.26$9.90$10.07$10.24$10.31$10.47
Personal income and savings
Income in billions$3,766$4,071$4,384$3,783$4,112$4,403$4,469$4,563$4,622$4,680
Disposable income in billions$3,195$3,479$3,726$3,211$3,520$3,743$3,800$3,888$3,926$3,971
Savings in billions$93$146$172$66$157$155$174$191$195$165
Personal saving rate2.94.24.62.14.54.14.64.95.04.1
Prices1
Gross national product fixed-weight price index (1982 = 100.0)118.9123.9129.5119.4124.7130.0131.2133.3134.6136.0
Consumer Price Index, all items113.6118.3124.0114.4119.1124.7125.9128.0129.3131.6
 All items less medical care112.6117.0122.4113.3117.9123.1124.2126.3127.5129.6
  Apparel and upkeep110.6115.4118.6110.0114.4116.7121.3120.8125.2123.3
  Energy88.689.294.392.091.997.193.796.597.3103.8
  Food and beverages113.5118.2124.9113.9119.4125.6126.7130.7131.3132.7
  Housing: shelter121.2127.1132.8122.0128.0133.9135.2136.9138.6141.9
 Medical care130.1138.6149.3131.2139.9150.7153.7157.4160.8164.8
Producer Price Index,2 finished consumer goods103.6106.2112.1104.3107.0112.3113.5116.3116.3118.4

Base period = 1982-84, unless noted.

Formerly called the “Wholesale Price Index.”

NOTE: Q designates quarter of year. Quarterly data are not seasonally adjusted.

SOURCE: U.S. Department of Commerce, Bureau of Economic Analysis: Survey of Current Business. Washington. U.S. Government Printing Office. Monthly reports for Jan. 1987-Nov. 1990; U.S. Department of Labor, Bureau of Labor Statistics: Employment and Earnings. Washington. U.S. Government Printing Office. Monthly reports for Jan. 1987-Sept. 1990.

Table 15

Percent change in selected national economic indicators: 1987-90

IndicatorCalendar year1987Q31988Q31989Q31989Q41990Q11990Q21990Q3
198719881989
Annual percent changePercent change from same period of previous year
Gross national product
Billions of dollars6.77.96.77.08.06.55.65.45.25.4
Billions of 1982 dollars3.44.52.53.94.52.41.81.31.01.1
Implicit price deflator (1982 = 100.0)3.13.34.13.03.43.93.73.94.14.3
Employment, hours, and earnings
Unemployment rate, all workers1−0.8−0.7−0.2−1.0−0.5−0.20.00.10.00.3
Private nonagricultural workers:
 Total employment in thousands2.83.52.83.03.52.62.32.11.81.6
 Average weekly hours0.1−0.2−0.30.3−0.30.0−0.6−0.3−0.3−0.3
 Average hourly earnings2.53.44.12.63.64.24.03.84.03.9
Health services workers:
 Total employment in thousands4.14.66.04.14.76.26.67.07.47.7
 Average weekly hours−0.10.20.10.3−0.30.30.30.00.30.6
 Average hourly earnings4.25.96.74.26.16.96.56.46.45.8
Personal income and savings
Income in billions6.88.17.76.98.77.16.86.15.96.3
Disposable income in billions6.08.97.16.29.66.36.26.26.26.1
Savings in billions−25.957.518.0−38.0137.4−1.517.20.815.56.6
Personal saving rate1−1.31.30.4−1.42.4−0.40.5−0.30.40.0
Prices2
Gross national product fixed-weight price index (1982 = 100.0)3.54.14.53.64.44.34.04.54.34.6
Consumer Price Index, all items3.74.14.84.24.14.74.65.24.65.5
 All items less medical care3.43.94.64.04.04.44.45.04.35.3
  Apparel and upkeep4.44.32.84.04.02.01.53.64.65.7
  Energy0.40.85.76.7−0.25.75.08.00.26.8
  Food and beverages4.14.15.73.74.95.25.36.55.45.6
  Housing: shelter4.74.84.54.74.94.64.85.05.26.0
 Medical care6.66.57.76.66.67.78.48.59.09.3
Producer Price Index,3 finished consumer goods2.12.55.63.72.64.95.15.73.25.4

Change in rate, rather than percent change.

Base period = 1982-84, unless noted.

Formerly called the “Wholesale Price Index.”

NOTE: Q designates quarter of year. Quarterly data are not seasonally adjusted.

SOURCE: U.S. Department of Commerce, Bureau of Economic Analysis: Survey of Current Business. Washington. U.S. Government Printing Office. Monthly reports for Jan. 1987-Nov. 1990; U.S. Department of Labor, Bureau of Labor Statistics: Employment and Earnings. Washington. U.S. Government Printing Office. Monthly reports for Jan. 1987-Sept. 1990.

The Producer Price Index for finished consumer goods grew 5.4 percent between the third quarter of 1989 and the third quarter of 1990.

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