Literature DB >> 10157377

Health care indicators. Hospital, employment, and price indicators for the health care industry: second quarter 1995.

A L Sensenig, S K Heffler, C S Donham.   

Abstract

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Year:  1995        PMID： 10157377      PMCID： PMC4193557     

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


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The economy slowed, as real gross domestic product (GDP) growth continued to decelerate. Measured over the same quarter 1 year ago, real GDP grew 3.2 percent, the slowest rate in the last 6 quarters. Employment growth in the private non-farm business sector decelerated markedly. Employment in health services grew faster than employment in the private sector, providing evidence of the health sector's relative immunity from business cycle fluctuations. Medical care prices are still increasing faster than prices in the economy as a whole, but the differential between the two continues to diminish, according to the Consumer Price Index (CPI) for all urban consumers. The deceleration in medical care prices in recent quarters has been the result of deceleration in prices for medical commodities. Growth in the HCFA prospective payment system (PPS) hospital input price index accelerated from 2.5 percent in the fourth quarter of 1994 to 2.9 percent in the second quarter of 1995 (measured over the same quarter 1 year earlier), a trend that Data Resources Inc./McGraw Hill (DRI) is forecasting to continue through the first quarter of 1996.

Introduction

This article presents statistics on health care utilization, prices, expenses, employment, and work hours, as well as on national economic activity. These statistics provide an early indication of changes occurring in the health care sector and within the general economy. We rely on indicators such as these to anticipate and predict changes in health care sector expenditures for the most recent year. Other indicators help to identify specific reasons (e.g., increases in price inflation or declines in utilization) for health care expenditure change. The first eight of the accompanying tables report selected quarterly statistics and the calendar year aggregations of quarterly information for the past 4 years. Unless specifically noted, changes in quarterly statistics are shown from the same period 1 year earlier. For quarterly information, this calculation permits analysis of data to focus on the direction and magnitude of changes, without interference introduced by seasonal fluctuations. The last four tables in the report show base weights, quarterly index levels, and 4-quarter moving average percent changes in the input price indexes maintained by HCFA.

Community Hospital Statistics

The rate of hospital admissions and outpatient visits continued to increase in the second quarter of 1995, according to the American Hospital Association's (AHA) statistics on community hospital operations (American Hospital Association, 1995). These data are presented on Table 1 and Table 2. Admissions increased 1.2 percent in the second quarter of 1995. This rate of admissions growth, while slower than the 3.2 percent registered in the first quarter of 1995, reflects the recent trend of steadily increasing admissions that began in the third quarter of 1993. The growth in total admissions recorded in the first two quarters of 1995, if sustained for the remainder of the year, will result in the fastest annual growth in admissions since 1980.
Table 1

Selected Community Hospital Statistics: 1991-95

ItemCalendar Year1991Q21991Q31991Q41992Q11992Q21992Q31992Q41993Q11993Q21993Q31993Q41994Q11994Q21994Q31994Q41995Q11995Q2
1991199219931994
Utilization
All Ages:
Admissions in Thousands32,67032,41132,65232,9388,1828,0758,1608,3578,1028,0057,9478,3518,0868,0838,1338,3688,1808,1548,2368,6348,281
Admissions Per 1,000 Population1125122122122125123124127123121120125121121121124121121121127122
Inpatient Days in Thousands211,475206,440202,078196,11752,68151,45952,75654,23851,30650,38750,50953,22850,15049,08949,61151,70948,64847,65748,10250,37747,296
Adult Length of Stay in Days6.56.46.26.06.46.46.56.56.36.36.46.46.26.16.16.25.95.85.85.85.7
65 Years of Age or Over:
Admissions in Thousands11,65911,86012,20912,4562,9182,8102,9813,0772,9692,8812,9323,1383,0422,9443,0853,2113,0983,0223,1253,3793,187
Admissions Per 1,000 Population1360360366369361346366376361349354378365352368382367357368397374
Inpatient Days in Thousands99,46898,92097,04294,87724,80123,75925,24826,08024,68223,87524,28325,82224,27422,99023,95625,55123,49322,63123,20324,77822,823
Adult Length of Stay in Days8.58.37.97.68.58.58.58.58.38.38.38.28.07.87.88.07.67.57.47.37.2
Under 65 Years of Age:
Admissions in Thousands21,01120,55120,44320,4835,2645,2655,1805,2805,1335,1245,0155,2135,0445,1395,0475,1585,0825,1325,1115,2555,094
Admissions Per 1,000 Population1928987879292909189888689868886888687868885
Inpatient Days in Thousands112,007107,520105,036101,24027,88027,70127,50928,15826,62426,51326,22527,40625,87526,09925,65526,15825,15525,02724,89925,59824,472
Adult Length of Stay in Days5.35.25.14.95.35.35.35.35.25.25.25.35.15.15.15.15.04.94.94.94.8
Surgical Operations in Thousands21,98322,46322,71023,2865,5725,5345,4985,6085,6415,6305,5845,6465,7215,6775,6655,6645,8645,8405,9186,0285,965
Outpatient Visits in Thousands344,116366,243390,188417,68486,33187,64887,66689,16891,57293,27192,23294,67797,63799,21298,66298,341104,079107,022108,241111,088113,699
Adjusted Patient Days in Thousands2282,874281,502278,911276,18270,59069,49670,80472,78970,02169,28669,33272,30669,33468,35168,86071,24468,77667,71168,36371,22668,146
Beds in Thousands912908902891913910909909910908904905904901897895893888886881877
Adult Occupancy Rate363.562.161.460.363.461.463.165.662.060.360.765.361.059.260.164.259.858.359.063.559.3
Operating Expenses
Total in Millions$238,633$260,994$278,880$292,801$58,930$60,214$62,301$63,739$64,532$65,829$66,894$68,527$69,245$70,002$71,106$71,677$72,618$73,468$75,039$76,259$76,751
 Labor in Millions128,704140,112149,733156,82631,69232,51633,52634,14334,50135,39636,07336,78237,25037,57838,12338,42038,82839,40840,17040,52940,768
 Non-Labor in Millions109,929120,882129,147135,97527,23827,69828,77529,59730,03130,43430,82131,74631,99432,42432,98333,25733,79034,05934,86935,73035,983
Inpatient Expense in Millions$178,401$191,401$202,055$207,918$43,979$44,586$46,421$47,495$47,284$47,873$48,733$50,447$50,085$50,274$51,229$52,023$51,366$51,709$52,800$53,936$53,268
 Amount per Patient Day8449271,0001,0608358668808769229509659489991,0241,0331,0061,0561,0851,0981,0711,126
 Amount per Admission5,4615,9056,1886,3125,3755,5225,6895,6835,8365,9806,1336,0416,1946,2206,2996,2176,2796,3416,4116,2476,432
Outpatient Expense$60,233$69,593$76,825$84,883$14,951$15,627$15,880$16,244$17,248$17,956$18,161$18,080$19,160$19,728$19,877$19,654$21,252$21,758$22,239$22,323$23,483
 Amount per Outpatient Visit175190197203173178181182188193197191196199201200204203205201207

Admissions per 1,000 population is calculated using population estimates prepared by the Social Security Administration.

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.

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

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 January 1991-June 1995.

Table 2

Percent Change in Selected Community Hospital Statistics: 1991-95

ItemCalendar Year1991Q21991Q31991Q41992Q11992Q21992Q31992Q41993Q11993Q21993Q31993Q41994Q11994Q21994Q31994Q41995Q11995Q2
1991199219931994
Annual Percent ChangePercent Change From the Same Period of Previous Year
Utilization
All Ages:
 Admissions-1.1-0.80.70.9-1.4-1.21.61.3-1.0-0.9-2.6-0.1-0.21.02.30.21.20.91.33.21.2
 Admissions Per 1,000 Population-2.1-1.8-0.3-0.1-2.5-2.20.50.2-2.0-1.9-3.7-1.1-1.2-0.11.3-0.80.2-0.10.32.20.3
 Inpatient Days-2.5-2.4-2.1-2.9-2.3-2.90.0-0.6-2.6-2.1-4.3-1.9-2.3-2.6-1.8-2.9-3.0-2.9-3.0-2.6-2.8
 Adult Length of Stay-1.4-1.6-2.8-3.8-0.9-1.8-1.6-1.9-1.6-1.2-1.7-1.8-2.1-3.5-4.0-3.1-4.1-3.8-4.3-5.6-4.0
65 Years of Age or Over:
 Admissions2.51.72.92.02.32.66.74.31.72.5-1.62.02.52.25.22.31.82.61.35.22.9
 Admissions Per 1,000 Population0.70.11.50.80.60.94.92.60.10.9-3.10.51.00.83.91.10.61.40.14.01.7
 Inpatient Days0.4-0.6-1.9-2.20.80.44.21.6-0.50.5-3.8-1.0-1.7-3.7-1.3-1.1-3.2-1.6-3.1-3.0-2.9
 Adult Length of Stay-2.0-2.2-4.7-4.2-1.5-2.2-2.3-2.6-2.2-2.0-2.2-2.9-4.0-5.8-6.3-3.3-5.0-4.1-4.4-7.8-5.6
Under 65 Years of Age:
 Admissions-2.9-2.2-0.50.2-3.4-3.1-1.1-0.4-2.5-2.7-3.2-1.3-1.70.30.7-1.10.7-0.11.31.90.2
 Admissions Per 1,000 Population-3.8-3.2-1.5-0.8-4.3-4.0-2.1-1.4-3.5-3.6-4.1-2.3-2.7-0.7-0.3-2.0-0.2-1.10.30.9-0.7
 Inpatient Days-4.9-4.0-2.3-3.6-4.9-5.6-3.6-2.6-4.5-4.3-4.7-2.7-2.8-1.6-2.2-4.6-2.8-4.1-2.9-2.1-2.7
 Adult Length of Stay-2.1-1.9-1.8-3.8-1.6-2.6-2.5-2.2-2.1-1.7-1.5-1.4-1.1-1.8-2.8-3.5-3.5-4.0-4.2-4.0-3.0
Surgical Operations0.42.21.12.5-0.20.72.24.21.21.71.60.71.40.81.50.32.52.94.56.41.7
Outpatient Visits5.46.46.57.04.55.18.08.16.16.45.26.26.66.47.03.96.67.99.713.09.2
Adjusted Patient Days-0.4-0.5-0.9-1.0-0.2-0.61.71.2-0.8-0.3-2.1-0.7-1.0-1.3-0.7-1.5-0.8-0.9-0.70.0-0.9
Beds-1.0-0.5-0.7-1.2-1.3-1.0-0.7-0.6-0.3-0.3-0.5-0.4-0.7-0.8-0.8-1.2-1.2-1.4-1.2-1.5-1.8
Adult Occupancy Rate1-0.9-1.4-0.7-1.1-0.7-1.20.4-0.7-1.5-1.1-2.4-0.2-1.0-1.1-0.6-1.1-1.1-0.9-1.1-0.7-0.6
Operating Expenses
Total9.99.46.95.09.79.711.211.59.59.37.47.57.36.36.34.64.95.05.56.45.7
 Labor9.28.96.94.79.18.69.910.28.98.97.67.78.06.25.74.54.24.95.45.55.0
 Non-Labor10.710.06.85.310.311.012.912.910.39.97.17.36.56.57.04.85.65.05.77.46.5
Inpatient Expense7.67.35.62.97.37.19.39.47.57.45.06.25.95.05.13.12.62.93.13.73.7
 Amount per Patient Day10.39.97.86.09.910.39.310.110.49.79.78.28.47.87.06.25.75.96.36.46.7
 Amount per Admission8.88.14.82.08.98.37.68.08.68.37.86.36.14.02.72.91.42.01.80.52.4
Outpatient Expense17.415.510.410.517.117.917.217.915.414.914.411.311.19.99.48.710.910.311.913.610.5
 Amount Per Outpatient Visit11.48.63.63.212.012.28.59.08.88.08.74.84.23.32.34.74.12.22.00.51.1

Change in rate, rather than percent change.

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 January 1990-June 1995.

The growth in total admissions in 1995 has been fueled by high rates of growth in admissions of those 65 years of age or over, essentially the Medicare population. Admissions for this age group increased 2.9 percent in the second quarter of 1995, after an increase of 5.2 percent in the first quarter of 1995. For the year ending in the second quarter of 1995, admissions for persons 65 years of age or over increased 3.0 percent over the previous year. Similar to the growth in total admissions, the first and second quarter growth in admissions for the population 65 years of age or over, if sustained for the remainder of 1995, would result in the fastest annual growth in admissions since 1983. Further evidence of the recent trend in increased hospital utilization is found in the growth of outpatient visits at community hospitals. Outpatient visits increased 9.2 percent in the second quarter of 1995, following an increase of 13.0 percent in the first quarter. Outpatient visits for the year ending in the second quarter of 1995 have grown faster than in any other year since 1970, when outpatient visits increased 15.4 percent from the previous year. The trend in two key indicators of hospital expenses changed direction in the second quarter of 1995. As shown in Figure 1, inpatient expense per admission, and outpatient expense per visit, had both been decelerating since mid-1990. By the first quarter of 1995, both measures essentially bottomed out at 0.5-percent growth over the same period 1 year earlier. In the second quarter of 1995, both measures accelerated. Inpatient expense per admission increased 2.4 percent; outpatient expense per visit increased 1.1 percent.
Figure 1

Percent Change in Inpatient Expense per Admission and Outpatient Expense per Visit From the Same Period of Previous Year: 1986-95

Health Care Sector Employment Trends

Employment in private-sector health services grew faster than employment in the private non-farm business sector in the second quarter of 1995 (Figure 2). This is a reversal of the short-lived trend observed over preceding 5 quarters, when private non-farm employment grew faster than employment in health services.
Figure 2

Percent Change in Employment From the Same Period of Previous Year: 1986-95

The business cycle has had little effect on the growth in health care services employment in the last 15 years. As evident in Figure 2, the trend in health services employment has little relation to employment growth in the overall economy. Prior to 1994, the last period when employment in the non-farm business sector grew faster than health services employment began in the fourth quarter of 1983 and persisted for 7 quarters. During this period, aggregate employment was expanding rapidly after the 1981-1982 recession. Since 1982, employment in the health services industry has grown at an average annual rate of 3.7 percent, while employment in the private non-farm business sector grew at an average annual growth rate of 2.1 percent. In health services, there were significant developments in two industries, home health care services and hospitals. Employment growth in home health care services decelerated rapidly in the second quarter of 1995. This marked the fifth consecutive quarter of decelerating growth in home health care services, and was the first time that employment in the industry grew at less than a 10-percent rate, measured over the same period 1 year earlier, since data on home health care as a separate industry have been collected. In contrast, employment growth in hospitals accelerated in the second quarter of 1995. Hospital employment has grown very slowly in recent years. In 1994, employment in private hospitals registered very little change, decreasing 0.1 percent from 1993 levels. However, in the second quarter of 1995, private hospital employment growth accelerated, from 0.8-percent growth in the first quarter to 1.1-percent growth in the second quarter. Implied non-supervisory payrolls, shown on Table 5, are the product of non-supervisory employment, average hourly earnings, and average weekly hours. By examining the trends in the components of implied payrolls, it is possible to attribute the overall change in the series to the movement in the components. For example, in the second quarter of 1995, implied non-supervisory payrolls in the non-farm private sector decelerated much more rapidly than employment due to the decrease in average weekly hours. Trends in implied non-supervisory payrolls provide important indicators of the change in overall labor costs in an industry. These labor cost trends are especially important as indicators of overall costs in labor-intensive industries like home health care services.
Table 5

Percent Change in Implied Non-Supervisory Payrolls, Employment, Average Weekly Hours, and Average Hourly Earnings in Private-Sector Health Service Establishments, by Selected Type of Establishment: 1991-95

Type of Establishment and MeasureCalender Year1991Q21991Q31991Q41992Q11992Q21992Q31992Q41993Q11993Q21993Q31993Q41994Q11994Q21994Q31994Q41995Q11995Q2
1991199219931994
Annual Percent ChangePercent Change From the Same Period of Previous Year
Health Services
Payrolls10.38.56.65.411.010.110.210.68.17.87.67.07.36.25.85.55.35.45.56.05.5
 Employment4.73.73.02.64.74.64.64.23.93.53.23.03.13.02.82.62.72.62.72.92.8
 Average Weekly Hours0.00.70.10.00.2-0.30.21.30.30.60.5-0.20.50.00.00.10.0-0.10.00.1-0.2
 Average Hourly Earnings5.33.93.42.75.85.65.24.73.73.63.74.13.63.13.02.72.62.82.72.92.8
Offices and Clinics of Physicians
Payrolls10.67.56.95.811.89.69.98.66.67.47.37.18.56.55.66.55.55.25.84.84.0
 Employment4.64.02.42.24.44.74.94.84.23.53.43.02.72.41.61.92.02.22.72.62.8
 Average Weekly Hours0.40.80.20.51.20.10.71.60.10.80.7-0.40.70.20.30.70.40.00.90.1-0.2
 Average Hourly Earnings5.32.54.23.05.94.64.02.02.22.93.04.44.83.83.63.83.03.02.12.01.4
Offices and Clinics of Dentists
Payrolls7.56.26.57.47.46.77.67.65.55.56.04.67.26.97.18.17.87.06.96.86.4
 Employment3.12.12.83.22.63.73.82.52.11.81.92.72.92.82.93.13.43.03.23.63.8
 Average Weekly Hours-0.40.2-0.3-0.5-0.1-1.1-0.60.7-0.40.40.1-1.30.7-0.2-0.20.1-0.7-0.8-0.5-0.7-0.9
 Average Hourly Earnings4.73.83.84.64.94.04.34.23.73.33.93.23.44.24.34.75.04.74.13.83.6
Nursing Homes
Payrolls10.17.47.18.310.69.38.38.57.17.56.55.67.47.28.29.18.47.77.77.16.1
 Employment5.42.83.33.95.55.44.63.62.92.42.32.33.13.64.34.54.23.93.02.82.5
 Average Weekly Hours0.10.5-0.30.30.3-0.5-0.20.80.10.80.3-0.70.4-0.3-0.70.20.0-0.21.00.60.2
 Average Hourly Earnings4.43.94.03.94.54.23.73.93.94.13.84.03.83.84.44.24.13.93.63.63.3
Private Hospitals
Payrolls9.47.64.52.510.19.89.910.17.36.76.46.15.23.83.02.22.12.73.24.14.2
 Employment3.22.70.6-0.43.23.03.03.03.02.62.11.51.00.4-0.3-0.7-0.6-0.40.20.71.1
 Average Weekly Hours0.00.60.50.20.1-0.10.51.20.40.40.40.50.50.50.50.50.20.1-0.1-0.2-0.2
 Average Hourly Earnings6.04.23.32.86.56.76.25.63.83.63.94.13.62.92.82.42.53.03.13.53.4
Home Health Care Services
Payrolls31.829.324.523.032.829.429.132.229.728.126.921.624.025.925.826.525.421.320.318.613.8
 Employment18.615.617.918.320.116.716.616.415.715.015.615.116.519.320.421.320.317.314.912.89.5
 Average Weekly Hours3.24.81.41.72.92.93.15.94.24.94.20.62.71.21.01.71.61.12.42.61.9
 Average Hourly Earnings7.86.64.12.57.57.77.411.37.66.25.55.03.74.23.52.62.72.32.32.52.1
Non-Farm Private Sector
Payrolls0.93.15.47.00.60.61.52.92.92.83.74.55.45.76.06.76.97.07.46.64.9
 Employment-1.60.42.53.6-1.9-1.7-1.3-0.60.40.61.22.02.32.73.13.23.73.83.83.62.9
 Average Weekly Hours-0.60.20.30.6-0.7-0.60.00.70.20.00.1-0.10.50.60.40.70.60.40.60.1-0.9
 Average Hourly Earnings3.12.42.52.73.23.02.92.82.32.32.42.52.52.32.52.62.52.72.92.82.9

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

NOTES: Data presented here conform to the 1987 Standard Industrial Classification. 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 January 1990-September 1995.

The growth in implied non-supervisory payrolls in home health care services decelerated at an unprecedented rate in the second quarter of 1995. The 13.8-percent growth in implied non-supervisory payrolls for home health care services, measured over the same period a year earlier, is one-half the average annual rate of growth exhibited in the years from 1988 through 1992. The slowdown in home health care services' implied non-supervisory payrolls is attributable to rapidly decelerating employment growth coupled with gains in average hourly earnings and average weekly hours that are sluggish by historical standards in the home health industry.

Output and Prices

The economy grew slowly in the second quarter of 1995. Real, or inflation-adjusted, GDP increased 3.2 percent in the second quarter, measured over the same period a year earlier (Table 6). This rate of growth is less than the annual rate in 1994 and represents the third consecutive quarter of deceleration. The quarter-to-quarter change at seasonally adjusted annual rates, a more common expression of GDP growth, was 1.3 percent in the second quarter of 1995, compared with 2.7 percent in the first quarter and 5.1 percent in the fourth quarter of 1994.
Table 6

Selected National Economic Indicators: 1991-95

IndicatorCalendar Year1991Q21991Q31991Q41992Q11992Q21992Q31992Q41993Q11993Q21993Q31993Q41994Q11994Q21994Q31994Q41995Q11995Q2
1991199219931994
Gross Domestic Product
Billions of Dollars$5,725$6,020$6,343$6,738$5,706$5,760$5,797$5,897$5,971$6,044$6,169$6,236$6,300$6,359$6,478$6,575$6,690$6,792$6,897$6,977$7,025
Billions of 1987 Dollars$4,868$4,979$5,135$5,344$4,868$4,880$4,881$4,919$4,948$4,991$5,061$5,075$5,105$5,139$5,218$5,261$5,314$5,367$5,434$5,470$5,485
Implicit Price Deflator (1987 = 100.0)117.6120.9123.5126.1117.2118.0118.8119.9120.7121.1121.9122.9123.4123.7124.1125.0125.9126.5126.9127.6128.1
Personal Income
Personal Income in Billions$4,860$5,154$5,375$5,702$4,841$4,869$4,934$5,032$5,102$5,148$5,335$5,256$5,365$5,396$5,485$5,556$5,660$5,735$5,857$5,962$6,004
Disposable Income in Billions$4,237$4,506$4,689$4,960$4,220$4,246$4,303$4,401$4,463$4,500$4,659$4,598$4,679$4,701$4,778$4,833$4,914$4,990$5,102$5,184$5,197
Prices1
Consumer Price Index, All Items136.2140.3144.5148.2135.6136.7137.7138.7139.8140.9141.9143.1144.2144.8145.8146.7147.6148.9149.6150.9152.2
 All Items Less Medical Care133.8137.5141.2144.7133.3134.3135.1136.0137.0138.0138.9140.0141.0141.5142.4143.3144.1145.4146.0147.1148.4
 Energy102.4103.0104.1104.6101.7103.1101.899.3102.6105.8104.3102.7104.7105.4103.8101.7103.5107.8105.4103.7106.5
 Food and Beverages136.8138.7141.6144.9137.4136.8136.9138.3138.5138.7139.3140.7141.4141.5142.7143.9144.1145.2146.2147.9148.7
 Medical Care177.0190.1201.4211.0175.3178.7181.7185.9188.7191.5194.1197.7200.3202.8204.8207.5209.8212.2214.7217.6219.3
Producer Price Index,2 Finished
 Consumer Goods120.4121.7123.0123.3120.4120.3120.7120.2121.7122.3122.5122.8124.2122.8122.3122.4123.0123.9123.7124.5125.7
 Energy78.177.878.077.077.478.577.774.378.180.578.377.079.579.476.174.476.780.276.976.780.0
 Food124.1123.3125.6126.8125.5123.5122.8123.1123.0123.2123.8124.5126.3125.4126.4127.1126.5126.4127.2128.3128.0
 Finished Goods Except Food & Energy133.7137.2138.5139.0133.1133.6135.4136.5137.3136.9138.4139.3139.8137.3137.6138.6138.7138.7139.8140.8141.6
Annual Percent ChangePercent Change From the Same Period of Previous Year
Gross Domestic Product
Billions of Dollars3.25.25.46.23.03.23.54.64.74.96.45.85.55.25.05.46.26.86.56.15.0
Billions of 1987 Dollars-0.62.33.14.1-1.0-0.50.31.61.62.33.73.23.23.03.13.74.14.44.14.03.2
Implicit Price Deflator (1987 = 100.0)3.82.82.22.14.03.73.33.03.02.62.62.52.22.21.81.72.02.32.22.11.7
Personal Income
Personal Income in Billions4.06.14.36.14.13.63.74.95.45.78.14.45.14.82.85.75.56.36.87.36.1
Disposable Income in Billions4.66.44.15.85.04.24.15.45.86.08.34.54.84.52.65.15.06.26.87.35.8
Prices1
Consumer Price Index, All Items4.23.03.02.64.83.93.02.93.13.13.13.23.12.72.72.52.42.92.72.83.1
 All Items Less Medical Care3.92.72.72.54.63.62.62.62.82.82.82.92.92.52.52.42.22.72.52.73.0
 Energy0.40.51.10.54.5-0.7-8.1-3.70.92.62.43.42.0-0.3-0.4-0.9-1.12.31.51.92.9
 Food and Beverages3.61.42.12.34.73.12.41.60.81.41.71.82.12.02.52.31.92.72.52.73.2
 Medical Care8.77.46.04.89.08.58.07.87.77.26.86.36.15.95.55.04.74.64.84.94.6
Producer Price Index,2 Finished
 Consumer Goods1.91.01.10.23.51.7-1.1-0.21.11.61.52.12.10.4-0.2-0.3-1.00.91.21.72.2
 Energy4.2-0.40.3-1.213.74.9-11.2-5.70.92.50.83.61.8-1.3-2.8-3.4-3.51.01.13.14.3
 Food-0.2-0.71.90.91.2-0.9-1.5-1.4-2.0-0.30.81.22.71.82.12.00.20.80.61.01.2
 Finished Goods Except Food & Energy3.82.70.90.33.83.63.52.93.12.52.22.11.90.3-0.5-0.5-0.81.01.61.52.1

Base period = 1982-84, unless noted.

Formerly called the Wholesale Price Index.

NOTES: Q designates quarter of year. Unlike Tables 1-5, quarterly data on gross domestic product, personal income, and disposable personal income are seasonally adjusted at annual rates.

SOURCES: U.S. Department of Commerce, Bureau of Economic Analysis: Survey of Current Business. Washington. U.S. Government Printing Office. Monthly reports for January 1990-September 1995; U.S. Department of Labor, Bureau of Labor Statistics: Employment and Earnings. Washington. U.S. Government Printing Office. Monthly reports for January 1990-September 1995.

Economy wide inflation accelerated slightly in the second quarter of 1995, yet remained moderate by historic standards. The CPI for all items increased 3.1 percent from the same period of the previous year. This increase follows increases of 2.8 percent in the first quarter of 1995 and 2.7 percent in the fourth quarter of 1994. The acceleration in the growth of the CPI was corroborated by an acceleration in the Producer Price Index (PPI). The PPI for finished goods increased 2.2 percent in the second quarter of 1995, following increases of 1.7 percent in the first quarter and 1.2 percent in the fourth quarter of 1994. Energy prices contributed to the acceleration in the overall index. Energy prices in the PPI increased 4.3 percent in the second quarter, following an increase of 3.1 percent in the first quarter and 1.1 in the fourth quarter of 1994. Finished goods except for food and energy also accelerated in the PPI, increasing 2.1 percent in the second quarter after an increase of 1.5 in the first quarter.

Medical Prices

The growth in health care sector prices, which has historically been faster than growth in overall prices, continues to decelerate compared with accelerating overall prices, closing the differential between the two measures (Figure 3). As indicated in Table 6, the CPI for all items less medical care increased 3.0 percent in the second quarter of 1995, the highest growth rate in 15 quarters. The CPI for medical care decelerated to a growth rate of 4.6 percent over this same period, matching its lowest rate of growth in over a decade. While the recent historical difference between the CPI for all items less medical care and the CPI for medical care has been more than 2 percentage points, the two measures differed by just 1.6 percentage points in the second quarter of 1995, a downward trend that has developed over recent quarters.
Figure 3

Percent Change in Consumer Price Indexes From the Same Period of Previous Year: 1986-95

The recent deceleration in aggregate medical care prices has been the result of rapid deceleration in the prices for medical care commodities. While the percentage change in the CPI for medical care decelerated by 0.2 percent between the fourth quarter of 1994 and the second quarter of 1995, the CPI for medical services remained unchanged. Thus, most of the deceleration in the CPI for medical care has been caused by the CPI for medical care commodities, which decelerated from 3.0 percent in the fourth quarter of 1994 to 1.7 percent in the second quarter of 1995. While the CPI for medical care commodities has historically grown at about one-half the rate of the CPI for medical care, the 1.7-percent growth rate for medical care commodities in the second quarter of 1995 is only one-third of the growth rate in the CPI for medical care. Medical care commodity prices have also grown slower than overall prices during the first and second quarters of 1995, reversing the prior trend. A similar pattern of deceleration has also occurred in the PPI for medical commodities over the past 3 quarters. The PPI for medical, surgical, and personal aid devices was virtually unchanged in the second quarter of 1995, increasing 0.3 percent over the same period of the previous year. In past years this index grew in excess of 2 percent annually. The growth rate in the PPI for drugs and pharmaceuticals has dropped below 2.5 percent, continuing a long-term overall pattern of decelerating growth. The CPI and the PPI for hospitals show differing trends in the growth rates for inpatient and outpatient hospital services. While prices for inpatient and outpatient services are growing at similar rates in the CPI, prices for outpatient services are growing considerably faster than prices for inpatient services in the PPI in the past 4 quarters. In past years, the CPI for hospital outpatient services had grown faster than the CPI for hospital room and other inpatient services. The CPI for hospitals grew at approximately equal rates for both inpatient and outpatient services in the first and second quarter of 1995. In contrast, the PPI for hospital outpatient treatments grew twice as fast as the PPI for hospital inpatient treatments during the same period. Most of the faster growth in hospital outpatient producer prices is the result of accelerating growth in outpatient prices of all other patients. The differing trends in the CPI and the PPI are caused by the different scopes of the surveys: The CPI measures mainly list prices and the PPI measures transaction prices, which reflect mandated payments rates and discounts (see Background). The growth rate in the PPI for hospitals has remained virtually unchanged over the past 6 quarters, the result of offsetting movements between Medicare and Medicaid, and private patients. By using the base year weights supplied by the Bureau of Labor Statistics (BLS), the inpatient and outpatient index levels for each type of patient can be added to produce totals for each type of patient. The hospital PPI for Medicare patients increased just 1.6 percent from the second quarter of 1994 to the second quarter of 1995, while the hospital PPI for Medicaid increased 3.8 percent over this same period. Each has decelerated from recent highs in the fourth quarter of 1994. On the other hand, the hospital PPI for all other patients increased by more than 5.0 percent in the first and second quarters of 1995. The 5.0-percent growth is an acceleration from prior quarters, which had growth in the range of 4.0 percent. As mentioned earlier, much of the acceleration over this period has been the result of an acceleration in the hospital PPI for outpatient services. The HCFA prospective payment system (PPS) hospital input price index is forecasted by DRI to continue its recent acceleration in the next few quarters (Table 9), while the skilled nursing facility (SNF) (Table 10) and the home health agency (HHA) (Table 11) input price indexes are forecasted to remain virtually unchanged in the near-term (Figure 4). The 4-quarter moving-average percent change in the HCFA PPS hospital input price index has accelerated from 2.5 percent in the fourth quarter of 1994 to 2.9 percent in the second quarter of 1995. This acceleration is consistent with that of the CPI for all items, which historically behaves similarly to the HCFA PPS hospital input price index as indicated in Figure 4. DRI is forecasting the acceleration in the HCFA PPS hospital input price index to continue to 3.4 percent in the first quarter of 1996. The SNF input price index, which has been decelerating over the past 2 quarters, and the HHA input price index, which has been accelerating over this period, are forecasted to maintain a virtually constant rate of growth through the first quarter of 1996.
Table 9

Quarterly Index Levels and Four-Quarter Moving-Average Percent Change in the Prospective Payment System (PPS) Hospital Input Price Index, by Expense Category: 1993-97

Expense Category1Price/Wage VariableBase Year Weights FY 198721993 Q31993 Q41994 Q11994 Q21994Q31994Q41995Q11995Q2Forecast
1995Q31995Q41996Q11996Q21996Q31996Q41997Q11997Q2
Index Levels
Total—100.000129.5130.1131.0131.6132.7133.6134.8135.9137.2138.2139.5140.4141.7142.6143.8144.7
Compensation—61.713132.8133.6134.9135.7136.8137.6138.5139.3140.6141.7143.0143.8145.4146.5147.8148.6
 Wages and SalariesHCFA Occupational Wage Index452.216130.0130.9131.8132.7133.7134.6135.5136.2137.5138.6139.8140.6142.2143.2144.4145.3
 Employee BenefitsHCFA Occupational Benefits Index49.497147.7148.9151.6152.1153.6154.0155.1156.3157.6158.7160.7161.4163.2164.3166.4167.3
Other Professional FeesECI—W/S: Professional/Technical (Private)1.649130.3131.0132.0132.9133.9134.8135.6136.3137.5138.5139.7140.5142.2143.1144.3145.2
Energy and Utilities3—2.368115.9113.0109.6110.1114.3109.3107.4112.7112.6111.6111.0113.6114.5114.8113.7115.3
Professional Liability InsuranceHCFA—Professional Liability Premium1.433139.5140.6137.5136.3135.9136.2137.0137.3138.1139.4140.9142.2143.5145.0146.5148.0
All Other—32.837123.7124.1124.8125.2126.1127.6129.8131.3132.6133.7134.9135.9136.6137.3138.4139.2
 Other Products3—21.788123.5123.8124.3124.8125.7127.6129.9131.7133.4134.5135.7136.7137.4137.8138.9139.5
  PharmaceuticalsPPI—Prescription Drugs3.873158.8159.4161.9163.1163.1163.9164.8166.6167.6168.7169.8171.4171.9172.1174.4175.6
  Food3—3.299118.6119.1120.1120.2119.8119.7120.8120.7122.0122.5123.7124.7125.6125.9127.1128.1
  ChemicalsPPI—Industrial Chemicals3.126118.0117.3115.8118.3123.9130.4136.0140.4141.6143.7146.3147.4146.7146.9147.4147.5
  Medical InstrumentsPPI—Medical Instruments/Equipment2.672115.4115.8116.0116.1116.3116.4117.3117.1118.3119.3120.4121.0120.7121.2122.1122.4
  Photographic SuppliesPPI—Photographic Supplies2.623112.8113.5114.6113.7112.4112.3113.6114.5118.7119.4120.6121.5123.3124.6125.7126.1
  Rubber and PlasticsPPI—Rubber/Plastic Products2.323113.8114.1113.9114.1115.3117.9120.3122.1123.3123.8123.9124.2125.0125.2125.2125.6
 Other Services3—11.050124.2124.7126.0126.1126.8127.7129.6130.5131.1132.0133.2134.2135.1136.2137.4138.5
  Business ServicesAHE—Business Services3.845122.5122.4124.8123.9124.4125.2128.0128.7129.1129.8131.8132.6133.4134.6136.6137.4
  Computer ServicesAHE—Data Processing Services1.992137.1138.8140.9141.3142.2143.7145.0146.3147.2148.5149.7150.4152.1153.5154.9156.3
4-Quarter Moving-Average Percent Change
Total—100.0003.02.92.72.52.52.52.62.93.13.33.43.43.43.33.23.1
Compensation—61.7133.53.53.33.23.13.12.92.82.82.82.93.13.23.33.33.4
 Wages and SalariesHCFA Occupational Wage Index452.2163.13.13.03.02.92.92.82.82.82.82.93.03.23.33.33.3
 Employee BenefitsHCFA Occupational Benefits Index49.4975.85.34.94.44.24.03.43.12.82.73.03.13.43.53.53.6
Other Professional FeesECI—W/S: Professional/Technical (Private)1.6493.43.33.13.02.92.92.82.72.72.72.82.93.13.23.33.3
Energy and Utilities3—2.3680.9-0.3-2.0-4.0-3.4-3.4-3.1-1.1-1.10.21.61.22.02.21.92.1
Professional Liability InsuranceHCFA—Professional Liability Premium1.4332.83.02.31.1-0.3-1.8-1.9-1.3-0.31.11.92.63.23.63.94.0
All Other—32.8371.91.91.81.71.72.02.53.44.24.74.74.33.83.33.02.7
 Other Products3—21.7881.91.71.61.41.41.82.63.74.85.45.45.04.23.42.92.5
  PharmaceuticalsPPI—Prescription Drugs3.8735.04.54.23.93.53.22.72.42.42.42.72.92.82.62.52.4
  Food3—3.2991.31.72.02.01.81.40.90.60.81.31.82.52.82.92.92.8
  ChemicalsPPI—Industrial Chemicals3.1261.41.10.1-0.80.53.58.213.115.415.012.59.16.54.52.91.6
  Medical InstrumentsPPI—Medical Instruments/Equipment2.6722.32.11.71.10.90.50.60.81.11.51.92.52.62.42.11.6
  Photographic SuppliesPPI—Photographic Supplies2.623-0.9-1.1-0.30.20.40.3-0.4-0.41.12.94.76.15.65.14.64.1
  Rubber and PlasticsPPI—Rubber/Plastic Products2.3230.90.80.70.60.71.42.74.35.76.15.44.12.81.81.31.2
 Other Services3—11.0502.02.22.32.32.22.32.32.73.03.33.33.13.02.93.13.2
  Business ServicesAHE—Business Services3.8451.51.51.81.71.71.92.02.63.13.53.53.43.23.33.43.6
  Computer ServicesAHE—Data Processing Services1.9923.54.14.74.54.44.13.53.43.33.33.43.23.23.23.23.5

For data sources used to estimate the input price index relative weights and choice of price proxies, see the September 4, 1990, Federal Register. For the most recent PPS update for payment rates, see the September 1, 1995, Federal Register.

Category weights may not sum to total or subtotals because of detail not included.

Represents a subtotal. Detailed categories not shown are listed below by subtotal, detailed category, and base year weight:

Energy and Utilities: Fuel Oil, Coal, and Other Fuel (0.624), Electricity (1.135), Natural Gas (0.343), and Motor Gasoline (0.230).

Other Products: Paper Products (1.399), Apparel (1.142), Machinery and Equipment (.0497), and Miscellaneous Products (0.833).

Food: Direct Purchase (2.111) and Contract Service (1.188).

Other Services: Transportation and Shipping (1.233), Telephone (0.987), Blood Services (0.588), Postage (0.372), Other—Labor Intensive (1.233), and Other—Non-Labor Intensive (0.800).

The HCFA Occupational Wage and Occupational Benefit Indexes are computed as the weighted-average of 10 ECI categories (ECI for Hospital workers and 9 ECI occupational categories).

NOTES: A dash (—) in the Price/Wage Variable column denotes a total or subtotal produced by adding 2 or more categories. ECI represents Employment Cost Index, PPI represents Producer Price Index, and AHE represents average hourly earnings. HCFA is Health Care Financing Administration. W/S is wages and salaries. FY is fiscal year. Q designates quarter of year. The 4-quarter moving-average percent change for the quarter indicated by the column heading is the rate of change in the average index level for 4 quarters ending in that quarter over the same period of the previous year. The 4-quarter moving-average index level for the quarter indicated by the column heading is computed by summing the index level for that quarter and the prior 3 quarters and dividing by 4. The process is repeated to compute the 4-quarter moving-average index level for the same quarter a year ago. The average index level for the quarter indicated by the column heading is divided by the average index level of the same quarter a year ago, and the quotient is subtracted from 1 and multiplied by 100 to determine the 4-quarter moving-average percent change in the index.

SOURCES: Health Care Financing Administration, Office of the Actuary: Data from the Office of National Health Statistics, Division of Health Cost Analysis. Third quarter 1995 forecasts were produced under contract to HCFA by Data Resources, Inc./McGraw-Hill.

Table 10

Quarterly Index Levels and Four-Quarter Moving Average Percent Change in the Skilled Nursing Facility Input Price Index, by Expense Category: 1993-97

Expense Category1Price/Wage VariableBase Year Weights CY 197721993Q31993Q41994Q11994Q21994Q31994Q41995Q11995Q2Forecast
1995Q31995Q41996Q11996Q21996Q31996Q41997Q11997Q2
Index Levels
Total—100.000249.7252.4254.9256.2258.2260.2262.7263.8266.2268.3271.4273.0275.5277.4280.9282.3
Compensation—70.620254.0257.2260.0261.4263.7266.1269.1269.9272.6274.8278.4279.7282.5284.5288.6289.9
 Wages and SalariesAHE—Nursing Facilities63.020251.1254.3257.1258.4260.9263.4266.3267.0269.6271.8275.6276.6279.3281.3285.4286.4
 Employee BenefitsBEA—Supplement to Wages/Salaries per Worker7.600278.0280.7284.3285.9286.9288.3292.3294.2297.0299.9302.2305.4308.6311.2315.6319.0
 Fuel and Other Energy—4.270232.6231.3233.0232.8232.8231.7231.4231.0231.7231.8233.8236.1237.7239.2239.8240.4
 Fuel Oil and CoalIPD—Fuel Oil and Coal1.660206.7202.4205.4203.8203.6201.3200.6201.2201.8200.7202.5205.7206.6208.3207.2206.2
 ElectricityIPD—Electricity1.210224.5224.3221.8221.2223.6224.3225.5225.7225.5225.6226.1226.3226.7227.2227.6228.3
 Natural GasIPD—Natural Gas0.910250.2250.7254.0254.6249.8246.9243.9239.9240.6241.6243.9246.4248.3250.1251.8253.4
 Water and Sewerage MaintenanceCPI(U)—Water and Sewage0.490307.5310.7315.1318.7322.5324.2326.8328.4332.0334.1340.7344.2350.6353.5357.9362.4
Food—9.740191.2193.0194.0193.9194.8195.5196.6196.9198.7200.3201.7202.9204.2205.5206.7207.9
 Direct PurchasePPI—Processed Foods4.930167.9169.4170.9169.8169.0168.9170.1168.7171.0172.3173.3174.2175.1176.0176.9177.8
 Contract ServiceCPI(U)—Food and Beverages4.810215.1217.2217.6218.6221.3222.8223.8225.9227.1228.9230.7232.4234.2235.7237.2238.8
All Other—15.370271.8273.8276.1278.1280.1281.9284.4287.1289.1291.4293.9296.5298.8301.0303.9306.4
 PharmaceuticalsPPI—Prescription Drugs1.500370.4371.9377.8380.4380.4382.5384.5388.7391.1393.5396.0399.8400.9401.5406.9409.6
 SuppliesCPI(U)—All Items3.280238.9240.9242.1243.7245.8247.2249.1251.1252.7254.7256.8259.0261.0263.1265.1267.2
 Health ServicesCPI(U)—Physicians' Services1.210329.5331.9336.2340.5343.1346.0351.5355.8359.3362.2366.7369.9373.2375.8381.3385.1
 Other Business ServicesCPI(U)—Services4.590282.0284.4286.8288.9291.1293.2296.0298.9301.3303.8306.6309.5312.3315.1318.0320.9
 Miscellaneous CostsCPI(U)—All Items4.790238.9240.9242.1243.7245.8247.2249.1251.1252.7254.7256.8259.0261.0263.1265.1267.2
4-Quarter Moving-Average Percent Change
Total—100.0003.73.83.83.83.73.53.33.13.13.13.13.33.33.43.53.5
Compensation—70.6204.04.14.14.24.13.93.73.53.43.43.43.43.53.63.63.6
 Wages and SalariesAHE—Nursing Facilities63.0203.84.04.14.14.23.93.83.63.53.43.33.43.53.53.63.5
 Employee BenefitsBEA—Supplement to Wages/Salaries per Worker7.6005.34.74.84.54.13.73.12.93.03.33.53.73.83.74.04.1
Fuel and Other Energy—4.2702.72.62.41.61.00.80.0-0.3-0.4-0.50.00.71.52.32.62.5
 Fuel Oil and CoalIPD—Fuel Oil and Coal1.6600.0-0.2-0.9-2.0-2.0-1.4-1.7-1.4-1.3-1.2-0.40.51.32.32.72.2
 ElectricityIPD—Electricity1.2102.01.91.91.20.40.00.10.81.11.30.90.50.40.50.60.7
 Natural GasIPD—Natural Gas0.9106.16.26.45.63.72.1-0.5-2.9-3.7-3.9-2.9-0.80.92.33.23.2
 Water and Sewerage MaintenanceCPI(U)—Water and Sewage0.4905.95.45.25.25.25.04.64.03.53.23.33.84.45.15.35.4
Food—9.7401.51.92.22.22.21.91.61.51.61.82.12.52.72.72.72.6
 Direct PurchasePPI—Processed Foods4.9301.01.62.12.21.91.20.4-0.2-0.10.51.12.12.42.42.52.2
 Contract ServiceCPI(U)—Food and Beverages4.8101.92.12.32.32.42.52.62.92.92.92.92.83.03.02.92.9
All Other—15.3703.83.73.53.33.23.13.03.13.13.23.33.33.33.33.33.3
 PharmaceuticalsPPI—Prescription Drugs1.5005.04.54.23.93.53.22.72.42.42.42.72.92.82.62.52.4
 SuppliesCPI(U)—All Items3.2803.13.02.82.62.62.62.72.92.82.93.03.03.13.23.23.3
 Health ServicesCPI(U)—Physicians' Services1.2105.95.65.35.04.74.44.44.44.54.64.64.44.24.03.93.9
 Other Business ServicesCPI(U)—Services4.5903.93.83.83.73.53.33.23.23.33.53.53.63.63.63.63.7
 Miscellaneous CostsCPI(U)—All Items4.7903.13.02.82.62.62.62.72.92.82.93.03.03.13.23.23.3

For data sources used to estimate the input price index relative weights and choice of price proxies, see the October 7, 1992, Federal Register.

Category weights may not sum to total because of rounding.

NOTES: A dash (—) in the Price/Wage Variable column denotes a total or subtotal produced by adding 2 or more categories. AHE represents average hourly earnings, BEA represents Bureau of Economic Analysis, IPD represents implicit price deflator from the Department of Commerce, CPI(U) represents Consumer Price Index for all urban consumers, and PPI represents Producer Price Index. CY is calendar year. Q designates quarter of year. An example of how a percer change is calculated is shown in the Notes at the end of Table 9.

SOURCES: Health Care Financing Administration, Office of the Actuary: Data from the Office of National Health Statistics, Division of Health Cost Analysis. Third quarter 1995 forecasts were produced under contract to HCFA by Data Resources, Inc./McGraw-Hill.

Table 11

Quarterly Index Levels and Four-Quarter Moving-Average Percent Change of the Home Health Agency (HHA) Input Price Index, by Expense Category: 1993-97

Expense Category1Price/Wage VariableBase Year Weights CY 197621993Q31993Q41994Q11994Q21994Q31994Q41995Q11995Q2Forecast
1995Q31995Q41996Q11996Q21996Q31996Q41997Q11997Q2
Index Levels
Total—100.000298.8301.4303.3303.9307.9310.6313.7314.2317.4319.5321.6325.0328.9331.5333.7337.1
Compensation—73.040310.2313.0315.1315.4319.5322.6326.0325.9329.7331.8334.0337.4341.9344.5346.9350.3
 Wages and SalariesAHE—Hospitals65.140310.3313.1315.0315.1319.6322.8326.1325.7329.6331.6333.8337.2341.8344.4346.5349.8
 Employee BenefitsBEA—Supplement to Wages/Salaries per Worker7.900309.0312.0316.0317.8318.8320.5324.9327.0330.1333.3335.9339.4343.0345.9350.7354.6
TransportationCPI(U)—Transportation4.870236.4239.9239.5241.6245.9248.3249.8254.5254.2256.8256.2261.3262.1264.8265.2270.5
Office CostsCPI(U)—Services2.790303.7306.2308.8311.1313.5315.7318.7321.9324.5327.2330.1333.2336.3339.3342.4345.6
Medical and Nursing SuppliesCPI(U)—Medical Equipment/Supplies2.810258.6259.0259.0258.9269.5270.4274.0274.8273.7275.7277.8282.5285.2287.4289.1293.3
Rental and LeasingCPI(U)—Residential Rent1.350246.5248.0249.8250.8252.6254.3255.8257.2259.0261.7262.8263.7265.4266.8268.1269.8
Energy and Utilities—1.170262.2260.8262.9262.7262.6261.4261.0260.6261.5261.6264.0266.6268.5270.2270.9271.7
Miscellaneous CostsCPI(U)—All Items7.100254.4256.4257.8259.4261.7263.2265.2267.4269.1271.1273.4275.7277.9280.1282.3284.4
Contract ServicesComposite—All Other Costs36.870298.8301.4303.3303.9307.9310.6313.7314.2317.4319.5321.6325.0328.9331.5333.7337.1
4-Quarter Moving-Average Percent Change
Total—100.0003.73.43.12.82.82.83.03.23.23.23.03.03.13.33.73.7
Compensation—73.0403.83.53.12.82.82.93.03.23.33.23.03.03.13.43.73.8
 Wages and SalariesAHE—Hospitals65.1403.63.32.92.72.72.83.03.23.33.22.92.93.13.43.73.8
 Employee BenefitsBEA—Supplement to Wages/Salaries per Worker7.9005.34.74.84.54.13.73.12.93.03.33.53.73.83.74.04.1
TransportationCPI(U)—Transportation4.8703.13.02.62.42.83.03.64.34.14.13.73.02.92.93.13.3
Office CostsCPI(U)—Services2.7903.93.83.83.73.53.33.23.23.33.53.53.63.63.63.63.7
Medical and Nursing SuppliesCPI(U)—Medical Equipment/Supplies2.8103.23.33.12.12.32.73.65.14.43.82.71.92.63.23.84.1
Rental and LeasingCPI(U)—Residential Rent1.3502.42.32.42.32.32.42.42.52.52.62.72.72.72.42.22.2
Energy and Utilities—1.1702.82.72.51.71.10.80.1-0.3-0.4-0.50.00.81.62.42.72.6
Miscellaneous CostsCPI(U)—All Items7.1003.13.02.82.62.62.62.72.92.82.93.03.03.13.23.23.3
Contract ServicesComposite—All Other Costs36.8703.73.43.12.82.82.83.03.23.23.23.03.03.13.33.73.7

For data sources used to estimate the input price index relative weights and choice of price proxies, see the July 8, 1993, Federal Register. For the latest HHA regulation, see the February 14, 1995, Federal Register.

Category weights may not sum to total because of rounding.

The price/wage variable for Contract Services, Composite—All Other Costs, is the composite of all other HHA cost category weights and variables in the HHA input price index.

NOTES: A dash (—) in the Price/Wage Variable column denotes a total or subtotal produced by adding 2 or more categories. AHE represents average hourly earnings, BEA represents Bureau of Economic Analysis, and CPI(U) represents Consumer Price Index for all urban consumers. CY is calendar year. Q designates quarter of year. An example of how a percent change is calculated is shown in the Notes at the end of Table 9.

SOURCES: Health Care Financing Administration, Office of the Actuary: Data from the Office of National Health Statistics, Division of Health Cost Analysis. Third quarter 1995 forecasts were produced under contract to HCFA by Data Resources, Inc./McGraw-Hill.

Figure 4

Four-Quarter Moving Average Percent Change in the Prospective Payment System (PPS) Hospital, Skilled Nursing FAcility (SNF), and Home Health Agency (HHA) Input Price Indexes, 1992-96

Background

Community Hospital Statistics

Since 1963, the AHA, in cooperation with member hospitals, has been collecting data on the operation of community hospitals through its National Hospital Panel Survey. Community hospitals, which comprised more than 80 percent of all hospital facilities in the United States in 1994, include all non-Federal, short-term general, and other special hospitals open to the public. They exclude hospital units of institutions; psychiatric facilities; tuberculosis, other respiratory, and chronic disease hospitals; institutions for the mentally retarded; and alcohol and chemical dependency hospitals. The survey samples approximately one-third of all U.S. community hospitals. The sample is designed to produce estimates of community hospital indicators by bed size and region (American Hospital Association, 1963-94). In Tables 1 and 2, statistics covering expenses, utilization, beds, and personnel depict trends in the operation of community hospitals annually for 1991-94 and quarterly for 1991 forward. For purposes of national health expenditures (NHE), survey statistics on revenues (not shown on Table 1) are analyzed in estimating the growth in the largest component of health care costs—community hospital expenditures. This one segment of NHE accounted for 37 percent of all health spending in 1993 (Levit et al., 1994a). The survey also identifies important factors influencing expenditure growth patterns, such as changes in the number of beds in operation, numbers of admissions, length of stay, use of outpatient facilities, and number of surgeries.

Private Health Sector: Employment, Hours, and Earnings

The BLS collects monthly information on employment for all workers, and employment, earnings, and work hours for non-supervisory workers in a sample of approximately 340,000 establishments. Data are collected through cooperative agreements with State agencies that also use this information to create State and local area statistics. The survey is designed to collect industry-specific information on wage and salary jobs in non-agricultural industries. It excludes statistics on self-employed persons and on those employed in the military (U.S. Department of Labor, 1995a). Employment in this survey is defined as number of jobs. Persons holding multiple jobs would be counted multiple times. Approximately 5 percent of the population hold more than one job at any one time. (Other surveys that are household-based, such as the Current Population Survey [CPS], also record employment. In the CPS, however, each person's employment status is counted only once, as either employed, unemployed, or not in the labor force.) Once each year, monthly establishment-based employment statistics are adjusted to benchmarks created from annual establishment census information, resulting in revisions to previously published employment estimates. Tables 3, 4, and 5 were reformatted in the last “Health Care Indicators” article. The most significant change was the addition of data on the home health care services industry. The 1987 revision of the Standard Industrial Code (SIC) established Home Health Care Services as a separate industry, SIC 808. Prior to the 1987 revision, home health care was included in SIC 809, Allied Health Services, not elsewhere classified. Data on home health care services have been collected on the revised SIC basis since 1988. The format and content of Table 5 were also altered. Table 5 previously showed the percent change from the same period in the previous year of implied non-supervisory payrolls and work hours. The new table drops work hours in favor of the change in the three components of payrolls—employment, average weekly hours, and average hourly earnings. This format will facilitate a description of the composition of the change in payrolls, i.e., payrolls are increasing or decreasing because of changes in the number of workers, or the amount of hours worked, or amount workers are paid per hour. Changes in total work hours are implicit in this new format and can be calculated from the data in Tables 3 and 4.
Table 3

Employment, Hours, and Earnings in Private-Sector Health Service Establishments, by Selected Type of Establishment: 1991-95

Type of EstablishmentCalendar Year1991Q21991Q31991Q41992Q11992Q21992Q31992Q41993Q11993Q21993Q31993Q41994Q11994Q21994Q31994Q41995Q11995Q2
1991199219931994
Total Employment in Thousands
Non-Farm Private Sector89,85489,95991,88994,91789,88490,54890,19488,11289,97190,82390,92889,47891,70692,97093,40292,09694,74596,18096,64695,20697,327
Health Services8,1838,4908,7569,0018,1318,2478,3218,3758,4538,5368,5968,6388,7248,8088,8548,8788,9709,0549,1019,1459,229
 Offices and Clinics of Physicians1,4041,4631,5061,5401,3941,4201,4321,4401,4551,4731,4841,4891,5021,5161,5161,5191,5341,5511,5581,5641,581
 Offices and Clinics of Dentists528541556575525532535534538543547548554559563565573577583587595
 Nursing Homes1,4931,5331,5851,6491,4851,5051,5151,5181,5261,5391,5481,5531,5731,5971,6171,6261,6421,6611,6661,6711,682
 Private Hospitals3,6553,7503,7793,7743,6363,6733,6963,7203,7413,7673,7713,7763,7823,7883,7713,7623,7683,7843,7843,7923,809
 Home Health Care Services344398469555340351364375393403420432458481505523550566582591603
Non-Supervisory Employment in Thousands
Non-Farm Private Sector72,65072,93074,77777,47672,66273,33173,04771,12772,92973,75273,91372,54174,61475,77776,17574,87877,35278,63079,04577,58879,564
Health Services7,2767,5467,7707,9747,2317,3347,3967,4447,5167,5887,6367,6697,7477,8157,8477,8697,9538,0168,0568,0968,175
 Offices and Clinics of Physicians1,1551,2021,2311,2571,1481,1681,1761,1841,1961,2091,2161,2191,2291,2381,2361,2421,2541,2651,2691,2741,289
 Offices and Clinics of Dentists463473487502461468469467471476479480485489492495501504508513520
 Nursing Homes1,3471,3851,4311,4871,3401,3591,3681,3711,3781,3921,3991,4021,4211,4421,4591,4651,4811,4981,5021,5061,517
 Private Hospitals3,3533,4423,4643,4513,3343,3703,3923,4153,4343,4583,4623,4653,4693,4713,4523,4413,4483,4583,4573,4663,484
 Home Health Care Services319369435514315325337347364374389400424446469485510523538547559
Average Weekly Hours
Non-Farm Private Sector34.334.434.534.734.334.634.434.134.334.634.534.034.534.834.634.334.734.934.834.334.4
Health Services32.532.832.832.832.532.732.632.832.632.932.832.732.832.932.832.832.832.832.832.832.7
 Offices and Clinics of Physicians31.932.232.232.431.932.032.032.332.032.232.232.132.232.332.332.432.332.332.632.432.3
 Offices and Clinics of Dentists28.328.328.328.128.328.228.328.528.228.328.428.128.428.228.328.228.228.028.228.028.0
 Nursing Homes32.132.332.232.332.032.432.232.232.032.732.332.032.232.632.132.132.232.532.432.332.2
 Private Hospitals34.234.434.634.634.234.434.334.434.434.534.434.634.534.734.634.734.634.734.634.734.5
 Home Health Care Services26.127.427.828.225.926.326.527.327.027.627.627.527.827.927.928.028.228.228.528.728.7
Average Hourly Earnings
Non-Farm Private Sector10.3210.5710.8311.1210.2910.3410.4410.5010.5210.5710.6910.7710.7910.8210.9611.0511.0611.1111.2811.3611.38
Health Services10.9611.3911.7812.1010.9011.0511.1611.2311.3111.4411.5711.6911.7111.8011.9212.0012.0212.1312.2412.3612.36
 Offices and Clinics of Physicians11.1311.4111.8912.2411.0811.1511.3111.2211.3211.4711.6511.7211.8611.9112.0712.1612.2112.2712.3312.4112.39
 Offices and Clinics of Dentists10.6211.0211.4411.9610.5810.6410.7810.9110.9710.9911.2011.2611.3511.4611.6811.7811.9112.0012.1612.2412.34
 Nursing Homes7.567.868.178.497.527.597.667.757.827.907.968.068.118.208.318.408.448.528.618.708.72
 Private Hospitals12.5013.0313.4613.8312.4312.6612.7512.8512.9013.1113.2513.3713.3713.4913.6113.7013.7013.9014.0414.1814.16
 Home Health Care Services9.3810.0010.4110.669.289.469.629.839.9810.0410.1510.3210.3510.4710.5010.5810.6210.7110.7510.8410.84
Addenda: Hospital Employment in Thousands
Total4,9585,0685,1005,0894,9374,9795,0045,0365,0585,0885,0905,0935,1015,1145,0915,0805,0835,0985,0935,1005,116
 Private3,6553,7503,7793,7743,6363,6733,6963,7203,7413,7673,7713,7763,7823,7883,7713,7623,7683,7843,7843,7923,809
 Federal234235234233233235235236235234233231233235235235234233231229230
 State417419414405417415417420420419417415414414412409407404401399393
 Local653665673676651656656659662668669670672677674673674678677680684

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

NOTES: Data presented here conform to the 1987 Standard Industrial Classification. 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 January 1991-September 1995.

Table 4

Percent Change in Employment, Hours, and Earnings in Private-Sector Health Service Establishments, by Selected Type of Establishment: 1991-95

Type of EstablishmentCalendar Year1991Q21991Q31991Q41992Q11992Q21992Q31992Q41993Q11993Q21993Q31993Q41994Q11994Q21994Q31994Q41995Q11995Q2
1991199219931994
Annual Percent ChangePercent Change From the Same Period of Previous Year
Total Employment
Non-Farm Private Sector-1.40.12.13.3-1.6-1.6-1.3-0.80.10.30.81.51.92.42.72.93.33.53.53.42.7
Health Services4.73.83.12.84.74.64.64.34.03.53.33.13.23.23.02.82.82.82.83.02.9
 Offices and Clinics of Physicians5.04.22.92.34.75.15.35.04.43.73.63.43.22.92.22.02.12.32.83.03.1
 Offices and Clinics of Dentists2.92.52.93.32.43.33.72.82.62.32.22.73.02.83.13.13.43.33.43.83.9
 Nursing Homes5.52.73.44.05.75.54.73.52.82.32.22.33.13.74.54.74.44.03.02.82.4
 Private Hospitals3.02.60.8-0.13.02.82.82.92.92.62.01.51.10.60.0-0.4-0.3-0.10.30.81.1
 Home Health Care Services18.515.517.918.419.916.516.516.015.514.815.515.216.519.320.321.020.217.815.213.09.6
Non-Supervisory Employment
Non-Farm Private Sector-1.60.42.53.6-1.9-1.7-1.3-0.60.40.61.22.02.32.73.13.23.73.83.83.62.9
Health Services4.73.73.02.64.74.64.64.23.93.53.23.03.13.02.82.62.72.62.72.92.8
 Offices and Clinics of Physicians4.64.02.42.24.44.74.94.84.23.53.43.02.72.41.61.92.02.22.72.62.8
 Offices and Clinics of Dentists3.12.12.83.22.63.73.82.52.11.81.92.72.92.82.93.13.43.03.23.63.8
 Nursing Homes5.42.83.33.95.55.44.63.62.92.42.32.33.13.64.34.54.23.93.02.82.5
 Private Hospitals3.22.70.6-0.43.23.03.03.03.02.62.11.51.00.4-0.3-0.7-0.6-0.40.20.71.1
 Home Health Care Services18.615.617.918.320.116.716.616.415.715.015.615.116.519.320.421.320.317.314.912.89.5
Average Weekly Hours
Non-Farm Private Sector-0.60.20.30.6-0.7-0.60.00.70.20.00.1-0.10.50.60.40.70.60.40.60.1-0.9
Health Services0.00.70.10.00.2-0.30.21.30.30.60.5-0.20.50.00.00.10.0-0.10.00.1-0.2
 Offices and Clinics of Physicians0.40.80.20.51.20.10.71.60.10.80.7-0.40.70.20.30.70.40.00.90.1-0.2
 Offices and Clinics of Dentists-0.40.2-0.3-0.5-0.1-1.1-0.60.7-0.40.40.1-1.30.7-0.2-0.20.1-0.7-0.8-0.5-0.7-0.9
 Nursing Homes0.10.5-0.30.30.3-0.5-0.20.80.10.80.3-0.70.4-0.3-0.70.20.0-0.21.00.60.2
 Private Hospitals0.00.60.50.20.1-0.10.51.20.40.40.40.50.50.50.50.50.20.1-0.1-0.2-0.2
 Home Health Care Services3.24.81.41.72.92.93.15.94.24.94.20.62.71.21.01.71.61.12.42.61.9
Average Hourly Earnings
Non-Farm Private Sector3.12.42.52.73.23.02.92.82.32.32.42.52.52.32.52.62.52.72.92.82.9
Health Services5.33.93.42.75.85.65.24.73.73.63.74.13.63.13.02.72.62.82.72.92.8
 Offices and Clinics of Physicians5.32.54.23.05.94.64.02.02.22.93.04.44.83.83.63.83.03.02.12.01.4
 Offices and Clinics of Dentists4.73.83.84.64.94.04.34.23.73.33.93.23.44.24.34.75.04.74.13.83.6
 Nursing Homes4.43.94.03.94.54.23.73.93.94.13.84.03.83.84.44.24.13.93.63.63.3
 Private Hospitals6.04.23.32.86.56.76.25.63.83.63.94.13.62.92.82.42.53.03.13.53.4
 Home Health Care Services7.86.64.12.57.57.77.47.27.66.25.55.03.74.23.52.62.72.32.32.52.1
Addenda: Hospital Employment
Total2.22.20.6-0.22.12.12.22.52.52.21.71.10.80.50.0-0.3-0.3-0.30.00.40.6
 Private3.02.60.8-0.13.02.82.82.92.92.62.01.51.10.60.0-0.4-0.3-0.10.30.81.1
 Federal0.80.5-0.4-0.20.31.32.22.21.0-0.2-1.0-1.9-1.10.41.01.70.5-1.1-1.9-2.9-1.7
 State-2.20.5-1.2-2.0-2.5-2.2-1.30.50.60.80.0-1.1-1.3-1.1-1.3-1.5-1.6-2.4-2.5-2.5-3.6
 Local1.11.81.30.30.91.11.01.61.81.92.01.61.51.30.70.50.20.10.51.11.6

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

NOTES: Data presented here conform to the 1987 Standard Industrial Classification. 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 January 1991-September 1995.

National Economic Indicators

National economic indicators provide a context for understanding health-specific indicators and how change in the health sector relates to change in the economy as a whole. Table 6 presents national indicators of output and inflation. GDP measures the output of the U.S. economy as the market value of goods and services produced within the geographic boundaries of the United States by U.S. or foreign citizens or companies. Constant dollar or “real” GDP removes the effects of price changes from the valuation of goods and services produced, so that the growth of real GDP reflects changes in the “physical quantity” of the output of the economy (U.S. Department of Commerce, 1995).

Prices

Consumer Price Indexes

BLS publishes monthly information on changes in prices paid by consumers for a fixed market basket of goods and services. Tables 6, 7, and 8 present information on the all urban CPI, which measures changes in prices faced by 80 percent of the non-institutionalized population in the United States. (The more restrictive wage earner CPI gauges prices faced by wage earners and clerical workers. These workers account for 32 percent of the non-institutionalized population [U.S. Department of Labor, 1995b].)
Table 7

Index Levels of Medical Prices: 1991-95

IndicatorCalendar Year1991Q21991Q31991Q41992Q11992Q21992Q31992Q41993Q11993Q21993Q31993Q41994Q11994Q21994Q31994Q41995Q11995Q2
1991199219931994
Consumer Price Indexes, All Urban Consumers1
Medical Care Services2177.1190.5202.9213.4175.2178.7181.8186.1188.9192.1195.0198.8201.8204.4206.7209.5212.0214.6217.5221.0223.0
 Professional Services165.7175.8184.7192.5164.5167.0169.1172.3174.7177.0179.0181.6184.1185.9187.1189.3191.8193.5195.5198.3200.2
  Physicians' Services170.5181.2191.3199.8169.3171.6173.6177.2180.3182.6184.6187.7190.5192.7194.2196.7199.2200.7202.4205.6208.1
  Dental Services167.4178.7188.1197.1165.5169.4172.1174.7177.0180.4182.6184.8187.6189.2190.8193.0196.1198.3201.1204.0205.8
Hospital and Related Services196.1214.0231.9245.6193.2197.9202.3208.1211.3216.0220.6226.2230.0233.8237.7241.3243.4247.2250.6254.2255.6
  Hospital Room191.9208.7226.4239.2189.5193.3197.4202.8206.1210.6215.2220.6224.6228.2232.0235.3237.2240.9243.5247.8249.4
  Other Inpatient Services (1986=100)158.0172.3185.7197.1155.4159.5163.3168.0170.2173.9177.0181.1183.9187.2190.4193.5195.4198.2201.2204.0205.2
  Outpatient Services (1986=100)153.4168.7184.3195.0151.1155.1158.5163.5166.4170.1174.7179.9183.0185.6188.7191.5192.9196.3199.4201.5202.3
Medical Care Commodities176.8188.1195.0200.7175.4178.9181.0184.9187.8189.0190.4193.0194.2196.0196.7198.5200.1201.6202.6203.4203.6
  Prescription Drugs199.7214.7223.0230.6197.6202.4205.6210.9214.5215.6218.0221.4221.6223.9225.2228.0230.5231.0232.8233.4233.9
  Non-Prescription Drugs and Medical Supplies (1986=100)126.3131.2135.5138.1125.9127.2127.8129.3131.1132.1132.1133.2135.6136.7136.5136.7136.8139.4139.4140.5140.0
   Internal and Respiratory Over-the-Counter Drugs152.4158.2163.5165.9151.9153.7153.7155.3158.4159.9159.3160.4163.4165.3164.9165.2165.5166.6166.4167.1166.0
   Non-Prescription Medical Equipment and Supplies145.0150.9155.9160.0144.8145.9148.0150.1150.4151.2152.1153.8156.4156.5156.7156.7156.7163.1163.6165.8166.3
Producer Price Indexes3
Industry Groupings:4
Health Services (12/94=100)———————————————————101.6102.0
 Offices and Clinics of Doctors of Medicine (12/93=100)———102.8———————————101.8102.4102.9104.0106.3106.8
  Medicare Treatments (12/93=100)———104.7———————————104.7104.7104.7104.7109.6109.6
  Non-Medicare Treatments (12/93=100)———102.3———————————101.0101.8102.4103.8105.5106.2
Hospitals (12/92=100)——102.5106.2———————101.2101.7103.0104.0105.0105.4106.7107.7109.2109.5
 General Medical and Surgical Hospitals (12/92=100)——102.4106.0———————101.3101.6102.9103.9104.8105.2106.5107.5109.0109.3
 Inpatient Treatments (12/92=100)——102.5106.0———————101.2101.5102.9104.2104.9105.2106.4107.5108.5108.7
  Medicare Patients (12/92=100)——100.6102.6———————100.0100.0100.0102.3102.3102.3102.3103.6103.6103.6
  Medicaid Patients (12/92=100)——102.3107.1———————100.9101.2103.0104.3105.3106.0108.1108.9109.5109.8
  All Other Patients (12/92=100)——103.5107.7———————101.9102.5104.5105.3106.3106.7108.4109.4111.0111.3
 Outpatient Treatments (12/92=100)——102.5106.7———————101.5102.0103.0103.4105.0105.8107.6108.2111.9112.4
  Medicare Patients (12/92=100)——103.7107.0———————103.1103.3104.4104.1105.5106.0107.5108.8110.2110.6
  Medicaid Patients (12/92=100)——101.6103.3———————100.7101.5102.4101.9101.8101.2105.1105.1105.7105.8
  All Other Patients (12/92=100)——102.4106.9———————101.3101.8102.8103.4105.2106.2107.8108.4112.7113.3
Skilled and Intermediate Care Facilities (12/94=100)———————————————————101.9102.5
 Public Payors (12/94=100)———————————————————101.8102.3
 Private Payors (12/94=100)———————————————————102.1102.9
Medical Laboratories (6/94=100)—————————————————100.099.9101.6101.1
Commodity Groupings:
Drugs and Pharmaceuticals182.6192.2200.9206.0181.8184.7186.2188.5191.8193.4195.1198.7200.6202.0202.4204.6205.9206.3207.0208.5210.2
 Ethical (Prescription) Preparations217.5231.7242.2250.0216.7219.9222.8227.1230.9233.3235.4239.0241.8243.5244.5248.3250.1250.0251.4252.7255.6
 Proprietary (Over-the-Counter) Preparations165.4173.6180.0183.2165.4168.2167.8168.9173.7175.1176.7177.4179.3181.6181.6181.4182.6184.4184.5185.5186.4
Medical, Surgical, and Personal Aid Devices130.3133.9137.8140.4130.1130.7131.0132.9133.8134.1134.7137.1138.1137.8138.3140.1140.3140.6140.5140.7140.7
 Personal Aid Equipment117.1120.2122.3130.1116.0117.0120.0120.0120.2120.3120.4122.6122.6121.9121.9127.8130.8130.9130.9131.2131.7
 Medical Instruments and Equipment (6/82=100)120.7123.4126.0126.7120.6121.0121.0122.6123.4123.5123.9125.5126.5125.8126.2126.4126.5126.8126.9127.8127.8
 Surgical Appliances and Supplies (6/83=100)140.7145.0151.0155.7140.5141.1141.3143.6144.9145.2146.3150.0151.1151.1151.7155.4155.7156.1155.4154.3154.1
 Ophthalmic Goods (12/83=100)116.0118.0119.0119.6115.5116.1117.0117.6118.1118.4117.7118.4118.7119.3119.4120.0119.4119.4119.8121.7120.8
 Dental Equipment and Supplies (6/85=100)121.2126.6131.5135.2120.3122.0122.4126.0125.6126.8127.9130.4131.8132.0131.6134.2135.0136.0135.7136.4138.2

Unless otherwise noted, base year is 1982-84=100

Includes the net cost of private health insurance, not shown separately.

Unless otherwise noted, base year is 1982=100. Producer price indexes are classified by industry (price changes received for the industry's output sold outside the industry) and commodity (price changes by similarity of end use or material composition).

Further detail for Producer Price Index industry groupings, such as types of physician practices, hospital diagnosis-related group groupings, etc., are available from the Bureau of Labor Statistics.

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

SOURCES: U.S. Department of Labor, Bureau of Labor Statistics: CPI Detailed Report. Washington. U.S. Government Printing Office. Monthly reports for January 1991-June 1995; U.S. Department of Labor, Bureau of Labor Statistics: Producer Price Indexes. Washington. U. S. Government Printing Office. Monthly reports for January 1991-August 1995.

Table 8

Percent Change in Medical Prices From Same Period a Year Ago: 1991-95

IndicatorCalendar Year1991Q21991Q31991Q41992Q11992Q21992Q31992Q41993Q11993Q21993Q31993Q41994Q11994Q21994Q31994Q41995Q11995Q2
1991199219931994
Annual Percent ChangePercent Change From the Same Period of Previous Year
Consumer Price Indexes, All Urban Consumers1
Medical Care Services28.97.66.55.29.28.58.07.97.87.57.26.86.86.46.05.45.15.05.25.55.2
 Professional Services6.26.15.14.36.15.96.06.26.26.05.85.45.35.04.54.34.24.14.54.74.4
  Physicians' Services6.06.35.64.45.95.55.55.96.56.46.35.95.75.65.24.84.54.24.34.54.5
  Dental Services7.56.75.34.87.27.88.17.46.96.56.15.86.04.94.54.44.54.85.45.74.9
 Hospital and Related Services10.29.18.45.910.89.88.99.09.49.19.08.78.88.37.86.75.85.75.45.35.0
  Hospital Room9.48.88.55.710.08.98.48.38.89.09.08.89.08.47.86.65.65.55.05.35.1
  Other Inpatient Services (1986=100)10.79.17.86.111.510.28.99.39.59.18.47.88.07.67.66.86.35.95.75.55.0
  Outpatient Services (1986=100)10.610.09.35.810.810.79.89.810.19.710.210.110.09.18.06.55.45.75.75.24.9
Medical Care Commodities8.26.43.72.98.18.47.87.77.15.75.24.33.43.73.32.93.02.83.02.51.7
 Prescription Drugs9.97.63.93.49.710.19.89.38.56.56.05.03.33.83.33.04.03.23.42.41.5
 Non-Prescription Drugs and Medical Supplies (1986=100)4.73.93.31.94.85.03.74.24.13.93.43.03.53.43.32.60.92.02.12.82.3
  Internal and Respiratory Over-the-Counter Drugs4.53.83.31.54.85.02.63.34.34.03.73.33.23.43.53.01.30.80.91.10.3
  Non-Prescription Medical Equipment and Supplies5.04.13.32.74.85.05.86.23.93.62.72.44.03.53.11.90.14.24.45.86.1
Producer Price Indexes3
Industry Groupings:4
Health Services (12/94=100)—————————————————————
 Offices and Clinics of Doctors of Medicine (12/93=100)———————————————————4.54.3
  Medicare Treatments (12/93=100)———————————————————4.74.7
  Non-Medicare Treatments (12/93=100)———————————————————4.54.3
Hospitals (12/92=100)———3.6———————————3.83.63.63.54.03.9
 General Medical and Surgical Hospitals (12/92=100)———3.5———————————3.53.53.53.44.03.9
 Inpatient Treatments (12/92=100)———3.5———————————3.73.63.53.13.43.3
  Medicare Patients (12/92=100)———2.0———————————2.32.32.31.31.31.3
  Medicaid Patients (12/92=100)———4.6———————————4.34.75.04.54.03.6
  All Other Patients (12/92=100)———4.0———————————4.34.13.83.94.44.3
 Outpatient Treatments (12/92=100)———4.1———————————3.43.74.44.76.66.3
  Medicare Patients (12/92=100)———3.1———————————2.32.63.04.64.54.3
  Medicaid Patients (12/92=100)———1.7———————————1.1-0.32.73.13.84.5
  All Other Patients (12/92=100)———4.4———————————3.84.34.84.87.26.7
Skilled and Intermediate Care Facilities (12/94=100)—————————————————————
 Public Payors (12/94=100)—————————————————————
 Private Payors (12/94=100)—————————————————————
Medical Laboratories (6/94=100)—————————————————————
Commodity Groupings:—————————————————————
Drugs and Pharmaceuticals6.95.34.52.56.97.86.96.25.54.74.85.44.64.43.73.02.62.12.31.92.1
 Ethical (Prescription) Preparations8.46.54.53.28.38.98.47.76.56.15.75.24.74.43.83.93.42.72.81.82.2
 Proprietary (Over-the-Counter) Preparations5.55.03.71.85.77.15.15.55.04.15.35.13.23.72.82.21.81.61.62.32.1
Medical, Surgical, and Personal Aid Devices2.32.73.01.82.32.32.02.62.82.52.93.23.22.82.62.11.62.01.60.50.3
 Personal Aid Equipment2.92.61.76.42.91.93.83.83.62.80.42.22.01.31.24.36.77.47.42.60.7
 Medical Instruments and Equipment (6/82=100)1.52.22.10.51.41.51.22.22.32.12.42.32.51.91.90.80.10.80.61.11.0
 Surgical Appliances and Supplies (6/83=100)3.53.14.13.13.63.22.62.73.12.93.54.54.34.13.73.63.13.32.4-0.8-1.1
 Ophthalmic Goods (12/83=100)0.91.70.90.60.30.81.71.82.32.00.70.70.50.81.41.40.50.10.31.41.2
 Dental Equipment and Supplies (6/85=100)1.94.53.82.91.92.92.65.14.43.94.53.54.94.12.92.92.43.03.11.62.4

Unless otherwise noted, base year is 1982-84=100.

Includes the net cost of private health insurance, not shown separately.

Unless otherwise noted, base year is 1982=100. Producer price indexes are classified by industry (price changes received for the industry's output sold outside the industry) and commodity (price changes by similarity of end use or material composition).

Further detail for Producer Price Index industry groupings, such as types of physician practices, hospital diagnosis-related group groupings, etc., are available from the Bureau of Labor Statistics.

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

SOURCES: U.S. Department of Labor, Bureau of Labor Statistics: CPI Detailed Report. Washington. U.S. Government Printing Office. Monthly reports for January 1991-June 1995; U.S. Department of Labor, Bureau of Labor Statistics: Producer Price Indexes. Washington. U. S. Government Printing Office. Monthly reports for January 1991-August 1995.

The index reflects changes in prices charged for the same quality and quantity of goods or services purchased in the base period. For most items, the base period of 1982-84 is used to define the share of consumer expenditures devoted to specific services and products. Those shares or weights remain constant in all years, even though consumption patterns of the household may change over time. This type of index is called a fixed-weight or Laspeyres index. CPIs for health care goods and services depict price changes for out-of-pocket expenditures and health insurance premium payments made directly by consumers. The composite CPI for medical care weights together product-specific or service-specific CPIs in proportion to household out-of-pocket expenditures for these items. In addition, some medical care sector indexes measure changes in list or charged prices, rather than in prices actually received by providers after discounts are deducted. In several health care areas, received or transaction prices are difficult to capture, although BLS is making advances in this area. In the NHE, a combination of CPIs for selected medical care items, input price indexes for nursing homes, and the PPI for hospitals are used as measures of inflation for the health industry. The indexes are used to develop a fixed-weight price index for personal health care to depict price changes affecting the entire health care industry more accurately than does the overall CPI medical care index (Levit et al., 1994b).

Producer Price Indexes

BLS produces monthly information on average changes in selling prices received by domestic producers for their output These prices are presented in Tables 6, 7, and 8 as the PPI. The index is designed to measure transaction prices, and is different from the CPI, which in some cases measures list or full charge prices. The PPI is a fixed-weight or Laspeyres index, with base period weights determined by values of receipts. The base period varies among series. The PPI consists of indexes in several major classification structures, including the industry and commodity classifications that are included in this article. The PPI by industry classification measures price changes received for the industry's output sold outside the industry. PPI changes for an industry are determined by price changes for products primarily made by establishments in that industry. The industry into which an establishment is classified is determined by those products accounting for the largest share of its total value of shipments. The PPI by commodity classification measures price changes of the end product (end use or material composition). The classification system for PPI commodity groups is unique to the PPI, and is divided into 15 major commodity groupings. While PPIs for medical commodities have existed for numerous years, PPIs for health service industries are relatively new. Most index series began in 1994, and the index series for the composite health services industry does not begin until December 1994. However, the PPI for hospitals began in December 1992, providing enough data for a useful time series. The PPI for hospitals is a measure of transaction prices, or net prices received by the producer from out-of-pocket, Medicare, Medicaid, and private third-party payor sources. The PPI for hospitals should not be compared with the CPI for hospital and related services. While other PPI and CPI series are somewhat comparable (for example, the PPI—office and clinics of doctors of medicine, and the CPI—physicians' services), the PPI and CPI for hospitals have important differences in survey scope and methodology. The PPI for hospitals measures price changes for the entire treatment path, measures net transaction price, includes Medicare and Medicaid, samples both urban and rural hospitals, and reflects total hospital revenue from all sources in its index weights. On the other hand, the CPI for hospitals measures price changes for a discrete sample of hospital services singly, measures published charges, excludes Medicare and Medicaid, samples only urban hospitals, and reflects only consumer out-of-pocket expenses and household health insurance premium payments in its index weights. These differences make a direct comparison between the PPI and CPI hospital services indexes inappropriate. The PPI for the health services industry is available by detailed industry groupings. For example, general medical and surgical hospitals consist of inpatient and outpatient treatments, which in turn consist of Medicare, Medicaid, and all other patients. These patient categories consist of more detail, such as diagnosis-related group (DRG) groupings for Medicare. While most of the data used to measure PPI price changes for health services are collected through a sample, there are specific instances in which data are collected from both a sample and from Federal regulation. This is the case for Medicare hospital inpatient services and Medicare offices and clinics of doctors of medicine. The producer price changes in Medicare hospital inpatient services are computed from a combination of a national sample of DRGs in hospitals, DRG relative weights from the PPS final rules published in the current and historical year, and other adjustments. The producer price changes in Medicare offices of doctors of medicine are computed from a combination of a geographic area sample of payments under the HCFA Common Procedure Coding System (HCPCS), HCPCS updates from the December 8, 1994, Federal Register, and other adjustments. Because of different methodologies, these two PPIs are not comparable to the national updates computed by HCFA and published in the Federal Register.

Input Price Indexes

In 1979, HCFA developed the Medicare hospital input price index (hospital market basket), which was designed to measure the pure price changes associated with expenditure changes for hospital services. In the early 1980s, the SNF and HHA input price indexes, often referred to as market baskets, were developed to price a consistent set of goods and services over time. Also in the early 1980s, the original Medicare hospital input price index was revised for use in updating payment rates for the PPS. All of these indexes have played an important role in helping to set Medicare payment percent increases, and in 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 PPS hospital input price index, the base period is 1987. Cost categories, such as food, fuel, and labor, are identified and their 1987 expenditure amounts determined. The proportion or share of total expenditures included in specific spending categories is calculated. These proportions are called cost or expenditure weights. There are 28 expenditure categories in the 1987-based PPS hospital input price index. Second, a price proxy is selected to match each expenditure category. Its purpose is to measure the rate of price increases of the goods or services in that 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. Following every calendar-year quarter, in March, June, September, and December, DRI updates its macroeconomic forecasts of wages and prices based on updated historical information and revised forecast assumptions. Some of the data in Tables 9 through 11 are forecasted and are expected to change as more recent historical data become available and subsequent quarterly forecasts are revised. 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 structure of the PPS input price index was published in the September 4, 1990, Federal Register. The most recent PPS update for payment rates was published in the September 1, 1995, Federal Register. The latest HHA regulatory input price index was published in the February 14, 1995, Federal Register, and the latest SNF input price index was published in the October 7, 1992, Federal Register (also see the January 6, 1994, Federal Register). Periodically, the input price indexes are revised to a new base year so that cost weights will reflect changes in the mix of goods and services that are purchased. Each revision allows for new base weights, a new base year, and changes to certain price variables used for price proxies. Each input price index is presented in a table with both an index level and a 4-quarter moving-average percent change. The hospital input price index for PPS is in Table 9, the SNF input price index is in Table 10, and the HHA input price index is in Table 11.

Medicare Economic Index

In 1972, Congress mandated the development of the Medicare Economic Index (MEI) to measure the changes in costs of physicians' time and operating expenses. The input price change measured by the MEI is considered in connection with the update factor for the Medicare Part B physician fee schedule under the resource-based relative value scale (November 25, 1992, Federal Register and December 8, 1994, Federal Register), or is used as an advisory indicator by Congress in updating the fee schedule. The MEI is a fixed-weighted sum of annual price changes for various inputs needed to produce physicians' services with an offset for productivity increases. Like a traditional Laspeyres index, the MEI is constructed in two steps. First, a base period is selected (1989 for the MEI), cost categories are identified, and the 1989 expenditure amounts by cost category are determined. Second, price proxies are selected to match each expenditure category. These proxies are weighted by the category weight determined from expenditure amounts, and summed to produce the composite MEI. Unlike a traditional Laspeyres index, the compensation portion of the MEI is adjusted for productivity so that economywide productivity and physician practice productivity are not both included in the update, resulting in a double counting of productivity. Forecasts of the MEI are made periodically throughout the fiscal year by DRI for HCFA using several different sets of economic assumptions. DRI produces four main forecasts of the MEI: (1) a presidential budget forecast in December, (2) the mid-session review in June based on assumptions for the Federal budget exercises, (3) the Medicare Trustees Report forecast in February based on assumptions by the Medicare Trustees, and (4) the Medicare premium promulgation forecast in August based on baseline assumptions by DRI. DRI also produces forecasts of the MEI using their own economic assumptions forecast. The forecasts based on DRI assumptions are presented in this article. Much of the forecasted data change as more recent historical data become available and the assumptions change. The methodology, weights, and price proxy definitions used in the MEI are described in the November 25, 1992, Federal Register. The MEI data are presented in Table 12 as index levels and 4-quarter moving-average percent changes.
Table 12

Quarterly Index Levels and Four-Quarter Moving-Average Percent Change in the HCFA Medicare Economic Index (MEI) with DRI Forecast Assumptions, by Expense Category: 1993-97

Expense Category1Price/Wage VariableBase Year Weights CY 198921993Q31993Q41994Q11994Q21994Q31994Q41995Q11995Q2Forecast
1995Q31995Q41996Q11996Q21996Q31996Q41997Q11997Q2
Index Levels
Total—100.000111.1111.8112.7112.9113.4114.2114.8115.1115.5116.3117.0117.6118.2119.0119.7120.2
Physician Earnings—54.155109.5110.4111.3111.2111.4112.5113.0112.9113.1114.1114.7114.9115.2116.1116.7116.8
 Wages and SalariesAHE—Private345.342107.2108.3108.9108.7108.8110.1110.6110.4110.5111.6112.1112.2112.4113.4113.8113.9
 BenefitsECI—Benefits, Private38.813121.4121.6123.5124.2124.8124.7125.6125.8126.3126.7128.0128.7129.7130.0131.3131.8
Practice Expenses—45.845112.9113.4114.3114.9115.8116.1117.0117.6118.2118.9119.8120.7121.8122.4123.3124.2
 Non-Physician Compensation—16.296112.7113.1113.9114.4115.1115.4116.1116.3117.0117.4118.3118.8119.6120.1120.9121.2
  Wages and Salaries—13.786111.3111.6112.2112.7113.3113.7114.3114.5115.2115.6116.4116.8117.6118.1118.8119.1
   Professional/TechnicalECI—W/S: Professional/Technical33.790112.8113.0113.5114.1114.6115.0115.3115.5116.2116.6117.2117.5118.4118.7119.3119.6
   ManagersECI—W/S: Administrative/Managerial32.620110.7111.2111.6112.2113.1113.2114.1114.3114.9115.5116.4117.0117.6118.1118.9119.3
   ClericalECI—W/S: Clerical35.074111.4111.9112.5113.1113.7114.0114.8115.0115.7116.1117.0117.5118.2118.7119.6119.9
   CraftECI—W/S: Craft30.069108.9109.0109.5110.1111.0110.8111.3111.9112.6112.7113.2113.7114.3114.5115.0115.4
   ServicesECI—W/S: Service Occupations32.233109.3109.3109.9110.1110.5111.3111.5111.7112.4113.2113.9114.0115.0115.5116.1116.1
   Employee BenefitsECI—Benefits, Private White Collar32.510120.6121.0123.4124.1124.9124.9126.3126.6127.1127.5128.9129.7130.7131.0132.3133.0
Office ExpensesCPI(U)—Housing10.280115.6115.6116.7117.3118.4118.3119.4120.2120.8120.9121.9123.1124.8125.1126.1127.2
Medical Materials/SuppliesPPI—Drugs/PPI-Surgical/CPI-Medical Supplies5.251122.6123.0124.6125.0126.7126.9127.4128.1128.7129.8130.9132.4133.0133.5134.6136.0
Professional Liability InsuranceHCFA—Professional Liability Premiums4.78093.694.595.396.096.497.197.998.999.7100.7101.8103.0104.4105.6106.9108.1
Medical EquipmentPPI—Medical Instruments/Equipment2.348108.6108.9109.1109.2109.4109.5110.3110.3110.6111.5112.4112.7112.3112.9113.8114.1
Other Professional Expenses—6.890117.1118.2118.9119.8120.8121.8122.9124.0124.8126.1126.7128.1129.0130.4131.1132.7
 AutomobileCPI(U)—Private Transportation1.400112.7114.3113.7115.2117.5119.1119.6121.5122.5123.6123.3125.9126.2127.4127.3130.0
 All OtherCPI(U)—All Items Less Food/Energy5.490118.2119.2120.2121.0121.7122.5123.7124.7125.4126.7127.5128.7129.7131.2132.1133.3
4-Quarter Moving-Average Percent Change
Total—100.0002.32.32.22.12.12.12.02.01.91.91.91.92.12.22.32.3
Physician Earnings—54.1551.71.81.81.71.71.71.71.71.61.51.51.51.61.71.81.8
 Wages and SalariesAHE—Private345.3421.21.21.31.31.41.51.51.61.61.51.51.51.51.51.61.6
 BenefitsECl-Benefits, Private38.8134.24.23.93.53.12.82.42.11.71.41.51.72.12.42.62.6
Practice Expenses—45.8453.02.92.82.62.52.42.42.42.32.32.32.42.62.82.92.9
 Non-Physician Compensation—16.2962.12.22.12.12.12.12.01.91.81.81.81.92.02.12.22.2
  Wages and Salaries—13.7861.81.91.91.81.81.81.81.81.71.71.71.81.92.02.12.1
   Professional/TechnicalECI—W/S: Professional/Technical33.7902.22.11.91.81.71.71.61.51.51.41.41.51.71.81.81.8
   ManagersECI—W/S: Administrative/Managerial32.6201.41.91.91.91.91.82.02.01.91.91.92.02.22.22.32.2
   ClericalECI—W/S: Clerical35.0742.02.12.22.22.12.02.01.91.91.81.81.92.02.12.22.2
   CraftECI—W/S: Craft30.0691.61.61.61.71.71.71.71.71.61.61.61.61.71.61.61.5
   ServicesECI—W/S: Service Occupations32.2330.90.91.01.11.21.41.41.51.61.61.71.92.02.12.12.0
  Employee BenefitsECI—Benefits, Private White Collar32.5103.83.83.63.43.43.43.12.82.42.12.02.12.32.52.72.7
 Office ExpensesCPI(U)—Housing10.2802.72.72.72.62.62.52.42.42.32.32.22.22.52.83.13.4
 Medical Materials/SuppliesPPI—Drugs/PPI-Surgical/CPI-Medical Supplies5.2514.14.03.83.23.13.02.82.92.42.12.22.52.93.13.12.9
 Professional Liability InsuranceHCFA—Professional Liability Premiums4.7806.05.54.74.03.63.33.02.93.03.23.53.84.14.44.74.9
 Medical EquipmentPPI—Medical Instruments/Equipment2.3482.32.11.71.10.90.50.60.90.91.31.41.81.91.71.61.3
 Other Professional Expenses—6.8903.23.12.92.82.82.93.13.33.33.43.43.33.33.33.43.5
  AutomobileCPI(U)—Private Transportation1.4002.62.31.91.82.53.03.94.84.84.74.23.73.43.23.23.2
  All OtherCPI(U)—All Items Less Food/Energy5.4903.43.33.23.02.92.92.92.93.03.13.23.23.33.33.43.5

For data sources used to estimate the index relative weights and choice of price proxies, see the November 25, 1992, Federal Register.

Category weights may not sum to total because of rounding.

Series are adjusted for productivity using 10-year moving average of output per hour for the non-farm business sector. All series in the compensation portion of the MEI are adjusted for productivity so both economy-wide productivity and physician-practice productivity are not included in the update.

NOTES: A dash (—) in the Price/Wage Variable column denotes a total or subtotal produced by adding 2 or more categories. Q designates quarter of year. AHE represents average hourly earnings, ECI represents Employment Cost Index, CPI(U) represents Consumer Price Index for all urban consumers, and PPI represents Producer Price Index. An example of how a percent change is calculated is shown in the Notes at the end of Table 9.

SOURCES: Health Care Financing Administration, Office of the Actuary: Data from the Office of National Health Statistics, Division of Health Cost Analysis. Third quarter 1995 forecasts were produced under contract to HCFA by Data Resources lnc./McGraw-Hill(DRI).

  5 in total

1.  Medicare program; changes to the hospital inpatient prospective payment systems and fiscal year 1995 rates--HCFA. Final rule with comment period.

Authors: 
Journal:  Fed Regist       Date:  1994-09-01

2.  Medicare program: schedule of limits for skilled nursing facility inpatient routine service costs--HCFA. Final notice with comment period.

Authors: 
Journal:  Fed Regist       Date:  1994-01-06

3.  Physician fee schedule update for calendar year 1995 and physician volume performance standard rates of increase for federal fiscal year 1995--HCFA. Final notice.

Authors: 
Journal:  Fed Regist       Date:  1994-12-08

4.  Medicare program; revision of the Medicare Economic Index--HCFA. Final rule.

Authors: 
Journal:  Fed Regist       Date:  1992-11-25

5.  National health spending trends, 1960-1993.

Authors:  K R Levit; C A Cowan; H C Lazenby; P A McDonnell; A L Sensenig; J M Stiller; D K Won
Journal:  Health Aff (Millwood)       Date:  1994       Impact factor: 6.301
  5 in total

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