Nursing home spending was among the highest compared to other health care categories at the beginning of this year, increasing by 9.2% in January, while the sector’s earnings were also ahead of hospitals and ambulatory care.
That’s according to Health Sector Economic Indicators (HSEI) briefs compiled by Altarum, a nonprofit research and consulting organization serving government health insurers, health foundations and other nonprofit clients that focus on the health industry.
Nursing home spending was the third-highest category, according to the data, with dental services seeing a 10.6% increase and home health care a 9.4% rise in spending. Physician and clinical services spending increased the least at 3.5%.
Overall health care spending on a national level grew by 4.6%, year-over-year.
Nursing homes also ranked at the top of price growth, or health care utilization, year-over-year, rising by 5.6% in February 2023 compared to 1% growth in February 2022.
“This swing to now positive year-over-year utilization growth in January 2023 was expected and is partly a result of changes in the base year data from twelve months ago,” researchers said in the Altarum brief.
Utilization data includes federal government’s Covid-19-related subsidies, according to the brief, contributing to positive growth. Even without government subsidies, the team at Altarum expects utilization to remain positive.
“Going forward this year we expect our implicit measure of utilization will continue to remain positive as the lingering swings in federal pandemic assistance abated throughout the new 2022 comparison year,” Altarum researchers said.
Overall, health care price growth has remained “significantly below” economy wide inflation, according to Altarum. But, the group expects health care price inflation to increase in 2023.
Another expectation: private payer growth will exceed Medicare price growth, while Medicaid price growth will fall somewhere between the two. It’s something for SNF operators to consider, with a payor mix of all three.
Altarum also highlighted job growth and earnings updates among health care settings, with 44,200 jobs added in February, with nursing and residential care facilities adding 13,700 jobs of the total monthly amount, and hospitals still leading job growth with 19,400 jobs added during the same time frame.
Courtesy of Alarum“Three years later, health care employment is just above where it was in February 2020 before the pandemic,” researchers said, noting that these levels were above 207,000 jobs or 1.3% from past levels, but that there are also regional variations.
Perhaps unsurprisingly for those close to the nursing home sector, Altarum data showed nursing and residential care employment remains more than 270,000 jobs below its level three years ago.
Hospitals are close to its level in 2020, while ambulatory care is well above – about 440,000 jobs more than three years ago.
In terms of earnings, nursing and residential care came out above hospitals and ambulatory care with a 5% growth in average earnings as of January, followed by hospitals with a 4.4% change and ambulatory care at 3.6%.
Between July 2021 and January 2023, a bump in average earnings reached its peak for the nursing home space in March 2022 at 11%.
Courtesy of AlarumAltarum researchers expect this gap in earnings changes to narrow as wage growth falls in all settings. Since the summer of 2022, wage growth for all of health care has been falling, now below the economy-wide average.
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