Nursing Home Care Prices Grow Faster Than Other Health Care Services Amid Job Growth Lag

Pricing for nursing home care continued to grow the fastest in the first month of 2024 compared to other major health care categories, jumping by 4.9% in January, as wages grew but job growth lagged.

That’s according to Altarum’s Health Sector Economic Indicators (HSEI) Briefs published on Tuesday. Nursing home care was among service prices to grow the fastest by 4% in December, according to a previous Altarum report. Ending January 2023, nursing home care price growth was 5.9% and 1.4% in January 2022.

The overall Health Care Price Index (HCPI) increased by 2.8% year over year in January, falling slightly from a revised growth rate of 3.0% in December. Economy-wide inflation was “stable and moderate” in January, according to the report.

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Dental care pricing was just behind nursing care in terms of fastest growing price growth increases, increasing by 4.7% in January.

Nursing and residential care facilities added 16,500 jobs in January as well – with 9,000 jobs added in nursing homes and 7,500 jobs added for other nursing and residential care settings.

“Nursing and residential care employment, although steadily increasing since January 2022, is still 139,400 jobs or 4.1% below pre-pandemic levels,” researchers said in the report. “As described in a recent Altarum analysis, this contraction in the nursing home workforce since the pandemic is likely due to nursing home closures, lower resident censuses, and staffing shortages.”

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Job growth in health care was led by the ambulatory sector, according to the report – health care job growth overall increased by 70,300 in January, above the 12-month average of 58,700.

Meanwhile, wage growth in health care settings was highest in nursing and residential care, at 4.0% year over year, followed by ambulatory care settings at 2.9% and hospitals at 2.4%. As a comparison, wage growth in health care in December 2023 was 2.9% year over year, in contrast to 4.5% in non-health care industries.

Health care utilization continued to drive spending increases, Altarum researchers said, despite growth for this statistic falling slightly to 4.3% year over year in December.

Year-over-year growth in the Consumer Price Index (CPI) fell slightly to 3.1% and the growth in the Producer Price Index (PPI) fell slightly to 0.9%.

The CPI medical care price index has shown signs of faster health care price increases, reaching 3.6% in January year over year. Health care price growth exceeded economy-wide price growth as measured by the GDP deflator for the third straight month, according to the report.

“Much of this increase in the medical care CPI index has been the result of price growth among major health care services, including faster growth among hospital and physician and clinical services prices compared to their average price growth over the past twelve months,” Altarum researchers said.

HSEI briefs work is supported by a grant from the Robert Wood Johnson Foundation.

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