Nursing home care spending grew by 8.9% year over year, largely driven by demand – not price increases for skilled services – with the sector also showing job gains, according to the latest data on health care spending.

Two-thirds, or 5.9%, of this bump in spending for nursing home care was due to increased utilization rather than price increases, according to Matthew Daly, senior analyst at Altarum.

That said, prices for nursing home care did rise, jumping 2.7% year over year in November – just slightly above the health care composite price index increase of 2.6%.

This data is shared in Altarum’s monthly Health Sector Economic Indicators (HSEI) brief released on Wednesday and reflects the updates provided by the Centers for Medicare and Medicaid Services (CMS) to National Health Expenditure Accounts for 2023. CMS released the official estimates of national health spending for 2023 on Dec. 18, indicating that health spending grew by 7.5% in 2023.

The data indicate that nursing care facilities added 3,900 jobs in November, contributing to a year-over-year increase of 2.9%. This represents a slightly higher-than-average monthly increase over the last twelve months of 3,400 jobs. 

Nominal wages in the nursing and residential care industry grew by 3.5% year over year in October, a figure that matches nominal health care wage growth of 3.5%, but is lower than wage growth at hospitals of 3.7%. Wage growth for the nursing home sector also reflects a slowdown compared to recent months, in which average wage growth between July through September stood at 4%, the Altarum analysis states. 

Meanwhile, in October 2024,  the growth in nursing home care spending was equaled by the spending growth for physician and clinical services. In comparison, home health care spending growth was the highest among major health care categories, jumping 11.1%, followed by dental services, which grew 9.7%. And, spending growth for hospital care grew the slowest, at 6.8%.

Overall national health spending grew by 7.6%, year over year in October, and represents 18.1% of GDP.

And, personal health care spending growth in October rose 7.8% year over year, with utilization growth continuing to outpace price growth. 

For major payers, year-over-year Medicaid price growth stood at 5.2%, exceeding services price growth for private insurance (3.4%) and Medicare patients (1.3%), continuing a trend beginning in June of 2022, the brief states.

Altarum’s monthly HSEI briefs analyze the most recent data available on health sector spending, prices, employment, and utilization.