PwC: Efforts to curb healthcare utilization 'have run their course'

PwC's Health Research Institute estimates 2019's employer medical cost trend will be 6 percent, remaining "stable yet unsustainably high," according to its annual medical cost trend report.

"Efforts by employers to cut utilization have mostly run their course," the report reads. "Employers and consumers are plagued by high prices that continue to grow because of new, expensive medical services and drugs, and other factors, such as consolidation."

The employer medical cost trend is a projection of the year-over-year increase in the cost to treat patients in the employer-based market, excluding Medicare, Medicaid and plans on the ACA exchanges. Factors such as new technologies, drug spending, government regulation, payment models, patient demographics, lifestyle factors and general inflation all play into the medical cost trend. However, PwC's HRI identified the following three factors as emerging inflators for 2019:

1. Retail and urgent care clinics have made care increasingly easy to access, driving utilization up in the short term. As healthcare providers strive to become more consumer-oriented, more patients are driven to use healthcare services. Providers hope this will eventually drive costs down as patients are treated in lower-cost settings, hopefully preventing major illness or catching it early.  

2. Provider mega-mergers are increasing prices. Almost all — 93 percent — of metropolitan hospital markets will be highly concentrated in 2019, according to the report. This market concentration is expected to drive healthcare prices up in the short term as merging providers have to cover the costs of integration and find more power at the negotiating table. Eventually, economies of scale could reverse this trend, HRI suggests.

3. Growth in physician employment and consolidation will also drive up prices. As physicians join larger practices or hospitals and health systems, they typically become less efficient and adopt the larger organization's billing practices, which drives up costs. Physician practices acquired by hospitals may also bill a facility fee on top of the fee for a patient visit, according to the report.

However, HRI identified three factors that are expected to help offset these inflators. These include a less severe flu season, greater patient engagement and "high-performance networks" with limited providers.

Read more here

 

More articles on finance:

MU Health Care hospital revenue climbs $58M over projections: 4 things to know
For-profit hospital stock report: Week of June 11-15
MedPAC releases June report to Congress: 7 takeaways

Copyright © 2024 Becker's Healthcare. All Rights Reserved. Privacy Policy. Cookie Policy. Linking and Reprinting Policy.

 

Featured Whitepapers

Featured Webinars