How the health sector ended 2023: Prices, employment and more

Spending on home healthcare surged in November, experiencing a 12.9% year-over-year increase, closely trailed by prescription drug spending, which soared 12.2%, according to a Jan. 31 report from nonprofit Altarum.

Altarum released its latest "Health Sector Economic Indicators" report that sheds light on critical aspects of the nation's health sector. The report offers an analysis of data on health sector spending, prices, employment and utilization. Here are the key highlights:

Health spending and GDP:

  • Health spending has maintained a trajectory below 17.5% of GDP for nearly two years.

  • In November 2023, national health spending experienced a 5.9% year-over-year growth, representing 17.4% of GDP.

  • Nominal GDP in November 2023 increased by 5% compared to November 2022, growing 0.9 percentage points slower than health spending.

  • Personal healthcare spending saw 7.3% year-over-year growth in November, primarily driven by an increase in utilization rather than price hikes.

  • Notably, spending on home healthcare surged the fastest at 12.9%, followed closely by prescription drug spending at 12.2%. In contrast, dental services and hospital care witnessed more modest growth at 5.8% and 5.9%, respectively.

Healthcare employment:

  • December marked a slowdown in healthcare employment growth, with only 37,700 jobs added, compared to the robust 78,300 jobs added in November.

  • Despite the December dip, the healthcare sector experienced historic growth in 2023, adding a total of 654,000 jobs, contributing nearly a quarter of all jobs across the economy.

  • Ambulatory care settings and hospitals led December's healthcare job growth, adding 19,200 and 15,300 jobs, respectively.

  • The nursing and residential care facilities sector added 3,200 jobs in December, with nursing homes contributing 4,700 jobs while other nursing and residential care settings lost 1,500 jobs.

  • Overall, the economy added 216,000 jobs in December, maintaining an unemployment rate of 3.7%.

  • Healthcare wage growth in November 2023 was 2.9% year over year, slightly trailing behind the total private sector's 4% growth. Wage growth was highest in nursing and residential care (4%), followed by hospitals (3.3%) and ambulatory care settings (2.4%).

Healthcare price growth:

  • The Health Care Price Index recorded a 2.9% year-over-year increase in December, slightly lower than the revised growth rate of 3% the previous month.

  • Economy-wide inflation stabilized, with the consumer price index and producer price index growing at 3.4% and 1%, respectively.

  • Among major healthcare categories, dental care (5%), home healthcare (4.2%) and nursing homecare (4%) experienced the fastest price growth, while physician and clinical services (0.3%) exhibited the slowest growth.

  • Healthcare utilization growth slightly decreased to 4.4% year over year in November, attributed to a minor decline in overall spending growth in the latter half of 2023.

  • Home healthcare (8.6%), prescription drugs (8.5%) and physician services (7.8%) demonstrated the fastest utilization growth, while dental services (1.4%) and hospital care (2.9%) experienced the slowest growth.

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