Hospital prices decline in January for first time in 23 years

Health care prices in January 2015 were just 1.2% higher than January 2014—much lower than the December 2014 year-over-year change of 1.8%, according to a report from Altarum Institute’s Center for Sustainable Health Spending.

The slowdown in health care prices has driven a drop in hospital prices. Hospital prices actually fell by 0.1% in January compared to a year ago—the first time this has happened in 23 years, according to the Altarum Institute Price Brief.

The 12-month moving average for health care prices in January was stable at 1.5% after increases beginning in August 2013. But, the “big news is the first ever negative hospital price growth (-0.1%), along with the historically low hospital price growth for Medicare (-2.9%) and “other” payers (1.6%).,” the report stated. “In contrast, price growth for prescription drugs, at 5.6%, though down from 6.4% in December, is still the highest since May 2002.”

Altarum estimated that national health spending grew 5% in 2014 and 5.7% in January compared with a year ago. In addition, the health sector added 23,800 new jobs in February, including 8,700 in hospitals.

In the report, Altarum wondered whether the price behavior for hospitals and physicians means “we are seeing the first signs of newfound health care efficienty via insurance exchanges, high-deductible health policies, transparency, and more keeping health care prices contained?”