Hospitals bent the cost curve in the 90’s

Healthcare costsHospital Expenditures and Physician and Clinical Expenditures are the two largest categories of the NHE (National Health Expenditure), comprising 51% in 2010. Intriguingly, while these cost categories have been growing rapidly from 2000 to the present, we seemed to do an excellent job during the 90’s of bending the healthcare cost curve in these two categories. If only we knew how we did that.

This post looks at the growth rates of these big cahunas of healthcare, and is a continuation of our quest to understand the growth of healthcare costs.
[Read more…]

Top healthcare cost categories

This post examines the size of the different components that make up the total $2.6 Trillion National Healthcare Expenditures (NHE) of the USA. It also looks at the different growth rates of the components.

This is the third installment in our series on US healthcare costs. For background to this project, which is all about identifying fertile opportunity spaces resulting from runaway healthcare costs, see the introduction; the first installment; and second installment of the series.

Components of $2.6 Trillion US National Healthcare Expenditure (2010)

NHE components as percentage of NHE

The chart above depicts the $2.6 Trillion of US National Healthcare Expenditures in 2010 by category (1). These top 5 categories comprise the majority of this expenditure (74% of the total):

  • Hospital expenditures (31%);
  • Physician and Clinical expenditures (20%);
  • Prescription Drug expenditures (10%);
  • Administration & total Net Cost of Health Insurance expenditures (7%); and
  • Nursing Care Facilities and Continuing Care Retirement Communities (5%).

[Read more…]

Eating the seed-corn of healthcare

In the prior post in this series, I concluded that controlling healthcare cost growth was about reducing the differential growth rate of NHEPC (compared to GDP per capita) by a couple of percent per year. This made me want to dig deeper into the question of what exactly is NHEPC (National Healthcare Expenditures Per Capita)? I learned some intriguing things.

The topic of this post is the inexorable decline over time in the fraction of our healthcare costs allocated to the bucket called “Investment”. [Read more…]

Healthcare cost growth analysis (1)

As explained in this prior post, I am working on a project to identify fertile opportunity spaces resulting from runaway healthcare costs. Here is the first installment of my investigation, my first steps to understanding the healthcare cost curves. (For details of data sources see the references at the bottom.)

Typical media depiction of healthcare costs

Here is the typical “scary graph” we have all seen in the media. The basic data comes from the US government (1). It shows “runaway cost growth” and more significantly, it shows healthcare costs approaching 20% of GDP. Yikes! [Read more…]

Runaway healthcare costs create opportunities

We all know US healthcare costs are growing at a rate most consider unsustainable. If you accept the premise that a lot of time and attention will be focused over the next decade on ways to improve healthcare quality and reduce costs (or perhaps reduce costs without reducing quality?), then there are likely to be some big changes in a very large industry, and that is likely to open up some opportunities for energetic entrepreneurs who can think a little ahead of the curve.

Well, at any rate that is the thesis of a project I am working on. I am going to be spending some time digging into this topic. The end goal is to see if we can figure out some promising areas for entrepreneurial focus. But first, we need to explore the facts a bit deeper. I am going to be capturing some of the initial results in a series of posts here, as I think they may be useful to a broader audience. The first question I am going to explore is “Just where is all that money going, and why are costs growing so fast?”.

If you are interested in getting involved with this project, helping, sharing ideas, or getting access to later portions of the work, please let me know by signing up here.

The healthcare cost series

  1. Healthcare cost growth analysis (1)
  2. Eating the seed-corn of healthcare?
  3. Top healthcare cost categories
  4. Hospitals “bent the cost curve” in the 90’s.
  5. Will Managed care return?
  6. Who pays for US healthcare?
  7. Disease through the eyes of an accountant (which diseases cost most)
  8. Disease economics drill down (top clinical conditions)
  9. Disease economics details: heart disease (coming)
  10. Disease economics details: asthma (coming)
  11. Disease economics details: back pain (coming)
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