Office visits, revenues drop in ailing economy

August 31, 2011

One reason for an empty waiting room is the ailing economy, according to a recent report. Monthly indices compiled by Standard & Poor suggest that office-based physicians may see a drop in patient visits, if they haven't already. Economic analysts also found that revenues for treating Medicare patients were at their lowest annual growth rate since at least 2005. Keep reading to find out what is likely to turn the trend around.

Primary care physicians may see a drop in patient visits, if they haven’t already, because of the ailing economy, according to a new report that found revenues for treating Medicare patients were at their lowest annual growth rate since at least 2005.

Standard & Poor's (S&P) Healthcare Economic Indices, which looks at revenue brought in each month by doctors and hospitals from Medicare and private insurance, said the Medicare growth rate was 2.50%, compared with 7.48% for private payers. The report included June data, the latest available.

“With June’s data, we saw general acceleration in the annual growth rates in healthcare costs primarily led by medical costs funded by commercial insurance plans,” says David M. Blitzer, chairman of the Index Committee at S&P Indices. “The Medicare Index, on the other hand, was down 0.18 percentage points from its May 2011 annual rate and recorded its lowest annual growth rate in its more than 6-year history.”

The trend of private insurance payments outpacing Medicare in growth may be temporary, however, according to another study by government actuaries that indicated that the federal government’s share of healthcare spending will increase from 27% in 2009 to 31% in 2020. The reasons? Growth in Medicare enrollment, expanded Medicaid coverage, and premium and cost-sharing subsidies for exchange plans, the study said.

In the short term, S&P reported that the June Professional Services Medicare Index, as well as the index for hospitals, decelerated in annual growth compared with the May readings.

 “Although rates have been slightly up in most indices over the past 2 months, the overall story continues to be moderation in trends over the past 12 to 15 months,” according to the report. “As noted in prior reports, some market participants are reporting relatively low trends in office visits and hospital admissions, as well as steps being taken to address healthcare reform and control costs. If true, these could be contributing to these lower trends.”

The report also noted that the slight spending increase in the past 2 months could be a good sign, but that it was too early to tell.

A study earlier this summer in the journal Health Affairs also found growth in U.S. health spending at a historic low of 3.9% in 2010 and blamed the recession. That study said national healthcare spending growth is expected to reach 8.3% when major coverage expansions from the Patient Protection and Affordable Care Act of 2010 begin in 2014.

Researchers from the Office of the Actuary at the Centers for Medicare and Medicaid Services also predicted that expanded access to Medicaid and private insurance will mean a significant increase in demand for physician and clinical services as well as prescription drugs.

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