Health care indicators - statistics on hospital employment, medical care prices, and national economic indicators

Health Care Financing Review, Spring, 1992 by Cathy A. Cowan, Carolyn S. Donham, Suzanne W. Letsch, Brenda T. Maple, Helen C. Lazenby

Community hospital statistics

For the first three quarters of 1991, growth in community hospital operating expenses dropped to the lowest rate in 5 years. The American Hospital Association National Hospital Panel Survey of approximately 2,000 community hospitals reported operating expenses of $60.2 billion for the third quarter of 1991, an increase of 9.7 percent from the third quarter of 1990 (Tables 1 and 2). Labor expenses, which include both payroll and employee benefits, account for 54 percent of all operating expenses.

Slower growth in input prices and utilization both contributed to slower growth in operating expenses for 1991. As a measure of pure price changes associated with hospital expenses, the Health Care Financing Administration's (HCFA) prospective payment system (PPS) hospital input price index indicates prices faced by hospitals grew nearly 1 percent more slowly in 1991 than in 1990 (hospital input prices will be discussed in a following section). Measures of inpatient and outpatient utilization also show deceleration. Admissions continued to decline in the third quarter of 1991, down 1.2 percent from the same quarter of 1990. This decline is somewhat smaller than that experienced in the previous three quarters, but still larger than that in calendar year 1990. The number of outpatient visits continued to increase in the first three quarters of 1991, but at a slightly lower rate than in 1990. During the third quarter of 1991, the number of outpatient visits grew 5.1 percent from the third quarter of 1990, compared with an annual increase of 6.0 percent from 1989 to 1990 (Table 2).

The number of inpatient days declined even more rapidly than admissions during this period. In the third quarter of 1991, the number of inpatient days decreased 2.9 percent, resulting in an average adult length of stay per admission of 6.4 days, 0.1 days less than the same quarter in 1990.

Operating expenses for the first three quarters of 1991 grew 9.4 percent from the first three quarters of 1990, a rate that is 2.0 percentage points lower than that of the same period from 1989 to 1990. If this trend continues throughout the remaining fourth quarter of 1991, we expect to see annual growth nearly 2.0 percent lower than the 11.1-percent annual growth from 1989 to 1990.

During the third quarter of 1991, nearly three-fourths, or $45 billion, of community hospital operating expenses covered inpatient expenses. Although growth in aggregate inpatient expenses slowed by 2.0 percentage points, the amount per admission and inpatient day continued to grow in 1991 as strongly as in 1990.

During 1991, the number of available hospital beds continued to decline because of falling inpatient utilization. Although some hospitals have closed down, surviving hospitals have converted traditional inpatient care wards to various types of outpatient care departments. However, these reductions have not kept pace with decreases in admissions and inpatient days, resulting in an all time low in adult occupancy rate for the third quarter of 1991. Community hospitals operated 910,000 beds during the third quarter of 1991, and on any given day an average of 61.4 percent were occupied by inpatients.

Community hospitals employed more than 3 million full-time equivalent (FTE) workers in the third quarter of 1991. Although the number of FTEs still increased throughout the first three quarters of 1991, the rate of growth decelerated between 1990 and 1991, nearing zero-growth. In the third quarter of 1991, FTEs employed by community hospitals grew only 0.3 percent from the third quarter of 1990. [TABULAR DATA OMITTED]

Private health sector: Employment, hours, and earnings

The gap between employment growth in the health service sector and the rest of the economy remained at an all-time high in the third quarter of 1991. The Bureau of Labor Statistics (BLS) reported that employment in private non-agricultural establishments fell 1.4 percent in the third quarter of 1991 compared with the same period 1 year earlier. Employment in the health service sector continued to show strong growth, appearing to be unaffected by the current recession. In the third quarter of 1991, private health service establishments employed 8.3 million people, an increase of 5.0 percent from the third quarter of 1990 (Tables 3 and 4). Since the onset of the current economic slowdown in the second quarter of 1989, growth in total private employment slowed through the remaining quarters of 1989 and 1990, and became negative in 1991. Initially, health service sector employment followed this trend in 1989, but quickly rebounded with continuing strong growth in 1990 and 1991. By the third quarter of 1991, the difference in growth rates amounted to 6.4 percentage points, a gap that has been widening over the past 2 years (Figure 1). This is the second consecutive quarterly period with a record breaking gap, as both categories maintained consistent growth for the two periods.