By Ferdous Al-Faruque - 06/24/14 12:00 AM EDT
As the economy improves people are starting to pay more for healthcare which will help spending in the industry grow 6.8 percent next year according to a new report.
According to their report as the economy has improved people feel more financially confident to get medical help and stop delaying treatments. This in turn means they are spending more on healthcare.
“At first glance, the health sector appears to be reverting to historical patterns of bouncing back as the nation recovers from the economic doldrums,” the report said. “Whether spending more freely because of the improved economy or shopping with insurance provided through the Affordable Care Act, consumers triggered the first bump in growth in the first quarter of 2014. We expect that to continue through next year.”
Last year PwC projected spending growth in employer-provided healthcare for 2014 at 6.5 percent but that's a far cry from the double-digit growth the sector experienced in the 1990s.
The analysts say other factors are also contributing to the healthcare spending growth including more people who now have health insurance and higher costs of specialty drugs.
Hospitals have also been buying up private practices around the country and raising cost of treatments.
Many healthcare providers have been upgrading their electronic health records systems, costs of which they have been passing on to consumers, the report said.
The report notes several factors that are helping reduce the cost of healthcare to consumers including improving efficiencies by streamlining clinical procedures and improving how health systems function to reduce administrative costs.
Another fact cited is that a growing number of insurers and employers are getting into risk-based payment systems. Under these contracts physicians receive bonuses for treating patients effectively to reduce costs but are penalized if their mistakes result in higher costs.
Employees are also buying health insurance plans where they are responsible for more of their healthcare costs leading them to be more cost-conscious and making better decisions about how to keep their medical bills down, the report said.
“A stronger economy and millions of newly insured Americans mean an uptick in spending growth for healthcare organizations. That may be a welcome respite from recent years of budgetary pressure,” says the report. “But the fact that health spending continues to outpace GDP underscores the need for a renewed focus on productivity, efficiency, and, ultimately, delivering better value for purchasers.”