The 2017 Acute Care Market Report provides an overview of the hospital/health system market, and addresses challenges and opportunities within the industry.
- U.S. spending on hospital care grew to nearly $1 trillion in 2015
- Under the ACA, insured ER volumes declined, resulting in a 13.1% drop in uncompensated care rates from 2014 to 2017
- Hospitals employed 5.2 million in 2016; however, turnover rates remain high
In 2016, hospitals received one-third of an estimated $3.23 trillion in national healthcare expenditures. National healthcare expenditures are expected to grow to $5.5 trillion by 2024. From 2016 to 2025, spend on hospital services is expected to grow at an average rate of 5.5% annually.
Multi-facility health systems have continued to acquire hospitals. Over a period of 10 years, the percentage of hospitals in systems has doubled, reaching 70% in 2016.
- The same trend has held true for physicians and medical offices. As of 2017, 44.6% of physicians were in a health system.
- The Agency for Healthcare Quality and Research broadly defines health systems as having at least one hospital and one physician group under common ownership. By this definition, there were 626 systems in the U.S. in 2016.
- The top 100 systems received between 50% and 60% of hospital revenues.
- Health systems are acquiring urgent care to attract millennials. Emergency room volumes have declined under the Affordable Care Act; however, younger patients remain 8-10% more likely to seek emergency care rather than primary care.
Hospital margins have increased in recent years. For five years ending in 2015, profit margins for the average hospital have exceeded 10%.
- Increases in both Medicare and Medicaid spending contributed to improved financial performance.
- Analysts observe that lower admissions, increased hiring, and inflation have all contributed to operational losses for some larger hospital systems.
- Nonprofit hospitals continue to face challenges, as growth in expenses has outpaced revenue growth.
- Turnover continues to drive shortages in hospital staffing. Increased collaboration with physicians and medical offices combats shortfalls.
- Uninsured ER volumes decline under the ACA. From 2014 to 2017, uncompensated care rates have fallen at a compound annual growth rate (CAGR) of 13.1%.
1. National Healthcare Spending Continues Rapid Growth
2. Spending on Hospitals Grew 25% in 5 Years
3. Operating Margins Climb Through 2015
4. Several Major Systems Report Declines
5. Half of Hospital Spend Goes to Hospitals in Top 100 Health Systems
6. Rising Expenses Cause Nonprofit Hospitals, Health Systems to Fall Behind
7. Medicare Spending on Hospital Services Projected to Reach $438 Billion by 2023
8. Medicare Margins Still Negative But Improving
9. Medicaid Expansion Raises Average Medicaid Revenues to $30 Million per Hospital
10. Supplies Were 19% of Publicly-Traded Hospital Expenses in 2016
11. Hospitals Would Face Financial Challenges Under ACA Repeal
12. 70% of Hospitals Are in a Health System
13. Top Five Health Systems Own 1/3 of System Hospitals
14. East Coast Has Highest ConcentrationOf Health Systems
15. Health Systems Acquire Medical Offices, Physicians
16. Health Systems Choose Collaboration with SNFs Over Acquisition
17. Global Hospital Mergers And Acquisitions Total $14 Billion in 2016
18. Outpatient Volumes Increase as Inpatient Volumes Decline
19. Profits Increase with Outpatient Volumes
20. Inpatient Payments Higher Than Outpatient for the Same Services
21. Uninsured ER Patient Volumes Decline After Medicaid Expansion
22. Patients Inclined to Visit ERs Despite Time, Cost Disadvantages
23. Health Systems Acquire Urgent Care to Attract Millennials
24. Hospitals Employ 33% of Healthcare Workers
25. High Turnover Plays a Large Role in Hospital Employee Shortages
26. Hospital Administrators Expect Increased Outsourcing
27. 1,300 Hospitals Penalized Under VBP
28. HACRP Penalties Total $430 Million in FY 2017
29. $500 Million in HRRP Penalties in 2017
30. Readmissions Rates Down, But Penalties Increase Under HRRP
31. Average Hospital HCAPS Score High in 2016
32. Quality And Patient Satisfaction Are a High Priority for Hospitals
33. Rural And Urban Hospitals Have Similar Rates of Closure
34. VA Hospitals Serve 21.7 Million
35. Government-Owned Hospitals Have Lower Operating Margins
36. Nearly All U.S. Hospitals Partner with GPOs
37. GHX Reports $45.1 Billion in Sales Through Distribution in 2016
38. GHX Lists Top Acute Care Products Sold Through Distribution