Health Care Indicator? by Carolyn S. Donham, Brenda T. Maple, and Cathy A. Cowan This regular feature of the journal includes a discussion of each of the following four topics: community hospital statistics; employment, hours, and earnings in the private health sector; health care prices; and national economic indicators. These statistics are valuable in their own right for understanding the relationship between the health care sector and the overall economy. In addition, they allow us to anticipate the direction and magnitude of health care cost changes prior to the availability of more comprehensive data.

Introduction This article presents statistics on health care utilization, prices, expenses, employment, and work hours as well as on national economic activity. Some of these statistics are based on sample surveys conducted monthly or quarterly by government agencies or private organizations, and are available 1 to 3 months after the completion of the period. They provide the first glimpse at changes occurring within the general economy and the health care sector. The accompanying tables report selected quarterly statistics for 1989 through the second quarter of 1992, and the calendar year aggregation of quarterly information in the past 3 years. Additional tables show change from the same period 1 year earlier. For quarterly information, this calculation permits analysis of quarterly data to focus on the direction and magnitude of changes, without interference introduced by seasonal fluctuations. In the national health accounts, indicators such as these play an important role in the estimation of the latest historical year of health care expenditures. Information that is more comprehensive tends to lag behind the close of a calendar year by 9 to 12 months or more. Therefore, we rely extensively on indicators such as these to anticipate and predict changes in health care sector expenditures for the most recent year. Other indicators help to identify specific reasons (e.g., increases in price inflation or declines in utilization) for expenditure change. In the following sections, we will identify important indicators of health care and national economic activity and their sources. We then describe what these indicators tell us about general economic and health sector activity during the most recent quarter.

For inquiries concerning market basket data, contact Brenda T. Maple at (410) 966-7954. For all other inquiries, contact Carolyn S. Donham at (410) 966-7947. Reprint requests: Carolyn S. Donham, Room L-1, 1705 Equitable Building, 6325 Security Boulevard, Baltimore, Maryland 21207. Health Care Financing Review/Winter 1992/Volume 14, Number 2

Community hospital statistics Since 1963, the American Hospital Association, in cooperation with member hospitals, has collected data on the operation of community hospitals through its National Hospital Panel Survey. Community hospitals, which comprised over 80 percent of all hospital facilities in the United States in 1990, include all non-Federal, short-term general, and other special hospitals open to the public. They exclude hospital units of institutions; psychiatric facilities; tuberculosis, other respiratory, and chronic disease hospitals; institutions for the mentally retarded; and alcohol and chemical dependency hospitals. The survey samples approximately one-third of all U.S. community hospitals. The sample is designed to produce estimates of community hospitals indicators by bed size and region (American Hospital Association, no date). In Tables 1 and 2, statistics covering expense, utilization, beds, and personnel depict trends in the operation of community hospitals annually from 1989 through 1991 and for selected quarters from 1989 through 1992. For purposes of national health expenditures (NHE), the survey statistics on revenues (not shown on Table 1) are analyzed in estimating the growth in the largest component of health care costs—community hospital expenditures. This one segment of NHE accounted for 33 percent of all health spending in 1991 (Letsch, Levit, and Lazenby, 1992). The survey also identifies important factors influencing expenditure growth patterns, such as changes in the number of beds in operation, number of admissions, length of stay, use of outpatient facilities, and number of surgeries.

Private health sector: Employment, hours, and earnings The U.S. Bureau of Labor Statistics (BLS) collects monthly information on employment for all workers, and earnings and work hours for non-supervisory workers in a sample of 350,000 establishments. Data are collected through cooperative agreements with State agencies that also use this information to create State and local area statistics. The survey is designed to collect industry-specific information on wage and salary jobs in non-agricultural industries. It excludes statistics on self-employed persons and on those employed in the military (U.S. Department of Labor, 1991). Employment in this survey is defined as number of jobs. Persons holding multiple jobs would be counted multiple times. Approximately 5 percent of the population hold more than one job at any point in time. (Other surveys that are household based, such as the Current Population Survey [CPS], also record employment. In the CPS, however, each person's employment status is counted only once, as either employed, unemployed, or not in the labor force.) Once 177

Table 1 Selected community hospital statistics: 1989-92 Calendar year Item

1990 Q2

1991 Q2

1991 Q3

1991 Q4

1992 Q1

1992 Q2

1990

$195,378 $106,019 89,359

$217,113 $117,828 99,286

Inpatient expense in millions Amount per patient day Amount per admission

152,147 690 4,586

165,792 765 5,021

178,401 844 5,461

37,444 685 4,537

40,969 760 4,936

43,979 835 5,375

44,586 866 5,522

46,421 880 5,689

47,495 876 5,683

47,284 922 5,836

Utilization Admissions in thousands Inpatient days in thousands Adult length of stay in days

33,176 220,361 6.6

33,017 216,836 6.6

32,670 211,475 6.5

8,253 54,684 6.6

8,300 53,931 6.5

8,182 52,681 6.4

8,075 51,459 6.4

8,160 52,756 6.5

8,357 54,238 6.5

8,102 51,306 6.3

Surgical operations in thousands

21,383

21,904

21,983

5,467

5,581

5,572

5,534

5,498

5,608

5,641

Outpatient visits in thousands

308,086

326,498

344,116

78,368

82,609

86,331

87,648

87,666

89,168

91,572

930 64.9

921 64.5

912 63.5

932 64.5

924 64.1

913 63.4

910 61.4

909 63.1

909 65.6

910 62.0

3,162 3.4 89

3,229 3.5 88

3,249 3.6 87

3,150 3.4 22

3,226 3.5 22

3,244 3.6 22

3,252 3.6 21

3,259 3.6 22

3,277 3.6 22

3,290 3.6 21

282,974

283,959

282,874

70,393

70,741

70,590

69,496

70,804

72,789

70,021

Operating expenses Total in millions Labor in millions Non-labor in millions

Beds in thousands Adult occupancy rate1 Full-time equivalent (FTE) personnel Total in thousands Number per bed Adjusted patient days2 per FTE Adjusted patient days in thousands

1991

1989 Q2

1989

$238,633 $48,201 $53,738 $58,930 $60,214 $62,301 $63,739 $64,532 $128,704 $26,057 $29,050 $31,692 $32,516 $33,526 $34,143 $34,501 109,929 22,145 24,688 27,238 27,698 28,775 29,597 30,031

1

Adult occupancy rate is the ratio of average daily census to the average number of beds maintained during the reporting period. 2 Adjusted patient days is an aggregate figure reflecting the number of days of inpatient care, plus an estimate of the volume of outpatient services, expressed in units equivalent to an inpatient day in terms of level of effort. It is derived by multiplying the number of outpatient visits by the ratio of outpatient revenue per outpatient visit to inpatient revenue per inpatient day, and adding the product to the number of inpatient days. NOTES: Q designates quarter of year. Quarterly data are not seasonally adjusted. SOURCE: American Hospital Association: National Hospital Panel Survey Reports. Chicago. Monthly reports for January 1989-June 1992.

each year, monthly establishment-based employment statistics are adjusted to benchmarks created from annual establishment census information, resulting in revisions to previously published employment estimates. Tables 3 and 4 present statistics on employment, average hourly earnings, and average weekly hours in private (non-government) health service establishments. Similar statistics for the all private non-agricultural sector, included on these tables, provide a basis for comparing the economy as a whole with the health sector in employment, earnings, and work hours. Table 5 summarizes business activity in the health sector and the overall economy by measuring change in the implied non-supervisory work hours and payroll. Implied work hours are the product of the number of non-supervisory employees and average weekly hours. Implied non-supervisory payrolls are calculated by multiplying implied work hours by average hourly earnings. For purposes of NHE, changes in work hours by industry combined with changes in prices (discussed in a later section) can be used to gauge the direction and magnitude of expenditure change in specific industries. We use these composite indicators in the estimation of growth in physician and dental expenditures for the most recent period. We study the historical relationship 178

of changes in this indicator to changes in expenditures and estimate this relationship for the most recent period.

Prices Consumer prices BLS publishes monthly information on changes in prices paid by consumers for a fixed market basket of goods and services. Tables 6 and 7 present information on the Consumer Price Index (CPI) for all urban consumers that measures changes in prices faced by 80 percent of the non-institutionalized population in the United States. (The more restrictive wage earner CPI gauges prices faced by wage earners and clerical workers. These workers account for 32 percent of the non-institutionalized population [U.S. Department of Labor, 1990].) The index reflects changes in prices charged for the same quality and quantity of goods or services purchased in the base period. For most items, the base period of 1982-84 is used to define the share of consumer expenditures purchasing specific services and products. Those shares or weights remain constant in all years, even though consumption patterns of the household may change over time. This type of index is called a fixed weight or Laspeyres index. Health Care Financing Review/Winter 1992/Volume 14, Number 2

Table 2 Percent change in selected community hospital statistics: 1989-92 Calendar year Item

1989

1990

1991

Annual percent change Operating expenses Total Labor Non-labor

1989 Q2

1990 Q2

1991 Q2

1991 Q3

1991 Q4

1992 Q1

1992 Q2

Percent change from the same period of previous year

9.9 10.0 9.8

11.1 11.1 11.1

9.9 9.2 10.7

10.1 10.3 9.8

11.5 11.5 11.5

9.7 9.1 10.3

9.7 8.6 11.0

11.2 9.9 12.9

11.5 10.2 12.9

9.5 8.9 10.3

Inpatient expenses Amount per patient day Amount per admission

8.3 9.3 9.3

9.0 10.7 9.5

7.6 10.3 8.8

8.4 8.9 9.6

9.4 10.9 8.8

7.3 9.9 8.9

7.1 10.3 8.3

9.3 9.3 7.6

9.4 10.1 8.0

7.5 10.4 8.6

Utilization Admissions Inpatient days Adult length of stay

1.0 0.9 0.1

0.5 1.6 1.1

1.1 2.5 1.4

1.1 0.5 0.6

0.6 1.4 1.9

1.4 2.3 0.9

1.2 2.9 1.8

1.6 0.0 1.6

1.3 0.6 1.9

1.0 2.6 1.6

Surgical operations

0.6

2.4

0.4

1.0

2.1

0.2

0.7

2.2

4.2

1.2

Outpatient visits

4.0

6.0

5.4

4.5

5.4

4.5

5.1

8.0

8.1

6.1

Beds Adult occupancy rate1

1.3 0.5

0.9 0.4

1.0 0.9

1.5 0.6

0.8 0.4

1.3 0.7

1.0 1.2

0.7 0.4

0.6 0.7

0.3 1.5

Full-time equivalent (FTE) personnel Total Number per bed Adjusted patient days per FTE

1.6 3.0 1.0

2.1 3.1 1.7

0.6 1.7 1.0

1.4 2.9 0.4

2.4 3.2 1.9

0.5 1.8 0.8

0.3 1.4 0.9

0.7 1.4 1.0

1.1 1.7 0.1

1.4 1.7 2.2

Adjusted patient days

0.6

0.3

0.4

1.1

0.5

0.2

0.6

1.7

1.2

0.8

1

Change in rate, rather than percent change.

NOTE: Q designates quarter of year. SOURCE: American Hospital Association: National Hospital Panel Survey Reports. Chicago. Monthly reports for January 1988-June 1992.

CPIs for health care goods and services depict price changes for out-of-pocket expenditures made by consumers directly. The composite CPI for medical care weights together product-or service-specific CPIs in proportion to household out-of-pocket expenditures for these items. For example, the composite medical care CPI measures inflation for the 3 percent of hospital expenditures that are made out-of-pocket by consumers; the remaining 97 percent of the costs of hospital care paid by private health insurers, Medicare, Medicaid, and other payers are not weighted into the CPI for medical care. In addition, some medical care sector indexes measure changes in list or charged prices, rather than the prices actually received by providers after discounts are deducted. In several health care areas, received or transaction prices are difficult to capture, although BLS is making advances in this area. In the NHE, a combination of CPIs for selected medical care items and input price indexes for hospitals and nursing homes are used as measures of inflation for the health industry. The indexes are used to develop a personal health care fixed-weight price index to depict price changes affecting the entire health care industry more accurately than does the overall CPI medical care index (Letsch, Levit, and Lazenby, 1992).

Background on input price indexes In 1979, the Health Care Financing Administration (HCFA) developed the hospital input price index to Health Care Financing Review/Winter 1992/Volume 14, Number 2

measure the pure price changes associated with expenditure changes for hospital services. In the early 1980s, the skilled nursing facility(SNF) and home health agency (HHA) input price indexes, often referred to as "market baskets," were developed to price a consistent set of goods and services over time. They have played an important role in helping to set payment percent increases and to understand the contribution of input price increases to growing health expenditures. The input price indexes, or market baskets, are Laspeyres or fixed-weight indexes that are constructed in two steps. First, a base period is selected. For example, for the prospective payment system (PPS) hospital input price index, the base period is 1987. Cost categories, such as food, fuel, and labor, are identified and their 1987 expenditure amounts determined. The proportion or share of total expenditures included in specific spending categories is calculated. These proportions are called cost or expenditure weights. There are 28 expenditure categories in the 1987-based PPS input price index. Second, a price proxy is selected to match each expenditure category. The purpose of the price proxy is to measure the rate of price increase of the goods or services in that expenditure category. The price proxy index for each spending category is multiplied by the expenditure weight for the category. The sum of these products (weights multiplied by the price index) over all cost categories yields the composite input price index for any given time period, usually a fiscal year or a 179

Table 3 Employment, hours, and earnings in private health service establishments, by selected type of establishment: 1989-92 1

Type of establishment and measure

Calendar year 1989

1990

1991

1989 Q2

1990 Q2

1991 Q2

1991 Q3

1991 Q4

1992 Q1

1992 Q2

Health services (SIC 80) Total employment in thousands

7,483.7

7,831.2

8,177.2

7,451.7

7,788.5

8,127.8

8,238.6

8,307.5

8,356.6

8,431.6

Non-supervisory workers: Employment in thousands Average weekly hours Average hourly earnings

6,654.1 32.5 $9.82

6,962.4 32.5 $10.40

7,271.0 32.5 $10.96

6,625.4 32.4 $9.70

6,925.3 32.4 $10.31

7,228.2 32.5 $10.90

7,327.1 32.7 $11.04

7,384.9 32.6 $11.15

7,429.3 32.8 $11.23

7,499.0 32.6 $11.30

Offices and clinics of medical doctors (SIC 801) Total employment in thousands

1,273.7

1,342.9

1,397.8

1,266.2

1,337.3

1,390.0

1,411.0

1,417.7

1,420.1

1,433.7

Non-supervisory workers: Employment in thousands Average weekly hours Average hourly earnings

1,052.0 31.9 $9.78

1,108.4 31.8 $10.58

1,149.8 31.9 $11.13

1,047.0 31.8 $9.63

1,104.9 31.6 $10.46

1,145.3 31.9 $11.07

1,160.5 31.9 $11.14

1,163.3 32.0 $11.30

1,167.1 32.2 $11.21

1,178.1 31.9 $11.30

Offices and clinics of dentists (SIC 802) Total employment in thousands

501.2

514.0

527.4

500.9

513.8

524.7

531.2

534.4

533.0

536.7

Non-supervisory workers: Employment in thousands Average weekly hours Average hourly earnings

438.6 28.5 $9.41

450.6 28.4 $10.14

463.3 28.3 $10.62

438.2 28.7 $9.33

450.7 28.4 $10.09

461.0 28.3 $10.58

467.3 28.2 $10.64

469.0 28.3 $10.77

466.6 28.5 $10.90

469.6 28.2 $10.96

Nursing and personal care facilities (SIC 805) Total employment in thousands

1,360.7

1,419.4

1,498.8

1,354.7

1,409.6

1,487.8

1,512.9

1,527.5

1,535.9

1,547.8

Non-supervisory workers: Employment in thousands Average weekly hours Average hourly earnings

1,230.3 31.8 $6.80

1,282.5 32.1 $7.24

1,352.8 32.1 $7.56

1,225.0 31.7 $6.72

1,274.1 31.9 $7.20

1,342.5 32.0 $7.52

1,365.8 32.4 $7.59

1,379.0 32.2 $7.66

1,386.3 32.2 $7.75

1,398.1 32.0 $7.81

Private hospitals (SIC 806) Total employment in thousands

3,440.2

3,550.1

3,656.7

3,429.6

3,532.0

3,636.7

3,675.0

3,699.1

3,725.1

3,746.2

Non-supervisory workers: Employment in thousands Average weekly hours Average hourly earnings

3,146.9 34.0 $11.21

3,249.7 34.2 $11.79

3,354.0 34.2 $12.50

3,136.3 33.9 $11.06

3,231.6 34.2 $11.67

3,334.9 34.2 $12.43

3,371.7 34.4 $12.66

3,395.1 34.3 $12.75

3,419.1 34.4 $12.85

3,439.5 34.4 $12.90

All private non-agricultural establishments Total employment in thousands

90,550

91,478

89,930

90,559

91,818

89,929

90,649

90,314

88,256

89,982

Non-supervisory workers: Employment in thousands Average weekly hours Average hourly earnings

73,400 34.6 $9.65

74,108 34.5 $10.01

72,705 34.3 $10.33

73,412 34.6 $9.59

74,419 34.5 $9.96

72,696 34.3 $10.29

73,406 34.6 $10.34

73,125 34.5 $10.46

71,212 34.1 $10.52

72,900 34.4 $10.54

4,741.9 3,440.2 227.4 442.4 632.0

4,854.0 3,550.1 231.6 426.2 646.1

4,963.6 3,656.7 234.1 414.0 658.7

4,728.2 3,429.6 225.1 444.6 628.8

4,836.8 3,532.0 232.5 427.8 644.5

4,939.8 3,636.7 233.5 415.8 653.8

4,985.9 3,675.0 235.7 411.7 663.6

5,014.8 3,699.1 236.4 410.9 668.4

5,050.9 3,725.1 237.5 411.8 676.5

5,080.3 3,746.2 238.5 411.8 683.8

Employment in thousands All hospitals Private hospitals (SIC 806) Federal hospitals State hospitals Local hospitals 1

Excludes hospitals, clinics, and other health-related establishments run by all governments.

NOTES: Data presented here incorporate conversion to the 1987 Standard Industrial Classification (SIC) and historical reconstruction of components back to the inception of the series, whenever possible. Q designates quarter of year. Quarterly data are not seasonally adjusted. SOURCE: U.S. Department of Labor, Bureau of Labor Statistics: Employment and Earnings. Washington. U.S. Government Printing Office. Monthly reports for January 1989-Sept. 1992.

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Health Care Financing Review/Winter 1992/Volume 14, Number 2

Table 4 Percent change in employment, hours, and earnings in private1 health service establishments, by selected type of establishment: 1989-92 Calendar year

Type of establishment and measure

1989

Health services (SIC 80) Total employment

Annual percent change 5.1 4.6 4.4

1990

1991

1989 Q2

1990 Q2

1991 Q2

1991 Q3

1991 Q4

1992 Q1

1992 Q2

Percent change from the same period of previous year 5.4 4.5 4.4 4.3 4.3 4.0 3.7

Non-supervisory workers: Employment Average weekly hours Average hourly earnings

5.2 0.1 6.7

4.6 0.3 5.9

4.4 0.0 5.3

5.5 0.0 6.4

4.5 0.2 6.3

4.4 0.2 5.8

4.4 0.3 5.5

4.3 0.2 5.1

4.0 1.3 4.6

3.7 0.2 3.6

Offices and clinics of medical doctors (SIC 801) Total employment

5.8

5.4

4.1

5.8

5.6

3.9

4.1

4.1

3.5

3.1

Non-supervisory workers: Employment Average weekly hours Average hourly earnings

6.0 1.0 7.9

5.4 0.4 8.1

3.7 0.4 5.2

6.2 1.1 7.2

5.5 0.8 8.7

3.7 1.2 5.8

3.7 0.0 4.5

3.6 0.7 3.9

3.3 1.4 1.8

2.9 0.0 2.0

Offices and clinics of dentists (SIC 802) Total employment

3.4

2.6

2.6

3.7

2.6

2.1

3.0

3.4

2.6

2.3

Non-supervisory workers: Employment Average weekly hours Average hourly earnings

3.3 0.1 6.6

2.7 0.2 7.8

2.8 0.4 4.7

3.4 1.1 6.6

2.8 1.0 8.2

2.3 0.1 4.9

3.4 1.1 4.0

3.6 0.6 4.2

2.3 0.7 4.1

1.9 0.4 3.6

Nursing and personal care facilities (SIC 805) Total employment

3.5

4.3

5.6

3.6

4.0

5.6

5.8

5.4

4.7

4.0

Non-supervisory workers: Employment Average weekly hours Average hourly earnings

3.6 0.9 7.4

4.2 0.9 6.5

5.5 0.1 4.4

3.8 0.6 7.7

4.0 0.6 7.1

5.4 0.3 4.5

5.7 0.5 4.2

5.4 0.3 3.7

4.7 0.8 3.9

4.1 0.1 3.8

Private hospitals (SIC 806) Total employment

4.4

3.2

3.0

4.8

3.0

3.0

2.8

2.9

3.0

3.0

Non-supervisory workers: Employment Average weekly hours Average hourly earnings

4.5 0.0 6.7

3.3 0.7 5.2

3.2 0.0 6.0

4.9 0.0 6.4

3.0 0.9 5.5

3.2 0.1 6.5

3.0 0.1 6.7

3.1 0.5 6.2

3.2 1.2 5.6

3.1 0.4 3.8

All private non-agricultural establishments Total employment

2.7

1.0

1.7

3.0

1.4

2.1

1.8

1.4

0.6

0.1

Non-supervisory workers: Employment Average weekly hours Average hourly earnings

2.8 0.3 4.0

1.0 0.3 3.7

1.9 0.6 3.1

3.1 0.4 4.0

1.4 0.3 3.9

2.3 0.7 3.3

2.0 0.6 3.0

1.4 0.1 3.0

0.5 0.8 2.9

0.3 0.4 2.4

Employment All hospitals Private hospitals (SIC 806) Federal hospitals State hospitals Local hospitals

3.1 4.4 5.5 0.9 2.1

2.4 3.2 1.9 3.7 2.2

2.3 3.0 1.1 2.8 2.0

3.2 4.8 7.6 0.3 1.7

2.3 3.0 3.3 3.8 2.5

2.1 3.0 0.5 2.8 1.4

2.2 2.8 1.6 3.0 2.3

2.4 2.9 2.8 2.7 3.0

2.8 3.0 2.9 1.4 4.2

2.8 3.0 2.1 1.0 4.6

1

Excludes hospitals, clinics, and other health-related establishments run by all governments.

NOTES: Data presented here incorporate conversion to the 1987 Standard Industrial Classification (SIC) and historical reconstruction of components back to the inception of the series whenever possible. SOURCE: U.S. Department of Labor, Bureau of Labor Statistics: Employment and Earnings. Washington. U.S. Government Printing Office. Monthly reports for January 1988-September 1992.

Health Care Financing Review/Winter 1992/Volume 14, Number 2

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Table 5 Percent change in implied non-supervisory payrolls and work hours in private1 health service establishments, by selected type of establishment: 1989-92 Calendar year 1991

1990 Q2

1991 Q2

1991 Q3

1991 Q4

1992 Q1

1992 Q2

1989

Private health service establishments (SIC 80) Payrolls Work hours

Annual percent change 12.4 5.3

11.1 4.9

10.0 4.4

12.3 5.5

11.3 4.7

10.6 4.6

9.8 4.0

9.8 4.5

10.2 5.4

7.8 4.0

Offices and clinics of medical doctors (SIC 801) Payrolls Work hours

15.5 7.1

13.5 5.0

9.6 4.2

15.1 7.4

13.7 4.6

11.0 4.9

8.4 3.7

8.5 4.4

6.6 4.7

5.0 2.9

Offices and clinics of dentists (SIC 802) Payrolls Work hours

10.0 3.2

10.5 2.6

7.2 2.4

11.4 4.5

10.1 1.8

7.1 2.2

6.4 2.3

7.3 2.9

7.3 3.0

5.3 1.5

Nursing and personal care facilities (SIC 805) Payrolls Work hours

12.3 4.5

12.0 5.1

10.2 5.6

12.5 4.4

12.1 4.7

10.4 5.7

9.6 5.2

8.9 5.0

9.7 5.6

8.2 4.3

Private hospitals (SIC 806) Payrolls Work hours

11.6 4.6

9.3 4.0

9.4 3.2

11.6 4.9

9.6 3.9

10.1 3.3

9.9 2.9

10.0 3.6

10.2 4.4

7.5 3.5

All private non-agricultural establishments Payrolls Work hours

6.6 2.5

4.4 0.7

0.6 2.4

6.8 2.7

5.0 1.1

0.2 3.0

0.4 2.6

1.6 1.3

3.2 0.3

3.1 0.7

1

1990

1989 Q2

Type of establishment

Percent changes from the same period of previous year

Excludes hospitals, clinics, and other health-related establishments run by all governments.

NOTES: Data presented here incorporate conversion to the 1987 Standard Industrial Classification (SIC) and historical reconstruction of components back to the inception of the series, whenever possible. Q designates quarter of year. Quarterly data not seasonally adjusted. SOURCE: U.S. Department of Labor, Bureau of Labor Statistics: Employment and Earnings. Washington. U.S. Government Printing Office. Monthly reports for January 1988-September 1992.

calendar year. The percent change in the input price index is an estimate of price change over time for a fixed quantity of goods and services purchased by a provider. The input price indexes are estimated on a historical basis and forecasted out several years. The HCFAchosen price proxies are forecasted under contract with Data Resources, Inc./McGraw Hill (DRI). Following every calendar year quarter, in March, June, September, and December, DRI updates its macroeconomic forecasts of wages and prices based on updated historical information and revised forecast assumptions. The methodology and price proxy definitions used in the input price indexes are described in the Federal Register notices that accompany the revisions of the PPS, HHA, and SNF cost limits. A description of the current PPS input price index was published September 4,1990 (Federal Register, 1990). The latest HHA regulatory input price index was published July 1,1992 (Federal Register, 1992a), and the latest SNF input price index was published October 7, 1992 (Federal Register, 1992b).

182

Each input price index is presented in two tables: The first is a percent-change table, and the second provides the actual index numbers from which the percentages were computed. The hospital input price index for PPS is in Tables 8 and 9. The SNF input price index is in Tables 10 and 11. The HHA input price index is in Tables 12 and 13. The PPS input price index has been revised, and a new base year of 1987 has been selected (Tables 8 and 9). Effective October 1, 1990, the new PPS input price index was used to set the fiscal year 1991 market basket value for the update of the prospective payment rates. This revision also included changes in certain variables used for price proxies. Periodically, the various input price indexes are revised so that the cost weights will reflect changes in the mix of goods and services that providers purchase.

Health Care Financing Review/Winter 1992/volume 14. Number 2

Table 6 Selected items of the Consumer Price Index for all urban consumers: 1989-92 Calendar year Item

1989

1990

1991

1989 Q2

1990 Q2

1991 Q2

1991 Q3

1991 Q4

1992 Q1

1992 Q2

All items

124.0

130.7

136.2

123.7

129.3

135.6

136.7

137.7

138.7

139.8

All items less medical care Apparel and upkeep Energy Food and beverages Housing: shelter

122.4 118.6 94.3 124.9 132.8

128.8 124.1 102.1 132.1 140.0

133.8 128.7 102.4 136.8 146.3

122.2 119.7 97.1 124.5 131.8

127.5 125.2 97.3 131.3 138.6

133.3 128.8 101.7 137.4 145.4

134.3 128.0 103.1 136.8 147.2

135.1 131.7 101.8 136.9 147.9

136.0 130.5 99.3 138.3 149.8

137.0 132.5 102.6 138.5 150.5

Medical care Medical care services1 Professional services Physicians' services Dental services Hospital and related services Hospital room Other inpatient services2 Outpatient services2

149.2 148.9 146.4 150.0 146.0 160.5 158.1 128.9 124.7

162.8 162.7 156.1 160.8 155.8 178.0 175.4 142.7 138.7

177.0 177.1 165.7 170.5 167.4 196.1 191.9 158.0 153.4

147.6 147.1 145.4 148.9 145.2 157.5 154.8 126.7 122.6

160.8 160.5 155.0 159.8 154.4 174.5 172.2 139.4 136.3

175.3 175.2 164.5 169.3 165.5 193.2 189.5 155.4 151.1

178.7 178.7 167.0 171.6 169.4 197.9 193.3 159.5 155.1

181.7 181.8 169.1 173.6 172.1 202.3 197.4 163.3 158.5

185.9 186.1 172.3 177.2 174.7 208.1 202.8 168.0 163.5

188.7 188.9 174.7 180.3 177.0 211.3 206.1 170.2 166.4

Medical care commodities Prescription drugs Non-prescription drugs and medical supplies2 Internal and respiratory over-the-counter drugs Non-prescription medical equipment and supplies

150.8 165.2

163.4 181.7

176.8 199.7

149.8 163.7

162.3 180.2

175.4 197.6

178.9 202.4

181.0 205.6

184.9 210.9

187.8 214.5

114.6

120.6

126.2

114.4

120.1

125.9

127.2

127.8

129.3

131.1

138.7

145.9

152.4

138.5

144.9

151.9

153.7

153.7

155.3

158.4

131.1

138.0

145.0

130.7

138.1

144.8

145.9

148.0

150.1

150.4

1

Includes net cost of private health insurance not shown in professional or hospital and related services. 2 December 1986 = 100. NOTES: 1982-84 = 100.0 unless noted. Q designates quarter of year. Quarterly data not seasonally adjusted. SOURCE: U.S. Department of Labor, Bureau of Labor Statistics: CPI Detailed Report. Washington. U.S. Government Printing Office. Monthly reports for January 1989-June 1992.

Table 7 Percent change in selected items of the Consumer Price Index for all urban consumers: 1989-92 Calendar year Item

1989

All items

Annual percent change 4.2 5.4 4.8

All items less medical care Apparel and upkeep Energy Food and beverages Housing: shelter Medical care Medical care services1 Professional services Physicians' services Dental services Hospital and related services Hospital room Other inpatient services Outpatient services Medical care commodities Prescription drugs Non-prescription drugs and medical supplies Internal and respiratory over-thecounter drugs Non-prescription medical equipment and supplies 1

1990

1991

1989 Q2

1990 Q2

1991 Q2

1991 Q3

1991 Q4

1992 Q1

1992 Q2

Percent change from the same period of previous year 2.9 5.2 4.6 4.8 3.9 3.0 3.1

4.6 2.8 5.7 5.7 4.5

5.2 4.6 8.2 5.8 5.4

3.9 3.7 0.4 3.6 4.5

5.0 3.2 9.1 6.3 4.4

4.3 4.6 0.2 5.4 5.2

4.6 2.9 4.5 4.7 4.9

3.6 3.9 0.7 3.1 3.7

2.6 3.7 8.1 2.4 3.8

2.6 3.4 3.7 1.6 3.6

2.8 2.8 0.9 0.8 3.5

7.7 7.6 6.4 7.3 6.2 11.5 10.3 13.1 10.9

9.1 9.3 6.6 7.2 6.7 10.9 10.9 10.7 11.2

8.7 8.9 6.2 6.0 7.5 10.2 9.4 10.7 10.6

7.3 7.2 6.4 7.3 6.3 11.3 9.7 13.4 10.5

9.0 9.1 6.6 7.3 6.3 10.8 11.2 10.1 11.2

9.0 9.2 6.1 5.9 7.2 10.8 10.0 11.5 10.8

8.5 8.5 5.9 5.5 7.8 9.8 8.9 10.2 10.7

8.0 8.0 6.0 5.5 8.1 8.9 8.4 8.9 9.8

7.8 7.9 6.2 5.9 7.4 9.0 8.3 9.3 9.8

7.7 7.8 6.2 6.5 6.9 9.4 8.8 9.5 10.1

7.8 8.7

8.4 10.0

8.2 9.9

7.9 8.7

8.3 10.0

8.1 9.7

8.4 10.1

7.8 9.8

7.7 9.3

7.1 8.5

6.0

5.2

4.7

6.4

5.0

4.8

5.0

3.7

4.2

4.1

6.1

5.2

4.5

6.7

4.6

4.8

5.0

2.6

3.3

4.3

5.8

5.3

5.0

5.9

5.7

4.8

5.0

5.8

6.2

3.9

Includes net cost of private health insurance not shown in professional or hospital and related services.

NOTE: Q designates quarter of year. SOURCE: U.S. Department of Labor, Bureau of Labor Statistics: CPI Detailed Report. Washington. U.S. Government Printing Office. Monthly reports for January 1988-June 1992.

Health Care Financing Review/Winter 1992/volume 14, Number 2

183

Table 8 Percent change in four quarter averages in the prospective payment system hospital input price index, by expense category: 1989-92 Expense category1 Total Wages and salaries Employee benefits Other professional fees Energy and utilities Fuel oil, coal, and other fuel Electricity Natural gas Motor gasoline Water and sewerage maintenance Professional liability insurance All other Other products Pharmaceuticals Food Direct purchase Contract service Chemicals and cleaning products Surgical and medical instruments Photographic supplies Rubber and plastics Paper products Apparel Minor machinery and equipment Miscellaneous products Other services Business services Computer and data processing Transportation and shipping Telephone Blood services Postage Other—labor intensive Other—non-labor intensive See footnotes at end of table.

184

Base year weights 19872

Four quarters ending 1989 Q1

1989 Q2

1989 Q3

1989 Q4

1990 Q1

1990 Q2

1990 Q3

1990 Q4

100.000

5.4

5.6

5.5

5.4

5.1

4.9

4.8

4.9

52.216 9.497 1.649 2.368 0.624 1.135 0.343 0.230 0.036 1.433 32.838 21.788 3.873 3.299 2.111 1.188 3.126 2.672 2.623 2.323 1.399 1.142 0.497 0.833 11.050 3.845 1.992 1.233 0.987 0.588 0.372 1.233 0.800

4.8 6.4 4.7 2.0 9.5 1.6 0.6 0.9 5.7 22.5 5.9 6.6 8.1 5.0 5.4 4.3 13.9 2.3 3.9 6.1 9.8 2.7 2.9 3.3 4.5 4.2 7.0 3.3 0.3 4.7 13.5 3.8 4.3

4.8 6.6 4.6 0.1 7.1 2.4 2.0 6.0 6.0 17.0 6.4 7.2 8.5 5.4 6.0 4.4 14.5 3.4 5.9 5.4 9.5 2.3 3.2 4.3 4.8 4.5 6.8 4.3 0.0 7.9 9.8 4.0 4.6

4.9 6.7 4.5 3.6 1.9 2.7 5.6 9.6 6.0 9.7 6.3 6.8 9.0 5.0 5.2 4.5 11.7 3.9 7.7 4.2 8.2 2.0 3.5 4.8 5.1 5.0 7.2 4.7 0.8 8.0 6.3 3.9 4.8

4.9 6.9 4.6 8.5 17.9 3.2 6.0 13.5 6.1 0.6 5.8 6.1 9.1 4.5 4.5 4.6 7.5 4.1 8.8 3.0 6.5 2.1 3.7 5.1 5.0 5.4 7.5 5.0 1.0 5.5 3.1 3.7 4.8

4.9 7.4 4.6 9.7 22.4 3.1 4.9 16.3 6.2 2.2 4.9 4.9 9.3 3.9 3.5 4.6 2.2 3.9 8.0 2.0 4.6 2.5 3.6 5.2 4.9 5.5 7.6 5.1 1.2 3.1 0.0 3.6 4.9

5.0 7.7 4.7 7.8 19.6 3.1 2.1 7.7 6.4 1.6 4.1 3.8 9.5 3.8 3.3 4.7 2.0 3.3 6.6 1.1 2.7 2.9 3.4 4.5 4.6 5.3 7.5 3.8 1.1 1.1 0.0 3.7 4.8

5.0 7.8 4.8 8.2 21.9 2.7 1.2 11.1 6.6 0.6 3.7 3.3 9.2 4.1 3.7 4.7 3.1 3.0 5.1 0.7 1.7 3.0 3.1 4.6 4.3 4.9 6.9 4.1 0.4 0.3 0.0 3.9 5.0

5.0 7.9 4.8 10.6 25.9 3.0 2.0 21.0 6.7 0.1 3.6 3.3 8.9 3.9 3.5 4.7 1.4 2.6 3.7 0.9 1.2 2.7 2.8 4.9 4.3 4.5 6.5 5.6 0.4 0.1 0.0 4.0 5.4

Health Care Financing Review/Winter 1992/volume14,Number 2

Table 8—continued Percent change in four-quarter averages in the prospective payment system hospital input price index, by expense category: 1989-92 Expense category1 Total

Base year weights 19872 100.000

Four quarters ending 1991 Q1

1991 Q2

1991 Q3

1991 Q4

1992 Q1

1992 Q2

1992 Q3

1992 Q4

4.8

4.6

4.3

3.7

3.4

3.1

3.1

3.2

Wages and salaries 3.6 52.216 4.9 4.8 4.6 4.3 4.2 3.9 3.8 Employee benefits 9.497 7.2 7.0 6.6 6.4 6.3 6.1 5.9 7.5 Other professional fees 4.3 1.649 4.7 4.6 4.5 4.3 4.2 4.1 4.0 Energy and utilities 9.7 10.7 7.5 1.9 6.2 5.1 0.4 2.368 5.5 Fuel oil, coal, and other fuel 21.7 11.4 11.3 17.7 13.6 1.3 0.624 21.1 18.3 Electricity 7.1 7.1 3.4 1.2 0.8 1.135 4.3 5.6 5.3 Natural gas 3.5 2.8 0.343 2.5 1.7 0.9 1.6 3.0 4.3 Motor gasoline 11.2 10.7 1.5 0.230 17.9 18.9 8.4 15.5 15.1 Water and sewerage maintenance 0.036 6.5 6.6 6.9 7.3 7.1 6.5 7.6 7.6 Professional liability insurance 1.433 0.4 2.0 2.5 1.3 4.2 5.7 5.0 2.5 All other 3.2 2.4 1.5 1.9 32.838 3.6 3.6 1.8 1.5 Other products 2.8 1.9 1.2 1.1 1.6 21.788 3.4 3.3 0.9 Pharmaceuticals 8.4 8.4 6.3 3.873 8.1 8.3 8.3 7.8 6.9 Food 1.2 1.2 3.7 2.8 1.8 0.7 1.0 3.299 0.8 Direct purchase 2.111 3.2 0.7 0.0 0.3 0.7 2.0 0.6 0.5 Contract service 4.1 3.8 3.4 2.4 2.0 1.188 4.5 3.1 2.8 Chemicals and cleaning products 1.3 5.2 4.3 2.0 3.126 0.9 2.6 2.3 4.0 Surgical and medical instruments 2.672 2.2 2.0 1.7 1.5 1.6 1.8 1.9 2.4 Photographic supplies 1.1 0.3 1.4 1.4 1.1 0.4 0.3 2.623 2.3 Rubber and plastics 0.2 0.4 0.2 2.323 1.3 1.7 1.9 1.3 0.4 0.9 Paper products 1.1 0.5 0.4 1.5 2.7 2.7 2.0 1.399 Apparel 1.142 2.4 2.2 2.1 2.1 1.9 1.7 1.6 1.5 Minor machinery and equipment 0.5 0.497 2.6 2.5 2.3 1.9 1.4 0.9 0.6 Miscellaneous products 3.8 2.1 0.8 0.8 1.4 0.833 4.5 4.6 1.4 Other services 3.3 2.4 2.4 11.050 4.2 4.1 3.8 3.0 2.5 2.4 2.5 Business services 4.1 3.7 3.2 2.9 2.4 3.845 2.8 Computer and data processing 1.992 4.1 3.0 2.1 1.4 1.3 1.6 6.0 5.1 Transportation and shipping 1.233 5.8 6.5 5.7 2.8 1.4 1.0 1.2 2.5 Telephone 1.3 1.6 1.7 1.7 1.1 0.7 0.987 0.4 0.6 Blood services 6.2 6.6 0.588 0.3 0.2 0.1 1.0 2.1 3.5 1.2 Postage 0.372 6.7 10.8 14.8 8.8 4.9 2.7 13.1 Other—labor intensive 4.1 4.1 4.1 3.4 3.1 1.233 4.0 3.9 3.9 Other—non-labor intensive 4.2 3.2 3.1 3.1 0.800 5.4 5.5 5.0 3.6 1 For data sources used to estimate the input price index relative weights and choice of price proxies, see the Federal Register (1990). 2 Category weights may not sum to total because of rounding. NOTES: Data for 1989,1990, and 1991 are historical. Data for 1992 are partly historical and partly forecasted. Q designates quarter of year. Percent change data shown are four-quarter moving averages. The following is an example of how a percent change is calculated. Use the quarterly index levels shown in Tables 9, 11, and 13. Choose the four-quarter period ending for which you would like to calculate the percent change (e.g., year-end 1991: Quarter 3). Count back three quarters so that you have a total of four (e.g., 1991: Quarter 3; 1991: Quarter 2; 1991: Quarter 1; 1990: Quarter 4). Average these four quarters (add the index levels and divide by 4). Now, take the four quarters previous to the four quarters that you just used (e.g., 1990: Quarter 3; 1990: Quarter 2; 1990: Quarter 1; 1989: Quarter 4). Average these four quarters. Finally, compute a percent change using the two averages. SOURCES: Health Care Financing Administration, Office of the Actuary: Data from the Office of National Health Statistics, Division of Health Cost Analysis. Third quarter 1992 forecasts were made by Data Resources, Inc./McGraw-Hill.

Health Care Financing Review/Winter 1992/volume 14, Number 2

185

Table 9 Quarterly index levels of the prospective payment system hospital input price index, by expense

category: 1989-92 Base year weights 19872

1989 Q1

1989 Q2

1989 Q3

1989 Q4

1990 Q1

1990 Q2

1990 Q3

1990 Q4

Total

100.000

110.0

111.2

112.5

113.6

115.3

116.3

118.0

119.6

Wages and salaries Employee benefits Other professional fees Energy and utilities Fuel oil, coal, and other fuel Electricity Natural gas Motor gasoline Water and sewerage maintenance Professional liability insurance All other Other products Pharmaceuticals Food Direct purchase Contract service Chemicals and cleaning products Surgical and medical instruments Photographic supplies Rubber and plastics Paper products Apparel Minor machinery and equipment Miscellaneous products Other services Business services Computer and data processing Transportation and shipping Telephone Blood services Postage Other—labor intensive Other—non-labor intensive See footnotes at end of table.

52.216 9.497 1.649 2.368 0.624 1.135 0.343 0.230 0.036 1.433 32.838 21.788 3.873 3.299 2.111 1.188 3.126 2.672 2.623 2.323 1.399 1.142 0.497 0.833 11.050 3.845 1.992 1.233 0.987 0.588 0.372 1.233 0.800

108.9 111.6 108.8 102.5 107.3 99.5 102.4 102.7 110.7 130.7 110.9 112.2 116.4 108.5 108.8 108.0 125.2 104.9 109.3 110.0 116.2 104.0 105.4 106.6 108.2 107.9 114.3 107.4 99.7 105.8 113.5 106.5 108.3

109.9 113.4 109.6 107.9 111.3 102.4 102.7 133.4 112.1 126.2 112.3 113.6 119.0 109.3 109.3 109.2 125.0 106.6 111.4 110.7 117.8 104.6 106.3 108.7 109.8 109.1 116.7 111.3 100.6 105.6 113.5 107.1 110.0

111.6 115.8 111.4 108.3 106.9 108.7 101.7 119.3 114.5 129.4 112.7 113.7 121.7 110.1 109.8 110.6 121.0 106.4 112.6 110.5 117.6 105.7 107.3 108.6 110.6 110.3 118.8 110.3 100.8 105.4 113.5 108.1 110.9

112.8 117.4 112.3 109.6 126.9 102.1 100.3 112.7 115.9 130.3 113.5 114.5 123.9 110.9 110.4 111.7 119.6 107.4 113.8 110.4 118.1 106.6 107.9 109.9 111.5 111.3 120.5 110.7 100.1 105.5 113.5 109.6 112.0

114.4 120.9 114.1 112.5 132.5 102.2 103.7 121.1 118.1 130.8 114.8 115.7 127.6 112.4 112.0 113.0 118.7 108.2 115.2 110.9 118.0 107.5 108.9 112.1 113.0 113.1 122.2 112.7 100.9 105.5 113.5 110.5 113.9

115.5 122.4 114.9 108.4 111.4 105.4 98.5 127.9 119.7 132.0 115.8 116.6 130.4 114.2 114.0 114.7 118.3 109.1 115.3 111.1 118.7 107.8 109.4 112.3 114.3 114.5 124.8 113.4 101.1 105.8 113.5 111.6 115.1

117.2 124.4 116.7 119.1 136.4 110.7 96.5 146.7 122.2 131.4 116.7 117.5 131.7 114.9 114.3 115.8 119.9 109.3 116.6 111.0 118.9 108.4 110.0 113.9 115.2 115.1 126.4 116.2 100.2 106.0 113.5 112.4 117.1

118.5 126.5 117.8 133.9 189.2 106.7 100.2 170.5 123.3 122.0 118.3 119.2 134.0 114.6 113.4 116.7 126.9 109.7 116.6 112.6 119.5 108.8 110.7 116.9 116.6 115.6 127.6 122.0 100.9 105.5 113.5 114.0 119.0

Expense category1

186

Health Care Financing Review/Winter 1992/volume 14, Number 2

Table 9—continued Quarterly index levels of the prospective payment system hospital input price index, by expense category: 1989-92 Expense category1 Total

Base year weights 19872

1991 Q1

1991 Q2

1991 Q3

1991 Q4

1992 Q1

1992 Q2

1992 Q3

1992 Q4

100.000

120.4

121.0

122.2

123.1

123.9

124.8

131.7

133.0

Wages and salaries 122.2 123.3 126.2 127.1 134.4 52.216 119.6 120.6 135.6 134.2 124.2 Employee benefits 9.497 129.0 130.6 132.8 125.0 131.7 132.9 Other professional fees 1.649 119.0 120.0 121.8 122.8 137.0 138.7 149.2 150.7 Energy and utilities 2.368 119.5 113.2 116.5 115.6 123.9 124.9 132.5 133.7 Fuel oil, coal, and other fuel 0.624 141.3 119.9 129.7 108.9 114.5 114.5 121.5 123.3 Electricity 119.0 111.4 1.135 110.4 114.1 108.3 120.5 133.7 145.8 94.4 Natural gas 0.343 103.0 97.8 97.3 111.6 114.9 118.9 116.0 Motor gasoline 0.230 128.7 126.2 125.6 122.3 96.8 91.8 99.5 100.0 Water and sewerage maintenance 125.4 132.0 0.036 128.2 133.1 110.9 127.0 129.9 128.9 Professional liability insurance 1.433 129.1 131.1 133.2 129.3 134.7 137.0 147.3 148.7 All other 119.1 119.7 152.2 32.838 118.8 119.1 133.8 135.3 156.9 120.2 Other products 21.788 119.5 119.5 119.3 119.8 120.8 126.3 127.7 143.4 Pharmaceuticals 3.873 137.4 145.3 120.1 120.9 126.2 127.4 141.3 Food 115.3 115.7 148.1 160.4 162.9 3.299 115.1 115.5 150.1 2.111 112.9 Direct purchase 113.8 113.7 113.1 115.8 116.5 120.8 121.2 Contract service 120.2 1.188 117.4 118.6 119.6 113.1 114.0 118.5 118.6 Chemicals and cleaning products 123.7 117.0 117.3 120.7 121.1 124.9 3.126 119.8 125.8 Surgical and medical instruments 2.672 111.0 124.1 110.1 110.7 111.0 115.0 115.8 122.7 114.1 Photographic supplies 2.623 114.8 114.1 114.3 112.5 113.2 116.6 117.6 Rubber and plastics 112.4 112.4 114.2 114.2 2.323 113.6 112.9 117.3 118.3 Paper products 1.399 119.4 117.1 115.8 115.7 112.2 112.5 114.4 114.7 Apparel 1.142 109.7 110.6 110.7 115.1 115.7 110.3 123.3 125.3 Minor machinery and equipment 0.497 111.7 111.9 111.8 111.9 111.2 111.9 114.2 114.8 116.1 112.2 Miscellaneous products 0.833 116.0 116.1 116.6 112.3 114.8 115.6 118.7 Other services 11.050 117.5 119.6 116.5 117.5 121.7 122.9 118.5 Business services 3.845 117.8 118.4 120.5 120.7 126.5 128.2 117.0 118.1 Computer and data processing 1.992 129.2 129.6 127.2 128.0 129.3 120.8 120.0 125.5 Transportation and shipping 1.233 119.3 118.6 119.1 120.2 129.3 130.2 139.4 141.8 0.987 102.1 102.5 Telephone 102.2 103.0 119.8 121.5 130.4 127.9 0.588 106.1 105.3 110.2 103.4 104.4 Blood services 105.6 103.1 104.6 Postage 0.372 125.7 131.9 131.9 131.9 111.3 111.0 119.1 121.1 Other—labor intensive 1.233 117.6 118.5 131.9 131.9 131.9 131.9 114.5 116.0 Other—non-labor intensive 121.6 122.5 119.1 125.2 0.800 119.9 120.7 119.6 126.6 1 For data sources used to estimate the input price index relative weights and choice of price proxies, see the Federal Register (1990). 2 Category weights may not sum to total because of rounding. NOTES: Data for 1989,1990, and 1991 are historical. Data for 1992 are partly historical and partly forecasted. Q designates quarter of year. SOURCES: Health Care Financing Administration, Office of the Actuary: Data from the Office of National Health Statistics, Division of Health Cost Analysis. Third quarter 1992 forecasts were made by Data Resources, Inc./McGraw-Hill.

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187

Table 10 Percent change in four-quarter averages in the skilled nursing facility input price index, by expense category: 1989-92 Expense category1 Total Wages and salaries Employee benefits Food Direct purchase Contract service Fuel and other energy Electricity Natural gas Fuel oil and coal Water and sewerage maintenance All other Drugs Supplies Health services Other business services Miscellaneous

Base year weights 19772

1989 Q1

1989 Q2

1989 Q3

1989 Q4

1990 Q1

1990 Q2

1990 Q3

1990 Q4

100.000

5.7

6.3

6.5

6.5

6.4

6.3

6.3

6.3

63.020 7.600 9.740 4.930 4.810 4.270 1.210 0.910 1.660 0.490 15.370 1.500 3.280 1.210 4.590 4.790

6.3 6.1 5.1 5.4 4.9 1.1 1.6 1.2 1.1 5.7 5.1 8.1 4.3 7.4 4.7 4.3

7.0 6.0 5.8 6.0 5.7 1.4 2.1 2.4 1.4 6.0 5.4 8.5 4.6 7.4 4.8 4.6

7.3 5.4 5.5 5.2 5.8 2.3 3.1 2.9 0.0 6.0 5.5 9.0 4.7 7.4 4.9 4.7

7.4 4.7 5.2 4.5 5.8 3.8 3.1 2.8 4.3 6.1 5.6 9.1 4.8 7.3 4.9 4.8

7.1 4.6 4.8 3.5 6.0 5.8 3.3 2.1 10.2 6.2 5.6 9.3 4.9 7.1 5.0 4.9

7.0 4.6 4.5 3.3 5.6 6.1 3.2 1.2 11.8 6.4 5.6 9.5 4.7 7.1 5.1 4.7

6.8 4.8 4.7 3.7 5.5 6.8 2.5 0.5 14.6 6.6 5.7 9.2 5.0 7.1 5.1 5.0

6.5 5.3 4.5 3.5 5.3 8.8 2.3 0.1 20.5 6.7 6.0 8.9 5.4 7.2 5.3 5.4

Base year weights 19772 Total

Four quarters ending

100.000

Four quarters ending 1991 Q1

1991 Q2

1991 Q3

1991 Q4

1992 Q1

1992 Q2

1992 Q3

1992 Q4

6.0

5.5

5.0

4.3

3.9

3.7

3.6

3.8

6.2 4.1 Wages and salaries 63.020 5.5 5.0 4.4 4.0 3.9 3.9 4.8 Employee benefits 7.600 5.8 6.4 6.8 6.7 6.1 5.4 7.0 Food 3.8 2.2 1.4 1.3 1.4 9.740 3.0 1.6 1.2 Direct purchase 3.2 0.8 4.930 2.0 0.7 0.0 0.6 0.3 0.5 1.9 Contract service 4.3 3.4 3.0 2.7 2.2 4.810 3.8 3.0 7.4 0.2 Fuel and other energy 4.270 7.3 5.7 0.7 1.3 1.9 1.6 Electricity 2.5 3.2 3.3 3.2 2.8 2.0 1.210 2.6 3.8 0.2 1.1 0.4 0.2 Natural gas 0.910 0.6 1.1 0.4 0.3 8.5 3.3 Fuel oil and coal 1.660 16.0 10.0 8.3 9.7 15.1 3.8 6.5 Water and sewerage maintenance 0.490 6.5 6.9 7.6 7.1 6.6 7.3 7.6 All other 15.370 5.9 5.6 4.7 4.4 4.1 4.1 5.9 5.1 6.3 8.4 8.3 6.9 Drugs 1.500 8.1 8.3 8.4 7.8 Supplies 5.4 3.1 3.280 5.5 5.1 4.2 3.6 3.2 3.1 Health services 7.3 6.5 5.7 6.1 6.3 1.210 6.9 6.0 5.9 Other business services 5.3 5.2 4.6 4.0 3.9 4.590 5.3 4.8 4.3 Miscellaneous 5.4 3.1 3.1 4.790 5.5 5.1 4.2 3.6 3.2 1 For data sources used to estimate the input price index relative weights and choice of price proxies, see the Federal Register (1992). 2 Category weights may not sum to total because of rounding. NOTES: Data for 1989,1990, and 1991 are historical. Data for 1992 are partly historical and partly forecasted. Q designates quarter of year. Percent change data shown are four-quarter moving averages. The following is an example of how a percent change is calculated: Use the quarterly index levels shown in Tables 9,11, and 13. Choose the four-quarter period ending for which you would like to calculate the percent change (e.g., year-end 1991: Quarter 3). Count back three quarters so that you have a total of four (e.g., 1991: Quarter 3; 1991: Quarter 2; 1991: Quarter 1; 1990: Quarter 4). Average these four quarters (add the index levels and divide by 4). Now, take the four quarters previous to the four quarters that you just used (e.g., 1990: Quarter 3; 1990: Quarter 2; 1990: Quarter 1; 1989: Quarter 4). Average these four quarters. Finally, compute the percent change using the two averages. SOURCES: Health Care Financing Administration, Office of the Actuary: Data from the Office of National Health Statistics, Division of Health Cost Analysis. Third quarter 1992 forecasts were made by Data Resources, Inc./McGraw-Hill.

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Table 11 Quarterly index levels in the skilled nursing facility input price index, by expense category: 1989-92 Expense category1 Total Wages and salaries Employee benefits Food Direct purchase Contract service Fuel and other energy Electricity Natural gas Fuel oil and coal Water and sewerage maintenance All other Drugs Supplies Health services Other business services Miscellaneous

Total Wages and salaries Employee benefits Food Direct purchase Contract service Fuel and other energy Electricity Natural gas Fuel oil and coal Water and sewerage maintenance All other Drugs Supplies Health services Other business services Miscellaneous

Base year weights 19772

1989 Q1

1989 Q2

1989 Q3

1989 Q4

1990 Q1

1990 Q2

1990 Q3

1990 Q4

100.000

203.4

205.8

209.0

212.4

216.4

219.0

221.9

225.6

63.020 7.600 9.740 4.930 4.810 4.270 1.210 0.910 1.660 0.490 15.370 1.500 3.280 1.210 4.590 4.790

203.4 210.2 172.0 158.1 186.3 200.0 198.8 223.9 178.6 231.1 221.0 271.5 201.0 250.9 231.9 201.0

205.7 212.2 173.9 158.7 189.5 202.6 201.0 223.4 183.2 234.0 224.3 277.7 204.1 254.5 234.4 204.1

209.5 214.5 174.9 159.1 191.1 205.5 203.1 225.0 186.8 239.0 226.9 283.8 205.7 258.7 237.1 205.7

213.3 216.8 176.9 160.9 193.3 209.5 204.2 226.7 194.4 241.9 229.6 289.1 207.8 261.8 240.0 207.8

217.0 220.4 180.6 162.8 198.8 219.5 204.8 226.7 218.2 246.5 233.9 297.6 211.3 267.5 243.8 211.3

220.4 222.8 182.1 165.4 199.2 211.4 206.6 222.1 197.8 249.9 237.0 304.3 213.5 273.2 246.7 213.5

223.0 226.2 182.8 165.7 200.4 219.7 206.4 223.6 216.8 255.1 240.4 307.2 217.2 277.9 249.6 217.2

226.1 229.8 183.5 165.2 202.3 239.2 208.1 227.8 262.6 257.5 244.2 312.5 220.8 281.3 253.3 220.8

Base year weights 19772

1991 Q1

1991 Q2

1991 Q3

1991 Q4

1992 Q1

1992 Q2

1992 Q3

1992 Q4

100.000

227.6

229.1

231.1

233.2

235.6

237.4

240.0

242.5

239.0 251.1 187.1 165.4 209.3 222.8 218.5 227.8 204.5 285.9 260.1 350.3 230.9 308.1 269.2 230.9

241.9 252.7 188.2 166.5 210.4 226.6 219.3 227.6 211.9 292.5 262.3 352.0 232.9 312.5 271.6 232.9

244.7 255.4 189.5 167.8 211.9 227.5 219.3 227.6 214.2 293.0 265.0 358.8 234.7 315.5 274.2 234.7

63.020 7.600 9.740 4.930 4.810 4.270 1.210 0.910 1.660 0.490 15.370 1.500 3.280 1.210 4.590 4.790

228.4 235.5 184.4 165.4 203.9 229.0 212.7 229.8 230.6 261.7 247.2 320.6 222.5 286.2 256.4 222.5

230.2 239.2 185.1 165.1 205.5 219.7 212.9 225.0 207.7 267.6 249.9 329.7 223.9 289.4 259.2 223.9

232.3 242.2 185.1 163.7 207.0 221.7 214.5 226.1 208.6 275.6 252.3 334.5 225.4 293.3 261.8 225.4

234.3 244.9 186.4 164.8 208.4 225.6 217.0 229.8 214.1 277.9 254.7 338.9 227.4 296.7 264.1 227.4

237.3 249.1 186.4 164.4 209.0 220.4 216.8 226.1 201.9 281.3 257.5 345.4 229.0 303.0 266.8 229.0

1 2

For data sources used to estimate the input price index relative weights and choice of price proxies, see the Federal Register (1992). Category weights may not sum to total because of rounding.

NOTES: Data for 1989, 1990, and 1991 are historical. Data for 1992 are partly historical and partly forecasted. Q designates quarter of year. SOURCES: Health Care Financing Administration, Office of the Actuary: Data from the Office of National Health Statistics, Division of Health Cost Analysis. Third quarter 1992 forecasts were made by Data Resources, Inc./McGraw-Hill.

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Table 12 Percent change in four-quarter averages in the home health agency input price index, by expense category: 1989-92 Expense category1 Total Wages and salaries Employee benefits Transportation Office costs Rent Non-rental space occupancy Medical and nursing supplies Contract services Miscellaneous

Total

Four quarters ending

Base year weights 19762

1989 Q1

1989 Q2

1989 Q3

1989 Q4

100.000

6.3

6.3

6.3

65.140 7.900 4.870 2.790 1.350 1.170 2.810 6.870 7.100

7.1 6.1 3.3 4.7 3.8 1.1 4.3 6.3 4.3

6.9 6.0 4.3 4.8 3.8 1.4 4.9 6.3 4.6

6.9 5.4 4.7 4.9 3.8 2.4 5.4 6.3 4.7

Base year weights 19772

1991 Q1

1991 Q2

1991 Q3

1991 Q4

100.000

5.0

5.3

5.6

5.7

1990 Q1

1990 Q2

1990 Q3

6.2

6.0

5.8

5.4

5.3

6.7 4.7 5.0 4.9 3.9 3.9 5.8 6.2 4.8

6.4 4.6 5.1 5.0 4.0 5.9 5.9 6.0 4.9

6.2 4.6 3.8 5.1 4.1 6.2 5.9 5.8 4.7

5.6 4.8 4.1 5.1 4.2 6.9 5.7 5.4 5.0

5.2 5.3 5.6 5.3 4.2 9.0 5.3 5.3 5.4

1992 Q1

1992 Q2

1992 Q3

5.7

5.1

4.4

1990 Q4

Four quarters ending 1992 Q4 4.0

4.2 Wages and salaries 4.8 5.6 5.6 4.7 65.140 5.1 6.0 6.3 Employee benefits 6.1 5.4 4.8 7.900 5.8 6.4 6.8 7.0 6.7 Transportation 1.0 4.870 5.8 5.7 2.8 1.4 1.2 2.5 6.5 Office costs 5.2 4.3 4.0 3.9 2.790 5.3 5.3 4.8 4.6 2.9 2.5 Rent 1.350 4.2 4.1 3.9 3.5 3.3 2.7 Non-rental space occupancy 1.9 0.2 1.170 7.5 7.4 5.8 0.7 1.3 1.6 Medical and nursing supplies 2.810 4.9 4.7 4.7 5.0 5.5 5.2 4.9 4.1 Contract services 6.870 5.0 5.3 5.6 5.7 5.7 5.1 4.4 4.0 3.2 Miscellaneous 7.100 5.4 5.1 4.2 3.6 3.1 3.1 5.5 1 For data sources used to estimate the input price index relative weights and choice of price proxies, see the Federal Register (1992). 2 Category weights may not sum to total because of rounding. NOTES: Data for 1989, 1990, and 1991 are historical. Data for 1992 are partly historical and partly forecasted. Q designates quarter of year. Percent change data shown are four-quarter moving averages. The following is an example of how a percent change is calculated: Use the quarterly index levels shown in Tables 9, 11, and 13. Choose the four-quarter period ending for which you would like to calculate the percent change (e.g.,.year-end 1991: Quarter 3). Count back three quarters so that you have a total of four (e.g., 1991: Quarter 3; 1991: Quarter 2; 1991: Quarter 1; 1990: Quarter 4). Average these four quarters (add the index levels and divide by 4). Now, take the four quarters previous to the four quarters that you just used (e.g., 1990: Quarter 3; 1990: Quarter 2; 1990: Quarter 1; 1989: Quarter 4). Average these four quarters. Finally, compute the percent change using the two averages. SOURCES: Health Care Financing Administration, Office of the Actuary: Data from the Office of National Health Statistics, Division of Health Cost Analysis. Third quarter 1992 forecasts were made by Data Resources, Inc./McGraw-Hill.

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Table 13 Quarterly index levels of the home health agency input price index, by expense category: 1989-92 Expense category

1

Total Wages and salaries Employee benefits Transportation Office costs Rent Non-rental space occupancy Medical and nursing supplies Contract services Miscellaneous

Expense category1 Total

Base year weights 19762

1989 Q1

1989 Q2

1989 Q3

1989 Q4

1990 Q1

1990 Q2

1990 Q3

1990 Q4

100.000

243.0

245.5

250.2

253.7

257.0

258.3

262.6

266.7

65.140 7.900 4.870 2.790 1.350 1.170 2.810 6.870 7.100

252.4 233.6 202.5 249.7 214.0 224.9 210.9 243.0 214.0

254.4 235.9 209.7 252.4 215.6 227.9 215.9 245.5 217.3

260.3 238.4 207.8 255.3 218.3 231.2 218.2 250.2 219.0

264.3 240.9 208.6 258.5 221.0 235.8 221.7 253.7 221.2

267.4 245.0 212.5 262.5 222.6 247.2 223.4 257.0 225.0

268.3 247.7 213.7 265.7 224.7 238.0 228.2 258.3 227.3

272.7 251.4 219.1 268.8 227.9 247.5 229.6 262.6 231.2

276.3 255.4 229.9 272.8 230.2 269.7 231.2 266.7 235.1

Base year weights 19762

1991 Q1

1991 Q2

1991 Q3

1991 Q4

1992 Q1

1992 Q2

1992 Q3

1992 Q4

100.000

269.6

274.4

278.8

281.1

283.2

284.7

288.3

292.3

Wages and salaries 65.140 279.7 291.1 293.3 295.4 296.7 285.9 300.8 305.6 Employee benefits 7.900 261.7 269.2 272.2 279.1 265.9 276.9 280.9 283.9 Transportation 4.870 224.8 223.4 224.5 226.5 225.7 229.0 232.4 234.5 Office costs 284.4 2.790 276.1 279.1 281.9 287.3 289.9 292.4 295.2 Rent 1.350 231.5 233.5 235.5 237.0 238.5 239.4 240.6 243.0 Non-rental space occupancy 1.170 257.9 247.4 249.7 254.1 248.2 251.0 255.4 256.4 Medical and nursing supplies 2.810 239.2 241.0 249.8 251.2 233.6 244.6 248.1 248.5 Contract services 274.4 283.2 284.7 6.870 269.6 278.8 281.1 288.3 292.3 Miscellaneous 7.100 238.4 242.1 245.8 236.9 240.0 243.8 247.9 249.9 1 For data sources used to estimate the input price index relative weights and choice of price proxies, see the Federal Register (1992). 2 Category weights may not sum to total due to rounding. NOTES: Data for 1989, 1990, and 1991 are historical. Data for 1992 are partly historical and partly forecasted. Q designates quarter of year. SOURCES: Health Care Financing Administration, Office of the Actuary: Data from the Office of National Health Statistics, Division of Health Cost Analysis. Third quarter 1992 forecasts were made by Data Resources, Inc./McGraw-Hill.

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191

Table 14 Selected national economic indicators: 1989-92 Calendar year Indicator Gross domestic product Billions of dollars Billions of 1987 dollars Implicit price deflator (1987 = 100.0)

1989

1990

1991

$5,251 $4,838 108.5

$5,522 $4,878 113.2

$5,677 $4,821 117.8

Employment, hours, and earnings Unemployment rate, all workers

1989 Q2

1990 Q2

1991 Q2

1991 Q3

1991 Q4

1992 Q1

1992 Q2

$5,230 $5,523 $5,658 $5,713 $5,753 $5,840 $5,899 $4,839 $4,903 4,817 $4,832 $4,838 $4,874 $4,891 108.1 112.6 117.5 118.2 118.9 119.8 120.6

5.3

5.5

6.7

Private non-agricultural workers: Total employment in thousands Average weekly hours Average hourly earnings

90,550 34.6 $9.65

91,478 34.5 $10.01

89,930 34.3 $10.33

90,559 91,818 89,929 90,649 90,314 88,256 89,982 34.6 34.1 34.6 34.5 34.1 34.4 34.5 $9.59 $9.96 $10.29 $10.34 $10.46 $10.52 $10.54

Health services workers: Total employment in thousands Average weekly hours Average hourly earnings

7,484 32.5 $9.82

7,831 32.5 $10.40

8,177 32.5 $10.96

7,452 7,788 8,128 8,239 8,307 8,357 8,432 32.4 32.4 32.5 32.7 32.6 32.8 32.6 $9.70 $10.31 $10.90 $11.04 $11.15 $11.23 $11.30

Personal income and savings Income in billions Disposable income in billions Savings in billions Personal saving rate

$4,380 $3,787 $152 4.0

$4,664 $4,043 $176 4.4

$4,828 $4,210 $200 4.7

$4,357 $4,640 $4,807 $4,846 $4,907 $4,980 $5,029 $3,758 $4,016 $4,190 $4,228 $4,285 $4,361 $4,413 $148 $191 $219 $215 $183 $195 $236 4.0 4.6 4.7 4.5 5.1 4.9 5.4

108.6 124.0 122.4 118.6 94.3 124.9 132.8 149.2

113.5 130.7 128.8 124.1 102.1 132.1 140.0 162.8

118.1 136.2 133.8 128.7 102.4 136.8 146.3 177.0

Prices1 Gross domestic product fixed-weight price index (1987 = 100.0) Consumer Price Index, all items All items less medical care Apparel and upkeep Energy Food and beverages Housing: shelter Medical care

5.2

108.2 123.7 122.2 119.7 97.1 124.5 131.8 147.6

5.3

112.9 129.3 127.5 125.2 97.3 131.3 138.6 160.8

6.8

117.7 135.6 133.3 128.8 101.7 137.4 145.4 175.3

6.8

118.6 136.7 134.3 128.0 103.1 136.8 147.2 178.7

7.0

119.3 137.7 135.1 131.7 101.8 136.9 147.9 181.7

7.2

120.4 138.7 136.0 130.5 99.3 138.3 149.8 185.9

7.5

121.2 139.8 137.0 132.5 102.6 138.5 150.5 188.7

Producer price index,2 finished consumer goods 120.4 112.7 116.3 120.4 120.3 120.7 120.2 121.6 112.1 118.2 1 Base period = 1982-84, unless noted. 2 Formerly called the "Wholesale Price Index." NOTES: Q designates quarter of year. Quarterly data are not seasonally adjusted. SOURCES: U.S. Department of Commerce, Bureau of Economic Analysis: Survey of Current Business. Washington. U.S. Government Printing Office. Monthly reports for January 1989-August 1992; U.S. Department of Labor, Bureau of Labor Statistics: Employment and Earnings. Washington. U.S. Government Printing Office. Monthly reports for January 1989-September 1992.

National economic indicators

Second quarter indicators

National economic indicators provide a context for understanding health-specific indicators and how change in the health sector relates to change in the economy as a whole. Tables 14 and 15 present national indicators of output, employment, and inflation (U.S. Department of Commerce, 1992). Gross domestic product (GDP) measures the U.S. economy as the value of output produced within the geographic boundaries of the United States by U.S. or foreign citizens or companies. Constant dollar or "real" GDP removes the effects of prices from the valuation of goods and services produced, so that the growth of real GDP reflects changes in the "physical" output of the economy.

As the rest of the economy is showing signs of a slow recovery from the recession that began in the early part of 1990, the health care industry is exhibiting a slowdown. Utilization in hospitals is down, and growth in the employment and payroll for overall health care industry is decelerating. Prices paid for medical care have been stabilized but are still growing at more than twice the rate of the CPI for all items. Admissions, inpatient days, and adult length of stays for community hospitals have dropped in the second quarter in 1992 when compared with the second quarter of 1991. The net effect of this downturn in utilization measures is a deceleration in operating and inpatient expense growth (Figure 1). In the fourth quarter of 1991 and the first quarter of 1992, the number of admissions rose slightly. This was primarily because of an increase in utilization by the population 65 years of age or over, who were adversely

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Table 15 Percent change in selected national economic indicators: 1989-92 Calendar year Indicator

1989

1990

1991

1989 Q2

1990 Q2

1991 Q2

1991 Q3

1991 Q4

1992 Q1

1992 Q2

Gross domestic product Billions of dollars Billions of 1987 dollars Implicit price deflator (1987 = 100.0)

Annual percent change 7.2 5.2 2.8 2.5 0.8 1.2 4.5 4.3 4.0

Employment, hours, and earnings Unemployment rate, all workers1

0.2

0.3

1.2

0.2

0.1

1.5

1.2

1.0

0.8

0.7

2.7 0.3 4.0

1.0 0.3 3.7

1.7 0.6 3.1

3.0 0.4 4.0

1.4 0.3 3.9

2.1 0.7 3.3

1.8 0.6 3.0

1.4 0.1 3.0

0.6 0.8 2.9

0.1 0.4 2.4

5.1 0.1 6.7

4.6 0.3 5.9

4.4 0.0 5.3

5.4 0.0 6.4

4.5 0.2 6.3

4.4 0.2 5.8

4.3 0.3 5.5

4.3 0.2 5.1

4.0 1.3 4.6

3.7 0.2 3.6

7.5 6.7 2.3 0.3

6.5 6.8 15.5 0.3

3.5 4.1 13.7 0.4

7.9 7.1 2.2 0.3

6.5 6.9 23.1 0.6

3.6 4.3 6.9 0.1

3.3 4.0 21.4 0.6

3.3 3.8 15.9 0.5

4.8 5.4 11.3 0.2

4.6 5.3 20.9 0.7

Gross domestic product fixed-weight price index (1987 = 100.0)

4.5

4.5

4.0

4.7

4.3

4.3

3.9

3.4

3.2

3.0

Consumer Price Index, all items All items less medical care Apparel and upkeep Energy Food and beverages Housing: shelter Medical care

4.8 4.6 2.8 5.7 5.7 4.5 7.7

5.4 5.2 4.6 8.2 5.8 5.4 9.1

4.2 3.9 3.7 0.4 3.6 4.5 8.7

5.2 5.0 3.2 9.1 6.3 4.4 7.3

4.6 4.3 4.6 0.2 5.4 5.2 9.0

4.8 4.6 2.9 4.5 4.7 4.9 9.0

3.9 3.6 3.9 0.7 3.1 3.7 8.5

3.0 2.6 3.7 8.1 2.4 3.8 8.0

2.9 2.6 3.4 3.7 1.6 3.6 7.8

3.1 2.8 2.8 0.9 0.8 3.5 7.7

Producer price index,3 finished consumer goods

5.6

5.5

1.9

6.8

3.2

3.5

1.7

1.1

0.2

1.0

Private non-agricultural workers: Total employment Average weekly hours Average hourly earnings Health services workers: Total employment Average weekly hours Average hourly earnings Personal income and savings Income Disposable income Savings Personal savings rate1

Percent change from the same period of previous year 7.7 5.6 2.4 2.8 3.5 4.6 4.3 2.9 1.3 1.7 1.0 0.1 1.6 1.5 3.4 2.9 4.7 4.2 3.8 2.7 4.3

Prices 2

1

Change in rate, rather than percent change. 2 Base period = 1982-84, unless noted. 3 Formerly called the "Wholesale Price Index." NOTE: Q designates quarter of year. SOURCES: U.S. Department of Commerce, Bureau of Economic Analysis: Survey of Current Business. Washington. U.S. Government Printing Office. Monthly reports for January 1988-August 1992; U.S. Department of Labor, Bureau of Labor Statistics: Employment and Earnings. Washington. U.S. Government Printing Office. Monthly reports for January 1988-September 1992.

affected by the 1991-92 flu season. In the most recent quarter, the admissions for the population 65 years of age or over continued to grow, while the admissions for the population under 65 years of age continued to decline. Other measures of hospital utilization, surgical operations and outpatient visits, had growth rates that decelerated in the second quarter of 1992 (Figure 2). The number of beds and adult occupancy rates have decreased. Employment in all private non-agricultural establishments grew slightly in the second quarter of 1992, up 0.1 percent. This is the first quarter of positive growth since the first quarter of 1991. At the same time, total employment in health care establishments continued to grow, but at a decelerated pace, up 3.7 percent (Figure 3). Growth in average hourly earnings in total health care establishments has decelerated dramatically since the second quarter of 1991. By the second quarter of Health Care Financing Review/Winter 1992/volume 14, Number 2

1992, growth had decelerated to 3.6 percent, down from 5.8 percent 1 year earlier. During that timeframe, hospitals' average hourly earnings decelerated from 6.5 percent to 3.8 percent. Payroll for private health service establishments decelerated over two points in the second quarter of 1992 after exhibiting stable growth since the second quarter of 1991. From the second quarter of 1991 to the second quarter of 1992, the growth in payroll for offices and clinics of medical doctors dropped 6.0 percentage points (Figure 4). The primary reason is due to the deceleration in the growth of average hourly earnings previously discussed. At the same time, growth in payroll in all private non-agricultural establishments accelerated approximately 3 percentage points (from 0.2 percent to 3.1 percent). Growth in work hours exhibited the same trend, decelerating in private health service establishments while accelerating in all private non-agricultural establishments.

193

Figure 1 Percent change in inpatient days, inpatient expense, and operating expense from the same period of previous year: 1982-92 20

——

15

- - -

Inpatient days Inpatient expense Operating expense

10

I

5 0 -5 -10 -15 1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

Quarters SOURCE: American Hospital Association: National Hospital Panel Survey Reports. Chicago. Monthly reports for January 1981–June 1992.

Figure 2 Percent change in outpatient visits, admissions, and surgical operations from same period of previous year: 1982–92 10-

5-

I

0-

!

• Outpatient visits - - - Surgical operations -- - - Admissions

-5-

-101982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

Quarters SOURCE: American Hospital Association: National Hospital Panel Survey Reports. Chicago. Monthly reports for January 1981–June 1992.

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Health Care Financing Review/Winter 1992/volume 14. Number 2

Figure 3 Percent change in employment from same period of previous year: 1983–92 8

_____

All private total employment

-

Health service total employment

-

-

6

4

2

0 •

-2

-4

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

Quarters SOURCE: U.S. Department of Labor, Bureau of Labor Statistics: Employment and Earnings. Washington. U.S. Government Printing Office. Monthly reports for January 1982–September 1992.

Figure 4 Percent change for non–supervisory payroll from the same period of previous year: 1983–92 18 16 14 12 10

8 6 4 2 0 1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

Quarters SOURCE: U.S. Department of Labor, Bureau of Labor Statistics: Employment and Earnings. Washington. U.S. Government Printing Office. Monthly reports for January 1982–September 1992.

Health Care Financing Review/Winter 1992/Volume 14, Number 2

195

Figure 5 Percent change in measures of price inflation from the same period of previous year: 1983–92 12 — — -

-

Consumer Price Index-all items -

Consumer Price Index–medical care

10 -

8 -

6 -

4 -

2 -

0 1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

Quarters SOURCES: U.S. Department of Labor, Bureau of Labor Statistics: CPI Detailed Report. Washington. U.S. Government Printing Office. Monthly reports for January 1982–June 1992; U.S. Department of Commerce, Bureau of Economic Analysis: Survey of Current Business. Washington. U.S. Government Printing Office. Monthly reports for January 1982–August 1992.

Figure 6 Percent change in measures of price inflation from the same period of previous year: 1982–92 14 ———

Medical care services

-

Medical care commodities

-

-

12

10

8

6

4 1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

Quarters SOURCES: U.S. Department of Labor, Bureau of Labor Statistics: CPI Detailed Report. Washington. U.S. Government Printing Office. Monthly reports for January 1981–June 1992; U.S. Department of Commerce, Bureau of Economic Analysis: Survey of Current Business. Washington. U.S. Government Printing Office. Monthly reports for January 1981–August 1992.

Figure 7 Percent change in indicators of national economic activity from same period of previous year: 1983–92 12 — — -

10

-

Unemployment rate level -

Real gross domestic product

8 6 4 2 0 2 4 1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

Quarters SOURCES: U.S. Department of Commerce, Bureau of Economic Analysis: Survey of Current Business. Washington. U.S. Government Printing Office. Monthly reports for January 1982–August 1992; U.S. Department of Labor, Bureau of Labor Statistics: Employment and Earnings. Washington. U.S. Government Printing Office. Monthly reports for January 1982–June 1992.

The CPI for all items displayed flat growth in the second quarter of 1992, up 3.1 percent from 1 year earlier. Growth of medical care prices has been decelerating slightly for more than three quarters; however, it still is more than twice the growth of the CPI for all items (Figure 5). Price growth for medical care services showed a slight decrease caused by a deceleration in the growth of insurance prices. Growth in medical care commodity prices decelerated with prescription drugs slowing down 0.8 percentage point in the second quarter (Figure 6). Price growth for prescription drugs decelerated because of forces inside and outside of the industry. Manufacturers are holding down prices in response to increased pressure from consumer and political groups for price constraints. Retail drug outlets are constraining price growth because of increased competition. An increasing number of outlets are selling prescription drugs at discount prices, causing all outlets to re-evaluate their pricing strategies. Real GDP grew slowly in the second quarter of 1992, the third quarter of positive growth, when compared with the same period from the previous year. The unemployment rate continued to rise, a trend that started in the fourth quarter of 1989 (Figure 7). At the same time, total employment showed the first positive growth since the third quarter of 1990 as a result of more individuals participating in the labor force during the second quarter of 1992. The combination of the hospital utilization, employment and earnings, and prices plays a large part Health Care Financing Review/Winter 1992/volume14,Number 2

in determining the growth of the national health expenditures and its relationship to the general economy. In the second quarter of 1992, the overall economy stabilized and growth in health care industry indicators continued to slow down. Decreasing utilization in hospitals has a dampening effect on hospital revenues. All areas of health care are showing a deceleration in the employment and hourly earnings and, consequently, payrolls. Price growth for medical care is decelerating. Should these current trends continue over the next two quarters, then the growth of NHE will be slower than the 11.4-percent growth in 1991 (Letsch, Levit, and Lazenby, 1992).

References American Hospital Association: National Hospital Panel Survey. Unpublished. Chicago. American Hospital Association. No date. Federal Register: Medicare Program; Changes to the Inpatient Hospital Prospective Payment System and Fiscal Year 1991 Rates; Final Rule. Vol. 55, No. 170, 36043-36050 and 36169-36173. Office of the Federal Register, National Archives and Records Administration. Washington. U.S. Government Printing Office, Sept. 4, 1990. Federal Register: Skilled Nursing Facility. Vol. 57, No. 195, 46177-46189. Office of the Federal Register, National Archives and Records Administration. Washington. U.S. Government Printing Office, Oct. 7, 1992a.

197

Federal Register: Medicare Program; Schedules of Limits of Skilled Nursing Facility Inpatient Routine Service Costs; Final Rule. Vol. 57, No. 195, 46177-46189. Office of the Federal Register, National Archives and Records Administration. Washington. U.S. Government Printing Office. Oct. 7, 1992b. Letsch, S.W., Levit, K.R., and Lazenby, H.C.: National health expenditures, 1991. Health Care Financing Review 14(2). HCFA Pub. No. 03335. Office of Research and Demonstrations. Health Care Financing Administration. Washington. U.S. Government Printing Office, Winter 1992.

198

U.S. Department of Commerce: National Income and Product Accounts. Survey of Current Business. Vol. 72, No. 3. Bureau of Economic Analysis. Washington. U.S. Government Printing Office, 1992. U.S. Department of Labor: Employment and Earnings. Vol. 38, No. 6. Bureau of Labor Statistics. Washington. U.S. Government Printing Office, June 1991. U.S. Department of Labor: Notes on Current Labor Statistics: Price Data. Monthly Labor Review. Vol. 113, No. 11. Bureau of Labor Statistics. Washington. U.S. Government Printing Office, Nov. 1990.

Health Care Financing Review/Winter 1992/volume 14, Number 2