PwC: Healthcare spending growth slow for 4th year

Growth in healthcare spending in the U.S. has slowed considerably since 2009, according to PricewaterhouseCoopers's (PwC) Health Research Institute. The organization projects medical costs will increase 7.5 percent for 2013, the fourth year in a row of relatively flat growth.

According to the organization's report, "Medical Cost Trends: Behind the Numbers 2013," the following four forces will continue to slow the rise in medical cost trend in 2013, or act as "deflators":

• Medical supply and equipment costs are abating under market pressure;
• New delivery methods for primary care gain popularity;
• Price transparency exerts downward pressure; and
• The pharmaceutical patent cliff continues to increase use of cost-saving generic drugs.

Meanwhile, the following factors will nudge the medical cost trend upward next year, or act as "inflators":

• An uptick in patient utilization is expected to rise as the economy strengthens; and
• Medical advances are driving growth in high-cost care and catastrophic claims.

The focus on medical cost containment strategies is continuing, aided by the sluggish economy, reforms in the healthcare industry and efforts by employers to hold down costs, according to the report.

Hospital reimbursement is being aggressively targeted for savings by both government and commercial insurers, the researchers found. Hospital systems push for rate increases, even though they know insurers want to avoid the hospital altogether.

The report includes the following methods that providers can use to prepare for the aggressive efforts by both government and commercial insurers to drive down hospital reimbursement:

• Prepare for increased scrutiny and accountability. Make sure pricing is defensible. Take into account competitive services at free-standing clinics.
• Partner care models with reimbursement methods that reward value over volume. Maximize information exchange among different providers.
• Develop a culture of collaboration with providers, patients and family members. Teamwork will be critical in achieving lower Medicare readmission rates. To reduce readmissions, improve the discharge process with steps such as proactively scheduling follow-up appointments, educating patients and their caregivers and initiating pill reminders.
• Predictive modeling, incorporated into the EMR, can help identify patients at higher risk for readmission.

Learn more about the report at PwC's website.