2017 Acute Care Market Report
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%.
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