2017 Acute Care Market Report

2017 Acute Care Market Report

Market At-A-Glance
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.

Health Systems
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%.

National Healthcare Spending Continues Rapid Growth
Spending On Hospitals Grew 25% In 5 Years
Operating Margins Climb Through 2015
Several Major Systems Report Declines
Half Of Hospital Spend Goes To Hospitals In Top 100 Health Systems
Rising Expenses Cause Nonprofit Hospitals, Health Systems To Fall Behind
Medicare Spending On Hospital Services Projected To Reach $438 Billion By 2023
Medicare Margins Still Negative But Improving
Medicaid Expansion Raises Average Medicaid Revenues To $30 Million Per Hospital
Supplies Were 19% Of Publicly-Traded Hospital Expenses In 2016
Hospitals Would Face Financial Challenges Under ACA Repeal
70% Of Hospitals Are In A Health System
Top Five Health Systems Own 1/3 Of System Hospitals
East Coast Has Highest ConcentrationOf Health Systems
Health Systems Acquire Medical Offices, Physicians
Health Systems Choose Collaboration With SNFs Over Acquisition
Global Hospital Mergers And Acquisitions Total $14 Billion In 2016
Outpatient Volumes Increase As Inpatient Volumes Decline
Profits Increase With Outpatient Volumes
Inpatient Payments Higher Than Outpatient For The Same Services
Uninsured ER Patient Volumes Decline After Medicaid Expansion
Patients Inclined To Visit ERs Despite Time, Cost Disadvantages
Health Systems Acquire Urgent Care To Attract Millennials
Hospitals Employ 33% Of Healthcare Workers
High Turnover Plays A Large Role In Hospital Employee Shortages
Hospital Administrators Expect Increased Outsourcing
1,300 Hospitals Penalized Under VBP
HACRP Penalties Total $430 Million In FY 2017
$500 Million In HRRP Penalties In 2017
Readmissions Rates Down, But Penalties Increase Under HRRP
Average Hospital HCAPS Score High In 2016
Quality And Patient Satisfaction Are A High Priority For Hospitals
Rural And Urban Hospitals Have Similar Rates Of Closure
VA Hospitals Serve 21.7 Million
Government-Owned Hospitals Have Lower Operating Margins
Nearly All U.S. Hospitals Partner With GPOs
GHX Reports $45.1 Billion In Sales Through Distribution In 2016
GHX Lists Top Acute Care Products Sold Through Distribution

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