Posted March 23, 2023
McKnights Home Care
By: Diane Eastabrook
Home health was one of the fastest-growing categories for healthcare spending in January, according to a healthcare economic indicator report released Wednesday by healthcare consulting firm Altarum.
Spending on home health expanded by 9.2% in the first month of the year, second only to 10.6% increase in spending for dental services. Services for nursing homes also rose by 9.2%. Spending on home health eclipsed the 4.6% year-over-year increase in overall healthcare spending in January.
Although home health and nursing homes experienced the same increase in spending in January, Altarum researchers said the reasons behind the increases differed.
“It appears that the most likely explanation for nursing home spending’s growth in 2022 and January 2023 was largely a belated recovery from the pandemic and includes some significant price level increases, while home health’s 2022 and 2023 spending growth more so reflects the continued growing utilization of home health care settings,” George Miller, PhD, BSE, MSE, Altarum research team leader, told McKnight’s Home Care Daily Pulse.
While spending grew for home health, it didn’t translate into higher prices for services. The report found that prices for home health services rose by a modest 1.9% in February — one of the slowest rates in the healthcare sector. That was slightly better than the 1.8% price increase home health recorded in January.
Altarum’s latest report reflects a healthcare industry slowly emerging from the COVID-19 pandemic. The industry added 42,200 jobs last month, which was fairly consistent with the 12-month average of 49,000. The sector overall has added back approximately 207,000 jobs over the past few years, which is a 1.3% increase over pre-pandemic levels.
Still, wage increases for the industry are lagging the rest of the economy, growing only 4.2% in January for healthcare. Wages climbed by a slightly better 4.4% for the private sector. That could help explain why recruitment and retention continue to be a problem for the direct care industry and why a number of large home care firms are dedicating resources to it.
A recent LeadingAge poll of 900 nonprofit providers, including 350 home health and hospice agencies, found two-thirds of respondents continuing to struggle with recruitment and retention of staff. Another healthcare workforce report ranked wages and benefits as top priorities for nurses. The average hourly wage sought by registered nurses was $61.04, $37.67 for licensed practical nurses and $27.56 for certified nursing assistants.
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