April 2021 Health Sector Economic Indicators Briefs

Altarum's monthly Health Sector Economic Indicators (HSEI) briefs analyze the most recent data available on health sector spending, prices, employment, and utilization—helping to fill gaps in the official government data. Below are highlights from the April 2021 briefs:

National health spending rebound slows to pre-pandemic growth rates

• National health spending through February 2021 has hovered near 0% year-over-year growth since July 2020, suggesting the rebound from the spring spending decline may have ended near pre-pandemic levels.
• The near 0% growth, year over year, means that spending has been growing in recent months at rates similar to those observed before the pandemic began.
• Since January 2020, spending through February 2021 increased only for home health care, which grew by 6.5%. The greatest decline was in dental services, at -18.8%.
• Prescription drug spending, which has been affected less by the COVID-19 pandemic than spending on most health care services, has declined month-over-month in four of the most recent five months.

Economywide prices increase as health care price growth continues

• Overall health care prices were 2.5% higher this March than a year prior, continuing the 2021 trend of above average increases. This month’s price growth was 0.1 percentage points slower than February’s 2.6% rate, which was also the average growth rate over the first quarter of 2021.
• The exception to overall health care price increases continues to be retail prescription drugs and medical products. Prescription drug prices were down -2.3% year over year in March, the sixth straight month with a price decline.
• Hospital price growth in March led the price increases among health care services, accelerating from 4.6% last month to 4.8% this month. Conversely, price growth in physician services, dental care, and nursing home care for March are now all back below 3.0% and showing some signs of moderating.
• Economywide price growth, as measured by both the consumer price index (CPI) and producer price index (PPI), are showing signs of picking up in March, with those measures increasing to 2.6% and 4.2% respectively.

End of first quarter 2021 health employment down 44,000 from end of 2020

• Health care added 11,500 jobs in March 2021 and 25,000 jobs in February; however, a drop of more than 80,000 jobs in January puts health employment at the end of first quarter (Q1) 2021 down by 44,000 jobs compared to the end of 2020. Compared to the February 2020 pre-pandemic peak, health employment is down 3.1%, or 557,000 jobs.
• Hospital employment fell only slightly in March (-600 jobs) but has now fallen in each of the past three months and closes Q1 2021 down 37,000 jobs compared to the end of 2020.
• Ambulatory care settings added 15,300 jobs in March and have added a net 31,000 jobs in Q1 2021.
• Nursing and residential care employment fell by 3,200 jobs in March. Nursing homes added jobs for the first time in more than a year, adding 1,700 jobs, while other nursing and residential care lost 4,900 jobs. Overall, nursing and residential care employment is down 38,000 jobs in Q1 2021 and has fallen by 8.6%, or 313,000 jobs, since February 2020.
• The economy overall added a robust 904,500 jobs in February and the unemployment rate dropped to 6.0%. Total employment remains 5.5%, or about 8.4 million jobs, below the February 2020 pre-pandemic peak.