Growth in health spending grinding to a halt: OECD

LONDON (Reuters) - Growth in health spending reversed a long-term trend of rapid increase and either slowed or fell in real terms in most OECD countries in 2010, driven by cuts among governments imposing austerity budgets, data showed on Thursday.

Overall health spending grew by nearly 5 percent a year in real terms in the 34 countries of the Organisation for Economic Co-operation and Development (OECD) between 2000-2009, but this was followed by zero growth in 2010.

In its Health Data 2012 report, the OECD also said preliminary figures for a limited number of countries suggest there was little or no growth in health spending in 2011.

"The halt in total health spending in 2010 was driven by a fall of 0.5 percent in public spending for health, following an increase of over 5 percent per year in 2008 and 2009," the report said.

It found that while government health spending tended to be maintained at the start of the economic crisis, cuts really began to bite in 2010.

This was most evident in European countries hardest hit by recession, such as Ireland, Greece and Estonia.

In Ireland, cuts in government spending drove total health spending down by 7.6 percent in 2010, compared with an average yearly growth rate of 8.4 percent between 2000 and 2009.

In Greece, OECD estimates suggest total health spending fell by 6.5 percent in 2010 after a yearly growth rate of more than 6 percent on average since 2000.

In Iceland, health spending fell by 7.5 percent in 2010, and in Estonia it dropped by 7.3 percent, driven by reductions in both public and private spending.

The OECD said most of the health spending cuts in Ireland were made through cuts in wages or fees paid to professionals and pharmaceutical companies, as well as through reductions in the number of health workers.

Estonia cut administrative costs in the ministry of health and also reduced prices of publicly reimbursed health services.

Investment plans have also been put on hold in a number of countries, including Estonia, Ireland, Iceland and the Czech Republic, while other countries have been seeking efficiency gains through mergers of hospitals or ministries, or by accelerating the move from caring for patients in hospitals towards more out-patient care and day surgery.

More generic drugs are also being used by a number of countries, the OECD said, and some other measures have been introduced to make people pay more out of their own pockets.

Outside of Europe, health spending growth slowed in 2010, to about 3 percent in the United States, Canada and New Zealand. Growth remained at more than 8 percent in Korea.

As a result of the zero growth in health spending across OECD countries in 2010, the percentage of GDP devoted to health stabilized or declined slightly in most countries.

Health spending accounted for 9.5 percent of GDP on average across OECD countries in 2010, versus 9.6 percent in 2009.

The United States spent by far the highest proportion of its GDP in health, at 17.6 percent, followed by the Netherlands at 12 percent and France and Germany on 11.6 percent.

The lowest proportions devoted to health were in Mexico, at 6.2 percent and Turkey on 6.1 percent. In Japan, the share of spending allocated to health has increased substantially in recent years to 9.5 percent, up from 7.6 percent in 2000.

The share also increased in Korea to 7.1 percent in 2010, up from 4.5 percent in 2000.

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University Health System Engages MedAssets for Construction Growth Strategies

Wed, Jun 20, 2012, 11:36 AM EDT - U.S. Markets close in 4 hrs 24 mins

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Health spending growth to stay low, then jump

Near historic growth rates in health spending will continue through 2013, then increase as the economy recovers and major health reform provisions take effect, a federal health agency projects.

NEW YORK (CNNMoney) -- Total health spending in the United States will grow at near-historic low rates until 2014 and then increase as provisions of the health reform law take effect, according to a government report Tuesday.

The report by the Centers for Medicare and Medicaid Services measures what everyone in the country spends on health -- governments, businesses and individuals.

Between 2011 and 2021, national health spending is forecast to grow by an average of 5.7% -- or slightly more than the U.S. economy, the agency said.

But for the first three years, annual spending growth will likely average just 4%, slightly above the historic low of 3.8% recorded in 2009. That's in part because of the effects of the recession and slow economic recovery tamping down income, although health experts believe other factors may be at play, too.

"The sustained effects ... on disposable personal income, insurance coverage and unemployment rates are expected to continue to dampen health spending growth through 2013," a group of CMS economists and actuaries wrote in an article detailing the findings in the journal Health Affairs.

By 2014, however, the CMS expects the annual growth rate to jump to 7.4% as major provisions of the health reform law along with a stronger economy kick in. By 2021, the rate slows to 6.2%.

Health reform provisions going into effect in 2014 include an expansion of eligibility for Medicaid; a mandate that all individuals be insured; and federal subsidies for low- and middle-income Americans purchasing policies on state-based insurance exchanges.

The law is expected to reduce the number of uninsured by 30 million over the decade.

As a percentage of the overall economy, the agency expects national heath spending to grow to 19.6% in 2021, up from 17.9% in 2010.

By 2021, federal, state and local governments are projected to foot about half of the nation's health spending, with two-thirds coming from Uncle Sam. That's because of faster growth in Medicare as more baby boomers retire, expanded Medicaid coverage and subsidies to buy insurance on the exchanges.

The CMS expects the health reform law will raise average health spending growth by a tenth of a percentage point over the decade.

Growth in health spending is not synonymous with growth in health care costs. While increased costs of health services and insurance can be factors, so too are how much health care people use and how many buy insurance and prescription drugs, among other things.

The CMS report was released with just days to go before the Supreme Court is expected to rule on the health reform law, which was passed in 2010. The court could choose to uphold the law, strike it down or just strike down portions of it, such as the mandate to have health insurance.

How the high court's decision might affect the CMS forecast, if at all, is unclear. Like everyone else, the agency is waiting to see how the Supreme Court rules, said Sean Keehan, a senior economist in the CMS actuary office. 

First Published: June 12, 2012: 4:01 PM ET

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Health spending growth to stay low, then jump

Near historic growth rates in health spending will continue through 2013, then increase as the economy recovers and major health reform provisions take effect, a federal health agency projects.

NEW YORK (CNNMoney) -- Total health spending in the United States will grow at near-historic low rates until 2014 and then increase as provisions of the health reform law take effect, according to a government report Tuesday.

The report by the Centers for Medicare and Medicaid Services measures what everyone in the country spends on health -- governments, businesses and individuals.

Between 2011 and 2021, national health spending is forecast to grow by an average of 5.7% -- or slightly more than the U.S. economy, the agency said.

But for the first three years, annual spending growth will likely average just 4%, slightly above the historic low of 3.8% recorded in 2009. That's in part because of the effects of the recession and slow economic recovery tamping down income, although health experts believe other factors may be at play, too.

"The sustained effects ... on disposable personal income, insurance coverage and unemployment rates are expected to continue to dampen health spending growth through 2013," a group of CMS economists and actuaries wrote in an article detailing the findings in the journal Health Affairs.

By 2014, however, the CMS expects the annual growth rate to jump to 7.4% as major provisions of the health reform law along with a stronger economy kick in. By 2021, the rate slows to 6.2%.

Health reform provisions going into effect in 2014 include an expansion of eligibility for Medicaid; a mandate that all individuals be insured; and federal subsidies for low- and middle-income Americans purchasing policies on state-based insurance exchanges.

The law is expected to reduce the number of uninsured by 30 million over the decade.

As a percentage of the overall economy, the agency expects national heath spending to grow to 19.6% in 2021, up from 17.9% in 2010.

By 2021, federal, state and local governments are projected to foot about half of the nation's health spending, with two-thirds coming from Uncle Sam. That's because of faster growth in Medicare as more baby boomers retire, expanded Medicaid coverage and subsidies to buy insurance on the exchanges.

The CMS expects the health reform law will raise average health spending growth by a tenth of a percentage point over the decade.

Growth in health spending is not synonymous with growth in health care costs. While increased costs of health services and insurance can be factors, so too are how much health care people use and how many buy insurance and prescription drugs, among other things.

The CMS report was released with just days to go before the Supreme Court is expected to rule on the health reform law, which was passed in 2010. The court could choose to uphold the law, strike it down or just strike down portions of it, such as the mandate to have health insurance.

How the high court's decision might affect the CMS forecast, if at all, is unclear. Like everyone else, the agency is waiting to see how the Supreme Court rules, said Sean Keehan, a senior economist in the CMS actuary office. 

First Published: June 12, 2012: 4:01 PM ET

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Health spending growth to stay low, then jump

Near historic growth rates in health spending will continue through 2013, then increase as the economy recovers and major health reform provisions take effect, a federal health agency projects.

NEW YORK (CNNMoney) -- Total health spending in the United States will grow at near-historic low rates until 2014 and then increase as provisions of the health reform law take effect, according to a government report Tuesday.

The report by the Centers for Medicare and Medicaid Services measures what everyone in the country spends on health -- governments, businesses and individuals.

Between 2011 and 2021, national health spending is forecast to grow by an average of 5.7% -- or slightly more than the U.S. economy, the agency said.

But for the first three years, annual spending growth will likely average just 4%, slightly above the historic low of 3.8% recorded in 2009. That's in part because of the effects of the recession and slow economic recovery tamping down income, although health experts believe other factors may be at play, too.

"The sustained effects ... on disposable personal income, insurance coverage and unemployment rates are expected to continue to dampen health spending growth through 2013," a group of CMS economists and actuaries wrote in an article detailing the findings in the journal Health Affairs.

By 2014, however, the CMS expects the annual growth rate to jump to 7.4% as major provisions of the health reform law along with a stronger economy kick in. By 2021, the rate slows to 6.2%.

Health reform provisions going into effect in 2014 include an expansion of eligibility for Medicaid; a mandate that all individuals be insured; and federal subsidies for low- and middle-income Americans purchasing policies on state-based insurance exchanges.

The law is expected to reduce the number of uninsured by 30 million over the decade.

As a percentage of the overall economy, the agency expects national heath spending to grow to 19.6% in 2021, up from 17.9% in 2010.

By 2021, federal, state and local governments are projected to foot about half of the nation's health spending, with two-thirds coming from Uncle Sam. That's because of faster growth in Medicare as more baby boomers retire, expanded Medicaid coverage and subsidies to buy insurance on the exchanges.

The CMS expects the health reform law will raise average health spending growth by a tenth of a percentage point over the decade.

Growth in health spending is not synonymous with growth in health care costs. While increased costs of health services and insurance can be factors, so too are how much health care people use and how many buy insurance and prescription drugs, among other things.

The CMS report was released with just days to go before the Supreme Court is expected to rule on the health reform law, which was passed in 2010. The court could choose to uphold the law, strike it down or just strike down portions of it, such as the mandate to have health insurance.

How the high court's decision might affect the CMS forecast, if at all, is unclear. Like everyone else, the agency is waiting to see how the Supreme Court rules, said Sean Keehan, a senior economist in the CMS actuary office. 

First Published: June 12, 2012: 4:01 PM ET

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Priority Health is Positioned for Growth

Priority Health’s year-end financials illustrate positive growth in both membership and income. The company has made a significant investment in diversifying its product portfolio to include individual, Medicare and Medicaid, and consumer-driven health plans like its HealthbyChoiceSM product suite. As a result, its combined year-end financials show the company gaining 20,000 new members and earning a $34 million net profit with $2.3 billion in revenues.

“Priority Health improves the health of all people by providing access to affordable and excellent health care,” said Steve Flack, Chief Financial Officer for Priority Health. “All of our products are designed to improve health outcomes and eliminate avoidable costs while providing an exceptional care experience. Our financial results underscore our ability to deliver on that promise.”

“We continue to have one of the fastest growing and highest quality Medicare plans in the state,” said Joan Budden, the Chief Marketing Officer for Priority Health. “We’ve found that when individuals have an opportunity to choose their health plan, they choose Priority Health.”

In the last year, the company has introduced several new products to the market including Medicare Advantage plans, individual plans, self-funded options, PPO programs, consumer-driven health plans and wellness packages and ancillary products.

“Since joining Priority Health, I’ve been impressed with the company’s efficiency, its strong provider network and how advanced its wellness and care management programs perform,” said Flack. “This company is approaching health reform and the coming year well positioned to grow.”

Flack joined Priority Health as the Chief Financial Officer in October 2011. In this role, he is focusing on helping the business deliver economic value to customers, strengthening the company financially and strategically and building a team of finance professionals and highly valued advisors.

Priority Health has successfully expanded across the state and now provides health care to every county in Michigan's Lower Peninsula, serving more than 620,000 members. The company currently employs 1,000 people in its six offices across Michigan.

About Priority Health

Priority Health is an award-winning health plan nationally recognized for creating innovative solutions that affect health care costs while maximizing customer experience. It offers a broad portfolio of products for employer groups and individuals including Medicare and Medicaid beneficiaries. As a nonprofit company, Priority Health serves more than 620,000 people and it continues to be rated among the best health plans in the nation by the National Committee for Quality Assurance.

Priority Health Consolidated Financials:

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CRF Health Announces Record Breaking Revenue and Earnings Growth in 2011

Wed, Mar 21, 2012, 3:01 PM EDT - U.S. Markets close in 59 mins.

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Health Diagnostic Laboratory seeing explosive growth

The packages start to arrive at Health Diagnostic Laboratory Inc. at about 7:30 a.m. daily.

Thousands of blood samples from physicians' offices across the country come to the HDL labs in the Virginia BioTechnology Research Park. There are so many, the company has its own FedEx mailing code.

"We run about 60,000 tests a day," said Tonya Mallory, HDL's president and chief executive officer. "We have been growing at a rate of about 5 percent a week for the last 23 months."

HDL provides diagnostic testing and services that help physicians improve patient treatment through a personalized health plan. The company's tests provide early detection of risk factors for cardiovascular disease, diabetes, metabolic syndrome and fatty liver disease. HDL also provides health counseling for patients to reduce those risks.

Opened in 2009 with just a handful of employees, HDL has seen phenomenal growth. It now provides testing for physicians and medical practices in 45 states. It employs about 425 people, and is still adding jobs.

Mallory said the company's revenue is projected to reach about $250 million this year.

"I have never seen a company grow as quickly and with the kind of dynamic growth and success that (HDL) has had," said Robert T. Skunda, president and chief executive officer of the park.

Skunda said the company has tapped into a market helping doctors and other health care professionals provide counseling for their patients.

"That is really what HDL is doing," he said. "They are not only providing test results, but they are really an adjunct to the health care provider, helping the physician and patient both monitor and improve their progress."

In November, the company announced plans for a $68.5 million, two-phase expansion in 2012 and 2013 that will demolish two buildings along Jackson and North Fifth streets in the Virginia Biotechnology Research Park — BioTech 3 and BioTech 5 — and replace them with two six-story buildings. Those buildings will connect with HDL's existing home in the three-story BioTech 8 on North Fifth Street.

And in December, Health Diagnostic Laboratory announced it was giving $2.2 million to the Science Museum of Virginia, marking the largest corporate gift in the museum's history. The gift will fund the development of a major new exhibit gallery called "Improving Grounds."

"It has been crazy fun," said Mallory, 46, who worked for more than 20 years in the laboratory industry before starting HDL.

* * * * *

Her fascination with science and medicine started early.

"I have always been intrigued and interested in treating patients," said Mallory, who grew up in the Doswell area of northern Hanover County. Her father was a welder for Philip Morris, and her mother was an accounting clerk for Bear Island Paper Co.

Mallory entered Virginia Commonwealth University as a pre-med student, focusing her studies on biology, but medical school wasn't in the cards.

"I had to pay for college by myself, and the year I was finishing undergraduate I had intended to continue to go to med school," she said.

But at the time in the late 1980s, with HMOs gaining ground, Mallory thought the nation was "heading towards socialized medicine."

"I would have to continue to take out loans to continue on to med school, and if we went to a socialized medical system, I thought I would not be able to pay back my loans in less than 100 years," she said.

So Mallory completed a graduate degree with honors in forensic science, intent on working in the emerging field of DNA fingerprinting.

But state job cuts nixed that idea, too, so Mallory took a job in 1990 with Wako Chemicals USA Inc., a Japanese-owned company with operations on Bellwood Road in Chesterfield County. The company is a global provider of laboratory chemicals and clinical diagnostic reagents.

"I expected then I would be there at most a few months until I found another job," Mallory said. "I was there about 16 years."

Mallory held a variety of roles with Wako. "I crammed 100 years of experience into those 16 years," she said, while also starting and raising a family in Richmond during that time. She and her husband, Scott, have two sons, ages 18 and 14.

* * * * *

Working in the clinical laboratory industry, she also met some of the people who later joined her in co-founding and managing HDL.

Among them was G. Russell Warnick, a Montana native with more than 40 years of experience working in laboratories, starting when he was a captain in the Army's medical service corps in the 1970s, working in a military laboratory in California.

He later worked at the University of Washington, doing pioneering work in cholesterol testing, before starting his own lab, Pacific Biometrics Inc., from which he retired.

After a few years of retirement, "I was getting bored," Warnick said. So he took a job as a vice president at Berkeley HeartLab in San Francisco, which was using a menu of tests to identify health-risk factors in patients.

However, as a vice president in charge of laboratory operations, one of Warnick's major concerns was geography.

The lab "was sitting right on the San Andreas fault," he said. "So I went to the management and convinced them that we should have a second lab somewhere in the country as a backup."

The eventual choice for that lab was the Richmond area, Warnick said, because of the region's "good universities and good supply of trained professionals and scientists and technicians, and also its relatively low costs."

* * * * *

Mallory had become well-known in the industry through her work with Wako Chemicals and through professional and trade groups, such as the National Association for Clinical Chemistry. So Warnick recruited her to Berkeley HeartLab with plans that she would eventually run the new lab in Richmond.

Mallory spent more than two years commuting from Richmond to San Francisco working for Berkeley HeartLab, and waiting for the time when the new lab would be built.

That time never came. Instead, Berkeley HeartLab was acquired, and the new owners scratched plans for the backup lab and started to cut management jobs.

After that, "long term, it did not make sense for me, and I did not need to be commuting anymore," Mallory said.

So in 2008, she hatched plans to start a lab of her own in Richmond.

"I decided I would give myself six months to start the company, or get a job," she said. "So my husband and I bet the farm, so to speak, to get the new company started."

Skunda, the biotechnology park CEO, had known Mallory for many years, and urged her to open the business in the park.

"The best way to describe her would be laser-focused on building this company and executing its business strategy, and she has just hit it out of the ballpark," he said.

* * * * *

Mallory opened HDL in July 2009. She was joined by three co-founders who now have major management roles in the company.

Among them is Warnick, now the company's chief scientific officer.

The chief medical officer and laboratory director is Joe McConnell, a Michigan native who earned an undergraduate degree at the University of Michigan and master's and doctoral degrees in clinical chemistry at Cleveland State University. He later taught at Indiana State University before joining the Mayo Clinic, a premier hospital and medical research institution in Minnesota.

McConnell's laboratory at the Mayo Clinic had set up a diagnostics program similar to what HDL offers.

"The difficulty was, we were not reaching a large population," he said. "We were helping a lot of people, but they were those people who could afford it."

Joining HDL brought "the opportunity to be able to reach everybody," McConnell said.

"It was a huge decision for me to move from an institution of prestige like the Mayo Clinic," McConnell said. "But I really saw that we had an opportunity with HDL, and it is coming to fruition much faster than I expected; I don't think any us realized that it would grow this fast."

* * * * *

HDL has invested heavily in technology and automation to bring down the cost of the testing it now provides for thousands of physicians across the country.

In part, that technology focus has come through bringing on board a technology guru, Satya Rangarajan, who was born in India, grew up in South America and came to the United States to study computer science, earning a master's degree.

A Richmond-area resident for about 15 years, Rangarajan worked in information-technology management for many years before starting up venture-capital firm Enlightened Capital, which he wanted to use for promoting socially responsible businesses and causes.

Mallory approached him about becoming an investor in HDL. "She pitched it to me," Rangarajan said. "For two hours, I heard her passionately talk about saving lives. That is one of the core things about the company. It has got a mission to make a difference in people's lives."

Though Rangarajan said he was prepared to write a check for HDL, he didn't become an investor. Instead, Mallory found another investor, and Rangarajan joined the company in 2009 as its chief operating officer.

* * * * *

The tests HDL performs are designed to provide useful, easy to understand information for physicians and patients on risk factors for heart disease, diabetes and other diseases.

The goal is to provide key information early enough so that physicians and patients can take action before the disease sets in, and before the costs of treatment rise significantly.

"The analogy would be if you are driving a car, and suddenly that car breaks down on the side of the road," Mallory said. "Are we spending all of our effort in repairing an engine that is failing on the side of the road, or should we be putting maintenance into the system so that the car never fails on the side of the road?"

To that end, the company also offers health counseling services. It now has about 60 health coaches who work with patients on ways to improve their health.

"We train them on what sorts of things can be done, and they discuss that with the patients," McConnell said. "Obviously, their focus is on lifestyle: diet and exercise and those sorts of things."

* * * * *

With the expansion announced in November, Health Diagnostic Laboratory will grow to about 240,000 square feet. By 2014, it should employ about 850 people, Mallory said.

As for its future growth, the company's founders see more markets where it can expand.

"We are evaluating markets outside the United States," Mallory said.

Another frontier is in corporate wellness. The company has been working for about a year and a half to "pilot and perfect" a corporate wellness program designed to help reduce health costs, Mallory said.

"We already have one for our own employees," she said, adding that the company has been rolling out the program to other large companies based in the Richmond area.

"It is quite effective," she said. "We are seeing that in about 14 weeks, we can decrease (health) risk significantly for employees."

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Evive Health Announces Record-Setting Growth in 2011; Total Number of Covered Lives Nationwide Tops 750,000

Sat, Jan 21, 2012, 11:04 AM EST - U.S. Markets closed

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Health Spending Growth Up in Early 2011 But Trending Toward Record Lows at Year’s End

ANN ARBOR, Mich.--(BUSINESS WIRE)-- The January Health Sector Economic Indicators briefs released today by Altarum Institute’s Center for Sustainable Health Spending indicate that over the first 11 months of 2011, health spending has grown at an annual rate of 4.5 percent, compared to the 3.9 percent increase for 2010, which has just been officially released by the Centers for Medicare & Medicaid Services. This growth was driven by high spending early in 2011 followed by a gradual, steady decline. Spending grew by only 3.6 percent in November 2011 relative to November 2010. Thus, while spending for 2011 as a whole is up, the nation will likely enter 2012 with health spending growth near the record-low levels experienced in 2009 and 2010.

Health care price inflation was 2.0 percent in November, a rate that has been steady throughout 2011, indicating the early 2011 jump in health spending can be traced to a bounce back in per capita health care utilization, which exhibited almost no growth in 2010. Health employment in December rose by 23,000 jobs, just under the 2-year average of 24,000. The health spending share of GDP was 17.8 percent in October 2011, up from 16.4 percent at the start of the recession (December 2007) but down from the all-time high of 18.2 percent in June 2011.

The complete set of briefs, providing monthly data on health care spending, prices, and employment, can be viewed at www.altarum.org/healthindicators.

“Our data build upon and extend the results issued by the Centers for Medicare & Medicaid Services earlier this week and reflect the latest revisions in data from the Bureau of Economic Analysis,” said Center Director Dr. Charles Roehrig. “Hospital spending has much to do with the slowing growth trend through 2011. And while both spending and utilization jumped early in the year, they declined throughout the year to bring us to near record low growth at year’s end.”

Altarum’s Health Sector Economic Indicators briefs offer timely analysis of health sector employment, spending, and prices. To receive an email notification regarding the monthly release of Health Sector Economic Indicators, please visit http://www.altarum.org/publications-resources-health-systems-research/sign-up.

Altarum Institute (www.altarum.org) integrates objective research and client-centered consulting skills to deliver comprehensive, systems-based solutions that improve health and health care. Altarum employs more than 400 individuals and is headquartered in Ann Arbor, Mich., with additional offices in the Washington, D.C., area; Sacramento, Calif.; Atlanta, Ga.; Portland, Maine; and San Antonio, Texas.

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