Healthcare costs projected to increase 6.5% in 2022

Healthcare costs are projected to increase 6.5% in 2022 as sicker patients seek care after putting it off during the COVID-19 pandemic, according to a new report.

Annual cost growth hovered between 5.5% and 6% from 2017 to 2020, following a steady decline from 2007’s 11.9% mark, according to PricewaterhouseCooper’s Health Research Institute. Deferred or forgone care, growing mental health issues, preparations for the next pandemic and investments in digital tools are expected to increase costs in 2022, researchers said.

“The pandemic has shown us that we have incredible gaps in the mental health system,” said Benjamin Isgur, who leads the Health Research Institute.

About 30% of commercially insured Americans surveyed in the spring by HRI said that the pandemic made them anxious or depressed. Meanwhile, 91% of primary-care physicians said more of their patients felt isolated or lonely.

Those patients are skewing younger. Children and adolescents typically struggle to find appropriate mental healthcare, exacerbated by a persistent shortage of therapists and psychiatric inpatient beds, Isgur said.

“We are back to these really basic population health issues,” he said, noting an increase in poor nutrition habits, cigarette use and opioids.

Care deferrals due to cost or access issues may deteriorate mental health. Healthcare was a lower priority after millions lost their jobs during the pandemic. Many hospitals were full during certain stretches.

About half of the commercially insured Americans polled by HRI said they skipped their annual preventative exam during the first six months of the pandemic. Nearly a third skipped routine care for chronic illnesses and lab tests or screenings.

Some emergency care was also deferred. In Fort Worth, Texas, there was a 55% increase in heart attacks from May 2019 to May 2020, but 911 calls were down 21%, according to data from Medstar, an emergency medical services company. Of those patients, the number pronounced dead on the scene was up 65% over that period.

“Many people were afraid to call 911 and consequently many suffered serious cardiac problems, strokes and even death,” Stephen Love, CEO of the Dallas-Fort Worth Hospital Council, told Modern Healthcare in August.

Telehealth was able to offset some of those cost and access issues, with utilization spiking in the early stages of the pandemic. While telehealth has led to increased utilization and downstream care, that is an appropriate tradeoff for better health outcomes and lower long-term costs, Isgur said.

Providers will continue to invest in those digital pathways as well as data analysis software, supply chain resiliency and staffing to prepare for the next pandemic, according to the report.

“This has been a real wakeup call, all the way from (personal protective equipment) to drugs,” Isgur said. “A lot of hospital executives are also making an investment in better forecasting—now we see epidemiological data tied to social determinants data.”

Telehealth and constrained inpatient capacity has also accelerated the move to lower-cost sites of care.

The share of telehealth-seeking consumers surveyed in September by HRI doubled compared to pre-pandemic levels. Meanwhile, retail clinic use increased by 40% and urgent care visits rose by 18%. While there were some issues with care coordination, most said they would use those sites of care again.

Some emergency department visits may never return to pre-pandemic levels, which would also slow cost growth. A 10% decrease in lower-acuity ED visits could save U.S. employers and patients nearly $1 billion a year, PwC estimated.

“Hospital CEOs are thinking that they will continue to move toward more outpatient care because that is the future. But the nuance is keeping an eye on deferred care, mental health and substance abuse issues that will be with us for a while,” Isgur said. “CEOs are figuring out how to right-size appropriately.”

Part of that right-sizing involves remote work, which will likely be a permanent adjustment for many administrative employees and some clinicians, industry observers said.

More than a 30% of clinicians surveyed last spring said their organizations are likely or have already allowed administrative staff to work from home permanently. Around 40% said it is likely or that their company has already downsized administrative offices and outsourced or automated related services.

Kaiser Permanente, for instance, recently canceled its $900 million expansion of its headquarters, and plans to use its existing space rather than add to its footprint.

“That transition allows them to spend more on patient care,” Isgur said.


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