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July 1996, Vol. 119, No. 7
Brian Catron and Bonnie Murphy
Since 1983, health care spending has increased dramatically in the United States. According to the Health Care Financing Administration, personal health care expenditures made up 9.3 percent of gross domestic product in 1983, but 10 years later, such expenditures climbed to 12.3 percent of gross domestic product.1 This increasing share of gross domestic product warrants a closer look into pricing and inflation measures in the health care industry. To accomplish this, the Bureau of Labor Statistics analyzed the hospital care industry because it represents one-third of personal health care expenditures - the largest expenditure category.
As part of an overall strategy designed to expand service industry coverage in the Producer Price Index (PPI), the Bureau of Labor Statistics began a survey design study for the hospital industry in 1989. Preliminary research included extensive discussions with representatives from more than 20 hospital establishments, the Health Care Financing Administration, the BLS Consumer Price Index (CPI) program, and the American Hospital Association. Sample collection began in January 1992, and by the following year, the PPI for the hospital industry was published. Other hospital industry price statistics have been available for some time. In fact BLS has published the CPI for hospitals and related services since 1977. Also, the Health Care Financing Administration publishes a quarterly input price index to provide measures for Congress to adjust Medicare program reimbursements to health care providers.
This article profiles the new PPI hospital industry price indexes. It highlights the survey sample and design, analyzes hospital price inflation as measured by the PPI, summarizes the results, and briefly compares the hospital industry measures of the PPI with those of the CPI.
This excerpt is from an article published in the July 1996 issue of the Monthly Labor Review. The full text of the article is available in Adobe Acrobat's Portable Document Format (PDF). See How to view a PDF file for more information.
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1 Katherine R. Levit, et. al. "National Health Expenditures, 1993," Health Care Financing Review (Baltimore, MD, U.S. Department of Health and Human Services, Health Care Financing Administration, 1993)
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