Falling Man

Falling Healthcare Consumption as Reform Approaches

Falling healthcare consumption statistics are showing up in many places as 2014 approaches, with major provisions of the Affordable Care Act (ACA) coming into effect. It’s becoming clear that Americans are making fewer visits to the doctor in a trend that started with the great recession and continues even through the ongoing recovery. The latest evidence is in weak volume statistics for a range of healthcare companies, ranging from device makers to hospital chains.

“It’s still early in the reporting season, but so far it all points to softness. In the U.S., volumes at hospitals — in-patient and out-patient — are soft,” according to David Heupel, an analyst for Thrivent Investment Management.

In releasing their most recent financial results a whole series of companies have cited a slowdown in the use of medical services having an impact on their sales. These companies include Quest Diagnostics, Johnson & Johnson, Abbott Laboratories, Hospital Corporation of America, and Kimberly Clark’s surgical supply business.

Debate continues about whether this softness is attributable to the economy or to preparation for changes coming under the ACA. On one side of the argument, Thomas Carroll, an analyst who follows the health insurance industry, says, “It’s just a continuation of this low utilization environment that we’ve been in, driven by the weak economy and lack of job growth – the same macro drivers that have been impacting the provider world for a few years now.”

On the other side of the argument, a new study from the Kaiser Family Foundation finds that about a quarter of the slowdown is due to “continuing changes in the way health care is delivered, but also to rising levels of patient cost-sharing in private insurance plans that discourage use of services.”

Foundation president Drew Altman says it represents a whole new ballgame for cost containment. “It’s more than just the ACA reforms, those are just beginning. But in the long run, those are the most important ones, because they have the force of Medicare and national policy behind them.”

The argument may be moot if the economy is forcing systematic changes that will persist long after the recovery is complete. ACA reforms may or may not be an important catalyst.

Click here to read more from Reuters, click here to read more in the New York Times, and click here to read the report from the Kaiser Family Foundation.

Falling Man by Antony Gormley, image © Simon Palmer / Wikimedia

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