Nursing home care experienced the largest price increase of any major health care field in August, but the sector also faced a large drop in employment that month, losing 3,600 jobs.
This is according to the latest Altaram Health Sector Economic Indicator (HSEI) summary for September 2024, released on Tuesday.
This is the sector’s biggest employment decline since September 2021, when hiring was still declining due to pandemic-related factors, Altarum analysts said.
“It remains to be seen from upcoming employment data whether this decline is an isolated event or part of a broader, longer-term trend in nursing home employment,” said Steven McCall, senior health economics and policy analyst at Altarum.
Nursing home care experienced the largest price increase of any major medical category, increasing 3.8% over the past year, followed by dental care at 3.5%. Prices for physician and clinical services increased at a more moderate rate of 1.3%, but the difference highlights the ongoing financial pressures facing nursing homes.
Medicaid rates for nursing home care jumped 5.7 percent, far outpacing the 3.2 percent increase for privately insured services and the 1.7 percent increase for Medicare patients. Nursing home utilization also increased 5.1 percent from a year ago, signaling increased demand for these services amid tough economic times.
Despite these trends, the nursing and residential care sector faced job losses, with a net loss of 2,600 jobs in August, including a decline of 3,600 jobs in nursing homes, while other residential care facilities managed to gain 1,000 jobs.
Meanwhile, nursing homes saw job and wage gains in July, with nursing homes and residential care facilities adding 9,200 jobs during the month. Most of the job growth was driven by a strong increase in nursing homes, which added 6,800 new jobs.
Additionally, nominal wages in care facilities increased by 4.1% from July 2023 to July 2024, outpacing growth in hospitals (3.6%) and outpatient care (3.4%).
Overall, health care employment increased by just 30,900 in August, well below the monthly average over the past year.
Healthcare costs continue to rise faster than overall inflation: The Healthcare Cost of Living Index (HCPI) rose 2.7% year-over-year, down slightly from the previous month. In contrast, economy-wide inflation, as measured by the Consumer Price Index (CPI), fell to 2.5%, and the Producer Price Index (PPI) fell to 1.7%.
