upward arrow graph

Spending on home healthcare rose by 10.5% in August, more than double the 4.9% increase in healthcare spending overall, according to a new report by research and consulting firm Altarum. Spending on skilled nursing care wasn’t far behind, expanding by 10.2%.

Altarum researchers attributed increased spending to a variety of healthcare services, including home health. An increase in both utilization of services and higher prices for those services contributed to the increase in healthcare spending, with price growth being the largest contributor.  They said price will play an increased role in spending growth in the near future as “newly negotiated government-set prices catch up with higher input costs driven by overall inflation. Despite that, Altarum pointed out that healthcare spending overall has been more moderate than expected, due to falling and negative Medicare price growth. 

The shortage of healthcare workers continued to put upward pressure on wages, but that pressure appears to be easing a bit. The report found average hourly wages for healthcare workers grew 6.8% in August, slightly better than the more than 7% monthly increases the sector has been experiencing since January. Home health has added approximately 66,000 jobs in the past twelve months. 

U.S. healthcare spending has been on the rise since the beginning of the COVID-19 pandemic in March 2020. In 2020 alone, spending increased nearly 10% year over year due to a 36% increase in federal spending to combat the COVID-19 pandemic.  Demand for home health services have outpaced those for skilled nursing over the past two years. A report last spring found discharges to home health between the second quarter of 2020 and the third quarter of 2021 increased by 2.5% to 24.1% of total inpatient discharges, while the number of patients released to SNFs declined by 2.4% to 18.6% of total discharges.