According to government Medicare numbers, total healthcare spending is expected to increase just over 5% this year. That rate should continue annually through 2026. Eight years from now, healthcare spending is expected to make up nearly 20% of GDP. That is a lot of money.
So what’s driving these estimates? Experts say there are two things: the aging U.S. population and medical sector inflation. Both will play a role in how increased healthcare spending affects therapy services.
Americans Are Getting Older
Advances in medical science have allowed us to increase average life expectancy significantly in the last half-century. We are now living longer than we ever have before. But that comes at a price. Living longer does not necessarily mean living healthier, and we see that in healthcare spending statistics.
Older Americans are by far the most frequent users of healthcare services. This includes everything from primary care to physical therapy. And as America ages, trends suggest that more seniors are going to need physical therapy following surgeries, falls, and the like. Many will need occupational therapy to remain functional as they age.
There is some good news here in that the government eliminated the hard cap on therapy services provided to seniors through the Medicare program. They put a few other regulations in place to mitigate some of the benefits of eliminating the cap, but the end result is good overall. The long and short of it is that Medicare will be spending more money on occupational and physical therapy over the next decade.
This greater spending should lead to a higher demand for therapists. We expect to see more locums working side-by-side with employee therapists at hospitals, assisted living facilities, and even private practices. We expect to see a new wave of physical and occupational therapists opening new practices as well.
Healthcare Is Getting More Expensive
The second factor, medical industry inflation, is equally important but should have less of an impact on the demand for therapists. Medical industry inflation relates only to the cost of providing health care services, equipment, and prescription medications. According to the data, it is expected to rise at an annual rate of 2.2% through 2026, double the 1.1% of the overall economy.
It is hard to make sense of this even if you are a trained economist. Why healthcare costs increase at twice the rate of inflation cannot be quantified using standard economic theories. Nonetheless, there it is. Almost every year since the early 1990s, the cost of health care delivery has outpaced inflation.
Does this mean for occupational and physical therapists will earn more 10 years from now? That is entirely possible. Increased spending may very well lead to better compensation for therapists. Yet there are no guarantees. Even at a rate of 2.2%, inflation within the medical industry may not trickle down to those people who actually hold jobs within the profession. All the increase may go directly into the costs of running hospitals, research and development, and maintaining regulatory compliance.
Existing trends do suggest that therapy services will be the beneficiary of increased spending between now and 2026. Hopefully that translates into better care for patients and more job opportunities for physical and occupational therapists. Perhaps it might mean more opportunities for locum therapists too.
APTA – http://www.apta.org/PTinMotion/News/2018/02/20/HealthCareSpendingProjections/