Healthcare Costs Increasing at Unsustainable Pace

Medical costs are expected to grow 6 percent in 2019, continuing their relatively flat growth of the past five years, reports Modern Healthcare . Yet higher costs have not translated to similar gains in consumers' health and productivity, according to PricewaterhouseCoopers researchers who studied employer-sponsored healthcare spending. Costly new medical services and drugs and market consolidation are driving higher costs, said Barbara Gniewek, a health services principal at PwC. "It looks like costs are stabilizing, but they are still going up at a rate above inflation," she said, calling this pace "ultimately unsustainable." As health systems consolidate and acquire physician practices, prices tend to increase through facility fees and other fixed costs, according to the report. Providers, employers, and health plans are offering consumers new healthcare access through telehealth, retail, and urgent-care clinics. The ultimate goal is to reduce spending, but improved access often leads to higher utilization in the short-term, PwC researchers said. To continue to lower costs, employers and health plans likely will have to address prices—and not just drug prices, according to the report. That will require employers and insurers to collaborate with numerous stakeholders, from pharmacy benefit managers to retail pharmacies. They will have to justify the price of services by demonstrating their value, get comfortable working with third parties advocating for patients, and target investments that enhance the customer experience.