SSR Index of Current-Quarter Healthcare Demand Growth, Final 3Q12 Estimate
We expect 3.8% y/y health services demand growth during 3Q12, the product of 1.8% growth in unit demand and 2.0% growth in pricing. Total demand growth is 20 bps lower than our previous 3Q12 estimate – both the unit demand and pricing estimates are down 10bp each
Weaker unit demand reflects continued slow job growth in the broader economy, and a flattening of hours worked in healthcare specifically. We view general employment as a lead indicator of demand; households with employer sponsored insurance consume roughly 2.7x the healthcare of age and health-status matched households without insurance. We use hours worked in healthcare settings as a coincident indicator of demand; providers (hospitals, doctors offices) produce no inventory, accordingly we believe that hours worked in these settings are tightly linked to patient demand
Healthcare pricing normalized in September; this is particularly true in Hospitals, whose August pricing trend spiked by 150 bps to 3.6%, but returned to an on-trend 2.4% in September
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