SSR Index of Current-Quarter Healthcare Demand Growth, Initial 1Q13 Estimate

Richard

We expect 3.6% (nominal) y/y growth in US health services demand during 1Q13, the product of 1.7% growth in unit demand, and 1.8% price growth; this marks a slight deceleration from the 3.7% actual growth rate in 4Q12. Unit demand growth remains very slow; the projected 1.7% rate is only marginally higher than the rate of health services unit demand growth (1.5 %) attributable to demographics (population growth and aging) alone, and well below our long-term expectation of 2.8%

We estimate that flu effects should have driven a roughly 1% unit demand increase in 4Q12, and that flu will raise health services unit demand by +/- 2% in 1Q13. Large apparent flu effects suggest that underlying ‘non-flu’ unit demand growth is well below the 1.5% demographic rate. By extension, this suggests demand is far more likely to improve than to weaken further

Even modest expansion of health insurance coverage – whether by rising employment, initiation of state health insurance exchanges, or both – has the potential to more than double the rate of unit demand growth

Independent of our quarterly growth rate model, we handicap the odds of a trend break, i.e. a significant acceleration or deceleration in demand. The trend-break model indicates an 11% chance of accelerating demand in 1Q13

For our full research notes, please visit our published research site.

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