Direct Costs for Healthcare Delivery Drive Overall Spending

A recent study in Health Affairs shows that purchased goods and services in healthcare, followed by nurse and physician compensation, were the principal drivers of overall increases in U.S. healthcare spending that reached 72% from 1997 to 2012.

In contrast, according to data compiled by Sherry Glied, PhD, and colleagues from New York University in New York City, spending on administrative costs had the slowest growth among these three major components of overall healthcare spending.

Costs for management, and IT compensation increased from $152 billion to $205 billion -- a 35.3% increase, less than for the other two sectors. Closer inspection of the data revealed variation. While the number of IT jobs increased by 67.0%, the number of administrative and managerial positions increased only by 13.4%.

Purchased goods and services -- which include medical supplies, services purchased externally, and other operating costs -- increased 118.3%, from $226 billion to $492 billion, according to Glied and colleagues.