Expenditures paid to physicians’ offices, hospitals, and outpatient care centers rose by $580 billion between 1997 and 2012, according to the research, newly published in Health Affairs.

NYU Wagner Dean and Professor Sherry Glied
NYU Wagner Dean and Professor Sherry Glied

A study out today (July 6) from New York University researchers sheds light on fast-rising expenditures in the $2.8 trillion United States health care system, indicating where the money goes.

In their Health Affairs piece, NYU Wagner Dean and Professor Sherry Glied and research scientists Stephanie Ma and Claudia Solis-Roman calculated that expenditures paid to physicians’ offices, hospitals, and outpatient care centers rose by $580 billion between 1997 and 2012.

“This analysis reveals that purchases of medical services and increased compensation of highly skilled professionals accounted for most of the increase in health spending in the time period we examined,” according to the study, entitled “Where the Money Goes: The Evolving Expenses Of The US Health Care System.” The plurality of the increase in spending—more than one-third—was used to purchase additional materials and services. The second largest share of the increase went to pay increased salaries to larger numbers of physicians and nurses.

The authors wrote that while rising health expenditures are tracked routinely, far less is known about how these expenditures—which constitute the revenue of health care industries—are subsequently allocated, and how this allocation has changed over time, knowledge that is important in the creation of healthcare policies.

Healthcare employment rose by 1.7 million people from 1997 to 2012, and just under half of all 2012 revenues was spent on labor compensation for both skilled and nonskilled employees of the sectors, the study found, using a range of Census Bureau and Bureau of Labor Statistics sources.

“Changes in the health care sector—including the development of new delivery systems and the introduction of new technologies—are likely to alter where the money in the sector goes and who receives how much of it in the future,” the authors wrote.

“Monitoring these aggregates therefore serves as a useful corollary to studies of specific reforms and a necessary element in sensible policy design.”

Dean and Professor Glied is available to discuss the study. To arrange an interview, please contact the NYU press officer listed with this release.

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Robert Polner
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