Nursing Home Prices Outpace Other Health Care, but Sector Posts Largest Job Loss Since Pandemic

Nursing home care experienced the most significant price increase among major health care categories in August, but the sector also faced a big dip in employment during the month, with the sector losing 3,600 jobs.

That’s according to the latest Altarum Health Sector Economic Indicators (HSEI) briefs for September 2024 released Tuesday.

This is the largest drop in employment in this sector since September 2021, when employment was still declining due to pandemic-related factors, according to Altarum analysts.

“It remains to be seen from future employment data whether this decline is an isolated occurrence or part of a broader, long-term trend in nursing home employment,” said Stephen McCall, senior analyst for health economics and policy at Altarum.

Nursing home care experienced the most significant price increase among major health care categories, rising 3.8% over the past year. This was closely followed by dental care at 3.5%. While prices for physician and clinical services grew at a slower rate of 1.3%, the disparities highlight the ongoing financial pressures facing nursing facilities.

Medicaid rates for nursing home care surged by 5.7%, significantly outpacing the 3.2% growth for private insurance services and 1.7% for Medicare patients. Utilization in nursing homes also increased, with a year-over-year growth of 5.1%, indicating a rising demand for these services amid challenging economic conditions.

Despite these trends, the nursing and residential care sector faced job losses, with a net decline of 2,600 positions in August. This included a loss of 3,600 jobs in nursing care facilities, although other residential care facilities managed to gain 1,000 jobs.

On the other hand in July, nursing homes posted job growth and wage increases, with nursing and residential care facilities adding 9,200 jobs during the month. Much of the job growth was fueled by a strong increase in jobs at nursing homes, which saw 6,800 new positions.

Also, nominal wages in nursing homes increased by 4.1% from July 2023 to July 2024, outpacing the growth in hospitals (3.6%) and ambulatory care services (3.4%).

Overall, health care industry employment grew by only 30,900 in August, well below the monthly average for the past year.

Health care prices rose at a rate that continues to outstrip overall inflation. The Health Care Price Index (HCPI) increased by 2.7% year over year, a slight decrease from the previous month. In contrast, economy-wide inflation, measured by the Consumer Price Index (CPI), fell to 2.5%, with the Producer Price Index (PPI) dropping to 1.7%.