Forecasting the economic future of medical care ... and, forecasting for your department

The growth of health-care spending in the United States depends more upon macroeconomic changes in personal income and inflation than upon changes in health-care reimbursement or regulations. Good forecasts for the next 4 years can be made using information available today. The outlook is for continued real growth of about 5% annually in the health sector, concentrated in the emerging services least subject to reimbursement controls: home health, diagnostics, long-term care, and pharmaceuticals. The long-run forecast is more speculative. International comparisons suggest that the United States will adjust spending imbalances that contribute to the federal deficit by reducing the rate of increase. Health expenditures will continue to grow, rising from the current 11% of gross national product (GNP) to 15% over the next 20 years, and are likely to exceed +15,000 per person by 2010. The article concludes by moving from a national and global perspective to focus on how to make forecasts of volume and costs within your department. Analysis of consistency and rate of change are the keys to successful and objective forecasting.