The outlook for hospital spending

Hospital use and spending greatly increased in 2001 and 2002, reversing a long-term trend. In this paper we contend that the forces driving current hospital expenditures are more likely to continue than they are to abate. If current trends continue, real hospital spending per capita will increase 75 percent between 2002 and 2012, and the demand for hospital beds will increase considerably. We discuss numerous forces that will contribute to spending growth, including technology, which is likely to continue to raise costs. We also find that hospital spending by baby boomers grew more rapidly than that of the elderly, a change in trend that could presage increased spending as this cohort moves into higher-spending age groups.