Hospitals account for the largest share of total health spending by the public sector, at a forecast 34.1% in 2019.
As public facilities, hospitals receive a given amount of funding and deliver as much health care as they can with that money. During periods of fiscal restraint, hospital budgets grow more slowly.
Hospitals have responded by changing how they deliver care. More and more, people who were once treated in hospital are being treated as outpatients, leading to a large overall increase in ambulatory and community visits, and to only modest growth in inpatient activity.
Compensation is a significant cost driver, accounting for more than 60% of hospital budgets.
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- Average annual growth in hospital expenses between 2005–2006 and 2011–2012 was 5.4%.
- Annual growth dropped to 3.7% in 2012–2013, to 3.0% in 2013–2014 (where it remained in 2014–2015), to 2.5% in 2015–2016 and to 1.9% in 2016–2017; it increased to 3.5% in 2017–2018.