Hospitals account for the largest share of total health spending by the public sector, at a forecast 36.5% in 2017.
As public facilities, hospitals receive a given amount of funding and deliver as much health care as they can with that money. During the current period of fiscal restraint, hospital budgets are growing more slowly than before.
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 2003–2004 and 2010–2011 was 6.4%.
Annual growth dropped to 4.2% in 2011–2012, 3.5% in 2012–2013, 2.8% in both 2013–2014 and 2014–2015, and 2.5% in 2015–2016.