Producer Price Index: Big Gap in Hospital Inpatient & Outpatient Prices

August’s Producer Price Index was flat, month on month, and dropped 0.8 percent, year on year, continuing the trend we saw in July. Producer prices for health goods and services are rising faster than other producer prices (see Table I).

Outside health care, goods for both final and intermediate demand declined from July. Although it has taken a while, it looks like prices increases for pharmaceutical preparations and their inputs are moderating significantly. Prices for medical devices are still growing faster than prices for final demand goods overall, but not dramatically so.

Producer prices for health services actually grew a little slower than prices of other services. What is interesting is the difference in the rate of inflation for hospital inpatient versus outpatient services. Outpatient prices are declining, while inpatient prices are rising, resulting in quite a gap.

I’d like to believe the outpatient prices are under pressure from ambulatory clinics. As for inpatient prices – well, this data gibes well with the Quarterly Services Survey, which showed an increase in hospital profits.

John R. Graham is a Senior Fellow at the Independent Institute.
Posts by John R. Graham | Full Biography and Publications
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