the increase in labor costs is the most important single driver of spending growth for hospitals, accounting for about 35 percent of overall growth and more than half of the growth in the costs of purchased goods and services.
Hospitals face continuing shortages of registered nurses, pharmacists, medical technicians and other clinical workers. High vacancy rates for registered and licensed practical nurses are largely a result of a declining number of students seeking careers in nursing and competition with non-hospital employers. Continued workforce shortages during a period of rising service demand likely will put further cost pressure on hospitals.
Rising demand for care accounted for about 34 percent of the overall growth in spending on hospital care between
2004 and 2008. Demand is rising because the population is growing and each person, on average, is using more hospital services. These trends reflect underlying changes in the demographics and health status of America's population. Our aging population is driving some of the increase-as people age they use more health services. Between 2000 and 2050, the population aged 65 and older is expected to grow from 12 percent to 21 percent, as the "baby boomer" population ages and life expectancy continues to rise. At the same time, the population is getting sicker. More and more people today are suffering from chronic diseases than ever before, driven by lifestyle factors, such as obesity. But rising volumes also reflect advances in medicine. Each year ill and injured patients have more options to meet their needs-new diagnostic techniques, procedures and treatment regimens. These advances lead to longer and better lives but add to the number of hospital services provided and drive up spending.