Texas Tech University Health Sciences Center
CEO Minute -May: Health Care Growth & Expenses

CEO Minute - June: Health Care Growth & Expenses

America’s health care delivery system has its great strengths and shortcomings. The world-class care provided to the vast majority of our citizens is one of our strengths. I am well aware of the inequities with access in our system. These are real issues, and I am certainly not saying ours is a perfect system. But, it is why many come to this country for care, and why we, as a whole, do some amazing work in health care delivery. Or as my friend Dr. Gabor Racz says, “Performing minor miracles every day.”

In addition to high quality, U.S. health care is a top producer of jobs. According to the Bureau of Labor Statistics, there were 24,300 new hires in May 2017. The 24,300 new health care hires in May boosted total sector employment to 15.7 million. The new jobs were on pace with the 24,600 jobs created in April. Ambulatory-care services once again led the charge in job growth in May adding 12,600 jobs, reflecting the shift observed over the past several years. The health care industry now employs one-in-nine Americans, up from one-in-12 in 2000. Since late 2007, 35 percent of the nation’s job growth has been in health care – the biggest sector for growth.

Now, for the downside, this growth comes at a cost to society. According to experts, corporate taxes, as a percentage of Gross Domestic Product (GDP), have fallen from 4 percent in 1960 to 2 percent today. Health care costs, on the other hand, have risen from 5 percent of GDP to more than 17 percent. Employers and individuals struggle to deal with rising health care cost.

Health care billing is another shortcoming. This is complex and overwhelming to many, both those receiving care and those providing care with its labyrinth maze of rules of alphanumeric codes and esoteric medical abbreviations. This leads to incessant squabbling over what procedure/visit was approved, what was done, what was coded, what was denied, what was appealed and so forth.

Consider a sampling of recent trends challenging providers:

  • Health care spending is expected to increase at an average rate of 5.6 percent between now and 2025. This prospect means that, by 2025, health care expenditures as a percentage of GDP will have risen still further, claiming an additional 2.1 percent of GDP (from 17.8 percent in 2016 to 19.9 percent in 2025).
  • Drug spending increased 12.2 percent in 2015, the highest rate of increase in more than a decade, and prices for more than 3,500 generic drugs at least doubled from 2008 to 2015, and for nearly 400, they increased 1,000 percent.
  • Continued consolidation among health plans could increase their scale and bargaining power, potentially reducing payment rates and increasingly shift the risk to hospitals.
  • Increasing supply costs and possible wage pressures from the improving economy may add margin pressure.
  • With the growing consumerism trend in health care, patients have increased access to information that can help them make choices in the health care marketplace.
  • The increasing use of high-deductible plans with higher premiums and out-of-pocket/deductible levels is adversely affecting consumer finances. One study found that 59 percent of people who had been contacted by a debt collector reported it was for medical services.


We are fortunate at Texas Tech Physicians. First, as employees we enjoy excellent health insurance benefits. This is a blessing. Second, we are on the frontline of many of these changes and have a chance to experiment on new ways of delivering and financing health care. Rather than be daunted by it all, we need to study trends and patterns and bring our solutions to the table.