Tag Archives: unit cost

The utilization puzzle

Health cost are up 7.4%, but the increase is far more complicated than this single number.


Look first at the hospital components of this cost trend.

  • The inpatient cost trend increased from 7.1% to 7.7% this year. Utilization remained flat and the increase was instead driven by unit costs.
  • The outpatient cost trend increased from 9.4% to 10.2%, again largely due to an increase in unit costs.
  • The physician cost trend decelerated, though physician costs remain the biggest piece of the puzzle.
  • Pharmacy costs saw a deceleration in the cost trend but still increased higher than other components of care at 7.9%, with just under 40% of that due to increased utilization. The increased use of generics over previous years complicates this cost trend.


Over-utilization clearly plays a role in the overall cost of healthcare, but as these dynamics illustrate, utilization as a cost driver is a complicated entity.