The Big Picture

Indicators for dental expenditure change

Background

The Centers for Medicare and Medicaid Services (CMS) estimates annual health care expenditures, including dental expenditures, and projects short-term health care spending trends for the United States. These projections have not provided average dental practitioners with much help in predicting meaningful short-term economic movements in their practices. A project was undertaken to identify simple indicators readily available to the public that can help to predict short-term market fluctuations

Methods

The data analyzed covered 30 variables over the years from 1980 through 2012 and sought correlations with dental care expenditures over the same period. The analysis was undertaken to identify factors that historically moved in a highly correlated manner, whether positively or negatively, with dental care expenditures. Factors were lagged to determine their potential predictive value with respect to dental care spending. The search began with a consideration of the gross domestic product (GDP)

Results

Two factors emerged as possible leading predictive indicators: GDP and personal consumption expenditures (PCE). The GDP movements expressed as annual growth rates were nearly concurrent with changes in dental care expenditures. Sometimes GDP lagged or led these changes, but generally the movement was in the same direction. The correlation with dental expenditures remained strong and increased with lagged comparisons.

PCE movements also tracked closely with dental care expenditures, and the

Discussion

The GDP and PCE were identified as predictive of trends in dental care expenditures. In the short term, national health care expenditures and dental care expenditures do not track (Fig 3). However, the GDP curve is mimicked by total dental care expenditures. PCE, which includes expenditures financed by third-party payers on behalf of households, represents the primary engine driving future economic growth. Overall, these two factors reflect changes in the behavior of the economy as a whole