ABSTRACT
The market for hospital services, like global markets in general, is becoming more competitive. Increased price transparency and focused competition can squeeze out inefficiencies, restraining prices and making some consumers better off. But competition can have a dark side. U.S. hospitals can treat Medicare and Medicaid patients at less than cost, care for the uninsured, and provide other money-losing services because they can cross-subsidize. By 2025 the need for general hospitals to cross-subsidize will greatly in-crease, but their ability to do so will be diminished. U.S. hospitals could begin to resemble U.S. airlines: severely cutting costs, eliminating services, and suffering financial instability.
Subject(s)
Aviation/economics , Economics, Hospital , Commerce , Economic Competition , United StatesABSTRACT
The number of U.S. specialty hospitals and ambulatory surgery centers has been increasing. Advocates of these facilities believe that they will increase competition and improve health services. General hospitals, however, complain that specialty facilities select only the most profitable patients, which reduces general hospitals' ability to pay for care of the uninsured and other unprofitable services. Physician ownership also raises conflict-of-interest concerns. Congress has enacted a moratorium on payments to new specialty hospitals as it ponders the questions that will determine future policy. Can the competitive playing field be leveled, or will future development of these facilities be highly regulated or banned?
Subject(s)
Efficiency, Organizational , Hospitals, General/organization & administration , Hospitals, Special/organization & administration , Public Policy , Surgicenters/organization & administration , United StatesABSTRACT
Hospital use and spending greatly increased in 2001 and 2002, reversing a long-term trend. In this paper we contend that the forces driving current hospital expenditures are more likely to continue than they are to abate. If current trends continue, real hospital spending per capita will increase 75 percent between 2002 and 2012, and the demand for hospital beds will increase considerably. We discuss numerous forces that will contribute to spending growth, including technology, which is likely to continue to raise costs. We also find that hospital spending by baby boomers grew more rapidly than that of the elderly, a change in trend that could presage increased spending as this cohort moves into higher-spending age groups.
