The economics of for-profit and not-for-profit hospitals.
(9/102)
This paper examines the economics of for-profit and not-for-profit hospitals through the prism of capital acquisitions. The exercise suggests that of two hospitals that are equally efficient in producing health care, the for-profit hospital would have to charge higher prices than the not-for-profit hospital would, to break even on capital acquisitions. The reasons for this divergence are (1) the typically higher cost of equity capital that for-profit hospitals face; and (2) the income taxes they must pay. The paper recommends holding tax-exempt hospitals more formally accountable for the social obligation they shoulder, in return for their tax preference. (+info)
Pharmaceutical cost-containment policy: experiences in Shanghai, China.
(10/102)
BACKGROUND: In the decade after 1983, the annual growth rate of drug expenditure was about four times as high as that of per capita gross domestic product (GDP) in Shanghai. In 1993 and 1994, a drug list policy and hospital revenue capping policy were introduced in Shanghai to contain drug expenditure. We studied the impact of these two policies, as a model for similar policies in other parts of China and elsewhere. METHODS: Quarterly drug expenditure data were collected from 1992 to 1996 and more detailed drug expenditure flow was obtained at seven selected hospitals. Twelve focus group discussions were organized to obtain opinions from all stakeholders. RESULTS: The research findings showed a dramatic and continuing decline in the growth rates of total medical and drug expenditures after the implementation of the two policies. The proportion of total medical expenditure attributable to drugs declined from 67% in 1992 to 51% in 1996. The annual growth rate of drug expenditure per ambulatory visit and per bed-day was reduced as well. Drug revenue as a proportion of total hospital revenue declined gradually in all seven hospitals. The two policies did not alter the equity of drug utilization between the insured and non-insured. The government, insurance authority and state-owned drug enterprises all favoured the new policies, while hospital administrators, professionals, joint venture and foreign manufacturers wished for the reimbursement mechanisms to be improved, for retention of their freedom of choice, and for the drug list to be further expanded. CONCLUSIONS: The drug list and capping policies in Shanghai appear to have achieved their objectives of containing the escalation of drug expenditure and improving the rational use of drugs without loss of equity. The underlying causes of the escalation of drug expenditure in China need to be further elucidated. (+info)
Bond-market skepticism and stock-market exuberance in the hospital industry.
(11/102)
The hospital industry needs funds to refurbish physical facilities, upgrade clinical and information technologies, and rebuild financial positions weakened by past external challenges and unwise organizational strategies. The financial markets offer a marked contrast in capital access, as bond creditors remain skeptical while stock investors plunge back into the once-shunned industry. Ironically, high stock prices may drive the for-profit chains to repeat past cycles of overexpansion, while weak bond ratings may save non-profit systems from a comparable loss of focus on the core business of operating and improving inpatient facilities. This turbulence has implications for public payment, antitrust, and financial disclosure policies. (+info)
The financial health of California hospitals: a looming crisis.
(12/102)
This paper summarizes a Shattuck Hammond Partners study, released in late 2000, that found marked erosion in California hospitals' financial health. The study examined the revenue and expense dynamics that contributed to this erosion and explored future challenges, some of which are unique to California's regulatory environment, in the context of the hospital industry's current financial performance. The study concluded that California hospitals face a potential crisis--defined as the potential nonviability of a large portion of its hospital infrastructure--and explored the policy questions and implications of this situation. (+info)
Out of the frying pan: New York City hospitals in an age of deregulation.
(13/102)
For several decades New York City hospitals had been distinguished by their tightly regulated environment, chronically weak finances, high occupancy rates, teaching intensity, dependency on public payers, low managed care penetration, and minimal merger activity. Then in the late 1990s a rapid convergence of forces--the Balanced Budget Act, managed care growth, state deregulation of commercial rates, escalating costs, and plunging hospital occupancy rates--threw the city's hospital industry into turmoil. In this paper we describe this period of turbulent change that has left most of the city's safety-net and small community hospitals near bankruptcy. (+info)
Medicare financing of graduate medical education.
(14/102)
The past decade has seen ongoing debate regarding federal support of graduate medical education, with numerous proposals for reform. Several critical problems with the current mechanism are evident on reviewing graduate medical education (GME) funding issues from the perspectives of key stakeholders. These problems include the following: substantial interinstitutional and interspecialty variations in per-resident payment amounts; teaching costs that have not been recalibrated since 1983; no consistent control by physician educators over direct medical education (DME) funds; and institutional DME payments unrelated to actual expenditures for resident education or to program outcomes. None of the current GME reform proposals adequately address all of these issues. Accordingly, we recommend several fundamental changes in Medicare GME support. We propose a re-analysis of the true direct costs of resident training (with appropriate adjustment for local market factors) to rectify the myriad problems with per-resident payments. We propose that Medicare DME funds go to the physician organization providing resident instruction, keeping DME payments separate from the operating revenues of teaching hospitals. To ensure financial accountability, we propose that institutions must maintain budgets and report expenditures for each GME program. To establish educational accountability, Residency Review Committees should establish objective, annually measurable standards for GME program performance; programs that consistently fail to meet these minimum standards should lose discretion over GME funds. These reforms will solve several long-standing, vexing problems in Medicare GME funding, but will also uncover the extent of undersupport of GME by most other health care payers. Ultimately, successful reform of GME financing will require "all-payer" support. (+info)
A relational approach to measuring competition among hospitals.
(15/102)
OBJECTIVE: To present a new, relational approach to measuring competition in hospital markers and to compare this relational approach with alternative methods of measuring competition. DATA SOURCES: The California Office of Statewide Health Planning and Development patient discharge abstracts and financial disclosure files for 1991. STUDY DESIGN: Patient discharge abstracts for an entire year were used to derive patient flows, which were combined to calculate the extent of overlap in patient pools for each pair of hospitals. This produces a cross-sectional measure of market competition among hospitals. PRINCIPAL FINDINGS: The relational approach produces measures of competition between each and every pair of hospitals in the study sample, allowing us to examine a much more "local" as well as dyadic effect of competition. Preliminary analyses show the following: (1) Hospital markets are smaller than thought. (2) For-profit hospitals received considerably more competition from their neighbors than either nonprofit or government hospitals. (3) The size of a hospital does not matter in the amount of competition received, but the larger hospitals generated significantly more competition than smaller ones. Comparisons of this method to the other methods show considerable differences in identifying competitors, indicating that these methods are not as comparable as previously thought. CONCLUSION: The relational approach measures competition in a more detailed way and allows researchers to conduct more fine-grained analyses of market competition. This approach allows one to model market structure in a manner that goes far beyond the traditional categories of monopoly oligopoly, and perfect competition. It also opens up an entirely new range of analytic possibilities in examining the effect of competition on hospital perfomance, price of medical care, changes in the market, technology acquisition, and many other phenomena in the health care field. (+info)
Partners HealthCare: an exercise in marital counseling.
(16/102)
The high cost of health care in Boston led industry and government to expand managed care. The expensive academic health centers had the choice of closing, downsizing, merging, and/or integrating. The MGH and BWH chose to develop Partners HealthCare (PHCS) an integrated healthcare system that maintained the identities of the founding institutions. PHS founded in 1994 is physician-led and protects the missions of patient care, research and education. It includes the MGH and BWH, four community hospitals and one thousand primary care physicians. All administrative services have been consolidated as had several clinical departments, residencies and fellowships. Research coordination has resulted in shared space, grants, industrial partnerships, and a growth in support. Clinical service volumes have surpassed pre-merger levels. Contracts now cover the true costs of care and produce positive operating margins and bottom lines. The strategy of forming an integrated health system has achieved most but not all of its goals. (+info)