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Hospital Trends

By March 25, 2010Commentary

Becker’s Hospital Review provides some observations on trends affecting hospitals over the next few years.  (Hospital Article) Many of the trends relate to reimbursement.  The author foresees that the move toward more bundled or episode-based reimbursement will have staying power.  Concern is expressed over a continued decline in paying patients, with growing charity care and bad debt.  Health reform is not perceived as helping with this trend for several years.  High-deductible plans add to the problem because they require the hospital to collect large amounts from the patient before they get anything from the insurer.

In some areas, overcapacity may still be a problem and there is a trend of building new hospitals in affluent areas which may exacerbate the capacity issue.  Because of the recession and slow recovery, however, construction costs are relatively low and access to relatively low-cost debt has been restored for many hospitals.  At the same time, there continues to be a trend of smaller hospitals becoming acquired by or integrating with larger systems.  One of the drivers of this consolidation is the reimbursement issues mentioned above.  It is not clear that the consolidation, however, results in a rationalization of capacity.

Finally, continued acquisition of physician practices and employment of physicians is likely to occur.  For the hospitals, this ensures a stream of referrals and may facilitate management of bundled reimbursement mechanisms.  For doctors, it provides a more stable and steady income and a source of the capital to meet health information system needs.  From a policy perspective, it appears that hospital price increases are the driver of much of the growth in health spending.  Policymakers need to understand what regulations or controls may be necessary to ensure that as hospitals amass more services and more bargaining leverage, their prices don’t continue to contribute to our cost problem.

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