Competition, Regulation, and Hospital Cost

Abstract

To the Editor. — A recent article by Drs Robinson and Luft 1 shows that the increasein hospital costs per adjusted admission in Massachusetts from 1982 through 1986 was 16.3% lower than that observed in 43 control states. On the basis of these figures, they conclude that Massachusetts was one of the state programs most successful in controlling hospital cost inflation. Unfortunately, this assertion is highly misleading on account of two aspects of their methodology. First, the study looks only at the period during which cost containment was in effect; success in controlling cost inflation is defined as the difference between the rate of increase in costs in Massachusetts and the rise in the country as a whole during this period. However, to assess the impact of the legislation, it is also necessary to consider the rate of increase in costs observed before cost containment was imposed. The