Cost Containment: How Is It to Be Achieved?

Abstract

Most strategies for containing health care costs have as their particular target curbing the growth of expenditures for acute-care inpatient services. Medicare has attacked hospital costs from two sides: prospective pricing to control hospital revenue per admission and, through the Peer Review Organization program, constraints on utilization to control the volume of admissions. Private-sector cost-containment programs, while less easy to characterize briefly, have in general headed toward the same primary goal of capping the growth of inpatient expenditures. Many employers are encouraging health maintenance organization enrollment and have imposed both preadmission certification and after-the-fact utilization review on their fee-for-service health insurance programs. As a result of these private- and public-sector efforts, both the occupancy and the capacity of the hospital industry have been declining. American Hospital Association statistics illustrate this trend: in the 12 months ending in March 1986, the number of staffed beds declined by 1.5%, the number of