Is cost containment working?

Abstract

Prologue: The nations hospitals are undergoing a period of turbulent changes as a consequence of multiple new pressures: Medicares prospective payment system, increasing efforts by physicians to maintain their patients in ambulatory, rather than inpatient, settings, and the aggressive promotion of alternative delivery modes. In this essay, professor Karen Davis, chairman of the Department of Health Policy and Management at The Johns Hopkins University School of Hygiene and Public Health, and her colleagues report that hospital costs have indeed moderated as a consequence of these new forces. The cost moderation has come as a consequence of a sharp decline in the admission of patients, particularly those under age sixty-five and decline in the length-of-stay of elderly hospital patients. The important question now, as the authors declare, is whether these recent utilization trends will continue, whether they will level off or begin to increase. Davis was, in essence, the Carter administrations health policy thinker during the years 1977-80. Gerard Anderson is an associate professor in Davis's department and was, himself, a regarded health policy analyst at the Department of Health and Human Services during the years 1978-1983. Steven Renn, an attorney, and Diane Rowland, who is responsible for long-term care issues on the staff of the U.S. House Energy and Commerce Subcommittee on Health and the Environment, are research associates at Hopkins' Department of Health Policy and Management. Carl Schramm is an associate professor at Hopkins' School of Hygiene and Public Health and director of its Center for Hospital Finance and Management Steinberg, a physician, is an assistant professor and a Henry J. Kaiser Family Foundation Faculty Scholar at the Hopkins' medical school.