Should Hospital Planning Continue To Be Regulated?

Abstract

Prologue: In the face of efforts by the Reagan administration to kill the federal health planning program, Congress is in the midst of debating the future of its authorizing statute—the National Health Planning and Resources Development Act Congress has already taken significant steps to reduce activities and funding of the health planning program. These actions reflect a serious disenchantment with health planning. Under the act, the Department of Health and Human Services created a national network of health systems agencies, building upon previous efforts at using locally based organizations to distribute resources. Richard L. Johnson, a respected private consultant to hospitals, asks in his article whether it is in the public interest to totally deregulate hospital planning and, if not, what alternatives might make sense. Johnson argues that in the total absence of planning, unnecessary duplication of facilities and equipment would develop as strong hospitals moved to increase their market share. And he also suggests that market segmentation would occur in some locales where for-profit hospital chains affiliate with large multispecialty group practices. As a consequence, Johnson suggests that a move towards free competition must embody an interim phase that eases regulations but does not do away with them entirely.