Growing strong. New government programs, building boom among positive vital signs for children's hospitals

With 85% of kids in the U.S. covered by insurance, and their number expected to rise to 80 million by 2020, children's hospitals aren't just playing games. They're building new campuses, expanding existing hospitals, and taking advantage of private donations and the "kid-care" program.

The changing effects of competition on non-profit and for-profit hospital pricing behavior

Has the nature of hospital competition changed from a medical arms race in which hospitals compete for patients by offering their doctors high quality services to a price war for the patients of payors? This paper uses time-series cross-sectional methods on California hospital discharge data from 1986-1994 to show the association of hospital prices with measures of market concentration changed steadily over this period, with prices now higher in less competitive areas, even for non-profit hospitals. Regression results are used to simulate the price impact of hypothetical hospital mergers.

[Hospital comparison--status quo and prospects]

Hospitals are competing with each other for the limited financial resources available in the health care sector. Comparison of hospitals is legally required (BPf1V section 5) to improve financial efficiency in the health care sector and make competition between hospitals keener, while also objectivizing it. If comparison of the hospitals is really to enhance profitability or efficiency, and not just to reduce the prices for hospital stays regardless of quality, it must extend to far more than the global figures in the compilation summarizing performance and calculation and the hospital statistics (no. of cases, days of care, length of stay, case lump sums and special fees). Documentation of particular features of the patient population, the potentials of the hospital and description of the treatment processes yield valuable information on capacity and performance level. With rising costs, the danger is growing that the quality and risk dimension of the actual medical treatment will not be promoted with the same enthusiasm by those offering the service. Hospital audit does not only allow a check on the hospital's own situation with regard to performance, quality, efficiency and patient satisfaction, but can also provide a basis of structural planning. The fact is that all efforts made and steps taken by the responsible persons in the hospital to improve the quality of structures, processes and results can only be successful if they are also perceived by the patients, the doctors who refer them and the visitors. If hospital audit is restricted to the bed occupancy and the invoicing data, it is only realistic to expect cuts in performance level. This would be bad for the patient and, in view of the consequent costs, also for the overall costs in the health care sector. Against the backdrop of a future performance-related system of remuneration instead of the principle of covering one's own costs that has been in place hitherto, openness about treatment results gains in importance as a competition parameter for qualified hospitals.

Increased competition and the quality of health care

Available information does not indicate either that quality has deteriorated as price competition has increased or that quality has improved. To reward plans for providing what consumers want, public and private policies have crucial roles in the following areas: mandating minimal requirements for plans; funding research to improve knowledge and methods related to quality-of-care assessment; publication of quality-of-care information; selective contracting and regionalizing of services; and payment for physician services. Learning what degree of trade-off between cost versus quality and other benefits is acceptable to consumers will be an iterative process that informs future policies to safeguard the quality of care.

Increasing consolidation in healthcare markets: what are the antitrust policy implications?

OBJECTIVE

To discuss the implications of the rapid transformation of the healthcare financing and delivery system for competition, social welfare, and antitrust policy.

PRINCIPAL FINDING

Horizontal and vertical consolidations can enhance efficiency but can also be anticompetitive in markets characterized by entry barriers.

RECOMMENDATION

Active enforcement of the antitrust laws is essential to ensure that competition in healthcare markets will lead to procompetitive, rather than anticompetitive effects. However, healthcare antitrust enforcement policy must be flexible enough to allow efficient new forms of organization and practice to emerge.

Positioning against niche competitors to reduce revenue erosion

Health care providers around the country face a growing threat from more limited service "niche" providers, often sponsored by specialty physicians. Mark Grube, vice president of Abendshien+Grube Associates, writes that hospitals and health systems may want to consider joint ventures with physicians to counter this trend.

Turf issues: how do we resolve them and optimize patient selection for intervention and ultimately patient care?

Turf issues exist largely because of emerging endovascular technologies. Vascular surgeons must develop skills with catheters, guidewires, and imaging techniques. Turf battles will result from unrestrained competition. Center/partnerships between vascular surgeons and interventional radiologists will minimize these turf battles and facilitate cross-training, which will improve the functioning of both specialists. These center/partnerships will, therefore, provide the best, most cost-effective care. Finally, all specialists who are interested in vascular disease must recognize the dangers of overproduction of competing specialists. More importantly, their leaders and specialty societies must make a serious effort to deal with this problem fairly.

As others see us, Part 3. The competitive marketplace: an exciting future for laboratory medicine

Timely anticipation of patient needs and fair pricing of services will ensure survival of the on-site hospital laboratory in the coming era of managed healthcare. Management education and efficient operation are the keys to a bright future.

Risks and benefits of private health care: exploring physicians' views on private health care in Ho Chi Minh City, Vietnam

As in a number of other low- and middle-income countries, the health sector in Vietnam is transforming with a rapid shift from fully state run and financed health care towards more private financing and delivery of health care. This development has been particularly noticeable in the largest city in the country, Ho Chi Minh City, where a majority of physicians now are practising in private clinics and where the private health care sector is an increasingly popular option for people. While the private sector is an important part of the health care system in Vietnam, few data are available on the characteristics and quality of private health care services. This case study describes some aspects of the re-emerging private health care sector in Ho Chi Minh City, Vietnam, from the view of 27 private and non-private physicians. The paper explores physicians' reasons for going private, physicians' notions of patients' health care preferences, and physicians' views on potential influence of financial incentives on characteristics of private health care. The characteristics of private health care are discussed in relation to a context of private health care characterised by a fully patient-financed fee-for-service payment system, weak regulatory mechanisms, and a public health care system (government-run and-financed health care) that operates under resource constraints. Issues to consider when attempting to steer private health care in Vietnam in a direction where it can optimally contribute to public health, are discussed while considering the interplay between authorised private practitioners, private pharmacies, the informal private sector, and the public health care sector.

Competitive forces in the medical group industry: a stakeholder perspective

Applying Porter's model of competitive forces to health care, stakeholder concepts are integrated to analyze the future of medical groups. Using both quantitative survey and qualitative observational data, competitors, physician suppliers, integrated systems new entrants, patient and managed care buyers, and hospitals substitutes are examined.

The Fortune 500 on health care. Most top executives want to set the market free

The nature of the American health care marketplace is in a state of flux and refinement. The recent attempt by the federal government to change the health care system has brought these issues to the forefront of public and private discourse. This research endeavor examines if these discussions influenced health care decisions by some of the nation's most influential decision makers.

Seeing difference: market health reform in Europe

The comparative literature on health care reform has identified a convergence upon market models as nations respond to similar economic, technological, social, and demographic pressures. In this article I first challenge the conventional view by comparing "market" reforms of the late 1980s and early 1990s in the United Kingdom, the Netherlands, and Sweden. Though these nations did indeed converge upon the instrument of the market incentive, there was considerable divergence in the content and aims of their reform strategies. These nations designed their respective markets to make different tradeoffs among competing values. While all three exploited the principle of provider competition, they appointed different actors to judge the contest: the cost-conscious public authority in the United Kingdom, the quality-conscious patient in Sweden, and the optimizing consumer in the Netherlands. I argue that these countries were thus using common market tools to promote different health policy goals. Distinguishing these reforms further is the fact that--particularly in the Netherlands--there was a gap between market plans and the reality of implemented change. I then ask why nations responded so differently to such similar objective pressures. My contention is that this divergence reflects, in part, the different ideological orientations of the ruling party or coalition in each nation. Yet divergence is also the result of differences in both the design of political institutions and the structure of the pre-reform health system in each country.

New frontiers for diagnostic testing: taking advantage of forces changing health care

The transformation of the health-care industry holds great economic potential for laboratory diagnostic testing providers who understand the five market forces driving change and who are shaping their own roles in the emerging market. Because of these trends, provider-based laboratories (PBLs) are competing with independent laboratories (ILs) for the latter's traditional client base--outpatients and nonpatients. PBLs will continue to service acute care patients while becoming more IL-like in logistics, sales, customer service, and marketing. Forced to compete on price, ILs have engaged in mega-mergers and will try to break into acute care via joint ventures. The ILs will need to choose their markets carefully, solidly integrate with parent organizations, and find ways to be profit centers. Consumers' demands also are forcing change. Consumers want accurate, legible bills and simplified eligibility determination and registration. They want an emphasis on prevention and wellness, which means that diagnostic testing must address early identification and monitoring of high-risk groups. To realize cost-efficiencies under whole-life capitation, laboratory networks must be part of a completely integrated health-care system. The laboratory of the future will be multicentered, without walls, and with quick access to information through technology.

Organizational ethics: it's your move

As market forces have continued to push healthcare systems toward greater efficiency and lower costs, providers have begun asking for help in balancing ethical concerns. Several organizations are responding by establishing programs to provide guidelines for ethical decisionmaking. Health System Leader talked with these pioneers about their progress, the thinking that went into establishing these programs, and their recommendations for others beginning to tackle this need.

Nothing but blue skies? Not-for-profit health systems try to soar over a slipping Columbia

With Columbia/HCA Healthcare Corp. sitting on the sidelines, a newly aggressive not-for-profit hospital sector is stepping up its merger and acquisition activity. Since Richard Scott resigned as Columbia's chief on July 25, the company hasn't announced a single acquisition. Meanwhile, during that span, 40 not-for-profit systems have announced deals involving 50 hospitals.

Pure versus hybrid: performance implications of Porter's generic strategies

This article identifies the strategic types in the hospital industry based on the hospital's use of Porter's generic strategies in their pure and hybrid forms. The article also examines differences in performance of hospitals across strategic types. Results indicate that hospitals that follow a focussed cost leadership strategy, in general, have superior performance on a variety of performance measures, while hospitals that use a combination of cost leadership and differentiation perform the poorest. Implications of findings for hospital administrators are also discussed.

The leveraged buy is out

While purchasing giants Premier and VHA jockey for market share, signs show they're looking for competition in all the wrong places. Some of their own members, having merged into powerful regional systems, say they've built up the buying muscle capable of getting better deals from suppliers.

NHS reforms. Counting the costs

Localism predominates in purchaser-provider relationships, with markets strictly limited in practice. Block contracting predominates, largely to enable purchasers to bring pressure to bear on providers' costs and outputs. The administrative costs of operating the purchaser-provider split have led to a clear growth in the overall administrative costs within the NHS. Locality commissioning may conflict with the need to reorganise clinical services.

Why activity-based costing works

With advancing technology and the quest for delineating the true cost of a procedure or diagnostic test, cost accounting techniques are being re-explored in the health care setting. Activity-based costing (ABC), adopted from other businesses, is one such example that has applications in the health industry. The purpose of this paper is to enhance the understanding of health care costs among physician providers, emphasizing a new approach--activity-based costing.

Academic health centers in competitive markets

Academic health center (AHC) hospitals and other major teaching hospitals have funded a portion of their academic missions through patient care revenues. Using all-payer state discharge data, this DataWatch presents information on how these institutions are being affected by market changes. Although AHCs are not as successful as other hospitals are in attracting managed care patients, competitive pressures had not eroded AHCs' financial status as of 1994. However, increasing enrollment in managed care and potential changes in both Medicare and Medicaid suggest that pressure on the financing of these institutions' social missions will continue to grow over time.

The coming globalization of health care

In Phase One of the global economy, international marketing of goods was paramount. In Phase Two, the marketing of services is becoming an increasingly important force. And one of the industries best positioned to profit from the globalization of services is U.S. health care. For years, a small number of providers with international reputations has catered to foreign patients. But the competition for this potentially lucrative market is on the verge of exploding. It's been estimated that the number of foreign patients visiting the U.S. for health care will quadruple in the next few years. How is this new global phenomenon unfolding, who are the potential players in the market, and what obstacles and opportunities exist? Is it so preposterous to imagine Egyptians undergoing heart bypasses in Boston? The fact is, it's already starting to happen.

Senior services. Hospitals around the country have seen the future and it is gray

Hospitals across the country are busy adding services and making investments in new facilities and renovations to serve the exploding senior-services market, which has estimated annual revenues of more than $124 billion when the assisted-living, skilled-nursing and home-care industries are combined. MODERN HEALTHCARE looks at what providers in three diverse major markets are doing to stay competitive.