Health Economics Policy 2 nd Edition James W

Health Economics & Policy 2 nd Edition James W. Henderson Chapter 8 The Market for Hospital Services Copyright 2002, South-Western, a division of Thomson Learning, James W. Henderson, Health Economics and Policy, 2 e

th 20 l l l Century Hospitals 1900 -1920: Flexner Report led to medical school /hospital affiliations 1920 s: Physician licensing and hospital privileges; role and trainings of nurses 1930 s: Health insurance beginnings; important drug discoveries 1940 s: IRS rulings that health benefits are tax deductible and tax exempt 1950 s: Advances in drugs and technology

th 20 l l Century Hospitals 1960 s: Medicare and Medicaid passed 1970 s: Explosive growth; development of expensive procedures and technology; double digit increases in HCE annually 1980 s: Hospital DRGs; HCE/GDP > 10% 1990 s: New forms of managed care to control costs

U. S. Institutional Setting Hospital classification l Hospital spending l Hospital market structure l

Community Hospital Characteristics, 1970 -1998

Community Hospitals, by Ownership Type

The Role of Not-for-profits Not-for-profit organizational form l Nature of competition in the not-for-profit sector l

Pricing Practices in Medicine Price discrimination l Cost shifting l

Models of Hospital Behavior Utility maximizing models l Physician-control models l

The Trend Toward Multihospital Systems The theory of consolidation l Empirical evidence l