Doing well versus doing good.
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Biomedical subjects
Publications and source records attributed to D R Cohodes.
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Access to capital will be a serious problem for a subset of our nation's hospitals in the 1980s. Without adequate capital to modernize or maintain life-safety codes, certain facilities may have no other choice than to close their doors. The consequences of closure are far-reaching and long-lasting. The hospitals that exit from the market may be forced out as a result of their location or payor mix, and not as a consequence of their inefficiency. Allowing capital formation in the hospital industry to be determined by the market criteria of bottom-line performance may lead to a serious contraction of the field, to increased financial hardships for the hospitals that remain, to reduced service provision, and to plant deterioration.
There are many misconceptions and commonly held "truisms" that cloud our understanding of hospital capital formation. In this attempt to clarify the issues related to hospital capital formation, three arguments are developed: 1) There are significant and frequently overlooked operating costs associated with capital investment projects, which can contribute significantly to hospital cost inflation. 2) The demand for hospital replacement, renovation and modernization is real but overstated. 3) Many hospitals will be unable to gain access to the capital market because of the populations they serve and their locations. It is argued that a coherent, targeted private and public sector policy on hospital capital formation is needed that addresses these points.
Cost of illness (COI) studies have grown in importance in the last decade. They are frequently used in funding decisions for selected health care programs. Cost of illness study proponents present their results as objective, unbiased analysis. Yet, there are severe conceptual and methodological difficulties with the technique. Given its methodological weaknesses, the singular use of COI analysis to reach policy decisions may be no better than the political decision process it was intended to replace.
In the past two years, the regulation/competition dialogue has polarized into an "either or" debate. The problems facing our health care system are too complex to allow the acceptance of this paradigm. Reasonable people will differ on what they believe are the key factors which contribute to the inflation of health care costs. Four separate scenarios for diagnosing and solving the health care inflation problem are presented. Alternative intervention strategies are discussed and the potential of current competition proposals is examined.
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