Paying the Hospital: The Organization, Dynamics, and Effects of Differing Financial Arrangements

Paying the Hospital: The Organization, Dynamics, and Effects of Differing Financial Arrangements

Paying the Hospital: The Organization, Dynamics, and Effects of Differing Financial Arrangements

Paying the Hospital: The Organization, Dynamics, and Effects of Differing Financial Arrangements

Excerpt

Hospitals were once charitable services; now they have become profitable industries. Once their users were the poor; now every hospital manager seeks the largest number of payers. Once the employees presumed that their rewards would come in Heaven; now they earn high incomes and have jobs rather than callings.

As evidence of their secularization, hospitals everywhere have become leading problems in economic policy. Total health expenditures now exceed 10 percent of gross national product (GNP) in several developed countries and approach that percentage in others.Hospitals account for about half of all health spending—more in some countries, less in others—and absorb between 3.5 and 6 percent of GNP.

Once the public policy issue was how to improve the buildings, equipment, and staffs of hospitals; that is, how to spend more money on the capital and operations of hospitals, and how to find it. By the 1970s the problem was limits and balance. Finance officers of governments were the principal constituency for cost containment. In countries where expenditures for patient care was run through the general Treasury (as in Canada, Britain, and American Medicaid), government finance officers worried about the future bankruptcy of the accounts and the need to rescue them by Treasury subsidies; they also questioned whether stopgaps such as greater cost sharing by patients really reduced costs and were politically feasible.In countries where health and hospitals were paid by private carriers (as in Germany, Holland, and American Blue Cross and commercial insurance), government officials were responsible for setting or approving the premiums and payroll taxes, and they worried that too much of the national income was being redirected through this channel, that health providers were profiting without giving an adequate return, that health services were inefficient and wasteful, that the premiums and payroll taxes would destroy incentives to work and invest, and that the premiums and payroll taxes . . .

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