Contract management and institutional cost control

The ability of contract management to control hospital cost is explored. Trends in cost-related performance factors for 61 contract-managed hospitals, three years pre- and three years postcontract, omitting the contract year, are examined. The study also considers factors derived from contract features and hospital characteristics that have been missing from past studies and more than doubles the data base of previously reported studies. To focus on current policy needs, cost-containment issues are emphasized. Analysis of these data suggests that contract management contained costs in the small isolated hospitals that have historically purchased these services during a period when cost containment was not rewarded by reimbursement policy.