"How might a low-cost hospital system look?" Lessons from the Rochester experience

An innovative, collaborative approach to promoting the effective and efficient delivery of hospital services and to maintaining the solvency of the nine participating hospitals in the greater Rochester, New York area has been successful. An evaluation of the early years (1980-1984) of the Hospital Experimental Payments Program (HEP) shows: 1) per capita hospital costs in Rochester increased at half the rate of increase of the national average; 2) by 1984, per capita hospital expenditures were at $446 compared with $521 nationally; 3) cost containment was achieved through a wide array of strategies such as changes in hospital resource allocation and physician practice patterns; and 4) during the same period, quality and access remained stable or improved. This project demonstrates that through self-control, hospitals can become efficient providers of health care.