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Competition versus regulation: its effect on hospitals

G Anderson1, R Heyssel, R Dickler

  • 1Center for Hospital Finance and Management, Johns Hopkins University, Baltimore.

Health Affairs (Project Hope)
|January 1, 1993
PubMed
Summary

Hospital competition and regulation strategies showed minor impact on per capita costs but significantly altered hospital productivity, costs per discharge, and utilization differently in Baltimore and Minneapolis/St. Paul.

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Area of Science:

  • Health Policy
  • Hospital Management
  • Health Economics

Background:

  • Competition and regulation are dominant strategies in health policy debates.
  • These strategies significantly influence hospital behavior and patient outcomes.
  • Understanding their impact is crucial for effective healthcare management.

Purpose of the Study:

  • To compare the effects of regulatory and competitive strategies on hospitals and patients.
  • To analyze the impact of these strategies in Baltimore (regulatory) and Minneapolis/St. Paul (competitive) since the 1970s.

Main Methods:

  • Comparative analysis of hospital data from Baltimore and Minneapolis/St. Paul.
  • Examination of healthcare experiences in two distinct policy environments over several decades.

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Main Results:

  • Both regulatory and competitive strategies had a minor impact on containing per capita hospital costs compared to national averages.
  • Significant differences were observed in hospital productivity, cost per discharge, and utilization between the two cities.
  • Regulatory strategies in Baltimore and competitive strategies in Minneapolis/St. Paul led to distinct operational and financial outcomes for hospitals.

Conclusions:

  • Neither competition nor regulation alone proved highly effective in controlling overall per capita hospital costs.
  • The choice of strategy (regulatory vs. competitive) significantly influences hospital-level metrics like productivity and cost per discharge.
  • Healthcare policy decisions have differential impacts on hospital operations and resource utilization.