ABSTRACT
Despite the visible growth of for-profit chains in recent years, most Americans receive their inpatient care in voluntary, nonprofit hospitals. Nonprofit hospitals' responses to cost reimbursement were modulated in important ways by simultaneous changes in economic conditions, physician-hospital power relations, patients' expectations, and medicine's capacities. Ambulatory surgery offers lower prices by avoiding both the hospital's overhead and the real costs of inpatient recovery. Memberships of Health Maintenance Organizations (HMOs) have been increasing rapidly, reflecting successful competition with the traditional fee-for-service cost reimbursement system of finance and delivery of care. Through vertically integrated contracts with physicians and nursing homes, hospitals hope to assure themselves of both a steady flow of patients to admit and sites for prompt discharge. Integration is proceeding to include hospital-controlled HMOs and even insurance companies. By allowing hospitals to retain any surpluses they manage to earn, it eases hospital acceptance of the lower payments inherent in Medicare's diagnosis related groups (DRG) system.
