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The Inevitable Failure of Cost-Containment Strategies-Reply

William B. Schwartz, MD
JAMA. 1987;257(15):2030. doi:10.1001/jama.1987.03390150045009.
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ABSTRACT

In Reply.—  I welcome Dr Bader's expansion of my brief mention of the Baumol effect. His fuller treatment provides further insight into the difficulty of controlling hospitals' labor costs.Dr Albert is incorrect in stating that HMOs use fewer hospital services because they enroll healthier people. My statement that members of HMOs use 30% fewer hospital days than do their fee-for-service counterparts is based on a controlled study in which individuals were randomly assigned to various types of health care providers.1,2 This study has laid to rest the view that skimming is the primary cause of differences in hospital utilization between HMOs and the fee-for-service sector.Mr Samuel's letter grossly misrepresents the ideas expressed in my article and also shows no understanding of the cost-containment dilemma that is rapidly approaching. Contrary to his statement, I emphasize the great medical value of new technology. But I also make the point

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