0
January 9, 1987, Vol 257, No. 2 >
ARTICLE | January 9, 1987

The Inevitable Failure of Current Cost-Containment Strategies: Title and subTitle BreakWhy They Can Provide Only Temporary Relief FREE

William B. Schwartz, MD
[+] Author Affiliations

The opinions and conclusions expressed herein are solely those of the author and should not be construed as representing the opinions or policies of the Commonwealth Fund, New York, and the Robert Wood Johnson Foundation, Princeton, NJ.

Reprint requests to Tufts University School of Medicine, 136 Harrison Ave, Boston, MA 02111 (Dr Schwartz).


JAMA. 1987;257(2):220-224. doi:10.1001/jama.1987.03390020086032
Text Size: A A A
Published online
Article
References

Current strategies for controlling hospital costs have focused primarily on eliminating care that is presumed to be of no medical value. These efforts have neglected the central fact that eliminating such care reduces current expenditures, but has little or no influence on three key factors responsible for the upward trend in real costs—population growth, rising input prices ("the hospital market basket"), and technologic innovation and diffusion. Aging of the population and the rising costs of malpractice insurance have received undue attention; together they can account for only three tenths of a percentage point in the upward trend. Gradual elimination of presumably useless care, perhaps as much as 30% of inpatient-days, can save many billions of dollars, but can only offset for a few years the forces causing costs to rise in US community hospitals. Indeed, in 1984, the reduction in patient days and resultant slowing in the real rate of rise to 2.1% appear simply to have concealed an underlying real rate of increase that was close to 7%. After all unnecessary days have been eliminated, the underlying rate of increase will reemerge unless limitations are placed on technologic innovation or beneficial services are rationed.

(JAMA 1987;257:220-224)

REFERENCES

1 +
Luft HS:  How do health-maintenance organizations achieve their 'savings'? Rhetoric and evidence . N Engl J Med 1978;;298:1336-1343.
2 +
Luft HS:  Trends in medical care costs: Do HMOs lower the rate of growth ?Med Care 1980;;18: 1-16.
3 +
Newhouse JP, Schwartz WB, Williams AP, et al:  Are fee-for-service costs increasing faster than HMO costs ? Med Care 1985;;23:960-966.
4 +
Manning WG, Leibowitz A, Goldberg GA, et al:  A controlled trial of the effect of a prepaid group practice on use of services . N Engl J Med 1984;;310: 1505-1510.
5 +
Newhouse JP, Manning WG, Morris CN, et al:  Some interim results from a controlled trial of cost sharing in health insurance . N Engl J Med 1981;; 305:1501-1507.
6 +
Hospital Statistics, 1985 . Chicago, American Hospital Association, 1985;.
7 +
Hospital Statistics, 1984 . Chicago, American Hospital Association, 1984;.
8 +
Statistical Abstract of the United States: 1986 , ed 106. US Bureau of the Census, 1985;.
9 +
Hospital Statistics, 1986 . Chicago, American Hospital Association, 1986;.
10 +
Freeland MS, Schendler CE:  Health spending in the 1980's: Integration of clinical practice patterns with management . Health Care Financ Rev 1984;;5:1-68.
11 +
Fisher CR:  Differences by age groups in health care spending . Health Care Financ Rev 1980;;1: 65-90.
12 +
Arnett RH III, McKusick DR, Sonnefeld ST, et al:  Projections of health care spending to 1990 . Health Care Financ Rev 1986;;7:1-36.
13 +
Baumol WJ, Bowen WG: Performing Arts— The Economic Dilemma . New York, Twentieth Century Fund, 1966;.
14 +
Hospital Statistics, 1983 . Chicago, American Hospital Association, 1983;.
15 +
Hospital Statistics, 1982 . Chicago, American Hospital Association, 1982;.
16 +
Hospital Statistics, 1981 . Chicago, American Hospital Association, 1981;.
17 +
Hospital Statistics, 1980 . Chicago, American Hospital Association, 1980;.
18 +
Hospital Statistics, 1979 . Chicago, American Hospital Association, 1979;.
19 +
Hospital Statistics, 1978 . Chicago, American Hospital Association, 1978;.
20 +
Hospital Statistics, 1977 . Chicago, American Hospital Association, 1977;.
21 +
Richmond JB: Annual Report: Overview of the First Five Years . Boston, Division of Health Policy Research and Education, Harvard University, 1985;.
22 +
Heckler MM:  Remarks . Read before the National Association of Counties, Seattle, July 9, 1984 .
23 +
Reeder GS, Krishan I, Nobrega FT, et al:  Is percutaneous coronary angioplasty less expensive than bypass surgery ? N Engl J Med 1984;;311: 1157-1162.
24 +
Barnes DM:  Grim projections for AIDS epidemic . Science 1986;;232:1589-1590.
25 +
The Working Group on Mechanical Circulatory Support of the National Heart, Lung, and Blood Institute: Artificial Heart and Assist Devices: Directions, Needs, Costs, Societal and Ethical Issues , publication 85-2723. National Institutes of Health, 1985;.
26 +
Angell M:  Cost containment and the physician . JAMA 1985;;254:1203-1207.
27 +
Scitovsky AA:  Changes in the costs of treatment of selected illnesses, 1951-65 . Am Econ Rev 1967;;57:1182-1195.
28 +
Scitovsky AA, McCall N: Changes in the Costs of Treatment of Selected Illnesses 1951-1964-1971 , US Dept of Health, Education and Welfare publication (HRA) 77-3161. Rockville, Md, National Center for Health Services Research, 1976;.
29 +
Sheeley DR, Sherman H:  Conservation in hospital resource use: Treatment of pneumonias: An investigation of care in four hospitals over the past decade . Ann Intern Med 1976;;85:648-652.
30 +
Martin SP, Donaldson MC, London CD, et al:  Inputs into coronary care during 30 years: A cost effectiveness study . Ann Intern Med 1974;;81: 289-293.
31 +
Showstack JA, Schroeder SA, Matsumoto MF:  Changes in the use of medical technologies, 1972-1977: A study of ten inpatient diagnoses . N Engl J Med 1982;;306:706-712.
32 +
Showstack JA, Stone MH, Schroeder SA:  The role of changing clinical practices in the rising costs of hospital care . N Engl J Med 1985;;313:1201-1207.
33 +
Scitovsky AA:  Changes in the costs of treatment of selected illnesses, 1971-1981 . Med Care 1985;;23:1345-1357.
34 +
HASIMonitrend: Discharge Based Data Book: For the Period Ending December 31,1983 . Chicago, American Hospital Association, 1984;.
35 +
Medical Malpractice: Insurance Costs Increased But Varied Among Physicians and Hospitals , publication GAO/HRD-86-112. US General Accounting Office, 1986;.
36 +
Aaron HA, Schwartz WB: The Painful Prescription: Rationing Hospital Care. Washington, DC, Brookings Institution, 1984;.

Figures

Tables

Interactive Graphics

Video

Country-Specific Mortality and Growth Failure in Infancy and Yound Children and Association With Material Stature

Use interactive graphics and maps to view and sort country-specific infant and early dhildhood mortality and growth failure data and their association with maternal

1 +
Luft HS:  How do health-maintenance organizations achieve their 'savings'? Rhetoric and evidence . N Engl J Med 1978;;298:1336-1343.
2 +
Luft HS:  Trends in medical care costs: Do HMOs lower the rate of growth ?Med Care 1980;;18: 1-16.
3 +
Newhouse JP, Schwartz WB, Williams AP, et al:  Are fee-for-service costs increasing faster than HMO costs ? Med Care 1985;;23:960-966.
4 +
Manning WG, Leibowitz A, Goldberg GA, et al:  A controlled trial of the effect of a prepaid group practice on use of services . N Engl J Med 1984;;310: 1505-1510.
5 +
Newhouse JP, Manning WG, Morris CN, et al:  Some interim results from a controlled trial of cost sharing in health insurance . N Engl J Med 1981;; 305:1501-1507.
6 +
Hospital Statistics, 1985 . Chicago, American Hospital Association, 1985;.
7 +
Hospital Statistics, 1984 . Chicago, American Hospital Association, 1984;.
8 +
Statistical Abstract of the United States: 1986 , ed 106. US Bureau of the Census, 1985;.
9 +
Hospital Statistics, 1986 . Chicago, American Hospital Association, 1986;.
10 +
Freeland MS, Schendler CE:  Health spending in the 1980's: Integration of clinical practice patterns with management . Health Care Financ Rev 1984;;5:1-68.
11 +
Fisher CR:  Differences by age groups in health care spending . Health Care Financ Rev 1980;;1: 65-90.
12 +
Arnett RH III, McKusick DR, Sonnefeld ST, et al:  Projections of health care spending to 1990 . Health Care Financ Rev 1986;;7:1-36.
13 +
Baumol WJ, Bowen WG: Performing Arts— The Economic Dilemma . New York, Twentieth Century Fund, 1966;.
14 +
Hospital Statistics, 1983 . Chicago, American Hospital Association, 1983;.
15 +
Hospital Statistics, 1982 . Chicago, American Hospital Association, 1982;.
16 +
Hospital Statistics, 1981 . Chicago, American Hospital Association, 1981;.
17 +
Hospital Statistics, 1980 . Chicago, American Hospital Association, 1980;.
18 +
Hospital Statistics, 1979 . Chicago, American Hospital Association, 1979;.
19 +
Hospital Statistics, 1978 . Chicago, American Hospital Association, 1978;.
20 +
Hospital Statistics, 1977 . Chicago, American Hospital Association, 1977;.
21 +
Richmond JB: Annual Report: Overview of the First Five Years . Boston, Division of Health Policy Research and Education, Harvard University, 1985;.
22 +
Heckler MM:  Remarks . Read before the National Association of Counties, Seattle, July 9, 1984 .
23 +
Reeder GS, Krishan I, Nobrega FT, et al:  Is percutaneous coronary angioplasty less expensive than bypass surgery ? N Engl J Med 1984;;311: 1157-1162.
24 +
Barnes DM:  Grim projections for AIDS epidemic . Science 1986;;232:1589-1590.
25 +
The Working Group on Mechanical Circulatory Support of the National Heart, Lung, and Blood Institute: Artificial Heart and Assist Devices: Directions, Needs, Costs, Societal and Ethical Issues , publication 85-2723. National Institutes of Health, 1985;.
26 +
Angell M:  Cost containment and the physician . JAMA 1985;;254:1203-1207.
27 +
Scitovsky AA:  Changes in the costs of treatment of selected illnesses, 1951-65 . Am Econ Rev 1967;;57:1182-1195.
28 +
Scitovsky AA, McCall N: Changes in the Costs of Treatment of Selected Illnesses 1951-1964-1971 , US Dept of Health, Education and Welfare publication (HRA) 77-3161. Rockville, Md, National Center for Health Services Research, 1976;.
29 +
Sheeley DR, Sherman H:  Conservation in hospital resource use: Treatment of pneumonias: An investigation of care in four hospitals over the past decade . Ann Intern Med 1976;;85:648-652.
30 +
Martin SP, Donaldson MC, London CD, et al:  Inputs into coronary care during 30 years: A cost effectiveness study . Ann Intern Med 1974;;81: 289-293.
31 +
Showstack JA, Schroeder SA, Matsumoto MF:  Changes in the use of medical technologies, 1972-1977: A study of ten inpatient diagnoses . N Engl J Med 1982;;306:706-712.
32 +
Showstack JA, Stone MH, Schroeder SA:  The role of changing clinical practices in the rising costs of hospital care . N Engl J Med 1985;;313:1201-1207.
33 +
Scitovsky AA:  Changes in the costs of treatment of selected illnesses, 1971-1981 . Med Care 1985;;23:1345-1357.
34 +
HASIMonitrend: Discharge Based Data Book: For the Period Ending December 31,1983 . Chicago, American Hospital Association, 1984;.
35 +
Medical Malpractice: Insurance Costs Increased But Varied Among Physicians and Hospitals , publication GAO/HRD-86-112. US General Accounting Office, 1986;.
36 +
Aaron HA, Schwartz WB: The Painful Prescription: Rationing Hospital Care. Washington, DC, Brookings Institution, 1984;.

Letters

Submit a Letter
CME Course for:


You need to register in order to view this quiz.


To understand the clinical management of acute heart failure syndromes.
Accreditation Information The American Medical Association is accredited by the Accreditation Council for Continuing Medical Education to provide continuing medical education for physicians.
The AMA designates this journal-based CME activity for a maximum of 1 AMA PRA Category 1 CreditTM per course. Physicians should claim only the credit commensurate with the extent of their participation in the activity.
Physicians who complete the CME course and score at least 80% correct on the quiz are eligible for AMA PRA Category 1 CreditTM.
Note: You must get at least of the answers correct to pass this quiz.
Note: You must get at least of the answers correct to pass this quiz.
You have not filled in all the answers to complete this quiz
The following questions were not answered:
Sorry, you have unsuccessfully completed this CME quiz with a score of
The following questions were not answered correctly:
For CME Course: A Proposed Model for Initial Assessment and Management of Acute Heart Failure Syndromes
Indicate what changes(s) you will implement in your practice, if any, based on this CME course.
To view and print your certificate and access a summary of your CME courses go to My CME.
NOTE:
Citing articles are presented as examples only. In non-demo SCM6 implementation, integration with CrossRef’s “Cited By” API will populate this tab (http://www.crossref.org/citedby.html).
Compression-Only CPR: Pushing the Science Forward
Cone
AAM 2010;304:1493-1495.
All you need to read in the other general journals
BMJ 2010;341:c5893-c1494.
Submit a Response

Some tools below are only available to our subscribers or users with an online account.

Related Content

Customize your page view by dragging & repositioning the boxes below.

© 2012 American Medical Association. All Rights Reserved.
Powered bySilverchair Information Systems