Hospital Evolution and Competing Missions

The evolution of hospitals is discussed from the perspective of their three competing missions. Duke (1996) reports that hospitals have been a central figure in civic, economic, and health care environments for communities throughout the nation. Hospitals have long-standing ties to their communities; they are important as local employers, a community presence, and a high-prestige institution. Cost-consciousness of health care purchasers has led to managed care systems. Movements toward managed care have forced hospitals to evolve; competing missions include maintaining community status, attaining goals of acute care focus, and perusing new survival perspectives. Hospitals effort to maintain their place in the community and continue to provide care, while seeking new ways to survive such as hospital mergers, developing closer relationships with physicians, and moving toward direct contracting with purchasers (pp. 49-60).

Hospitals have lost market power to health plans and insurers, resulting in an expanding number of hospitals (expanding geographic field of competition) and low occupancy rates. Despite low occupancy rates and financial difficulties, many hospitals remain open, loyal to their community ties. Some hospitals have been able to resist major changes because of their high prestige within the community. Overall, however, they have evolved away from being "a cottage industry of individual, freestanding, and primarily n

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90s, hospitals reduced operating costs and Medicare and Medicaid became the better payor. Managed care companies negotiated payments with physicians, hospitals, and providers; in 1994 a reduction in healthcare costs to employers was noted (Sachs, p. 7). External, competitive economic forces have driven the health care industry to develop new physician-hospital relationships. Included are the physician-hospital organizations (PHOs), management service organizations (MSOs), and integrated health organizations (IHOs). Internal forces include competitive forces facing physicians, hospitals, and hospital-based specialists. The marketplace has become unfamiliar and unfriendly for physicians and hospitals. Reimbursement changes affect abilities of physicians to set their own levels of income and operating costs are increasing. Efforts to increase numbers of units of service are prohibited. Physicians face managed care impacts on their practice; the doctor is no longer the only patient agent regarding treatment. These stresses have changed hospital-physician relationships (Burns & Thorpe, 1993, pp. 7-8). Hospitals also face uncertainty regarding payment systems. Managed care and prospective payment system (PPS) have resulted
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Approximate Word count = 1559
Approximate Pages = 6 (250 words per page)

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