Hospitals and Health Systems Chapter 8 Hospitals and Health Systems

Table 8.1 Hospital Expenditures by Source of Funds 1960 1990 2003 Hospital Care Expenditures (in billions) $9.2 $253.9 $515.9 All Source of funds 100.0% Out of pocket payments 20.8 4.4 3.2 Private health insurance 35.8 38.3 34.4 Other private funds 1.2 4.1 Government 42.2 53.2 58.3 Medicaid - 10.9 16.9 Medicare 26.7 30.3

Table 8.2 Hospital and Beds by Ownership and Hospital Size Type of Ownership and Size of Hospital 1975 1995 2003 Hospitals Number All hospitals 7,156 6,291 5,764 Federal 382 299 239 Non-Federal 6,774 5,992 5,525 Community 5,875 5,194 4,895 Nonprofit 3,339 3,092 2,984 For profit 775 752 790 State-local government 1,761 1,350 1,121

Table 8.2 Hospital and Beds by Ownership and Hospital Size Type of Ownership and Size of Hospital 1975 1995 2003 Bed Size 6-24 beds 299 278 327 25-49 beds 1,155 922 965 50-99 beds 1,481 1,139 1,031 100-199 beds 1,363 1,324 1,168 200-299 beds 678 718 624 300-399 beds 378 354 349 400-499 beds 230 195 172 500 beds or more 291 264 256

Nonprofit Entities Governed by community-based boards and do not have shareholders. Exempt from most taxes at the federal, state, and local levels. Funded by donations, retained earnings, and debt obligations.

For Profit Entities Issue stock and may be publicly or privately held. Most for-profit hospitals in the United States are part of large multihospital chains Most are publicly traded

State and Local Government Entities Owned by state or local governments and may be managed by for-profit or nonprofit management companies. Many local government hospitals are owned by counties or other local government units. “Providers of last resort”

Table 8.3 Hospital Beds by Ownership and Hospital Size Type of ownership and size of hospital 1975 1995 2003 Beds by Ownership Number All hospitals 1,465,828 1,080,601 965,256 Federal 131,946 77,079 47,456 Non-Federal 1,333,882 1,003,522 917,800 Community 941,844 872,736 813,307 Nonprofit 658,195 609,729 574,587 For profit 73,495 105,737 109,671 State-local government 210,154 157,270 129,049

Table 8.3 Hospital Beds by Ownership and Hospital Size Type of ownership and size of hospital 1975 1995 2003 Bed size 6-24 beds 5,615 5,085 5,635 25-49 beds 41,783 34,352 33,613 50-99 beds 106,776 82,024 74,025 100-199 beds 192,438 187,381 167,451 200-299 beds 164,405 175,240 152,487 300-399 beds 127,728 121,136 119,903 400-499 beds 101,278 86,459 76,333 500 beds or more 201,821 181,059 183,860

Reference Table 8.3 The total number of hospital beds has dropped from under 1.5 million to under less than 1 million since 1975. This trend reflects a combination of closures and reductions in operating license beds among those hospitals still in operation.

Reference Table 8.3 Large hospitals account for a disproportionate share of the total number of hospital beds. 70 percent of the nation’s hospital beds are in nonprofit facilities.

Table 8.4 Hospital Admissions by Ownership and Hospital Size Type of ownership and size of hospital 1975 1995 2003 Beds by Ownership Number in Thousands All hospitals 36,157 33,282 36,611 Federal 1,913 1,559 973 Non-Federal 34,243 31,723 35,637 Community 33,435 30,945 34,783 Nonprofit 23,722 22,557 25,668 For profit 2,646 3,428 4,481 State-local government 7,067 4,961 4,634

Table 8.4 Hospital Admissions by Ownership and Hospital Size Type of ownership and size of hospital 1975 1995 2003 By hospital bed size 6-24 beds 174 124 162 25-49 beds 1,431 944 1,098 50-99 beds 3,675 2,299 2,464 100-199 beds 7,017 6,288 6,817 200-299 beds 6,174 6,495 6,887 300-399 beds 4,739 4,693 5,590 400-499 beds 3,689 3,413 3,591 500 beds or more 6,537 6,690 8,174

Reference Table 8.4 Approximately 36 million admissions to the nation’s hospitals each year. 25 million admissions are to nonprofit hospitals. A small proportion of admissions are accounted for by smaller hospitals.

Table 8.6 Hospital Occupancy Rates by Ownership and Hospital Size Type of ownership and size of hospital 1975 1995 2003 Occupancy Rates by Ownership Percent All hospitals 76.7 65.7 68.1 Federal 80.7 72.6 64.8 Non-Federal 76.3 65.1 68.3 Community 75.0 62.8 66.2 Nonprofit 77.5 64.5 67.7 For profit 65.9 51.8 59.6 State-local government 70.4 63.7 65.3

Table 8.6 Hospital Occupancy Rates by Ownership and Hospital Size Type of ownership and size of hospital 1975 1995 2003 By hospital bed size 6-24 beds 48.0 36.9 31.9 25-49 beds 56.7 42.6 44.6 50-99 beds 64.7 54.1 57.2 100-199 beds 71.2 58.8 62.6 200-299 beds 77.1 63.1 67.0 300-399 beds 79.7 64.8 68.5 400-499 beds 81.1 68.1 70.7 500 beds or more 80.9 71.4 74.2

Horizontal Integration The affiliation of similar units of production. Designed to provide an enhanced level of efficiency across multiple institutions in related geographic areas.

Horizontal Integration May serve to reduce duplication of services and marketplace competition. May facilitate operational efficiency such as purchasing, information systems, quality assurance, and management capacity.

Vertical Integration Incorporates all or most aspects of the health care process to form a comprehensive delivery system. Provides a delivery chain for a range of health services rather than specializing in one product.

Vertical Integration Facilitates feeding patient flows into hospital inpatient services and other critical delivery components. Allows for greater capture of patients and a more established institutionally-based relationship with physicians.

The Hospital and Medical Staff Governing board Clinicians Administration

Key Issues Facing the Hospital Industry Specialty hospitals Technology Clinical practice patterns Reimbursement mechanisms Academic medical centers