1. Hospitals and Health Systems
Chapter 8
Hospitals and Health Systems

2. 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

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

4. 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
beds
1,363
1,324
1,168
beds
678
718
624
beds
378
354
349
beds
230
195
172
500 beds or more
291
264
256

5. 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.

6. 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

7. 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”

8. 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

9. 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
beds
192,438
187,381
167,451
beds
164,405
175,240
152,487
beds
127,728
121,136
119,903
beds
101,278
86,459
76,333
500 beds or more
201,821
181,059
183,860

10. 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.

11. 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.

12. 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

13. 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
beds
7,017
6,288
6,817
beds
6,174
6,495
6,887
beds
4,739
4,693
5,590
beds
3,689
3,413
3,591
500 beds or more
6,537
6,690
8,174

14. 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.

15. 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

16. 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
beds
71.2
58.8
62.6
beds
77.1
63.1
67.0
beds
79.7
64.8
68.5
beds
81.1
68.1
70.7
500 beds or more
80.9
71.4
74.2

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

18. 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.

19. 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.

20. 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.

21. The Hospital and Medical Staff
Governing board
Clinicians
Administration

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