Hospitals will be ableto keep theircentral role in the rapidly changing healthcare marketplace of the 1 990s, but rising costs and more competition will push them out of the dominant position they have held until recent years, according to Edwin J. McCarthy, a senior healthcare consultant at Arthur D. Little, an international management and technology consulting firm.
A recent report observed that in the 1 980s, the way in which hospitals functioned and provided services was transformed by four major trends that will continue to challenge hospitals and their suppliers in the 1990s: rising health expenditures, shifts in the use of healthcare services, increasing competition among health-care providers, and more control by the buyers of health care, such as third-party payers, employers, and patients.
In the 1980s, the growth in health spending outpaced the rate of increase in the gross national product (GNP) by nearly 2% a year. This gap will continue to grow in the 1990s, said McCarthy, estimating that by 1995 "national health expenditures will jump from their current rate of 1 1 .5% of the GNP to between 13% and 1 5% of the GNP."
The apparent intractability of healthcare costs can be attributed to several factors: government and commercial cost-containment efforts that have focused on inpatient services while neglecting ambulatory services; rapidly rising prices of the goods and services hospitals use; wage rates that have been driven upward by labor shortages (a situation not expected to improve in the 1 990s); and increasingly expensive medical technology.
Higher costs are hitting hospitals when admissions and average lengths of stay are declining and outpatient visits are increasing. Hospitals are now facing intense competition from other hospitals and such alternative providers as physician group practices, independent ambulatory care and surgery centers, diagnostic imaging centers, home health agencies, nursing homes, and assisted living facilities. These organizations compete with hospitals for nursing and allied health personnel, as well as physicians.
For more information, contact Celia Doremus, Arthur D. Little, Ine, Corporate Communications, Acorn Park, Cambridge, MA 021 40-2390; 61 7-864-5770.