Post by Admin: Vedant Acharya on Sept 21, 2015 16:07:59 GMT
muse.jhu.edu/journals/jhm/summary/v062/62.1mayes.html
It surprises me that initially medicare reimbursements were based on hospital costs + 2%. In effect, there was a direct incentive for hospitals to do more. In effect, the only way to grow the hospital business was to do more and charge more. In a normal market, the company is in charge of both expenses and revenue. If expenses are not properly handled, then even an increase in revenue will lead to a loss. However, with healthcare in the early 70s, the hospitals were not accountable for expenses. Regardless of hospital expenses, the hospitals were granted a profit. How this problem was not forseen/ignored astounds me.
It surprises me that initially medicare reimbursements were based on hospital costs + 2%. In effect, there was a direct incentive for hospitals to do more. In effect, the only way to grow the hospital business was to do more and charge more. In a normal market, the company is in charge of both expenses and revenue. If expenses are not properly handled, then even an increase in revenue will lead to a loss. However, with healthcare in the early 70s, the hospitals were not accountable for expenses. Regardless of hospital expenses, the hospitals were granted a profit. How this problem was not forseen/ignored astounds me.