The Evolution of Today's Health Care Economy

Abstract

The health care economy has fluctuated in the last 30 years. One of the contributing factors has been the reimbursement schemes used by hospitals and physicians, which has had a considerable impact on the behavior and performance of the health care market. Unlike health care markets in other countries, the U.S. has a multi-payer system. These third-party payers include the federal, state, and local governments, commercial health insurance companies (HMO's) and self-pay patients. In the 1980's, because of the confusion, some hospitals established internal agencies to regulate their cash flow and to review capital expenditure requests. State agencies were established to promote and embrace the facilities'changes as they evolved into more business-like organizations. There are four stages in the health care revolution: The first stage was characterized by having power in the hands of the provider with the greatest number of assets. The second stage saw the birth of "competing" for market share. In the third stage, everyone was reconstructing. The final stage questions the quality of care and if the patient is receiving good value for their dollar and has evolved into hospital consolidation into corporate chains, which was a major revolution and made it difficult for administrators, who lost their autonomy.