Hospitals Flex Their Market Muscle Amid Competitive Threats

American hospitals are a powerful blend of capital, charity,and commercial success. Despite payers’ efforts to constrainspending and technologies that have enabled more outpatientcare, many hospitals are thriving enterprises. In 1970 hospitalspending totaled $27.8 billion—38 percent of total nationalhealth spending that year. Despite slowdowns during the 1990s,by 2001 hospital spending had risen to $451.2 billion—at32 percent, the largest slice of national health spending. Thisissue’s major papers document the strong standing of manyhospitals in the U.S. health care system and underscore thechallenges they face. The issue and a national conference weresupported by the California HealthCare Association, Center forStudying Health System Change, CIGNA, Council on Health CareEconomics and Policy, Federation of American Hospitals (FAH),General Electric, and Johnson and Johnson. Charles N. Kahn III,FAH president, led in organizing the conference, at which someof these papers were first presented.

One of hospitals’ most immediate challenges is improvingthe quality and safety of their care. Many providers have recognizedthe scope of these issues and are addressing them, but as notedin the statement (p. 8) signed by fifteen distinguished Americansfrom across the political spectrum, this effort must be accelerated,particularly the role played by Medicare.

Health Affairs is expanding its online functionality throughthe services of Stanford University’s High-Wire Press,which serves as the electronic link between several hundredmedical and scientific publications and their readers. HighWirewill provide our readers, authors, and funders more capacityto search our twenty-two-year archive, a greater ability totrack citations, and enhanced e-mail alert features.

John K. Iglehart

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Hospitals Flex Their Market Muscle Amid Competitive Threats