Profits in Hospital Laboratories: The Effects of Reimbursement Policies on Hospital Costs and Charges

摘要

The present study provides a theoretical and empirical analysis of the effects of Medicare reimbursement policies on hospital costs and charges. The basis Medicare formula is intended to provide payment for the share of hospital costs incurred on behalf of Medicare beneficiaries. Two modifications of the formula designed to control costs are examined in the report: a ceiling on per diem costs for routine services and a requirement that Medicare pay the lesser of (1) its share of costs and (2) what it would pay if it reimbursed on the basis of charges (prices to private patients) instead. A theoretical model analyzes the effect of costbased reimbursement on the level of hospital costs on charges and on accounting profits. The model is tested with 1976 data on short term general hospitals in California, obtained from Medicare cost reports and reports to the California Health Facilities Commission. Differences among non-profit, for-profit, and government hospitals are examined. The shortcomings of cost-based reimbursement per see and of these two cost reporting systems are discussed.