Competing on price: the economics of managed competition.
OBJECTIVE
To describe the economics of teaching hospitals in an increasingly price-conscious managed care marketplace by determining the relationships between a teaching hospital's operations and cost per discharge.


METHODS
A quantitative correlational regression analysis was undertaken of 1993 operational and financial data from the Health Care Financing Administration for a national sample of 100 major urban, non-federal teaching hospitals. The sample was systematically selected from membership in the Association of American Medical Colleges' Council of Teaching Hospitals.


RESULTS
The analysis indicated that the new economics of managed competition requires teaching hospitals to focus on reducing costs through five main areas: decreasing poorly utilized beds, increasing the numbers of discharges, renovating facilities to modernize and streamline patient flow, utilizing fewer employees and thus boosting productivity, and improving the internal financing of operations and investments through working-capital management.


CONCLUSIONS
Achieving efficiency in operations in each of the five main areas will help teaching hospitals to survive the turbulence of market evolution toward managed care.
Langabeer
J
J
Business Affairs Division, University of Texas Medical Branch, Galveston, USA.
D004465:Economic Competition; D017721:Hospital Costs; D006784:Hospitals, Teaching / Q000191:economics* / Q000458:organization & administration; D018854:Managed Competition / Q000191:economics*; D014481:United States