The effect of managed care on hospital staffing and technological diffusion

In the United States, it has been suggested that managed care is having a major impact on the health care system most notably the hospital sector. Managed care is now responsible for the majority of hospital revenues and as a result hospitals must respond to the incentives created by managed care. In this paper, the impact of managed care on the efforts of hospital managers to control labor costs and technological diffusion is examined. Hospitals were sorted into four categories based on the level of HMO penetration in their metropolitan statistical area and data on differences in staffing levels and the availability of technology from 1982 to 1996 was compared across the four categories. We found that most differences across the four groups that was observed in 1982 was gone by 1996. We conclude that instead of responding to local market conditions, hospitals are more responsive to national forces than local conditions. These results are confirmed in interviews with decision-makers in selected metropolitan statistical areas. Copyright (C) 1999 Elsevier Science Ireland Ltd.