Hospital Trends

The structure of hospital care has been changing rapidly over the past few decades. The first item to note is that the number of nonprofit hospitals is decreasing. For-profit hospitals are making up a larger percentage of all hospitals than in 1980. Below, table 1 shows the number of hospitals in the United States. I did not break out the government hospitals separately but they exhibit a similar declining trend like the nonprofits.
Table 1 – Number of Hospitals

If we examine the number of beds the trend remains strong.

Table 2 – Beds (in thousands)

While it is true that for-profits are taking up a larger share of the market, it is evident that the number of total hospitals and hospital beds is decreasing. Below, we can see that occupancy rates, admissions, and lengths of stay are all decreasing. Do people simply need fewer medical services in recent years? The obvious answer is: No. We see a trend in the last row of Table 3 that outpatient visits have increased dramatically. One may worry that the trend of hospital consolidation would increase the hospitals’ market power, but if each hospital faces competition from outpatient services, one should not worry that hospitals we monopolistically increase price.

Table 3

Data from: Folland, Goodman, and Stano, The Economics of Health and Health Care, 4th ed., Pearson Prentice Hall, 2004, p. 306.