Press Release

Embargoed Until Contact

July 07, 2011
12:01 AM EST

Sue Ducat
Director of Communications
(301) 841-9962


Challenges for Hospitals: Payment, Governance, Expanding Access, and Delivery System Transformation

July 2011 issue of Health Affairs explores a range of critical issues, from the financial behavior of hospitals to new duties for hospital boards of trustees


Bethesda, MD -- Four papers in the July 2011 issue of Health Affairs examine key topics for hospitals, including the extent to which hospitals "cost shift" to private payers; the success of efforts to reduce avoidable rehospitalizations; new responsibilities for hospital boards of trustees as a consequence of the Affordable Care Act; and expanding access to low-income populations.


A brief summary of each of the four papers follows:


  • James Robinson of the University of California, Berkeley, sheds new light on the simple story line that hospitals "cost shift" to make up for low Medicare payments. Evaluating data from a value-based purchasing initiative, and twenty-seven local hospital markets in eight states, he concludes that the story is more complicated. In markets where there is little competition among hospitals, hospitals do in fact try to offset lower Medicare payments with higher prices for private insurers. However, in competitive markets hospitals cut costs to better survive on lower rates. As a result, in areas where competition is scarce, Medicare payment cutbacks and integration of providers into accountable care organizations may increase costs, cautions Robinson.

  • Collaboration between hospitals and community-based providers can help avoid rehospitalizations, write Amy Boutwell of Collaborative Healthcare Strategies, Patricia Rutherford of the Institute for Healthcare Improvement, and colleagues. They provide an update on the performance of a four-state collaborative to reduce unnecessary rehospitalizations called the State Action on Avoidable Rehospitalization (STAAR) initiative. In just two years, 148 hospitals and more than 500 community partners have improved state-wide rehospitalization data reports, aligned incentives for change, and begun to routinely review rehospitalization events together.

  • Hospital boards, which are legally accountable for the quality of care in their institutions, must shift from a focus on evaluating the competence of individual providers against a "standard of care" to measuring overall system performance in caring for patients, says Elisabeth Belmont of MaineHealth and coauthors. Such a systems-based approach to quality oversight focuses on how the entire system of inpatient and outpatient care functions. It may require boards to concentrate on assessing such issues as providers' appropriate use of electronic health records and their ability to coordinate a patient's care with other providers.

  • To improve access to care for low-income people, Ascension Health, the nation's largest nonprofit health system, partnered with local safety net providers and agencies that help patients navigate the health system. By sharing information and coordinating care, community collaboratives are making strides in providing patients with more timely, appropriate, and cost-effective care, report Laurie Felland of the Center for Studying Health System Change and coauthors. The effort has had financial payoffs: In Austin, Texas, every dollar spent on improving asthma care resulted in a return of $5.50, the authors write.

About Health Affairs

Health Affairs, published by Project HOPE, is the leading journal of health policy. The peer-reviewed journal appears each month in print, with additional Web First papers published weekly at You can also find the journal on Facebook and Twitter and download Narrative Matters on iTunes. Address inquiries to Sue Ducat at (301) 841-9962 or