The proliferation of elective services in U.S. urban hospitals

Abstract

Background: Although adding convenience for both patients and providers, the proliferation of elective services and equipment in U.S. general hospitals contributes to higher costs and raises concerns about quality and overuse.

Purposes: We assess the relationship of two forces-health system membership and market competition-with the diffusion of elective services and equipment.

Methodology/approach: The sample consists of all urban U.S. nonfederal general acute hospitals in 2010 (n = 2,467). Elective equipment and services are defined by 25 services offered by less than 33% of urban general hospitals. We relate the number of elective services to environmental and organizational conditions, adopting a contingency theory perspective. Ordinary least squares regression is used to estimate the associations among the key variables.

Findings: Market competition is positively associated with numbers of elective services. The effect of health system membership varies by system type, with the most developed integrated systems showing a positive relationship with the quantity of elective services, relative to freestanding hospitals. Members of less-developed integrated systems, however, have fewer elective services than freestanding hospitals.

Practice implications: The evidence on market competition is consistent with a medical arms race scenario in which hospitals pursue elective services and equipment to compete with each other. Membership in highly integrated systems does not act as a constraint on the pursuit of elective services and equipment but instead may independently promote it. It may be unrealistic to expect hospitals to resist offering elective services in the face of competitive and organizational considerations that encourage proliferation.