Duplicated hospital facilities: How much can we save by consolidating them?

Abstract

One strategy for controlling the costs of health care is to eliminate duplicative hospital facilities so that the current volume of services can be delivered more efficiently. We evaluated the potential saving from consolidating hospital facilities according to the guidelines recently established by the Department of Health and Human Services (HHS) Eliminating duplication in four categories (computerized axial-tomographic scanners, open-heart surgery and cardiac-catheterization units, megavoltage-radiation units, and general hospital beds) would yield a potential theoretical saving of about $1 billion a year. However, the resulting indirect costs, such as those incurred by certificate-of-need programs and by moving patients from one facility to another, would reduce or possibly eradicate this gain. Overall, the expected saving falls far short of HHS goals. We conclude that only by reducing the demand for services will substantial savings be realized.