This decrease in hospital beds will continue the trend of moving the focus of medical care, especially for chronic diseases, away from the inpatient setting.

Second, managed care organizations will compete on price. What is not so clear yet is whether they will be able to compete on quality as well. This is a fundamental issue for health care delivery and certainly for the future of chronic disease care.

Third, technical services, which have long been sources of revenue, are becoming sources of cost. This changes the way we look at services such as endoscopy, cardiac catheterization, and surgery. We can no longer use them to comfortably cross-subsidize specialist care for chronic conditions.

Fourth, physicians' rewards and relationships will continue to change. We are moving away from traditional fee-for-service payment and higher payment for more technical procedures. Our professional relationships no longer will be determined solely by our personal preferences, but will be determined by new payment systems and re-engineered systems of care.

Fifth, gatekeepers will manage patient care, primary care will become primary, specialists will specialize, and consultants will consult.

Finally, physicians will redefine their relationships to organizations and third-party payers. More physicians will be employees; fewer will be self-employed.


The decreasing use of hospitals is an important element in the changing face of medical care. Medicare-reimbursed hospital stays are already shorter and admissions fewer. The national average hospital use for Medicare is about 2,800 hospital days per 1,000 people annually. The California health maintenance organizations (HMO) rate is about half that, and for California integrated systems of care, the rate is only 960 days per 1,000 people per year. Soon, we will likely experience as few as 800–900 hospital days per 1,000 Medicare beneficiaries per year. That is about one-third of the days of hospitalization currently used.

Commercially reimbursed hospital stays are shortening as well, and admissions are fewer. As a result, the national average is about 500 hospital days per 1,000 people annually; for California HMOs, 250; and for California integrated systems of care, 200. Many will remember Kerr White's description, a generation ago, of the health care system being like a pyramid. For every 1,000 people there were 1,000 days of hospitalization per year. No more. We will soon be experiencing 200 days per year per 1,000, at least for relatively young populations.

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