1998 Managed care is taking a toll on the nation s hospitals.
Overhead expenses are higher at hospitals in markets with high managed care enrollment.
In 1997, the median overhead expense as a percentage of operating expense was higher at these hospitals than all U.S. hospitals combined and hospitals in markets with lower levels of managed care. As such, it is a measure of the relative amount of fixed expenses at a hospital. Managed care companies create an administrative burden on hospitals, which must bear the onus of detailed claims processes and utilization review procedures. We used data from the American Association of Health Plans to classify geographic areas as having high, medium, or low managed care penetration. Of the hospitals classified, nearly 20 percent were in high managed care markets in 1997.