After the Great Depression and WWII the country was facing another crisis, a lack of community hospitals. In 1946 the U.S. government approved the Hill-Burton Act. The purpose of Hill-Burton was to increase hospital beds from 3.2 per 1,000 people to 4.5 per 1,000 people through a program aimed at increasing the construction of community hospitals (Shi & Singh, 2015). It was a lofty goal by the government, one in which they invested more than $4.6 billion in grants and $1.5 billion in loans (Mantone, 2005). By 1980 the government had achieved its goal, but due to changes in reimbursement, the creation of managed care, and the closing of hospitals, the healthcare industry saw a steady decline in beds and the utilization of hospital services (Shi & Singh, 2015).
Changes in Reimbursement …show more content…
The PPS changed reimbursement from a program where hospitals were reimbursed based on actual expenditures, to the PPS where hospitals were reimbursed a predetermined rate based on the patients Diagnosis Related Group (DRG). For example, Medicare would reimburse a hospital X amount of dollars for a patient discharged from the hospital with a primary diagnosis of pneumonia, regardless of patient length of stay, costs incurred, and complications. The federal government viewed this move as a way to “encourage hospitals to restrain the use of resources while providing high-quality inpatient care” (Davis & Rhodes, 1988, p.
Changes in Reimbursement …show more content…
The PPS changed reimbursement from a program where hospitals were reimbursed based on actual expenditures, to the PPS where hospitals were reimbursed a predetermined rate based on the patients Diagnosis Related Group (DRG). For example, Medicare would reimburse a hospital X amount of dollars for a patient discharged from the hospital with a primary diagnosis of pneumonia, regardless of patient length of stay, costs incurred, and complications. The federal government viewed this move as a way to “encourage hospitals to restrain the use of resources while providing high-quality inpatient care” (Davis & Rhodes, 1988, p.