Hospital Specialization: Benefits-Focused Product Line Planning
Abstract
Trends in hospital specialization are studied using multiple regression analysis for the period 2005-2014. The observed 34.1 percent rise in specialization was associated with a 10.1 percent decline in unit cost per admission. The number of specialized hospitals has grown by 186 percent in the past decade. Other hospitals are getting more specialized by reducing their product lines. Specialization has been highest in competitive West Coast markets and lowest in New York state. General hospitals in competition with specialty hospitals have a strong incentive to contain costs, and decrease the array of services offered. The term "underspecialization" is advanced to capture the inability of some hospitals to selectively prune out product lines in order to specialize. Such hospitals spread resources so thin that many good departments suffer. Unit cost per case (DRG-adjusted) is higher in the less specialized of the general hospitals.
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