Since the mid-1980s, the US health institutions have experienced a great shift in their number of areas and there are likely indications of the trend continuing. Downsizing that time, downsizing of the hospitals has become a popular trend. Downsizing entails the elimination of jobs in the hospitals and also, the reduction in the number of available beds. The rates of bed occupancy have been steadily reducing, with only a minimal increase in 2010. Different communities and hospitals put more emphasis on the provision of outpatient treatment to replace the costly inpatient visits for care for instance oncology and mental health care. The downsizing of hospitals can highly be attributed to three major factors. That entails the impact of managed care, changes in the reimbursement and hospital closures. In the following lines of paragraphs, I attempt to explain the contribution of each factor to the decline in inpatient utilization of health facilities.
Hospital Reimbursements
Reimbursement in hospitals is one of the major forces that caused the shift to have a high number of outpatient services. By the late 1980s, a high number of hospitals were losing dozens of money on the patients who were on Medicare ( Carman, Eibner & Paddock, 2015) . Most health institutions responded to this by shifting to privately insured patients to cover up the costs. The Tax Equity and Fiscal Responsibility Act of 1982 (TERFA) in addition to the Balanced Budget Act that was passed by Congress in 1997, that did a replacement of TERFA with the choice of Medicare plan (M+C) necessitated hospitals to have costs under the fixed reimbursement amount. TERFA needed hospitals to permit payment depending on a prospective system of payment versus a cost-plus system. That incentivized health institutions to reduce the length of stay of patients ( Carman, Eibner & Paddock, 2015) . The hospitals got payment depending on the set amount for the diagnosis-related groups (DRGs). Such an alteration affected 80% of the full number of Medicare inpatient benefits and had a massive effect on outpatient and inpatient use.
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Private payers followed suit on the Medicare‘s lead, that offered to monitor patients when they were discharged. The prospective system of payment gave high pressure on the health institutions to minimize the duration of stay. Early discharge was a significant solution to keep the costs lower and therefore, sub-acute care facilities and home health care started to develop stronger within the United States borders ( Carman, Eibner & Paddock, 2015) . The eventual implementation of the PPS lowered usage of inpatient services to 9.2 % between the years 1984 and the year 1991.
Managed Care Impacts
During the 1990s, managed care was a force to reckon with that made a significant transformation in the health services delivery in the US. Additionally, managed care placed on effective service delivery and cost containment. The market penetration of HMO’s played a major role in lowering profitability and utilization. Through PPS, Medicare managed to control the expenditure rate but on the other hand fueled inflation in the private health insurance premiums, therefore, triggered the reaction of the employer to lower the costs. The private sector Employers are then forced to absorb the costs resulting from inflation from the programs of Medicare. The poorly calibrated payment rates of PPS resulted into the declining margins of profit in the hospitals but since private buyers continued to pay rates which were not negotiated or fixed, health institutions were not in a position to offset Medicare costs by improving margins of private profit. That can possibly be termed as indirect taxation. In response to this case, private employers directed their employees into a managed care arrangement to contain the costs. By the 1990s, approximately 75 percent of workers were covered through a managed care program. Managed care placed lots of limitation on the services covered and also gave contracts to providers that were willing to offer discounts. The negotiated leverage did also shift in favor of the buyer rather than the provider ( Gandolfi & Hansson, 2015) . Arguably, it violated the decision-making process of healthcare providers making autonomy.
Shifting of costs became a challenge to the hospitals due to the managed care growth. That prevented hospitals from increasing costs to meet there financial requirements and obligations. The payments of hospitals per case decreased over the years 1993 to the year 1997. With a view to maintaining the volume of patients, the hospitals did cut deal with private payers and thus entering into a multilayer contract. Regions of the country with greater levels of managed care resulted in lower costs of growth ( Carman, Eibner & Paddock, 2015) . A specific line of response to this required the hospitals to restrain the costs of inpatients and attain more form of financial costs control. Health institutions that were successful in reducing their costs stemmed from restructuring and shifting a larger proportion of care provided far from the inpatient arenas.
Hospital Closures
Gandolfi and Hansson (2015) mentioned that b etween 1990 and 2000, 11 percent of urban hospitals and 8 percent of rural hospitals closed down on reasons attached to the economy. The health institutions entirely closed or chose to transfer/convert the beds to alternative purposes. There were minimal utilization and competition as the major contributing factors to the closures ( Burke & Wolpin, 2016). The presence of other hospitals necessitates them to compete for the limited market space. The challenge not only relies on the new hospital development but also on the growing geographical markets. Most hospitals agree to terms of doing mergers or face closures
In conclusion, it is censoriously realized that downsizing in hospitals is a major factor in the US and it started in the mid-1980s. The downsizing of hospitals is caused by three major factors and that includes the impact of managed care, changes in the reimbursement and hospital closures. The health institutions need to adapt to readjust their behaviors in response to the altering regulations and monetary incentives that are part of the change.
References
Burke, R. J., Ng, E. S., & Wolpin, J. (2016). Effects of Hospital Restructuring and Downsizing on Nursing Staff: The Role of Union Support. Journal of Health Management , 18 (3), 473-488.
Carman, K. G., Eibner, C., & Paddock, S. M. (2015). Trends in health insurance enrollment, 2013–15. Health Affairs , 34 (6), 1044-1048.
Gandolfi, F., & Hansson, M. (2015). A global perspective on the non-financial consequences of downsizing. Revista de Management Comparat International , 16 (2), 185.
