Objective:

To contain hlth-care costs by eliminating an estimated 5,000 excess beds in Maryland's 54 acute care hospitals while ensuring that hospitals are readily available where people need them.

Method: Using a carrot-and-stick system of incentives and penalties to persuade hospitals to make the reductions themselves, by eliminating unneeded beds, merging with other hospitals, moving into new health care roles or closing.

The carrot: Allow hospitals that meet target reductions or merge or turn part of their facilities to a nonhealth use to bypass expensive and time-consuming "certificate of need" procedures for health care additions and building projects. Allow hospitals that merge a two-year respite from further bed reductions.

The stick: Establish rankings, based on efficiency and access for all hospitals within the same county (or Baltimore City) and establish a higher ratio of bed reductions for the lower ranking hospitals.

Consider rankings and bed reductions when hospitals apply for "certificates of need."

Require that hospitals delicense "paper beds" -- beds that are licensed for nursing care but have been converted to another use -- before obtaining a "certificate of need."

The big stick: If carrot-and-stick-approach fails, allow state health planners to request the state to remove licenses for hospital beds or hospitals.