President Carter, in his strongest statement on the subject since taking office, says providers of the nation's health care show "a 'spend more, get more' attitude."
Hospitals, Carter said in a statement appearing in the current issue of the National Journal, "purchase unneeded equipment as an attraction to more physicians and as a matter of institutional pride. Large numbers of new hospitals beds are built in the face of an existing surplus. New methods of diagnosis and treatment are introduced before their effectiveness has been confirmed."
The American health care system "rewards spending and penalizes efficiency," Carter said, by paying hospitals retreactively on a "cost-plus" basis, by having insurance companies pay 90 per cent of all hospital bills, by having "the providers of services control the demand for services," by giving patients little voice in the choice of hospitals they will use and by having insurance companies stress expensive treatment rather than less expensive preventive care.
Carter's statement was a vigorous defense of the hospital control bill he has sent to Congress. The bill has met strong opposition from associations representing hospitals as well as the American Medical Association.
The Administration's bill would impose a limit on revenue increase over a base year - roughly computed to be about 9 or 10 per cent in the first year - that hospitals could receive. The bill also would impose a limit of roughly $2.5 billion - about half of what was spent in 1979 - on capital improvements for hospitals.
"Excessive spending by hospitals produces Worse - not better - care," Carter said. "When unnecessary procedures are performed, the patient is subjected to needless risk of injury or death. Where highly technical facilities such as cardiac centers are duplicative and underutilized, patients are treated by personnel who lack the constant practice to keep their skills in top form . . . In short, many hospital expenditures make no contribution to increased quality of care."
Carter, who has communicated his concern about rising costs generated by expensive technology to officials in the Department of Health, Education and Welfare, said that health research agencies "have not yet concentrated on assessing the costs and benefits of high-technology health care.
The lack of incentives to control costs was "clearly visible," Carter said, during the period from 1971 into 1974 when hospital prices and physician fees were controlled under the Economic Stabilization Program.
"With price increases for health services restrained, providers delivered a greater number and more expensive mix of services, so health spending continued to soar. As controls ended, the impact of level and mix of services declined sharply, and large price increases reappeared. In this way, providers were able to sustain the growth in the total expenditures," Carter said.
Carter, who has consistently stressed the importance of preventive health care, said that the administration's hospital cost control bill may make its most important contribution to improving health care if more resources are made available for Primary care, nutritionand occupational and environmental health initiative.