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Fortnightly Magazine - February 1 1995

largely from the nature of the undertaking itself.The Pendulum Swings

Why should the health field encounter these regulatory pressures just as electric utilities move away from traditional regulation? Here's a possible explanation: During the 1960s and 1970s, regulation in the nontransport industries contributed to the nation's economic prosperity, while health expenditures increased annually at twice our consumer price index. Productivity for utilities increased in the postwar period faster than any other industrial sector, as utility rates rose far less than prices generally. By contrast, the health field added 800,000 more workers to its payroll in the 1980s. It now employs one out of 13 in our labor force.

Presidents Nixon and Carter placed temporary price controls on the health industry; for a year or so this delayed increases in its expenditures. During the Reagan, Bush, and Clinton administrations, competition also flourished in the health field. As I see it, the pendulum will swing the other way for hospitals, physicians, and other providers in the late 1990s, in just the opposite direction from the electric utility industry.Thomas P. Weil, PhD, is president of Bedford Health Associates Inc., Mnagement Consultants for Health and Hospital Services, Asheville, NC, a firm founded in 1975, whose practice focuses on the managed care plans, health alliances, and the possible impact of future health reform legislation.


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