You are what you reimburse  What drives capital spending in
health care? Follow the money.  Ronald A. Wirtz - Editor,
fedgazette  Published January 1, 2007  |  January 2007 issue
Many people have the notion that hospitals and other health care
organizations are high-margin cash cows—I mean, have you seen
their prices lately? And how else do you explain all those
building cranes?  In fact, many believe the cranes and cash go
hand in hand: High prices lead to fat margins; fat margins lead
to new buildings; new buildings lead to higher costs; higher
costs lead to higher consumer prices, which gets us back to
those fat margins.  The health care public, as well as many
policymakers, see new buildings as evidence of a medical "arms
race" that is unnecessarily and recklessly pushing up costs.
Economists, on the other hand, are fond of saying that
incentives matter, and if you follow the money, the pattern of
capital investment seems to be a rational attempt to attract
higher-margin patients as defined by the reimbu