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August, 1986, Vol. 109, No. 8
Hospital employment under revised medicare payment schedulesEileen Appelbaum and Cherlyn Skromme Granrose
In the face of declining employment in manufacturing, service sector industries such as health services are expected to offer expanded employment opportunities in the future. More than 900,000 jobs have been added in the health services industry since 1975, making it one of the largest industries in the U.S. economy. Moreover, the number of Americans over 65, who make the greatest use of health care services, is currently approaching 29 million and continues to grow.
Recently, however, the Federal Government has attempted to limit the rise in health care costs by instituting a prospective payment system based on Diagnosis Related Groups, or DRG's. Under the former system, reimbursement for hospital treatment covered by medicare at an acute care hospital1 was based on the prevailing rates for hospital and physician care in the locality. Hospitals typically recovered the full cost of care for each patient.
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1 For purposes of program administration, an "acuter care hospital" is defined by exception; that is, a facility is considered an acute care hospital unless it falls within a category specifically excluded from the program by law, such an alcohol rehabilitation center. However, the term may be approximated by the American Hospital Association's definition of "community hospitals": Non-Federal, short-term general and other special hospitals, excluding hospital units of institutions, whose facilities and services are available to the public. See Hospital Statistics, 1985 Edition (Chicago, American Hospital Association, 1985), p. xi.
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