Health Services:

Available Research Shows That Capacity Is Only Weakly Related to Volume

PEMD-91-7: Published: Jan 31, 1991. Publicly Released: Mar 4, 1991.

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Pursuant to a congressional request, GAO examined completed studies of health services delivery, focusing on: (1) the relationship between health services capacity and volume of services provided; and (2) any research gaps that need to be filled to reliably assess the validity of Roemer's law, which assumes that increases in health services capacity lead to increases in demand.

GAO found that: (1) although the relationship between health services capacity and volume of services provided was not strong, it could have a substantial cost impact from a budgetary point of view; (2) since earlier studies did not include changes in health services that accompanied the adoption of Medicare's Prospective Payment System in 1983, post-1983 data needed review to determine the current relationship between capacity and volume; (3) since most studies measured hospital beds and admissions and failed to reflect the increase in outpatient surgery due partly to technological changes, new studies were needed to measure discretionary services for situations where new policy was being applied; (4) future research designs should eliminate alternative explanations for their findings; and (5) populations affected by policies based on Roemer's law should be studied, since the strength of the relationship between capacity and volume depends on population characteristics.

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