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HRD-85-21 1 (1985-03-15)

handle is hein.gao/gaobabeyt0001 and id is 1 raw text is: BY THE US, GENERAL ACCOUNT NG OFFICE Report To The Secretary Of Defense DOD Should Adopt A New Approach To Analyze The Cost Effectiveness Of Small Hospitals Several studies of nonfederal hospitals have found that smaller hospitals are less economical to operate than larger ones. The studies indicate that the most economical hospital size is between 200 and 300 beds. In fiscal year 1983, the Department of Defense (DOD) operated 126 hospitals, 69 of which had average daily inpatient loads of 50 or less. The cost to operate the 69 small hospitals totaled about $506 million in that year. GAO developed a computer-based model which compares the costs of operating small military hospitals to the estimated costs of converting them to outpatient clinics and treating inpatients at nearby civilian facilities. Applying the model at three small hospitals, GAO found that DOD could have saved about $3.9 million in fiscal year 1981 costs had these hospitals been converted. A decision to convert a small military hospital to an outpatient clinic should not be based solely on economic factors. Other consider- ations--such as the mission requirements, availability of alternative sources of care, and impact on beneficiaries--need to be evaluated. GAO believes, however, that because of the potential benefits of selectively converting small hospitals, DOD should evaluate the cost effectiveness of continuing small hospital operations when alter- native sources of care are available. 126452 U OI 63'4 6 GAO/HRD-85-21 MARCH 15, 1985

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