Center for Studying Health System Change

Excess Capacity in Little Rock Market Continues to Expand, Impact on Costs Looms

News Releases
April 7, 1999

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ASHINGTON, D.C. -- Over the last two years, Little Rock health care providers have continued driving up capacity by expanding hospital facilities and ambulatory care, according to a Community Report released today by the Center for Studying Health System Change (HSC). HSC researchers found that Little Rock purchasers or Arkansas state policy have done little to constrain these activities, and there are few outside pressures on the market to keep this expansion in check.

The Community Report, "Capacity Expands in Unrestrained Market," highlights the key changes in the Little Rock heath care market since 1996 as well as Little Rock-specific data from HSC’s household, physician and employer surveys. Little Rock is one of 12 communities that HSC researchers are tracking over time to understand how local health care systems are changing and the impact of those changes on consumers.

"In the future, controlling cost in this environment may prove to be a challenging," said Paul B. Ginsburg, President of HSC. "Fee for service medicine is the norm, physicians are consolidating to protect their income and clinical autonomy, and plan efforts to implement care management - specifically profiling - have failed."

According to the report, the proliferation of freestanding ambulatory surgery centers over the past two years has been remarkable - with an estimated six centers under construction. These centers have been formed by specialists as a means to increase their leverage with hospitals and health plans and a way to maintain control over medical decisions.

Since the repeal of certificate-of-need regulation for acute care services, hospitals have also continued to expand by building new acute care facilities, adding inpatient beds and opening new services. This expansion is primarily due to the interest of hospitals in expanding their presence in North Little Rock and the surrounding suburbs, in order to make themselves more accessible to the residents and physicians in these areas.

In addition to expanded capacity, the lack of care management fuels concern about where costs may be headed. The physician-profiling initiatives health plans instituted in 1996 in an attempt to influence clinical practice and to control costs, have been unsuccessful due to physician resistance. Physicians objected to linking reimbursement to profiling data and to the quality of the data itself. Plans are now pursuing more modest profiling efforts which are not linked to reimbursement.

Research for the Community Report is conducted as part of HSC’s Community Tracking Study (CTS), which involves tracking 60 communities every two years through surveys to understand the effects of health system change on consumers. Little Rock is one of 12 communities that is being studied more intensively through site visits to understand how local market factors affect change.

Health System Change - an independent research organization funded exclusively by The Robert Wood Johnson Foundation - provides objective, timely analyses about changes in the nation’s health care system and their impact on consumers to private and public decision makers. Health System Change, based in Washington, D.C., is affiliated with Mathematica Policy Research.