Abstract
The divergent cost containment strategies of the 1980s shared a basic premise: budgets constrained by one or another means would cause providers to become “more efficient” producers of medical care. Identifying and eliminating wasteful practices did not seem so imposing a task. Hospitals, in particular, had been nurtured and shaped by a cost-based payment system that rewarded excess and punished thrift. Yet, as we enter a new decade, we do not find a sleeker and more efficient delivery system. Rather, we find still costly institutions suffering increasing financial distress. The expected revolution in health care productivity based on innovations in service delivery has not taken place.