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Comments by Frank Greenwald, President Memorial Hospital is a community hospital governed by a Board of Directors elected by the Hospital Corporation The Board represents the interests of the community It provides governance for the hospital by providing policy direction to the administration One of i ts most important duties is providing administration for the hospital through the hir ing, guidance and evaluating of a chief executive off icer The Board must not interfere in the administration of the hospital, although this can be a temptation for Board members Another key responsibi l i ty of the Btoard is long-range planning A major planning issue which our Board faces r ight now is the Government s determination to bring health care costs undercontrol Health care costs have been rising faster than the inf lat ion rate Spending on. health care has more than tr ipled in the past 10 years and now is estimated to be 362 bi l l ion dollars Hospitals receive the biggest share of this, about 40% Governments, both State and Federal, are taking drastic action by changing the method they pay hospitals under the Medicare and Medicaid programs In the past, Medicare reimbursed hospitals for their costs It is bel ieved that this method of reimbursement provided no incentive for hospitals to i-mprove their eff iciency. The new method of payment wil l compensate the hospital a f ixed amount which wil l be determined by the condit ion for which the patient was treated If the hospital is able to treat the patient for an amount less than the al lowed reimbursement, i t benefits If hospital costs exceed the al lowed amount, the hospital suffers a loss Although this may sound l ike a simple change, the impact on hospitals and how they are run wil l be far-reaching Incidental ly, over 40%of the patient days at Memorial Hospital-are accounted for by Medicare patients The rapid increase of medical costs are related to a number of factors A major factor is the age of patients admitted A larger and larger percentage of patients are over 65 Older patients tend to require longer hospital stays, and their care tends to be more expensive Indeed, almost 30% of the Medicare budget is spent on patients in the last year of l i fe Another major factor in increased costs is the more sophist icated care being offered. Part of the r ise in costs represents the demand for advanced technology by the public and medical community These are the issues the Board must deal with It must plan for an uncertain future since government reimbursement for medical care is in a state of major transit ion. We are certain that the relationship between the hospital and its medical staff wil l be affected since up to 70%'of hospital costs are determined by the physicians who admit patients, order tests, and perform operations. The Board is taking steps to ensure that i ts communication channels with i ts medical staff remain open and clear Other matters of concern to the Board of Directors (to be discussed in future issue of Heartbeats) include Scope and type of services to be provided, faci l i ty improvement, personnel development, community outreach programs, and quali ty assurance I am optimistic about the future of Memorial Hospital I bel ieve that we are in an excellent posit ion to meet successful ly the challenges which wil l be coming in the next few years. We have just completed a major addit ion to our faci l i t ies which has greatly improved the hospital 's abi l i ty to render f irst class care to inpatients and out­ patients. The remodeling now being completed wil l greatly enhance the hospital services.