The California Health Facilities Commission

A Case Study of Government Regulation

by Albert J. Lipson

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Examines California's attempts to create institutions and policies for containing health facility costs, a goal that has been elusive for both federal and state governments. Cost containment pressures prompted the hospital industry to sponsor legislation, enacted in 1971, creating the California Health Facilities Commission and empowering it to implement a mandatory accounting, reporting, and public disclosure system for hospitals and, later, for nursing homes. Unsuccessful attempts have been made both to expand the Commission's authority to regulate facility rates and capital expenditures, and to abolish it altogether. The study describes the history of these attempts and of the Commission's implementation of its statutory charge, analyzes the primary influences on the California health facility regulatory process, and draws conclusions about future state legislation and the role of state agencies, physicians, and consumers in cost containment.

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