The 1990s witnessed an unprecedented restructuring of the American health care industry, featuring a staggering rate of mergers, acquisitions and closures of hospitals as well as major shifts in "where and how" care is delivered. Early on, these changes were fueled by the unchecked growth in the cost of health care, advances in technology, and anticipation of national health care reform. Over the past decade, 675 acute care hospitals closed; the average daily census and inpatient days dropped 21 percent; and length of stay fell 7 percent. Indications are that this is only the beginning, as the existing supply of hospital beds far outweighs estimated demand under current and projected market conditions (Gerstein, 1995). Based on an average hospital occupancy of 67 percent and assuming managed care use rates, there may be more than 440,000 excess acute care beds in the country, according to a study done by the American Health Care Systems Institute, Washington, D.C.(Gerstein, 1995).

Since the failure of national health care reform proposals in 1994, the major drivers of health care restructuring have been unbridled competition and corporatization in the industry, and the unprecedented growth in managed care. Cost-containment, effected in large part by managed care, has caused hospitals and health systems to radically and rapidly reconfigure how they structure and provide care. Health care purchasers -- including large employers, and state and federal government programs -- seeking to lower their costs have increasingly turned to managed care contracts as a solution. In response, many hospitals, already struggling to compete in over-bedded environments, sought to obtain these lucrative managed care contracts by deeply discounting the prices for their services, hoping to underbid their competitors. As a result, hospitals frequently focus on achieving needed savings by reducing labor costs through work redesign and through substitution of lower-paid unlicensed assistive personnel (UAPs) for higher-paid personnel, including registered nurses (RNs).

There is no doubt that as hospitals continue to take licensed beds out of service in response to reduced demand in over-bedded communities, there will be some reductions in the number of positions in all job categories, including registered nurses. Unfortunately, most of the RN layoffs now occurring are not true job reductions due to over bedding, but simply job substitution, instituted by hospitals to reduce labor costs and increase cash reserves (Huntington, 1995). Recent surveys of registered nurses provide many anecdotal accounts of the negative effects of downsizing on patient care and working conditions (ANA, 1994; Shindul-Rothschild, 1996). The results of these surveys lead the reader to conclude that many hospitals are engaging in cost-cutting practices that endanger patient safety and quality of care for the sake of profits.

The most recent of these is the 1996 American Journal of Nursing (AJN) Patient Care Survey, conducted by Judith Shindul-Rothschild, RN, CS, PhD, and commissioned by AJN in collaboration with ANA The survey, conducted March through June 1996, was designed to investigate nurses' perceptions of the safety and quality of patient care currently being delivered. Just released, the AJN survey of 7,560 registered nurses provides a comprehensive overview of nurses' perceptions of the effects of downsizing, restructuring, and the use of UAPs upon the quality of patient care and RN employment conditions.

Key findings of the AJN survey:

• Almost two out of five nurses would not recommend that a family member receive care in their facility.
• More than 85% of the respondents said that the increased use of UAPs did not improve patient care at their facility.
• More than 60% of the nurses reported a reduction in the number of RNs providing direct patient care and an increase in the number of patients assigned to RNs resulting in a labor trend known as "speed-up" -- expecting fewer workers to both work harder and be more efficient than before staff reductions.
• Fifty-five percent of nurses reported less continuity of care, and an even higher percentage reported less time to provide all aspects of nursing care. For example, most RNs reported less time to comfort and talk to patients (74%), teach patients and their families (73%), provide basic nursing care (68%), document care (66%), and consult with other members of the health care team (57%).
• The number of nurses who report that they will remain in the nursing profession appears to be dropping. In 1986, University of Texas researchers found that 86% of nurses indicated that they planned to remain in nursing. In the AJN study, the retention rate dropped ten points, to 76%. According to the AJN survey, the lowest retention rates are in the Pacific region (70%) and the highest are in the West/North Central region (80%).

Even with these most recent survey results, the full impact of these changes on the quality and safety of care is difficult to document and evaluate. Most of the needed data are not publicly reported, and remain in proprietary databases of hospitals or managed care plans. As a result, health care quality in managed care plans and hospitals is subject to increased scrutiny, not only by the nursing profession, but by regulators and the public as well. Some question whether the current configurations can truly be called managed "care" or whether they are simply managed "cost."

Thus, the question: Is managed care, as it is often proclaimed, a panacea for the nation's health care system, effectively controlling costs and providing preventive approaches and early interventions to millions who would not have benefited from these strategies under traditional indemnity plans? Or is it, as others claim, a pandora's box, destined to erode quality of care by cutting too many corners?