Bed Availability and Hospital Utilization: Estimates of the “Roemer Effect”

“Roemer's Law,” the notion that an increase in the number of hospital beds per capita increases hospital utilization rates, is an important underpinning of efforts to control hospital construction through health planning. Attempts to measure the magnitude of the effect have yielded results ranging from no effect to a one-to-one relationship. The present study, by restricting its inquiry to Medicare patients and using a unique data base, avoids many of the shortcomings of earlier studies. This study concludes that an increase of 10 percent in hospital beds per capita would increase hospital utilization by Medicare enrollees by about 4 percent.