US hospitals are struggling to meet rising demand. Among health care facilities with at least 300 beds, 90 percent are at or over capacity. Most of them can't finance more beds, because of a low debt rating, and in any case an acute nursing shortfall is constraining their ability to admit more patients. This capacity gap has adversely affected the speed of delivery as well as the availability and duration of appointments with physicians.1 Yet in every problem lies an opportunity. For US nonprofit hospitals, a new study suggests, the disparity between supply and demand and the attendant decline in service levels have boosted the number of consumers willing to pay more for better service.
Hospitals now have an opportunity to supply target customers with differentiated, "boutique" services that would offer easier access to and greater integration of health care2 and enhanced comfort and convenience during hospital stays. Some nonprofit hospitals have already begun to promote these services, but others are holding back, principally for two reasons—one philosophical, the other economic. The philosophical concern is that catering to affluent patients will diminish the quality of care for those unable to pay more.3 In reality, the extra revenues...