Hospitals have used a mix of short-term and long-term strategies to deal with nurse shortages, particularly efforts emphasizing nurse education, competitive compensation, and temporary staff. Interviews with health care leaders from Round Five of the Community Tracking Study indicate that these activities, in conjunction with other factors, have assisted in reducing shortages of hospital nurses. However, hospitals' actions have increased costs and raised concerns about their potential impact on patient care. Additionally, a large degree of doubt exists among hospitals about their ability to meet future nursing needs.

Because many services performed in hospitals can safely and conveniently be performed in ambulatory settings, physicians have become owners of entities directly competing with hospitals for patients in a new medical arms race. Hospitals and medical staff physicians face growing tensions as a result of physicians' growing reluctance to take emergency department call and the consequences of hospitalists replacing physicians in the care of inpatients. Although there are increasing expectations that health system challenges will lead hospitals and physicians to collaborate, in many markets the willingness and ability for hospitals and physicians to work together is actually eroding.

Using data from Round Four of the Community Tracking Study (CTS) site visits, we describe how recent revenue and cost pressures have led physicians to aggressively increase prices and service volume and provide fewer traditional services that are less lucrative. As a result, physicians' business practices are contributing to rising service use and hindering cost containment, which could impair access to critical services for certain populations. In response, policymakers may need to revisit regulation of physicians' conflicts of interest and consider how their financial incentives could be realigned. But the diversity of physicians' behavior requires that policy responses take account of differences between specialists and primary care physicians.