The SHARE program, which set per diem prospective rates for New Jersey hospitals during the period 1975–1982, is evaluated. Analysis suggests that this program did contain hospital cost increases. However, the program threatened the viability of most inner-city hospitals. Indirect evidence suggests that there was cost-shifting in response to this program, which regulated payment for only Blue Cross and Medicaid patients. Structural features of this program and its successor, the New Jersey DRG program, are analyzed; and implications for the Medicare prospective payment system are examined.

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