Managing Health Services Organizations and Systems SIXTH EDITION
Managing Health Services Organizations and Systems SIXTH EDITION by Beaufort B. Longest, Jr., Ph.D., FACHE University of Pittsbur Pittsburgh gh Kurt Darr, J.D., Sc.D., FACHE The George Washington University
Baltimore • London • Sydney
Health Professions Press, Inc. Post Office Box 10624 Baltimore, Maryland 21285-062 21285-0624 4 www.healthpropress.com www .healthpropress.com Copyright © 2014 by Beaufort B. Longest, Jr., and Kurt Darr. All rights reserved. Interior and cover designs by Mindy Dunn. Typeset by Barton Matheson Willse & Worthington, Baltimore, Maryland. Manufactured in the United States of America by Versa Press, East Peoria, Illinois. The information provided in this book is in no way meant to substitute for the advice or opinion of a medical, legal, or other professional expert. This book is sold without warranties of any kind, express or implied, and the publisher and authors disclaim any liability liability,, loss, or damage caused by the contents of this book.
Library of Congress Cataloging-in-Publication Cataloging-in-Publication Data Longest, Beaufort B., Jr., author. Managing health services organizations organizations and systems / by Beaufort B. Longest, Jr., Kurt Darr. Darr. — Sixth edition. p. ; cm. Includes bibliographical bibliographical references and index. ISBN 978-1-938870-00-2 978-1-938870-00-2 (case) — ISBN 1-938870-00-X 1-938870-00-X (case) I. Darr, Kurt, author. II. Title. [DNLM: 1. Health Facility Facility Administration—United Administration—United States. States. 2. Hospital Administration—U Administration—United nited States. WX 150 AA1] RA971 362.1068—dc23 2014006399 British Cataloguing in Publication data are available from the British Library. Library. E-book edition: ISBN 978-1-938870-34-7 978-1-938870-34-7
Contents About the Authors Authors .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi Preface .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiii Preface About this Edition Edition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xv Acknowledgments Acknowled gments .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xvii Acronymss Used in Text Acronym Text . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xix
Part I. The Healthcare Setting Chapter 1. Healthcare in the United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Health and System Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lack of Synchrony . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Processes That Produce Health Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A Brief History of Health Serv rviices in the United States . . . . . . . . . . . . . . . . . . . . . Other Western Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Structure of the Health Services System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Classification and Types of HSOs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Local, State, and Federal Regulation of HSOs/HSs . . . . . . . . . . . . . . . . . . . . . . . . Other Regulators of HSOs/HSs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accreditation in Healthcare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Educat atiion and Regulation of Health Serv rviices Man anaagers. . . . . . . . . . . . . . . . . . . . . Regulation and Education of Selected Health Occupations . . . . . . . . . . . . . . . . . . Associations for Individuals and Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . Paying for Health Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Government Payment Schemes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . System Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Discussion Questions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Case Study 1: Gourmand and Food—A Fable . . . . . . . . . . . . . . . . . . . . . . . . . . . . Case Study 2: Where’s My Organ? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Case Study 3: Dental Van Shenanigans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3 4 6 7 11 16 17 19 22 25 25 29 33 39 41 41 46 49 50 51 52 53 54
Chapte Cha pterr 2. 2. Type ypess and and Stru Structu cture ress of of Heal Health th Se Servic rvices es Or Organ ganiza izatio tions ns and and Sy Syste stems ms . . . . . . . 65 The Triad of Key Organizational Components . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 Governing Body . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 Chief Executive Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 Professional Staff Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 73 Organizational Structures of Selected HSOs/HSs . . . . . . . . . . . . . . . . . . . . . . . . . 81 Acute Care Hospitals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 Nursing Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 Health Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 The Triad in HSs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96 96 Ambulatory Health Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 Hospice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
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Home Health Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 Managed Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110 Public Health. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 Diversification in HSOs and HSs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116 Envir En vironm onment ental al Pr Press essure uress to Cha Change nge Type ypess and St Struc ructur tures es of HSO HSOs/H s/HSs Ss . . . . . . . . 118 118 Discussion Questions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119 Case Study 1: The Clinical Staff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120 Case Study 2: The Role of the Healthcare Executive in a Change in Organizational Ownership or Control. . . . . . . . . . . . . . . . . . . . . 120 Case Ca se Stu tudy dy 3: Pub ubli licc He Healt alth h an and d th thee He Heal alth th Se Servi rvice cess De Deliv liver eryy Sy Syst stem. em. . . . . . . . . . 122 Case Study 4: Board Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124 Chapter 3. Healthcare Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131 History and Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134 Types of Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135 Effects of Technology on Health Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138 For orce cess Aff ffec ecttin ingg De Devvelo lop pme ment nt an and d Dif iffu fusi sioon of Tec echn hnoolo logy gy . . . . . . . . . . . . . . . . . 13 139 Responses to Diffusion and Use of Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . 144 HSO/HS Technology Decision Making. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150 Managing Biomedical Equipment in HSOs/HSs . . . . . . . . . . . . . . . . . . . . . . . . . . 154 Health Information Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158 Telemedicine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165 Future Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166 Technology and the Future of Medicine. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167 Discussion Questions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168 Case Study 1: The Feasibility of BEAM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169 Case Study 2: “Who Does What?” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170 Case Study 3: “Let’s ‘Do’ a Joint Venture” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171 Case Study 4: Worst Case Scenario—the Nightmare . . . . . . . . . . . . . . . . . . . . . . . 172 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172 Chapter 4. Ethical and Legal Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Society and the Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Relationship of Law to Ethics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ethics Framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Personal Ethic and Professional Codes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Health Services Codes of Ethics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ethical Issues Affecting Governance and Management. . . . . . . . . . . . . . . . . . . . . . Biomedical Ethical Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . End-of-Life Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Organizational Responses to Ethical Problems . . . . . . . . . . . . . . . . . . . . . . . . . . . . Managers and the Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Torts and HSOs/HSs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reforms of the Malpractice System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Selected Legal Areas Affecting HSOs/HSs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Legal Process of a Civil Lawsuit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Special Considerations for the Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
183 184 185 185 191 192 194 198 200 211 218 223 225 226 230 232
CONTENTS
Case Study 1: “What’s a Manager to Do?” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Case Study 2: Bits and Pieces . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Case Study 3: Understanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Case Study 4: Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Part II. Managing Health Services Organizations and Systems Chapter Chap ter 5. 5. The The Pract Practice ice of Manage Management ment in in Health Health Servic Services es Organiz Organizatio ations ns and Syste Systems ms . . . . . . 251 The Work of Managers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 252 Key Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 252 Manag Ma nageme ement nt and Org Organi anizat zation ional al Cu Cultu lture re,, Phi Philos losoph ophyy, and Perf erform ormanc ance. e. . . . . . . . 255 255 Management Functions, Skills ls,, Roles, and Competencies . . . . . . . . . . . . . . . . . . . 258 A Management Model for HSOs/HSs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 278 Discussion Questions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 283 Case Study 1: The CEO’s Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 283 Case Study 2: Today’s Workforce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 286 Case Stu Study dy 3: Hea Healthcar lthcaree Exe Executiv cutives es’’ Resp Responsib onsibility ility to Thei Theirr Comm Communiti unities es . . . . . 287 Case Study 4: The Business Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 288 Cas asee Stu tud dy 5: Ver eryy Brie ieff His isttor oryy of Man anag ageeme ment nt The heoori riees . . . . . . . . . . . . . . . . . . 28 289 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 289 Chapter 6. 6. Ma Managerial Pr Proble lem m So Solving an and De Decision Ma Making . . . . . . . . . . . . . . . . . . . . 293 Problem Analysis and Decision Making . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 294 Problem Solving . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295 Process and Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 297 Influencing Problem Solving and Decision Making . . . . . . . . . . . . . . . . . . . . . . . . 308 Unilateral and Group Problem Solving . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 312 Problem-Solving and Decision-Making Styles . . . . . . . . . . . . . . . . . . . . . . . . . . . . 314 Discussion Questions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 318 Case Study 1: The Nursing Assistant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 318 Case Study 2: The New Charge Nurse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 319 Case Study 3: Listening . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 320 Case Study 4: Ping-Ponging . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 320 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 321 Chapter 7. The Quality Imperative: The Theory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Improving Quality and Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Taking A CQI Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CQI, Pro rodu duct ctiv ivit ityy Impro rovveme ment nt,, an and d Co Com mpe peti tittiv ivee Pos osit itio ion n ................. Theory of CQI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Strategic Quality Planning: Hoshin Planning. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Organizing for Improvement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Next Iteration of CQI—A Community Focus . . . . . . . . . . . . . . . . . . . . . . . . Discussion Questions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Case Study 1: Fed Up in Dallas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Case Study 2: Clinics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Case Study 3: Where and How to Start? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Case Study 4: Extent of Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Case Study 5: Surgical Safety— y—R Retained Foreign Objects . . . . . . . . . . . . . . . . . . .
325 326 332 337 33 7 338 349 354 356 357 357 358 359 360 361 36
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Chapter 8. The Quality Imperative: Implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . 367 Undertaking Process Improvement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 368 Other Improvement Methodologies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 370 Barriers and Facilitators to Improvement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 375 Improvement and Problem Solving . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 376 Statistical Process Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 377 Tools for Improvement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 378 Productivity and Productivity Improvement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 385 Physicians and CQI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 390 Patient and Worker Safety in Healthcare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 394 Quality Qual ity Imp Improv rovemen ementt Str Structur uctures/P es/Proce rocesses sses Use Useful ful in Pa Patient tient/W /Worker orker Safe Safety ty . . . . . 398 Overlapping Safety Issues for Patients and Workers . . . . . . . . . . . . . . . . . . . . . . . . 400 Discussion Questions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 407 Case Study 1: The Carbondale Clinic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 408 Case Study 2: Noninvasive Cardiovascular Laboratory ry.. . . . . . . . . . . . . . . . . . . . . . 409 Case Study 3: Infections—C. difficile (CDI) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 410 Case Study 4: Infections—CLABSI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 411 Case Study 5: Infections—Flu Vaccination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 411 Case Study 6: Sharps Injuries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 412 Case Study 7: Slips, Trips, and Falls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 412 Case Ca se Stu tudy dy 8: Sa Safe fe Pat atie ient nt Ha Hand ndli ling ng an and d Pat atie ient nt Mov ovem emen entt In Inju juri ries. es. . . . . . . . . . . 413 413 Case Study 9: Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 413 Case Study 10: Violence in the Workplace . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 414 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 414 Chapter 9. Strategizing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 421 Strategizing and Systems Theory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 422 Strategizing and Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 424 The Strategizing Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 434 Situational Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 434 External Environmental Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 435 Internal Environmental Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 440 Strategy Formulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 441 Strategic Implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 449 Strategic Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 450 Strategic Issues Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 454 Discussion Questions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 455 Case Study 1: No Time for Strategizing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 455 Case Study 2: A Response to Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 456 Case Study 3: HSO Strategic Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 457 Case Study 4: Closing Pediatrics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 457 Case Study 5: Affiliation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 458 Case Study 6: Healthcare Firms Send Jobs Overseas. . . . . . . . . . . . . . . . . . . . . . . . 458 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 459 Chapter 10. Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 463 Marketing Defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 464 Strategic Marketing Management and Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . 467 The Mar arke kettin ingg Mix ix:: Core Con once cep pts in Mar arke kettin ingg Man anag agem emen entt . . . . . . . . . . . . . . 46 468
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Cha hall llen enge gess in Ide dent ntif ifyi ying ng th thee Cus usttom omer er an and d Tar arge gett Mar arke kets ts . . . . . . . . . . . . . . . . . 47 471 Examples of Marketing Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 474 Ind ndus usttry Stru rucctu turre an and d Co Comp mpeeti tittiv ivee Posi sittio ion: n: Port rter er’’s Mod odel el.. . . . . . . . . . . . . . . . . 47 477 Market Position Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 481 Strategic Marketing Postures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 483 Market Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 484 Ethics in Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 485 Discussion Questions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 486 Case Ca se Stu tudy dy 1: La Lact ctat atio ion n Ser ervi vice cess at Wom omen en’’s Wel elln lnes esss Hos ospi pita tal. l. . . . . . . . . . . . . . . 487 487 Case Study 2: What Is Marketing? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 488 Case Study 3: Image Management and Branding at the Disability Se Serv rviices Organization of Rivert rtoown . . . . . . . . . . . . . . . . . . 489 Case Ca se Stu tudy dy 4: Ho Hosp spit ital al Ma Mark rket etin ingg Ef Effe fect ctiv iven enes esss Ra Rati ting ng In Inst stru rume ment. nt. . . . . . . . . . . . 49 490 0 Case Study 5: Nontraditional Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 493 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 494 Chapter 11. Controlling and Allocating Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 497 Monitoring (Control) and Intervention Points . . . . . . . . . . . . . . . . . . . . . . . . . . . 498 Control Model. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500 Levels of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 501 Control and CQI. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 502 Control and Problem Solving . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 502 Control Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 502 Information Systems and Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 504 Control and Human Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 508 Staffing Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 510 RM and Quality Improvement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 520 Heal altthcare and Public Health Emergency Prepar areedness . . . . . . . . . . . . . . . . . . . . . 527 Control Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 535 Use of Analytical Techniques in Resource Allocation . . . . . . . . . . . . . . . . . . . . . . . 548 Project Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 558 Specific Construction Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 569 Discussion Questions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 572 Case Study 1: Admitting Department . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 573 Case Study 2: Centralized Photocopying . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 574 Case Study 3: Barriers to an Effective QI Effort. . . . . . . . . . . . . . . . . . . . . . . . . . . 575 Case Ca se Stu tudy dy 4: St Stat atee Al Allo loca cati tion on De Deci cisi sion ons— s—Ce Cent ntra rali lize ze or De Dece cent ntra rali lize. ze. . . . . . . . . . 576 576 Case Study 5: Financial Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 577 Case Study 6: Healthcare Emergency Preparedness . . . . . . . . . . . . . . . . . . . . . . . . 579 Case Ca se Stu tudy dy 7: Pl Plac acin ingg Ima magi ging ng Se Serv rvic ices es to Sup uppo port rt ED Op Oper erat atio ions ns . . . . . . . . . . . . 580 580 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 580 Chapter 12. Designing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 587 The Ubiquity of Designing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 588 Formal and Informal Aspects of Organization Design . . . . . . . . . . . . . . . . . . . . . . 58 589 Clas Cl assi sica call De Desi sign gn Co Conc ncep epts ts in Bui uild ldin ingg Or Orga gani niza zati tion on Str truc uctu ture res. s. . . . . . . . . . . . . . . 59 590 0 Designing Interorganizational Relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 606 An Integrative Perspective on Organization Design . . . . . . . . . . . . . . . . . . . . . . . . 613 Discussion Questions 617
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Managing Health Services Organizations and Systems
Case Study 1: Is the Matrix the Problem or the Solution? . . . . . . . . . . . . . . . . . . . Case Study 2: Trouble in the Copy Center . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Case Study 3: “I Cannot Do It All!”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Case Study 4: Somebody Has to Be Let Go . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Case Study 5: Is Outsourcing Part of Designing? . . . . . . . . . . . . . . . . . . . . . . . . . . Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
618 61 8 619 619 620 621 622
Chapter 13. Leading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 627 Leading Defined and Modeled. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 629 Ethical Responsibilities of Leaders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 630 Power and Influence in Leading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 632 Motivation Defined and Modeled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 635 Conclusions About the Roles of Power and Influence and of Motiva Motivation tion in Leading. . . . 646 Approaches to Understanding Leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 647 Toward an Integrative Approach to Effective Leading . . . . . . . . . . . . . . . . . . . . . . 661 Discussion Questions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 663 Case Study 1: Leadership in the West Wing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 664 Case Study 2: Charlotte Cook’s Problem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 664 Case Study 3: The Presidential Search . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 665 Case Study 4: The Young Associate’s Dilemma . . . . . . . . . . . . . . . . . . . . . . . . . . . 666 Case Study Study 5: The Holdback Holdback Pool Pool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 666 Case Study 6: Ethical Aspects of Leadership. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 667 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 668 Chapter 14. Communicating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 673 Communicating Is Key to Effective Stakeholder Relations. . . . . . . . . . . . . . . . . . . 67 674 Communication Process Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 675 Barriers to Effective Communication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 678 Flows of Intraorganizational Communication . . . . . . . . . . . . . . . . . . . . . . . . . . . . 682 Communicating with External Stakeholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 686 Spe peci cial al Si Situ tuat atio ions ns of Co Comm mmun unic icat atin ingg wi with th Ext xter erna nall Sta take keho hold lder erss . . . . . . . . . . . . . 688 688 Discussion Questions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 694 Case Study 1: Apple Orchard Assisted Living . . . . . . . . . . . . . . . . . . . . . . . . . . . . 694 Case Ca se Stu tudy dy 2: In Info form rmat atio ion n Tec echn hnol olog ogie iess in Ru Rura rall Fl Flor orid idaa Hos ospi pita tals. ls. . . . . . . . . . . . 695 695 Case Study 3: “You Didn’t Tell Me!” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 696 Case Study 4: How Much Should We Say? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 696 Case Study 5: Getting Help When Needed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 697 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 697 Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 699
About the Authors Authors Beaufort B. Longest, Jr., Ph.D., FACHE, M. Allen Pond Professor of Health Policy & Management in the Graduate School of Public Health at the University of Pittsburgh and Founding Director of the University’s Health Policy Institute, an organization he led from 1980–2011. Professor Longest is a fellow of the American College of Healthcare Executives and a member of the Academy of Management, AcademyHealth, and American Public Health Association. With a doctorate from Georgia State University University,, he served ser ved on the faculty of North western Universit University’ y’ss Kellogg School of Management before joining the Universit Universityy of Pittsburgh’s Public Health faculty in 1980. He is an elected member of the Beta Gamma Sigma Honor Society in Business as well as in the Delta Omega Honor Society in Public Health. His research on modeling managerial competence, issues of governance in healthcare organizations, and related issues of health policy and management has appeared in numerous peerreviewed journals and he is author or co-author of 11 books and 32 chapters in other books. His book, Health Policymaking in the United States, now States, now in its fifth edition, is among the most widely used textbooks in graduate health policy and management programs. His newest book is Mana is Managging Health Programs: From Development Through Evaluation (2014). Professor Longest has consulted with healthcare organizations and systems, universities, associations, and government agencies on health policy and management issues and has served on several editorial and organizational boards. Kurt Darr, J.D., Sc.D., FACHE, FACHE, Professor Professor,, Department of Health Services Serv ices Management Mana gement and Leadership, School of Public Health and Health Services, The George Washington University, Washi Washington, ngton, DC 20052 20 052 Dr. Darr is Professor of Health Services Administration in the Department of Health Services Management and Leadership at The George Washington University. He holds the Doctor of Science from The Johns Hopkins University and the Master of Hospital Administration and Juris Doctor from the Universit Universityy of Minnesota. Professor Profe ssor Darr completed his administrative residency at a t Rochester (Minnesota) Methodist Hospital and subsequently worked as an administrative associate at the Mayo Clinic. After being commissioned in the U.S. Navy, he served in administrative and educational assignments at St. Albans Naval Hospital and Bethesda Naval Hospital. He completed postdoctoral fellowships with the Department of Health and Human Services, the World Health Organization, and the Accrediting Commission on Education for Health Services Administration. Professor Darr is a Fellow of the American College of Healthcare Executives, a member of the District of Columbia and Minnesota Bars, and served for 20 years as a mediator in the Superior Court of the District of Columbia. He serves or has served on commissions and committees for various professional organizations, including in cluding The Joint Commission on Accreditation of Healthcare Organizations, the American College of Healthcare Executives, and the Commission on Accreditation of Healthcare Management Education. Education. He is a voluntary consultant on quality improvement improveme nt and ethics to hospitals in the District of Columbia metropolitan area. Professor Profe ssor Darr regularly presents seminars on health h ealth services ethics, hospital organization and management, quality improvement, and application of the Deming method in health services delivery. He is the author and editor of numerous books and articles in the health services field.
Preface Leading health services organizations (HSOs) and health systems (HSs) are setting the benchmarks and establishing the best practice standards for others to emulate. They are simultaneously satisfying their customers, achieving quality and safety goals, and meeting cost objectives. The benchmarks of excellence in health services delivery are being established in HSOs and HSs that have excellent managers, as well as talented clinicians and a nd dedicated governing bodies. Our purpose in this 6th edition, as in previous editions, is to present information and insight that can set the benchmarks of excellence in the management of health services delivery delivery.. The book will be useful to two groups. It will assist students as they prepare for health services management careers through programs of formal study. In addition, it has broad use in providing knowledge of applied management theory that is part of professional development for practicing health services executives. We We hope both groups will find the book a useful reference in their professional libraries. As in previo previous us editions, editions, the main main focus focus is managing HSOs and HSs. HSs. This edition gives significant attention to managing the increasingly important system of public health organizations and services. Hospitals and long-term care organizations continue to be prominent HSOs and are treated as such here. Ambulatory care organizations, home health agencies, and managed care organizations, among other HSOs, are also covered. Whether HSOs operate as independent entities or align themselves into various types of HSs, all face dynamic external environments—a mosaic of external forces that includes new regulations and technologies; changing demographic patterns; increased competition; public scrutiny; heightened consumer expectations; greater demands for accountability; and major constraints on resources. The interface between HSOs and HSs and their external environments is given added attention in this edition. The 6th edition includes over 30 new case studies and updated coverage of healthcare services issues and practices—including financial management. In addition, there are new sections on emergency preparedness, patient and staff safety, infection control, employee stress, hazardous materials, workplace violence, and applying project management in health services. As in previous editions, we present management theory so as to demonstrate its applicability to all types of HSOs and HSs. This objective objective is accomplished by using a process orientation that focuses on how managers manage. We examine management functions, concepts, and principles as well as managerial roles, skills, and competencies within the context of HSOs and HSs and their external environments. For nascent managers, the book introduces and applies terms of art, provides an updated list of acronyms, and explains concepts that will be a foundation for lifelong learning and professional development. development. Experienced managers will find reinforcement of existing skills and experience, provision and application of new theory, and application of traditional theory and concepts in new ways. Managing in the unique environment that is health services delivery requires attention to the managerial tools and techniques that are most useful. The fourteen chapters in this 6th edition of Managing of are an integrated whole that covers how Managing Health Services Organizations Organizations and Systems Systems are management is practiced in HSOs and HSs. The discussion questions and cases will stimulate thought and dialogue of chapter content. It is our hope that the book will assist all who aspire to establish the benchmarks of excellence in the extraordinarily complex and essential economic sector that is the health services field.
About this Edition Part I describes the setting in which health services (HSs) are delivered. Chapter 1, “Healthcare in the United States,” develops a framework of the important public and private entities that are the grounding for delivery of health h ealth services. Discussed are regulators, educators, and accreditors, as well as sources of financing for services. The book’s second chapter, “Types and Structures of Health Services Organizations and Health Systems,” provides a generic discussion of governance, management, and professional staff organization found in health services ser vices organizations (HSOs). This triad is applied to selected HSOs that are archetypal of those in the health services field. Each type is discussed briefly briefly.. Technology has a central role in delivery of health services. Chapter 3, “Healthcare TechnolTechnology,” ogy ,” describes the history history,, effects, and diffusion of technology and the decisions made by HSOs in acquiring and managing technology in the workplace. Chapter 4, “Ethical and Legal Environment,” establishes the pervasive influence and effects of ethics and law in the health services field. Ethical frameworks are discussed, ethical issues are identified, and HSO responses to them are suggested. Law is the minimum level of performance in managing health services. The relationship between the law and the work of managers is also identified. Part II builds on the previous chapters by focusing on the process of managing in HSOs/ HSs. In Chapter 5, “The Practice of Management in Health Services Organizations and Health Systems,” management is is defined and a comprehensive model of the management process in HSOs/HSs is presented. This This model provides a framework for understanding what managers actually do. The management process is considered from four perspectives: the functions managers perform, the skills they use in carrying out these functions, the roles managers fulfill in managing, and the set of management competencies that are needed to do the work well. These perspectives perspectives form a mosaic—a more complete picture than any one perspective—of management work “Managerial Problem Solving and Decision Making,” is discussed in Chapter 6. The pervasive decision-making function is examined, particularly as it relates to solving problems. Application of a problem-solving model is a major focus of the chapter. Chapter 7, “The “ The Quality Imperative: The Theory,” Theory,” describes and analyzes the development of the theoretical underpinnings of quality and performance improveme improvement. nt. Chapter 8, “The Quality Imperative: Implementation,” focuses on how HSOs make continuous improvement of quality and productivity a reality reality.. The emphasis is process improvement, which leads to impr improve oved d qualit qualityy and enhanc enhanced ed prod productiv uctivity ity.. Orga Organizing nizing for qualit qualityy impr improve ovement ment requires a commitment from governance, management, and physicians, as well as the involvement of staff throughout the HSO in applying the methods and tools described. Chapter 9, “Strategizing,” details how managers determine the opportunities and threats emanating from the external environments of their organizations and systems and how they respond to them effectively. Chapter 10, “Marketing,” details how managers understand and relate to the markets they serve. Chapter 11, “Controlling and Allocating Resources” presents a general model of control and focuses on controlling individual and organizational work results through techniques such as management information systems, management and operations auditing, human resources management, and budgeting. Control of medical care quality through risk management and
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quality assessment and improvement is discussed. The chapter concludes with applications of quantitative techniques useful in resource allocation, such as volume analysis, capital budgeting, cost–benefit analysis, and simulation. Chapter 12, “Designing,” provides conceptual background for understanding HSO/HS organizational structures. It contains information on general organization theory theor y, including classical principles and contemporary concepts as they relate to organizations, systems, and alliances of organizations. Chapter 13, “Leading,” differentiates transactional and transformational leadership and models and defines leadership leadership.. The extensive literature on leader behavior and situational theories of leadership is reviewed. Mot reviewed. Motivati is defined and modeled. The The concept of motivation and its ivation on is role in effectively leading people and entire HSOs/HSs is also discussed. Chapter 14, “Communicating,” describes a communication process model and applies it in communicating within organizations and systems and between them and their external stakeholders.
Instructor Resources Downloadable Course Materials Attention Inst Attention Instructo ructors! rs! Dow Download nloadable able mater materials ials are availa available ble to help you desig design n your your course using Managing Mana ging Hea Health lth Services Services Orga Organizat nizations ions and Syst Systems, ems, Sixt Sixthh Edition Edition.. Please visit www visit www.healt .healthprop hpropress ress.com .com/lon /longest-c gest-course ourse-mate -materials rials to access the following: • •
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Customizable PowerP PowerPoint oint presentations for every chapter, totaling more than 350 slides Image bank of figures and tables* in PDF format for easy use in your PowerPoint presentations, tests, handouts, and other course purposes Summary of chapter learning objectives for use in course syllabus and classroom/online instruction Additional Addi tional discuss discussion ion questions questions and and case studies studies for each each chapter chapter to extend extend student student learning learning opportunities List of acronyms for quick and easy reference
*Some figures and tables are not included due to permissions constraints.
Acknowledgments Professor Longest thanks Carolyn, whose presence in his life continues to make many things possible and doing them seem worthwhile. He extends appreciation to Mark S. Roberts, M.D., Chair of the Department of Health Policy and Management; Donald S. Burke, M.D., Dean of the Graduate School of Public Health; and Arthur S. Levine, M.D., Senior Vice Chancellor for Health Sciences at the University of Pittsburgh, for encouraging and facilitating a work environment that is conducive to the scholarly endeavors of faculty members. Professor Darr is grateful to Anne for her unstinting support of this latest edition and for never becoming impatient with the sometimes snail-like pace of the work. My department chair, Robert E. Burke, Ph.D., was supportive of my work on this 6th edition, and I am pleased to acknowledge him. A book of this magnitude—even a revision—cannot be researched and written without witho ut help. help. Thanks are owe owed d to my graduat graduatee assistan assistants ts during its writi writing. ng. Ayla Baugh Baughman man and Nora Albert worked effectively, effectively, often under severe time constraints. Both of these young women have the qualities to succeed in the health services field. I wish them all good things in the future. The authors wish to thank several people at Health Professions Press Press for their assistance with this book. Mary Magnus, Director of Publications; Kaitlin Konecke, Marketing Coordinator and Textbook Manager; Erin Geoghegan, Graphic Design Manager; and Carol Peschke and Diane Ersepke, copyeditors; each made important contributions. We are grateful to Cecilia González, Production Production Manager, for her untiring efforts to make the book as good as it could be. She saw us through the project with good cheer and much assistance. We We also thank the publishers and authors who granted permission to reprint material to which they hold the copyright. Finally, and last but not least, we are grateful to users of the 5th edition whose comments and critiques helped us to improve the 6th edition.
The authors acknowledge the contributions made by our coauthor on earlier editions, Jonathon S. Rakich, Ph.D. Professor Rakich collaborated with us on Manag on Managing ing Health Health Services Services Organ Organizaizations and Systems for more than three decades. His participation and historic role in setting direction and selecting substance to achieve a high-quality book can be found even in the 6th edition. Wee thank W thank him. him.
Acronyms Acr onyms Use Used d in Text AA AAAHC AAHSA AAMC ABC ABMS ACA ACHE ACH E ACO ACS ADL ADR AHA AHCA AHCPR AHCP R AHIP AHRQ AHR Q AI AIDS ALOSS ALO AMA ANA AND AOA AO A APACHE AP ACHE APC APG ASC ASQ BCG BEAM BIM BLS BSC BSN CABG CAD CAHME CalRHIO CAMH CAS CAUTI
associate of associate of arts (degr (degree) ee) Accredita Accr editation tion Assoc Association iation for Ambulat Ambulatory ory Healthc Healthcare are American Ameri can Associat Association ion of of Homes Homes and Service Servicess for the Aging, Aging, also known known as LeadingAge Association Associ ation of American American Med Medical ical Colleg Colleges es activity-bas activi ty-based ed costing costing American Ameri can Board Board of Medical Medical Spe Specialti cialties es Affordable Affor dable Care Act of 2010 2010 American Ameri can College College of Health Healthcare care Exec Executive utivess accountable accoun table care organi organizatio zation n American Ameri can College College of Surgeo Surgeons ns activities activi ties of daily daily living living alternative altern ative dispu dispute te resolu resolution tion American Ameri can Hospit Hospital al Associati Association on American Ameri can Health Health Care Associ Association ation Agency for Health Health Care Policy and Resear Research ch America Ameri ca’’s Health Health Insur Insurance ance Plans Plans Agency for Healthc Healthcare are Rese Research arch and Quality Quality artificial artifici al intellige intelligence nce acquired acquir ed immunod immunodeficie eficiency ncy syndrom syndromee average avera ge length length of of stay American Ameri can Medical Medical Assoc Association iation American Ameri can Nurses Nurses Associ Association ation allow natura naturall death death American Ameri can Osteo Osteopathic pathic Associ Association ation acute physio physiology logy and chronic chronic health evalu evaluation ation ambulatory ambula tory payment payment categ category ory ambulatory ambula tory patient patient group ambulatory ambula tory surgery surgery cente centers rs American Ameri can Societ Societyy for Quali Quality ty Boston Consulting Group Matrix brain electrical activity mapping building information modeling Bureau of Labor Statistics balanced scorecard bachelor of science in nursing (degree) coronary artery bypass grafting computer-aided design Commission on Accreditation of Healthcare Management Education California Regional Health Information Organization Comprehensive Accreditation Manual for Hospitals carotid artery stenting catheter-associated urinary tract infection
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CBO CDC CDI CDSS CEA CEO CEPH CFO CGE CHA CHAP CHC CHIN CIO CLABSI CMO CMS CNA CNM CNO CNS COE CON COO COP CPI CPM CPR CQI CQO CRM CRNA CSS CT CTO CUS CUSP DBS DHHS DIC DMAIC DNR DNVHC DO DOL DRG DVA DV A EAP ECHO
Managing Health Services Organizations and Systems
Congressional Budget Office Centers for Disease Control and Prev Prevention ention Clostridium difficile infection clinical decision support system carotid endarterectomy chief executive officer Council on Education for Public Health chief financial officer continuing governance education Catholic Health Association of the United States Community Health Accreditation Program community health center community health information network chief information officer central line–associated bloodstream infection chief medical officer Centers for Medicare and Medicaid Services certified nursing assistant certified nurse midwife chief nursing officer clinical nurse specialist Center for Outcomes and Evidence certificate of need chief operating officer conditions of participation consumer price index critical path method cardiopulmonary resuscitation continuous quality improveme improvement nt chief quality officer crew resource management certified registered nurse anesthetist clinical support system computerized tomography chief technology officer “I am Concerned. I am Uncomfortable. This is a Safety issue.” comprehensive unit safety program deep brain stimulation Department of Health and Human Services diagnostic imaging centers Define, measure, analyze, improve, control do not resuscitate Det Norske Veritas Healthcare Healthcare,, Inc. doctor of osteopathy U.S. Department of Labor diagnosis-related group Department Departm ent of Veterans Affair Affairss employee assistance program echocardiogram
ACRONYMS USED IN TEXT
ED EH EHR EMR EMS EMT EOC EPC EOP EPM EVM FAH FC FDA FEMA FMEA fMRI FQHC FTC FTE GB GDP GE GPO HAI HCFA HCAHPS HCQIA HEDIS HHA HIPDB HIT HIV HME HMO HQI HR HRET HRM HS HSA HSO HTA HT A HVA HV A ICRC ICU IDN IDS IEC
emergency department employee health electronic health record electronic medical record emergency medical services emergency medical technician environment of care evidence-based practice center emergency operations plan epidemiological planning model earned value management Federation of American Hospitals fixed costs Food and Drug Administration Federal Emergency Management Agency failure mode effects analysis functional magnetic resonance imaging Federally Qualified Health Centers Federal Trade Commissi Commission on full-time equivalent employee governing body gross domestic product General Electric group purchasing organization healthcare-associated infection Health Care Financing Administration Hospital Consumer Assessment of Healthcare Pro Providers viders and Systems Health Care Quality Improv Improvement ement Act of 1986 Health Plan Employer Data and Information Set home health agency Healthcare Integrity and Protec Protection tion Data Bank health information technology human immunodeficiency virus home medical equipment health maintenance organization hospital quality improvem improvement ent human resources Hospital Research and Educatio Educational nal Trust human resources management health system health systems agency health services organization healthcare technology assessment hazard vulnerability analysis infant care review committee intensive care unit integrated delivery network integrated delivery system institutional ethics committee
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IHI IHIE IOM IOR IPA IRB IRS IS ISO IT IV JCAHO JCAH O JCC KQC KPV LAN LCL LIP LLC LOS LPC LPN LTC LTCH M&M MBNQA MBO MBR MCO MD MDSS MGMA MICU MIS MRI MRSA MSD MSDS MSI MSO M-TAC M-T AC MVS NCQA NA NASA NaSH NCHSRHCTA NCHSRHCT A NCHCT
Managing Health Services Organizations and Systems
Institute for Healthcare Improv Improvement ement Indiana Health Information Exchange Institute of Medicine interorganizational relationship independent practice association institutional review board Internal Revenue Service information system International Organization for Standardization information technology intravenous Joint Joi nt Commissi Commission on on on Accredi Accreditatio tation n of Hea Healthcar lthcaree Organiza Organizations tions joint confe conference rence comm committee ittee key quality characteristic key process variable local area network lower control limit licensed independent practitioner limited liability company length of stay least preferred co-worker licensed practical (vocational) nurse long-term long-t erm care long-term long-t erm care (extended stay) hospita hospitall morbidity and mortality Malcolm Baldrige National Quality Awar Award d management by objectives management by results managed care organizations medical doctor management decision support system Medical Group Management Association medical intensive care unit management information systems magnetic resonance imaging Methicillin-resistant Staphylococcus aureus musculoskeletal disorder material safety data sheets magnetic source imaging management services organization multidisciplinary technology assessment committee multi-vendor servicing National Committee for Quality Assurance nursing assistant National Aeronautics and Space Administation National Surveillance System for Healthcare Workers National Center Center for Health Health Services Research Research and Health Care Technology Assessment National Center for Health Care Technolo echnology gy
ACRONYMS USED IN TEXT
NCHL NCVL NF NGC NHS NHSN NICU NIH NIOSH NLM NLN NLNAC NP NPSG OBRA ODS OPG OR OSHA OT OTA OT A PA PAC PA C PAS PBT PDCA PDSA PERT PER T PET PGY PHO PI PICU PIT POS PPE PPO PRO PSDA PSO PSRO PT PTCA PVR PVS QA Q/PI QA/I QI
National Center for Healthcare Leadership noninvasive cardiovascular laboratory nursing facility National Guideline Clearinghouse National Health Service (U.K.) National Healthcare Safety Netwo Network rk (CDC) neonatal intensive care unit National Institutes of Health National Institute for Occupational Safety and Health National Library of Medicine National League for Nursing National League for Nursing Accrediting Commission nurse practitioner National Patient Safety Goals Omnibus Budget Reconciliation Act of 1987 organized delivery system ocular plethysmograph operating room Occupational Safety and Health Administration occupational therapy Office of Technol echnology ogy Assess Assessment ment physician assistant political action committee physician-assisted suicide proton beam therapy plan, do, check, act plan, do, study study,, act program evaluation and review technique positron emission tomography postgraduate year physician-hospital organization productivity improveme improvement nt pediatric intensive care unit process improvem improvement ent team point of service personal protective equipment preferred provider organization peer review organization Patient Self-Determination Act professional staff organization professional standards review organization physical therapy percutaneous transluminal coronary angioplasty pulse volume recording plethysmograph persistent vegetative state quality assurance quality/productivity improvement quality assessment and improvement quality improveme improvement nt
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QIC QIO QIT QMHCD QWL RBRVS RBR VS RDE RHIO RM RN ROI RT RUG SA SBAR SBU SCAP SD SEA SHRM SICU SNF SPC SPECT SSU STEPPS SWOT TB TC TEAM TEE t-PA TQM UCL UPMC UR USPHS VAP VC VNS VP VPMA WAN W AN
Managing Health Services Organizations and Systems
quality improveme improvement nt council quality improveme improvement nt organization quality improveme improvement nt team quality management for health care delivery quality-of-work life resource-based relative value scale rule of double effect regional health information organization risk management registered nurse return on investment rehabilitation therapy resource utilization group strategic alliance situation, background, assessment, recommendation strategic business unit service, consideration, access, and promotion standard deviation sentinel event alert strategic human resources management surgical intensive care unit skilled nursing facility statistical process control single-proton emission computed tomography strategic service unit strategies to enhance performance and patient safety strengths/weaknesses/opportunities/threats tuberculosis total costs Technolo echnology gy Evaluation and Acquisiti Acquisition on Methods transesophageal echocardiography tissue plasminogen activator total quality management upper control limit University of Pittsburgh Medical Center utilization review United States Public Health Service ventilator-associated pneumonia variable costs vagus nerve stimulation vice president vice president for medical affairs wide-area widearea netw network ork
To those who manage health services organizations and to those who aspire
1 Healthcare in the United States
Learning Objectiv Objectives es • Discuss the development of healthcare in the United States • Comprehend the importance of prevention compared with other interventions • Compare the roles of various various organizations in delivery of health services • Understand the health policy and regulatory processes • Describe the education and regulation of selected health occupations • Understand the role of government government in organizing health services and paying for them • Detail the importance and effect of accreditation in health services
Part I
The Healthcare Setting
1
Healthcare in the United States Chapter Outline Health and System Goals Lack of Synchrony Processes That Produce Health Policy A Brief History of Health Services in the United States Other Western Systems Structure of the Health Services System Classification and Types of HSOs Local, State, and Federal Regulation of HSOs/HSs Other Regulators of HSOs/HSs Accreditation Accreditation in Healthcare Regulation and Education of Selected Health Occupations Associations for Individuals and Organizations Paying for Health Services Government Payment Schemes System Trends
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Managing Health Services Organizations and Systems
This first chapter describes the system of healthcare in the United States—the States—the general environment in which managers of health services organizations (HSOs) and health systems (HSs) work. The chapter develops d evelops conceptual frameworks and presents information about healthcare resources that show their historical development, nature, and extent and the relationships among them. Resources include HSOs/HSs, programs, personnel, technology, technology, and financing. Information about several types of HSOs—acute care hospitals, nursing facilities, ambulatory care organizations, hospice, managed care organizations (MCOs), and home health agencies— is provided in Chapter 2. Data and information presented here describe the manager’s environment. Successful managers have a comprehensive and accurate understanding of the world beyond their organizations; this includes a thorough understanding of trends and developments. The management model presented in Figure 5.7 (Chapter 5) shows this relationship and should be referenced as necessary. necessary. It is important not only to understand the individual presentations of data but also to appreciate their interactions. Health expenditures in the United States in 2010 were roughly $2.6 trillion, which was 17.9% of gross domestic product (GDP), or more than $8,000 per capita. 1 Table 1.2 shows that actual numbers for 2006–2010 and projections to 2021 have a much slower annual percentage change in the increase of health spending. Rates of growth for health expenditures are also a function of changes in GDP because these changes affect the denominator. 2 These changes have slowed the large upward trend of health expenditures as a percentage of GDP that had been observed since the 1960s. 3 Table 1.2 shows that, from $2.7 trillion in 2011, expenditures are projected to increase to $4.8 trillion in 2021, or 19.6% of GDP. 4 Growth in healthcare spending is projected to average 6.2 percentage points per year above the rate of GDP growth for f or 2015–2020.5 Expending such huge sums suggests both the magnitude of the problems and the opportunities for HSO/HS managers. An Institute of Medicine report issued in 2012 estimated that about 30% ($750 billion) of health system expenditures are wasted as the result of unneeded care, complex complex paperwork, fraud, and other waste.6
Health and System Goals Distinguishing the healthcare system from the health services system may seem a pedantic exercise, but health services managers must understand the connections between them. Blum’s model, shown in Figure 1.1, identifies factors affecting health. The relative size of the arrows shows the degree of their effects—medical care services (prevention, cure, care, rehabilitation) are much less important than environment and somewhat less important than heredity and lifestyles in affecting health (well-being). In explaining the model, Blum states that the “largest aggregate of forces resides in the person’s environment. One’s own behavior, in great part derived from one’s experience with one’s environment, is seen as the next largest force affecting health.”7 Effective managers understand the numerous influences on health status, both as factors that lead to episodes of illness and as affecting recovery and long-term absence of illness and minimization of disability. HSO/HS managers must have a broad view of illness and health. This requires looking beyond the organization. They must understand that, at best, the health services system has a limited effect and can provide only stopgap measures if negative influences on health undo what delivery of services has done. Blum suggests several goals for a health system: • Prolonging life and and preventing preventing premature death • Minimizing departures from physiological or functional norms norms by focusing focusing attention on precursors of illness
Healthcare in the United States
CHAPTER 1
5
POPULATION (size, distribution, growth rate, gene pool) E S
L R A U T A N
C U L T U R A L
HEREDITY
C U R S O
R E
S Y S
T E M
S
Internal Satisfaction ENVIRONMENT Fetal, physical (natural and man made), sociocultural (economics, education, employment, etc.)
External Satisfaction
Life Expectancy Impairment
s o m a t Discomfort i c
l a i c o s
HEALTH (well-being)
Reserve
E C
Disability
Participation in Health Care
Interpersonal Behavior Social Behavior
psychic Ecologic Behavior
Health Behavior
O L O G
I C A
L B A L A N C E
MEDICAL CARE SERVICES prevention, cure, care, rehabilitation
LIFESTYLES attitudes, behaviors
S N I O T A C S F I T
S A A N H U M
Figure 1.1. The force-field and well-being paradigms of health (From Blum, Henrik K. Expanding Health Care Horizons: From General Systems Concept of Health to a National Health Policy , Policy , 2nd ed., 37. Oakland, CA: Third Third Party Publishing, 1983; reprinted by permission.)
• Minimizing discomfort (illness) • Minimizing disability (incapacity) • Promoting high-level wellness or self-fulllment • Promoting high-level satisfaction with the environment environment • Extending resistance resistance to ill health and creating creating reserve capacity • Increasing opportunities for consumers to participate in health matters matters8
These goals are part of the conceptual framework underlying the use of this book. The Precede-Proceed Precede-Proceed planning model in Figure 1.2 is a more applied conceptualization of the relationships among activities that are part of health promotion planning and evaluation and that should be part of the efforts to deliver comprehensive healthcare. 9 Phase 1 is a social assessment that recognizes the relationships among health and various social issues by identifying a target population’ population’s social, economic, cultural, and other nonmedical concerns and goals. The epidemiological assessment in Phase 2 has the initial goal of identifying specific health goals or problems that may contribute to, or interact with, the social goals or problems noted in the social assessment of Phase 1. Phase 2 uses vital indicators such as morbidity, disability, mortality, mortality, and demographic patterns, as well as genetics and behavioral and environmental indicators of health problems. The health concerns needing amelioration are listed in rank order after the objectively appraised health problems identified in Phase 2 are compared with the subjectively appraised quality-of-life issues identified in Phase 1. The educational and ecological assessment in Phase 3 groups the factors associated with health concerns into predisposing factors, reinforcing factors, and enabling factors. The elements of these factors are sorted,
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Managing Health Services Organizations and Systems PHASE 4 Administrative Administrative & policy assessment and intervention alignment
PHASE 3 Educational & ecological assessment
PHASE 2 Epidemiological Epidemiological assessment
HEALTH PROGRAM
Predisposing
Genetics
Reinforcing
Behavior
PHASE 1 Social assessment
Educational strategies
Health Policy regulation organization
PHASE 5 Implementation
Enabling
Environment
PHASE 6 Process evaluation
PHASE 7 Impact evaluation
Quality of life
PHASE 8 Outcome evaluation
Figure 1.2. The model for health promotion planning and evaluation (From Health Program Planning: An Educational and Ecological Approach. Approach. 4th 4th ed. Lawrence W. Green and Marshal W. Kreuter. New York: McGraw-Hill, McGraw-Hill, 2005, 10.) With permission of the McGraw-Hill McGraw-Hill Companies, Inc.
categorized, and selected in terms of their greatest potential to change the behavioral and environmental targets generated in previous stages. The administrative and policy assessment and intervention alignment in Phase 4 begin the interventions that lead to the Proceed portion of the model. This phase answers questions about what program components and interventions are needed and whether policy, organization, and resources are sufficient to make the program a reality. reality. The result is the implementation in Phase 5. Phases 6, 7, and 8 are among the most important in the model. Here the program is evaluated in terms of process, impact, and outcome. The evaluation criteria are linked to objectives defined in the corresponding steps of the Precede portion of the model. The increasing emphasis on health promotion and prevention makes the Precede-Proceed model a useful tool in planning and delivering comprehensive healthcare, especially in integrated delivery systems that focus on population health.
Lack of Synchrony The wide geographic variation in rates of hospitalization and lengths of hospital stay by diagnosis has been known for decades. Similar geographic variation occurs in the use of nursing facilities by Medicare beneficiaries. 10 The variation in hospital use is a true difference that cannot be explained by redefining or estimating the effect of variables such as age, sex, and climate. Even more puzzling are the large differences in rates of hospitalization and lengths of stay by diagnosis within geographic regions, and even within individual hospitals. The most plausible explanation is that physician practice patterns—physicians’ patterns—physicians’ clinical decisions—vary, decisions—vary, sometimes widely. widely. It can be hypothesized that some rates of hospitalization and lengths of stay s tay
CHAPTER 1
Healthcare in the United States
7
are more appropriate than others. This means that exceeding the appropriate level of resource use has significant implications for HSOs/HSs striving to use resources judiciously. Other data have shown significant differences between morbidity and mortality caused by a disease and the amount of hospitalization for that disease. 11 The lack of synchrony can be explained in various ways: hospitals are constrained by available technology; hospitalization may be inappropriate to treat the medical condition that causes death or limits activity; and some medical conditions require more attention to prevention, which is historically a general deficit of acute care hospitals. Achieving synchrony suggests that services provided by HSOs and their use are in harmony with health needs. There are important distinctions between the need and the demand for health services. Need is measured by morbidity and mortality data and by disability that limits activity. Need Need is more objective than demand, but value judgments invariably underpin conclusions about need. Demand occurs when need (or perceived need) is converted into demand for services. As suggested, need and demand do not have a one-to-one relationship. Providers Providers such as hospitals and physicians have a role in demand, as does the availability of third-party payment for services. Demand for a service or treatment may be artificially low in a service area if, for instance, a hospital does not offer it and potential users must go elsewhere. Physicians’ Physicians’ perspectives about whether a medical service is needed directly affect demand for it. From the consumers’ perspective, need may not become demand, because consumers lack knowledge about a disease or or because social or cultural mores dissuade them from seeking s eeking services or treatment. In addition, demand may be less than need because people lack financial resources or there are other access barriers. Further, some demand, such as that for cosmetic surgery, is subjective and varies by individual consumers and their resources. The relationships between need and demand must be considered as health services are planned. The ethical dimensions of need and demand are addressed in Chapter 4.
Processes That That Produce Health Policy The federal Constitution is the basic law of the United States. The federal system that it established arose after the American Revolution when the several sovereign states relinquished specific powers to a central government. The enumerated powers of the federal government are interpreted by the U.S. Supreme Court and its inferior courts. Powers not delegated to the federal government are reserved to the states or the people. This is important because of the states’ police power. power. Each state has a constitution that establishes its form of government. The right to petition government is found in the First Amendment to the federal Constitution. This guarantee of access to government and its processes has produced various nonpublic efforts to affect aff ect the legislative, regulatory, and judicial processes.
Public Processes Legislative Process Statutes are enacted by state legislatures and the U.S. Congress. Comparable legislative activities are performed by local governments when ordinances are passed. The laws are binding, but they may be challenged in court if they violate constitutionally protected rights or were improperly enacted because of procedural irregularity. irregularity. The legislative branch relies on the executive branch to implement and enforce the laws.
8
Managing Health Services Organizations and Systems
Paradigmatic of these processes is the process that occurs in the U.S. Congress. The basic legislative process in the Senate and House of Representatives is the same. The majority political party controls committees and subcommittees and determines legislative priorities. Bills related to healthcare introduced in either house are referred to committees or subcommittees and may be amended at various points, including in committee or subcommittee, on the floor, or in conference between the houses. During the legislative process, or to learn more about problems before drafting bills, committees or subcommittees may hold hearings in which testimony about a problem or issue is heard. Individual managers or governing body members of HSOs/HSs rarely participate in the le legislative gislative process. Testimony Testimony,, drafts of o f bills, and other input are provided by professional or trade associations, either by their staffs staf fs or through lobbyists. A bill approved by the Senate and the House and signed by the president becomes law.
Implementing Law—Re Law—Regulations gulations Laws are implemented by regulations issued by executive departments and agencies and independent regulatory bodies such as the Federal Trade Commission (FTC). This process is governed by the Administrative Procedure Act of 1946, as amended.12 Requirements include notice of proposed rule making, proposed regulations, and final regulations. The steps before final regulations are issued permit interested parties to comment on provisions. Interim regulations that test the effect of proposed regulations may be issued before final regulations are drafted and approved. During the time for public comment, individual HSOs/HSs and their trade associations and lobbyists seek to affect the content of final regulations. It is most cost-effective to influence the process at this point. The record of HSOs/HSs and their trade associations is mixed. Lobbying by provider groups moderated the Medicare fraud and abuse regulations. Conversely, the federal National Labor Relations Board did not accept the position of hospitals during rule making regarding the definition of bargaining units. Results of the implementation process appear in the Federal Register, which is published each working day. Final Final regulations are compiled in the Code of Federal Regulations .
Multiple Functions of the Regulator Regulatoryy Process Implementation and enforcement of federal laws are accomplished by executive branch departments and agencies and by independent regulatory bodies, all of which were established by Congress. The regulatory process melds legislative, executive, and judicial functions. Drafting and promulgating regulations (rule making) give executive departments and agencies and independent regulatory bodies quasi-legislative authority. authority.13 The basic law’s specificity determines the latitude for interpretation in the rule-making process. The regulations reflect the law and congressional intent and have general (prospective) application. Executive departments and agencies and independent regulatory bodies have quasi-executive powers because they have authority to enforce the regulations. Compliance is achieved by bringing complaints, issuing directives such as cease-and-desist orders, and levying fines, all of which can occur pending a decision in the agency’s hearing and review process or prior to a hearing in an emergency. Executive departments and agencies and independent regulatory bodies have quasi-judicial powers because they judge compliance in hearings and reviews that are held before their hearing officers or administrative law judges. Such officials have a degree of independence because they are appointed for specific terms by the president and can be removed only for cause. Challenging a regulatory decision by engaging in the administrative hearing and review process is time-consuming and expensive. Legal counsel expert in the law being disputed, as well as in administrative law, law, are needed to work with retainer or in-house corporate counsel.
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Healthcare in the United States
9
As a practical practical matter, matter, small HSOs/HSs have little choice choice but to comply comply with a regulation or to to simply accept an adverse administrative ruling without appeal to the courts. Legal challenges are costly and usually can be undertaken only by a large HSO/HS or association. This may change, however, however, because some federal f ederal laws permit successful challengers to recover costs. An important development beginning in the late 20th century is the increasing complexity and significance of administrative law and the rule-making processes. Some political scientists argue that bureaucracies have become a de facto fourth branch of federal (and state) government. Generally, the parties must exhaust the administrative review process before appeal to the federal courts is allowed.
Judicial Process Space does not permit full discussion of various courts and their jurisdictions and authority. Suffice it to say that state and federal court systems are similar. Both have trial courts (county and district courts, respectively), intermediate courts (appeals courts), and supreme courts. Some states reverse use of the terms supreme and appeals . Judge is the title for jurists in courts cour ts other than the highest state and federal courts; justice is the title for members of state supreme courts and the Supreme Court of the United States. Typically Typically,, governors nominate state judges and justices, who are ratified ratified by the the state senates. senates. Some Some states elect elect judges judges and justices, justices, although although the election election of judges is more common. Elected jurists typically serve terms of 10 or 15 years. Federal court judges and and justices justices are nominated nominated by by the president president and and confirmed confirmed by the the Senate. Senate. They They serve for for life. Appointment insulates the judiciary somewhat from politics. This results results in more predictpredictable and consistent court-made law. Judges and justices appointed by governors or presidents will likely have compatible compatible political political philosophies; the history of the U.S. SSupreme upreme Court Court shows some notable exceptions, however. The need for legislative confirmation and the almost universal review of nominees by bar committees usually result in appointment of competent and ethical members of the judiciary.
The Courts HSOs/HSs are often involved in state and federal courts, as plaintiffs (those bringing civil legal action) or defendants (those against whom civil legal action is taken). In addition, when a case is heard by an appeals court, an individual or association may submit legal briefs as a friend of the court, or amicus curiae . The briefs bring to a court’s attention legal precedents and other information from that group’s group’s perspective.
Stare Decisis and Res Judicata Two legal doctrines make courts a source of formal law. Stare decisis is Latin meaning that courts will stand by precedent and not disturb a settled point. 14 Intrinsic to a stable society is that the law is fixed, definite, and known and that courts and litigants are guided by previous cases with similar facts. Whimsical changes and uncertainty must not result from judge-made law or legislative enactments. Nevertheless, precedents are sometimes overturned. The second doctrine is reflected in the Latin phrase res judicata, which means that a matmat15 ter has been judged or a thing has been judicially acted on or decided. Thus, rehearing will occur only if there is a substantial problem in the original judgment because of factual error, misrepresentation, or fraud or if significant new information becomes available. Res judicata adds stability and predictability to the law because a case is rarely reopened after appeals are exhausted.
10
Managing Health Services Organizations and Systems
Executivee Orders Executiv Formal law results from executive orders issued by the president through the executive branch of the federal government. Authority for some executive orders, such as the president’s president’s role as commander-in-chief of the armed forces, is derived from the U.S. Constitution. Decisions arising from treaties result in executive orders. Another example is delegation of authority by Congress to the president to act in special circumstances, such as emergencies. An executive order that declares a disaster will enable an HSO/HS to qualify for federal assistance.
Private Processes Influence of HSOs/HSs Healthcare became highly politicized politicized after massive federal financing fi nancing of health services began in the mid-1960s with enactment of Medicare and Medicaid. The legislative and regulatory processes affecting health services were increasingly subject to the influence of lobbyists, political action committees (PACs), (PACs), and other interest groups, all of whom sought to ensure that their concerns were known. For HSOs/HSs and their trade associations, asso ciations, participating in federal and state government processes that affected them was a matter of survival. In the management model in Figure 5.7, the change loop (number 6) suggests that HSOs/ HSs affect their external environment, even as they are affected by it. This occurs when they advocate a position or support a trade association or PAC. Another effect results from bringing a lawsuit.
Trade Associations and Interested Parties Washington, Washington, D.C., and and environs are home to thousands of trade associations; among them are many from healthcare. Physical proximity to policy makers and the bureaucrats who develop and enforce federal laws and regulations is considered an advantage. In addition to major associations, there are hundreds of narrowly focused special interest groups. At best, trade associations and interested parties provide information that enhances the results of legislative and regulatory processes. HSOs/HSs and their associations seek to further their own interests, but their quasi-public role means that their interests have much in common with the public’s public’s interests. Associations and interested parties make their positions known at various points in the legislative and regulatory processes. The myriad bills and their often complex subject matter minimize the depth of decision makers’ knowledge. An essential role of lobbyists is providing decision makers with information that otherwise is unavailable, as well as analyzing the intended and unintended consequences of legislation being considered. Interactions with lobbyists occur in private, which is not to suggest illegal or immoral acts. Legislators and their staffs know that lobbyists will present information most advantageously for the party that they represent. A cardinal rule among lobbyists is that truthfulness tr uthfulness is essential. Lobbyists caught lying or purposefully misleading decision makers or staff will irretrievably lose credibility—their greatest asset. The obvious bears repeating: There will always be dishonest legislators whose vote can be bought and special interests who try to do more than express a viewpoint and make a convincing argument. Despite occasional publicity to the contrary, such ethical and legal lapses are the exception.
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Healthcare in the United States
11
A Brief History of Health Services in the United States Figure 1.3 shows trends in U.S. health services since 1945. It provides a useful context for understanding the evolution and current status of healthcare and health services.
Technology The importance of ensuring the purity of o f food and water was shown during the “great sanitary awakening” that occurred in the mid-19th century. One result was the creation of local and state health departments. At about the same time, the work of scientists such as Pasteur, Pasteur, Lister, and Koch resulted, first, in antisepsis and, later, asepsis. In addition, medical technology such as radiographs, inhalation anesthesia, blood typing, and improved clinical laboratories in the late 19th century permitted efficacious surgical interventions with greatly reduced morbidity and mortality. Making these scientific advances available to the public required an organization, specialized staff, and effective systems. Hospitals became the answer. It was common for hospitals to be sponsored by private, not-for-profit corporations that had been formed by religious groups, concerned citizens, or wealthy benefactors; local governments sponsored others. In addition, many small “hospitals” were established as for-profit corporations, often by individual physicians who needed a place to care for patients following surgery. Long-term care facilities were rare because extended families cared for one another. Persons with mental illnesses were isolated from society in facilities owned almost exclusively by state governments. Effective, large-scale treatment for them did not occur until after World World War War II through the use of psychoactive drugs. Another type of HSO sponsored by local and state governments was the public health department. Chapter 3 details the role of technology in contemporary health services.
Mortality and Morbidity Except for tuberculosis, the incidence of which declined rapidly at the end of the 19th century mainly because of improved nutrition and housing, and leprosy, which has never been a major medical problem in the United States, there were few chronic diseases before the 20th century. Primarily, people died of acute gastrointestinal and respiratory tract infections, such as pneumonia, that usually occurred well before they could develop chronic diseases. Many communicable health problems common in the mid-19th century were solved through preventive measures taken by health departments. Pure food and water and improved sanitation were major contributors to decreased morbidity and mortality. The greatest influence on public health in the United States came from work done in England. Local public health departments d epartments were established in the early 19th century; those in Baltimore, MD, and Charleston, SC, were among the first. 16 Causes of mortality and morbidity in the mid-20th century were much less amenable to easy prevention or inexpensive treatment, and greater emphases on acute services substantially increased costs. As in the United States, the worldwide trend is that fewer illnesses are acute and result, for example, from water- and foodborne diseases that lead to premature death. Aging populations po pulations have more disability and will be afflicted by diseases such as Alzheimer’s Alzheimer’s and Parkinson’ Parkinson’s. Such conditions are long-term and require significant amounts of resources.17
12
N S E O I S S C R T L V E R U E I S D S E H V R T O R E L P S A E E H H T
S N O I T C A E R E S E H T
S T C E F F E E S E H T
S D N E R T E S E H T
S E C R O F E S E H T
Managing Health Services Organizations and Systems
/ s e g i n c i l t l p i d w u r s e r k r n e u s a i d i b v n n d o r u e p t s a a r e e e r r c w t o e t n I f
s e i g e t a r t s k s e i r v i s r n e e h f g e i D H
s t n e m e g n a r r a l a n o i t a z i n a s g r e r i o u t s l o u l C M
n o i t i t e p m o c r e t a e r G
y t i c a p a c s s e c x E
n o i t a l u g e r e D
e r a c t s o c r e h g i H
s r e d i k v s o r i r p l a y i b c n g a n n i i f t f t i a h s s t s O o S C H
s s e n l l i e t u c a e r o M
m o c n e u r a n c i d e e s t a s a e r n c e n p I
n i f e o g n n a o h i t c c l e a r c i d i g e d l n e o i i f o c i n i d h o c d e e m M t
, s G R D , s O R P : n o i t a l u g e r l S a G r e U d R e , f S e r V R o B M R
f o s e c O n S a H l a s b D g M n i r s g : n e a w O h o C C p M
e t a v i r p d n a c i l b u p y b s r s e l r o r u t s n i n o c h t t s l a o e C h
y r o t a l u b m a r o f e g e a r r a e v c o c d e e c d n n t e a r x u s e n d i n r a e e t t r e a B c
e r a c d e g a n a m f o h t w o r G
, e r e a c e c i p m y s r o o o h t a h n l o u d n b a , s m i n a s , i o a h t h l a p t l a i l e a m E h p
s e c i t c a r p l a c i d e m p u o r g d r a w o t d n e r T
s r e d i v o r p n a i c i s y h p n o n f o h t w o r G
s r e t n e c h t l a e h d o o h r o b h g i e N
s l a r r e r f e e h t r a n r d a i r l c a a i s n w o y o i t t h u p d i n n t t a e s h r i n t T
s p r o C e c i v r e S h t l a e H l a n o i t a N
n i g n i k r o w s D M r o f s s e s a n e e v r i a g r e o g f a n t r a o o L h s
S T S O N I C N E R O I A T C A H L L A T C A E S E H
k s i r l a s s i c e n c a c n a i f d l e a n n e o s s r s e e L P
D N E N T D A T E R E N E A R A N R E H A Y A T T C O R C A F S A U O I O S D Y O R Q T A N A E S I D L H O N E P C T R A V I E E E N O M E S T I T L
y t i n u m l l e m w o f c o d l e s h a t p i p t i w p s o r u q o G e h
d e r u s n i n u / r e d n U
f o e t s r a o c c h t h l a g e i H h
. c d t e e g r , n a n o h s i o m s , t a r a r e g g e n r t o e i n i t , a m s r — e e s c p i o O v r o S e C H s
e d r a i a c c i i d d e e M M
y l l a ) i n c i o h t t e l p a a s i z e e l a h ( t e g c i p n n s i a o r w u h o r r s o n f G i
n o t r u B l l i H
12
s b r u b u s f o h t w o r G
f o n o i c t i u h i b p r s a t r s o r i g l d o a t c e o G m d
n o i t a z i l a i c e p s s r g t n o i c o w d o r f G o
l a t i p s o s h D f o M h d t i e w r a o r l a G s
f o f e s o c l a r l s n t e o e i u p w o l s o h f o n h p s c i g l g g a i n c n i n i w i w h d c o o a r e r e G m G t
g y n i g d o n d f l o u o n n f a t , t n h n h e c e c t e m m r l a p a n e o i r c s l e e d e v r v o f e e G o d m
d s r n o a t c s r o e b d n m m o e u n t s f n o y n e s i c h t h t n l a e e w u o f h r l n i n G i
g n i n n a l P h t l a e H [ ,
m e t s y S e r a C h t l a e H . S . ) . U 3 e 1 h 0 t 2 , g s n r i t o c h e t f f u A a s e d h t n y e r b T d
. e e t t a u d t i p t s u n d I n h a c d r a s e e i s e v e R R e . g 6 d 7 i r 9 b 1 , m n a o i C t a r m t s o r i n F ( m . 5 d 4 A 9 s 1 e c r e u c o n s i s e R m n e a t s m y s u e H r : a C c D h t l , a n e o h t g . i n S . h U s a e W h t . n 9 0 i s 4 , d ] n s e e i r r T e S . n 3 o . i t 1 a e m r r u o g f i n F I
CHAPTER 1
Healthcare in the United States
13
In 2010, life expectancy in the United States at birth was 78.7 years. The 15 leading causes of death in 2010 were as follows: 1. Diseases of the heart (heart disease) 2. Malignant neoplasms (cancer) 3. Chronic lower respiratory diseases 4. Cerebrovascular Cerebrovascular diseases (stroke) 5. Accidents (unintentional injuries) 6. Alzheimer’ Alzheime r’ss disease diseas e 7. Diabetes mellitus (diabetes) 8. Nephritis, nephrotic syndrome, syndrome, and nephrosis (kidney disease) 9. Influenza and pneumonia 10. Intentional self-harm (suicide) 11. Septicemia 12. Chronic liver disease and cirrhosis cirrhosis 13. Essential hypertension and hypertensive renal disease (hypertension) 14. Parkinson’s Parkinson’s disease diseas e 15. Pneumonitis Pneumonitis due to solids and liquids18 Figure 1.1 shows a link between lifestyle and medical problems. Several of the leading causes of death listed above reinforce the seeming connection between lifestyle choices and medical conditions that result in death. Many types of prevention require changes in behavior. Efforts to effect these changes raise issues of individual choice and liberty rights, which are much more complex than purifying water and protecting food supplies. Modifying behavior raises questions such as What are the limits of government’s efforts to force people to live healthy lives? What is society’s society’s obligation to treat those whose illnesses are a direct result of engaging in activities known to be unhealthy or to result in injury?
Social Welfare A major shift in the locus of responsibility for social welfare occurred with the Social Security Act of 1935,19 whose enactment resulted from the Great Depression’s catastrophic economic and social problems. To To the extent that government was involved in social welfare before 1935, it was provided at the local and state levels. City or county governments might own a “poor farm,” for example, where needy persons could live and work until they could regain their independence. Since 1935, there has been a massive shift of perceived and actual responsibility for social welfare from state and local levels to the federal government. This accretion continued virtually uninterrupted until revenue sharing and other federal programs were developed in the 1970s and 1980s. Federal government–sponsored national health insurance programs, ranging in scope from all-encompassing to modest, were seriously considered in the late 1940s and late 1960s and again in the early 1990s. Various factors made them unattractive: lack of voter interest
14
Managing Health Services Organizations and Systems
because of their cost and the fear of government control, widely available employer-provided health insurance, and the presence of Medicare and Medicaid that covered millions of Americans. Organized medicine’s medicine’s opposition is often cited, but its role is overstated. The experience with Medicare and Medicaid from 1966—especially their rapidly rising costs—blunted the political will to universalize them. Passage of the Patient Protection and Affordable Care Act (ACA) (PL 111-148) marked a substantial increase in the federal government’s government’s involvement in organizing, controlling, and financing delivery of health services. In 2010, 13% of the population was age 65 or older; it is projected that by 2050, this proportion will grow to 20.0%.20 These data suggest that there will be a greater demand for health services in geriatrics, chronic diseases, rehabilitation, and institutional long-term care.
Federal Initiatives Major beneficiaries of early federal programs were not-for-profit acute care hospitals, including those operated by state and local governments. From 1946 to 1981, the Hill-Burton Act (Hospital Survey and Construction Act of 1946, PL 79-725) 21 provided more than $4 billion in grants, loans, and guaranteed loans in a federal-state f ederal-state matching program and aided nearly 6,900 hospitals and other health services facilities in more than 4,000 communities. Initially, new inpatient facilities were constructed; later, outpatient facilities were constructed or remodeled. In return for Hill-Burton assistance, organizations had to provide uncompensated services for varying lengths of time.22 The legal processes that produced Hill-Burton and laws like it were discussed earlier in this chapter. Another federal fede ral program provided generous gen erous funding for medical medi cal research. The National Institutes of Health (NIH) began with experimentation on cancer in the 1930s. In 2012, there were 21 institutes and 6 centers and related activities, such as the National Library of Medicine (NLM) and the NIH Clinical Center. 23 In 2013, the NIH budget was $30.9 billion, over four times the $7.6 billion in 1990 and more than nine times the $3.4 billion in 1980 (for only nine institutes and related activities). 24 In 2011, the NIH provided grants to more than 45,000 research projects in universities, medical schools, and independent research institutions. 25 By way of context, an estimated $140.5 billion was spent on U.S. health research in 2010. Industry spent $76.5 billion (55%), including $37 billion (26%) from the pharmaceutical industry, $30 billion (21%) from the biotechnology industry, and $9 billion (9%) from the medical technology industry. Government spent $46 billion (33%); most of this came from NIH ($35 billion [25%]), and other federal agencies and state and local governments spent $11 billion (8%). The remaining $18 billion (13%) was spent by universities, independent research institutes, voluntary health organizations, and foundations. 26 Significant federal programs to educate more physicians, nurses, technicians, and managers were established and funded in the 1960s. It was clear to Congress that the knowledge produced by NIH and the care delivered at hospitals built by Hill-Burton could improve health status only if health professionals profess ionals were available in sufficient numbers. The federal government has also built large numbers of Department of Veterans Affairs (DVA) hospitals and other HSOs to serve former military personnel. The DVA system is separate from the services provided to groups in special categories, including inmates in federal prisons, American Indians and Alaska Natives, and active-duty and retired military personnel and their dependents in the U.S. Army, U.S. Navy, and U.S. Air Force health facilities. In 1965, amendments 27 to the Social Security Act of 1935 obligated the federal government to pay for health services under the newly enacted Medicare and Medicaid programs. Medicare is exclusively federal and pays for medical services provided to persons who have
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Healthcare in the United States
15
disabilities or are 65 or older. Originally, Medicare included only Part A, to pay for hospital inpatient services, and Part B, to pay for physicians’ services. The Balanced Budget Act of 1997 (PL 105-33) 28 added Part C, which allows Medicare beneficiaries to choose from various health plans, including fee-for-service, coordinated care plans, provider service organizations, and medical savings accounts.29 Part D was added to Medicare by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (PL 108-173)30 to establish a voluntary prescription drug benefit program. Medicaid is a state-federal cost-sharing program. States determine eligibility. The federal government subsidizes a state’s Medicaid program in varying ratios. Medicaid requires that participating states offer a minimum set of benefits: inpatient and outpatient hospital services; physician, midwife, and certified nurse practitioner services; laboratory and x-ray services; nursing homes and home healthcare for individuals age 21 or older; early and periodic screening, diagnosis, and treatment for children under age 21; family f amily planning services and supplies; and rural health clinics or federally qualified health center services. In addition to the basic benefits, states can receive federal matching funds for “optional” services, including prescription drugs, prosthetic devices, hearing aids, and dental care. 31 The open-ended cost-sharing commitment by the federal government has proven largely uncontrollable because limiting or reducing benefits is politically infeasible. This has caused Medicaid to become extremely expensive for both state and federal governments. Meanwhile, federal legislators have sought to rationalize health services. 32 The Comprehensive Health Planning and Public Health Service Amendments Act of 1966 (PL 89-749) was the first attempt. It enhanced the modest planning requirements in Hill-Burton by encouraging voluntary planning and use of planning processes and techniques. This legislation was amplified and expanded in the National Health Planning Planning and and Resources Development Act Act of 1974 (PL 93-641), which increased the control that planning agencies had over expansion of hospitals and services in an effort to regulate the supply of services. Monitoring the use and quality of services provided under Medicare and Medicaid programs was included in the Social Security Amendments of 1972 (PL 92603) that established professional standards review organizations (PSROs). P Political olitical changes caused reassessment of planning and PSROs. Federal support of planning ended. PSROs were replaced by peer review organizations (PROs), which are discussed later in this chapter. chapter. Such regulatory controls were thought to be essential in slowing the rapid increases in healthcare costs. Generally, Generally, they were ineffective. Except for 4 years between 1969 and 1996, the medical-care-items component of the consumer price index (CPI) had the highest rates of increase, usually by wide margins. In several years, the average annual percentage changes for hospital services were two to three times the annual percentage changes for all items measured by the CPI.33 Healthcare costs are discussed later in this chapter. The Tax Equity and Fiscal Responsibility Act of 1982 (PL 97-248) and the Social Security Amendments Amendments of 1983 (PL 98-21) 98-21) established established a prospective prospective payment system to slow cost in34 creases for hospital services. Medicare reimbursement is determined prospectively. It is based on diagnosis-related groups (DRGs), which tie the payment from the federal government for Medicare patients to a hospital’s case mix. Since the mid-1970s, state governments’ concerns about rising health services costs resulted in certificate of need (CON) and rate review laws. In addition, states have reduced reimbursement for Medicaid such that providers typically incur financial loss providing them. These federal legislative initiatives forced hospitals and other providers, such as nursing facilities, to become more efficient. Providers cannot control their environments, however. In addition, they may have to provide significant levels of uncompensated care. In such circumstances, providers—especially hospitals—can survive only if they find other revenue sources. Previously, unpaid costs were shifted to Blue Cross, commercial insurance companies, and
16
Managing Health Services Organizations and Systems
private-pay patients. Third-party payers have become less willing to bear these shifted costs. This left only private-pay patients—a group too small to make up the difference. Beyond the issue of fairness, cost shifting is a major political issue, especially with regard to the uninsured and the costs of medical education. To protect themselves financially, hospitals and other HSOs are developing new organizational entities and relationships through corporate restructuring, joint ventures, and participation in HSs. The result is a mix of not-for-profit and for-profit organizations that, it is hoped, will produce an enhanced revenue stream to offset deficits. These developments are discussed in Chapter 2. MCOs, the most common of which is the health maintenance organization (HMO), have helped moderate the rate of increase in healthcare costs, but the results have been mixed. Evidence for this includes a need for MCOs to recoup losses, the higher costs of prescription drugs, the difficulty of wresting additional price concessions from physicians and hospitals, and the fact that all the one-time savings that resulted from employees’ changing to managed care have been realized. HMO costs are estimated to be growing like those of traditional health insurance.35 In addition, anecdotes asserting that economics drive certain physician decision making may be overstated, as seen when equalizing payments to physicians for caesarean sections and vaginal deliveries did not decrease the number of caesarean sections. The opportunity costs of waiting out a difficult labor, the fear of malpractice suits, and the effects of a bad outcome on physicians’ self-respect, reputation, and long-term profits may be more important in caesarean delivery decisions than current fees. 36
Other Western Western Systems Western Western Europe, notably Germany and England, had government involvement in financing health services much earlier than did the United States. In 1883, Chancellor Otto von Bismarck achieved passage of a social insurance scheme, including a health services component, for certain working-class Germans. In 1911, England adopted a national health insurance program, and in 1948, the United Kingdom established the National Health Service, which included government ownership of the health services s ervices system. Historically, Historically, Western European and Canadian healthcare systems have had more governmental control and financing than did the healthcare system in the United States. In the past, many of these countries experienced inflation in health services costs similar to that in the United States, despite greater government involvement in planning and financing. However, since about 1985, the United States has the highest growth rate in healthcare spending.37 Countries whose public budgets allocate expenditures for health services prospectively spend substantially less than the United States. In 2010, as a percentage of GDP, the United States spent 17.6% ($8,233 per capita), Germany spent 11.6% ($4,338 per capita), Canada spent 11.4% ($4,445 per capita), and the United Kingdom spent 9.6% ($3,433 per capita).38,39 One reason for this difference is that the United Kingdom and Canada spend much less on technology. Furthermore, elective and nonemergent procedures may be available only after long waiting periods, known as queues. An important difference differen ce in expenditures expenditure s for health in various countries is the source of funds. In 2000, public sources in the United States accounted for spending of 5.8% of GDP. This is virtually identical to public spending in Italy, Japan, and the United Kingdom (5.9% each) and very similar to that in Canada (6.5%). It is private health spending that distinguishes these comparison countries from the United States. In 2011, private healthcare spending as a percentage of total healthcare spending was 22.4% in Italy, 17.5% in Japan, and 16.1% in the United Kingdom. In the United States, however, private spending for healthcare was 46.9%. 40
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Healthcare in the United States
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Structure of the Health Services System Various types of HSOs are found in the private (owned by individuals or groups) and public (owned by government) sectors. HSOs may be institutions—the most important and numerous are hospitals and nursing facilities—or they may be agencies and programs such as public health departments and visiting nurse associations. Information about selected HSOs is found in Chapter 2. Various HSOs are aggregated into HSs for greater efficiency and to provide a connected network of services. In this regard, HSOs are orienting their activities toward the health of populations and communities. HSOs depend on their environments (see Figure 5.7). The range of health services delivery and various providers is shown in Figure 1.4. One way HSOs/HSs can improve their focus on populations and communities is to develop community care networks, which have the following objectives: increasing access and coverage, enhancing accountability to the community, imbuing the healthcare system with a community health focus, improving coordination among the many parts of the healthcare system, and using healthcare resources more efficiently. efficiently. Participants include insurers, business alliances, schools, religious organizations, social services agencies, public health departments, local governments, and community-based organizations, in addition to HSs, hospitals, clinics, and physician groups. An estimated 26% of hospitals participated in community care networks in the late 1990s. 41 Health departments can and should take a leading role in coordinating disparate providers and minimizing political and competitive issues to deliver integrated and comprehensive health services to the community. community.42 Delivery of integrated services is discussed in Chapter 2, and community health information networks are discussed in Chapter 3. Preventive care is an essential part of meeting the health needs of a population. It comprises two parts, education and prevention. Health education is a long-standing part of K-12 education. It is an increasingly important part of health services delivery. Prevention Prevention has three parts: primary, secondary, and tertiary. Primary prevention is prevention of disease or injury. Examples include improved design of roadways, school education programs about tobacco use and substance abuse, and immunizing against poliomyelitis or measles. Secondary prevention slows or blocks progression of a disease or injury from an impairment to a disability. Using the Papanicolaou smear (Pap test) to identify early cellular changes that are precursors of cervical cancer is a type of secondary prevention. If impairment has already occurred, disability (or death) may be prevented through early intervention. Treating certain streptococcal infections with penicillin can prevent the occasional development of rheumatic fever and serious heart disease. Early detection and treatment of high blood pressure reduces the probability of heart attack or stroke. Tertiary prevention blocks or retards progression of disability to a state of dependence. Early detection and effective management of diabetes can prevent some dependencies associated with the disease, or at least slow or stop progression. Prompt medical care followed by rehabilitation can limit damage caused by a cerebrovascular accident (stroke); damage from heart attacks can be limited in the same way. Good vehicular design can reduce the dependency that might otherwise result from an accident. 43 HSOs such as state and local public health departments have programs at all three levels of prevention. Hospitals and nursing facilities are more likely to engage in secondary and tertiary prevention than primary prevention. Figure 1.4 shows that primary care is delivered in various settings—most common are physicians’ physicians’ offices, clinics, and the outpatient units of acute care hospitals. Primary care is routine care, a part of which is primary prevention. Primary care may also be part of secondary and tertiary prevention.44 In addition, acute care hospitals provide secondary and tertiary acute care services through emergency treatment and inpatient services. Restorative care (rehabilitation)
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S E H C M T I E L V A R T E E S Y H S S
18
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m e t s y S e r a C h t l a ) e . 3 H . 1 0 S . 2 , U s r e o h h t g t n u a i t e c h e f f t y A b s d d e n t e a r d T
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Healthcare in the United States
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19
may be provided in acute care hospitals. It is also available in specialized hospitals, in nursing facilities, and in the home through home health services. Continuing care is available in settings such as the home, nursing facilities, and hospice. Holistic, complementary, and alternative medicine are similar concepts that greatly broaden the theories about disease prevention, causation, and treatment. They focus on nontraditional medicine, with special emphasis on self-help and on interventions less dramatic than chemicals and surgery, and they stress health promotion and prevention. Increasingly, such measures are adjuncts to allopathy—traditional Western medicine that emphasizes dramatic interventions such as chemicals and surgery to return the body to normal functioning. 45 Use of nontraditional medicine will significantly affect HSOs, physician (allopathic) practice, and healthcare financing. It is likely that using alternative sources will only shift where payment is made and not reduce costs to the system. In fact, costs may increase, at least in proportion to increases in the alternate sources of care. Issues of third-party coverage and payment and effects on total costs and delivery of care are beginning to be addressed. Most physician–patient interactions (visits) occur in physician offices. In 2009 and 2010, over one billion physician–patient interactions occurred in physicians’ offices; another 231 million occurred in hospital outpatient clinics and emergency departments (EDs). 46 Despite increasing numbers of physicians employed by HSOs, most are self-employed entrepreneurs who may share a receptionist, receptionist, billing services, patient coverage, coverage, and perhaps diagnostic equipment with other physicians, or they may be in a partnership or may be “employees” “employees” of a physician (professional) corporation such as a multi- or single-specialty group practice. A physician office practice is not considered an HSO unless it is part of a clinic or group practice.
Classification Classifica tion and Types of HSOs H SOs Profit or Not For Profit HSOs/HSs may be classified as profit seeking (for profit or investor owned) or not for profit. The former pay the owners (investors) a return on investment. In the latter, any excess of income over expense is not available to any person or corporation and is used by the HSO/HS to enhance the content or quality of health services or to reduce charges. Government-sponsored HSOs/HSs are classified as not for profit, while privately owned corporations may be for profit or not for profit. For-profit and not-for-profit HSOs/HSs may be converted to the opposite status. This is done for tax and other strategic reasons. Converting for-profit HSOs/HSs to not-for-profit status may result in provision of more uncompensated care in the service area, but it simultaneously decreases property and other tax revenues to local jurisdictions. Conversely, Conversely, changing not-for-profit HSOs/HSs to for-profit status raises issues of valuing assets, charitable mission, private inurement, and the mission and activities of the charitable foundation usually established with proceeds of the sale.
Ownership HSOs/HSs may be classified by ownership. Privately owned corporations are two types: sectarian (faith based) and nonsectarian that are organized as not-for-profit corporations; and for-profit corporations that issue stock to either an identified group of investors (closely held corporations) or to the general public, in which case the stock is traded on stock exchanges. Government-owned Government-owned HSO/HSs are owned by a public entity and classified as not for profit. All
20
Managing Health Services Organizations and Systems
levels of government own and operate acute care hospitals and other types of HSOs or HSs. Cities and counties own acute care hospitals, some of which are financed by special tax districts. Cities and counties establish, fund, and control public health departments. HSOs/HSs owned by state government include health departments and psychiatric hospitals or HSOs for persons with mental disabilities. Many states own academic health (medical) centers, which are often university-affiliated teaching hospitals that treat acute illness, conduct research, and educate those in the health occupations. The federal government has a long history of limited involvement in financing health services. To a lesser extent, it has delivered preventive, acute, and long-term health services to special groups. U.S. Public Health Service (USPHS) hospitals were established in the late 18th century to care for merchant seamen. USPHS hospitals serving general acute care patients operated until 1981, when the few remaining hospitals closed or converted to other uses. The only facility in the United States devoted to Hansen’s disease (leprosy) is the National Hansen’s Disease Clinical Center at the Ochsner Medical Center in Baton Rouge, LA.47 In 2012, the Indian Health Service, an agency of the Department of Health and Human Services (DHHS), operated 29 hospitals, 68 health centers, and 41 health stations. In addition, through self-determination contracts, American Indian and Alaska Native corporations administer 16 hospitals, 258 health centers, 74 health stations, and 166 Alaska village clinics. 48 In 2010, the DVA operated 153 medical centers (hospitals), 956 outpatient clinics, 134 nursing homes, 90 residential rehabilitation treatment programs, 232 readjustment counseling centers, 57 veterans benefits regional offices, and 131 national cemeteries.49 In addition, acute care hospitals and clinics operated o perated by the U.S. Army, Army, Navy, Navy, and Air Force serve active-duty and retired military personnel and their dependents.
Length of Patient Stay A third way to classify HSOs is by the length of time care is provided. A general dichotomy divides HSOs by whether services are provided to inpatients—those treated 24 hours or longer—or to outpatients—those treated for less than 24 hours. Outpatient (ambulatory) services are provided in hospital EDs and clinics, physicians’ offices, and freestanding HSOs such as surgery centers and imaging centers. Home health services are a unique blend of inpatient and outpatient services because care is provided in patients’ homes over months or years. Hospice care is also a blend of inpatient care and care delivered in patients’ homes. Hospice is available to the terminally ill—typically those with fewer than 6 months to live. Chapter 2 discusses several types of HSOs in detail. HSOs that provide inpatient care are divided into short term (acute) and long term. The American Hospital Association (AHA) defines a short-term hospital as one in which the average length of stay (ALOS) is less than 30 days; a long-term hospital has patient stays that average 30 days or longer. The ALOS in community (short-term [acute care]) hospitals has declined steadily from 7.6 days in 1981 to 5.4 days in 2010. 50 In the continuum of care measured by length of stay (LOS), long-term care hospitals (LTCHs) (LTCHs) are sited between acute care hospitals and nursing facilities. LTCHs provide extended medical and rehabilitative services to patients who are clinically complex because of multiple acute or chronic conditions. Federal regulations define LTCHs as hospitals whose ALOS is longer than 25 days. 51 Further along the LOS continuum are nursing facilities (NFs). NFs typically treat only inpatients, who are called residents. Some rehabilitation services may be provided, but the level of care is typically custodial. The LOS in an NF is measured in months or years.
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Healthcare in the United States
21
Role in the Health Services System A fourth way to classify HSOs/HSs is by their role in delivery of services. Health or healthrelated services may be provided in public health department screening programs, in family planning and substance abuse treatment centers, or through sanitation efforts that protect food and water. There are thousands of privately and publicly owned and operated emergency medical units, such as rescue squads and ambulance services, often organized into emergency medical services systems. In addition, there are programs more oriented to social welfare activities; some only raise funds, others deliver specialized services. Depending on their activities, they may or may not be considered HSOs. The total number of HSOs in the United States is in the tens of thousands. Chapter 2 describes the history, history, numbers, functions, and organization of several types.
Unique Institutional Providers In addition to inpatient HSOs such as hospitals and NFs, many other types of inpatient facilities provide health and health-related services. Data about them are sparse. They include residential facilities or schools for special groups such as the blind or deaf, persons with emotional or physical disabilities, persons with mental disabilities, dependent children, unwed mothers, alcoholics, drug abusers, and persons with multiple physical and mental disorders. In 2011, for example, there were 87,400 persons with intellectual disabilities, developmental disabilities, or both who received training and support in 6,465 facilities 52; this is a substantial decline in the number of similar persons and facilities reported 2 decades earlier.53 Privately operated facilities numbering 5,594 accounted for 87% of all facilities and served 62% of clients. Thirty-eight percent of clients resided in 843 state-owned/operated facilities. A few clients were served by city-, county-, or town-based facilities. The trend has been away from care in large state-operated institutions toward smaller, privately operated facilities with fewer than eight beds.54 Community services may reduce the need for long-term inpatient care for patients of all types. Examples include diagnostic and evaluation clinics, day care centers, early childhood education facilities, rehabilitation programs, and summer camps and recreational facilities. All offer alternatives to institutional placement. Community-sponsored educational services are provided by local school districts directed by state special education programs. Programs for the developmentally disabled are typically operated at the local level and supported by state funding.
Mental Health Organizations Mental health organizations are defined as HSOs that primarily provide mental health services to persons with mental illness or emotional disturbances. Included are public or private psychiatric hospitals, psychiatric services in general acute care hospitals, outpatient psychiatric clinics, and mental health day/night facilities. Since 1955, the lo cus of delivering mental health services has changed markedly. In the mid-1950s, state and county mental hospitals accounted for 77% of inpatient services; 23% were outpatient. By 1975, a reversal had occurred, and 76% of mental health services were outpatient. 55 Inpatient treatment continues to be a major type of care. There were 3,130 inpatient and residential mental health organizations with more than 230,000 beds in 2008, the latest year data are available. 56
22
Managing Health Services Organizations and Systems
Teaching Hospitals In 2012, 464 hospitals participated in graduate medical education as defined by the Council of Teaching Hospitals and Health Systems, 57 a decline of 850 since 1990. They fall under the general rubric of “teaching hospital” and offer a wide range of secondary, tertiary, and some quaternary medical services. These 464, plus a large number of other hospitals, participate in training a wide variety of students in the health occupations. Many teaching hospitals are part of a medical center complex that includes a medical school. Those having no medical school are likely affiliated with one. Prominence in medical education, plus their research and resulting publications in the medical and scientific literature, make teaching hospitals a vital resource in healthcare. A unique HSO that fits into into more than one of the categories described earlier merits special mention. The premier institution among all HSOs is the academic health (medical) center hospital, which is a subset of teaching hospitals. An academic health center hospital is one in which a majority of the chiefs of service at the hospital are chairs of the academic departments departments 58 in a medical school. In 2012, there were 119 academic health center hospitals.
Local, State, and Federal Regulation of HSOs/HSs When the original colonies delegated delegate d specific spe cific powers powe rs to a national natio nal government gove rnment and a nd ratified rati fied the U.S. Constitution, they retained a wide range of authority traditionally held by the sovp ower, generally defined as the authority to protect the ereign. These are known as the police power, public’s health, safety, order, and welfare. State laws and regulations implement the police power, many of which may be delegated to, or shared with, local governments. It is common for state departments of health to regulate licensure of HSOs, for example. The typical regulatory authority delegated to local governments, reflected in city and county ordinances and exercised by local health departments, includes food, fire, radiation, and environmental safety; air and water quality; waste and trash disposal; sanitation and pest control; and workplace hazards. These activities affect HSOs.
Licensure and Regulation HSOs/HSs are subject to state laws and local ordinances, an important dimension of which is the group of inspections linked to licensure for specific types of HSOs. States may accept accreditation by a private organization in lieu of some types of regulation. For example, accreditation by the Joint Commission on Accreditation of Healthcare Organizations (The Joint Commission) Commissio n) is recognized for hospital licensure by 48 states. Similarly, many states recognize The Joint Commission’s accreditation throughout the range of its accreditation programs.59 State and local government regulation focuses on physical plant and safety. Scant attention is paid clinical quality issues in patient care. The Fire Prevention Code, National Fuel Gas Code, National Electrical Code, and Life Safety Code published by the National Fire Protection Association, an international, not-for-profit organization, are prominent sources of environmental standards used by state and local government in regulating HSOs.60
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Conditions of Participation The 1965 Medicare law (1965 amendments to the Social Security Act of 1935) stated that Joint Commission–accredited Commission–accredited hospitals were in “deemed” “deemed” status (eligible) (eligible) for purposes of reimbursement. In response to concerns about delegating government authority to a private group, the DHHS promulgated the “conditions of participation” (COPs) in 1966. 61 Federal legislation in 1972 mandated oversight of Joint Commission accreditation and review of accredited hospitals on the basis of random sampling or complaints. Originally, COPs emphasized physical plant and safety (e.g., the Life Safety Code ) and minimized attention to the content and processes of clinical practice and organization; The Joint Commission emphases were the opposite. The private and public programs have evolved toward each other; COPs changed the most. Several other private accrediting organizations have been recognized by the Centers for Medicare and Medicaid Services (CMS) as able to confer “deeming status,” Among them are the Community Health Accreditation Program (CHAP), the American Osteopathic Association (AOA), and, more recently, Det Norske Veritas Healthcare, Inc. (DNVHC), which uses a combination of the COPs and ISO 9000-2000 quality standards. HSOs not in “deemed” status must meet the applicable COPs to receive payments from federal programs.
Planning and Rate Regulation Much of what happens in the states is stimulated by the federal government, and because hospitals consume disproportionate resources, policy makers have given them a great deal of attention. The Hill-Burton Act of 1946 included statewide planning for hospital services. The Comprehensive Health Planning and Public Health Service Amendments Act of 1966 62 encouraged use of planning methodologies to allocate resources, improve access, and contain costs. In the late 1960s, states began enacting laws to control health services costs. A special concern was Medicaid, whose funding funding they they shared shared.. The laws used rate review to control control capital capital expendit expenditures ures and costs of health services. New York York and Maryland were among the first to enact capital expenditure review. review. 63 Other states were prompted by the Social Security Amendments of 1972 (PL 92-603), which established PSROs to review the quantity and quality of care for Medicare patients in hospitals. PSROs complemented the planning laws by controlling use of health services to reduce costs. Section 1122 required capital expenditure review to enhance planning agency control. The National Health Planning and Resources Development Act of 1974 (PL 93-641) 64 required states to establish a health planning and development agency and a network of health systems agencies (HSAs). HSAs superseded the areawide health planning agencies (“b” agencies) required by the 1966 law. Planning laws sought to control costs by focusing on the supply of services. CON (certificate-of-need) laws required HSOs/HSs to have approval for a new service or construction or a renovation project exceeding a certain cost, usually several hundred thousand dollars. The purpose was to ration the supply of health services by controlling capital expenditures and preventing unneeded expansion. Critics of CON argued that this artificial limitation on the supply of services caused inflation. In the late 1970s, criticism about the usefulness of mandated planning grew. The antiregulatory mood in health services fit with the movement toward deregulation elsewhere in the economy. In 1987, the National Health Planning and Resources Development Act was repealed. 65 In the years since, states have scaled back their involvement in planning. In 2012, the District of Columbia and 35 states had CON laws; Maine’s Maine’s were the most restrictive, with review of 25 types of services. Ohio’ Ohio’s were the least 66 restrictive, with review of only 2 types of services.
24
Managing Health Services Organizations and Systems
In addition to CON, states began enacting health services rate review (cost review) laws. By 1983, mandatory programs had been enacted in six states, 67 and there were more than 20 voluntary programs. By regulating how much HSOs (primarily hospitals) charged or were paid, the states were treating them as public utilities. States with rates of increase in health services costs below the national average were exempt from the federal DRG system for Medicare patients. In the mid-1980s, exempt states included New York, New Jersey, Maryland, and Massachusetts.68 By 2008, only Maryland was exempt. This status has continued because Maryland has had a highly regulated, all-payer system to pay for hospital-based inpatient and outpatient care since 1971. The system allows only limited discounts; this inhibits Maryland hospitals’ ability to compete, especially in border areas.
UR, PSROs, and PROs69 Utilization review (UR) was a mandated part of hospital participation in the original Medicare law. Hospitals had to certify the necessity of admission, continued stay, and professional services rendered to Medicare beneficiaries. Review was delegated to hospitals. Rapid Medicare cost increases in the late 1960s showed that hospital-based UR was ineffective. Consequently, PSROs were mandated by the Social Security Amendments of 1972 (PL 92-603) 70 as federally funded physician organizations responsible for ensuring the appropriateness, medical necessity, necessity, and quality of care furnished to Medicare beneficiaries. As with UR, emphasis in the PSRO program was on hospital review. review. The three functions of PSRO were admission and continuedstay review, review, quality assurance, and profile analysis (patterns of care). Ten years later, PSROs had proved neither cost effective nor able to significantly improve quality. As a remedy, Congress established professional review organizations (PROs) as part of the Tax Equity and Fiscal Responsibility Act of 1982.71 PROs were outcome rather than process and structure oriented, and outcomes were measured against performance standards. The core of PRO activities was to deny Medicare payment for medically unnecessary care, care rendered in an inappropriate setting, or care of substandard quality. PROs also educated problem providers, reviewed 100% of problem cases, and exerted peer pressure. If correction was not achieved or if a gross and flagrant quality problem occurred, PROs recommended excluding the provider from Medicare. Since the inception of PROs, their work has expanded to include all federal payments for medical services, including those in physicians’ offices. A major initiative in the early 1990s was implementing a uniform clinical data set that enabled PROs to consistently select cases that required review. This database allowed epidemiological studies and inter-PRO comparisons. Critics of PROs have noted that few physicians and hospitals have been disciplined. The inspector general of the DHHS estimated that, beyond the few sanctions against providers, far more hospital admissions were inappropriate than were found by PROs.72 In 2001, PROs were officially renamed quality improvement organizations (QIOs). Like PROs, the QIOs provide their services under contract with the Centers for Medicare and Medicaid Services (CMS), formerly the Health Care Financing Administration (HCFA), which is part of the DHHS. The name change is largely symbolic, however, and although QIOs have been charged with quality improvement initiatives in numerous clinical areas and across healthcare settings, there have been no published assessments of whether hospitals believe QIO interventions are improving the quality of care.73 In 2012, there were 53 QIOs operational in the United States. 74
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Other Regulators of HSOs/HSs In addition to the CMS, a multitude of federal regulators affect HSOs/HSs. Their activities are based on authority in the U.S. Constitution, as interpreted by the U.S. Supreme Court, to regulate interstate commerce and to provide for the general welfare. Regulators include independent agencies and various other executive branch departments and bureaus. The Department of Justice and the FTC enforce the Sherman Antitrust Act (1890)75 and the Clayton Act (1914) 76 and their various amendments prohibiting anticompetitive practices. The National Labor Relations Board applies provisions of the National Labor Relations Act (1935)77 and its amendments to the process of union organizing and collective bargaining. The Occupational Safety and Health Administration enforces provisions of the Occupational Safety and Health Act (1970) (1970)78 to safeguard the work environment. The Food and Drug Administration enforces provisions of the Food, Drug, and Cosmetic Act of 190679 and its amendments and regulates drugs and medical devices. The Securities and Exchange Commission enforces the Securities Exchange Act of 1934, as amended, 80 and affects how investor-owned HSOs/HSs market, sell, and trade stock. The Nuclear Regulatory Commission enforces provisions of the Atomic Energy Act (1954) 81 and regulates and licenses the nuclear industry, thus regulating hazards arising from storage, handling, and transportation of radioactive materials. The Equal Employment Opportunity Commission enforces the Equal Pay Act of 1963, 82 Title VII of the Civil Rights Act of 1964, 83 and the Age Discrimination in Employment Act of 1967, 84 among others, and investigates complaints about treatment of employees and prospective employees. The Bureau of Alcohol, Tobacco, Firearms and Explosives of the Justice Department enforces the alcohol and tobacco tax provisions of the Internal Revenue Code85 and the Alcohol Administration Act of 1935 86 and regulates the use of tax-free alcohol. It is noteworthy that many federal regulatory, regulatory, review, and control activities have applied to HSOs only since the early 1970s.
Accreditation Accreditati on in Healthcare Accreditors of HSOs/HSs The Joint Commission on Accreditation Accreditati on of Healthcare Organizations No voluntary, private organization has affected HSOs, especially hospitals, as has The Joint Commission. Its lineage can be traced to the “Hospital Standardization” program established by the American College of Surgeons (ACS), which began surveying hospitals in 1918. ACS single-handedly worked to improve hospital-based medical practice until 1951. Its director during most of its formative period was Malcolm T. MacEachern, a physician and health services leader, whose book, Hospital Organization and Management, 87 is a classic in the field. The Joint Commission was formed in 1951 and began accrediting hospitals in 1953. As noted earlier, accreditation became much more important with designation of “deemed” status in the 1965 Medicare law. Since 1951, The Joint Commission has expanded its accreditation services far beyond hospitals. It accredits nine types of providers: ambulatory care, behavioral healthcare, critical access hospitals, home care, hospitals, laboratory services, long-term care, office-based surgery,
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and primary care medical home certification. 88 Accreditation of networks (MCOs, managed behavioral healthcare organizations, and preferred provider organizations) ended in 2006. 89 Each accreditation program has its own set of standards. Surveys of common standards such as physical plant, licensure, and corporate bylaws in multiprogram HSOs are combined to minimize duplication. Almost all hospitals are Joint Commission accredited. In 2012, there were over 19,000 healthcare organizations and programs accredited by The Joint Commission.90 The Joint Commission accreditation has the following benefits: • Strengthens Strengthens community condence in the quality and safety of care, treatment, and and service • Provides a competitive competitive edge in the marketplace marketplace • Improves risk management and risk reduction • Helps organize and strengthen strengthen patient safety efforts • Provides education on good practice to improve business operations operations • Provides professional advice and counsel, enhancing staff education education • Provides a customized, intensive process of review grounded grounded in the unique mission of the organization • Enhances staff recruitment and development • Provides deeming authority for Medicare Medicare certication • Is recognized recognized by insurers insurers and other third parties • May reduce liability insurance costs • Provides a framework for organizational organizational structure structure and management • May fulll regulatory requirements in select select states91
Accreditation by The Joint Commission establishes the HSO’s HSO’s community and professional credibility. HSOs accredited by The Joint Commission meet the standards for patient safety, provide education on good practice to improve business operations, and hold a competitive edge in the marketplace. These HSOs maintain a framework for organizational structure and management that improves quality of care and patient safety saf ety.. The Joint Commission will continue to be a major force in developing performance expectations for HSOs. Even those HSOs that choose not to be accredited by The Joint Commission will benefit from considering its standards in developing and managing their programs. The Joint Commission emphasizes outcomes and continuous quality improvement, the theory and application of which are described in Chapters 7 and 8. The Joint Commission will remain viable only if its standards are state of the art, if HSOs and the public value accreditation, and if the survey is worth the thousands of dollars that it costs. In their evolution, the COPs developed by CMS pose a substantial risk to the continued need for The Joint Commission. In addition, competing private specialty and programmatic accreditation efforts, several of which are described later, will almost certainly challenge The Joint Commission’ Commission’s preeminent position as “the” accrediting body.
American Osteopathic Association Osteopathic hospitals may be accredited by the AOA as well as by The Joint Commission. AOA’ AOA’s Bureau of Healthcare Facilities Facilities Accreditation accredits acute care hospitals, mental health centers, substance abuse centers, and physical rehabilitation centers. CMS recognizes
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AOA accreditation as granting “deemed” “deemed” status.92 In 2013, AOA accredited 480 healthcare facilities.93
Community Health Accreditation Program CHAP specializes in home care and community health. CHAP is a subsidiary of the National League for Nursing (NLN) and began accreditation activities in 1965. 94 It accredits community nursing centers, home healthcare aide services, home health organizations, infusion therapy services, home medical equipment, hospice, private duty nursing, public health organizations, and supplemental staffing services. 95 CHAP confers “deemed” status for home health.96 CHAP standards emphasize organizational structure and function; quality of services and products; adequacy of human, financial, and physical resources; and long-term viability. viability.97
International Organization for Standardizat Standardization ion The International Organization for Standardization (ISO) in Geneva is a nongovernmental organization established in 1947. ISO is a worldwide federation of national standards bodies from 164 countries. 98 Its work results in international agreements published as international standards, to the obvious benefit of consumers. ISO registers the organizations that meet its standards. Although it does not “accredit,” as that term is generally used, ISO registration has a similar effect. ISO 9000 and ISO 14000 are families of generic management system standards that focus on processes and not directly on the results of process activities, even though what happens in the process affects the outcome. This means that they can be applied to any organization in any sector of activity, including HSOs. ISO 9000 is concerned primarily with quality management, which which means means that the features features of a product product or of services conform to custome customerr requir requirements ements.. ISO ISO 14000 is primarily concerned with environmental management, which is what an organization does to minimize harmful effects on the environment caused by its activities. 99 Organizations or components of organizations that seek certification or registration using ISO 9000 or ISO 14000 standards are surveyed by independent, ISO-qualified auditors, not by ISO representatives. 100 The certification or registration is not officially recognized by ISO, even though its standards are used. The ISO does not accredit organizations or components of organizations against its standards, as does The Joint Commission. Increasingly, HSOs are using the ISO 9000 and ISO 14000 families of standards to certify departments; Chapter 8 discusses their application. The National Integrated Accreditation for Healthcare Organizations program of Det Norske Veritas Healthcare, Inc. (DNVHC) uses a combination of the CMS COP and ISO 9000:2000 quality management standards to accredit healthcare providers. This is the first healthcare accreditation program to combine the COP and ISO 9001:2000 Quality Management Systems.
National Committee for Quality Assurance Assurance The National Committee for Quality Assurance (NCQA) began accrediting health plans in 1991. More than 500 of the nation’ nation’s MCOs (covering 33% of all MCO enrollees) participate in NCQA’s review of healthcare quality. 101 Of these, about 430 were accredited by NCQA in 2007. 102 In 1992, NCQA began developing the Health Plan Employer Data and Information Set, which is widely used by employers and HMOs in judging and comparing quality. quality. As part of accreditation, NCQA requires health plans to submit audited results of clinical quality and consumer survey measures. Clinical quality includes childhood and adolescent immunization status, breast cancer and cervical cancer screening, advice to smokers to quit, and postpartum checkups. Examples of consumer survey measures are giving care quickly, quickly, having doctors who communicate, having courteous and helpful office staff, giving needed care, claims processing,
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and customer service. Most health plans offer several different types of products, such as a Medicare plan, a Medicaid plan, an HMO, and a point-of-service plan; NCQA reports on these products separately. separately.103
Educational Accreditors Various accreditors review the quality of didactic and clinical programs that educate health services professionals. Typically, accreditors have boards (policy-making bodies) composed of representatives from professional groups in their fields.
Managers Programs for a master’s level education of health services ser vices managers are accredited by the Commission on Accreditation of Healthcare Management Education (CAHME). The CAHME comprises representatives from professional associations in the healthcare field. In 2013, CAHME accredited 82 graduate programs in North America, 3 of which are in Canada. 104,105 The accreditation process is similar to The Joint Commission’s Commission’s process.106 The Council on Education for Public Health (CEPH) accredits schools of public health and graduate public health programs. CEPH is composed of representatives from various groups in public health. In 2012, CEPH accredited 48 graduate schools of public health and 87 graduate public health programs. 107
Physicians Medical school and postgraduate medical education are accredited by various groups, most of them connected to the American Medical Association (AMA). The Council for Medical Affairs provides policy development and review activities. The Liaison Committee on Medical Education, the Accreditation Council for Graduate Medical Education, and the Accreditation Council for Continuing Medical Education accredit various levels of medical training and education. Continuing medical education is receiving increasing emphasis.
Nurses Since 1917, the National League for Nursing has been a leading force in nursing education. ed ucation.108 The National League for Nursing Accrediting Commission (NLNAC) accredits registered nurse (RN) programs for master’s, bachelor’s, and associate’s degrees and diplomas. In 2012, NLNAC accredited 961 basic RN programs in the United States, including 223 baccalaureate, 691 associate, and 47 diploma programs. 109
Medical Specialization Medical specialization for allopathic physicians did not occur in the United States until the early 20th century. The American Board of Ophthalmology, incorporated in 1917, was the first certifying board; the American Board of Integrative Medicine was approved in 2013. 110 Each board offers at least one general certification of specialization; most recognize subspecialization. In 2012, the 24 specialty boards in allopathic medicine and surgery that were members of the American Board of Medical Specialties Specialties (ABMS) certified more than 145 specialties and 111 subspecialties. Specialty boards are vital in certifying training and in monitoring the continued competence of physicians in specialties. Through member boards, the ABMS is significant in undergraduate, postgraduate, and continuing medical education. Specialty boards include representatives of the associations organized for that specialty. specialty.
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The Accreditation Council for Graduate Medical Education accredits residencies, but the content of residency education is largely determined by each medical specialty board’s board’s residency review committee. The Accreditation Council for Continuing Medical Education accredits the continuing medical education programs required by specialty boards for continued certification. The most recent iteration of medical specialty recertification is known as maintenance of certification. Developed by the ABMS and member boards, maintenance of certification is a program of continuous professional development that is used as a formal means of measuring a physician’s continuing competency in a specialty or subspecialty. 112 Approximately 85% of licensed specialty physicians are board certified by an ABMS board.113 HSOs and HSs must be vigilant about board certification. There are scores of self-designated medical specialty boards with no ABMS recognition. Some states have sought to protect the public by regulating use of the terms board certification and board certified.114 A proliferation of “boards” diminishes the public’s ability to identify practitioners who have earned significant, accepted formal recognition of skills in a specialty. Neither licensure nor board certification entitles a physician to clinical privileges in an HSO. Licensure is more basic—lawful medical practice is impossible without it; specialty certification is only one indicator of competence. The HSO has an independent ethical and legal duty to determine competence initially and to continually monitor the care delivered in it by licensed independent practitioners, whether or not they are board certified. The credentialing process is detailed in Chapter 2.
Education and Regulation of Health Services Managers
Education Hospital administration administration was identified as a distinct educational discipline when the University of Chicago established the first professional master’s master’s program in 1934. This followed founding of the American American College College of Hospital Hospital Administra Administrators, tors, now the America American n College of Healthcar Healthcaree Executives (ACHE) in 1933. Graduate and undergraduate programs exist or are being developed world wide. wide. It is estima estimated ted that that Nor North th Americ American an master master’’s program programss have have more more than than 40,000 40,000 graduate graduates. s. To meet the demands of a complex environment, education for health services managers is eclectic, with an emphasis on o n generic management education. Some programs offer specialty preparation in hospital, NF, NF, or ambulatory services management. The didactic portion for accredited programs is at least 2 academic years, or four semesters. A field experience requirement is common; a few programs require a 1-year, full-time residency to allow application of the academic preparation under the guidance of an on-site preceptor. The curricula of accredited master’s degree programs must include knowledge of the healthcare system and healthcare management; aligned course competencies and program mission; communications and interpersonal effectiveness; critical thinking, analysis, and problem solving; competencies in management and leadership; and professionalism and ethics. 115 Professional master’s programs in health services management use various titles and are found in several different academic settings. As with graduate programs, rapid growth in the number number of undergraduate programs that prepare health services management personnel occurred in the late 1960s and early 1970s. There are 84 undergraduate programs affiliated with the Association of University Programs in Health Administration. 116 In addition to the scores of other o ther healthcare management education programs in the United States, there are health services curricula of various types. Foci of the two levels of education are different. Master’s programs prepare graduates to become seniorlevel line or staff managers; baccalaureate programs train supervisors or department managers. Coordinating graduate and undergraduate programs is a continuing challenge.
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Regulation In 2012, no state required licenses for hospital administrators; all states licensed NF administrators. Managers of long-term care facilities must pass the National Association of Long Term Term 117 Care Administrator Boards examination and obtain a state license. Managers in other types of HSOs/HSs are rarely licensed. Regulation results when problems in an industry show that self-regulation and self-discipline have been ineffective.
Health Services Workers In 2012, over 14 million people were employed by healthcare providers such as ambulatory healthcare services, physicians’ offices, outpatient care centers, home health ser vices, hospitals, residential care facilities, and NFs.118 Table 1.1 shows the numbers in healthcare practitioner and technical occupations in the United States. Most individuals in the occupations listed are employed by healthcare providers and are counted in the 14 million. Many, however, such as physicians, dentists, optometrists, and podiatrists, are predominantly self-employed or employed by organizations owned or controlled by them. To be meaningful, time series comparisons of the numbers in various healthcare occupations should use ratios of their numbers compared with the U.S. population. Ratios do not consider maldistribution of healthcare providers, who tend to be concentrated in metropolitan and urban areas, even to the point po int of surplus. The result is that rural and less populated areas are underserved. Physician and nonphysician clinicians who may independently treat patients are known as licensed independent practitioners (LIPs). Regulation and education of LIPs are discussed later in this chapter. Many types of LIPs are likely to be competitors because they provide similar or overlapping services, which has largely unknown implications for the cost of health services. Quality and productivity are less of an issue, iss ue, however. For For example, nurse practitioners (NPs) and physician assistants (PAs) provide care of equivalent quality as they perform many of the tasks of primary care physicians. 119 Most physicians and many other types of LIPs are self-employed private entrepreneurs, even though employment may provide a portion of their incomes. In contrast, non-LIPs, or dependent caregivers, are employed in the practices of LIPs or in HSOs such as NFs or hospitals. Physicians in residencies are usually employed by their residency sites; their training status makes them unique and unlike employed physicians, however. These These relationships are part of of the context for human resources issues in HSOs/HSs.
Physicians Allopathic medicine—the profession of the medical doctor (MD)—traces its lineage to Hippocrates (460–377 b.c.). It emerged as the dominant theory of treating disease at the beginning of the 20th century. century. As noted earlier, allopathy holds that interruptions of the body’s body’s normal functioning must be treated with significant interventions to restore that normal bodily functioning (health). Development of the germ theory of disease causation and increasingly efficacious surgery in the late 19th century gave allopathy a scientific basis, which secured its place and dominance in Western medical practice. The increase in effective chemical therapies early in the 20th century enhanced its stature, as did the scientific knowledge developed throughout the 20th century. Major competing theories of disease causation and cure in the mid- to late 19th century were naturopathy, naturopathy, homeopathy, osteopathy, osteopathy, and chiropractic. After being relegated to the
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Table 1.1 Numbers in Healthcare Practitioner and Technical Technical Occupations, U.S., 2012
No.
U.S. No./100,000 population* 2012 Population: 314,773,031
Professional Specialty Physicians and Surgeons Dentists Optometrists Pharmacists Podiatrists Registered Nurses Occupational Therapists Physical Therapists Respiratory Therapists Speech-Language Pathologists Audiologists Social Workers Dietitians and Nutritionists
611,650 109,570 29,180 281,560 9,090 2,633,980 105,540 191,460 116,960 121,690 12,060 582,270 58,240
194.3 34.8 9.3 89.4 2.9 836.8 33.5 60.8 37.2 38.7 3.8 185.0 18.5
Service Home Health Aides Psychiatric Aides Nursing Assistants Physical Therapist Assistants Dental Assistants Medical Assistants
839,930 77,880 1,420,020 69,810 300,160 553,140
266.8 24.7 451.1 22.2 95.4 175.7
718,800 318,620 190,290 194,790 182,370 97,150 232,860 67,760 64,930
228.4 101.2 60.5 61.9 57.9 30.9 74.0 21.5 20.6
Technicians Licensed Practical and Licensed Vocational Nurses Clinical Laboratory Technologists and Technicians Dental Hygienists Radiologic Technologists Medical Records and Health Information Technicians Surgical Technologists Emergency Medical Technicians and Paramedics Psychiatric Technicians Opticians, Dispensing
* U.S. & World Population Clocks, November 15, 2012. United States Census Bureau. http://www.census .gov/main/www/popclock.html . Retrieved November 15, 2012. Occupational Employment and Wages, May 2012: Healthcare Practitioner and Technical Technical Occupations. Bureau of Labor: U.S. Department of Labor. http://www.bls.gov/oes/current/oe http://www.bls.gov/oes/current/oes_nat.htm#b29-0000 s_nat.htm#b29-0000 . Retrieved July 21, 2013
fringe of medical practice, naturopathy and homeopathy have seen a revival of interest, though they remain far from medicine’s mainstream. Osteopathy has largely merged with allopathy. Chiropractic is more accepted in the United States than at any time in its history; nevertheless, orthodox medicine still considers it a manipulative therapy with no clear scientific basis. Osteopathy evolved from the bonesetters of England, who practiced the craft of repositioning dislocated collar bones, cartilages, and other skeletal structures—work spurned by orthodox medicine.120 The philosophy and science of osteopathic medicine were first described in 1874 by Virginian Andrew Taylor Still, a physician who founded the American School of Osteopathy in 1892. Osteopaths are educated in osteopathic medical schools and earn the doctor of osteopathy (DO) in an education that emphasizes structure and functioning of the
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Managing Health Services Organizations and Systems
musculoskeletal system and an appreciation for the body’s body’s ability to heal itself when it is in its normal functional relationship and has a favorable environment and nutrition. 121 Osteopathic healthcare emphasizes manipulative methods of detecting and correcting structural problems, but it also utilizes generally accepted conventional medical and surgical treatment. Osteopathic medical training is similar to that of allopathic medicine, and in most respects, osteopaths are the same as allopaths. Many osteopaths enter allopathic residency training programs and are licensed under the same state statutes. Chiropractic, an offshoot of osteopathy, emphasizes manipulation to correct anatomical faults that cause functional disturbances in the body. It is uniquely American. Daniel David Palmer established the first school of chiropractic medicine in Iowa in 1895. Palmer’ Palmer’s theories stressed the importance of minor spinal displacements, or subluxations, as chiropractors later called them. Subluxations are less severe than dislocations but cause nerve irritation that leads to disturbances of the nervous system and eventually to illness. According to Palmer, medical orthodoxy’s mistake is that it treats disorders without understanding the source—the spinal column—and chiropractic can remedy that problem. 122
Physician Physicia n Numbers Table 1.1 shows the physician and surgeon workforce in 2012. U.S. population growth to 2020 is projected to be 14%, which is almost the same as the projected growth rate for full-time equivalent physicians. 123 This projection presumes a static need for allopathic physicians and holds productivity constant. In 2008, the Association of American Medical Colleges (AAMC) projected a need to increase the number of physicians by 30% to accommodate growth in demand to 2025. Aging of the population (and the physician workforce) and its need for more medical services, especially age-related medical specialties, was a major factor. factor. The report noted that greater use of nonphysician providers such as physician assistants and nurse practitioners could reduce the effects of too to o few physicians. “Complex changes such as improving efficiency, efficiency, reconfiguring the way some services are delivered and making better use of o f our physicians will 124 also be needed.” As already noted, however, even with an adequate ratio the major unresolved problem will continue to be maldistribution of physicians. Predictions of physician shortages or surpluses have caused federal support of medical education to wax and wane for several decades. In addition to federal and state government support, income from hospitals and clinics, nongovernmental grants and contracts, and endowment and philanthropy have been important revenue sources for medical schools. In 2011–2012, 2011–2012, tuition and fees contributed only about 4% of revenues in both public and private medical schools. For both, the largest contributions came from practice plans (34% and 43%, respectively), hospital-purchased services and investments (18% and 15%, respectively), and federal research grants and contracts (18% and 19%, respectively). 125 Out-of-state tuition at some public medical schools, like tuition at some private (nongovernmental) medical schools, exceeds $45,000 per year. 126 In 2011, there were more than 110,000 residents in Accreditation Council for Graduate Medical Education–accredited and combined special programs. Those residents included 73,472 U.S. medical graduates, 30,989 international medical graduates, 8,432 DOs, and 238 Canadian medical graduates. 127 Historically, Historically, it was generally believed that a ratio of two thirds primary care physicians to one third specialists was desirable. In 1970, 40.9% of physicians were in primary care, defined by the AMA to include the general specialties of family medicine, general practice, internal medicine, obstetrics and gynecology, gynecology, and pediatrics.128 Federal legislation in the 1970s sought to redress the imbalance between primary care and specialists. Impetus was added to ef forts to reduce emphasis on specialization when specialty societies and boards reconsidered the number of specialty residencies that would be available. Third-party payers, including the federal government, MCOs, and HMOs, also decided to deemphasize specialists. Regardless, by
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1996, only 34.0% of physicians were classified as primary care practitioners.129 Only in the late 1990s did efforts to increase the number of primary care physicians begin to succeed. By 2010, 47.9% of physicians were in primary care, a percentage only slightly above that in 1970. 130 It is predicted that the employment of physicians and surgeons will increase 24% from 2010 to 2020, which is faster than the average of all occupations.131 Even as the ratio of primary care physicians increased, there were signs that specialists had become too few in number. number. Driven by lack of attention to a need for specialists in delivery settings and by consumer demand for specialist services, the almost exclusive emphasis on primary care physicians subsided. Specialist physicians were once again in demand by the end of the 1990s. 132 Such cycles will recur as more private and public efforts are made to “manage” “manage” delivery of services and the uses and availability of various types of clinical providers. Again, the focus on absolute numbers ignores the geographic maldistribution of physicians and nonphysician clinicians. The latter appear to be no more interested in underserved areas—usually inner city and rural communities—than are physicians. 133
Nonphysician Nonph ysician Clinicians Of concern, too, is that the number of nonphysician caregivers will increase to meet needs. The 2004 National Sample Survey of Registered Nurses showed an increase—from 196,000 in 2000 to 240,461 in 2004—in nurses who had completed additional courses and training to become advanced practice nurses, such as clinical nurse specialists, nurse practitioners, nurse midwives, and nurse anesthetists.134 The 2008 National Sample Survey of Registered Nurses found that, from 2004 to 2008, 444,668 RNs completed additional courses and training to become advanced practice nurses, such as clinical nurse specialists, NPs, nurse midwives, and nurse anesthetists.135 This trend is likely to continue. In its report “Future “Future of Nursing: Leading Change, Advancing Health,” the Institute of Medicine (IOM) recommended higher levels of education in the nursing field. This recommendation was made to prepare nurses for the more complex care needed by sicker patients and the sophisticated new technologies for providing care.136 The greatest growth is projected among nonphysician clinicians who provide primary care services; the greatest concentration will occur in states that already have an abundance of physicians.137 Growth in nonphysician practitioners is occurring even as it is generally agreed that the United States has too few physicians. A physician shortage suggests potential problems for HSO/HS managers, while concomitantly creating opportunities.
Regulation and Education of Selected Health Occupations Licensure, Certification, and Registration Licensing of the healthcare occupations is ubiquitous. All states and the District of Columbia require physicians (MDs and DOs) and RNs, licensed practical (vocational) nurses (LPNs), and NPs to take licensing examinations after completing the appropriate educational programs at accredited educational institutions. 138 There is wide variation beyond these groups, however. however. 139 The trend is toward greater regulation of the health occupations. For example, the Omnibus Budget Reconciliation Act of 1987 (PL 100-203; commonly known as OBRA ’87) required states to register nursing assistants. Licensure, registration, and certification have important distinctions:
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Licensure: Approval granted by government that allows someone to engage in an occupation after a finding that the applicant has achieved minimum competency. competency. Licensing is a state function under the police power. Physicians and dentists are always licensed, for example. Physicians and osteopaths are the only LIPs granted an unlimited license. Registration: Listing of qualified individuals on an official of ficial roster maintained by a governmental or nongovernmental body. States may require registration for someone to engage in a health occupation. If so, registration has the effect of licensure. Persons who are registered may use that designation. Registered nurses and registered dietitians are examples. Certification: Process by which a nongovernmental agency or association grants recognition to someone who meets its qualifications. States may require certification for someone to engage in a health occupation, thus giving certification the effect of licensure. Nurse midwives are certified, for example. In terms of regulation, nonphysician health services workers may generally be divided into two groups: LIPs, who are licensed to treat patients independently, independently, and those who may or may not be licensed but who are dependent on an LIP’s orders before they can deliver health services. Nonphysician LIPs have state licenses that limit their practice to certain parts of the body or specific medical problems; optometrists, podiatrists, dentists, and chiropractors are examples. In many states, nurse midwives and some types of NPs are LIPs. Some states allow RNs without specialty training to perform certain examinations and procedures. Applying the general principle of independent versus dependent practice is complicated because acute care hospitals and many other types of HSOs further limit the scope of practice of health services workers (even of physicians) to clinical activities in which they have demonstrated current competence. Similarly, Similarly, HSOs may limit the licenses of nonphysician LIPs to activities ordered or supervised by physicians. Dependent caregivers may or may not be licensed, registered, or certified, but they provide services only after receiving an order from an LIP. Distinctions beyond this are blurred. Dependent caregivers include medical technologists, pharmacists, radiographers, LPNs, and nursing assistants. RNs and pharmacists use registered as a synonym for licensed . Dietitians are registered by a private association and are licensed or statutorily certified or registered in a number of states.140 Certification is a process of approval involving a professional association and oftentimes the AMA. Certificates are issued to those who pass an examination, the eligibility for which requires specified academic preparation. A confusing aspect of the process is that sometimes the certificate is issued by a body that uses the title registry . Often, a group of specialty physicians also certifies. For example, the American Society of Clinical Pathologists certifies medical technologists through its board of registry.141 Those who are unable to meet the private certifying group’s standards are likely to be unemployable in HSOs; this gives certification the effect of licensure. Concomitantly, someone certified who does not continue to meet the group’s standards loses certification; employment is likely forfeited.
Education of Clinicians Physicians The most important modern effort effor t to improve allopathic medical education occurred in 1910 when Abraham Flexner’s Flexner’s study of o f medical education in the United States detailed its weaknesses. As a result, the science curriculum was enhanced, the didactic portion was lengthened,
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and the clinical component was strengthened. Weak allopathic medical schools failed when they could not meet the more stringent standards. In 1950 there were 79 U.S. allopathic medical schools, by 1970 there were 103. In 2012 there were 138 accredited allopathic medical schools 142 with 75,000 students 143 and 17,364 graduates annually.144 In 2011, there were 128,000 faculty involved in educating more than 210,000 medical students and residents. 145 In 2012, Canada’s 17 accredited medical schools (none osteopathic)146 graduated 2,573 MDs.147 Allopathic medical schools are accredited by the Liaison Committee on Medical Education, whose members include medical educators and administrators, practicing physicians, public members, and medical students. 148 DOs are educated in 26 AOA-accredited colleges of osteopathic medicine, with 19,427 students in 2011. DOs may be board certified in 75 general medical specialties in addition to various subspecialties. In 2011 there were more than 73,000 DOs in the United States.149
Postgraduate Postg raduate Education Following Following graduation from medical school with either a 4-year postbaccalaureate education or, or, less often, a 6- or 7-year combined baccalaureate-MD, the new allopathic physician begins a residency. Historically, intern was a designation for medical school s chool graduates who were in the first year of post-MD clinical training. Resident is the correct title, however; intern has not been used officially for allopaths in training since 1975.150 Residents are designated by postgraduate year (PGY) or graduate year (GY). For example, a PGY-2 PGY-2 has had 1 year of clinical experience after medical school and is in the second year. Clinical activities of residents are supervised by more senior residents, fellows (postresidency physicians in training), and teaching faculty (physicians) who have faculty appointments through a medical school or are active staff at the HSO, which is usually a hospital. Residencies are accredited by the Accreditation Council for Graduate Medical Education, which is composed of professional associations in the medical field. Each specialty has a residency review committee that sets standards for specialty training and accredits the program. The specialty determines the number of PGYs and the specific clinical content of those years so that the program may be accredited and provide the basis for eligibility to be certified in that specialty. specialty. For example, anesthesiology requires 1 year of general residency, residency, completion of an accredited anesthesiology residency, residency, and at least 2 years in private 151 practice. Family medicine requires 3 years of postgraduate training in an accredited family practice residency. 152 Neurological surgery requires 1 year in an accredited general residency and 3 years of advanced specialty training in an accredited neurological surgery residency.153 In 2009, Veterans Administration (VA) medical centers had affiliations with 114 of 136 allopathic medical schools and 15 of 26 osteopathic medical schools. Each year, about a third of the 100,000 U.S. medical residents rotate through a VA clinical training site. In addition, the VA has more than 5,000 affiliations with associated health professions training programs.154 About 70% of VA staff physicians have medical school faculty appointments, and about 10% of medical residents training in the United States are funded by the VA. 155 It has been estimated that more than half of practicing physicians have received some part of their professional training in a VA medical center.156
Licensure U.S. and Canadian medical graduates are licensed in most states after passing the U.S. Medical Licensing Examination and completing 1 year of residency. Several states require 2 years of residency; a few require 3 years.157 In addition, all states and the District of Columbia require physicians to complete continuing medical education credits to remain licensed. 158 State licenses are unlimited in terms of the medical activities that physicians may undertake.
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Managing Health Services Organizations and Systems
Thus, physicians may legally prescribe all medications (except some narcotics and experimental drugs) and perform all medical and surgical activities. It is only in HSOs that the scope of this otherwise unlimited legal right to practice medicine is modified. Limiting practice activities to those consistent with demonstrated current competence is especially important in acute care hospitals because of the acuity of illnesses and the significant treatments provided. Protecting patients by ensuring the competence of physicians and other LIPs, such as podiatrists and clinical psychologists, is vital in all HSOs, however. Protection is achieved through the credentialing process, which includes a review of didactic and clinical experience, licensure, specialty certification, and health status, among other aspects. Periodic review of clinical performance is part of the recredentialing process that is necessary for the practitioner to continue to have privileges in an HSO. Credentialing and recredentialing are detailed in Chapter 2. Many state medical boards fail to discipline physicians with problems related to their professional activities. This continuing problem is addressed further in Chapter 4.
Nonphysician Caregivers Nowhere Nowhere is there greater fragmentation and specialization of o f work than in HSOs. Apparently, Apparently, each new technology requires a new category of technical expertise. In the early years of modern medicine, physicians usually worked with little need for other types of caregivers. Support became necessary, however, however, and some physician activities were performed by technicians. Nurses were the earliest example; sonographers are among the most recent. Changes in staffing will continue as old technologies evolve and others are introduced. The use of roentgen rays (x-rays), discovered by Wilhelm Roentgen in 1895, is instructive. Roentgenology became radiology, radiology, which bifurcated into diagnostic radiology and therapeutic radiology. Diagnostic radiology has added computers, analysis of cellular emissions, and use of sound waves and has become known as diagnostic imaging. Similarly, therapeutic radiology now includes linear accelerators added to x-ray equipment, and use of radioactive sources spawned the specialty of nuclear medicine. A specialized staff is needed to deliver this state-ofthe-art, high-technology medicine.
Podiatrists Podiatrists Podiatrists are LIPs who provide services in offices, clinics, and hospitals. Podiatrists employed by HSOs or members of their attending staffs should be subject to a credentialing process; credentialing is required in hospitals. Podiatry is the branch of the healing arts and sciences that treats the foot and its related or governing structures by medical, surgical, or other means. Applicants to the nine colleges of podiatric medicine in the United States should hold a baccalaureate, but exceptions are made.159 The first 2 years of instruction emphasize basic medical sciences, such as anatomy, physiology, microbiology, biochemistry, pharmacology, and pathology. The second 2 years emphasize clinical sciences, including general diagnosis, therapeutics, surgery, anesthesia, and operative podiatric medicine. Graduates are awarded awarded the degree of doctor do ctor of podiatric medicine. Most graduates complete a residency of 1 to 4 years. Podiatrists are licensed in all states. The American Podiatric Podiatric Medical Association has approved two specialty boards: primary care and orthopedics, or surgery. surgery.160
Nurses Early recognition and increased stature of nursing were achieved largely through the efforts of Florence Nightingale, an Englishwoman who worked to improve nursing in the mid-19th century. century. Until then, secular nursing had a poor reputation. Dorothea Dix was an early nursing
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Healthcare in the United States
37
leader and educator in the United States. As education and professional standards improved and licensing was introduced in the United States, RNs became second only to physicians in numbers and importance on the patient care team. Nurse licensing began in the early 1900s and initially concentrated on state registration. In 1903, North Carolina was the first state to establish state registration for nurses, and only those found qualified by a board of examiners could be listed as RNs in a county and use the designation RN . Voluntary Voluntary licensure (registra161 tion) has been superseded by mandatory licensure (registration). RNs may be LIPs, depending on specialty preparation. Of the 3.06 million licensed RNs in the United States in 2008, it was estimated that 2.6 million were employed in nursing. 162 In 2012, the largest source of employment was acute care hospitals (62%), followed by ambulatory care settings (6%), home health and hospice (5%), and nursing home/extended care (4%). Other employment is in nursing education and public/ community health.163 Table Table 1.1 shows that there are over 2.6 million employed RNs. RNs are educated in programs of varying length in various educational settings: baccalaureate (4 years, university or college based, leading to a bachelor of science in nursing [BSN]), diploma (3 years, hospital based, leading to a diploma in nursing), and associate’s degree (2 years, junior or community college based, leading to an associate of arts [AA]). Graduates of all three programs may be licensed (registered) as RNs. BSN preparation is the gold standard and is preferred by organized nursing. It is considered a superior preparation in the practice setting. LPNs, sometimes known as licensed vocational nurses, are another type of nurse and are found in all types of HSOs. Other nursing personnel widely found in NFs and hospitals are nursing assistants (NAs), who are sometimes called nurse aides. NAs must be registered and may be certified. Certification is required by CMS for NAs working in NFs; they are then certified nursing assistants (CNAs). LPNs and NAs are clinically and usually administratively subordinate to the RN. Table Table 1.1 shows almost 720,000 employed LPNs in 2012. In the late 1970s, the American Nurses Association (ANA) began an RN certification program that became the American Nurses Credentialing Center. In 2012, RNs could take various certification examinations, depending on educational preparation. 164 Advanced practice nurses (NPs, clinical nurse specialists, and those in other advanced practice specialties) must have a master’s degree and can be certified in various specialties. RNs with bachelor’s bachelor’s or associate’s degrees or diplomas in nursing may take certification examinations in areas such as gerontology, pediatrics, perinatology, community/public health, and nursing administration.165 The 11,000 RNs certified by ANA in 1982 166 increased to 77,000 by 1991 167 and to 146,574 by 2011. 168 Most states have categories of caregivers who become RNs first and then prepare in a specialty. NPs, for example, have independent practice authority in 18 states and the District of Columbia.169 Some types of independent practice nurses are certified by private associations (e.g., certified registered nurse anesthetists [CRNAs], certified nurse midwives [CNMs]). A majority of states allow CRNAs to administer anesthesia without a physician’s supervision. Use of CRNAs will increase because Medicare regulations no longer require an anesthesiologist’s gist’s supervision.170 CNMs are licensed as RNs, certified by the American College of NurseMidwives, and licensed in almost half the states as nurse midwives. Advanced practice nurses generally include NPs, clinical nurse specialists (CNSs), CRNAs, and CNMs, who are likely to be credentialed by HSOs, either as a group or individually. Such providers are LIPs. HSO managers will be challenged to recruit and retain RNs, as well as use RN resources effectively.171 Productivity is addressed in Chapters 8 and 11.
Pharmacists The pharmacist is a type of nonphysician caregiver commonly found in HSOs, and always in hospitals. The profession of pharmacy emerged later than nursing. Historically Historically,, the pharmacist’s pharmacist’s
38
Managing Health Services Organizations and Systems
role in the spectrum of care was narrow and primarily limited to dispensing medications. Recently, Recently, hospital pharmacists have emerged as active members of the clinical care team. They monitor medication use and advise physicians in prescribing and nurses in administering medications. Pharmacists are educated in 129 accredited colleges of pharmacy in the United States.172 The baccalaureate in pharmacy has been replaced by the doctor of pharmacy, which is earned in a 6-year program that includes 2 years of postsecondary education and 4 years in pharmacy college. State licensure requires candidates to graduate from an accredited program, complete a variety of experiences in practice settings under the supervision of licensed pharmacists, and pass a state board examination. Pharmacists are not LIPs and dispense medications only on the orders of LIPs such as physicians, podiatrists, and dentists.173 Table 1.1 shows that there were 281,560 pharmacists employed in the United States in 2012.
Dietitians A type of nonphysician caregiver almost always found f ound in hospitals and NFs is the clinical or therapeutic dietitian, who plans therapeutic menus in consultation with a physician. Dietitians also provide nutritional counseling. Like pharmacists, dietitians emerged later than nurses, and their role is narrower. Historically, dietitians have been registered by the American Dietetic Association. In the mid-1980s, states began licensing or certifying dietitians. In 2006, there were 30 states and the District of Columbia that licensed dietitians; 13 states had statutory certification; and 1 state registered dietitians, nutritionists, or both. 174 Minimum preparation to become a registered dietitian includes a baccalaureate, a minimum of 900 supervised practice hours of professional experience, and passing a national, written exam administered by the Commission on Dietetic Registration.175 Table Table 1.1 shows 58,240 employed dietitians and nutritionists in 2012.
Technologists Radiologic technologists include radiographers, cardiovascular-interventional technologists, sonographers, radiation therapists, mammographers, nuclear medicine technologists, computerized tomography technologists, magnetic resonance imaging technologists, dosimetrists, and quality management technologists. 176 The titles reflect job responsibilities and the extent of specialization. Radiologic technologists are trained in 2-year academic or nonacademic programs or 4-year programs leading to a baccalaureate. They become registered by passing one of several national certifying examinations. Most states have specific licensing laws. 177 Table 1.1 shows 194,790 employed radiologic technologists in 2011. More than half of clinical laboratory or medical technologists are employed in hospitals. Typically, ypically, they hold a baccalaureate in medical technology or one of the life sciences. They perform various laboratory tests and may specialize in clinical chemistry, blood bank technology, technology, cytotechnology, hematology, histology, microbiology, or immunology. Training is offered by colleges, universities, and hospitals. Technologists Technologists are certified by various groups, including the Board of Registry of the American Society of Clinical Pathologists and the American Medical Technologists. Many states require medical technologists to be licensed or registered.178 Table 1.1 shows 318,620 employed clinical laboratory technologists and technicians in 2011. Both radiologic technologists and medical technologists are dependent nonphysician caregivers because they have no independent access to patients and perform services ser vices only in response to the order of an LIP.
Physician Physicia n Assistants Another Another type of dependent dependent caregiver caregiver common common to HSOs HSOs is the PA, PA, the concept concept for which origioriginated in the 1960s and was based on the army medic or navy corpsman. Typically, PAs are
Healthcare in the United States
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39
trained in a 2-year general medical (primary care) curriculum, approximately half of which is devoted to clinical rotations in a wide range of inpatient and outpatient settings. A number of programs award baccalaureates, and there is a trend to award master’s degrees. In 2012, more than 130 accredited programs educated PAs. 179 Historically, PAs worked under the direction or supervision of a physician, who was accountable for their activities. The trend is for PAs to be more independent, as reflected by the fact that more states are regulating PAs, who may be licensed, registered, or certified. The National Commission on Certification of Physician Assistants awards a certification used by the states to regulate PAs. In 2012, more than 84,000 PAs were in active practice practice in the United States, States, with a majority in primary care. In addition, addition, they may specialize in orthopedics, emergency medicine, and hospital operating rooms. Almost all states allow physicians to delegate the authority to write prescriptions to the PAs they supervise. Most PAs practice in ambulatory care settings. About 53% are employed by physician groups, many as house staff.180 The demand for PAs is expected to increase. 181
Associations for Individuals and Organizations The health services field has numerous professional and trade associations for personal and institutional providers, both in generic groups and in an increasing number of subsets.
Professional Associations for Individual Managers With more than 30,000 affiliates, affiliates, the ACHE is the leading professional association for HSO/ 182 HS managers. It was established in 1933 as the American College of Hospital Administrators. Important categories of affiliation are fellow and full, associate, and student member, all of which are separated by time and achievement requirements, including years in category and passing an examination. 183 ACHE offers continuing education programs and publishes and enforces a code of ethics. The Medical Group Management Association (MGMA) was established in 1926. It has over 22,000 members, including administrators, CEOs, physicians in management, office managers, and others who manage medical offices and ambulatory care organizations. MGMA promotes patient-focused care; sets standards of professional performance; supports continued learning for professional growth; and promotes evidence-based clinical and managerial decision making, physician and administrator teamwork, service to the community and profession, integrity, integrity, collegiality, collegiality, and respect for the individual.184 Examples of other professional groups include those for specialized managerial personnel in HSOs: the Academy of Medical Group Management, the American College of Mental Health Administrators, the American College of Health Care Administrators (of NFs), the National Association of Healthcare Executives, and the College of Osteopathic Healthcare Executives. Some groups have levels of affiliation and advancement requirements. All provide a forum and educational activities to improve the content and quality of professional practice. The American Public Health Association does not focus on managers but has a broad membership of those in public health and various provider settings.
Physicians Preeminent among physician groups is the AMA, established in 1847. In 1998, the AMA had 290,917 members. 185 In 2012, the AMA had about 225,000 members, 186 including physicians, medical students, and residents. The AMA is synonymous with “organized medicine”; it has been both a conservative and a progressive force in healthcare. Conservatism is exemplified by historical
40
Managing Health Services Organizations and Systems
opposition to government-sponsored health insurance and by resistance to salaried physician arrangements and innovations such as HMOs, which were seen as infringing on professional independence and total commitment to patients. The AMA has been a progressive force by embracing programs such as Medicare (once enacted) and by encouraging federal expenditures for basic and applied research and medical and paramedical education. Its involvement in establishing standards for medical education and licensure has contributed significantly to the unequaled standards of American medicine. The AMA publishes and enforces a code of ethics. There are many other associations for physicians. The National Medical Association represents more than 30,000 African American physicians and has goals similar to the AMA AMA’’s. 187 In addition, medicine has numerous professional associations, called colleges or academies, whose memberships are based on medical and surgical specialties. specialties. Among the most prominent are the American College of Physicians and the ACS. Affiliates are known as fellows or diplomates. These associations represent the interests of affiliates and assist them in continuing education.
Nonphysician Providers The list of associations for members of the health professions is almost endless. Each new type of provider considers it necessary to have a professional association to focus common interests. Some are old; the ANA was established in 1896. 188 Other examples of nonphysician provider groups include the American Dental Association, the American Podiatry Podiatry Association, the American Psychological Psychological Association, Association, the Association Association of Operating Operating Room Nurses, Nurses, the National National Association of Social Workers, the American Pharmaceutical Association, the National Federation of Licensed Practical Nurses, and the American Academy of Physician Assistants. The hundreds of professional associations for organizational and personal providers and managers reflect the high degree of specialization and fragmentation in the healthcare field.
Associations for HSOs/HSs American Hospital Association With approximately approximately 5,000 institutional members, members, the AHA is the most prominent association 189 for hospitals. Founded in 1898, AHA educates and represents its members. It is a focal point for hospital participation in the political process, a key element of which is lobbying federal government. In 1991, AHA’s executive offices were moved to Washington, D.C. Other activities remain in Chicago.
Federation of American Hospitals The Federation of American Hospitals (FAH) is the investor-owned counterpart to AHA. Established in 1966, it had over 1,100 member hospitals in 2013. 190 It monitors health legislation, regulatory and reimbursement matters, and developments in the healthcare industry at the state and national levels. In addition, FAH compiles statistics on the investor-owned hospital industry. industry.191
Other Hospital Associations The Catholic Health Association of the United States (CHA) represents a subset of hospitals with sectarian ownership ownership and interests. CHA had over 2,000 2,000 members in 2013.192 In addition to national hospital associations, there are regional and state hospital associations that link hospitals to geographical or state communities of interest. State hospital associations gained importance as states became more involved in regulating hospitals.
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Healthcare in the United States
41
American Health Care Association Association Founded in 1949, the American Health Care Association (AHCA) is a federation of 50 state health organizations that represent more than 11,000 not-for-profit and for-profit nursing, assisted-living, and subacute care providers.193 AHCA’s objectives are to improve standards of service and administration of member nursing homes; to secure and merit public and official recognition and approval of the work of nursing homes; and to adopt and promote programs of education, legislation, better understanding, and mutual cooperation.194
American Association Association of Homes and Services for the Aging The American Association of Homes and Services for the Aging (AAHSA), also known as LeadingAge, is the trade association of not-for-profit adult day services, home health services, community services, senior housing, assisted living residences, continuing care retirement communities, and nursing homes. It had over 6,000 members in 2012. 195 AAHSA lobbies Congress and federal agencies on members’ behalf; certifies practitioners and facilities; and offers conferences, programs, and publications. Members may participate in group purchasing and insurance programs. 196
America’s Health Insurance Plans America’ America’s Health Insurance Plans (AHIP) is the successor organization to the American Association of Health Plans, which was established in 1996 when the Group Health Association of America and the American Managed Care and Review Association merged. 197 With 1,300 members, AHIP is a trade association for organizations that provide health insurance coverage to more than 200 million Americans. AHIP represents members in state and federal legislative and regulatory matters and in matters involving the media, consumers, and employers. It provides information to stakeholders and conducts education, research, and quality assurance.198
Paying for Health Services Expenditure Expendit ure Trends Trends As noted, the percentage of U.S. GDP devoted to health expenditures has increased steadily since the 1960s—an interesting juxtaposition to the passage of Medicare and Medicaid. National health expenditures in 2011 consumed 17% of GDP, GDP, or about $2.7 trillion. CMS projects that healthcare will consume $3.5 trillion, or 18.3% of GDP, by 2016 and $4.8 trillion, or 19.6% of GDP, by 2021. 199 The period of rapid inflation occurred soon after the passage of Medicare and Medicaid in 1965; this demand–pull stimulation is a likely cause of the initial and continuing cost increases. In turn, these significant increases have been the stimulus for state and federal efforts to control healthcare costs, or at least limit what they will pay. pay. Table 1.2 shows that, except for professional services (a category that has several elements), hospitals consume the largest amount of health expenditures. This has resulted in hospitals’ bearing the brunt of state and federal efforts to control costs. The perspective of regulators and politicians seems to be that hospitals are badly managed, and that excessive use of high technology, technology, expensive tests, and treatments is a major source of the cost increases. Less time spent in hospitals has been posited as the best means of reducing costs; thus, there has been great emphasis on reducing both admission rates and average lengths of stay. It has been suggested, however, that a policy of “single-mindedly emptying hospitals not only does not
42
Managing Health Services Organizations and Systems
Table 1.2.
National Health Expenditure Amounts, and Annual Percent Change by Type of Expenditure: Calendar Years 2006–2021. 1
Type of Expenditure National Health Expenditures Health Consumption Expenditures Personal Health Care Hospital Care Professional Services Physician and Clinical Services Other Professional Services Dental Services Other Health, Residential, and Personal Care Home Health Care Nursing Care Facilities and Continuing Care Retirement Communities Retail Outlet Sales of Medical Products Prescription Drugs Other Medical Products Durable Medical Equipment Other Non-Durable Medical Products Government Administration Net Cost of Private Health Insurance Government Public Health Activities Investment Research2 Structures & Equipment National Health Expenditures Health Consumption Expenditures Personal Health Care Hospital Care Professional Services Physician and Clinical Services Other Professional Services Dental Services Other Health, Residential, and Personal Care Home Health Care Nursing Care Facilities and Continuing Care Retirement Communities Retail Outlet Sales of Medical Products Prescription Drugs Other Medical Products Durable Medical Equipment Other Non-Durable Medical Products Government Administration Net Cost of Private Health Insurance Government Public Health Activities Investment Research2 Structures & Equipment
2006
20 2007
20 2008
20 2009
20 2010
$2,162.4 2,031.5 1,804.9 651.9 585.6 438.8 55.4 91.4 101.7 52.6
$2,297.1 2, 2,153.4 1,914.6 692.5 618.6 461.8 59.5 97 9 7.3 107.7 57.8
$2,403.9 2, 2,250.1 2,010.2 729.3 652.6 486.6 63.6 102.4 113.3 61.5
$2,495.8 2, 2,349.5 2,109.0 776.1 671.2 502.7 66.0 102.5 122.0 66.1
$2,593.6 2, 2,444.6 2,186.0 814.0 688.6 515.5 68.4 104.8 128.5 70.2
117.3 295.8 224.2 71.6 32.9 38.7 29.5 134.5 62.5 130.9 41.4 89.6
126.4 311.5 236.2 75.3 34.3 41.0 30.2 13 1 39.7 69.0 143.7 41.9 101.7
132.7 321.0 243.6 77.4 34.9 42.5 29.5 13 1 37.8 72.7 153.8 43.4 110.4
138.7 334.9 256.1 78.8 35.2 43.6 29.6 13 1 34.7 76.2 146.3 45.7 100.6
143.1 341.6 259.1 82.5 37.7 44.8 30.1 14 1 46.0 82.5 149.0 49.3 99 99.8
— — — — — — — — — —
6.2% 6.0 6.1 6.2 5.6 5.2 7.4 6.4 5.9 9.9
4.7% 4.5 5.0 5.3 5.5 5.4 6.9 5. 5.2 5.2 6.4
3.8% 4.4 4.9 6.4 2.9 3.3 3.8 0. 0.1 7.7 7.5
3.9% 4.0 3.7 4.9 2.6 2.5 3.6 2. 2.3 5.3 6.2
— — — — — — — — — — — —
7.8 5.3 5.3 5. 5.2 4.4 5.9 2.3 3.8 10.4 9.7 1.3 13.6
4.9 3.0 3.1 2.8 1.7 3.7 -2.5 -1.4 5.3 7.1 3.4 8.6
4.5 4.3 5.1 1.8 0.8 2.6 0.4 -2.2 4.9 -4.9 5.3 -8.9
3.2 2.0 1.2 4.7 7.3 2.6 1.7 8.4 8.2 1.9 7.9 -0.8
From Centers for Medicare & Medicaid Services, Office of the Actuary. 1. The health spending projections were based on the National Health Expenditures released in January 2012. The projections projections include effects of the Patient Patient Protection and Affordable Care Act. 2. Research and development expenditures expenditures of drug companies and other manufacturers and providers of medical equipment and supplies are excluded from research research expenditures. These research research expenditures are implicitly included in the expenditure class in which the product falls, in that they are covered by the payment received for that product. Note: Numbers may not add to totals because of rounding.
Healthcare in the United States
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43
Projected 2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
$2,695 $2,695.0 .0 2,543 ,543.2 .2 2,270 ,270.4 .4 848.9 708.0 529.2 70.9 107.9 134.3 72.9
$2,809 $2,809.0 .0 2,655 ,655.3 .3 2,364 ,364.1 .1 884.7 735.4 549.6 74.5 111.4 143.9 77.5
$2,915 $2,915.5 .5 2,757 ,757.8 .8 2,441 ,441.8 .8 920.7 745.9 554.5 76.1 115.2 152.8 81.9
$3,130 $3,130.2 .2 2,9 2,964.9 64.9 2,6 2,622.7 22.7 982.7 805.6 601.5 83.8 120.3 163.7 88.3
$3,307 $3,307.6 .6 3,1 3,132.7 32.7 2,7 2,774.1 74.1 1,038.3 849.9 633.4 89.7 126.8 175.3 94.5
$3,514 $3,514.4 .4 3,3 3,329.2 29.2 2,9 2,948.9 48.9 1,106.6 900.6 670.6 96.5 133.6 188.1 101.2
$3,723 $3,723.3 .3 3,5 3,526.5 26.5 3,1 3,130.4 30.4 1,170.7 956.5 712.4 103.1 141.1 201.8 108.4
$3,952 $3,952.3 .3 3,7 3,743.0 43.0 3,3 3,326.1 26.1 1,240.0 1,016.4 757.0 109.7 149.6 216.9 117.1
$4,207 $4,207.3 .3 3,9 3,985.3 5.3 3,5 3,544.2 4.2 1,317.7 1,084.3 807.3 117.6 159.5 233.1 126.6
$4,48 $4,487.2 7.2 4,25 4,252. 2.4 4 3,78 3,782. 2.6 6 1,404.1 1,156.1 860.5 125.9 169.7 250.8 137.0
$4,781 $4,781.0 .0 4,53 ,532.7 2.7 4,03 ,034.0 4.0 1,495.7 1,229.1 914.9 134.5 179.8 269.9 148.3
151.3 355.0 269.2 85.8 39.7 46.1 33.8 152.3 86.7 151.9 50.2 101.7
155.2 367.4 277.1 90.3 42.5 47.8 37.5 162.6 91.0 153.7 48.7 105.0
163.2 377.4 283.7 93.7 44.7 49.0 39.8 180.8 95.3 157.7 48.6 109.1
172.0 410.4 308.7 101.7 47.3 54.4 44.5 197.4 100.3 165.3 50.8 114.5
181.1 435.0 327.3 107.6 50.1 57.5 47.4 205.6 105.7 174.9 53.7 121.2
191.0 461.4 347.8 113.6 52.2 61.4 51.0 217.7 111.6 185.2 57.1 128.1
201.7 491.2 371.1 120.1 55.2 64.9 52.9 225.1 118.1 196.8 60.9 136.0
213.6 522.1 394.9 127.2 58.6 68.6 56.3 235.3 125.2 209.3 64.8 144.5
226.2 556.3 420.9 135.4 62.4 73.0 59.9 248.4 132.7 221.9 68.9 153.0
239.9 594.7 450.7 144.0 66.5 77.5 63.8 265.2 140.8 234.9 73.3 161.6
255.0 635.9 483.2 152.7 70.7 82.0 68.0 281.3 149.4 248.2 77.8 170.4
3.9% 4.0 3.9 4.3 2.8 2.7 3.7 2.9 4.5 3.9
4.2% 4.4 4.1 4.2 3.9 3.8 5.0 3.3 7.1 6.4
3.8% 3.9 3.3 4.1 1.4 0.9 2.1 3.5 6.2 5.7
7.4% 7.5 7.4 6.7 8.0 8.5 10.1 4.4 7.1 7.8
5.7% 5.7 5.8 5.7 5.5 5.3 7.1 5.4 7.1 6.9
6.3% 6.3 6.3 6.6 6.0 5.9 7.5 5.4 7.3 7.1
5.9% 5.9 6.2 5.8 6.2 6.2 6.8 5.6 7.3 7.1
6.2% 6.1 6.3 5.9 6.3 6.3 6.5 6.1 7.5 8.1
6.5% 6.5 6.6 6.3 6.7 6.6 7.1 6.6 7.5 8.1
6.7% 6.7 6.7 6.6 6.6 6.6 7.1 6.4 7.6 8.2
6.5% 6.6 6.6 6.5 6.3 6.3 6.8 6.0 7.6 8.3
5.4 8.7 8.8 8.5 6.0 10.8 11.7 9.2 5.3 4.8 4.4 5.0
5.3 6.0 6.0 5.8 5.8 5.9 6.5 4.1 5.4 5.8 5.7 5.8
5.5 6.1 6.2 5.6 4.2 6.7 7.6 5.9 5.6 5.9 6.4 5.7
5.6 6.5 6.7 5.7 5.8 5.7 3.7 3.4 5.8 6.3 6.6 6.2
5.9 6.3 6.4 5.9 6.1 5.7 6.4 4.5 6.1 6.3 6.5 6.3
5.9 6.5 6.6 6.5 6.5 6.4 6.5 5.6 6.0 6.0 6.3 5.9
6.0 6.9 7.1 6.3 6.5 6.2 6.5 6.7 6.1 5.8 6.3 5.6
6.3 6.9 7.2 6.0 6.3 5.8 6.5 6.1 6.1 5.7 6.2 5.4
5.8 3.9 3.9 4.0 5.1 3.0 12.3 4.3 5.1 1.9 1.8 1.9
2.6 3.5 2.9 5.3 7.2 3.6 11.0 6.8 5.0 1.2 -3.0 3.3
5.1 2.7 2.4 3.8 5.0 2.7 6.3 11.2 4.6 2.6 -0.1 3.8
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Managing Health Services Organizations and Systems
save any money, it might even add to total national health spending.” 200 More recently, rapid increases in Medicaid costs, both general costs and those for subacute and postacute services such as NFs and home health, are likely to redirect and broaden cost-control efforts.
Sources and Uses of Funds In Healthcare As shown sh own in Table 1.2, personal healthcare expenditures expendit ures follow f ollow a similar sim ilar trend of dramatic annual increases. In 2010, these expenditures total $2.2 trillion, compared with $1.8 trillion in 2006. It is forecast that by 2021, personal healthcare expenditures will total over $4.0 trillion. Table 1.2 shows other uses of funds expended on health from 2006 to 2010, with projections to 2021. Private nongovernmental sources continue to provide almost 60% of personal healthcare expenditures.201 As already noted, it is the willingness and ability of the American public (unlike those in systems in which private expenditures are illegal or purchasing power is limited) to spend personal funds on healthcare that makes expenditures high compared with other countries. Simultaneously Simultaneously,, it shows the importance of freedom of choice in the United States. The charts in Figure 1.5 show the sources and expenditures of the U.S. healthcare dollar for 2010. It is notable that, despite the significant growth of public expenditures since the enactment of Medicare in 1965, private sources provided almost 45% of funds in 2010. In terms of how the healthcare dollar is spent, hospital care expenditures predominate by consuming over 30% of funds. Inflationary pressures in healthcare expenditures have moderated since 2000, although, with few exceptions, they continue to lead increases in the CPI.202 Hospital services have had very significant cost increases since 1969. The contribution of physicians’ services has been significant too, but less than that of hospital services. Data such as these caught the attention of federal policy makers. DRGs, resource utilization groups (RUGs), and resource-based relative value scales (RBRVS), which will be discussed later in the chapter, chapter, have been their response. Historically, much of the cost of health services has been borne by employers, and many have been instrumental in forming strategic alliances to control them. Strategic alliances bring together hospitals, physicians, employers, organized labor, insurers, and sometimes government to collect and exchange data and discuss how to finance and deliver health services in a community. Strategic alliances are discussed in Chapter 12. Large increases in healthcare costs to employers have caused many to stop providing health insurance; narrow the range and content of health insurance product choices; and/or require employees to pay a larger share of costs through higher premiums, copays, and deductibles.
Private Payment under the Insurance Principle The first insurer to write “sickness” insurance did so in 1847, but the insurance industry paid little attention to health insurance until after World War War II. Contributing to this lack of interest was a perception that sickness and paying for treatment were too unpredictable to fit traditional actuarial concepts. It was not until 1929 that Blue Cross showed it could be done. Blue Cross began when a group of school teachers made an agreement with Baylor Hospital in Dallas to provide hospital room and board and certain diagnostic services for a monthly fee. In 1932, the first citywide plan was established with a group of hospitals in Sacramento. The The comparable plan for physicians’ services became known as Blue Shield and was established in California in 1939. Hospitals fostered development of Blue Cross to enhance their patients’ ability to pay the costs of
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Other Health Spending, $407.6 (15.7%) Other Personal Healthcare, $384.2 (14.8%) Home Health Care, $70.2 (2.7%) Nursing Care Facilities & Continuing Care Retirement Communities, $143.1 (5.5%)
Prescription Drugs, $259.1 (10.0%)
45
Hospital care, $814.0 (31.4%)
Physicians/ Clinical Services, $515.5 (19.9%)
NHE Total Total Expenditures: $2,593.6 billion
Percent Distribution of National Health Expenditures, by Source of Funds, 1960–2010
100% 9.4%
10.4%
80%
15.6%
13.9%
70%
6.2%
90%
60% 50%
4.4% 7.1%
7.9%
6.7%
6.4%
6.2%
6.3%
5.9%
5.7%
13.7%
13.5%
12.2%
11.0%
11.1%
10.5%
10.6%
3.3%
3.7%
3.8%
3.0%
3.6%
10.2%
10.2% 10
14.6%
15.2%
16.3%
19.1%
14.7%
13.0%
32.3%
33.4%
1990
2000
10.3%
14.6%
47.7%
40%
33.4%
22.8%
2.6%
3.2%
14.2%
15.0%
15.5%
20.0% 20
20.2%
12.5%
11.8%
11.6%
34.6%
33.8%
33.2%
32.7%
2005
2007
2009
2010
15.3%
16.7%
18.8%
30% 20% 10%
21.1%
20.6%
1960
1970
27.0%
0% 1980
Investment
Other 3rd Party Payers/Public Payers/Public Health
Medicaid
Medicare
Out-of-Pocket
Other Pub. Ins. Programs Priv. Health Ins.
Figure 1.5. Distribution of national health expenditures, by type of service (in billions), 2010. Note: Other Personal Health Care includes, for example, dental and other professional health services, durable medical equipment, etc. Other Health Spending includes, for example, administration and net cost of private health insurance, public health activity, research, structures and equipment, etc. (From Kaiser Family Foundation calculations using National Health Expenditure data from the Centers for Medicare and Medicaid Services, Office of the Actuary, Actuary, National Health Statistics Group [at http://www. cms.hhs.gov/NationalHealthExpendData/].)
hospitalization. After several mergers and reorganizations during the 1990s, by 2012, there were 38 Blue Cross Cross and Blue Shield plans insuring insuring more than 100 million people.203 Private health insurance coverage grew rapidly during the 1940s and 1950s. It received a boost during World War II, when wages and salaries were subjected to federal government controls but fringe benefits were not. Commercial carriers began writing substantial amounts of health insurance. By 1955, they had more insureds than Blue Cross. By 1981, more than 1,000 commercial insurance companies were writing health insurance in the United States. 204 The number of commercial insurance carriers writing healthcare coverage has remained relatively stable since the 1980s; however, the number is predicted to decline. 205 Most private insurance coverage is available through the employment relationship. 206 The number of persons uninsured was estimated to be more than 49 million in 2012. 207 It is
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Managing Health Services Organizations and Systems
important to analyze the categories of persons who are uninsured. Some of the uninsured are self-pay; many choose not to pay for insurance through their employers or similar sources; most of the uninsured would be medically indigent in a major illness. The estimate of the uninsured does not indicate how many cannot get care when it is needed. About 54% of Americans (more ( more than 180 million) millio n) had private p rivate (nongovernmental (no ngovernmental)) health insurance covercove r208 age in 2010. Historically, Historically, Blue Cross has been a community-rated service plan; all insureds in the same geographic area paid the same rate. Blue Cross paid providers a negotiated fee pursuant to a contract. In contrast to service plans, indemnity insurance—the type usually written by commercial carriers—indemnifies (pays) the insured person a fixed amount for each different diagnosis or treatment. A variation of indemnification is assignment—the insured person assigns the payment to the provider, who is paid directly. Service plan limits are expressed in days of care and services covered. Blue Shield paid participating physicians according to a f ee schedule, which was payment in full and which had the effect of assignment. Nonparticipating Nonparticipating physicians billed the patient, who was reimbursed per the fee schedule. Another difference between Blue Cross/Blue Shield and the commercial carriers is that, historically, the former were notfor-profit corporations that prided themselves on providing consumer-oriented coverage with low overhead costs for plan administration.
Government Payment Schemes Background As n noted, oted, until 1965, 1965, the federal government government concentrated concentrated on providin providingg the wherewithal wherewithal to supsupport private delivery of services. The advent of Medicare and Medicaid brought federal and state governments into direct financing of medical care. Historically and presently, federal programs provide services to veterans, military personnel, and Native Americans. State governments provide services for special health problems such as mental illness and disabilities and tuberculosis. States may also operate general acute care hospitals that are part of academic health centers connected with state medical schools. Other HSOs, usually general acute care hospitals, are owned by local governments. As noted, noted , federal fed eral government gove rnment has sought to t o control contro l the increase i ncrease in healthcare expenditures through programs such as PROs, DRGs, RUGs, and RBRVS. Also as noted, the states have used regulatory controls such as CON and rate review through rate-setting commissions to moderate the increase in healthcare costs. In addition, most have sought to slow the growth of Medicaid costs by hospital preadmission screening, limiting hospital days, reducing what is paid for each day of care or each service, paying months (or years) after bills are submitted by HSOs and physicians, requiring beneficiaries to pay larger copayments for optional services, increasing eligibility eligibility (income) restrictions, and decreasing the range of services available. Oregon developed a priority list of services (based on a budget) for which its Medicaid program will pay. For many services, Medicaid pays only a fraction of the costs incurred by HSOs to provide them. Reducing what Medicaid pays has ripple effects. Other payers must make up the diff erence through cost shifting if the HSO is to be financially viable. Government programs do not pay charges (the nonnegotiated fee charged by the HSO), nor does Blue Cross. Commercial insurers are almost certain not to pay charges, and indemnity plans have always paid only a fixed fee to the beneficiary regardless of what the beneficiary is charged or pays. It is only the self-pay patients who pay charges. The small number of those who pay out of pocket makes cross subsidies infeasible.
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Cost shifting raises basic questions of fairness. Should any payer pay less than costs for services? Medicare is a case more politically difficult than Medicaid because Medicare is an exclusively federal program. Congress has been unwilling to cut benefits, although it has increased copayments and deductibles (e.g., Medicare Part A, hospitalization) and the insurance premium (e.g., Medicare Part B, physicians’ services) several times since 1965. Medicare has been called uncontrollable because once beneficiaries are eligible, all services are available. Meaningful savings will occur only if benefit levels are controlled, which is politically unpalatable.
Diagnosis-Related Groups Initially, Medicare reimbursement for hospital services was based on costs; the lack of incentives to be efficient caused runaway cost increases. By the early 1980s, a direct means of cost control was instituted when the Tax Equity and Fiscal Responsibility Act of 1982 209 and the Social Security Amendments of 1983 (PL 98-21) 210 mandated a prospective payment system for Medicare using DRGs. The CMS administers Medicare and Medicaid and establishes and reviews DRG rates for each Medicare inpatient admission. Discharged Medicare patients are assigned to one or more of the 751 DRGs, based on diagnosis, surgery, patient age, discharge destination, and sex.211 The weight of each DRG is based primarily on Medicare billing and cost data and reflects the relative cost, across all hospitals, of treating cases that are classified in that DRG.212 Hospitals that can provide services at lower costs keep the difference. Those exceeding the DRG rate must recoup the loss elsewhere. The change from cost-based reimbursement to payment according to rates prospectively determined by CMS has had and will continue to have major effects on hospitals. One is that hospitals “unbundled” (separated) postacute services such as subacute, recuperative, and rehabilitative care from the acute episode hospital stay. For example, hospital-based NF beds were established to provide transitional care. Under prospective payment, hospitals must be certain that their average costs per DRG do not exceed CMS rates. Managers and physicians must collaborate to eliminate unnecessary tests and procedures and reduce LOS, and, in general, hospitals must become more efficient. Initially, Initially, the DRG payment system applied only to Medicare patients, but state Medicaid programs, Blue Cross, and other third-party payers have adopted it for inpatient services. Similar, DRG-like prospective payment system methodologies are being used for NFs and outpatient clinics, as well.
Resource Utilization Groups DRGs are applied to hospitalized Medicare beneficiaries. The classification system applied to long-term care puts NF residents with similar resource needs (utilization) into groups. Initially, Initially, these groups were based on the ability of NF residents to engage in activities of daily living, which are major explanatory factors in resource use. Since Since the mid-1980s, RUGs RUGs have undergone significant derivation and validation and have evolved through RUG-II, which was used to determine NF payment for Medicaid in New York and Texas. 213 RUG-III was mandated for Medicare residents by the Balanced Budget Act of 1997.214 The number of reimbursement levels based on resident condition and use of services was increased from 44 to 53 in 2005, and again from 53 to 66 in 2010. RUG-IV uses a daily rate based on the needs of individual residents, adjusted for local labor costs. The rate changes as the resident’s resident’s condition changes.215 As with other federal payment payment schemes, most payers are are likely to adopt RUG-IV in determining payments to NFs.
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Ambulatory Patient Groups and Ambulatory Payment Categories Other providers of services have drawn the attention of lawmakers and regulators. Research in the late 1980s led to development of ambulatory patient groups (APGs), a system of codes that explains the amount and type of resources used in an ambulatory visit. The variety of outpatient services settings, wide variation in the reasons for outpatient care, and the high percentage of costs associated with ancillary services necessitated a classification scheme that could reflect the range of services rendered. As with DRGs, patients in each APG are assumed to have similarities in clinical characteristics, resource use, and costs. Also like DRGs, a primary APG or a significant procedure is subdivided into groups by body systems. Unlike DRGs, variables for additional services are based on clinically similar classes, and multiple APGs can be applied per patient encounter. APGs encompass the full range of ambulatory settings, including sameday surgery units, hospital emergency rooms, and outpatient services. They do not address telephone contacts, home health visits, NF care, or inpatient services.216 HCFA (now the CMS) adapted ambulatory payment categories (APCs) from APGs. APCs cluster thousands of procedure and diagnosis codes into more than 300 categories, with separate classifications for surgical, medical, and ancillary services. Each group includes clinically similar services that require comparable levels of resources. A relative weight based on median resource use is assigned to each classification. Payment for each APC is determined by multiplying the relative weight by a conversion factor, which is the average rate for all APC services. 217
Resource-Based Relative Value Scale In 1992, CMS’s predecessor, HCFA, began implementing a fee schedule for physicians who participate in Medicare Part B, a change mandated by the Omnibus Budget Reconciliation Act of 1989 (PL 101-239, OBRA ’89). 218 Previously, physician payment under Part B was based on usual, customary, and reasonable charges. Among the most important effects of charge-based payment was that procedure-based specialties such as surgery were more highly paid than specialties such as internal medicine that use cognitive skills (e.g., evaluation, management). The new schedule used an RBRVS that resulted in dramatic changes in physician payment patterns. The prospectively set reimbursement is based on the resources that are used to produce physician services and is divided into three components: physician work, practice expenses, and malpractice insurance. 219 Nonphysician practitioners whose services are paid under Medicare Part B will continue to have their fees tied to those of physicians, and their fees will move in the same direction. 220 RBRVS RBRVS increased reimbursement for family and general practice physicians by about 15%; payments to ophthalmologists and anesthesiologists declined the most (approximately 35%), but payments to other procedure-based specialists, such as surgeons, decreased as well.221 Since RBRVS RBRVS was introduced, the inexorable trend in physician’ physician’s fees has been downward. d ownward. In addition, to prevent physicians who have not signed a Medicare participation agreement (accepting Medicare as full payment for services [sometimes called assignment]) from balance-billing patients (i.e., billing patients for the difference between what Medicare pays and what the physician charges), the statute imposed a cap on the amount that a nonparticipating physician may balance-bill a Medicare beneficiary. 222 Regulations developed pursuant to the Balanced Budget Act of 1997 allow physicians (and other healthcare practitioners) to opt out of Medicare and provide services through private contracts with patients. The federal application of RBRVS is only to Medicare. However, RBRVS is likely to be used by other third-party payers, as they have used RUGs and DRGs. The effect will be a
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major change in how physicians are paid. Other likely effects are that physicians employed in high-technology practices will generate less income for their employers; physicians will try to unbundle services and move more of them out of hospitals; physicians may seek to have lost income made up by hospitals; physicians may limit their willingness to treat Medicare beneficiaries; and adjustments in how physicians are paid in rural areas as compared with urban areas will make it easier for rural hospitals to attract physicians, thus increasing access to care for rural beneficiaries while potentially decreasing it for urban beneficiaries.223
Summary Incentives in DRGs, RUGs, and APG/APCs may lead to underuse of services and consequently to inappropriate treatment. The effect of DRGs is an incentive to discharge patients from hospitals as soon as possible. Early discharge has significant implications for home health agencies, NFs, and hospitals, but most of all for the patients who may experience ill effects from too early a discharge. Incentives in RBRVS are to overuse services because physicians are paid for each treatment. Treatment by specialists is not necessarily more expensive. Interventions by specialists may be more effective, with lower total cost than the same diagnosis treated by a family practitioner, titioner, for example. A likely long-term effect of RBRVS is that changes in physician income will reconfigure the ratios of physicians physicians by specialty. specialty.
System Trends Significant efforts by state and federal governments to control their health services programs’ costs will continue. Hospitals consume about one quarter of health expenditures.224 Thus, they will continue to receive disproportionate attention from government and other third-party payers. The large component of fixed and semivariable costs will limit the savings that HSOs can achieve. Case-mix cost control through DRGs will cause hospitals to treat patients with the most remunerative diagnoses. There will be economic pressure to discharge patients quickly, perhaps earlier than sound practice warrants. In addition, treating the less ill with alternative regimens and in nonhospital HSOs leaves only the most ill in acute care hospitals. The result will be that costs per day of care will increase, ultimately putting even greater financial pressure on hospitals. Unless hospitals close beds, discontinue services, and reduce the number of employees, the cost per case and the total cost per hospitalization will rise. Regulation was the watchword in the late 1960s and early 1970s. The competitive environment that emerged in the late 1970s and early 1980s has continued, especially among hospitals. Public and private payment sources are unwilling to subsidize the inefficient. The bankruptcies, mergers, and joint activities among HSOs/HSs that began in the 1980s have continued. Increasingly, hospitals will be connected to one another as part of systems and through shared services, group purchasing, and strategic alliances. As with politics, all healthcare delivery is local. HSs tend to be local or regional rather than national, a reality that is likely to continue. Predictions that the end of the 20th century would find U.S. healthcare provided by a few national hospital systems, some large unaffiliated facilities, and few small freestanding hospitals proved to be incorrect. The widespread corporate restructuring undertaken by hospitals in the early 1980s was largely unsuccessful. Even as corporate restructuring protected and enhanced hospitals’ assets and reimbursement and expanded their range of activities, it caused management to lose sight of the core business. Consequently, Consequently, hospitals have divested themselves of noncore
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Managing Health Services Organizations and Systems
businesses and are again focusing on their original raison d’etre. Restructuring is addressed in Chapter 2. Physicians have increasingly undertaken activities that compete with hospitals. As technology becomes more portable and as new medical interventions that do not require hospitalization are developed, hospitals will have sicker and sicker patients. The fragmentation and ultraspecialization of hospital clinical staff will continue. As a result, the problems of acquiring, retaining, and managing human resources and their appropriate roles in HSOs will be exacerbated in the future.
Discussion Questions 1. What are the ramifications and implications for the health services system of the model developed by Blum? What are its strengths and weaknesses? 2. Select a disease problem and apply the Precede-Proceed model described in the chapter. How should HSO/HS governing bodies and managers use this model? 3. Describe and analyze the relationships among the various institutional and programmatic providers in the health services system. 4. Facilities and programs other than acute care hospitals are much more numerous and arguably have a greater effect on health status, but acute care hospitals remain the focus of attention. Why is this? What are the desirable and undesirable aspects of this attention from the standpoint of the acute care hospital and the consumer of health services? 5. Proliferation of the health health professions continues unabated. What What is desirable and undesirable about this fragmentation? If something should be done to slow or stop it, what should it be, and how can it be achieved? 6. Highlight the changes changes in reimbursement to HSOs that have occurred since 1965. What forces in the general environment were most important in causing these changes? Sketch Ske tch and defend a scenario that suggests the likely developments in reimbursement during the first part of the 21st century. 7. Federally supported state health planning has risen and fallen since the passage of Medicare and Medicaid. Identify the advantages and disadvantages of statewide or areawide health planning from the standpoints of providers and consumers. 8. Describe how licensure, registration, and certification are different. What are the advantages and disadvantages of each from the standpoint of providers and consumers? How do they facilitate and inhibit the availability of health services occupations?
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9. Resources consumed by the health services system have soared since the late 1960s. What factors contributed to the increases? Identify actions that have been taken. What else might be done to control costs? 10. Identify the advantages and disadvantages of excess numbers of physicians and nonphysician clinicians from the perspective of health services managers. What are the advantages and disadvantages to society?
Case Study 1
Gourmand and Food—A Fable225 The people of Gourmand loved good food. They ate in good restaurants, donated money for cooking research, and instructed their government to safeguard all matters having to do with food. Long ago, the food industry had been in total chaos. There There were many restaurants, some very small. Anyone Anyone could call himself or herself a chef or open a restaurant. In choosing a restaurant, one could never be sure that the meal would be good. A commission of distinguished chefs studied the situation and recommended that no one be allowed to touch food except for qualified chefs. “Food “Food is too important to be left to amateurs,” they said. Qualified chefs were licensed by the state, and there were severe penalties for anyone else who engaged in cooking. Certain exceptions were made for food preparation in the home, but those meals could be served only to the family. Furthermore, a qualified chef had to complete at least 21 years of training (including 4 years of college, 4 years of cooking school, and a 1-year apprenticeship). All cooking schools had to be first class. These reforms did succeed in raising the quality of cooking, but a restaurant meal became substantially more expensive. A second commission observed that not everyone could afford to eat out. “No one,” they said, “should be denied a good meal because of income.” Furthermore, they argued that chefs should work toward the goal of giving everyone “complete physical and psychological psychological satisfaction.” The The government declared that those people who could not afford to eat out should be allowed to do so as often as they liked, and the government would pay. For others, it was recommended that they organize themselves into groups and pay part of their income into a pool that would be used to pay the costs incurred by members in dining out. To To ensure the greatest satisfaction, the groups were set up so that members could eat out anywhere and as often as they liked, their meals could be as elaborate as they desired, and they would have to pay nothing or only a small percentage of the cost. The cost of joining such prepaid dining clubs rose sharply. Long before this, most restaurants had employed only one chef to prepare the food. A few restaurants had been more elaborate, with chefs specializing in roasting, fish, salads, sauces, and many other things. People had rarely gone to t o these elaborate restaurants because they had been so expensive. With the establishment of prepaid dining clubs, everyone wanted to eat at these fancy restaurants. At the same time, young chefs in school disdained going to cook in a small restaurant where they would have to cook everything. Specializing and cooking at a very fancy restaurant paid much better, better, and it was much more prestigious. Soon there were not enough chefs to keep the small restaurants open. With prepaid clubs and free meals for f or the poor, many people started eating three-course meals at the elaborate restaurants. Then Then restaurants began to increase the number of courses, directing the chefs to “serve the best with no thought for the bill.” (Eventually, a meal was served that had 317 courses.)
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Managing Health Services Organizations and Systems
The costs of eating out rose faster and faster. A new government government commission reported as follows: 1. Noting that licensed chefs were being used to peel potatoes and wash lettuce, the commission recommended that these tasks be handed over to licensed l icensed dishwashers (whose 3 years of dishwashing training included simple cooking courses) or to some new category of personnel. 2. Concluding that many licensed chefs were overworked, the commission recommended that cooking schools be expanded, that the length of training be shortened, and that applicants with lesser qualifications be admitted. 3. The commission commission also observed that chefs were unhappy because because people seemed to be more concerned about the decor and service than about the food. (In a recent taste test, not only could one patron not tell the difference between a 1930 and a 1970 vintage, but he also could not distinguish between white and red wines. He explained that he always ordered the 1930 vintage because he knew that only a very good restaurant would stock such an expensive wine.) The commission agreed that weighty problems faced the nation. They recommended that a national prepayment group be established, which everyone must join. They recommended that chefs continue to be paid on the basis of the t he number of dishes they prepared. They They recommended that the Gourmandese be given the right to eat anywhere they chose and as elaborately as they chose and pay nothing. These recommendations were adopted. Large numbers of people spent all of their time ordering incredibly elaborate meals. Kitchens became marvels of new, new, expensive equipment. All those who were not consuming restaurant food were in the kitchen preparing it. Because no one in Gourmand did anything except prepare or eat meals, the country collapsed.
Questions 1. Read and analyze analyze the fable of Gourmand. How well well does the allegory fit delivery of healthcare in the United States? 2. What is, and what what should be, the role of the consumer in healthcare? healthcare?
Case Study 2
Where’s My Organ? Organizations that support and encourage transplantation of human organs estimate that tens of thousands of persons with end-stage renal disease, who are now maintained on dialysis, could resume a relatively normal life with a kidney transplant. The supply of cadaver cadaver kidneys, however, however, falls far short of demand. To encourage persons to sign organ donor cards and to encourage families to consent to organ donation, a member of the U.S. House of Representatives introduced a bill to provide tax incentives for what is often called the “gift of life.” Here, the gift is vascularized organs, including the heart, liver, pancreas, lungs, and kidneys. Tax incentives would be twofold: a $25,000 deduction per organ in the individual’s last taxable year, plus a $25,000 exclusion per organ from estate taxes. To qualify, the organ must be in a condition suitable for transplantation. The same tax incentives would be granted for donations by dependents as defined by the federal tax code. When introducing the bill, the
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representative stated, “Thus, a minor with significant income would reduce the family’s tax liability with a posthumous donation that would benefit both the minor’s loved ones and the loved ones of the recipient of the life-saving organ.” organ.” The representative noted, too, that enactment of his bill would result in significant cost savings to the federal government, which pays pays for the dialysis of persons with end-stage renal r enal disease under Medicare. Assuming a 50% income tax bracket and an average of two organs per taxpayer, the deductions for 10,000 donors would reduce tax collections by $250 million. Renal dialysis is projected to cost the federal government almost $12 billion by fiscal year 2015.
Questions 1. Identify the issues that this proposed legislation legislation raises. 2. Choose to support support or oppose the the bill. Develop a set of arguments arguments that justifies your position. 3. Develop an alternative alternative proposal that that would be more effective effective in encouraging encouraging organ donation.
Case Study 3
Dental Van Shenanigans226 Use of vans to take healthcare services to the medically underserved is common in rural areas and inner cities. One midwestern city had a federally funded community health center (CHC) that provided some dental clinic services to the needy. The CHC was well qualified but was known for an aggressive management style and creating self-serving alliances. This questionable management style was seen by CHC managers as the most savvy and efficient path to financial success. Unilaterally, the CHC developed a proposal for a van with two dental treatment areas to take primary care dental services to underserved inner-city school children. Then Then the CHC worked behind the scenes at other local agencies to get some of their funds to support the van. The effort included colluding with board members from other agencies on matters of those board members’ personal interests in exchange exchange for the board members’ putting financial support of the dental van on their organizations’ meeting agendas. Of course, these differing interests or actual conflicts of interest were not disclosed when dental van support was included on the agendas. The The staffs of the other agencies were not consulted in advance, because CHC management thought it was unlikely that those staffs would support allocating funds for the CHC’s CHC’s big public relations initiative. One agency learned about the dental van and the CHC’s effort to obtain some of their budget when the van appeared as an agenda item that was added at the last minute. The The proposal did not pass, however, because the board members who had conspired with the CHC were unable to answer the other board members’ questions about how support of the CHC’s dental van furthered their agency’s mission. The dental van was badly needed in the community, but it was about to lose its funding. Only if the staff from the other agency argued in support of the CHC’s effort would it pass. Supporting the dental van, however, required that the agency’s staff overcome its anger that the CHC’s CHC’s efforts had been surreptitious and had sought to gain support in a devious manner. manner.
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Questions 1. Make the assumption that your agency’s agency’s budget had funds available. Should your staff have spoken in support of the dental van project even though it was outside your agency’s agency’s mission and it was put on the agenda through questionable means? 2. Competitiveness or a desire for preeminence and public relations advantage advantage may may cause agencies providing public health services to act unethically or dishonestly. dishonestly. What is the best way to work to improve public health when this occurs? 3. In many states, dentists provide provide services to the economically economically disadvantaged disadvantaged who qualify for Medicaid. How should the CHC respond to protests from area dentists that sending a dental van into the inner city will disrupt their existing dentist–patient relationships (and, incidentally, incidentally, reduce their incomes)?
Notes 1. Centers for Medicare Medicare and Medicaid Medicaid Services. “National “National Health Expenditure Projects Projects 2011-2012, 2011-2012, Forecasted Summary and Selected Tables.” http://www.cms.gov/Research-Statistics-Data-andSystems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/Proj2011PDF.pdf , retrieved July 21, 2013. 2. Sean Keehan, Andrea Sisko, Christopher Christop her Truffer, ruffe r, John Poisal, Gigi Cuckler, Andrew Madison, Joseph Lizonitz, and Sheila Smith. “National Health Spending Projections Through 2020: Economic Recovery and Reform Drive Faster Spending Growth.” Health Affairs (July 2011). http:// content.healthaffairs.org/content/early/2011/07/27/h content.healthaffairs.org/conten t/early/2011/07/27/hlthaff.2011.0662.full lthaff.2011.0662.full , retrieved July 21, 2013 . 3. Health Care Financing Administration. “Highlights: “Highlights: National Health Expenditures, 1998.” http:// www.hcfa.gov/stats/NHE-OAct/hilites.htm, retrieved March 21, 2000. 4. U.S. Census Bureau. “Profile “Profile of General Population Population and Housing Characteristics: Characteristics: 2010.”
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Files/MainSite/Content/Healthcare_Industry_Insights/Industry_Research/AMN%202012%20 RN%20Survey.pdf , retrieved July 21, 2013. Note: Response rate for survey was 3.3 percent. 164. American Nurses Nurses Credentialing Center. “General Requirements Requirements for Initial Certification.” http:// www.nursecredentialing.org/Certification/Certific www.nursecredentialing.org/Certification/CertificationPolicies/CertificationG ationPolicies/CertificationGeneralRequirements eneralRequirements , retrieved September 22, 2012. 165. American Nurses Credentialing Credentialing Center. Center. “ANCC “ANCC Certification/Specialty Certification.” Certification.” http:// www.nurse www.nurse credentialing.org/ancc/cert/PDFs/S credentialing.org/ancc/cert/PDFs/SpecialtyCat.pdf pecialtyCat.pdf , retrieved July 13, 2007. 166. American Nurses Association. Association. “ANA “ANA Certification Catalogue.” Kansas City, City, MO: American Nurses Association, 1983. 167. American Nurses Credentialing Credentialing Center. “ANCC “ANCC Certification.” (Pamphlet.) (Pamphlet.) Kansas City, City, MO: American Nurses Credentialing Credentialing Center, Center, 1991. 168. American Nurses Credentialing Center. Center. “Annual “Annual Report and Accomplishments Accomplishments 2010.” http:// www.nursecredentialing.org/Document www.nursecredentialing.org/Documents/Annual-Reports-Ar s/Annual-Reports-Archive/2010-An chive/2010-AnnualReport.pdf nualReport.pdf , retrieved June 26, 2013. 2013.
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169. Health Affairs Health Policy Policy Briefs. “Nurse “Nurse Practitioners and Primary Care.” (Updated). (Updated). http:// www.healthaffairs.org/healthpolicybriefs/brief.php?brief_id=92 , retrieved June 22, 2013. 170. Jacobson, Nadine M. “Rule on Physician Supervision Supervision for Certified Nurse Anesthetists.” Anesthetists.” Policy, , retrieved November November Politics, & Nursing . May 2001. http://ppn.sagepub.com/cgi/reprint/2/2/157.pdf 14, 2006. 171. Greene, J. and A.M. Nordhaus-Bike, Nordhaus-Bike, “Nurse “Nurse Shortage: Shortage: Where Have All the RNs Gone?” Hospital 75 (15–18): 78, 80. & Health Networks 75 172. Accreditation Council for Pharmacy Education. https://www.acpe-accredit.org/shared_in https://www.acpe-accredit.org/shared_info/programs fo/programs Secure.asp, retrieved September 23, 2012. 173. 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American Medical Medical Association. Association. “2012 Annual Report.” http://www.ama-assn.org/resources/doc/ aboutama/2012-annual-report.pdf, retrieved June 26, 2013. 187. National Medical Association. “Why Join?” http://www.nmanet.org/index.php/membership_sub/ why_ join/, retrieved July 17, 2007. 188. Encyclopedia of Associations, Vol. 1, 33rd ed., edited by Christine Maurer and Tara Tara E. Sheets, 1498. New York: Gale Research, 1998. 189. American Hospital Association, Associati on, “AHA Member Center.” http://www.aha.org/aha/member-center/ index.html, retrieved July 23, 2007. 190. Federation of American Hospitals. Who We Are. http://www.fah.org/fahCMS/Documents/Who%20 We%20Are/Who_We_Are_Onepager.pdf , retrieved June 27, 2013. 191. Melanie Delaney, Delaney, Membership Director, Federation of American Health Systems, personal communication, July 23, 2007. 192. 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197. American Association of Health Health Plans. Plans. http://www.aahp.org/services/home_page_links/homelinks/ about_aahp.htm, retrieved April 13, 1999. 198. America’s Health Insurance Plans. “Who We We Are.” http://www.ahip.org/content/default.aspx?bc= 21/42, retrieved July 27, 2007. 199. Centers for Medicare and Medicaid Services. “National “National Health Expenditure Projections 2011–2021.” http://www.cms.gov/Research-S http://www.cms.gov/Research-Statistics-Data-and-Systems/Statist tatistics-Data-and-Systems/Statistics-T ics-Trends-and-Reports/ rends-and-Reports/ NationalHealthExpendData/Downloads/Proj2011PDF.pdf, retrieved September 23, 2012. 200. Reinhardt, Uwe E. “Spending More through through ‘Cost Control’: Our Obsessive Quest to Gut the Hospital.” Health Affairs 15 15 (Summer 1996): 145–154. Reinhardt argues that the incremental cost of convalescent days in a hospital is much less expensive than care provided by alternative sources such as home health. Thus, rather than reduce national healthcare costs, shifting care outside hospitals has actually added to the costs. It is noted that, despite major reductions in inpatient stays from 1980 to 1995, total U.S. health spending increased by more than 50%. 201. U.S. Department of of Health and and Human Services, Centers for for Medicare and Medicaid Medicaid Services. “National Expenditure Projections 2006–2016.” http:www.cms.hhs.gov/NationalH http:www.cms.hhs.gov/NationalHealthExpend ealthExpend Data/downloads/proj2006.pdf, retrieved July 23, 2007. 202. U.S. Department of Labor, Labor, Bureau of Labor Labor Statistics. “Consumer “Consumer Price Index.” http://www.bls .gov/cpi/, retrieved July 23, 2007. 203. Blue Cross Blue Shield Association. http://www.bcbs.com/, http://www.bcbs.com/, retrieved retrieved September 23, 2012. 2012. 204. Health Insurance Association of America. America. Source Book of Health Insurance Data, 1982–83, 7. Washington, Washington, DC: Health Insurance Insurance Association of America, America, 1982–83. 205. Insurance Information Information Institute. Institute. Industry Overview. Overview. http://www.iii.org/facts_statistics/i http://www.iii.org/facts_statistics/industryndustryoverview.html, overview.html, retrieved September 23, 2012. 206. Lopes, Gregory. Gregory. “Health Care Costs Outstrip Pay, Pay, Inflation.” Inflation .” The Washington Times, September 27, 2006, C10. 207. Kaiser Family Foundation. Foundatio n. Health Health Insurance Coverage of the Total Populatio Population. n. http://www.state-
healthfacts.org/comparetable.jsp? 208. Kaiser Family Family Foundat Foundation. ion. Health Health Insurance Coverage of the Total Populati Population. on. 209. Legislative Summaries. Summaries. Centers for Medicaid and Medicare Services. http://www.cms.hhs.gov/ RelevantLaws/LS/list.asp, retrieved January 28, 2008. 210. Summary of P.L. 98-21, (H.R. 1900), SSocial ocial Security Amendments Amendments of 1983—Signed 1983—Signed on April 20, 1983. Social Security Online. http://www.ssa.gov/history/1983amend.html, retrieved January 28, 2008. 211. Centers for Medicare Medicare and Medicaid Medicaid Services. CMS DRG Version 30 FY13. FY13. http://www.dhs.state. retrieved June 28, 2013. or.us/policy/healthplan/guides/hospital/drg_tables/drg_v30.pdf, retrieved 212. Health Care Financing Financing Administration. Administration. “Medicare Provider Provider Analysis and and Review (MEDPAR).” (MEDPAR).” retrieved March 22, 1999. http://www.hcfa.gov/stats/medpar.htm, retrieved 213. Fries, Brant Brant E., Gunnar Ljunggren, and Bengt Winblad. Winblad. “International Comparison Comparison of LongLongTerm Care: The Need for Resident-Level Classification.” Journal of the the American Geriatrics Geriatrics Society 39 (January 1991): 12–13. 214. White, Chapin, Steven Steven D. Pizer, Pizer, and Alan J. White. “Assessing “Assessing the RUG-III RUG-III Resident ClassificaClassification System for Skilled Nursing Facilities.” Health Care Financing Review 24, 2 (Winter 2002): 7–15. 215. The American Association Association of Homes and Services for the Aging, “Getting Started: Understanding Understanding RUGs IV Payment.” http://wahsa.org/rugspymt.pdf, retrieved June 27, 2013. 216. Ambulatory Patient Patient Groups Definitions Definitions Manual Version 2.0. http://www.irpsys.com/fedregs/apg def20.htm#Item2, retrieved September 23, 2012. 217. U.S. Department of of Health and and Human Services, Centers for for Medicare and Medicaid Medicaid Services. Program Memorandum: Intermediaries Transmittal A-02-074, 3. August 7, 2002. http://www .cms.hhs.gov/hospitaloutpatientpps/downloads/a02074.pdf, retrieved July 16, 2007. 218. Omnibus Budget Budget Reconciliation Act of 1989, PL 101-239, 101-239, 103 103 Stat. 2106 (1989). (1989). 219. Inlander, Inlander, Charles B., and Michael A. Donio. Donio. Medicare Made Easy, 111. Allentown, PA: People’s Medical Society, 1997. 220. Grimaldi, Paul L. “RBRVS: “RBRVS: How New Physician Physicia n Fee Schedule Schedul e Will Work.” Work.” Health Care Financial 45 (September 1991): 74. Management 45 221. “Has HCFA ‘Broken Faith’ Faith’ with MD Fee Schedule?” Schedul e?” Medical Staff Leader 20 20 (August 1991): 8. 222. Grimaldi, Paul L. “RBRVS: How New Physician Fee Schedule Schedu le Will Work,” Work,” 74. 223. Koska, Mary T. “Hospitals: “Hospitals : Begin Strategic Planning for RBRVS.” Hospitals 65 65 (February 20, 1991): 28–30.
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224. Centers of Medicare Medicare and Medicaid. Medicaid. National National Health Expenditures Expenditures Projections Projections 2010–2020. 2010–2020. http://
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1 Healthcare in the United States
Learning Objectives • Discuss the development of healthcare in the United States • Comprehend the importance of prevention compared with other interventions • Compare the roles of various organizations in delivery of health services • Understand the health policy policy and regulatory processes processes • Describe the education education and regulation regulation of selected health health occupations occupations • Understand the role of government in organizing health services and paying for them • Detail the importance importance and effect of accreditation accreditation in health services services
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Discussion Questions 1. What are the ramifications ramifications and implications for the health health services system of the model devel- oped by Blum? What are its strengths and weaknesses? The ramifications and implications of Blum’s model (see Figure 1.1) result primarily from the weights that are assigned to various aspects. The widths of the arrows suggest that environment has the most significant effect on well-being. Blum identifies medical care services (health services delivery) as the least important factor. The disproportionately high costs of health services relative to other components give one pause to consider the role and true value of health services. If one accepts the model’s weighting, rational planning requires commitment of additional resources to make the environment more healthful, for example. Societal perceptions of acute care and the education and orientation of physicians, especially allopaths, will cause this change to occur slowly, slowly, if at all. Even with more emphasis on the nondelivery segments of the model, HSOs or quasi-HSOs would be needed to perform the tasks required. Care for chronic diseases and those that are not preventable would continue to require at least the range of HSOs/HSs found in the health services system. A critique of the model identifies its strengths and weaknesses: • Strengths: • Many of the factors affecting well-being are identified. • The relative importance of factors is emphasized. • Arrow size for environment environment seems appropriate. • The health services system is shown as important to well-being, which is correct in many respects. • Psychological and sociological components of well-being are identified. • Weaknesses: • It does not recognize that persons are unlikely to consider the long-term results of their actions. • The effects of lifestyle (personal habits and nutrition) are understated. • Individual responsibility for achieving and maintaining health is not specifically stated. • Science has not verified the weighting of the elements. • Prevention may improve quality of life and increase longevity, but reducing acute diseases leaves chronic, degenerative diseases that may prolong lives of marginal quality at significant cost. • Emphases and components vary by socioeconomic class, which is not shown. 2. Select a disease problem and apply the Precede-Proceed Precede-Proceed model described in the chapter. chapter. How should HSO/HS governing bodies and managers use this model? The model for health promotion planning and evaluation (Precede-Proceed (Precede-Proceed model) shown in Figure 1.2 fits best with the role and scope of community hospitals, public health departments, substance abuse centers, mental health facilities, and integrated HSs, but it could be applied
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to any HSO that seeks a broader understanding of its activities and the link to its community. Students are likely to suggest an acute care medical condition, but discussion should emphasize that the Precede-Proceed model can be applied to all health services, from prevention to continuing care. Figure 1.4 shows the spectrum of health services delivery and should be referenced as necessary. An important result of this exercise is that students should have an appreciation for the social, behavioral, economic, cultural, and environmental factors that affect health and health status. Governing bodies (GBs) and managers should use the model to understand, analyze, and intervene to improve community health status, or population health, which is an increasingly important focus. This intervention can be done as an individual HSO or as part of an HS. Given that virtually all health problems are affected by the factors considered in the PrecedeProceed model, it is a vital template for interventions that improve community health. The model can focus measures of community benefit—a concept important to both not-for-profit and for-profit health services providers, but espec ially important to justify the tax-exempt status of the former. former. 3. Describe and analyze the relationships among the various institutional institutional and programmatic providers in the health services system. Figure 1.4 should be reviewed in analyzing the interactions of various system components. Typical interactions include links between an internist’s office-based practice and the diagnostic services offered by a radiology group. The internist is likely to use at least part of a hospital’s specialized laboratory and imaging services for diagnostic workups. Nursing facilities have transfer agreements with acute care hospitals, and patients are moved between the two as their medical conditions require. State health departments often participate in applying the “conditions of participation” established by the Centers for Medicare and Medicaid Services (CMS) to determine eligibility for Medicare reimbursement. This occurs if, for example, a hospital is not accredited by The Joint Commission or as part of a validation survey. State State and local health departments inspect HSOs for radiation safety, food services, disposal of medical wastes, and sanitation. Some communicable diseases are reportable to state or local health departments or both. HMOs have agreements with acute care c are hospitals (and other HSOs) to provide inpatient care. Hospice may use visiting nurse associations for home nursing services to people who are terminally ill. It is useful to ask students to trace patients through various elements in the system, based on human development (from infancy to old age) or after an event such as an automobile accident. 4. Facilities and programs programs other than acute care hospitals are are much more numerous and arguably have a greater effect on health status, but acute care hospitals remain the focus of attention. Why Why is this? What are the desirable and undesirable aspects of this attention from the standpoints of the acute care hospital and the consumer of health services? Acute care hospitals have received the most attention attention because they • are often dramatic dramatic settings in which technically technically skilled, highly ranked professionals save save patients from dying. • are a focus for the miracles of medical technology. technology. • are the most expensive component component of the health services system. • have received received major media attention that publicizes successes, successes, as well as failings. • treat critically critically ill people and often achieve achieve miraculous miraculous cures.
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From the standpoints of the acute care hospital and the consumer of services, the desirable and undesirable aspects of this attention are as follows: • For the acute care hospital provider
Desirable
Undesirable
They have high prestige/status. Professionals want to be part of the “team”; recruitment and retention are eased. Prestige, status, and medical “miracles” “miracles” justify high costs/salaries. Managers have a large say or much influence.
There is great pressure on managers to perform. The hospital is in the spotlight—even minor problems are highly publicized. The public expects more than the hospital may be able to deliver. Cost pressures will cause many to fail.
• For consumers of services
Desirable
Undesirable
Consumers are aware of new treatments and technology and where to receive them. Consumers are confident the hospital will assist in recovery of their health. Consumers know where to go for emergency services. It is convenient to have many services in one place.
High overhead and standby costs result in high costs. The hospital is expected to do more than it can do, in fact. Bureaucracy dehumanizes; it may cause poor responses. Technological imperative causes unnecessary or inappropriate testing and treatment.
5. Proliferation Proliferation of the health professions continues unabated. What is desirable and undesirable undesirable about this fragmentation? If something should be done to slow or stop it, what should it be, and how can it be achieved? The desirable effects of the proliferation of types of health services personnel include the following: • Specially trained people are available available to provide technical technical services. • Specializing Specializing enhances qualications and depth of preparation preparation in discrete activities. • Such proliferation allows allows HSOs/HSs and clinical staff to deliver deliver high-tech medical care. Proliferation Proliferation can also have the following undesirable effects: • It produces produces human resources problems, problems, such as as recruiting, stafng, and benets management. management. • It complicates complicates union organizing (desirable (desirable for management) and collective collective bargaining. bargaining. • It increases cost of services. • It causes turf battles among provider groups, which lessen HSO/HS effectiveness. It seems, however, however, that little can be done to stop the proliferation of types of health personnel. Perhaps Perhaps nothing should be done; high-tech services are impossible without them. One solution to the problem of proliferation is cross-training and cross-certifying. Another is to resist further fragmentation. For example, primary nursing is more expensive than team nursing, but it provides a wider range of services and decreases fragmentation. Job enrichment reduces
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fragmentation with the further benefit of employee fulfillment and motivation. Managers can slow proliferation by resisting the establishment of new types of personnel and seeking less fragmenting ways to provide services. 6. Highlight the changes in reimbursement reimbursement to HSOs that have occurred since 1965. What forces in the general environment were were most important in causing these changes? Sketch and defend a scenario that suggests the likely developments d evelopments in reimbursement during the first part of the 21st century. The major changes in reimbursing HSOs since 1965 have occ urred through federal initiatives in Medicare and, to a lesser extent, Medicaid. When enacted, Medicare reimbursed hospitals on a cost c ost basis. In 1983, however, the Health Care Financing Administration (HCFA) began to pay hospitals using diagnosis-related group (DRGs), which pay a fixed fee (determined prospectively) per admission. Care provided at lower cost produces a surplus; care provided at higher cost results in a loss on that DRG. Many third-party payers have adopted similar schemes. Resource utilization groups (RUGs) have been applied to nursing facilities. Managed care, capitation, preferred provider organizations (PPOs), and physician case management accentuate the economics of services, perhaps to the detriment of quality. The environmental forces that were most important in causing these changes are shown in Figure 5.7 . They include the general environment [8]. The healthcare environment should be considered in conjunction with Figure 1.3, which details those external forces. A scenario for developments in reimbursement reimbursement early in the 21st century includes payment for disease prevention and health promotion; coverage of physician-assisted suicide (PAS); coverage limits on care determined to be futile; case and disease management; capitation; use of preferred (lower-cost) providers; spreading costs using coinsurance, deductibles, and copayment; and more salaried physicians. 7. Federally supported state health planning has risen and fallen since the passage of Medicare and and Medicaid. Identify the advantages and disadvantages of statewide or areawide health planning from the standpoints of providers and consumers. • The advantages advantages of statewide or areawide health health planning planning include the following: following:
For providers (HSOs/HSs)
For consumers
Limited competitor market entry Saved HSOs/HSs from themselves (their own bad judgment) Reduced/eliminated risks of market competition Gave those who obtained technology first a competitive advantage
May have reduced costs Sought to rationalize the system Gave consumers a voice in how/where services would be available Publicized processes, which made consumers more aware of health and health services
• The disadvantages disadvantages of statewide or areawide health health planning planning include the following: following:
For providers (HSOs/HSs)
For consumers
Restricted the range of action Slowed acquisition of new technology Made HSOs/HSs less successful in getting approval were at a competitive disadvantage Added costs/uncertainty because of planning and delays
Reduced access to services/technology by reducing alternatives May have increased costs of obtaining care Delayed availability of services Increased the cost of government and added bureaucracy
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Managing Health Services Organizations and Systems
8. Describe how licensure, licensure, registration, registration, and certification are different. different. What What are the advantages and disadvantages of each from the standpoints of providers and consumers? How do they fa- cilitate and inhibit the availability of health services occupations? Licensure is a government function (based on the police power of the state) that allows people to engage in a health occupation after they are found to have minimum competence. Registration lists qualified people on a roster developed by government, a government-sanctioned nongovernmental body, body, or a nongovernmental body. body. States may require registration of persons engaging in a health occupation, thus giving registration the effect of licensure. People who are registered may use that designation (e.g., registered dietitian [RD], registered nurse [RN]). Certification is a process by which a nongovernmental organization or association recognizes someone who meets its qualifications. States may require certification of persons engaging in a health occupation, thus giving certification the effect of licensure. HSOs/HSs commonly require certification as a qualification for clinical privileges and/or employment. The advantages and disadvantages from the standpoints of providers and consumers are as follows: • For consumers
Advantages
Disadvantages
Enhances quality of care Informed consumers can choose the services needed High technology is available Reduces risk of quacks and charlatans in healthcare Helps ensure competence
Limits the range of choice of providers Fragments care Range and roles of providers are confusing to consumers Raises costs of care Consumers forced to accept some state paternalism
• For providers (HSOs/HSs)
Advantages
Disadvantages
Helps ensure competence Reduces need for in-house training Enhances quality of care Allows delivery of high-tech medicine May provide competitive advantage
Limits staffing flexibility Promotes fiefdoms Raises salary costs Adds complexity to managing Adds to proliferation/fragmentation proliferation/fragmentation of health services personnel (See Question 5.)
9. Resources consumed by the health services system have soared since the late late 1960s. What factors contributed to the increases? Identify actions that have been taken. What else might be done to control costs?
Contributing Factors Table 1.2 in the text should be reviewed. The coincidence of a rapid rise in health services expenditures and inflation in health services is apparent and instructive, but it does not prove cause and effect. However, large amounts of new money for Medicare and Medicaid were likely major factors, especially because, for almost 20 years, reimbursement for Medicare was cost based. Medicare and Medicaid also paid HSOs/HSs for services for which they may not have been paid previously. Some inflation resulted from provider greed, fraud, and abuse. General
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inflation in the economy was also a factor, as was greater demand for services because of population growth and aging. Providers claim (and it is almost certainly true) that the content of services has increased and that services have become qualitatively superior since the 1960s. Fair comparisons must consider these changes as well.
Proposals Applied and Under Consideration DRGs were the first effort to move from cost-based to fixed-sum payment for services. The resource-based relative value scale puts greater weight on cognitive medical services, such as internal medicine, compared with procedure-based services, such as surgery. Developing and implementing RUGs, ambulatory patient groups, and ambulatory payment categories have been a natural evolution. Managed care and capitation are recent suggestions, although both are old concepts. There are efforts to use lower cost alternatives to institutional care, especially in acute care hospitals. PPO and case and disease management by physicians and specialized organizations are part of the competitive environment. State and federal governments will continue to try to squeeze the “fat” out of HSO/ HS budgets, especially the costs in acute care hospitals, by monitoring utilization, decreasing lengths of stay, and paying a per diem or capitated rate. Likely, the results will be more bankruptcies, mergers, and aggregation into integrated delivery systems. Raising capital to replace old facilities and buy new equipment has become much more difficult and will be an additional force that causes consolidations, mergers, and afliations. Whether these changes and pressures reduce costs and inflation is problematic. Driving technologies and patients out of acute care hospitals changes the location of care (and costs) but, as in the case of home healthcare, does not eliminate them. One answer lies in encouraging less use of services, especially technology. technology. Wellness programs, holistic medicine, and prevention activities reduce—or, more accurately, accurately, shift to a later point in the human life cycle—use and costs of acute care and high-technology services. Some efforts have succeeded and are succeeding. They must be judged case by case. The biggest inhibitor to change and cost reduction will be the consumers, especially those insulated from the costs of care by first-dollar third-party coverage. 10. Identify the advantages advantages and disadvantages of excess numbers of physicians physicians and nonphysician clinicians from the perspective of health services ser vices managers. What are the advantages and disad- vantages to society? The advantages of excess physicians and nonphysician clinicians to both health services manag- ers and society include include the following: • More choice of whom to hire/credential • Greater choice of providers • Lower payroll costs of those employed • Likelihood of greater geographic dispersion • Greater opportunity opportunity to serve underserved areas areas and meet customers’ customers’ expectations expectations for services • Better access to a broad range of providers providers • Greater ability to control control content content of services • Possibly lower-priced services
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Managing Health Services Organizations and Systems
The disadvantages of excess physicians and nonphysician clinicians to health services managers can include the following: • Numerous turf battles battles and political issues in HSOs/HSs • GB pressures to control control types types and numbers • More difculty managing managing and planning professional professional staff organizations The disadvantages of excess physicians and nonphysician clinicians to society include the following: • Inefcient use of societal resources—high resources—high training training costs and underutilization underutilization • Possibly Possibly fewer and poorer quality applicants applicants for training • Bad publicity publicity possibly causing consumers consumers to lose condence in HSOs/HSs HSOs/HSs • Overall cost increase increase from overutilization of services by professional groups and ordering ordering services to maintain income
Case Study 1
Gourmand and Food—A Fable
1
This case should cause students to think critically about the issues in developing national health policy. The discussion is likely to raise more questions than can be answered, but the case can be referenced again in later chapters. For example, Chapter 2 focuses on various types of HSOs in terms of coverage and services; Chapter 4 discusses ethical theories that permit a more thorough assessment of the micro- and macroallocation issues in the case of Gourmand. 1. Read and analyze the fable of Gourmand. Gourmand. How well does the allegory fit delivery of healthcare in the United States? The fable is a parody of the historical development of the U.S. healthcare system. It describes what the authors believe occurred: initial licensing and educational requirements led to expansion and increased availability of services, specialization, a decreased number of general practitioners, and increased costs. It is a satire showing that the ultimate result of adding money and regulation without basic system reforms was that the country collapsed. The allegory is somewhat awed because the healthcare system does not give consumers the level of control (or knowledge) to be able to order the tests, procedures, and interventions that someone ordering and consuming a restaurant meal has. The physician is the gatekeeper for access to almost all signicant s ignicant aspects of the healthcare system. Educating physicians and giving them incentives to be judicious but appropriate users of healthcare resources will provide the most effective way to control costs. The extreme result described in the case cannot occur in the United States. There will continue to be inequalities in treatment of various diseases. Consider, Consider, for example, end-stage renal disease, the dialysis for which is paid for by federal dollars, and the disproportionate focus on HIV and AIDS, in terms of both research expenditures and treatment. It is i s argued that an arbitrary limit should be put on the percentage of the gross domestic product spent on health services. This could occur only with centralized government decision making—something the public is unlikely to countenance in the foreseeable future, which is shown by the failed Clinton health proposal and the initial negative reaction to the federal Patient Protection and Affordable Care Act (Obamacare).
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2. What is, and what should should be, the role of the consumer consumer in healthcare? Consumers have an obligation to be informed users of health services. This means undertaking health promotion and disease prevention activities and becoming knowledgeable about the health system and using it with special attention to costs and efcaciousness. Consumers have an obligation to understand the limits of medicine and technology so that unrealistic expectations are not placed on HSOs/HSs and the system as a whole. Just as consumers have an obligation to be informed users, responsible adults have an obligation to provide a means to pay for the services they require to the extent that they are nancially able to do so. Typically Typically this means insurance or a mechanism such as medical savings accounts.
Case Study 2
Where’s My Organ? This case considers the effect of public policy on highly personal, private decisions such as organ donation. Further, Further, the case raises the t he issue of payment for organs. 1. Identify the issues that this proposed legislation raises. he following issues are raised: • Are there adequate adequate protections for conicts conicts of interest, such such as when a patient with transtransplantable organs is on life support and the decision is made by someone who might benet from estate tax consequences of a donation? • Is the proposal proposal fair to people people with no taxable estate? • The nancial nancial incentives are ineffective ineffective for the poor. (Perhaps (Perhaps they should be allowed to sell organs, which is now illegal.) • The proposal proposal would tend to reduce the redistributive aspect aspect of previous estate tax policy. policy. • Is encouraging encouraging organ donation donation the proper proper role of government? government? • Are there more effective effective ways ways to obtain obtain organs? 2. Choose to support or oppose the bill. Develop Develop a set of arguments that justifies your your position. Responses will vary. vary. Key aspects of responses should include clarity and certainty of position, supporting arguments and data/information, and appeals to reason, emotion, or both. 3. Develop an alternative alternative proposal that would be more effective in encouraging organ donation. Responses might include the following: • Implied consent to harvest organs organs from beneciaries beneciaries of federal programs programs • Implied consent to harvest harvest organs of those who die in certain venues venues (federal prisons or military service) or from certain causes • National promotion or advertising advertising campaigns • Repeal of federal laws laws that prohibit interstate transportation of organs organs procured through sale • More donor control control of where and by whom whom organs are are used • Organizing and and encouraging encouraging organ trading trading among compatible compatible donors donors
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Managing Health Services Organizations and Systems
Case Study 3
Dental Van Shenanigans
2
This case considers issues that might arise out of public view in developing, implementing, and funding public health programs. 1. Make the assumption that your agency’s budget had funds available. Should your staff have spoken in support of the dental van project even though it was outside your agency’’s mission and it was put on the agenda through questionable means? agency It is very undesirable to encourage the behavior described in this case. It is likely, however, that despite the staff’s lack of knowledge about the project the blame for failure will fall on them. Also, the van is a reasonably good idea, even though the idea came about in a bad way. Avoid overreacting, overreacting, and make at least one comment about the advantages of having the dental van. In other words, go on record as saying something positive about it. Connect the comment with your organization’s mission, while avoiding a specic reference to the van’s apparent inconsistency with the mission. miss ion. Then Then leave it to those who have a vote to make the nal decision. 2. Competitiveness or a desire for preeminence and public relations advantage may cause agencies providing public health services to act unethically or dishonestly. What is the best way to work to improve public health when this occurs? You can ght back in the same vein, and perhaps lose credibility with your more honorable colleagues or yourself (an even worse result). Or you can say “naughty, naughty” without joining the dispute—take the high road, while at the same time remaining watchful for more end-runs or anking maneuvers by competing organizations. Regardless, you need good intelligence about what your competitors are doing. Never make the mistake of ignoring i gnoring them. Watch Watch their decisions closely to nd out how they think, what motivates them, and what their tendencies are. Remember the aphorism: “Keep your friends close, but your enemies closer.” If you learn about an initiative that might affect your organization, take the steps necessary to reduce the likelihood of a negative effect—but always do so ethically. For example, if as a hospital administrator you learn that a competitor is planning to buy land near each of its competitors, move quickly quickly to acquire any land that is important to your own plans. An actual case involves a hospital in the Midwest that allegedly purchased the last piece of land in the middle of another hospital’s campus just to prevent that hospital from being able to legally close a city street. Such organizational and planning vulnerabilities must be removed quickly if the HSO is in an aggressively competitive environment. environment. 3. In many states, dentists provide services to the economically disadvantaged who qualify for Medicaid. How should the CHC respond to protests from area dentists that sending a dental van into the inner city will disrupt their existing dentist–patient relationships (and, incidentally incidentally,, reduce their incomes)? In the nal analysis, area dentists should not be allowed to prevent a needed service from being offered. One way to nesse their opposition is to give them a limited period of time to develop their own alternative to the dental van, such as offering low-cost or no-cost in-ofce services to uninsured indigent persons in the inner city. Public health constituencies are primarily medically indigent persons who will never be as afuent and as organized as those of a medical or dental professional group. As a commissioner of public health, you are their spokesperson and should expect to receive complaints complaints from establishment providers. If a furor is expected, be sure to educate your GB about the issue and the implications before moving too far. With GB support and clearly documented need for the service, your continued em-
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ployment should not become an issue, even if a furor arises. It is helpful to have some genuine media interest and support for a program of this type.
Additional Case Study 1: Stakeholders This case addresses the role(s) of health services executives in the political process. Clearly there are limits, but like conicts of interest and duciary duty, the issues can be subtle, and managers can nd themselves in ethical (and possibly legal) difculty before they fully appreciate the situation. Complete awareness of the legal limits of inuencing i nuencing the political process is the rst principle to impress on students. The ethical dimensions are more subtle and require more attention. A good test of the acceptability of an action is whether one would feel comfortable if the story were reported on the front page of the local newspaper—“the light of day test.” A small-town attorney named Franklin Jones was rst elected to the Virginia state senate in 1985. Jones served his constituents well, performed his committee assignments diligently, and enjoyed a good reputation among members of his party as well as his political opponents. Jones was reelected to each 4-year term by substantial margins. Healthcare issues were an area of special interest for Jones, and by the late 1990s, he had sufcient seniority to be appointed chair of the powerful subcommittee on health. Soon after, the president of the senate, who was a member of Jones’s political party, was told by reliable, unnamed sources that Jones was enjoying a lifestyle beyond his means. He owned several upscale automobiles and a large pleasure boat, lived in a very afuent neighborhood by the ocean, and often was seen dining at expensive restaurants. restaurants. Reluctantly, Reluctantly, the senate president ordered a condential investigation of the matter. Several months later, the report showed the following about Jones: 1. Jones was asked to join the boards of several not-for-prot not-for-prot health groups that subsequently received tens of thousands of dollars in grants and gifts from organizations that are subject to the purview of the subcommittee on health. 2. Jones owned small amounts of stock in several several publicly traded for-prot for-prot health services companies, which had received advance information on new regulations that were being developed by the state Medicaid ofce. 3. A letter from a constituent, who who was the president of a large Medicaid Medicaid managed care company, company, had prompted Jones to hold hearings on Medicaid reimbursement rates. The subcommittee on health concluded that reimbursement was too low and issued a report that recommended a new payment schedule. The president of the senate was very distressed. There seemed to be enough questions to warrant a criminal investigation, investigation, but he was not sure what to do.
1. Describe the role of health services managers in the political process. Identify the limits in their professional and personal activities. In general, HSO/HS managers have a responsibility to be community health leaders. In a sense, the response in this case is idiosyncratic in that individual personalities are important. Many duties of CEOs of larger HSOs/HSs are focused outside the organization. This This means involvement volvement in local, l ocal, regional, and state political processes. Health services managers in smaller communities are among the educated and job elite and will be seen as leaders simply by reason of their importance to the local health and welfare. Health services managers elected or appointed to national trade association posts will have inuence at the national level as well. States will likely have laws and regulations that affect the interactions of HSO managers with politicians and bureaucrats, especially in terms of monetary gifts and other gratuities. These laws should be known by managers and followed scrupulously. Managers act
12
Managing Health Services Organizations and Systems
unethically if they use their inuence and position to further personal interests, such as selfaggrandizement or nancial gain, and not for community benet. They must be honest and forthright in all personal and professional dealings and lead the community to better health status through action and words. 2. Distinguish the investigation’s three findings in terms of ethics and the law. (See Chapter 4.)
Finding 1 Jones was asked to join the boards of several not-for-prot health groups that subsequently received tens of thousands of dollars in grants and gifts from organizations that were subject to the purview of the subcommittee on health. Objective analysis of this situation would identify potential conicts of interest. The prot status of the organizations is not relevant. To To argue that achieving a good result makes the conict acceptable is to apply utilitarian reasoning—the end justies the means. Students should be reminded that a conict can be present even when there is no nancial benet. In this case, Jones might have been lauded for his efforts on behalf of the organizations, winning awards and public recognition. This This suggests personal aggrandizement aggrandizement and public adulation. In addition, organizations or activities that were more worthy might have been deprived of funding because of Jones’s personal interests.
Finding 2 Jones owned small amounts of stock in several several publicly traded for-prot for-prot health services companies, which had received advance information on new regulations being developed by the state Medicaid ofce. The response is fact dependent. It is unclear from whom or by what means the for-prot health services companies obtained the information about Medicaid regulations. If the information is traced to Jones, the suspicion is raised that he provided it to benet his position as a shareholder. Regardless of Jones’s ownership interest, however, and regardless of the prot status of the t he organizations, leaking such information is unethical—breaching unethical—breaching a duciary duty and the duty of condentiality. condentiality. In addition, it is almost certainly illegal. Assuming, however, that Jones did provide the information and that it is not illegal to do so, a conict of interest arises if his nancial investment in the companies is large. If it is remote (e.g., a few hundred shares in organizations with hundreds of thousands or millions milli ons of publicly held shares of stock), then it is questionable that this benet is such that it constitutes a conict of interest. However, However, it is certainly poor judgment on his part and will be seized upon by political enemies as emblematic of his character. character.
Finding 3 A letter from a constituent, the president of a large Medicaid managed care company, company, prompted Jones to hold hearings on reimbursement rates in that program. The The subcommittee on health concluded that reimbursement was too low and issued a report that recommended a new payment schedule. Constituents have a constitutional right to petition (contact) their legislators and government. Petitioning government is equally available for CEOs and representatives of for-prot corporations. On the face of it, there is no legal (or ethical) problem with what is described in this case. Obviously, evidence of bribes to Jones would alter the facts and cast suspicion on the subcommittee’s recommendation, as well as on Jones’s role. 3. Apply the American American College of Healthcare Executives Executives code of ethics (see Chapter 4) in analyzing the investigation’s investigation’s findings. Although Jones is not an afliate of the ACHE, this case study allows students to apply its code of ethics to a situation similar to one in which healthcare executives might nd themselves.
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The ACHE code of ethics states only that the healthcare executive shall “avoid nancial and other conicts of interest,” an admonition that provides scant guidance. Students will benet from reading the discussion on conicts of interest in Chapter 4. The ACHE ACHE code requires afliates to report circumstances of suspected unethical behavior. behavior. If applied to Jones, this provision would require colleagues colleagues of Jones to report suspected unethical behavior. The ACHE’s committee on ethics would investigate and make a determination. 4. Propose ways ways in which the problems suggested by the findings could (or should) be prevented.
Finding 1 Jones should have have declined to participate in any ofcial capacity with the not-for-prot organizations. Each of us has preferences and biases as to how and by what means, if any, entities should benet from public monies. However, lawmakers have a special responsibility to minimize these preferences and biases and work in the t he best interests of their constituencies at large. Even acting unofcially diminishes objectivity and risks the common good.
Finding 2 Absent Jones’s Jones’s involvement in leaking the new Medicaid regulations, there is no action to take in this case, nor is there anything that should have been done. It is not unethical for politicians to hold investments. Problems arise when they have regulatory control over organizations in which they have a signicant nancial interest. The issue of conict of interest is diminished when these investments are small and nancially remote, but such situations suggest poor judgment, nonetheless. It is common for prominent politicians or political appointees to put their assets in “blind trusts,” which means that their assets are managed so that the politicians have neither direct knowledge nor involvement in managing the investment. State law may have similar requirements for legislators, and this should be noted. It is not, however, part of the scenario of this case.
Finding 3 This nding raises no ethical issues that could or should have been prevented. Students may wish to speculate, however, on how small changes in the facts presented would signicantly affect the analysis.
Additional Case Study 2: Demarketing to Avoid Bankruptcy 3 This case describes a problem faced by many hospitals at which emergency emergency departments are a major source of inpatients. If the patients admitted to the ED are uninsured, underinsured, or covered by underfunded state and federal programs, programs, hospitals are at double risk—both ED and inpatient services are a nancial loss to the hospital. Notably, a number of hospitals have had to close their EDs because of problems similar to those described here. The Emergency Medical Treatment and Active Labor Act (EMTALA) is a classic example of an unfunded federal mandate. Chris Hines had nally gotten far enough into the stack of papers on her desk to see last month’s month’s emergency department (ED) activity report. She had already digested the grim news about the continued nancial losses at Community Hospital. The The total decit was $500,000, and it was only the fourth month of the scal year. Because Community Hospital served a largely inner-city population, with many uninsured or with care paid for by a chronically underfunded Medicaid program, there seemed little hope that the nancial situation would improve.
As CEO, Hines knew that over 40% of Community Hospital admissions came through the ED and that about one half of these arrived by taxi, by private automobile, or on foot. The other half were brought in by the city-run ambulance service. A few years earlier, earlier, Hines had tried to implement a plan to increase the number of elective admissions (and thus improve the payer mix) by encouraging physicians to bring their private patients to Community Hospital. It failed, however, largely because the physicians had difculty getting their patients admitted—ER admissions were taking too many beds. Next, Hines tried to work with city ofcials to implement a new ambulance routing system that would send more patients to other hospitals and give Community Hospital a chance to improve its nancial condition. They were unsympathetic. Hines knew that Community Hospital’s Hospital’s endowment would carry the hospital about 3 years, but if they were not breaking even by then, the hospital would close. Since there was nothing that could be done through the city, the key to survival, she concluded, lay in reducing the number of uninsured and Medicaid admissions through the ED. Hines spoke with several marketing consultants, one of whom offered to work without a fee. The The consultant recommended a plan to demarket the ED. He argued that it was the ED’s ne reputation in the community that was responsible for the 50% of patients who came to the ED other than by city ambulance. He listed ways to make the ED less desirable: reducing ED stafng to a minimum; closing the parking lot near the ED; reducing housekeeping coverage, so the physical plant would be dirty and unkempt; deferring non–safety-related maintenance; changing triage policies and procedures and stafng to increase waiting time for nonemergency patients; using staff who were most likely to be rude and inconsiderate; and encouraging rumors that the closure of the ED was imminent. Demarketing would cause repercussions beyond the ED, but the hospital was in desperate straits. Extreme actions seemed justied.
1. Identify the policy issues in the case. Who bears major responsibility for their pres- ence? Their Their solution? Policy issues raise ethical issues, including 1) unjust (unfair) responses by government to the hospital’s plight, 2) the hospital’s general duty of benecence to the community (which will be unmet if the demarketing plan is used and if it closes), and 3) a duty of nonmalecence to patients who present at the ED but are not seriously ill. The responsibility for these ethical problems can be assigned as follows: • Bureaucratic (city) intransigence intransigence may may be a factor. factor. It is possible that Hines was ineffective. ineffective. • This is a no-win situation. The hospital hospital fails its general duty of benecence benecence by demarketing demarketing the ED. By keeping the ED open, the hospital meets a general duty of benecence to the community and a specic duty of benecence to patients under treatment, with the result that it may go bankrupt. • Patients not seriously ill are minimally harmed by waiting or going elsewhere; however however,, successful demarketing may cause seriously ill patients to try to go elsewhere, to their detriment. 2. Outline a strategy that would save Community Hospital without using the plan developed by the marketing consultant. consultant. How is it superior? Inferior? Possible strategies include the following: • Hines could appeal again again to the city and to the physicians. Using the bureaucracy may be useless; working with politicians through the community is probably more effective. ArguArguments include access to healthcare, lost jobs, and community pride. • There may may be a core of physicians physicians for whom Community Hospital is important because because of loyalty and/or economics. Identify them. Develop a strategy. strategy. • Close the ED, ED, if the health planning planning agency agency allows it. • Develop activities/initiatives whose income income will offset losses. • Open primary care care clinics to treat those who inappropriately inappropriately use the ED. ED.
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3. Critique the marketing consultant’s consultant’s suggested plan from a public policy perspective. perspective. From a utilitarian perspective, that is, the greatest good for the greatest number, demarketing causes inconvenience inconvenience and less access for persons with minor problems; emergencies get care. The greatest good for the greatest number is produced by demarketing to keep Community Hospital open. From a Kantian perspective, that is, respect for persons, the hospital has a perfect moral duty to treat tr eat emergencies, but an imperfect moral duty to treat minor, nonemer nonemer-gency problems. Meeting a perfect duty by demarketing is the morally superior action. (Note: Perfect and imperfect duties are not discussed in the text.) 4. Identify the impacts on its service area if Community Hospital closes. Patients who use the Community Hospital ED for primary healthcare will have less access. Patients with true emergencies will be at greater risk if they have to travel farther to receive treatment. It is likely that family and friends of community members hospitalized elsewhere will have to travel travel farther to visit. Community pride will be lessened because hospitals are an integral part of community services and activities. Many in t he community will lose their jobs. The hospital’s hospital’s cafeteria will no longer be a source of nourishment and fellowship for members of the community.
Additional Case Study 3: Marketing Turmoil—Pharmaceuticals
4
George Hinton was a local pharmacist in rural Alabama. He had served his community of 900-plus people for more than 40 years. He was also an ofcer in the local Rotary Club, and his business co-sponsored several community events such as the annual Girl Scout picnic. In addition to drugs, his little shop sold cosmetics and nostrums, and it had a restaurant counter where a waitress would bring you the latest blue plate special each weekday noon, if you had $5. It was Monday (meatloaf day) when Mrs. Olive Murden, age 63, entered the establishment and, using her cane, shufed back to the pharmaceutical area in the rear. She called to George as he counted pills in the side room. “How do you do, Mrs. Murden?” George amiably inquired as he walked over to speak with her. “I am still ghting my arthritis,” she offered with a half smile. “What brings you in today? You still have some of your prescriptions, don’t you?” George asked. “Yes, “Yes, I do, and I really appreciate your driving in and opening up your store for me last Sunday at midnight when I found myself out of the expensive pill. I was really hurting.” “Well, we’ve we’ve been doing business together for a long time, and you are still my number one customer for Brinklie’s Magnolia Blossom Perfume,” Perfume,” he said with a smile. Mrs. Murden’s face grew darker as she told George what she had come to say. “I will be needing my prescriptions transferred, I am afraid.” afraid.” George was disturbed but not surprised. “Moving to that special discount drug program the big chain department store is offering, are you, Mrs. Murden?” “No, though I considered it until I learned my expensive pill was not on their list.” Mrs. Murden shifted her feet, plainly uncomfortable with the news she was giving her old friend. “The local chamber of commerce is offering a no-cost drug discount card, and by using it, I can save a lot of money on my expensive pill.” “Well, I can ll that for you here with that card and get you the same discount,” George said, although he knew what she was going to say next. “Well, yes, but they say I can save even more if I use the card and order my pills by mail from someplace in Delaware.” “I see. Many people are buying their pills by mail nowadays. The drug companies can reduce overhead and middlemen, and you can get more for the dollar, but of course it is hurting us local pharmacies.” George was plainly upset. Mrs. Murden was the 10th customer
16
Managing Health Services Organizations and Systems that month he had lost to the marketing initiatives of his huge competitors, and the expensive pills that she and other customers needed were major sources of his income. His bottom line was getting thinner every day. In the months that followed, Mrs. Murden came to George’s store once for some of her special perfume but then stopped coming altogether.
1. The largest company doing business in Alabama during 2007 was a company of- fering discount cards for pharmaceuticals. It is clear that the money Mrs. Murden is saving is only a fraction of what these discount mail houses—and the manufacturers who work with them—save when they bypass people like George. Is there some way we could share those funds with local pharmacies to help keep them in business? Should we? The savings savings could be shared, s hared, especially if the small town pharmacies could add some value to the transactions, but it is unlikely that they could do much. The The kind of personal services they can offer (opening up on the weekend or at night for a valued customer) are hard to quantify and are not likely to be equated with dollars and cents by either the customer, customer, the pharmaceutical company, company, or the discounters. 2. George came down and opened his store at midnight for his long-time client—but the big chain stores have pharmacies that are open 24 hours, 7 days a week, and if you mail your orders on time, you will never even need to drive to the pharmacy again. Would you stay with your old friend George if you were on a pension and it cost you 5% of your disposable income in increased drug costs to do so? Unless you were extremely loyal, it would be difcult to stay with George, as was noted in the answer to the rst question, and to put his personal services and friendship before your pocketbook. This is especially true when affording drugs is literally a life and death item for some people on xed incomes. Medicare drug benets have recently increased, but there is a no-coverage zone (the so-called Medicare “doughnut hole”) that represents a challenge for elderly patients. Some common drugs are better not started if there is a chance you will not be able to continue them for the rest of your life—a chilling prospect when you have a drug coverage coverage that comes and goes, as do millions of Americans. 3. How could you market George’s George’s products and services to maintain/increase his mar- ket share and keep him in business? The marketing approach of improving your product and services may be difcult because everyone is selling the same drug. You might, however, be able to make drug interaction information easier to access locally, or use a special pill holder for your drugs. However, such efforts may be slight increases in the quality or product or service given the large amounts your customers can save elsewhere. The marketing approach of improving your location or accessibility could be taken. George can mention the personal touch and friendly availability, but it needs to be made explicit, not just word of mouth, so that everyone knows they can call him 24/7. George may nd himself unable to offer such a service to everyone, however, and this kind of advertising would be a dead end. A better approach would perhaps be to operate 24 hours at the store and use a drive-through window, if the cost can be borne, in order to keep clients. Such an approach must bear fruit by stopping client defections quickly, quickly, or the additional costs involved may be unaffordable. The marketing approach of improving your costs may be another option, but it can be risky if you are on a tight margin, and it will usually run afoul of health insurance policies. For instance, you might try to offer to pay your patients’ copayments. copayments. Unfortunately, Unfortunately, this is a violation of health insurer agreements and expectations. Insurers insist on certain specic copayments by patients in order to discourage them from excessive utilization/demand. If the local pharmacists pay this copayment, they throw off the insurers’ incentive planning and violate their agreements with the insurers that send them their payments for the pills. Patients give the pharmacist only the small copayments. copayments.
CHAPTER 1
Healthcare in the United States
17
If, instead, George provides free items—such as perfume—to everyone who gets their drugs from him, it has the same effect and will result in sanctions from insurers. Finding something besides drugs as the main money maker is another option, but these areas have new problems. Selling alcoholic beverages may may ll the gap, but licenses are hard to obtain or impossible to get in some jurisdictions, and there may be moral barriers. Selling tobacco t obacco may provide similar income, but it has moral problems too—especially for health advocates, many of whom are pharmacists. Perfumes, jewelry, and the like may ll the gap, but top prices in such items are more likely to be obtained from specialty stores with reputations for fashion— not the local drug store. The nal answer might be “if you can’t beat them join them.” George may have to go to work for the big chain store. The day day of the corner drugstore owned and operated by an independent pharmacist may have passed.
Notes 1. From Lave, Judith Judith R., and Lester B. Lave. “Health Care: Part Part I.” Law and Contemporary Problems, 35 (Spring 1970); reprinted by permission. Copyright 1 970, 1971 by Duke University. University. 2. Case study and answers to the questions were written by Gary E. Crum, Ph.D., M.P.H., M.P.H., District Director of Health (retired), Northern Kentucky Independent District Health Department. Used with permission. 3. Adapted from Darr, Darr, Kurt. Kurt. Ethics in Health Services Management, 5th ed., 293–295. Baltimore: Health Professions Press, Press, 2011; used by permission. 4. Case study and answers to the questions were written by Gary E. Crum, Ph.D., M.P.H., M.P.H., District Director of Health (retired), Northern Kentucky Independent District Health Department. Used with permission.
HEALTHCARE HEAL THCARE IN THE T HE UNITED STATES
Managing Health Services Organizations & Systems
Chapter 1
CHAPTER 1, LEARNING OBJECTIVES § §
§
§ §
§
Discuss the development of healthcare in the United States Comprehend the importance of prevention compared with other interventions Compare the roles of various organizations in delivery of health services Understand the health policy and regulatory processes Describe the education and regulation of selected health occupations Understand the role of government in organizing health services and paying for them
CHAPTER 1, LEARNING OBJECTIVES § §
§
§ §
§
§
Discuss the development of healthcare in the United States Comprehend the importance of prevention compared with other interventions Compare the roles of various organizations in delivery of health services Understand the health policy and regulatory processes Describe the education and regulation of selected health occupations Understand the role of government in organizing health services and paying for them Detail the importance and effect of accreditation in health services
Copyright © 2014 by Health Professions Press, Inc. All rights reserved. Based on Managing Health Services Organizations and Systems, Sixth Edition, by Beaufort B. Longest, Jr., and Kurt Darr (Copyright © 2014 by Beaufort B. Longest, Jr., and Kurt Darr).
3
HEALTH & SYSTEM GOALS ¡
Health services managers must understand the distinctions and connections between the health care system and the health services system.
¡
Blum s Model
§
§
§
Identifies factors that affect health The size of the arrows indicates the d egree each factor affects a person s health The model shows factors like prevention prevention care and rehab care have much less of an effect on health than environmental environmental
HEALTH & SYSTEM GOALS ¡
Health services managers must understand the distinctions and connections between the health care system and the health services system.
¡
Blum s Model
§
§
§
Identifies factors that affect health The size of the arrows indicates the d egree each factor affects a person s health The model shows factors like prevention prevention care and rehab care have much less of an effect on health than environmental environmental factors, and somewhat l ess of an effect than heredity and lifestyle
Copyright © 2014 by Health Professions Press, Inc. All rights reserved. Based on Managing Health Services Organizations and Systems, Sixth Edition, by Beaufort B. Longest, Jr., and Kurt Darr (Copyright © 2014 by Beaufort B. Longest, Jr., and Kurt Darr).
4
HEALTH & SYSTEM GOALS (CONT.) ¡
Blum s Model states, O n e s own behavior, in great part derived from one s experience with one s environment, is seen as the next largest force affecting health.
¡
Effective managers understand that the many influences on health status include §
§
¡
Factors that lead to episodes of illness Effects on recovery and long-term absence of illness and immunization of disability
HSO/HS managers must have a broad view of illness and health
HEALTH & SYSTEM GOALS (CONT.) ¡
Blum s Model states, O n e s own behavior, in great part derived from one s experience with one s environment, is seen as the next largest force affecting health.
¡
Effective managers understand that the many influences on health status include §
§
¡
Factors that lead to episodes of illness Effects on recovery and long-term absence of illness and immunization of disability
HSO/HS managers must have a broad view of illness and health
Copyright © 2014 by Health Professions Press, Inc. All rights reserved. Based on Managing Health Services Organizations and Systems, Sixth Edition, by Beaufort B. Longest, Jr., and Kurt Darr (Copyright © 2014 by Beaufort B. Longest, Jr., and Kurt Darr).
HEALTH & SYSTEM GOALS (CONT.) ¡
Blum s Model suggests seve several ral goals for a health system: 1.
Prolonging life and preventing premature death
2.
Minimizing departures from physiological or functional norms by focusing attention on precursors of illness
3.
Minimizing discomfort (illness)
4.
Minimizing disability (incapacity)
5.
Promoting high-level wellness or self-fulfillment
6.
Promoting high-level satisfaction with the environment
7.
Extending resistance to ill health and creating reserve capacity
8
Increasing opportunities for consumers to participate in health
5
HEALTH & SYSTEM GOALS (CONT.) ¡
Blum s Model suggests seve several ral goals for a health system: 1.
Prolonging life and preventing premature death
2.
Minimizing departures from physiological or functional norms by focusing attention on precursors of illness
3.
Minimizing discomfort (illness)
4.
Minimizing disability (incapacity)
5.
Promoting high-level wellness or self-fulfillment
6.
Promoting high-level satisfaction with the environment
7.
Extending resistance to ill health and creating reserve capacity
8.
Increasing opportunities for consumers to participate in health matters
Copyright © 2014 by Health Professions Press, Inc. All rights reserved. Based on Managing Health Services Organizations and Systems, Sixth Edition, by Beaufort B. Longest, Jr., and Kurt Darr (Copyright © 2014 by Beaufort B. Longest, Jr., and Kurt Darr).
6
HEALTH & SYSTEM GOALS (CONT.) ¡
The Precede-Proceed planning model §
Applied conceptualizat conceptualization ion of the relati relationship onshipss among activities activities that §
Are a part of health promotion planning and evaluation
§
Should be part o f the efforts to deliver comprehensive healthcare
HEALTH & SYSTEM GOALS (CONT.) ¡
The Precede-Proceed planning model §
Applied conceptualizat conceptualization ion of the relati relationship onshipss among activities activities that §
Are a part of health promotion planning and evaluation
§
Should be part o f the efforts to deliver comprehensive healthcare
Copyright © 2014 by Health Professions Press, Inc. All rights reserved. Based on Managing Health Services Organizations and Systems, Sixth Edition, by Beaufort B. Longest, Jr., and Kurt Darr (Copyright © 2014 by Beaufort B. Longest, Jr., and Kurt Darr).
HEALTH & SYSTEM GOALS (CONT.) ¡
Phases of the Precede-Proceed planning Model §
Phase 1: Social assessment §
Recognizes the relationships among various issues § § §
§
Phase 2: Epidemiological assessment §
Goal of identifying specific health goals or problems § § § §
§
Health and Social issues Target population Economic, cultural, and other nonmedical concerns and goals
Morbidity/mortality Disability Demographic patterns Genetic, behavioral, and environmental indicators
Phase 3: Educational and ecological assessment
7
HEALTH & SYSTEM GOALS (CONT.) ¡
Phases of the Precede-Proceed planning Model §
Phase 1: Social assessment §
Recognizes the relationships among various issues § § §
§
Phase 2: Epidemiological assessment §
Goal of identifying specific health goals or problems § § § §
§
Health and Social issues Target population Economic, cultural, and other nonmedical concerns and goals
Morbidity/mortality Disability Demographic patterns Genetic, behavioral, and environmental indicators
Phase 3: Educational and ecological assessment §
Groups factors associated with health concerns § § §
Predisposing factors Reinforcing Reinforci ng factors Enabling factors
Copyright © 2014 by Health Professions Press, Inc. All rights reserved. Based on Managing Health Services Organizations and Systems, Sixth Edition, by Beaufort B. Longest, Jr., and Kurt Darr (Copyright © 2014 by Beaufort B. Longest, Jr., and Kurt Darr).
8
HEALTH & SYSTEM GOALS (CONT.) ¡
Phases of the Precede-Proceed Planning Model (cont.) §
Phase 4: Administrative and policy assessment § §
Includes intervention alignment Interventions lead to the Proceed portion of the model § § §
§ §
Policy Organization Resources
Phase 5: Implementation Phases 6 8: Evaluation § § §
Among the most important in the model Evaluation of program in terms of process, impac t, and outcome Evaluation criteria are linked to objectives defined i n the corresponding steps of the Precede portion of the model
Increasing emphasis on health promotion and prevention makes
HEALTH & SYSTEM GOALS (CONT.) ¡
Phases of the Precede-Proceed Planning Model (cont.) §
Phase 4: Administrative and policy assessment § §
Includes intervention alignment Interventions lead to the Proceed portion of the model § § §
§ §
Phase 5: Implementation Phases 6 8: Evaluation § § §
¡
Policy Organization Resources
Among the most important in the model Evaluation of program in terms of process, impac t, and outcome Evaluation criteria are linked to objectives defined i n the corresponding steps of the Precede portion of the model
Increasing emphasis on health promotion and prevention makes this model a useful tool in pla nning and delivering comprehensive healthcare, especially in integrated delivery systems
Copyright © 2014 by Health Professions Press, Inc. All rights reserved. Based on Managing Health Services Organizations and Systems, Sixth Edition, by Beaufort B. Longest, Jr., and Kurt Darr (Copyright © 2014 by Beaufort B. Longest, Jr., and Kurt Darr).
LACK OF SYNCHRONY ¡
Explanations for lack of synchrony synchrony §
§
§
Hospitals are chosen based on their available technology Hospitalization may be inappropriate to treat the medical condition that causes death or limits activity Some medical conditions require more attention to prevention §
¡
Historically,, there is a deficit of acute ca re hospitals Historically
Achieving synchrony synchrony suggests that services provided by HSOs and their use are in harmony with health needs
9
LACK OF SYNCHRONY ¡
Explanations for lack of synchrony synchrony §
§
§
Hospitals are chosen based on their available technology Hospitalization may be inappropriate to treat the medical condition that causes death or limits activity Some medical conditions require more attention to prevention §
¡
Historically,, there is a deficit of acute ca re hospitals Historically
Achieving synchrony synchrony suggests that services provided by HSOs and their use are in harmony with health needs
Copyright © 2014 by Health Professions Press, Inc. All rights reserved. Based on Managing Health Services Organizations and Systems, Sixth Edition, by Beaufort B. Longest, Jr., and Kurt Darr (Copyright © 2014 by Beaufort B. Longest, Jr., and Kurt Darr).
LACK OF SYNCHRONY (CONT.) ¡
Important distinctions between the need and the demand for health services §
Need §
§
Measured by morbidity and mortality data, and by disability that limits activity
§
More objective than demand
§
Value invariability underpins c onclusions about need
Demand §
Occurs when need is converted into demand for ser vices
§
Providers, like hospitals and physicians, influence demand
10
LACK OF SYNCHRONY (CONT.) ¡
Important distinctions between the need and the demand for health services §
Need §
§
¡
Measured by morbidity and mortality data, and by disability that limits activity
§
More objective than demand
§
Value invariability underpins c onclusions about need
Demand §
Occurs when need is converted into demand for ser vices
§
Providers, like hospitals and physicians, influence demand
§
The availability of third-party payment for servic es influences demand
Need and demand do not have a one-to-one relationship
Copyright © 2014 by Health Professions Press, Inc. All rights reserved. Based on Managing Health Services Organizations and Systems, Sixth Edition, by Beaufort B. Longest, Jr., and Kurt Darr (Copyright © 2014 by Beaufort B. Longest, Jr., and Kurt Darr).
11
PROCESSES THA THAT T PRODUCE HEAL HEALTH TH PO LICY ¡
Public Processes §
§
§
¡
Statutes are enacted by state legislatures and the U.S. Congress The legislative branch relies on the executi executive ve branch to implement and enforce the laws A bill approved by the Senate and the House and signed by the president becomes law
Judicial Process §
State and federal court systems are similar §
Trial courts (county and district courts)
§
Intermediate courts (appeals courts)
PROCESSES THA THAT T PRODUCE HEAL HEALTH TH PO LICY ¡
Public Processes §
§
§
¡
Statutes are enacted by state legislatures and the U.S. Congress The legislative branch relies on the executi executive ve branch to implement and enforce the laws A bill approved by the Senate and the House and signed by the president becomes law
Judicial Process §
§
State and federal court systems are similar §
Trial courts (county and district courts)
§
Intermediate courts (appeals courts)
§
Supreme courts
Judges are appointed, which insulates them somewhat from politics
Copyright © 2014 by Health Professions Press, Inc. All rights reserved. Based on Managing Health Services Organizations and Systems, Sixth Edition, by Beaufort B. Longest, Jr., and Kurt Darr (Copyright © 2014 by Beaufort B. Longest, Jr., and Kurt Darr).
12
PROCESSES THA THAT T PRODUCE HEAL HEALTH TH PO LICY ¡
Executive Orders §
§
¡
Formal law results from executive orders issued by the president through the executive executive branch of the federal government An executive executive order that declares a disa ster will enable an HSO/HS to qualify for federal assistance
Private Processes §
§
Healthcare became highly politicized after massive federal financing of health services began in the mid-1960s with enactment of Medicare and Medicaid The legislative and regulatory processes affecting health services
PROCESSES THA THAT T PRODUCE HEAL HEALTH TH PO LICY ¡
Executive Orders §
§
¡
Formal law results from executive orders issued by the president through the executive executive branch of the federal government An executive executive order that declares a disa ster will enable an HSO/HS to qualify for federal assistance
Private Processes §
§
§
Healthcare became highly politicized after massive federal financing of health services began in the mid-1960s with enactment of Medicare and Medicaid The legislative and regulatory processes affecting health services were increasingly subject to the influence of lobbyists, political action committees (PACs), and other interest groups Associations and interested parties make their positions known at various points in the legislative and regulatory processe s
Copyright © 2014 by Health Professions Press, Inc. All rights reserved. Based on Managing Health Services Organizations and Systems, Sixth Edition, by Beaufort B. Longest, Jr., and Kurt Darr (Copyright © 2014 by Beaufort B. Longest, Jr., and Kurt Darr).
A BRIEF HI ST STORY ORY OF HEAL HEALTH TH SERVICES IN THE U.S. ¡
For trends trends in U.S. health services since 1945, see Figure 1.3
¡
L e t s review a useful context for understanding the evolution and current status of healthcare and health services through trends in §
Technology
§
Mortality and morbidity
§
Social welfare
§
Federal initiatives
13
A BRIEF HI ST STORY ORY OF HEAL HEALTH TH SERVICES IN THE U.S. ¡
For trends trends in U.S. health services since 1945, see Figure 1.3
¡
L e t s review a useful context for understanding the evolution and current status of healthcare and health services through trends in §
Technology
§
Mortality and morbidity
§
Social welfare
§
Federal initiatives
Copyright © 2014 by Health Professions Press, Inc. All rights reserved. Based on Managing Health Services Organizations and Systems, Sixth Edition, by Beaufort B. Longest, Jr., and Kurt Darr (Copyright © 2014 by Beaufort B. Longest, Jr., and Kurt Darr).
A BRIEF HI ST STORY ORY OF HEAL HEALTH TH SERVICES IN THE U.S. (CONT.) TECHNOLOGY ¡ The great sanitary awakening of the mid-19th century called for new technology to purify food and water ¡ New medical technology in the late 19th century permitted efficacious surgical interventions with greatly reduced rates of mortality and morbidity § § § §
¡
Radiographs Inhalation aesthesia Blood typing Improved clinical laboratories
Hospitals were often sponsored by p rivat rivate e not-for-profit corporations that had been formed by
14
A BRIEF HI ST STORY ORY OF HEAL HEALTH TH SERVICES IN THE U.S. (CONT.) TECHNOLOGY ¡ The great sanitary awakening of the mid-19th century called for new technology to purify food and water ¡ New medical technology in the late 19th century permitted efficacious surgical interventions with greatly reduced rates of mortality and morbidity § § § §
¡
Radiographs Inhalation aesthesia Blood typing Improved clinical laboratories
Hospitals were often sponsored by p rivat rivate e not-for-profit corporations that had been formed by § § § §
Religious groups Concerned citizens Wealthy We althy benefactors Local governments
Copyright © 2014 by Health Professions Press, Inc. All rights reserved. Based on Managing Health Services Organizations and Systems, Sixth Edition, by Beaufort B. Longest, Jr., and Kurt Darr (Copyright © 2014 by Beaufort B. Longest, Jr., and Kurt Darr).
15
A BRIEF HI ST STORY ORY OF HEAL HEALTH TH SERVICES IN THE U.S. (CONT.) TECHNOLOGY ¡
Many small hospitals were established as for-profit corporations §
Often established by individual physicians who needed a place to care for patients following surgery
¡
Long-term care facilities were rare because extended families cared for one another
¡
People with mental illnesses were kept away from society in facilities owned almost exclusively by state governments
A BRIEF HI ST STORY ORY OF HEAL HEALTH TH SERVICES IN THE U.S. (CONT.) TECHNOLOGY ¡
Many small hospitals were established as for-profit corporations §
Often established by individual physicians who needed a place to care for patients following surgery
¡
Long-term care facilities were rare because extended families cared for one another
¡
People with mental illnesses were kept away from society in facilities owned almost exclusively by state governments
¡
Local and state health departments were created at this time
Copyright © 2014 by Health Professions Press, Inc. All rights reserved. Based on Managing Health Services Organizations and Systems, Sixth Edition, by Beaufort B. Longest, Jr., and Kurt Darr (Copyright © 2014 by Beaufort B. Longest, Jr., and Kurt Darr).
16
A BRIEF HI ST STORY ORY OF HEAL HEALTH TH SERVICES IN THE U.S. (CONT.) Mortality and Morbidity ¡
Low incidence of chronic diseases before the 20th century §
Exceptions §
§
¡
Leprosy,, which has never been a major medical problem in the U.S. Leprosy
Most people died of acute GIs and RTIs, like pneumonia §
¡
Tuberculosis, the incidence of which declined rapidly at the end of the 19th century (mainly because of improved nutrition and housing)
Usually occurred before people could develop chronic diseases
Many communicable health problems common in the mid-19th century were solved through preventative measures taken by
A BRIEF HI ST STORY ORY OF HEAL HEALTH TH SERVICES IN THE U.S. (CONT.) Mortality and Morbidity ¡
Low incidence of chronic diseases before the 20th century §
Exceptions §
§
¡
Leprosy,, which has never been a major medical problem in the U.S. Leprosy
Most people died of acute GIs and RTIs, like pneumonia §
¡
Tuberculosis, the incidence of which declined rapidly at the end of the 19th century (mainly because of improved nutrition and housing)
Usually occurred before people could develop chronic diseases
Many communicable health problems common in the mid-19th century were solved through preventative measures taken by health departments §
Clean food and water
§
Improved sanitation
Copyright © 2014 by Health Professions Press, Inc. All rights reserved. Based on Managing Health Services Organizations and Systems, Sixth Edition, by Beaufort B. Longest, Jr., and Kurt Darr (Copyright © 2014 by Beaufort B. Longest, Jr., and Kurt Darr).
17
A BRIEF HI ST STORY ORY OF HEAL HEALTH TH SERVICES IN THE U.S. (CONT.) Mortality and Morbidity §
Life expectancy in U.S. in 2010 was 78.7 years
§
Heart disease and cancer continue to be the leading causes of death
§
§
§
Several current leading causes of death reinforce the connection between lifestyle choices and medical conditions that result in death Prevention often requires changes in behavior Efforts to effect these changes raise issues of individual choice and liberty rights
A BRIEF HI ST STORY ORY OF HEAL HEALTH TH SERVICES IN THE U.S. (CONT.) Mortality and Morbidity §
Life expectancy in U.S. in 2010 was 78.7 years
§
Heart disease and cancer continue to be the leading causes of death
§
§
§
Several current leading causes of death reinforce the connection between lifestyle choices and medical conditions that result in death Prevention often requires changes in behavior Efforts to effect these changes raise issues of individual choice and liberty rights
Copyright © 2014 by Health Professions Press, Inc. All rights reserved. Based on Managing Health Services Organizations and Systems, Sixth Edition, by Beaufort B. Longest, Jr., and Kurt Darr (Copyright © 2014 by Beaufort B. Longest, Jr., and Kurt Darr).
18
A BRIEF HI ST STORY ORY OF HEAL HEALTH TH SERVICES IN THE U.S. (CONT.) SOCIAL WELFARE ¡ Social Security Act of 1935 shifts responsibility of social welfare from local to federal government ¡ Government-sponsored national health insurance programs § § §
Seriously considered in the late 1940s, late 1960s, and early 1990s Ranged in scope from modest to all-encompassing Factors contributing to disinterest § § § § §
¡
Lack of voter interest Cost Fear of government control Widely available employer-provided health insurance Medicare and Medicaid
Affordable Care Act in 2010 increased the federal government s role in organizing, controlling, and financing delivery of health services
A BRIEF HI ST STORY ORY OF HEAL HEALTH TH SERVICES IN THE U.S. (CONT.) SOCIAL WELFARE ¡ Social Security Act of 1935 shifts responsibility of social welfare from local to federal government ¡ Government-sponsored national health insurance programs § § §
Seriously considered in the late 1940s, late 1960s, and early 1990s Ranged in scope from modest to all-encompassing Factors contributing to disinterest § § § § §
¡
¡
Lack of voter interest Cost Fear of government control Widely available employer-provided health insurance Medicare and Medicaid
Affordable Care Act in 2010 increased the federal government s role in organizing, controlling, and financing delivery of health services Anticipated increased demand for geriatric healthcare § § §
13% of population aged 65 or older in 2010 Expected to be 20% by 2050 Increasing demand for services in geriatrics, chronic diseases, rehab, and institutional long-term care
Copyright © 2014 by Health Professions Press, Inc. All rights reserved. Based on Managing Health Services Organizations and Systems, Sixth Edition, by Beaufort B. Longest, Jr., and Kurt Darr (Copyright © 2014 by Beaufort B. Longest, Jr., and Kurt Darr).
19
OTHER WESTERN SYSTEMS ¡
¡
In Western European countries like Germany and England, the government gove rnment started financing health services much earlier than in the U.S. §
1911, England adopts national health insurance program
§
1948, UK establishes the National Health Service
Compared to other countries with public budgets for health services, U.S. has the highest growth rate in healthcare spending §
Difference is explained by very high private health spending in U.S.
OTHER WESTERN SYSTEMS ¡
¡
In Western European countries like Germany and England, the government gove rnment started financing health services much earlier than in the U.S. §
1911, England adopts national health insurance program
§
1948, UK establishes the National Health Service
Compared to other countries with public budgets for health services, U.S. has the highest growth rate in healthcare spending §
Difference is explained by very high private health spending in U.S.
Copyright © 2014 by Health Professions Press, Inc. All rights reserved. Based on Managing Health Services Organizations and Systems, Sixth Edition, by Beaufort B. Longest, Jr., and Kurt Darr (Copyright © 2014 by Beaufort B. Longest, Jr., and Kurt Darr).
20
STRUCTURE OF THE HEALTH SERVICES SYSTEM ¡
The Health Services System consists of: §
§
§
§
Preventive Care §
Prevention
§
Education
§
Primary Care §
Early Detection
§
Routine Care
Secondary Care (acute care) Emergency Treatment
§
Tertiary/Quaternary Care (special care) Restorative Care §
Rehabilitation
§
Home Care
§
Intermediate/Follow-up Care
Continuing Care §
Long-term care Chronic Care
STRUCTURE OF THE HEALTH SERVICES SYSTEM ¡
The Health Services System consists of: §
§
§
§
Preventive Care §
Prevention
§
Education
§
Primary Care §
Early Detection
§
Routine Care
Secondary Care (acute care)
§
Tertiary/Quaternary Care (special care) Restorative Care §
Rehabilitation
§
Home Care
§
Intermediate/Follow-up Care
Continuing Care §
Long-term care
§
Emergency Treatment
§
Chronic Care
§
Critical Care
§
Personal Care
§
Hospice/Palliative Care
Copyright © 2014 by Health Professions Press, Inc. All rights reserved. Based on Managing Health Services Organizations and Systems, Sixth Edition, by Beaufort B. Longest, Jr., and Kurt Darr (Copyright © 2014 by Beaufort B. Longest, Jr., and Kurt Darr).
CLASSIFICATION AND TYPES OF HSOs ¡
Major beneficiaries of early federal programs were not-forprofit acute care hospitals §
¡
Profit statuses converted for tax and strategic reasons §
¡
Includes those ope rated by state and local governments Conversion of for-profit HSOs and HSs to not-for-profit status typically results in provision of more uncompensated care in the service areas
Ownership §
Two types of privately owned corporations Faith-based and nonsectarian that are organized as non-for-profits
21
CLASSIFICATION AND TYPES OF HSOs ¡
Major beneficiaries of early federal programs were not-forprofit acute care hospitals §
¡
Profit statuses converted for tax and strategic reasons §
¡
Includes those ope rated by state and local governments Conversion of for-profit HSOs and HSs to not-for-profit status typically results in provision of more uncompensated care in the service areas
Ownership §
§
Two types of privately owned corporations §
Faith-based and nonsectarian that are organized as non-for-profits
§
For-profit corporations that issue stoc k to investors or to general public
Government-owned HSOs/HSs are publicly-owned and not-for-profit
Copyright © 2014 by Health Professions Press, Inc. All rights reserved. Based on Managing Health Services Organizations and Systems, Sixth Edition, by Beaufort B. Longest, Jr., and Kurt Darr (Copyright © 2014 by Beaufort B. Longest, Jr., and Kurt Darr).
CLASSIFICATION AND TYPES OF HSOs (CONT.) ¡
Length of patient stay (LOS) §
§
¡
ALOS if less than 30 days for short-term care, more than 30 days for long-term care
Role in the health services system §
¡
Inpatient vs. outpatient services
HSOs/HSs are classified by their role in delivery services
Unique institutional provide providers rs §
Many other types of inpatient facilities provide health and healthrelated services
22
CLASSIFICATION AND TYPES OF HSOs (CONT.) ¡
Length of patient stay (LOS) §
§
¡
ALOS if less than 30 days for short-term care, more than 30 days for long-term care
Role in the health services system §
¡
Inpatient vs. outpatient services
HSOs/HSs are classified by their role in delivery services
Unique institutional provide providers rs §
§
Many other types of inpatient facilities provide health and healthrelated services Examples are residential facilities and schools for special groups such as blind or deaf
Copyright © 2014 by Health Professions Press, Inc. All rights reserved. Based on Managing Health Services Organizations and Systems, Sixth Edition, by Beaufort B. Longest, Jr., and Kurt Darr (Copyright © 2014 by Beaufort B. Longest, Jr., and Kurt Darr).
23
CLASSIFICATION AND TYPES OF HSOs (CONT.) ¡
Mental Health Organizatio Organizations ns §
¡
Defined as HSOs that primarily provide mental health services to people with mental illness or emotional disturbances
Teaching Hospitals §
Many states own academic health (medical) centers, which are often university-affiliated teaching hospitals that treat acute illness, conduct research, and educate those in the health occupations
CLASSIFICATION AND TYPES OF HSOs (CONT.) ¡
Mental Health Organizatio Organizations ns §
¡
Defined as HSOs that primarily provide mental health services to people with mental illness or emotional disturbances
Teaching Hospitals §
Many states own academic health (medical) centers, which are often university-affiliated teaching hospitals that treat acute illness, conduct research, and educate those in the health occupations
Copyright © 2014 by Health Professions Press, Inc. All rights reserved. Based on Managing Health Services Organizations and Systems, Sixth Edition, by Beaufort B. Longest, Jr., and Kurt Darr (Copyright © 2014 by Beaufort B. Longest, Jr., and Kurt Darr).
24
LOCAL STATE AND FEDERAL REGULATION OF HSOs/HSs ¡
Licensure and Regulation § §
¡
Conditions of Participation (COP) §
¡
HSOs/HSs are subject to state laws and local ordinances Licensure is liked to regulatory inspections for specific types of HSOs The 1965 Medicare law allowed deemed hospitals to receive reimbursements. COP was established in response to concerns about delegating government authority to a private group
Planning and Rate Regulation § §
Much of what happens in the states is stimulated by federal government Because hospitals consume disproportionate resources, policy makers have given them a great deal of attention
LOCAL STATE AND FEDERAL REGULATION OF HSOs/HSs ¡
Licensure and Regulation § §
¡
Conditions of Participation (COP) §
¡
The 1965 Medicare law allowed deemed hospitals to receive reimbursements. COP was established in response to concerns about delegating government authority to a private group
Planning and Rate Regulation § §
¡
HSOs/HSs are subject to state laws and local ordinances Licensure is liked to regulatory inspections for specific types of HSOs
Much of what happens in the states is stimulated by federal government Because hospitals consume disproportionate resources, policy makers have given them a great deal of attention
UR, PSROs, and PROs § §
As with UR, emphas is in the PSRO program was on hospital review In 2001, PROs were officially renamed quality improvement organizations (QIOs)
Copyright © 2014 by Health Professions Press, Inc. All rights reserved. Based on Managing Health Services Organizations and Systems, Sixth Edition, by Beaufort B. Longest, Jr., and Kurt Darr (Copyright © 2014 by Beaufort B. Longest, Jr., and Kurt Darr).
LICENSURE AND REGULATION ¡
HSOs/HSs are subject to state laws and local ordinances §
§
§
Includes the group of inspections linked to licensure for specific types of HSOs §
Physical plant
§
Safety
Pays little attention to clinical quality issues in patient care Includes Fire Prevention Code, National Fuel Gas Code, National Electrical Code, and Life Safety Code
25
LICENSURE AND REGULATION ¡
HSOs/HSs are subject to state laws and local ordinances §
§
§
Includes the group of inspections linked to licensure for specific types of HSOs §
Physical plant
§
Safety
Pays little attention to clinical quality issues in patient care Includes Fire Prevention Code, National Fuel Gas Code, National Electrical Code, and Life Safety Code
Copyright © 2014 by Health Professions Press, Inc. All rights reserved. Based on Managing Health Services Organizations and Systems, Sixth Edition, by Beaufort B. Longest, Jr., and Kurt Darr (Copyright © 2014 by Beaufort B. Longest, Jr., and Kurt Darr).
26
CONDITIONS OF PARTICIPATION (COP) ¡
Medicare Law of 1965 and Social Security Act of 1935 §
¡
Stated that JCAHO hospitals were in deemed status (eligible) for purposes of reimbursement that will delegate government authority to a private group, where DHHS promulgated COP in 1966
Other private accrediting groups have also achieved status from HSOs §
Community Health Accreditation Program (CHAP)
§
American Osteopathic Association (AOA)
§
Det Nor Norsk ske e Veritas Veritas Heal Healthc thcare, are, Inc. Inc. (DNVHC) (DNVHC)
deemed
HSOs not in deemed status must meet the applicable COPs to
CONDITIONS OF PARTICIPATION (COP) ¡
Medicare Law of 1965 and Social Security Act of 1935 §
¡
¡
Stated that JCAHO hospitals were in deemed status (eligible) for purposes of reimbursement that will delegate government authority to a private group, where DHHS promulgated COP in 1966
Other private accrediting groups have also achieved status from HSOs §
Community Health Accreditation Program (CHAP)
§
American Osteopathic Association (AOA)
§
Det Nor Norsk ske e Veritas Veritas Heal Healthc thcare, are, Inc. Inc. (DNVHC) (DNVHC)
deemed
HSOs not in deemed status must meet the applicable COPs to receive payments from federal programs
Copyright © 2014 by Health Professions Press, Inc. All rights reserved. Based on Managing Health Services Organizations and Systems, Sixth Edition, by Beaufort B. Longest, Jr., and Kurt Darr (Copyright © 2014 by Beaufort B. Longest, Jr., and Kurt Darr).
PLANNING AND RATE REGULATION ¡
Stimulated by the federal government §
¡
Hill-Burton Act of 1946 §
¡
Included statewide planning for hospital services
Comprehensive Health Planning and Public Health Comprehensive Amendments Act of 1966 §
¡
Hospitals consume disproportional resources
Encouraged use of planning methodologies to allocate resources, improve access, and contain costs
National Health Planning and Resources Development Act of
27
PLANNING AND RATE REGULATION ¡
Stimulated by the federal government §
¡
Hill-Burton Act of 1946 §
¡
Included statewide planning for hospital services
Comprehensive Health Planning and Public Health Comprehensive Amendments Act of 1966 §
¡
Hospitals consume disproportional resources
Encouraged use of planning methodologies to allocate resources, improve access, and contain costs
National Health Planning and Resources Development Act of 1974 §
Required states to establish a health planning and development agency and a network of health systems age ncies (HSAs)
Copyright © 2014 by Health Professions Press, Inc. All rights reserved. Based on Managing Health Services Organizations and Systems, Sixth Edition, by Beaufort B. Longest, Jr., and Kurt Darr (Copyright © 2014 by Beaufort B. Longest, Jr., and Kurt Darr).
UTILIZATION REVIEW (UR) ¡
A mandated part of hospital participation in the hospital Medicare laws §
¡
Hospitals had to certify the necessity of admission
Rapid Medicare cost increases in the late 1960s shows that hospital-based UR was ineffe ineffective ctive
28
UTILIZATION REVIEW (UR) ¡
A mandated part of hospital participation in the hospital Medicare laws §
¡
Hospitals had to certify the necessity of admission
Rapid Medicare cost increases in the late 1960s shows that hospital-based UR was ineffe ineffective ctive
Copyright © 2014 by Health Professions Press, Inc. All rights reserved. Based on Managing Health Services Organizations and Systems, Sixth Edition, by Beaufort B. Longest, Jr., and Kurt Darr (Copyright © 2014 by Beaufort B. Longest, Jr., and Kurt Darr).
29
PROFESSIONAL STANDARDS REVIEW ORGANIZATION ORGANIZA TIONS S (P SROs) ¡
PSROs were mandated by the Social Security Amendments Act of 1972
¡
Federally funded physician organizations were responsible for ensuring the appropriateness, medical necessity, necessity, and quality of care furnished by Medicare beneficiaries
¡
The three functions of PSROs §
Admission and continued-stay review
§
Quality assurance
§
Profile analysis (patterns of care)
PROFESSIONAL STANDARDS REVIEW ORGANIZATION ORGANIZA TIONS S (P SROs) ¡
PSROs were mandated by the Social Security Amendments Act of 1972
¡
Federally funded physician organizations were responsible for ensuring the appropriateness, medical necessity, necessity, and quality of care furnished by Medicare beneficiaries
¡
The three functions of PSROs §
Admission and continued-stay review
§
Quality assurance
§
Profile analysis (patterns of care)
Copyright © 2014 by Health Professions Press, Inc. All rights reserved. Based on Managing Health Services Organizations and Systems, Sixth Edition, by Beaufort B. Longest, Jr., and Kurt Darr (Copyright © 2014 by Beaufort B. Longest, Jr., and Kurt Darr).
PROFESSIONAL REVIEW ORGANIZATIONS (PROs) ¡
Established by C ongress as part of the Tax T ax Equity and Fiscal Responsibility Act of 1982 §
§
¡
Outcomes were measured against performance standards Officially renamed Quality Improvement of Organization (QIO) in 2001
PROs denied Medicare payment for §
Medically unnecessary care
§
Care rendered in an inappropriate setting
§
Care of substandard quality
30
PROFESSIONAL REVIEW ORGANIZATIONS (PROs) ¡
Established by C ongress as part of the Tax T ax Equity and Fiscal Responsibility Act of 1982 §
§
¡
Outcomes were measured against performance standards Officially renamed Quality Improvement of Organization (QIO) in 2001
PROs denied Medicare payment for §
Medically unnecessary care
§
Care rendered in an inappropriate setting
§
Care of substandard quality
Copyright © 2014 by Health Professions Press, Inc. All rights reserved. Based on Managing Health Services Organizations and Systems, Sixth Edition, by Beaufort B. Longest, Jr., and Kurt Darr (Copyright © 2014 by Beaufort B. Longest, Jr., and Kurt Darr).
OTHER REGULATORS OF HSOs/HSs ¡
HSO/HS activity is based on the authority in the U.S. Constitution as interpreted by the U.S. Supreme Court to regulate interstate commerce and to provide for the general welfare
¡
Regulators include independent agencies and various other executive branch departments and bureaus
¡
The Department of Justice and the FTC enforce the Sherman Antitrust Act (1890) and the C layton Act Act (1914), as well as their various amendments prohibiting anticompetitive practices
31
OTHER REGULATORS OF HSOs/HSs ¡
HSO/HS activity is based on the authority in the U.S. Constitution as interpreted by the U.S. Supreme Court to regulate interstate commerce and to provide for the general welfare
¡
Regulators include independent agencies and various other executive branch departments and bureaus
¡
The Department of Justice and the FTC enforce the Sherman Antitrust Act (1890) and the C layton Act Act (1914), as well as their various amendments prohibiting anticompetitive practices
¡
The National Labor Relations Board app lies provisions of the National Labor Relations Act (1953) and its amendments to the process of union organizing and collective bargaining
Copyright © 2014 by Health Professions Press, Inc. All rights reserved. Based on Managing Health Services Organizations and Systems, Sixth Edition, by Beaufort B. Longest, Jr., and Kurt Darr (Copyright © 2014 by Beaufort B. Longest, Jr., and Kurt Darr).
32
O THER REGULA REGUL AT ORS OF HSOs/HSs HSOs/HS s (CONT (CONT.) .) ¡
The Occupational Safety and Health Administratio Administration n enfor enforces ces provisionss of the Occupational Safety and Health Act of 1970 provision to safeguard the work environment
¡
The Food and Drug Administration enforces provisions of the Food, Drug, and Cosmetic Act of 1906 and its amendments, amendme nts, as well as regulates drugs and medical devices
¡
The Securities and Exchange Commission enforces the Securities Exchange Act of 1934 as amended and affects how investor-owned inv estor-owned HSOs/HSs market, sell, and trade stock The Nuclear Regulatory Commission enfor
provisionss of the provision
O THER REGULA REGUL AT ORS OF HSOs/HSs HSOs/HS s (CONT (CONT.) .) ¡
The Occupational Safety and Health Administratio Administration n enfor enforces ces provisionss of the Occupational Safety and Health Act of 1970 provision to safeguard the work environment
¡
The Food and Drug Administration enforces provisions of the Food, Drug, and Cosmetic Act of 1906 and its amendments, amendme nts, as well as regulates drugs and medical devices
¡
The Securities and Exchange Commission enforces the Securities Exchange Act of 1934 as amended and affects how investor-owned inv estor-owned HSOs/HSs market, sell, and trade stock
¡
The Nuclear Regulatory Commission enfor enforces ces provision provisionss of the Atomic Energy Act (1954) and regulates and licenses the nuclear industry, industry, thus regulating hazards arising from storage, handling, and transportation of radioactive radioactive materials
Copyright © 2014 by Health Professions Press, Inc. All rights reserved. Based on Managing Health Services Organizations and Systems, Sixth Edition, by Beaufort B. Longest, Jr., and Kurt Darr (Copyright © 2014 by Beaufort B. Longest, Jr., and Kurt Darr).
33
O THER REGULA REGUL AT ORS OF HSOs/HSs HSOs/HS s (CONT (CONT.) .) ¡
The Equal Employee Opportunity Commission enfor enforces ces the Equal Pay Act of 1963, Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967, a mong others, and investigates investigates complaints about treatme treatment nt of employees and prospective employees
¡
The Bureau of Alcohol, Tobacco, Firearms and Explosives of the Justice Department enforces the alcohol and tobacco tax provisions of the Internal Revenue Code §
The Alcohol Administration Act of 1935 regulates the use of tax-free alcohol
O THER REGULA REGUL AT ORS OF HSOs/HSs HSOs/HS s (CONT (CONT.) .) ¡
The Equal Employee Opportunity Commission enfor enforces ces the Equal Pay Act of 1963, Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967, a mong others, and investigates investigates complaints about treatme treatment nt of employees and prospective employees
¡
The Bureau of Alcohol, Tobacco, Firearms and Explosives of the Justice Department enforces the alcohol and tobacco tax provisions of the Internal Revenue Code §
The Alcohol Administration Act of 1935 regulates the use of tax-free alcohol
Copyright © 2014 by Health Professions Press, Inc. All rights reserved. Based on Managing Health Services Organizations and Systems, Sixth Edition, by Beaufort B. Longest, Jr., and Kurt Darr (Copyright © 2014 by Beaufort B. Longest, Jr., and Kurt Darr).
ACCREDITATION IN HEALTHCARE ¡
The Joint Commission § §
§
¡
Am A m e r i c a n O s t e o p a t h i c A s s o c i a t i o n ( A OA ) §
¡
Began accrediting hospitals in 1953 Accredits many types of providers, including ambulatory care, behavioral healthcare, home care, etc. Benefits of accreditation include community confidence in care, competitiveness in marketplace, increases patient safety etc. Acute care, mental health, substance abuse, physical rehab
Community Health Accreditation Progra Program m §
Home care and community health
34
ACCREDITATION IN HEALTHCARE ¡
The Joint Commission § §
§
¡
Am A m e r i c a n O s t e o p a t h i c A s s o c i a t i o n ( A OA ) §
¡
Acute care, mental health, substance abuse, physical rehab
Community Health Accreditation Progra Program m §
¡
Began accrediting hospitals in 1953 Accredits many types of providers, including ambulatory care, behavioral healthcare, home care, etc. Benefits of accreditation include community confidence in care, competitiveness in marketplace, increases patient safety etc.
Home care and community health
International Organization for Standardization (ISO) § § §
Nongovernmental organization established in 1947 Standards from 164 countries Does not accredit but ISO registration has similar effect
Copyright © 2014 by Health Professions Press, Inc. All rights reserved. Based on Managing Health Services Organizations and Systems, Sixth Edition, by Beaufort B. Longest, Jr., and Kurt Darr (Copyright © 2014 by Beaufort B. Longest, Jr., and Kurt Darr).
ACCREDITATION IN HEALTHCARE ¡
Educational Accredit Accreditors ors §
§
¡
Boards of professionals review the quality of didactic and clinical programs for health services professionals Boards are composed of managers, physicians, nurses
Medical Specialization §
These boards offer certification in specializations
35
ACCREDITATION IN HEALTHCARE ¡
Educational Accredit Accreditors ors §
§
¡
Boards of professionals review the quality of didactic and clinical programs for health services professionals Boards are composed of managers, physicians, nurses
Medical Specialization §
These boards offer certification in specializations
Copyright © 2014 by Health Professions Press, Inc. All rights reserved. Based on Managing Health Services Organizations and Systems, Sixth Edition, by Beaufort B. Longest, Jr., and Kurt Darr (Copyright © 2014 by Beaufort B. Longest, Jr., and Kurt Darr).
36
REGULATION AND EDUCATION OF SELECTED HEALTH OCCUPATIONS ¡
Licensure approval from the government for someone to engage in an occupation after the applicant achieves minimum competency
¡
Registration listing of qualified individuals on an official roster maintained by a governmental or nongovernmental body
¡
Certification
process by which a nongovernmental agency
REGULATION AND EDUCATION OF SELECTED HEALTH OCCUPATIONS ¡
Licensure approval from the government for someone to engage in an occupation after the applicant achieves minimum competency
¡
Registration listing of qualified individuals on an official roster maintained by a governmental or nongovernmental body
¡
Certification process by which a nongovernmental agency or association grants recognition to someone who meets its qualifications.
Copyright © 2014 by Health Professions Press, Inc. All rights reserved. Based on Managing Health Services Organizations and Systems, Sixth Edition, by Beaufort B. Longest, Jr., and Kurt Darr (Copyright © 2014 by Beaufort B. Longest, Jr., and Kurt Darr).
REGULATION AND EDUCATION OF SELECTED HEALTH OCCUPATIONS ¡
1910 study by Abraham Flexner detailed weaknesses of U.S. medical education §
Led to more stringent standards
§
Weak allopathic medical schools failed new standards
¡
U.S. and Canadian medical graduates are licensed in most states after passing the U.S. Medical Licensing Exam and completing the first year of residency
¡
Nursing §
Early recognition of nursing through ef forts of Florence Nightingale in the mid-19 th
37
REGULATION AND EDUCATION OF SELECTED HEALTH OCCUPATIONS ¡
1910 study by Abraham Flexner detailed weaknesses of U.S. medical education §
Led to more stringent standards
§
Weak allopathic medical schools failed new standards
¡
U.S. and Canadian medical graduates are licensed in most states after passing the U.S. Medical Licensing Exam and completing the first year of residency
¡
Nursing §
Early recognition of nursing through ef forts of Florence Nightingale in the mid-19 th century
§
Nursing licensing began in early 1900s
§
Nurses and RNs have various educational ba ckgrounds
Copyright © 2014 by Health Professions Press, Inc. All rights reserved. Based on Managing Health Services Organizations and Systems, Sixth Edition, by Beaufort B. Longest, Jr., and Kurt Darr (Copyright © 2014 by Beaufort B. Longest, Jr., and Kurt Darr).
38
PAYING FOR HEALTH SERVICES ¡
U.S. GDP for health expenditures has increased steadily since 1960s
¡
This period of inflation occurred after Medicare and Medicaid were passed in 1965
¡
Hospitals consume the largest amount of health expenditures
PAYING FOR HEALTH SERVICES ¡
U.S. GDP for health expenditures has increased steadily since 1960s
¡
This period of inflation occurred after Medicare and Medicaid were passed in 1965
¡
Hospitals consume the largest amount of health expenditures
Copyright © 2014 by Health Professions Press, Inc. All rights reserved. Based on Managing Health Services Organizations and Systems, Sixth Edition, by Beaufort B. Longest, Jr., and Kurt Darr (Copyright © 2014 by Beaufort B. Longest, Jr., and Kurt Darr).
39
GOVERNMENT PAYMENT SCHEMES ¡
By the early 1980s, a direct means of cost c ontrol was instituted when the Tax Equity and Fiscal Responsibility Act of 1982 and the Social Security Amendments of 1983 mandated a prospective payment system for Medicare using DRGs
GOVERNMENT PAYMENT SCHEMES ¡
By the early 1980s, a direct means of cost c ontrol was instituted when the Tax Equity and Fiscal Responsibility Act of 1982 and the Social Security Amendments of 1983 mandated a prospective payment system for Medicare using DRGs
Copyright © 2014 by Health Professions Press, Inc. All rights reserved. Based on Managing Health Services Organizations and Systems, Sixth Edition, by Beaufort B. Longest, Jr., and Kurt Darr (Copyright © 2014 by Beaufort B. Longest, Jr., and Kurt Darr).
40
GOVERNMENT PAYMENT SCHEMES (CONT.) ¡
Resource Utilization Groups (RUG) are applied to hospitalized Medicare beneficiaries §
Based on the ability to perform ADLs, the classification system when applied to long-term care puts nursing facility residents with similar resource needs into groups
¡
RUG-II was used to determine nursing facility payment for Medicaid in New York and Texas
¡
RUG III was mandated to Medicare residents by the Balanced Budget Act of 1997 §
Also used as a daily rate based on the needs of individual residents,
GOVERNMENT PAYMENT SCHEMES (CONT.) ¡
Resource Utilization Groups (RUG) are applied to hospitalized Medicare beneficiaries §
Based on the ability to perform ADLs, the classification system when applied to long-term care puts nursing facility residents with similar resource needs into groups
¡
RUG-II was used to determine nursing facility payment for Medicaid in New York and Texas
¡
RUG III was mandated to Medicare residents by the Balanced Budget Act of 1997 §
§
Also used as a daily rate based on the needs of individual residents, adjusted for local labor costs It may also change as the resident s condition changes
Copyright © 2014 by Health Professions Press, Inc. All rights reserved. Based on Managing Health Services Organizations and Systems, Sixth Edition, by Beaufort B. Longest, Jr., and Kurt Darr (Copyright © 2014 by Beaufort B. Longest, Jr., and Kurt Darr).
41
GOVERNMENT PAYMENT SCHEMES (CONT.) ¡
Resource-Based Relative Value Scale (RBRVS) §
¡
In 1992, CMS s predecessor HCFA began implementing a fee schedule for physicians who participate in Medicare Part B, a change mandated by the Omnibus Budget Reconciliation Act of 1989
Physician payment payment under Part B was based on usual customary and reasonable charges §
Among the most important effects of charge-based payment was that procedure-based specialties such as surgery were more highly paid than specialties such as internal medicine that use cognitive skills
GOVERNMENT PAYMENT SCHEMES (CONT.) ¡
Resource-Based Relative Value Scale (RBRVS) §
¡
In 1992, CMS s predecessor HCFA began implementing a fee schedule for physicians who participate in Medicare Part B, a change mandated by the Omnibus Budget Reconciliation Act of 1989
Physician payment payment under Part B was based on usual customary and reasonable charges §
Among the most important effects of charge-based payment was that procedure-based specialties such as surgery were more highly paid than specialties such as internal medicine that use cognitive skills
Copyright © 2014 by Health Professions Press, Inc. All rights reserved. Based on Managing Health Services Organizations and Systems, Sixth Edition, by Beaufort B. Longest, Jr., and Kurt Darr (Copyright © 2014 by Beaufort B. Longest, Jr., and Kurt Darr).
42
SUMMARY ¡
Incentives in DRGs, RUGs, and APG/APCs may lead to underuse Incentives of services and consequently to inappropriate treatment
¡
The effect of DRGs is an incentive to discharge patients from hospitals as soon as possible
¡
Early discharge has significance for home health agencies, nursing facilities and hospitals, but most of all for patients patients
SUMMARY ¡
Incentives in DRGs, RUGs, and APG/APCs may lead to underuse Incentives of services and consequently to inappropriate treatment
¡
The effect of DRGs is an incentive to discharge patients from hospitals as soon as possible
¡
Early discharge has significance for home health agencies, nursing facilities and hospitals, but most of all for patients patients
Copyright © 2014 by Health Professions Press, Inc. All rights reserved. Based on Managing Health Services Organizations and Systems, Sixth Edition, by Beaufort B. Longest, Jr., and Kurt Darr (Copyright © 2014 by Beaufort B. Longest, Jr., and Kurt Darr).
POPULATION (size, distribution, growth rate, gene pool) E S
L R A U T A N
C U R S O
HEREDITY
R E
C U L T U R A L
S Y S T E M
S
Life
43
POPULATION (size, distribution, growth rate, gene pool) E S
L R A U T A N
C U L T U R A L
HEREDITY
C U R S O
R E
S Y S T E M
S
Internal Satisfaction ENVIRONMENT Fetal, physical (natural and man made), sociocultural (economics, education, employment, etc.)
External Satisfaction
Life Expectancy Impairment
s o m a t Discomfort i c
l a i c o s
HEALTH (well-being)
Reserve
Interpersonal Behavior Social Behavior
E C
MEDICAL CARE SERVICES prevention, cure, care, rehabilitation
Disability
Participation in Health Care psychic Ecologic Behavior
Health Behavior
O L O
G I C A L B A L
A N C E
LIFESTYLES attitudes, behaviors
S N I O T C F A I S
T A
S A N H U M
Figure 1.1. The force-field and well-being paradigms of health (From Blum, Henrik K. Expanding Health Care Horizons: From General Systems Concept of Health to a National Health Policy , Policy , 2nd ed., 37. Oakland, CA: Third Party Publishing, 1983; reprinted by permission.)
PHASE 4 Administrative & policy assessment and intervention alignment
PHASE 3 Educational & ecological assessment
PHASE 2 Epidemiological assessment Epidemiological
HEALTH PROGRAM
Predisposing
Genetics
Reinforcing
Behavior
PHASE 1 Social assessment
Educational strategies
Health Policy regulation organization
PHASE 5 Implementation
Enabling
Environment
PHASE 6 Process evaluation
PHASE 7 Impact evaluation
Quality of life
PHASE 8 Outcome evaluation
Figure 1.2. The model for health promotion planning and evaluation (From Health Program Planning: An Educational and Ecological Approach. Approach. 4th 4th ed. ed . Lawrence W. Green and Marshal Marsh al W. Kreuter. New York: York: McGraw-Hill, 2005, 10.) With permission of the McGraw-Hill Companies, Inc.
N S E O I S S C R T L V R E U E I S D S E H V R T O E L R P S E A E H H T
S N O I T C A E R E S E H T
S T C E F F E E S E H T
S D N E R T E S E H T
S E C R O F E S E H T
/ s e g i n i c l t l p i d u e r w r s k r e u n s a d n b i v i n o u d r t e p a s a r e e e r r c w t o e t n f I
s e i g e t a r t s k s e r v i i s r n e e h f g e i D H
s t n e m e g n a r r a l a n o i t a z i n a s g r e r i o u t s l o u l C M
n o i t i t e p m o c r e t a e r G
y t i c a p a c s s e c x E
n o i t a l u g e r e D
e r a c t s o c r e h g i H
s r e d i v k s o i r r p l a y i b c n g a n n i i t f f i t h s a s t s O o S C H
s s e n l l i e t u c a e r o M
m o c n e u r a n c i d e e s t a e a s r c n n e I p
n i f e o g n n a o h i t c c l e r a i c d i g e d l n e o i i f o c i n i d h o c d e e m M t
, s G R D , s O R P : n o i t a l u g e r l S a G r e U d e R , f S e r V R o B M R
f o s e c O n a S l a s H b D g M n : i g r e s n a w O h o C C p M
e t a v i r p d n a c i l b u p y b s s r l e r o r u t s n i n o c h t t l s a o e C h
y r o t a l u b m a r o f e g a r r e a e v c o c d e e c d n n e a r t x u s e d n i n r a e e t t e r B a c
e r a c d e g a n a m f o h t w o r G
, e r e a c e c i p m y s o r o o h h t a d n l o u n b a , s m i a n s o , i a h t h l a i p t l a e l a m E h p
s e c i t c a r p l a c i d e m p u o r g d r a w o t d n e r T
s r e d i v o r p n a i c i s y h p n o n f o h t w o r G
s r e t n e c h t l a e h d o o h r o b h g i e N
s l a r r e r e f e r h t a n r d a i r c a l a i n w o s y o i h t t p u d t i n n a e t s h r n t T i
s p r o C e c i v r e S h t l a e H l a n o i t a N
n i g n i k r o w s D M r o f s s e s n a e e v r i a g r e o f g a t n a r o o h L s
S T S O N I C E N R O I A T C A H L T A L C A E S E H
k s i r l a s i s c e n c a c n a i f l d e a n n e o s s r s e e P L
D N E N T D A E T R N A E R A E R E H A N Y A T C O R C T A F S I A Y U O O S D R Q O A N A E T S I L H O D N T P C R A E V O E I E M E S T N I T E L
y t i n u m l l e m w o f c o d l e s h a t p i p t w i p o u r q s o G e h
d e r u s n i n u / r e d n U
f o e t s r a o c c h t h l g a i e H h
. c d t e g e r , n a n o h s i o m , t a s a r e r g g e n r t o e i n i t m , a s r — e e s c p i o O v o S r e C H s
e i d r a a c i c i d d e e M M
y l l a ) i n c i o h t t e p l a a s z i e e l a h ( t e i g c p n n s i a o w r u h o r r s o n f G i
n o t r u B l l i H
s b r u b u s f o h t w o r G
f o n o i c t i u h i b p r s t a s r r i o g d t l o e a c o G m d
n o i t a z i l a i c e p s s r g t n o i c o w d o r f G o
l a t i p s o s h D f o M h d t e w i r a o r l a G s
f o f e s o c l a r s n i e l e t o u w o f s l p o h n o p c i h s g l g g n a n i n i c i w i w h d c o o r e r a e G m G t
g y n i g d o n d f l o u o f n n t h t a , n n c e h e c t e m m r l a p a n e o r c s l i e e d v e r v o f e e G o d m
d s r n o a t c s r e o b d n m m o e n t u f n o s y n e s i h c t h n l t a w e u e o f h r l n i n G i
g n i n n a l P h t l a e H [ ,
m e t s y S e r a C h t l a e H . S . ) . U 3 e 1 h t 0 2 , g s n r i t o c h e t f f u A a s e d h t n y e b r T d
. e e t t a u t i d p t s u n d I n h a c r d a e s e i s e v e R R e . g 6 d 7 i r 9 b 1 , m a n o C i t a r t m s o r n i F ( m . 5 d 4 A 9 s 1 e c r e c u n o s i s e R m n e a t s m y s u H e r : a c C D h t , l a n e t o h g . i n S . h U s a e W h t . n 9 0 i s 4 , d ] n s e e r i T r e S . n 3 o . i t 1 a e m r r u o g f i n F I
n o i t a r g e t n : I f m o t e s s y m r S o f F o
• • • •
s r e h d t t o n l o e a e h r c h s o h t r e t n t b l h a a n g e r i g e c e h i N M
s m a r g o r p n o i n t o a i t i a n c c u c d a e v d h t l n a a e g h i l n o n o e h e r c c S S
n o i t a c u d E
E R A : C e E r a V C I f T o N l E e V v E e R L P
•
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g n i h c a e s t l a e r t a i p e s o m h o S
- e e c c i i f t f o c a r n p i s d r e o s t a c b o D
, h t s , , e l a s i d d e r & r t i h n e l i i f o s e s l y p c t i u l p c a s l b b l f n a a e e i o a & c c i i t g t l h g f s i i d a n i o u a y n i c c r e h a s p a r n f l a d d p h u i N
m e t s y S e r a C h t l a ) e . 3 H . 1 0 S . 2 , U s e r o h h t g t n u i t a c e e h f f t y A b s d d e n t e a r d T
y s r t i e n g r u s u h t y l a r o e t a h l e u g b e m l l o a c g n d i n d r s a e l n a t o t s o n e h e c c e r S F
s r e t n n o e i c t a l c o r u t d n e o e s c s i a c & : n e i s i s l n p d c i o s t i u l e g a c o n n i m r b i n a r l c G i c n f a o y r l n n b e u p i a d y n b i l i v m o l l s m m i o o r o e a P C F P W
: n o i t p i r c s e D
n o i t a m r o f n I g n i n n a l P h t l a e H [ ,
l a t l s a n o O n i z s C s i o r n A e e t o o i , t s a r h c a z s i a d n i d l i o c i O v i n n n n f P r a t a f e o a d a i a s d P s e g s l t i , d g r a a l r l s e o r a m i o c g g s e a t O r e i e m a n l t t r t r r n M h a u s e n o e o y H S M M s V i F M c
n o i t n e v e r P
s r s t e t n e n e m c t r h t a l p a e e s t d h i t l a n n t u e n i e t c e h t i l f a m a f p e o t y h t i s u ’ o l n n l u i a a a t r i t c i m i p m s s s u y o o d h n P H C I
e r a n C o i e t c i n e t t e u o D R y l d r a n E a
E R A C Y R A M I R P
l a c i s r d t e n f o e m l l m s a a e t t c i r i r a v p e s r s n l r p e o e s e e s a t h g i t n d y y g i n p e s c c r n o i n t i o r s g e h a i r e c l g l i u r u u q t v a e b e n r i c g e n m m r i s e s g e a t d l t r m u n n a l n p e s a e i a t t i i t u i d s i p s p t a q t n a e s p e p a e r o o n F H H I
t n e m t a e r T y c n e g r e m E
E R A C Y ) R e A r D a c N e t O C u E c a S (
s i s o e s n n g e a t i n d ) i ( t e t n e a e r r a o t m C b a l l a e r a c e t i t d d i r n n C a a
l a d r e z , e i l c n i a r e g i t c a i d e h n p c a s y y s ) s l p ’ n h ( g e i s l m h a h t o t i i p s w , w o s s s h ’ n l a i e e i y r t t t l d i a l p i s l i i c h o c a e c h f p S
o r e y o g l f h s e g e g i c r h a l ( i v r a ) a e r e r a s i n e a C l a t s c l i c i a n n h i e c h i e c t p r p e a a S t p g
E R A C Y ) R e r a / A Y N c l R R E a A T i I T A c R U e E p s T Q (
S H E C M T E L I T A V S E R E Y H S S
l a e n l o p i o t e o p m s e r t r e o , t n f e s n o n e i e t m i a c e i d s r t l i r e t i c c a i e a t r f v e s r r e e r s h i t l s e s l t a e a e i c t i a t l y i i e n c a c g n h n e a a f i n u t b d m c r n u i m g r u t e h t n m n i i i t i t s i a i s t a r n o d r u o c p w e n N C I G
n i s t i n e r u c a n i r c w t a d o i e d h s l d - c a s t y l p s s n e p t a i e t e t i p c x s r i p s o n e d o s e , n f h o g e a s h r e a r e a s n a h c n o s u i o c t l e i o s t t l a i a t a m a h t t e v i t i r y n h s e s l i i i t e l p i e e s a b t r b w a a g a o l m g h h f h n p o o a e o r e H P R H R L
, p e u ) - r e a w t c r a s o l o e c l n l o p i F l t a c u i e a c r t o d e a i i g e m d r v e u i s t e ( n m i r e a r t e e u t r a p o n C o r I
E R A C E V I T A R O T S E R
n o i t a t i l i b a h e R
e r a C e m o H
e r a C m r e t g n o L
E R A C G N I U N I T N O C
e r a C c i n o r h C
e r a C l a n o s r e P
e r a C e v i t a i l l a P / e c i p s o H
. p u e t u d t n i t s a n I d e s h c i v r e a R e s e . R 6 7 9 e g 1 d , i r n o b i t m r a a s C t n i m o m r d F ( A . y r s e e c v r i u l e o d s e s R e c i n a v r m e s u H h : t l a e C h D , f n o o t m g u n i r t h c s e a p S W . . 2 6 4 . 2 1 , ] e s r e i u g r i e F S
Other Health Spending, $407.6 (15.7%) Other Personal Healthcare, $384.2 (14.8%) Home Health Care, $70.2 (2.7%) Nursing Care Facilities & Continuing Care Retirement Communities, $143.1 (5.5%)
Prescription Drugs, $259.1 (10.0%)
Hospital care, $814.0 (31.4%)
Physicians/ Clinical Services, $515.5 (19.9%)
NHE Total Expenditures: $2,593.6 billion
Percent Distribution of National Health Expenditures, by Source of Funds, 1960–2010 100% 9.4%
10.4%
80%
15.6%
13.9%
70%
6.2%
90%
60% 50%
4.4% 7.1%
7.9%
6.7%
6.4%
6.2%
6.3%
5.9%
5.7%
13.7%
13.5%
12.2%
11.0%
11.1%
10.5%
10.6%
3.3%
3.7%
3.8%
3.0%
3.6%
10.2%
10.2% 10
14.6%
15.2%
16.3%
19.1%
14.7%
13.0%
32.3%
33.4%
1990
2000
10.3%
14.6%
47.7%
40%
33.4%
22.8%
2.6%
3.2%
14.2%
15.0%
15.5%
20.0% 20
20.2%
12.5%
11.8%
11.6%
34.6%
33.8%
33.2%
32.7%
2005
2007
2009
2010
15.3%
16.7%
18.8%
30% 20% 10%
21.1%
20.6%
1960
1970
27.0%
0% 1980
Investment
Other 3rd Party Payers/Public Health
Medicaid
Medicare
Out-of-Pocket
Other Pub. Ins. Programs Priv. Health Ins.
Figure 1.5. Distribution of national health expenditures, by type of service (in billions), 2010. Note: Other Personal Health Care includes, for example, dental and other professional health services, durable medical equipment, etc. Other Health Spending includes, for example, administration and net cost of private health insurance, public health activity, research, structures and equipment, etc. (From Kaiser Family Foundation calculations using National Health Expenditure data from the Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group [at http://www. cms.hhs.gov/NationalHealthExpendData/].)
Table 1.1 Numbers in Healthcare Practitioner and Technical Occupations, U.S., 2012
No.
U.S. No./100,000 population* 2012 Population: 314,773,031
Professional Specialty Physicians and Surgeons Dentists Optometrists Pharmacists Podiatrists Registered Nurses Occupational Therapists Physical Therapists Respiratory Therapists Speech-Language Pathologists Audiologists Social Workers Dietitians and Nutritionists
611,650 109,570 29,180 281,560 9,090 2,633,980 105,540 191,460 116,960 121,690 12,060 582,270 58,240
194.3 34.8 9.3 89.4 2.9 836.8 33.5 60.8 37.2 38.7 3.8 185.0 18.5
Service Home Health Aides Psychiatric Aides Nursing Assistants Physical Therapist Assistants Dental Assistants Medical Assistants
839,930 77,880 1,420,020 69,810 300,160 553,140
266.8 24.7 451.1 22.2 95.4 175.7
718,800 318,620 190,290 194,790 182,370 97,150 232,860 67,760 64,930
228.4 101.2 60.5 61.9 57.9 30.9 74.0 21.5 20.6
Technicians Licensed Practical and Licensed Vocational Nurses Clinical Laboratory Technologists and Technicians Dental Hygienists Radiologic Technologists Medical Records and Health Information Technicians Surgical Technologists Emergency Medical Technicians and Paramedics Psychiatric Technicians Opticians, Dispensing
* U.S. & World Population Population Clocks, November November 15, 2012. United States Census Bureau. http://www.census .gov/main/www/popclock.html .. Retrieved November 15, 2012. .gov/main/www/popclock.html Occupational Employment and Wages, May 2012: Healthcare Practitioner and Technical Occupations. Bureau of Labor: U.S. Department of Labor. http://www.bls.gov/oes/current/oes_nat.htm#b29-0000 . Retrieved July 21, 2013
National Health Expenditure Amounts, and Annual Perc Percent ent Change by Type of Expenditure: Calendar Years Years 2006–2021. 2006 –2021.1 Table 1.2. 1. 2.
Type of Expenditure National Health Expenditures Health Consumption Expenditures Personal Health Care Hospital Care Professional Services Physician and Clinical Services Other Professional Services Dental Services Other Health, Residential, and Personal Care Home Health Care Nursing Care Facilities and Continuing Care Retirement Communities Retail Outlet Sales of Medical Products Prescription Drugs Other Medical Products Durable Medical Equipment Other Non-Durable Medical Products Government Administration Net Cost of Private Health Insurance Government Public Health Activities Investment 2
Research
Structures & Equipment National Health Expenditures Health Consumption Expenditures Personal Health Care Hospital Care Professional Services Physician and Clinical Services Other Professional Services Dental Services Other Health, Residential, and Personal Care Home Health Care Nursing Care Facilities and Continuing Care Retirement Communities Retail Outlet Sales of Medical Products Prescription Drugs Other Medical Products Durable Medical Equipment Other Non-Durable Medical Products Government Administration Net Cost of Private Health Insurance Government Public Health Activities Investment 2 Research Structures & Equipment
2006
2007 20
2008 20
2009 20
2010 20
$2,162.4 2,031.5 1,804.9 651.9 585.6 438.8 55.4 91.4 101.7 52.6
$2,297.1 2 ,1 ,153.4 1,914.6 692.5 618.6 461.8 59.5 97.3 97 107.7 57.8
$2,403.9 2 ,2 ,250.1 2,010.2 729.3 652.6 486.6 63.6 102.4 113.3 61.5
$2,495.8 2 ,3 ,349.5 2,109.0 776.1 671.2 502.7 66.0 102.5 122.0 66.1
$2,593.6 2 ,4 ,444.6 2,186.0 814.0 688.6 515.5 68.4 104.8 128.5 70.2
117.3 295.8 224.2 71.6 32.9 38.7 29.5 134.5 62.5 130.9 41.4 89.6
126.4 311.5 236.2 75.3 34.3 41.0 30.2 139.7 69.0 143.7 41.9 101.7
132.7 321.0 243.6 77.4 34.9 42.5 29.5 137.8 72.7 153.8 43.4 110.4
138.7 334.9 256.1 78.8 35.2 43.6 29.6 134.7 76.2 146.3 45.7 100.6
143.1 341.6 259.1 82.5 37.7 44.8 30.1 146.0 82.5 149.0 49.3 99.8 99
— — — — — — — — — —
6.2% 6.0 6.1 6.2 5.6 5.2 7.4 6.4 5.9 9.9
4.7% 4.5 5.0 5.3 5.5 5.4 6.9 5 .2 5. 5.2 6.4
3.8% 4.4 4.9 6.4 2.9 3.3 3.8 0.1 0. 7.7 7.5
3.9% 4.0 3.7 4.9 2.6 2.5 3.6 2 .3 2. 5.3 6.2
4.9 3.0 3.1 2.8 1.7 3.7 -2.5 -1.4 5.3 7.1 3.4 8 .6 8.
4.5 4.3 5.1 1.8 0.8 2.6 0.4 -2.2 4.9 -4.9 5.3 -8.9
3.2 2.0 1.2 4.7 7.3 2.6 1.7 8.4 8.2 1.9 7.9 -0.8
— — — — — — — — — — — —
7.8 5.3 5.3 5.2 5. 4.4 5.9 2.3 3.8 10.4 9.7 1.3 13.6
From Centers for Medicare & Medicaid Services, Office of the Actuary. 1. The health spending spending projections were based on the National Health Health Expenditures released released in January 2012. The projections projections include include effects of the Patient Patient Protection Protection and Affordable Care Act. 2. Researc Research h and development expenditures of drug companies and other manufacturers and providers of medical equipment and supplies are excluded from research expenditures. These research expenditures are implicitly included in the expenditure class in which the product falls, in that they are covered by the payment received for that product. Note: Numbers may not add to totals because of rounding.
Projected 2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
$2,695.0 $2,695 .0 2,54 2, 543. 3.2 2 2,27 2, 270. 0.4 4 848.9 708.0 529.2 70.9 107.9 134.3 72.9
$2,809.0 $2,809 .0 2,6 ,655 55.3 .3 2,3 ,364 64.1 .1 884.7 735.4 549.6 74.5 111.4 143.9 77.5
$2,915.5 $2,915 .5 2,75 2, 757. 7.8 8 2,44 2, 441. 1.8 8 920.7 745.9 554.5 76.1 115.2 152.8 81.9
$3,130.2 $3,130 .2 2,9 ,964 64.9 .9 2,6 ,622 22.7 .7 982.7 805.6 601.5 83.8 120.3 163.7 88.3
$3,307.6 $3,307 .6 3,13 3, 132. 2.7 7 2,77 2, 774. 4.1 1 1,038.3 849.9 633.4 89.7 126.8 175.3 94.5
$3,514.4 $3,514 .4 3,3 ,329 29.2 .2 2,9 ,948 48.9 .9 1,106.6 900.6 670.6 96.5 133.6 188.1 101.2
$3,723.3 $3,723 .3 3,52 3, 526. 6.5 5 3,13 3, 130. 0.4 4 1,170.7 956.5 712.4 103.1 141.1 201.8 108.4
$3,952.3 $3,952 .3 3,7 ,743 43.0 .0 3,3 ,326 26.1 .1 1,240.0 1,016.4 757.0 109.7 149.6 216.9 117.1
$4,207.3 $4,207 .3 3,9 3, 985 85..3 3,5 3, 544 44..2 1,317.7 1,084.3 807.3 117.6 159.5 233.1 126.6
$4,487.2 $4,487 .2 4,25 4, 252. 2.4 4 3,78 3, 782. 2.6 6 1,404.1 1,156.1 860.5 125.9 169.7 250.8 137.0
$4,781.0 $4,781 .0 4,5 ,532 32.7 .7 4,0 ,034 34.0 .0 1,495.7 1,229.1 914.9 134.5 179.8 269.9 148.3
151.3 355.0 269.2 85.8 39.7 46.1 33.8 152.3 86.7 151.9 50.2 101.7
155.2 367.4 277.1 90.3 42.5 47.8 37.5 162.6 91.0 153.7 48.7 105.0
163.2 377.4 283.7 93.7 44.7 49.0 39.8 180.8 95.3 157.7 48.6 109.1
172.0 410.4 308.7 101.7 47.3 54.4 44.5 197.4 100.3 165.3 50.8 114.5
181.1 435.0 327.3 107.6 50.1 57.5 47.4 205.6 105.7 174.9 53.7 121.2
191.0 461.4 347.8 113.6 52.2 61.4 51.0 217.7 111.6 185.2 57.1 128.1
201.7 491.2 371.1 120.1 55.2 64.9 52.9 225.1 118.1 196.8 60.9 136.0
213.6 522.1 394.9 127.2 58.6 68.6 56.3 235.3 125.2 209.3 64.8 144.5
226.2 556.3 420.9 135.4 62.4 73.0 59.9 248.4 132.7 221.9 68.9 153.0
239.9 594.7 450.7 144.0 66.5 77.5 63.8 265.2 140.8 234.9 73.3 161.6
255.0 635.9 483.2 152.7 70.7 82.0 68.0 281.3 149.4 248.2 77.8 170.4
3.9% 4.0 3.9 4.3 2.8 2.7 3.7 2.9 4.5 3.9
4.2% 4.4 4.1 4.2 3.9 3.8 5.0 3.3 7.1 6.4
3.8% 3.9 3.3 4.1 1.4 0.9 2.1 3.5 6.2 5.7
7.4% 7.5 7.4 6.7 8.0 8.5 10.1 4.4 7.1 7.8
5.7% 5.7 5.8 5.7 5.5 5.3 7.1 5.4 7.1 6.9
6.3% 6.3 6.3 6.6 6.0 5.9 7.5 5.4 7.3 7.1
5.9% 5.9 6.2 5.8 6.2 6.2 6.8 5.6 7.3 7.1
6.2% 6.1 6.3 5.9 6.3 6.3 6.5 6.1 7.5 8.1
6.5% 6.5 6.6 6.3 6.7 6.6 7.1 6.6 7.5 8.1
6.7% 6.7 6.7 6.6 6.6 6.6 7.1 6.4 7.6 8.2
6.5% 6.6 6.6 6.5 6.3 6.3 6.8 6.0 7.6 8.3
5.4 8.7 8.8 8.5 6.0 10.8 11.7 9.2 5.3 4.8 4.4 5.0
5.3 6.0 6.0 5.8 5.8 5.9 6.5 4.1 5.4 5.8 5.7 5.8
5.5 6.1 6.2 5.6 4.2 6.7 7.6 5.9 5.6 5.9 6.4 5.7
5.6 6.5 6.7 5.7 5.8 5.7 3.7 3.4 5.8 6.3 6.6 6.2
5.9 6.3 6.4 5.9 6.1 5.7 6.4 4.5 6.1 6.3 6.5 6.3
5.9 6.5 6.6 6.5 6.5 6.4 6.5 5.6 6.0 6.0 6.3 5.9
6.0 6.9 7.1 6.3 6.5 6.2 6.5 6.7 6.1 5.8 6.3 5.6
6.3 6.9 7.2 6.0 6.3 5.8 6.5 6.1 6.1 5.7 6.2 5.4
5.8 3.9 3.9 4.0 5.1 3.0 12.3 4.3 5.1 1.9 1.8 1.9
2.6 3.5 2.9 5.3 7.2 3.6 11.0 6.8 5.0 1.2 -3.0 3.3
5.1 2.7 2.4 3.8 5.0 2.7 6.3 11.2 4.6 2.6 -0.1 3.8