Health Care Organization

1
Health Care Organization

• Jan Probst, PhD
• Department of Health Administration

2
Housekeeping

• Introductions
• Review syllabus
• Field questions

3
People need

• Need versus demand
• What is health?
• Health as function

4
Goals of health care system

• Prolong life/defer death
• Minimize departure from norms, discomfort,
  disability
• Promote wellness
• Promote satisfaction with environment
• Extend resistance/promote capacity
• Increase participationLRD, p 45

5
A patient needs...

• Preventive Care
• Primary care
• Specialized care
• Chronic care

• Hospital care
• Long-term care
• Subacute care
• Rehabilitative care
• End-of-life care

Shi Singh 1998, p. 20
6
The system.responds?
Shi Singh 1998, p. 8
7
Where we are comes from where we were

• Three streams of history
• Emergence of physicians
• Changing role of hospitals
• Evolution of supporting professions
• A tangled web of dollars and control

8
Who succeeded Louis XIV?
Bernier, O. (1987)
9
On the shoulders of giants

• Competing theories
• Homeopathic
• Osteopathic
• Allopathic
• Chiropractic
• Emergence of a learned profession

10
Emergence of allopathic medicine

• Legitimate complexity
• Bacteriology
• Anesthesia
• Antisepsis
• Asepsis
• Licensing

Starr, P. (1982)
11
Formalization of training

• Early options school or apprenticeship
• Flexner report (1910)
• Requirements for entry
• Standardized training
• Self-regulating

12
Current Medical Practice

• Number of physicians (1997)
• 756,710 total, 664,556 active physicians
• 25.3 physicians per 10,000 population
• 645,203 Nonfederal, 19,353 Federal
• Type of practice
• 216,598 (32.6) primary care generalists

13
Unbalanced scales

• What would you choose?

14
Hospitals

• Introduced by the Romans
• Charitable institutions
• Emergence of specialization
• Sick Poor
• Types of sickness

15
Transition to physician workplace

• Specialized (aseptic) environment
• Specialized tools (X-ray)

16
The hospitals dilemma

• Specialized equipment is expensive
• Charity cannot cover these costs
• Individuals cant always pay (Great Depression)
• Commission on the Costs of Medical Care (1932)
  recommended national health insurance

17
Hospital ownership

• Voluntary hospitals (not for profit)
• Sectarian
• Nonsectarian
• For-profit hospitals
• Government hospitals

18
Hospitals Unique Structure

• Hospital provides nursing, technical capability
  and hotel services
• Physicians recruit patients and direct the
  process of care

19
Other health manpower

• Approximately 11M people work in health care
• Nurses the first support profession
• 60 in auxiliary roles

20
Evolution of Nursing

• Florence Nightengale
• Military model
• Uniforms
• Hierarchy
• Linked to physicians
• Wildly popular from 3 schools in 1873 to 1,129
  in 1920
• Licensing beginning 1903

21
Nursing under Pressure

• A supportive occupation
• Difficult to practice independently
• Institutional practice
• Predominantly female
• Service over money

22
The patient needsplanning?
Preventive Care Primary care Specialized
care Chronic care Hospital care Long-term
care Subacute care Rehabilitative
care End-of-life care
Shi Singh 1998, p. 20
23
Wrapping up history

• Legitimate complexity entails extensive training
• Director of a team--by law
• Direct care in offices, hospitals and other care
  sites
• Nursing and other professions support medicine
• Support is not without tension

24
Wrapping up history

• Specialists versus generalists
• Finance creates a tangled web
• Doctor insurance/hospital insurance leads to
  mixed lines of authority
• Emerging managed care trends attempt to increase
  control at all levels

25
BREAK
26
Money, money

• Who pays the piper?
• Everyone, and they all want a different tune
• Government
• People out of pocket
• Insurers

27
Topics

• National health care expenditures
• Amounts
• Trends
• Major financing mechanisms and their impact
• How financing affects management
• Other national systems

28
Your job, my bill

• GDP in 1997 8,111B
• Health care
• 1,092B or 13.5 of GDP
• 21.1 of all Federal expenditures
• 14.6 of all State local government expenditures

Health 1999, NCHS
29
Moderating growth

• Health care as GDP, 1960-1995

30
Who pays?

• Overall
• 53.6 private
• 46.4 government

31
How its paid

• Most persons have insurance thru work
• Blacks (24.5) and Hispanics (20.1) more likely
  than Whites (9.4) to receive Medicaid
• Hispanics (31.6) most likely to be uninsured

Health coverage for persons under 65
32
Different care, different payor
Hospital Funding
Physician funding
Nursing home care
33
Evolution of payment mechanisms

• The chicken
• The Great Depression
• The Commission on the Costs of Health Care (1932)
• Group practice versus the Blues

34
Key characteristics of Fee for Service Insurance

• Separate payment lines
• Physicians (others)
• Hospitals
• Independence for each practitioner
• Cost reimbursement
• Employer funding Cui bono?

35
First appearance of the ratchet

• Baseline 50 per delivery (usual when the
  patient paid)
• Year One 75 per delivery (50 insurer, 25
  patient)
• Year Two 125 per delivery

36
Moral Hazard One

• Fees can be self-determined
• Fees can be self-generated

37
Empty places at the table

• Medicare
• An entitlement program (age disability)
• Federal standard across US
• Medicaid
• An eligibility program
• State administered with Federal match dollars

38
Medicare structure

• Part B Physician and other outpatient services
• Funded 75 tax , 25 enrollee payment
• Copays (usually 20 of approved charges) and
  deductibles
• Medigaps Provide supplemental coverage

• Part A Hospital care
• Automatic with Social Security funded by general
  tax revenue
• Coypayments and deductibles
• Deductible 716 per benefit period

39
Medicaid

• Health care for the poor
• Federal match dollars fund 55 (SC 73)
• Minimum service specifications

• Who is eligible?
• AFDC
• Old Age Assistance
• Aid to the Blind
• Permanently totally Disabled
• Needy children lt 21

40
Effects of Medicare coverage

• The sickest persons now had resources
• Demographics plus fee ratchet
• Concentration of costs with a single, publicly
  accountable payor
• STOP THE INSANITY!

41
Medicare cost containment

• Assignment
• Physician only charges Medicare-allowable fee.
• Patients only pay 20 of that fee (no extra bill)
• Diagnostic Related Groups (DRGs)
• A preset amount per diagnosis for hospitalization
  (prospective payment system)
• Keep the change --gt get patients out quickly

42
More Medicare cost containment

• Resource Based Relative Value System (RBRVS)
• Applies to physicians
• Equal pay for equal work
• Private FFS insurance frequently copies Medicare

43
Common themes

• Patient has free choice of provider
• Constrained only by willingness of provider
• A fee for service structure
• Patient seeks care (service)
• Provider bills for care (fee)
• Insurer (and patient) pay
• No overall organizing principle except the patient

44
Something completely different

• Prepaid group practice of the 1930s
• HMOs of the 1970s
• Managed Care of the 1990s
• Government promotion in 1970s
• Industry promotion in 1990s

45
Types of MC organization

• Closed Panel (or staff model) Health Maintenance
  Organizations (HMOs)
• Employee physicians provide services
• Group model variant MD groups
• Preferred Provider Organizations
• Physician list, free or discount
• Independent Practice Associations
• Per member per month, network without walls,
  gate-keeping

46
Common MC elements

• Assignment to a primary care provider
• Restrictive formularies for medicine
• Limited providers for hospitalization
• Preventive and patient education services
• MD incentives for cost-effective care
• Utilization review

47
Thoughts.
48
Managed care and you.

• The essential element of a successful PPO or IPA
  is an ability to identify accurately efficient
  health-care providers who provide quality care at
  reasonable rates
• In the search to save money, physicians are a
  prime target

Gottleib Einhorn 1997
49
Moral hazard, revisited

• To attract and retain physicians who are willing
  to practice in what the plans deem a
  cost-effective manner, many plans offer
  opportunities to physicians for stock options or
  bonus payments, or both.
• Incentives to delay/deny care

Gottleib Einhorn 1997
50
The current market

• Conventional, isnt

Conventional
HMO
POS
employees covered by each type of coverage
PPO
51
The impossible triad
Quality
Access
Cost
52
Other options

• National Health Service
• UK model
• National Health Insurance
• Canadian model

53
Looking North

• United States
• Private
• Mixed not everything
• Need insurance copay
• Mixed
• Per patient

• Feature
• Delivery
• Coverage
• Access
• Physicians
• Hospitals

Canada Private Everyone, everything No
barrier Fee schedule Prospective global budget
54
Global budget

• How much is the system going to spend for care?
• More internal freedom
• No need to run up charges

55
Canada hasnt controlled cost growth.
Health Care expenditures as GDP
56
But they are happier

• In 1990, most Americans wanted change
• At the same time, most Canadians were happy

57
A more recent survey
Kellogg Fndn, 1999
58
Wrapping up

• We spend a lot of money on health care
• Aging population
• Technology
• We live in interesting times
• Fee for service
• Managed care
• Various options are possible

59
The future is clouded

• Legislative sniping at managed care
• Problems of equity
• Medicaid
• Uninsured

60
Advice for the future

• Utilization review and other types of profiling
  will profoundly affect practice