Health Care USA Chapter One At the end of the class, you should: Understand the basics of the U.S. health care system. Understand the basics of the U.S

Health Care USAHealth Care USAChapter OneChapter One

At the end of the class, you should:At the end of the class, you should:

Understand the basics of the U.S. health care Understand the basics of the U.S. health care system.system.Be able to outline four components of the health care Be able to outline four components of the health care delivery system.delivery system.Be able to differentiate the U.S. health care system Be able to differentiate the U.S. health care system and the free market.and the free market.Have an overview of health care in other countries.Have an overview of health care in other countries.

Health Care USAHealth Care USA

There are two key objectives of a health There are two key objectives of a health care delivery system: care delivery system:

To provide universal access and to deliver To provide universal access and to deliver services that are cost-effective.services that are cost-effective.

To meet pre-established standards of quality.To meet pre-established standards of quality.

In the United StatesIn the United States

Health care….Health care…. Is not delivered through a standard linear Is not delivered through a standard linear

system, but instead through a kaleidoscope of system, but instead through a kaleidoscope of financing, insurance, delivery, and paymentfinancing, insurance, delivery, and payment

mechanisms that are not standardized and are mechanisms that are not standardized and are coordinately loosely.coordinately loosely.

Health Care DeliveryHealth Care Delivery

There are four functional components…There are four functional components…

FinancingFinancing to purchase insurance or to pay for health care to purchase insurance or to pay for health care

services consumedservices consumed

InsuranceInsurance to protect against catastrophic riskto protect against catastrophic risk

Health Care DeliveryHealth Care Delivery

four functional components…four functional components…

DeliveryDelivery To provide health care services.To provide health care services.

PaymentPayment To reimburse providers for services rendered.To reimburse providers for services rendered.

Healthcare DeliveryHealthcare Delivery

Access to health care is determined by four Access to health care is determined by four main factors:main factors:

Ability to payAbility to pay Availability of serviceAvailability of service PaymentPayment Barriers to enablementBarriers to enablement

Healthcare-Financing Healthcare-Financing

Financing and insurance mechanisms are Financing and insurance mechanisms are divided into…divided into…

Private (employer-based or privately purchased Private (employer-based or privately purchased health insurance).health insurance).

Public (Medicare and Medicaid) sectors.Public (Medicare and Medicaid) sectors.

United States United States

Key elements that contribute to the number of Key elements that contribute to the number of uninsured persons….uninsured persons…. UnemploymentUnemployment Lack of a requirement for employers to provide Lack of a requirement for employers to provide

insuranceinsurance Lack of a requirement for employees to purchase Lack of a requirement for employees to purchase

health insurance when it is offeredhealth insurance when it is offered Lack of eligibility for government-funded Lack of eligibility for government-funded

programs.programs.


The problem of rising health care costs was a The problem of rising health care costs was a major force driving the rise of…major force driving the rise of…

MANAGED CAREMANAGED CARE. .

Healthcare – Managed Healthcare – Managed CareCare

Managed care is a system of health care Managed care is a system of health care delivery…. delivery…. That seeks to achieve efficiencies by integrating That seeks to achieve efficiencies by integrating

the basic functions of health care deliverythe basic functions of health care delivery Employs mechanisms to control utilization of Employs mechanisms to control utilization of

medical services medical services Fees for services rendered.Fees for services rendered.

United States HealthcareUnited States Healthcare

All major developed countries except for the All major developed countries except for the United States offer national health care United States offer national health care programs.programs.

These programs provide universal access These programs provide universal access through health care delivery systemsthrough health care delivery systems that are managed by the respective governments that are managed by the respective governments

and provide a defined set of health care services to and provide a defined set of health care services to all citizens. all citizens.

The Health Care Workforce

Employs approximately 10 million people

850,000 doctors3 million nurses168,000 dentists208,000 pharmacists700,000 administrators300,000 physical therapy, occupational therapy, speech5,810 hospitals17,000 nursing homes5,720 mental health hospitals11,700 home health and hospice agencies800 primary care programs

(HIV, black lung, homeless, migrant workers…)300 medical, dental and pharmacy schools1,500 nursing programs


More numbers:

– 190 million Americans with private ins

– 39.6 million Medicare beneficiaries

– 41.4 million Medicaid recipients

– 1,000 insurance companies

– 42 BlueCrossBlueShield plans

– 540 health maintenance organizations

– 925 preferred provider organizations

National Health SystemsNational Health Systems

There are three models:There are three models:

National health insurance (NHI)National health insurance (NHI): : a tax-supported a tax-supported

national program in which services are rendered by national program in which services are rendered by

private providers but paid for by the government.private providers but paid for by the government.


National health system (NHS)National health system (NHS) a tax-supported national program in which a tax-supported national program in which

the the government finances and also controls the government finances and also controls the health care service infrastructure.health care service infrastructure.


Socialized health insurance (SHI):Socialized health insurance (SHI):

a program in which health care is financed bya program in which health care is financed by

government-mandated contributions by government-mandated contributions by employers and employees, and in which employers and employees, and in which health care is delivered by private health care is delivered by private

providers.providers.


Uniqueness of the U.S. health care delivery Uniqueness of the U.S. health care delivery system…system…

Lack of a central agencyLack of a central agency Lack of universal accessLack of universal access An imperfect market.An imperfect market. The presence of third-party insurers and The presence of third-party insurers and

multiple payers. multiple payers.


Imperfect Market …Imperfect Market …

Item pricingItem pricing obtain fees charged for serviceobtain fees charged for service

(surgeon’s price)(surgeon’s price) services can’t be determined prior to procedureservices can’t be determined prior to procedure

Package pricingPackage pricing bundled fee for a group of related servicesbundled fee for a group of related services

CapitationCapitation all health care services include one set fee per person, more all-all health care services include one set fee per person, more all-

encompassingencompassing

Healthcare DeliveryHealthcare DeliveryImperfect Market cont’d…Imperfect Market cont’d…

Phantom providersPhantom providers bill for services separately bill for services separately

anesthesiology, pathologist, supplies, hospital facility anesthesiology, pathologist, supplies, hospital facility useuse

Supplier/provider-induced demandSupplier/provider-induced demand

Physicians have influence on creating demand for Physicians have influence on creating demand for their financial benefittheir financial benefit

Physicians receive care beyond what is necessaryPhysicians receive care beyond what is necessary (i.e. follow-up visits, tests, unnecessary surgery)(i.e. follow-up visits, tests, unnecessary surgery)


Third-Party Insurers and Payers

– Patient is first party

– Provider is second party

– Intermediary is third party • a wall of separation between financing

and delivery – quality of care is a secondary concern


The practice of defensive medicine.*The practice of defensive medicine.*

*The practice of ordering medical tests, procedures, *The practice of ordering medical tests, procedures, or consultations of doubtful clinical value in order or consultations of doubtful clinical value in order to protect the prescribing physician from to protect the prescribing physician from malpractice suits.malpractice suits.


An understanding of the health care delivery An understanding of the health care delivery system is essential…system is essential…

Effective management of health services.Effective management of health services. Help managers understand the shifts occurring inHelp managers understand the shifts occurring in

the systemthe system Enable senior managers to take advantage of Enable senior managers to take advantage of

opportunities and minimize threats evaluate the opportunities and minimize threats evaluate the need for training, and understand the impact of need for training, and understand the impact of new regulations.new regulations.


Has:– duplication– overlap– inadequacy– inconsistency– waste– complexity– inefficiency– financial manipulation– fragmentation


The system is comprised of a set of interrelated and The system is comprised of a set of interrelated and interdependent components designed to achieve interdependent components designed to achieve common goals. common goals.

The systems framework provides an organized The systems framework provides an organized approach to understanding the various components of approach to understanding the various components of the U.S. health care delivery system and it is the U.S. health care delivery system and it is comprised of five key components; system comprised of five key components; system foundations, system resources, system processes, foundations, system resources, system processes, system outcomes, and system outlook.system outcomes, and system outlook.

The System FrameworkThe System Framework

E N V I R O N M E N TE N V I R O N M E N T

I. SYSTEM FOUNDATIONS Cultural Beliefs and Values, and Historical

Developments “Beliefs, Values, and Health” (Chapter 2) “The Evolution of Health Services in the United

States” (Chapter 3)

The System FrameworkThe System FrameworkSystem FeaturesSystem Features

II. SYSTEM RESOURCESII. SYSTEM RESOURCES Human ResourcesHuman Resources

““Health Services Professionals”(Chapter 4)Health Services Professionals”(Chapter 4)

Nonhuman ResourcesNonhuman Resources ““MedicalTechnology” (Chapter 5)MedicalTechnology” (Chapter 5)

““HealthServices Financing” (Chapter 6)HealthServices Financing” (Chapter 6)

The System FrameworkThe System Framework System Features System Features

III. SYSTEM PROCESSESIII. SYSTEM PROCESSES

The Continuum of Care“Outpatient and Primary The Continuum of Care“Outpatient and Primary Care Services”(Chapter 7)Care Services”(Chapter 7)

““Inpatient Facilities and Services”(Chapter 8)Inpatient Facilities and Services”(Chapter 8) ““Managed Care and Integrated Managed Care and Integrated

Organizations“(Chapter 9)Organizations“(Chapter 9) Special Populations“Long-Term Care”(Chapter Special Populations“Long-Term Care”(Chapter

10)10) ““Health Services for Special Populations”(Chapter Health Services for Special Populations”(Chapter

11)11)

The System FrameworkThe System Framework System Features System Features

IV. SYSTEM OUTCOMESIV. SYSTEM OUTCOMES

Issues and Concerns“Cost, Access, and Issues and Concerns“Cost, Access, and Quality”(Chapter 12)Quality”(Chapter 12)

Change and Reform“Health Policy”(Chapter 13)Change and Reform“Health Policy”(Chapter 13)

The System FrameworkThe System Framework

FUTURE TRENDS

V. SYSTEM OUTLOOKV. SYSTEM OUTLOOK ““The Future of Health Services Delivery” (Chapter The Future of Health Services Delivery” (Chapter

14)14)

TerminologyTerminology

Access -Access - The ability of an individual to obtain The ability of an individual to obtain health care services when needed. In the health care services when needed. In the United States, access is restricted to (1) those United States, access is restricted to (1) those who have health insurance through their who have health insurance through their employers, (2) those covered under a employers, (2) those covered under a government health care program, (3) those government health care program, (3) those who can afford to buy insurance out of their who can afford to buy insurance out of their own private funds, and (4) those who are able own private funds, and (4) those who are able to pay for services privately. Health insurance to pay for services privately. Health insurance is the primary means for ensur ing access. is the primary means for ensur ing access.


Administrative costsAdministrative costs-Costs that are incidental -Costs that are incidental for the delivery of health delivery services. for the delivery of health delivery services. Those costs are associated withThose costs are associated with Billing/collection of claims for delivered services.Billing/collection of claims for delivered services. Time incurred by employers for selection of Time incurred by employers for selection of

insurance carriers.insurance carriers. Costs incurred by insurance and managed care Costs incurred by insurance and managed care

organizations for marketing their products and cost organizations for marketing their products and cost negotiation for rates.negotiation for rates.

TerminologyTerminology Balance bill- the billing of leftover sum by the

provider to the patient after the insurance has only partially paid the charges initially billed.

Capitation- A set amount (or a flat rate) to cover a person’s medical care for a specified period, usually monthly.

Defensive medicine demand- Excessive medical tests and procedures performed as a protection against malpractice lawsuits, otherwise regarded as unnecessary.

Enrollee- (member) refers to the in dividual covered under the plan.


Health plan (or “plan,” for short). The contrac tual arrangement between the MCO and the enrollee—including the collective array of covered health services that the enrollee is entitled to—is referred to as the health plan. It uses selected providers from whom the enrollees can choose to receive routine services. This primary care provider—often a physician in general practice—is customarily charged with the responsibility to determine the appropriateness of higher level or specialty services. The primary care provider refers the patient to receive specialty services if deemed appropriate.


Continuum of Services - Continuum of Services - Medical care services Medical care services are generally classified into three broad are generally classified into three broad categories: categories: Cura tive (e.g., drugs, treatments, and surgeries). Cura tive (e.g., drugs, treatments, and surgeries). Restorative (e.g., physical, occupational, and Restorative (e.g., physical, occupational, and

speech therapies)speech therapies) Preventive (e.g., prenatal care, mammograms, and Preventive (e.g., prenatal care, mammograms, and

immu nizations). immu nizations).

TerminologyTerminology “Continuum of Services” “Continuum of Services”

Health care service settings:Health care service settings:

No longer confined to the hospital and the physician’s No longer confined to the hospital and the physician’s office, where many of the aforementioned services office, where many of the aforementioned services were once deliv ered. were once deliv ered.

Several new settings, such as home health, subacute Several new settings, such as home health, subacute care units, and outpatient surgery centers have care units, and outpatient surgery centers have emerged in response to the changing configuration of emerged in response to the changing configuration of economic incentives. economic incentives.

Documents

Health Care USA Chapter One At the end of the class, you should: Understand the basics of the U.S. health care system. Understand the basics of the U.S