Health Care USAChapter One

At the end of the class, you should:

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

Health Care USA

There are two key objectives of a health care delivery system: To provide universal access and to deliver services that are cost-effective.

To meet pre-established standards of quality.

In the United States

Health care…. Is not delivered through a standard linear

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

mechanisms that are not standardized and are coordinately loosely.

Health Care Delivery

There are four functional components…

Financing to purchase insurance or to pay for health care

services consumed

Insurance to protect against catastrophic risk

Health Care Delivery

four functional components…

Delivery To provide health care services.

Payment To reimburse providers for services rendered.

Healthcare Delivery

Access to health care is determined by four main factors:

Ability to pay Availability of service Payment Barriers to enablement

Healthcare-Financing

Financing and insurance mechanisms are divided into…

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

Public (Medicare and Medicaid) sectors.

United States

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

insurance Lack of a requirement for employees to purchase

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

programs.

Healthcare Delivery

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

MANAGED CARE.

Healthcare – Managed Care

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

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

medical services Fees for services rendered.

United States Healthcare

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

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

and provide a defined set of health care services to 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

Healthcare Delivery

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 Systems

There are three models:

National health insurance (NHI): a tax-supported

national program in which services are rendered by

private providers but paid for by the government.

National Health Systems

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

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

National Health Systems

Socialized health insurance (SHI):

a program in which health care is financed by

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

providers.

Healthcare Delivery

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

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

multiple payers.

Healthcare Delivery

Imperfect Market …

Item pricing obtain fees charged for service

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

Package pricing bundled fee for a group of related services

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

encompassing

Healthcare DeliveryImperfect Market cont’d…

Phantom providers bill for services separately

anesthesiology, pathologist, supplies, hospital facility use

Supplier/provider-induced demand

Physicians have influence on creating demand for their financial benefit

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

Healthcare Delivery

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

Healthcare Delivery

The practice of defensive medicine.*

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

Healthcare Delivery

An understanding of the health care delivery system is essential…

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

the system Enable senior managers to take advantage of

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

Healthcare Delivery

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

Healthcare Delivery

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

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

The System Framework

E 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 FrameworkSystem Features

II. SYSTEM RESOURCES Human Resources

“Health Services Professionals”(Chapter 4)

Nonhuman Resources “MedicalTechnology” (Chapter 5)

“HealthServices Financing” (Chapter 6)

The System Framework System Features

III. SYSTEM PROCESSES

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

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

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

10) “Health Services for Special Populations”(Chapter

11)

The System Framework System Features

IV. SYSTEM OUTCOMES

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

Change and Reform“Health Policy”(Chapter 13)

The System Framework

FUTURE TRENDS

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

14)

Terminology

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

Terminology

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

insurance carriers. Costs incurred by insurance and managed care

organizations for marketing their products and cost negotiation for rates.

Terminology 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.

Terminology

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.

Terminology

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

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

immu nizations).

Terminology “Continuum of Services”

Health care service settings:

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

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