HSMT 2104 -Chapter 1

Chapter 1: Overview of US Health Care Delivery HSMT 2104: Introduction to the US Health Care System Week 1 Learning Objectives • • • • • Understand the nature of the U.S. health care system. Outline the key functional components of a health care delivery system. Get a basic overview of the Affordable Care Act. Discuss characteristics of the U.S. health care system. Emphasize importance for practitioners and managers to understand the health care delivery system. • Get an overview of health care systems in selected countries. • Point out global health challenges and reform efforts. • Introduce the systems model as a framework. Introduction • Medical/ Biomedical model: • Presupposes the existence of illness or disease • Clinical diagnosis & medical intervention • Health care delivery refers to: • Major components of the health care system • Processes that enable people to receive health care • Provisions of health care services to the patients The systems framework • A system consists of interrelated and interdependent, logically coordinated components designed to achieve common goals. • Main components: • System inputs (Resources) • System structure • System processes • System outputs (Outcomes) • Other components: • System Foundations • System outlook (Future directions) Primary Objectives of a Health Care System To enable all citizens to receive health care services To deliver services that are cost-effective and meet established standards of quality Complexity Structures Education / Research Suppliers Insurers Health care administrators Payers Government Patients Providers • Individuals • Facilities Take a moment to reflect • What happens when we visit the doctor’s office? • Clinical interaction? • Financial transactions? • Planning for the future? jot down some notes about your experience and try to think it through the lenses of healthcare management within the healthcare as a system Processes and Connections • Quad-function model with 4 components: 1. Financing 2. Insurance 3. Delivery 4. Payment Financing & Insurance Mechanisms Private • Employer-based • Privately purchased Public / Government programs • State/Federal employees • Medicare • Medicaid & CHIP Affordable Care Act (ACA) Health care reform refers to expansion of health insurance to cover the uninsured • ACA was the most sweeping health care reform in recent US history Key components of the ACA include: • Required all citizens/legal residents to be covered by public or private insurance • Expanded Medicaid eligibility (optional for states) • Health insurance exchanges/marketplace Managed Care Managed care is a system of healthcare delivery that: • Seeks to achieve efficiency by integrating the four functions of health care delivery • Controls utilization of medical services • Determines the price of services and how much providers are paid Compared to fee-for-service plans, managed care has greater cost control and integration of health care delivery External Forces Affecting Health Care Delivery ◼ Political climate ◼ Economic development ◼ Technological progress ◼ Social & cultural values ◼ Physical environment ◼ Population characteristics ◼ Global influences US Health Care System The US has a unique health care delivery system • Americans are not automatically covered • A true, cohesive system does not exist • Fragmented system that continues to undergo periodic changes Health care workforce employs more than 16.4 million people • 838,000 active Medical Doctors (MDs) • 70,480 Doctors of Osteopathic Medicine (DOs) • 2.6 million nurses US Health Care System • Key characteristics include: • Market-oriented • Blend of public and private involvement • Multiplicity of financial arrangements for health care services • Multiple payers make their own determinations about cost for each service • Diverse settings where services are delivered • Little standardization and no coordination from a central agency • Inefficiencies result in duplication/ overlap of services and waste US Health Care System US consumes more health care services as a proportion of total economic output • Delivers some of the best clinical care but does not deliver equitable services to every American Although US falls short in access, excels in: • • • • Medical technology Medical training Research Sophisticated institutions, products, & processes US Health Care System US Health Care System • Ten basic characteristics: 1. No central agency governs the system 2. Access to health care services is selectively based on insurance coverage 3. Health care is delivered under imperfect market conditions 4. Third-party insurers act as intermediaries between financing & delivery 5. The existence of multiple payers makes the system cumbersome US Health Care System (cont) • Ten basic characteristics: 6. The balance of power among players prevents any single entity from dominating the system 7. Legal risks influence practice behavior of physicians 8. Development of new technology creates an automatic demand for its use 9. New service settings have evolved along a continuum 10. Quality is no longer accepted as unachievable No Central Agency Most developed nations have a national health care program • Citizens entitled to a defined set of health care services • Global budgets determine total expenditures and allocate resources US has mainly private system of financing and delivery • Private financing through employers (52%) & government (48%) • Majority of hospitals & physician clinics are private businesses • Government sets reimbursement rates and standards of participation for Medicare, Medicaid, & CHIP Partial Access Access means the ability of an individual to obtain health care services when needed • Not the same as having health insurance, but health insurance is the primary means for ensuring access Americans can access health care services if they: • Have health insurance through their employer • Are covered under a government health care program • Can afford to buy insurance with private funds • Can pay for services privately • Can obtain charity or subsidized care Imperfect Market Conditions • The US health care system is a quasi-market or imperfect market – only partially managed by free markets • Health plans – not patients – are the real buyers • Prices are set by external agencies • Lacks unrestrained competition • Patients lack information & have limited ability to make decisions Third-Party Insurers Patient is first party Provider is second party Insurance is third party • Acts as intermediary – wall of separation between financing & delivery • Does not have incentive to advocate for patient on price or quality Multiple Payers Multiple Payers make system more cumbersome: Providers must hire claims processors Payments can be denied for not precisely following requirements • Difficult for providers to track various health plans • Each payer covers different services and has different reimbursement rates • Each payer has its own format • Denied claims cause rebilling and/or collection efforts Balance of Power Each set of players has its own economic interests to protect • Physicians, administrators, insurance companies, large employers, & government • Self-interests of different players often at odds • Produce competing forces within the system Makes it difficult to achieve comprehensive system-wide reform Legal Risks Influence of malpractice lawsuits Defensive medicine is largely unnecessary, costly, and ineffective • Prescribing additional diagnostic tests • Scheduling return checkup visits • Maintaining copious documentation High Technology US is hotbed of research and innovation Creates demand for new services despite high costs Utilization is required due to capital investments Legal risks for denying new technology People equate high-tech with high-quality and want “latest and best” treatments. New Service Settings • Medical services are classified as curative, restorative, and preventive • Emergence of additional health care settings, such as home health and outpatient surgery centers • Health care continuum places heavier emphasis on specialized services than on preventive services, primary care, and management of chronic conditions Quality • Definition and measurement of quality are not clear-cut • Health care delivery has increased pressure to develop quality standards and demonstrate compliance • Higher expectations for improved health outcomes at individual and community level Trends and Directions Fundamental shifts in US health care system Promotion of health while reducing costs Focus changing from illness to wellness More effective & efficient quality care Focused on delivery of services • Mid-level health professionals • Health information technology Trends and Directions The U.S. health care delivery system continues to undergo fundamental shifts. • • • • • • • Integrated delivery systems Pay-for-value ACOs Promotion of health while reducing costs Focus is changing from illness to wellness Providing more effective and efficient quality care Focused more on delivery of services • Patient-centered care • Mid-level health professionals, health coaches, and health information technology • Telemedicine Significance for health care managers • • • • • • • Positioning the organization Handling threats and opportunities Evaluating implications Planning Capturing New Markets Complying with regulations Following the organizational Mission Health Care Systems of Other Countries • 3 basic models (universal health care): 1. National health insurance (NHI) • Government financed, private providers 2. National health system (NHS) • Government finances and manages 3. Socialized health insurance (SHI) • Government mandates finance, private providers • Other health delivery systems • Developed nations • Developing nations Health Care Systems of Other Countries • National health insurance (NHI) • Government finances healthcare through taxes • Care delivered through private providers • Requires more consolidation of financing, insurance, & payment functions by the government • Example: Canada Health Care Systems of Other Countries • National health system (NHS) • Government finances and manages health care • Tax-supported program with most medical institutions & providers managed by the government • Tighter consolidation of all four functions – financing, insurance, delivery, & payment • Example: United Kingdom Health Care Systems of Other Countries • Socialized health insurance (SHI) • Government mandates finance of health care • Compels employers & employees to contribute • Care delivered through private providers • Insurance and payment are closely integrated, financing is better coordinated, & delivery is heavily regulated • Example: Germany Health Care Systems of Other Countries • Australia • Switched from universal national health care program to privately financed system, then returned to national program called Medicare • Philosophy of everyone contributing to the cost of health care according to capacity to pay Health Care Systems of Other Countries: Israel and Japan Israel • Universal coverage based on German SHI model • National health information exchange in 2014 Japan • Providing universal coverage with two main insurance schemes • Employer-based and national health insurance program • Japan Primary Care Society will run a training program • Health and long-term care systems face sustainability issues including rising costs and increasing demands for services. Developing Countries • Developing countries are responsible for only 11% of the world’s total health spending even though they account for 93% of the worldwide burden of disease. • Moving toward universal coverage • Global Health Challenges and Reform • No countries in the world so far have found the perfect solution to addressing their multiple health challenges while containing escalating health care costs. • A huge gap in health care and health status persists between developing and developed countries. • International health assistance continues to play a significant role in many developing countries. Wrapping up… • The primary objectives of a health care system are: • Enable all citizens to obtain needed health care services • Ensure cost-effective services and meet quality standards • The US has a unique health care delivery system that is a combination of private and public financing and insurance • No country has a perfect health care insurance system or true universal access Questions? email: lbaltean@uncc.edu or twashi29@uncc.edu