Health Care USA
Chapter 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 doctors
3 million nurses
168,000 dentists
208,000 pharmacists
700,000 administrators
300,000 physical therapy, occupational therapy, speech
5,810 hospitals
17,000 nursing homes
5,720 mental health hospitals
11,700 home health and hospice agencies
800 primary care programs
(HIV, black lung, homeless, migrant workers…)
300 medical, dental and pharmacy schools
1,500 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



services can’t be determined prior to procedure
Package pricing


(surgeon’s price)
bundled fee for a group of related services
Capitation

all health care services include one set fee per person, more allencompassing
Healthcare Delivery
Imperfect 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
financial benefit
Physicians receive care beyond what is necessary

(i.e. follow-up visits, tests, unnecessary surgery)
their
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
ENVIRONMENT
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 Framework
System 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




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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 ensuring 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 individual covered
under the plan.
Terminology

Health plan (or “plan,” for short). The contractual
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:



Curative (e.g., drugs, treatments, and surgeries).
Restorative (e.g., physical, occupational, and
speech therapies)
Preventive (e.g., prenatal care, mammograms, and
immunizations).
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 delivered.
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.