Health Care Distribution, Ch. 7

United States Gross Domestic Product (GDP) in 2002 was 10 trillion dollars

1.6 trillion of it was spent on health care 5,440 dollars per citizen (including children)Causes of high cost:

Demographic changes (as population ages more demand for health care)

Administrative costs (insurance systems cost money to run)

Malpractice insurance (costs of large settlements and penalties are passed on to consumers)

Labor costs Technology (updating equipment with advances)

Traditional Care: Patients are free to choose whomever they want to

provide their health care Patients pay for that care

out of pocket, or though their purchased insurance

Managed Care:Any system that controls the Type Quality Use, and Costs of health care

Main problem with traditional care is its costs, which are

often crippling to individuals who can pay, and

prohibitive for those who cannot Insurance was the solution to prohibitive

costs, but is no longer

Main problems with managed care are (p155):

For Physicians: Restrictions that affect “practice patterns”:

obtain preapprovals denied diagnostic tests monitored drug prescriptions limited referrals to specialists limited scope of specialists available

Financial relationship with managed care entities (unspecified)

Main problems with managed care are (p155):

For Patients: choice of hospital choice of physician concern over limitations placed on

physicians 73% of respondents to a poll said they

support expanding the right to sue for malpractice to managed care facilities

1900-1970 – Traditional Care

3 problems with traditional, fee-for-service, care (mainly employer-sponsored, insurance-based care):

Rising prices no incentives to reduce costs

Health risks due to variation of care small towns had very different care than large cities

Health risks due to lack of coordination doctor shopping led to multiple prescriptions and

conflicting care

1970s- Managed Care Arrives

Managed Care is the joining of two things that were separate:

The delivery of medical care The financing of medical careFinancing works against delivery, which is good for keeping cost down, but potentially bad for quality

1970s- Managed Care Arrives, cont.

Since physicians and patients dislike the restrictions of managed care, the Nixon administration passed the

Health Maintenance Organization (HMO) Act in 1973

used federal money to spur the growth of HMOsto encourage their acceptance by the publicSee list of Minnesota’s HMOs

Few Americans signed up with HMOs Businesses began to complain that health care

insurance costs were causing them to become uncompetitive internationally

1980s and 1990s - Managed Care Evolves

Insurers recognize Americans dislike the restrictions of HMOs, begin loosening them,

Create IPAs (Independent-Practice Associations)

Rather than employ physicians, contract with them

Physicians agree to limited restrictions Insurers provide a list of approved

physicians (which increases physician exposure)

1980s and 1990s - Managed Care Evolves, cont.

Insurers respond to calls for more freedom with the Point of Service (POS) plan:

Take an IPA plan Add, for a fee, freedom to choose

doctors not on the list

Despite IPA and POS plans … Patients still disliked the restrictions Physicians dislike the meddling,

reduction in autonomy Prices are still rising

ERISA v. State LawMain points:HMOs bear some responsibility for errors in

health care They encourage less than comprehensive

testing They limit consultation with specialists Etc.HMOs, however, have not been legally liable for

malpracticeThat is changing; p160-161 tells the story

Since expanding the ability to sue to HMOs, we can expect the cost to rise again

One way to reduce those costs arrived through the work of the Institutes of Medicine (IOM)

The IOM is a non-profit branch of the National Academy of Sciences

IOM has conducted research and created protocols to guide HMOs in their decision making, resulting in Risk Managed Care over Managed Care

Leaving Managed Care behind, you should also know about Medicare and Medicaid

Medicare Provided by the federal government Administered by the Centers for Medicare &

Medicaid Services The nations largest health insurance program Covers 40 million Americans For those 65 and older, only Some exceptions for disabled

Medicaid A joint and voluntary program between

the federal government and the states Provides health insurance to the

Poor Disabled Impoverished elderly

If a state participates (receives federal money), it must abide by federal guidelines regard the delivery of heath care

In an effort to reduce costs, some health care providers are employing the concept of Patient-Focused, or Patient-Centered Care

The goal is to reduce costs and improve the standard of care

The model “…attempts to centralize patient services using the unit-

based model seen with nursing care.” http://gateway.nlm.nih.gov/MeetingAbstracts/ma?f=102272800.html Patients have a team of health care workers assigned to

them Not all the team members are trained for every job they

may be assigned, and so liability questions are so far unexplored

ReadImpact on the Imagine Professional,

p163