809 Test 2
Hospital Related Ambulatory Services: Most hospitals provide two levels of ambulatory care
emergency services outpatient clinics 1. teaching hospitals 2. ambulatory surgery centers 3. other outpatient services
Accreditation is critical for fulfilling
state license requirements and for receiving reimbursement in the Medicare and Medicaid programs
general ambulatory care
"free" clinics
grouped by length of stay
"short-stayers" versus "long-stayers"
HOME CARE defined
"the provision of equipment and services to the patient in the home for the purpose of restoring and maintaining his or her maximal level of comfort, function and health"
Why the growth in home care? Medicare prospective payment system
discharge patients "quicker and sicker"
The US spends
$113 billion on mental health treatment; this accounts for 5.6% of the national health care spending
Employer provided health insurance
- advantage of group insurance is that rate can be reduced by spreading risk over many people. Overall, tends to be less expensive than individual policies. In 2016 = 56% of Insurance Coverage 1. Large employers may obtain policies from commercial companies or self-insure 2. Small employers purchase directly through commercial companies and indirectly some state insurance exchanges
Mental health professionals: nurses
- certified clinical nurse specialists in adult psychiatric and mental health
Mental health professionals: others
- counseling psychologists, marriage and family therapists, etc.
Types of home care services: hospice services
- goal is to improve the quality of life for terminally ill patients and their families.
ambulatory surgery centers
- housed either in free space from unused patient beds or in freestanding building; response to prospective payment and managed care pressures.
Mental health professionals: social workers
- in competition with psychologists, provide lower cost care
community hospitals
- includes all nonfederal hospitals; short term general and specialty hospitals available to the public.
Mental health professionals: psychiatrists
- licensed physicians with up to five years of additional specialized training after medical school
Oligopsony
- many sellers, few buyers; buy less and at a lower price (examples: some argue that pharmacy benefit manager (PBM) companies who manage prescription purchases for large health insurers and large self-insured employers represent an oligopsony)
Why the growth in home care? clinician's acceptance
- more cost effective and increased quality of life for patient.
Mental health professionals: psychologists
- non medical professionals who generally hold a doctoral degree in clinical psychology. Can bill third party payers directly for services provided to clients.
teaching hospitals
- organized their clinics to function more as group practices - usually three types of clinics: medical, surgical and other
Types of home care services: respiratory therapy
- oxygen, bronchodilators via nebulization, etc.
Types of home care services: durable medical equipment
- reusable medical equipment
2. prospective payment
- revolutionized by Medicare program in paying hospitals for inpatient care; based on DRGs (diagnosis related groups - codes for major diagnosis groups, with specific codes for more complex). Hospitals are paid a pre-established amount per case treated, with payment rates varying by type of case
Increasing need for LTC services: Demographics of population changing
1. In 2010 one third of American people were persons of color In 2015 (61% white, 12 % black, 18% Hispanic, 6% Asian/PI, 1% Native American) 2. by 2042, non-Hispanic white Americans will be a minority group 3. changing demographics will have an impact on the populations of LTC facilities
Provision of services
1. LTC not just nursing home care; occurs in community and institutional settings. 2. Factors determining the type of LTC needed include level of disability, availability of informal caregivers, and other personal circumstances. 3. People of all ages need LTC services; elderly use them more frequently. 4. LTC has become a major health policy and financing issue due to uncertainty in predicting levels and types of LTC services a person will need
Impact of managed care on the provision of mental health services
1. Managed care organizations not only provide mental health services to employed population, they have become more active in their expansion into the public sector. Usually known as MBHOs (managed behavioral health care organizations) 2. Managed care growth in mental health provision has resulted in 3. Evidence that MBHOs have reduced costs, but at what expense?
Why the growth in home care?
1. Medicare prospective payment system 2. impact of managed care 3. advances in technology 4. clinician's acceptance
The settings for mental health services
1. Private practice 2. Community or County Mental Health Centers 3. Substance Abuse Treatment Centers
Health care financing in the public sector: other
1. Veterans (VA) 2. Active armed forces and military dependents (DoD, TriCare) 3. Workman's compensation - state run insurance program 4. County indigent health funds 5. State Children Health Insurance Program (SCHIP); Fed gov. (70%)/state split 6. IHS (Indian Health Service)
The Pharmacists Role in Hospital Based Practice Organizational structure of the pharmacy department
1. director of pharmacy 2. staff and clinical pharmacists 3. technical and support staff
The Pharmacists Role in Hospital Based Practice Responsibilities of the hospital pharmacy
1. drug distribution systems a. floor stock distribution b. unit-dose distribution 2. centralized versus decentralized pharmacy systems 3. intravenous admixture services 4. non-distributive pharmacy services a. drug therapy monitoring b. education c. drug utilization evaluation d. adverse drug reaction monitoring e. specialized clinical pharmacy services
How the Money is Paid Out Physicians
1. fee for service 2. capitation 3. salary
Managed care
1. health maintenance organizations (HMOs) - both delivers and finances health care 2. preferred provider organizations (PPOs) - insured members pay less when seen by PPO providers, but can still obtain care elsewhere 3. point-of-service (POS) - really combination of HMO and PPO - provides the most freedom of choice about where to obtain care; tend to pay a lot more however for out-of-network care 4. exclusive provider organizations (EPOs) - similar to HMO plans but members required to use in-network physicians unless have an emergency • Examples: here in ABQ, Presbyterian Health Plan is an integrated HMO (hospitals, physician group, health insurance)
Types of home care services
1. home infusion therapy 2. hospice services 3. durable medical equipment 4. nursing services 5. respiratory therapy 6. speech and physical therapy 7. social services/homemaker services
Increasing need for LTC services: Roles of women are changing
1. importance- much of care giving in the home provided by wives, daughters, etc. 2. some women may have to balance dual responsibilities for parent and child care 3. some women may have to balance paid work responsibilities and care giving for a parent.
Delivery of mental health care beset by many difficulties
1. inequitable access based on geography, class and diagnosis (social stigma attached to mental patients and public apathy toward their suffering hamper care). 2. health care delivery system is poorly coordinated with other human service systems s (general medicine, legal, education and welfare) 3. many mental disorders can only be treated, not cured; require long term management 4. mental health personnel and community based treatment programs in short supply
Where are LTC services provided? Institutional services
1. nursing facilities - previously called nursing homes a. grouped by length of stay b. skilled nursing facilities (SNF's) 2.other institutional services
HOME CARE facts
1. one of the fastest growing segments of the America health care system 2. employs a multitude of health care professionals 3. millions of Americans are cared for in a home care environment
hospitals 1980 to Present - Maturation and End of Growth of Number and Size of Hospitals
1. overall decreasing trend in the number of hospitals. hospital beds per population, occupancy rates and lengths of stay have decreased overall. 2. DRG (diagnostic related group) payment mechanism - created incentives contrary to fee for service, hospitals motivated to perform fewer procedures and discharge patients as quickly as possible (decrease lengths of stay) , hospitals began "unbundling" services to bill separately. 3. Fewer independent hospitals, emergence of investor owned and not-for-profit multi-hospital corporations horizontal integration vertical integration 4. hospital care is big business- ~33 % of nation's health expenditures ($ 1.2 trillion dollars in 2018), Total per capita spend of $11,172 per person; $3,649 on hospital care per capita (per American) in 2018.
Hospitals prior to 1945
1. primarily religious or charitable organizations (infirmaries in poorhouses). 2. 1870 to 1920 - spectacular growth in number of hospitals, including for profit hospitals owned by physicians. 3. hospitals grew because medical care had become too complex for doctors "black bags", special equipment and consultation became essential.
Mental health professionals
1. psychiatrists 2. psychologists 3. social workers 4. nurses 5. others
Increasing need for LTC services: Aging of America
1. rapid increase in the number of elderly persons expected between 2010 and 2030 2. by 2030, the number of elderly individuals in the US will more than double 3. fastest growing segment in the population are those 85 years and above.
How the Money is Paid Out Hospitals
1. retrospective payment 2. prospective payment 3. Advantages of DRG related prospective payment 4. Disadvantages of DRG related prospective payment
Hospitals 1945 to 1980 - Period of Rapid Growth
1. tremendous increase in hospital services, costs and technology. 2. small rural hospitals built, financed by Federal monies under Hill-Burton Act (1946). 3. rapid growth of health insurance increased breadth and intensity of hospital services. 4. Medicare and Medicaid - 1965; patients now had a mechanism to pay for hospital care.
National Health Care Expenditures components
1.Health Consumption Expenditures (payments for health services and supplies; ~ 95% of total NHE in 2016). i. Personal Health Care (PHC) a.government public health activity b.government administration/net cost of health insurance 2. investment
Length of Stay in Acute Care
30 days or less
emergency services
93% of community hospital have emergency departments.
communicable disease control
TB, STD, HIV and contagious disease clinics
LONG TERM CARE (LTC) - (Also known as EXTENDED CARE)
A range of health, personal care, social and housing services provided to people who have lost or have never developed the capacity to care for themselves independently as a result of chronic illness or mental or physical disability. A set of health, personal care, and social services delivered over a sustained period of time to persons who have lost or never acquired some degree of functional capacity
Types of Ambulatory Care: Managed Care
A structured network of providers formed to offer cost effective services, with an emphasis on preventive care. Payment usually prepaid to the provider for services on a per member, per month (PMPM) basis. Provider is paid the same amount of money every month for a member, regardless of whether the member receives services, and despite the cost of those services. Managed care is built on the foundation of the Primary care provider (PCP) or "gatekeeper". Managed care now comprises about 75% of the U.S. marketplace. 1. HMO's 2. PPO's
Ambulatory Pharmacy Services
A. Hospital outpatient clinics B. Primary care and family practice clinics C. Community pharmacy- chain pharmacies /independent pharmacies - "the most accessible of health care professionals".
Pharmacist role in Long Term Care Setting
A. Medication distribution B. LTC Consulting- growing segment/practice setting for pharmacists
Increasing need for LTC services
Aging of America Demographics of population changing Roles of women are changing
services increases
All this as population ages and demand for
Types of Ambulatory Care: Private Practice/Fee-for Service
Care provided on a fee-for-service basis. Patient - or the patient's insurer- pays the physician (fee) directly. 1. solo practice 2. group practice
Increased competition for managed care contracts, physicians and patients
Change in the pattern of the delivery of care and budgets by capitated reimbursement policies (managed care) will precipitate more hospital closures and mergers
limited budgets
Continued focus on quality and technology balanced with
The settings for mental health services:Substance Abuse Treatment Centers
Detoxification facilities, Acute Residential Treatment (ART) programs, Intensive Outpatient Programs (IOP).
Patients requiring long-term care services
Elderly Patients with chronic disease, terminal illnesses or rehabilitative needs.
government public health activity
spending by governments to organize and deliver health services and to prevent or control health problems
increasingly vertically integrated
Growth of larger multi-hospital systems,
HMO's
Health Maintenance Organizations - prepaid health plan in which enrollees pay a fix fee for designated health services. Five common models of HMO's (staff, group, network, independent practice association (IPA) and direct contract) will be discussed in depth later in semester.
Creating Incentives (can be used along with regulations or market forces)
Healthcare providers, like everyone else, usually respond to incentives. Examples: i. Methods of payment for goods and services: discounted fee-for service, perdiem, DRGs and capitation reimbursement these methods usually work best for chronic care ii. Medicare Accountable Care Organizations (ACOs) - Medicare Shared Savings Program, Pioneer ACO. Encourage providers to invest in programs to reduce unnecessary utilization and more efficient models of delivering care.
outpatient clinics
Hospitals will diversify their services to operate
Health Insurance
In 1940 health insurance was negligible; today ~ 90% of U.S. population has some type of either private or public (Medicare, Medicaid, etc.) health insurance.
Hospitals
In 2004, nonfederal general hospital psychiatric units (56.5% of admissions), private psychiatric hospital (22.06%), and state and county psychiatric hospital (9.8%). Hospitalizations Involving Mental and Substance Use Disorders Among Adults, 2012.
Factors contributing to the growth of long-term care
Increasing elderly population changing family structure nature of modern chronic diseases advent of cost containment in health care
Where are LTC services provided?
Institutional services Hospice care Community facility services
formal or informal
LTC services can be categorized as either
advent of cost containment in health care
LTC services typically less expensive than hospital bed
Freedom of entry and exit:
Low barriers to entry and exit from an industry stimulates competition; high barriers inhibit it. In perfect competition there are no barriers to entry and exit. [examples - licenses, certificate-of-need, patents]
Perfect Competition:
Many buyers and sellers Freedom of entry and exit Standardized products Full and free information No collusion
Health care financing in the public sector:
Medicare Medicaid
The Healthcare Market
Numbers of buyers and sellers Entry to / exit from the Market Variation in Products, Services and quality Full and free information Universal and inelastic demand Unpredictability of Illness Health care as a "right" Supplier Induced Demand (can cause costs to increase) Third-Party Insurance and Moral Hazard (can cause costs to increase)
LTC informal
Over 70% of chronically disabled people receive their LTC services from family and friends
Increasing elderly population
Over the past 10 years --persons 65 years or older—increased from 37.2 million in 2006 to 49.2 million in 2016 (a 33% increase) and is projected to more than double to 98 million in 2060 About 1 in every seven, or 15.2% of the population is an older American in 2017 The 85 and over population is projected to more than double from 6.4 million in 2016 to 14.6 million in 2040 (a 129% increase) Persons reaching age 65 have an average life expectancy of an additional 19.4 years (20.6 years for females and 18 years for males). By 2030, there will be about 72.1 million older persons, more than twice their number in 2000 Older women outnumber older men at 27.5 million older women to 21.8 million older men By 2042, non- Hispanic White Americans will account for 50% of the country's population, down from 67.4% in 2004. The need for caregiving increases with age. In January-June 2017, the percentage of older adults age 85 and over needing help with personal care (22%) was more than twice the percentage for adults ages 75-84 (9%) and more than six times the percentage for adults ages 65-74 (3%)
Four types of market structures and their characteristics
Perfect Competition Monopolistic Competition Monopoly Oligopoly
PPO's
Preferred Provider Organizations - organization contracts to provide health services for a set fee through the use of selected physicians. Physicians agree to the fee structure of the PPO in return for the PPO providing them with patient.
Health Insurance types
Private health care insurance Brief background on private health insurance
Improving Economic Performance of the Healthcare System
Regulation Using Market forces Creating Incentives (can be used along with regulations or market forces)
Accreditation Joint Commission on Accreditation of Healthcare Organizations (Joint Commission)
Sets standards and accredits hospitals based upon those standards.
. Regulation
Some believe that health care is more monopolistic/oligopolistic than competitive markets and advocate that health care services should be considered a public utility and regulate accordingly (other countries do this - regulation provides a mechanism for setting the price for health care services (clinic visits, hospitalizations, laboratory tests, therapy visits, procedures) and medications). Others advocate that the healthcare industry should be managed in a way that allows market forces to work more effectively.
Moral hazard.
Some believe that the open ended nature of most health insurance coverage leads to "moral hazard", where people tend to over consume health care that is not essential/inappropriate because of the reduced marginal cost to the consumer/user of the good/service. Concept is that people will consume health care resources as long as they perceive at least some net positive marginal utility (benefit/value) without thought to the cost and how that cost in the long-term will impact others. The out of pocket costs (copayments or deductibles) are generally much less than the actual cost of providing the service.
similar demographic characteristics and medical problems
Standardization of treatment for patients of
Types of Ambulatory Care: National Ambulatory Medical Care Survey (NAMCS)
The National Ambulatory Medical Care Survey (NAMCS) is a national survey designed to meet the need for objective, reliable information about the provision and use of ambulatory medical care services in the United States. Findings are based on a sample of visits to non-federal employed office-based physicians who are primarily engaged in direct patient care.
Hospital Related Ambulatory Services: The National Hospital Ambulatory Medical Care Survey (NHAMCS)
The National Hospital Ambulatory Medical Care Survey (NHAMCS) is designed to collect data on the utilization and provision of ambulatory care services in hospital emergency and outpatient departments. Findings are based on a national sample of visits to the emergency departments and outpatient departments of non-institutional general and short-stay hospitals.
Total cost of mental health care difficult to calculate.
The direct medical care costs (medications, treatment visits and hospitalization) are known. The indirect costs (incarceration, homelessness, public benefits, reduced labor supply and medical complications) associated with mental health care are much more difficult to calculate.
investment
spending for noncommercial biomedical research and expenditures by health care establishments on structures and equipment (~ 5% of total NHE in 2016)
Medicaid
Title XIX- 1965- Amendment to the Social Security Act of 1960 • Federal-state financing program for the poor children, pregnant women, indigent, and for many states since ACA of 2010, low-income
Medicare
Title XVIII- 1965 - Amendment to the Social Security Act of 1960 • Federal program that provides financing of medical services for elderly and those with disabilities or severe kidney disease (ESRD), regardless of ability to pay.
Demand
a consumer's ability and willingness to pay for a good or service
long term care
a range of services and support provided to meet personal care needs on a long term basis; most of which is not medical care. Provides services in a variety of settings for people who have lost some independence because of an injury, medical condition or chronic illness. Provided in an individual's home or in a community setting or institution.
Supply
a supplier's ability and willingness to provide a good or service
Important Mental Health Care Related Legislation
a. Community Mental Health Centers Act of 1963 b. Medicare and Medicaid 1965 c. Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008, part of the Emergency Economic Stabilization Act of 2008
Patients with chronic disease, terminal illnesses or rehabilitative needs: examples
a. chronic diseases - cancer, stroke, Alzheimer's disease, depression, diabetes. b. terminal illness - hospice care often used (physical, social and spiritual support). c. rehabilitative needs- usually need LTC services for a short period of time, institutional or home health care used.
Government programs: Indian Health Service (IHS)
a. falls under U.S. Public Health Service (PHS), part of DHHS. b. health care and pharmacy services provided to American Indians and Alaska Natives c. 180 ambulatory health care centers and 49 hospitals (7 to 150 beds) d. innovative primary care program performed by pharmacists
Government programs: Community Health Centers
a. originally cared for medically underserved inner-city minority groups b. later served rural, poor populations of mixed racial composition c. pioneered training and employment of nurse practitioners, physician assitants and community health workers d. late 70's CHC's were encouraged to expand their services to the non poor, program focused on urban and rural medically underserved populations
2. Managed care growth in mental health provision has resulted in:
a.) therapists and counselors working for multiple masters. b.) reduction in services (lack of chronic mental illness coverage, limit of hospitalization and outpatient visits per year). c.) evidence that patients covered by managed care plans are less likely to have a mental illness identified and diagnosed. May be to incentives related to no referral. d.) bias toward medication versus psychotherapy (biological versus 'psychological' psychiatry).
MBHOs attempt to reduce costs of mental health care through:
a.) utilization of mental health practitioners at discounted fees b.) reduction in the length of mental health treatment c.) decreased use of hospital treatment d.) increased use of ambulatory/outpatient treatment
government administration/net cost of health insurance
administrative cost of various government health care programs, and the difference between premiums earned by insurers and the claims or losses incurred for which insurers become liable (the net cost of PHI)
Where are LTC services provided? Community facility services
adult day care assisted living facilities/residential care communities
Main risk factors for institutionalization include
advanced age, diagnostic condition, living alone. Other risk factors include problems with ADLs, mental status, ethnicity (minorities are at lower risk), low social support, poverty, outpatient admission, and hospital admission.
group practice
affiliation of three or more providers (average group is nine practitioners), most are incorporated as professional corporations. Advantages of group practice include joint ownership, centralized administrative functions and a professional manger. Disadvantages include less individual freedom, less income, weak provider patient relationships.
National Health Care Expenditures [NHE]
aggregate health care spending in the U.S.; in 2016, NHE was $3.3 trillion (17.9% of the GDP)
rehabilitative care
aimed at restoring person to his/her original state of health. Rehab services help a person keep, regain or improve skills and functioning for daily living that may have been lost or impaired due to illness or injury. Examples: physical therapy, occupational therapy, speech language pathology, psychiatric rehabilitation. Offered in inpatient and outpatient settings.
preventive
aims at promoting mental health and preventing specific mental disorders.
Standardized products:
all products are similar and interchangeable creating a situation where many substitutes exist. In perfect competition, products are perfectly substitutable for each other.
ambulatory care defined
an individual presenting for personal health services, who is neither bedridden, nor currently admitted to any health care institution Healthcare services that can be delivered on an outpatient basis and do not require overnight hospitalization.
Oligopoly
between perfect competition and monopoly; has few sellers and many buyers. Firms in oligopolies are interdependent, and a dominant firm can exert influence through price leadership. Firms produce less than they would in a competitive market and charge a higher price. i. Examples: cable (tv, internet) providers, hospitals in medium sized urban areas and certain drug classes with market share concentrated among a few manufacturers. ii. Oligopsony
chronic diseases
cancer detection, Pap smear, breast examinations, etc.
palliative or end of life care
care provided for the final hours or days of an individual's life. Includes physical, mental and emotional comfort as well as social support, for patients who are living and dying of terminal illness. Hospice care is end of life care utilized when a patient is expected to live 6 months or less.
Inelastic demand -
change in price causes only a small change (if any) in demand for product/service
Government programs: Public Health Services /Clinics
communicable disease control maternal and child health clinics chronic diseases general ambulatory care
Management board of trustees
composed of members of the community, determine the mission and goals of the hospital and to develop policies, has primary authority of hospital.
Management medical staff
composed of staff physicians and physicians with hospital privileges. Self governing body responsible for quality of medical services provided to patients.
Type of service specialty hospitals
concentrate on one disease process such as psychiatric or cancer.
Elastic demand
consumption of good/service sensitive to changes in price (eg, price increase leads to less consumption and decreases in revenue)
Complementary goods
consumption of one impacts consumption of the other (eg, eye exams and purchases of prescription glasses, NSAIDs and proton pump inhibitors [PPIs]) - inverse relationship between Price of Good A and demand (Quantity) for Good B (for example, Price of Good A, Demand for Good B ↓)
In the U.S., major depression is one of the leading causes of
disability and suicide was one of the leading preventable causes of death. Mental disorders ranked only second to cardiovascular disease in the magnitude of disease burden.
Private health care insurance -
covers both hospital and physician services; can be fee-for-service (FFS) or managed care (Examples of insurers: Prudential, Aetna, UnitedHealthcare, Blue Cross/Blue Shield) - in 2016, 2/3's of Americans have private health insurance i. Employer provided ii. Individual
multi-hospital systems
created through mergers, acquisitions, or other legal arrangements. Frequently national in scope with hospitals in one or more geographic areas of the country. Purchasing and managed care advantages.
Full and free information:
customers have complete information on the prices of goods and services and can compare the prices offered by competing sellers. Equally important, consumers can compare the quality of these goods and services.
nature of modern chronic diseases
example Alzheimer's Disease
Personal Health Care (PHC)
expenditures (largest component of HCE) - total amount spent to treat individuals with specific medical conditions (ex: hospital care, physician services, prescriptions, etc.)
other outpatient services
free standing diagnostic-imaging services, home IV services, home health care services
Mental illness is a significant
global health issue
Where are LTC services provided? Hospice care
goal of therapy is maintaining the quality of a patient's life rather than curing the patient's disease. Usually provided in patient's home.
Length of stay long-term care
greater than 30 days
Short history: Ambulatory care services
greatly expanded in recent years due to the rapid growth of managed care / greater emphasis on outpatient hospital care
Why the growth in home care? impact of managed care
has effectively limited the reason and length of hospitalization, has also fostered the expansion of home care.
Why the growth in home care? advances in technology
have made it more feasible to administer traditional inpatient therapies, such as parenteral medications, at home; developments in telecommunications to monitor patients from home
horizontal integration
hospitals began to form affiliations with one another to improve efficiency and to secure better opportunities for purchasing equipment
Organizational structure support services
housekeeping, dietary, laundry, purchasing, security
The demand curve and the supply curve
however can be impacted by other factors, in which case the curves would shift entirely (eg, shift to the right or left).
4. Disadvantages of DRG related prospective payment:
i. Assumes DRG classification schemes are clinically meaningful and "reasonably" homogenous with respect to resource consumption. Criticism of DRGs is that they include patients with dissimilar resource needs because they do not account for large differences in patient complexity or severity of illness. ii. Incentives to divert more complex patients to other hospitals. In long run, shedding of unprofitable DRG "products" and expanding the volumes of profitable services to ensure hospital financial viability. iii. Changes in hospitalization utilization patterns have caused sharp increase in post hospital use of services, including home health care, nursing home care and increased readmissions. iv. Cost-shifting- because government payments to hospitals are now being regulated, some argue that hospitals started charging more to private insurance companies or private paying patients in order to recover the lost money
3. Advantages of DRG related prospective payment:
i. Basis of payment is the case treated rather than the ancillary or routine inputs to hospital care. ii. Ability to control the per-case rate of increase for Medicare patients. iii. Changing hospitalization utilization patterns have saved money.
Unpredictability of Illness
i. Consumers are often unable to time their healthcare purchases, and are not typically in a negotiating position when they need the services. Health insurance is one way to pool risk of the unpredictability of illness.
Universal and inelastic demand
i. Healthcare products and services are used by nearly everyone instead of only part of the potential market (eg - the market for rollerblades). Demand for healthcare is universal and nearly insatiable. ii. Demand for many health care products and services is not sensitive to price (eg, emergency appendectomy)
Full and free information
i. Healthcare usually requires specialized knowledge. Patients may have incomplete knowledge or information about the prices and quality of healthcare services.
Entry to / exit from the Market
i. High barriers to entry exist for new pharmaceuticals into the market and for individual providers or institutions/suppliers of health care. These barriers effectively limit the number of new prescription therapies (patents, first mover market advantage [first brand to market], substantial upfront investment), and number of healthcare professionals who can be added to the labor force (eg, medical school acceptance, residency slots). ii. Exit barriers exist because healthcare resources are not easily transferred to producing other products and services (eg, closing a hospital).
Variation in Products, Services and quality
i. Instead of producing standardized products and services, health care is usually customized for individual patients. ii. Variation in products and services results in variation in outcomes.
Third-Party Insurance and Moral Hazard (can cause costs to increase)
i. Insurance induced demand. Health insurance creates a form of induced demand initiated by patients. By decreasing out of pocket expenses through cost sharing (coinsurance, copayments, maximum out of pocket), health insurance has encouraged patients to consume more healthcare services than they would if they had to bear the full cost of the service or product (assuming that demand for the product/service is NOT inelastic). Examples: 1. Prescription coverage under Medicare Part D potentially increases demand for prescriptions and intensity of use (over what it would have been without insurance). 2. Although, having insurance can potentially reduce demand for emergency departments - individuals may seek more preventive care and thus avoid conditions that result in need for ED visits ii. Moral hazard.
Using Market forces
i. Make patient aware and sensitive to healthcare costs (through benefit redesign). Ex. - Itemized receipts, patient cost sharing, tiered co-payments. ii. Provide feedback to healthcare providers about cost, quantity and quality of healthcare services variations through performance reports and academic detailing. (many physicians have no idea about patient costs for lab tests, medications, etc.) iii. Managed care organizations can design physician and hospital reimbursement to create incentives for reducing costs.
Health care as a "right"
i. Many people view health care as a prerequisite for individuals to be productive members of society and believe that allocation of scarce resources should not be determined by people's ability and willingness to pay (as is the case with most other goods and services in the US); they believe price should not be a determining factor in deciding who will get health care products and services.
Supplier Induced Demand (can cause costs to increase)
i. Physicians control both supply and demand of health care services. This potential conflict of interest is an inherent element of health care under fee-for service reimbursement and difficulty to prevent completely. Modified somewhat by managed care organizations. ii. Direct to Consumer Advertising (DTCA). Some evidence that patients seek brand name treatments because of exposure to DTCA. Others counter that DTCA causes individuals to recognize that they need treatment (because their symptoms match those discussed) and receive care earlier than they might otherwise.
Numbers of buyers and sellers
i. Poor distribution in the supply of healthcare services exists by geographic and specialty area (rural/urban, primary/specialist physicians). ii. Consolidation among buyers and sellers is occurring. This leads to buyers and sellers lowering costs and have more market power to negotiate favorable prices. Concern is that too much consolidation could reduce competition.
Many buyers and sellers:
if the number of buyers and sellers is large, the entry (or exit) of one firm/customer into (or out of) the marketplace does not affect market prices. Both buyers and sellers are price takers - prices are set by the market (where price = marginal cost).
No collusion
in perfect competition, companies in a given industry compete with each other rather than "getting together" or colluding to set prices. Collusion is illegal in the United States.
Short history: Ambulatory/Primary care providers
include physicians, midwives, nurse practitioners and physician assistants.
Serious mental illness (SMI)
is defined as a mental, behavioral, or emotional disorder resulting in serious functional impairment, which substantially interferes with or limits one or more major life activities. The burden of mental illnesses is particularly concentrated among those who experience disability due to SMI.
Any mental illness (AMI)
is defined as a mental, behavioral, or emotional disorder. AMI can vary in impact, ranging from no impairment to mild, moderate, and even severe impairment (e.g., individuals with serious mental illness as defined below).
Hospital Related Ambulatory Services: Interest of hospital managers in improving ambulatory services
is to expand their patient base for inpatient services
Monopolistic Competition
market structure closest to perfect competition. Major difference is that it does NOT have standardized and interchangeable products. Firms rely heavily on product differentiation. They minimize price completion by differentiating their products from competitors by promoting advantages in style, image, quality, etc. Local restaurants, movie theaters, auto dealerships and book stores are all examples of monopolistic competition. i. Low barriers to entry ii. Price makers iii. Profit maximizers - price charged is above marginal cost
Elasticity
measure of the responsiveness (sensitivity) of consumer demands to a change in price. Elastic demand Inelastic demand
adult day care
medically supervised health related services that are furnished in an ambulatory group care setting. Patients reside in their own home and travel to a central location for services. Allows family to continue daily activities.
Mental disorders account for
more than 15% of the burden of disease in industrialized countries and estimates 14% of global disease burden is due to mental disorders.
skilled nursing facilities (SNF's)
most medically and therapeutically intensive nursing facilities.
Hospital Related Ambulatory Services: Hospitals have sought to maintain their inpatient base by
moving their ambulatory base away from hospital, expansion of clinics into community improves access to care for underserved populations
3. salary
no financial risk for physician i. from employer's point of view, has the merit of administrative simplicity. ii. from provider's point of view, income is protected from sudden fluctuation in supply and demand and no bill collection problems
Ownership non-government owned
not-for-profit (nonprofit) for profit
Organizational structure direct patient care services
nursing, emergency/urgent care department, surgery
rehabilitative
occupational training, social skills training, re-education.
Monopsony
only one buyer and the buyer sets the price. Insurers often use monopsony power to buy physician services. Federal government is a monopsony for health care services for Medicare and Medicaid patients. Caveat: federal government is unable to fully exploit its market power and set prices as the only buyer because it is subject to political pressure and due process.
Ownership non-federal government
owned by city, county or state governments
Types of home care services: home infusion therapy
parenteral administration of drugs and solutions to patients in the home. Pharmacists play a crucial role in this type of home care service. examples: parenteral nutrition (TPN, PPN), enteral nutrition, anti-infectives, pain management, chemotherapy, biotech and other therapies
1. retrospective payment
payment rates to hospitals by third party payers and individuals that are set after services are provided.
People with mental disorders endure
social isolation, poor quality of life and increased mortality
Organizational structure ancillary services
pharmacy, laboratory, and diagnostic imaging
2. capitation
physician receives a capitated payment - an annual payment for each patient who uses that physician as a primary provider - whether the patient is seen or not. HMOs primarily use capitated and salary payments. The capitated payment is meant to cover certain forms of primary care, and some share of specialty care, ancillary services and hospital care. The physician has strong incentives to manage resources effectively. [narrow networks on exchange under ACA - exclusive provider organizations (EPOs)] - but a potential disadvantage is that physicians may not implement expensive procedures or drugs. Physicians tend to earn more under FFS.
prevention
prevention of disease and maintenance of good health are the focus of health promotion and preventive services. May occur at individual or population health level. Prominent in 2010 Affordable Care Act.
Mental health care encompasses three diverse activities:
preventive therapeutic rehabilitative
Brief background on private health insurance -
prior to 1980, all private insurance was provided either by insurance purchased by individuals directly (Blue Cross Blue Shield) or by employer provided health insurance (through commercial insurance companies). Employers or individuals were charged annual premiums and paid providers on a fee for service (FFS) basis. Starting in 1980, managed care and HMOs arrived on the scene providing services on a capitated basis. i.Managed care
Type of service general hospitals
provide a variety of services, general medical and surgical services
Safety-net providers -
provide care and services to uninsured and underinsured individuals - (examples in ABQ, NM: UNMH, First Choice ( a federally-qualified health center [FQHC]) [disproportionate % of young adults uninsured)
assisted living facilities/residential care communities
provide supportive, individualized and personal services in a residential setting. Goal is to encourage independence, privacy and dignity.
The settings for mental health services: Community or County Mental Health Centers
provides public mental health care services when a referral to a private doctor or therapist is not possible. Centers are operated by local governments to meet the needs of people whose mental health condition seriously impacts their daily functioning
vertical integration
provision of a continuum of services; created an unintended benefit - an integrated health care delivery system.
other institutional services
psychiatric hospitals, correctional facilities, specialized institutional care (for patients with cognitive deficits).
Joint Commission also accredits LTC facilities
psychiatric hospitals, hospices, managed care organizations, etc..
therapeutic-
psychotherapies, hypnosis, drug therapy,
Changes in prices charged by providers of goods/services drive changes in
quantities demanded (movement along demand curve).
Substitute goods
related products/services that are perceived as being fairly interchangeable (e.g., aspirin, acetaminophen, NSAIDs; vaccination at WalGreens vs doctor's office; brand name vs generic medications)
Management hospital administration
responsible for daily operation. Responsible for implementing policies developed by board of trustees. Pyramid like hospital management structure.
changing family structure
roles of women are changing
Utility
satisfaction obtained from purchasing a good or service
LTC formal
services include services such as home health, mental health and institutional services such as nursing facilities
acute care
short term, intense medical care providing diagnosis and treatment of diseases, illness or injury. Sometimes defined as being primary or specialty in nature, usually centered around the care delivered by physicians and other providers in clinical settings. Can be provided in an ambulatory or outpatient (not requiring and overnight stay) or an inpatient (requiring an overnight stay basis. Examples: emergency and urgent care, primary care, specialty care, chronic care, tertiary care (involves hospitalization), subacute inpatient care.
1. fee for service
simple system in which physician is paid for each type of service delivered, fees range depending on basis for fee; physicians usually paid by both insurer and individual (eg, copayments/coinsurance, differential for out-of-network providers) - physician has almost no financial risk for providing care (low financial risk for discounted FFS - cost of care may be more than reimbursed) and many incentives to provide unnecessary procedures: i. price set by physician ii. price based on usual and customary for physicians in local area iii. price set by Medicare - resource-based relative value scale (RBRVS) - payments based on resource costs needed to provide them; three components: physician work, practice expense, professional liability insurance; payments adjusted for geographical region iv. discounted fee-for-service - based on a pre-determined discount of the usual and customary for area (often case for Preferred provider organizations [PPOs])
teaching versus non teaching hospital
teaching hospital associated with a medical school. Not considered a teaching hospital unless it serves as a clinical training site for physicians
number of beds
the American hospital typically has fewer than 200 beds. Smaller hospitals have an approximate 50% average occupancy rate; larger hospitals have occupancy rates from 65 to 72%.
Short history: Prospective payment system (PPS) mechanism of the DRG's created incentives
to perform fewer procedures in hospitals. Hospitals adapted to DRG's by "unbundling" or separating out the services. Example: presurgical diagnostic procedures were performed on an outpatient basis instead of as a component of hospital stay
solo practice
traditionally has attracted the largest number of practitioners, due to managed care, the number of solo practitioners is rapidly decreasing.
Individual health insurance
up until ACA1 , could obtain from commercial companies, since ACA, individual coverage pretty much now only obtainable through Healthcare Exchange (Marketplace). iii. Note that people can have more than one type of insurance (employer+indiv)
Long-term care is
used to assist people who have limitations in performing activities of daily living (ADL) or instrumental activities of daily living (IADL).
not-for-profit (nonprofit)
uses excess revenues to reinvest in organization
for profit
uses it excess revenues in same way; however a portion of the excess revenues paid to organization's investors in the form of a dividend.
Marginal utility
value or benefit derived from an additional unit - used to determine monetary value of good or service
Ownership federal government
veterans, military personnel, Native Americans
Changes in prices consumers are
willing to pay drive changes in quantities that are supplied (movement along the supply curve).
Serious mental illness (SMI) numbers
• In 2017, there were an estimated 11.2 million adults aged 18 or older in the United States with SMI. This number represented 4.5% of all U.S. adults. • The prevalence of SMI was higher among women (5.7%) than men (3.3%). 2 • Young adults aged 18-25 years had the highest prevalence of SMI (7.5%) compared to adults aged 26-49 years (5.6%) and aged 50 and older (2.7%). • The prevalence of SMI was highest among the adults reporting two or more races (8.1%), followed by White adults (5.2%). The prevalence of SMI was lowest among Asian adults (2.4%).
Any mental illness (AMI) : numbers
•In 2017, there were an estimated 46.6 million adults aged 18 or older in the United States with AMI. This number represented 18.9% of all U.S. adults. •The prevalence of AMI was higher among women (22.3%) than men (15.1%). •Young adults aged 18-25 years had the highest prevalence of AMI (25.8%) compared to adults aged 26-49 years (22.2%) and aged 50 and older (13.8%). •The prevalence of AMI was highest among the adults reporting two or more races (28.6%), followed by White adults (20.4%). The prevalence of AMI was lowest among Asian adults (14.5%).