Essentials in Healthcare

Hospital Evolution

1. Almshouses as primarily institutions of social welfare 2. Community owned private hospitals as charitable institutions supported by affluent donors 3. Institutions of medical practice and training serving the needs of all members of society, and able to make a profit 4. Emergence of a relatively small number of physician owned proprietary hospitals 5. University based centers of medical research 6. Emergence of medical systems providing a large array of health services

General Hospitals

A general hospital provides diagnostic, treatment, and surgical services for patients with a variety of acute medical conditions. Its services may include general and specialized medicine, general and specialized surgery, and obstetrics. Most hospitals in the United States are general hospitals, but they are not all community hospitals because most federal hospitals are general hospitals, too.

Self-Insurance

A large employer often has a workforce that is big enough and suf-ficiently well diversified in terms of risk to warrant offering its own insur-ance. Rather than pay insurers a dividend to bear the risk, large employers can simply assume the risk by budgeting funds to pay medical claims incurred by their employees. This practice, which is referred to as self- in-surance, gives employers better control over the health plan. Self- insured employers can protect themselves against any potential risk of high losses by purchasing reinsurance from a private insurance company.

Rural Health Care challenges

A rural hospital is one that is located in a county that is not part of a metropolitan statistical area (MSA). The U. S. Bureau of the Census has defined an MSA as a geographical area that includes at least (1) one city with a pop-ulation of 50,000 or more or (2) an urbanized area of at least 50,000 inhabitants and a total MSA population of at least 100,000. Compared with other hospitals, rural hospitals generally treat a larger percentage of poor and elderly patients. Remote geographic location, small size, and limited work-force along with physician shortages and inadequate financial resources pose a unique set of challenges for rural hospitals. To save some of the very small rural hospitals from having to close, the Balanced Budget Act of 1997 allowed certain rural hospitals to operate as critical access hospitals (CAHs). According to Medicare rules, a CAH should have no more than 25 beds and must provide 24-hour emergency medical services. An additional 10 beds may be operated for psychiatric and/ or rehabilitation services. CAHs are reimbursed according to the retrospective cost-plus method, instead of the PPS method.

Health concerns faced by women

Although women in the United States now enjoy a life expectancy almost eight years longer than that of men, they suffer greater morbidity and poorer health outcomes than their male counterparts. Women also have a higher prevalence of certain health problems than men over the course of their lifetimes. Compared with men of comparable age, women develop more acute and chronic illnesses, result-ing in a greater number of short- and long- term disabilities. For example, heart disease and stroke account for a higher percentage of deaths among women than among men at all stages of life. For example, 49% of women who have heart attacks die within one year, compared to 31% of men who suffer this fate. Similarly, women have higher cholesterol level than men at all ages. Finally, women represent the fastest- growing population diagnosed with AIDS. The differences between men and women are equally pronounced regarding mental illness. For example, anxiety disorders and major depression affect twice as many women as men. Approximately 90% of all cases occur in young women, and eating disorders—which affect mostly women—account for the highest mortality rates among all mental disorders.

Capitation

Capitation is another mechanism used by HMOs. Under this reimburse-ment scheme, a provider is paid a set monthly fee per enrollee ( sometimes referred to as per member per month [ PMPM] rate), regardless of whether an enrollee sees the provider or not, and regardless of how often an enrollee sees the provider. Capitation removes the incentive for provider- induced demand. It makes providers prudent and encourages them to provide only necessary services.

Gatekeeping

Commonly used by HMOs, gatekeeping is an arrangement that requires a primary care physician to coordinate all health care services needed by an enrollee. The physicians have contracts with the HMO as in-network providers. Gatekeeping also emphasizes preventive care, routine physi-cal examinations, and other primary care services that are delivered by the primary care gatekeeper. Secondary care services, such as diagnostic test-ing, consultation from specialists, and admission to a hospital, are provided only on referral from the gatekeeper. In this way, the gatekeeper controls access to costly medical services.

Concurrent methods

Concurrent utilization review occurs when decisions regarding appropriateness are made during the course of health care utilization. The most common examples of this type of review involve monitoring the length of inpatient stays. When a patient is hospitalized, a certain number of inpatient days are generally preapproved. A trained nurse then monitors the patient's status and reviews the case with a physician if a longer stay is necessary. A decision is made to authorize or deny additional days. Discharge planning is an important component of concurrent utilization review. A patient's prognosis for recovery, expected outcomes, and anticipated day of discharge are critical elements of concurrent review. Discharge planning deals with the patient's ongoing care and evaluates any special requirements that are necessary after discharge. For example, if a patient is admitted with a fractured hip, it is important to decide whether home health care or a skilled nursing facility would be more appropriate for convalescent care. If the patient requires care in a skilled nursing facil-ity, then discharge planning must find out whether the appropriate level of rehabilitation services would be available and for how long insurance will pay for rehabilitation therapy in a long term care setting.

Days of Care

Days of care = discharges × ALOS The average number of days a patient spends in the hospital is called the average length of stay ( ALOS). The total number of inpatient days incurred by a population over a given period of time is referred to as days of care.

DRG

Diagnosis- Related Groups The DRG method is used to pay for hospital inpatient services. Medicare has established approximately 500 DRGs corresponding to the most prevalent diagnoses among patients using inpatient services.

End of Life Care

End- of- life care is commonly associated with hospice, a cluster of com-prehensive services for terminally ill persons who have a life expectancy of six months or less. Hospice is a method of care, not a location, although some freestanding hospice facilities have been established. Hospice can be a part of home health care when the services are provided in the patient's home. In other instances, hospice services are taken to patients in nursing homes, retirement centers, or hospitals.

Nursing homes and licensure

Every state requires nursing homes to be licensed by the state. Annual renewal of a license is required for existing nursing homes. To keep their licenses in good standing, it is essential that facilities comply with the state's standards for nursing homes. These standards vary from state to state, except for national fire safety regulations. The Life Safety Code, published by the National Fire Protection Association, encompasses national building and fire safety rules that have become a part of licensure standards. In addition, each state has crafted basic standards for nursing care and other services. Compliance with standards is verified through periodic inspections, generally once a year. A state's department (board or division) of health or department of human services generally has nursing home licensing and oversight responsibilities.

Financing

Financing refers to any mechanism that gives people the ability to pay for health care services. For most people, financing is necessary to access health care. Some uncompensated or charity care, mainly provided through free clinics, community health centers, and hospital emergency depart-ments, is delivered to those who have little or no means to finance their health care. Such services, however, are not available in all geographic locations.

Risk Associations

Four fundamental principles underlie the concept of insurance • Risk is unpredictable for the individual insured. • Risk can be predicted with a reasonable degree of accuracy for a group or a population. • Insurance provides a mechanism for transferring or shifting risk from the individual to the group through the pooling of resources. • Actual losses are shared on some equitable basis by all members of the insured group.

Institutionalization

Generally, institutional LTC is more appropriate for patients whose needs cannot be adequately met in a less clinical, community based setting. However, a variety of institutional options are available to meet the varying needs of the elderly who no longer can live alone safely. Available options today include retirement centers, residential or personal care facili-ties, assisted living facilities, and nursing homes. These facilities provide varying levels of assistance. An evaluation of the extent of functional impairment often deter-mines which services are best suited to the individual, but personal prefer-ences, and often the availability of financing, also play a significant role. Most people prefer to receive care in their own home, and when institutionalization becomes necessary, they prefer a home-like, nonclinical setting. Nevertheless, medical needs must often override personal preferences, especially when severe physical or mental problems develop. Figure 10.2 illustrates, on a continuum, six types of elder care institutions that can be classified under three general categories: retirement homes, personal care homes, and nursing homes. Continuing- care retirement communities ( CCRCs) offer all three options within one campus- like setting. Based on the concept of aging-in-place, CCRCs can address people's changing needs.

HMO

HMOs were the first type of managed care plans to appear on the market. An HMO is distinguished from other types of plans by its focus on wellness care. Such an organization not only provides medical care during illness but also offers a variety of services to help people maintain their health—hence the name " health maintenance" organization. HMOs place considerable emphasis on preventive and screening services through routine checkups and tests. Prevention of disease and early detection and treatment save health care costs in the long run when the course of a disease is checked before it turns into a more complex case. As an incentive to the enrollees to seek wellness care, HMO plans typically do not have annual deductibles, and they also have lower copayments than do other types of plans. Initially, HMOs used only capitation to reimburse providers, but pro-viders disliked the risk- sharing feature of capitation. HMOs, therefore, had to compromise by raising PMPM rates and, in many instances, switching to fee- for- service reimbursement. In 2010, fee for service was used by 60% of HMO plans.

Primary care benefits

In defining primary care, the focus is often on the type or level of services, such as prevention, diagnostic and therapeutic services, health education and counseling, and minor surgery. Although primary care specifically emphasizes these services, many specialists also provide the same spectrum of services; therefore, primary care should be viewed as an approach to providing health care rather than as a set of specific services. The World Health Organization (WHO) and the Institute of Medicine (IOM) offer useful definitions of primary care that differenti-ate primary health care from primary care. Primary health care focuses on its function as the point of entry into the health service system and its coor-dination of the delivery of health services, whereas primary care is more involved in the integration of health care services and the accountability of clinicians and patients to the health care system.

Home Health Care

In home health care, services are brought to patients in their own homes. Without home services, the only alternative for such patients would be institutionalization in a hospital or nursing home. Home health care is consistent with the philosophy of maintaining people in the least restrictive environment possible. Most people express a strong preference for receiving health services at home. Home health services typically include nursing care, such as changing dressings, monitoring medications, and help with bathing; short- term rehabilitation, such as physical therapy, occupational therapy, and speech therapy; homemaker services, such as meal prepara-tion, shopping, transportation, and some specific household chores; and certain medical supplies and equipment, such as ostomy supplies, hospital beds, oxygen tanks, and walkers and wheelchairs (the latter are referred to as durable medical equipment).

Cost-Sharing

Insurance requires some type of cost sharing so that the insured assumes at least part of the risk. The purpose of cost sharing is to reduce the misuse of insurance benefits. Three main types of cost sharing are utilized in pri-vate health insurance: premium cost sharing, deductibles, and copayments.

Long Term Care

Long-term care ( LTC) has typically been associated with care provided in nursing homes, but a number of alternative settings are also now avail-able to address a variety of needs. Two types of ambulatory LTC services are case management and adult day care. Case management provides coor-dination and referral among a variety of health care services; the objective is to find the most appropriate setting in which to meet a patient's health care needs. Adult day care complements informal care provided at home by family members, with professional services available in adult day care centers during the day.

Mental Disorders

Mental disorders are common psychiatric illnesses affecting both adults and children, and they represent a serious public health problem in the United States. National studies have concluded that the most common mental disorders include phobias, substance abuse ( including alcohol and drug dependence), and affective disorders ( including depression). Schizophrenia is considerably less common, affecting approximately 1.1% of the population.

PPO

PPO plans were created by insurance companies in response to the growth of HMOs. PPOs differentiated themselves by offering out- of- net-work options for enrollees. By early 1990s, PPOs became more popular and their market share began to exceed that of HMOs. PPO enrollees can either choose in- network preferred providers with whom the PPO has established contracts, or use physicians and hospitals outside the network. Higher copayments apply for using nonpreferred pro-viders. The additional out-of-pocket expenses largely act as a deterrent to going outside the network for care. PPOs make discounted fee arrangements with providers. The discounts typically range between 25% and 35% off the providers' regular fees. Negotiated payment arrangements with hospitals can take a variety of forms, such as payments based on diagnosis- related groups, bundled charges for certain services, and discounts. Hence, no direct risk sharing with providers is involved. PPOs also apply fewer restrictions to the care-seeking behavior of enrollees. In most instances, they do not use gatekeeping, which allows enrollees to see specialists without being referred by a primary care physician. Precertification ( prospective utilization review) is generally employed only for hospitalization and high-cost outpatient procedures.

POS

Point-of-service ( POS) plans combine features of classic HMOs with some of the characteristics of patient choice found in PPOs. Through this combination, POS plans overcome the drawback of restricted provider choice but retain the benefits of tight utilization management. Many POS plans are actually offered by HMOs to offer members an optional plan that allows utilization of out- of- network providers. From the consumer's per-spective, free choice of providers was a major selling point for POS plans, but after reaching a peak in popularity in 1998-1999, enrollment in POS plans gradually declined mainly because of the high out- of- pocket costs associated with them.

Retrospective

Retrospective utilization review determines the appropriateness of utili-zation after services have already been delivered. Such review is based on an examination of medical records to assess the appropriateness of care. It may involve an assessment of individual cases. Large claims may be reviewed for billing accuracy. Retrospective review may also involve an analysis of data to examine patterns of excessive utilization or underutilization. Underutilization occurs when medically necessary care is not delivered. Overutilization occurs when medical services that are not necessary are delivered.

Specialty Hospitals

Specialty hospitals admit only certain types of patients or those with specified illnesses or conditions. Specialty hospitals have traditionally included tuberculosis, psychiatric, rehabilitation, and children's hospitals. With increasing competition, other types of specialty hospitals have emerged to provide treatments that are also available in many general hospitals. Examples include hospitals specializing in orthopedic surgery and cardiology. Specialty hospitals forge a distinct service niche in a given market. These hospitals are also considered community hospitals as long as they meet the criteria discussed in that section.

Tertiary Care

Tertiary care is the most complex level of care and is required for conditions that are relatively uncom-mon. Typically, tertiary care is institution based, highly specialized, and tech-nology driven. Much of it is rendered in large teaching hospitals, especially university hospitals. Examples include trauma care, burn treatment, neonatal intensive care, tissue transplants, and open- heart surgery. In some instances, tertiary treatment may be long term in nature, and the tertiary care physician may assume long- term responsibility for the bulk of the patient's care.

Hill-Burton Act

The Hospital Survey and Construction Act of 1946, commonly known as the Hill- Burton Act. It provided federal grants to the states for the construction of new hospital beds. The objective of the Hill-Burton Act was to increase the United States' hospital capacity to 4.5 beds per 1,000 population.

Activities of daily living

The classic ADL scale includes six basic activities: • Eating • Bathing • Dressing • Using a toilet • Maintaining bowel and bladder control • Transferring, such as getting out of bed and moving into a chair Sometimes grooming and walking a distance of 8 feet are also included in the scale.

Almshouse

The forerunner of today's hospitals and nursing homes in the United States was the almshouse ( also called a poorhouse). Almshouses existed in almost all cities of moderate size and were run by the local government. In many ways, the almshouse was an infirmary, old- age facility, mental asylum, homeless shelter, and orphanage all rolled into one institution.

Defensive Medicine

The risk of malpractice lawsuits is a seri-ous consideration in the practice of medicine. As a form of protection, most providers engage in what is known as defensive medicine by prescribing additional diagnostic tests, scheduling checkup appointments, and main-taining abundant documentation on cases. Many of these efforts may be unnecessary, and simply drive up costs and promote inefficiency.

Outpatient Services

The term outpatient services refers to any health care services that do not require an overnight stay in an institution of health care delivery. Some outpatient services may be offered by a hospital or long- term care facility. For instance, in addition to EDs, many hospitals have other outpatient service centers such as outpatient surgery, rehabilitation, and specialized clinics.

HIPAA

To alleviate concerns about the confidentiality of patient information, the Health Insurance Portability and Accountability Act ( HIPAA) of 1996 restricted the legal use of personal medical information for three main purposes: health care delivery to the patient, operation of the health care organization, and reimbursement. The HIPAA legislation mandated strict controls on the transfer of personally identifiable health data between two entities, provisions for disclosure of protected information, and criminal penalties for violation ( Clayton, 2001). It also established certain patient rights, such as the right of patients to inspect and have copies of their protected health information, to request corrections to the records, and to restrict the use of the information.

PCP

U. S. states with higher ratios of primary care physicians to the total population have lower smoking rates, less obesity, and higher seatbelt use than states with lower primary care physician- to- population ratios. Continuity of care with a single provider was also positively associated with primary preventive care, including smok-ing cessation and influenza immunization, in a large, ongoing 60-community study in the United States. Studies have shown that an increase of one primary care physician per 10,000 population is linked to a reduction of 1.44 deaths per 10,000 population, a 2.5% reduction in infant mortality, and a 3.2% reduction in low-birth-weight infants on average. Similarly, population subgroups with a good primary care source have better birth-weight distributions than comparable populations without good primary care. In 2000, it was shown that among white and black popula-tions in both urban and rural areas of the United States, birth weights were higher when the source of care was a community health center designed to provide good primary care than they were in the comparable population as a whole. The likelihood that disadvantaged children will have preventive care visits is much greater when their source of care is a good primary care practitioner. Early detection of breast cancer is also enhanced when the supply of primary care physicians ( at least relative to specialists) is adequate, while a one- third increase in the supply of family physicians correlates to a 20% decrease in the mortality rates of cervical cancer in a population . Additionally, studies have suggested that as many as 127,617 deaths per year in the United States might be prevented with an increase of one primary care physician per 10,000 population

Prospective

Under this method, the medical necessity for certain treatments is determined before the care is actually delivered. An example of prospective utilization review is the decision by a primary care gatekeeper to refer or not refer a patient to a specialist. However, not all managed care plans use gatekeepers. Some plans require the enrollee or the provider to call the plan administrators for precertification— that is, approval before certain services are provided. Most plans use established clinical guidelines to determine the appropriateness of services. Preauthorization of hospital admissions and second opinions for surgical procedures are examples of precertification. In case of an emergency admission to an inpatient facility, plans generally require notification within 24 hours. One of the main objectives of prospective review is to prevent unnecessary or inappropriate institutionalization or other courses of treatment such as surgery.

Growth contributions of hospitals form 1930's to 1980's

• Broad appeal, once hospitals evolved into institutions of medical practice as a result of technological advances and professional training of health care professionals • Private health insurance • Hill-Burton Act • Medicaid and Medicare After 1930, the wider availability of private health insurance enabled more and more people to pay for hospital services, which became increasingly more costly and unaffordable. In the 1940s, the U. S. government recognized that a severe shortage of hospitals existed in the country. In response, Congress passed the Hospital Survey and Construction Act of 1946, commonly known as the Hill-Burton Act. It provided federal grants to the states for the construction of new hospital beds. The creation of Medicaid and Medicare in 1965 made public health insurance available to a large segment of the U. S. population. Between 1965 and 1980, the number of com-munity hospitals in the United States increased.

Medicaid requirements of states

• Inpatient hospital services • Hospital outpatient services • Physician services • Federally qualified health center services • Rural health clinic services • Outpatient laboratory and x-ray services • Nursing facility services for beneficiaries age 21 and older • Home health services for those eligible for nursing facility services, including medical supplies and equipment • Certified pediatric and family nurse practitioner services (when licensed to practice under state law) • Nurse- midwife services • Medical and surgical services of a dentist • Preventive, diagnosis, and treatment services (including vaccinations) for children • Family planning services and supplies • Pregnancy-related services, including postpartum care for 60 days

Vulnerability

• Predisposing characteristics • Racial/ ethnic characteristics • Gender and age (women and children) • Geographic location (rural health) • Enabling characteristics • Insurance status (uninsured) • Homelessness