The U.S. Health Care Delivery “System”

Introduction

Our healthcare system in the United States is not really a system at all. Rather, it is a collection of several separate healthcare subsystems.  This tutorial will introduce the student to the factors that made our system so unique and it will describe four of the major healthcare subsystems (the middle class system, the poor and uninsured system, the military system, and the Veterans Administration system) that exist in our delivery of healthcare. 

Understanding Our Health Care “System”

1. The public has an inadequate understanding of our health care system and so too do healthcare practitioners because the healthcare system has become so specialized that people tend to only know the world from their own view of it.
2. Currently there is a lot of cynicism about our healthcare delivery system because of problems in cost, access, and quality.
3. It is important for all healthcare practitioners to understand our mosaic of systems because:

• It is important to understand differences before planning improvements to the nation’s health care delivery system.
• It is important to understand that all the systems are competing for the same scarce resources and that the biggest and strongest usually prevail, thus the middle class system, the military and the VA system have done considerably better than the poor, uninsured system.
• It is important to understand there is a lot of waste and duplication of services, that planning or controlled allocation might improve.
• It is important to understand there is great inequality in the system.
• It is important to know that most of our healthcare has been directed at the curative and restorative side of the disease continuum and very little focused on health promotion and disease prevention.

Stakeholders in the healthcare industry

1. Stakeholders are those individuals, agencies, or entities that have an interest in the industry, can influence the industry, or are impacted by the industry.  
2. Who are they?

• The public, such as patients. They want to know if healthcare is a right or a privilege.
• Employers.  They pay for a high proportion of the cost of healthcare since they frequently pay healthcare insurance premiums for their work force.
• Providers such as physicians, dentists, nurses, mid-level practitioners, pharmacists, chiropractors, podiatrists, allied health professionals who are actually delivering the services.
• Hospitals and other health care facilities that provide the settings and often the technology used in delivering services.
• Governments (local, state, and federal).  They serve as payers, regulators and as providers through public hospitals, health departments, Veteran’s Affairs, etc.
• Other stakeholders:

• Providers of Alternative Therapies - those not usually taught in medical and other health professional schools (rolfing, yoga, spiritual healing, relaxation, herbal remedies, energy healing).  These have become very popular (one in three uses some form of alternative therapy) and insurance companies are considering paying for them.
• Ambulatory Care personnel
• Long Term Care personnel
• Mental Health personnel
• Voluntary facilities and agencies - provide health counseling, care and follow-up, research support.
• Health professions education and training institutions - schools of public health, medicine, nursing, dentistry, pharmacy, optometry, allied health - they prepare generation after generation of health care providers inculcating their values, attitudes, and ethics that will govern their practices and behaviors.
• Professional Associations
• Insurance and Pharmaceutical Enterprises
• Managed Care Developers
• Rural health networks
• Research Communities

The History and Evolution of our Health Care System

1.  Predominant Health Problems in our early history

• 1850-1900 - epidemics of infectious disease (plague, smallpox, typhoid, cholera, influenza, malaria).  Many were caused or assisted by poor water, inadequate sewage, impure food, poor urban housing.
• Efforts were made to improve the environmental conditions.  This would aid populations of people, not just individuals.  It greatly reduced infectious disease.  Health departments were increasing in number and strength.  Had a tremendous affect in improving health status of our population.
• After 1900, epidemics had subsided, and concern was on acute illnesses contracted by individuals, such as pneumonia and tuberculosis - individual treatment needed.  Now attention was on improving medical interventions and treatments.  New tests were developed for diagnoses, new treatments for disease conditions. 
• 1941 - discovery of penicillin and antibiotics - greatly relieved individual acute illnesses.
• Concern was now on chronic illness (heart disease, cancer, stroke).  Many of these chronic diseases are related to genetic makeup, personal lifestyles, and environmental hazards.  Not much can be done about family history, but certainly lifestyle practices (diet, exercise, smoking, drinking, managing stress, obesity) and the hazards we subject ourselves to (toxins, seat belts, guns) can be targeted and controlled. 

2.  Available Technology

• 1850 – 1900 --poorly trained physicians, little technology

• Physicians obtained skills trough apprenticeships with physicians in practice for about three months to a year. No formal training in US.
• Physician medicines and instruments contained in black bags.
• Few hospitals existed; those that did exist were places of shelter for the sick poor.  Most people stayed at home; hospitals had little to offer.
• Nursing care was provided by members of religious groups.

• 1900 – 1940 The Scientific Era developed. 

• Importance of vitamins noted.
• Abraham Flexner studied medical education for the Carnegie Foundation.  His report was so blistering on the quality of our medical schools that 40% were subsequently closed. Schools improved after this.
• New technologies came into being which were concentrated in hospitals. 
• Physicians began to specialize, although in 1940, more than 80% were in general practice.

3. 1940-1980 - Advent of World War II and the country wanted to be able to provide effective care for its military personnel.  Federal government began taking an interest.

• Antibiotics discovered.
• New surgical techniques were developed.
• Hospitals no longer primarily involved in caring, but in curing.  Also became research laboratories - new procedures, new equipment, and new techniques.
• All these developments required people specially trained to use equipment, do procedures - increase in specialization.  Not limited to physicians, but also to nursing and allied health practitioners.  As a result, professional associations arose, each looking to protect and advance their members.
• As technology grew, more emphasis on the equipment and less on the person, the patient.  Concern also about unequal access to technology for patients based on ability to pay (insurance or not).
• One of this country’s core values is rugged individualism.   Our predominant belief is that each person, each family should be able to take care of its own. 
• President Franklin Roosevelt and the New Deal program launched a wide array of social programs all aimed at assisting people during the Great Depression.  Prior to this, no national programs existed.

• In healthcare, we had some assistance to states with grants for help with infectious disease control and maternal and child health.
• With World War II, we created military health services.
• Health insurance industry began.  There was a freeze of wages and salaries during the war so no collective bargaining for increases could occur.  But health insurance companies arose bringing in the “third party payer” or fiscal intermediary.   The aim was to pool money to protect people from financial disaster from a sudden onset of medical problems.

• Blue Cross, Blue Shield insured against hospital and medical costs. 
• With the Blues’ success, commercial insurance began offering health insurance to employers as part of their compensation package along with retirement and disability plans.  The percentage of Americans insured prior to WWII was less than 20%.  By 1960, it was greater than 70%.

• The creation of Medicare to insure elderly was monumental in its significance:

• It was the first time the American society acknowledged that healthcare should be assured for at least some citizens, and that it is a societal responsibility, not just an individual responsibility.
• It was the first time it was assumed that the federal government should take responsibility for planning, financing, and monitoring health care services.

• Development of Neighborhood Health Centers, a program of the US Office of Economic Opportunity  were created to help fight the War on Poverty.  This was an attempt to help the underserved.

• 1970’s and 1980’s - increases in Medicare and advances in technology increased health expenditures.  Hospitals had been reimbursed on their costs of service.  This served as an incentive to provide more services, resulting in more reimbursement.  Insurance costs spiraled, and employers who were paying higher insurance premiums as a result began to complain loudly.  This resulted in the government’s cost containment efforts.
• 1983 brought about the Prospective Payment System (PPS) in which hospital reimbursements for Medicare patients were predetermined based on the patient’s Diagnostic Related Group (DRG).  The intent was to incentivize hospitals to contain costs.  It has had limited effect, however, because hospitals have traditionally had little control over the practice patterns of their medical staff. 

Our healthcare system: A mosaic of systems

1. Our system is not one system, but a multiplicity of systems -- lots of subsystems that are not well coordinated or integrated.  The reason is not hard to understand when we reflect on our history.  We believed in rugged individualism, and therefore most people cared for themselves and their families in the 1800’s.   When they needed to, they used private physicians.
2. In early 1900’s, city and county hospitals were created for the poor - established by local governments or non-profit charity hospitals.  These public facilities were large, acute care general hospitals with busy emergency rooms.  Had close connections to police, ambulance services.
3. State governments began developing mental institutions to warehouse the mentally unfit.  Prior to this, cities had been responsible for care of the insane.  
4. Military healthcare - occurred during World War II. The government felt an obligation to care for its servicemen.
5. As healthcare costs increased, Blue Cross, commercial insurance, and the federal government began assisting with health payments for citizens. 
6. We have a very diverse system of care.  It offers a number of subsystems and there are numerous opportunities for improving our system.  Our system is uncoordinated, overlapping, unplanned, and wasteful

The Major Healthcare Sub-systems in our US Health Care “System”:

1.  Employed, insured, middle-income use private practice, fee-for-service (although changing).

• This is said to be the best medical care in the world.
• But no formal system - instead each family puts together an informal set of services and facilities to meet its needs.  Very confusing.
• Coordination occurs through physicians in private practice.
• System is financed through personal, non-government funds, either one’s own money or one’s insurance
• Preventive health services included both public (such as water purification, sewage disposal, air pollution control and well-baby check-ups, PAP smears, and immunizations  through private physicians). 
• Ambulatory care services provided by private physicians.
• Hospital services paid by insurance.  Usually a community, non-profit hospital.
• Long-term care provided at home by a visiting nurse, sometimes in a nursing home.
• Emotional problems cared for by variety of private providers.  First private physician, then perhaps private psychiatrist or psychologist.  Then perhaps community mental health center, perhaps hospitalization. 
• Patient has a lot of opportunity to make decisions - can choose the physician, health insurance plan, hospital.  But very poorly coordinated.
• Medicare benefits people in all income levels if they are eligible to receive it.  Main difference is that bills are paid by federal government.

2.  Unemployed, Uninsured, Inner City, Minority America (Local Government Health care)

• People not regularly employed and without continuous health insurance.  Often minority population living in inner city.
• This is the worst sub-system we offer.
• No formal system and each family must put together an informal set of services from whatever possible.  The poor have to take what is available since there are no resources, thus they have very limited access to services.
• Most of the services they use are provided by the city or county hospital and the local health department.
• No continuity with a single provider, next episode of illness is seen by someone else.
• The poor get their mass preventive health services AND their individual preventive health services from the local health dept.
• Ambulatory care comes from neighbors, local pharmacist, health dept., emergency room, outpatient clinics of city or county hospitals.
• Hospital care is from city or county hospital - often teaching hospitals where there are free or lower priced wards.
• Long-tern care - usually in poor, ill-equipped facilities.  Care may be paid for by Medicaid or some other public funds.
• Mental health - local government system
• Services used to be free, but now facilities are attempting to get reimbursement.  Often get Medicaid.  Medicaid is for the very poor. Many poor people are not poor enough to qualify for Medicaid.
• A subset is Medicare, which puts everyone on equal footing, except that deductibles still must be met, and the poor have trouble affording the deductibles.

3.  Military Medical Care System

• Well-organized system of quality care provided at no cost to recipient
• System goes wherever military personnel go.
• Little or no choice in specific physician
• Emphasis on prevention and wellness - regular physical exams and testing and education
• Ambulatory care provided in base dispensaries, sick bays on ships.
• Inpatient stays may be in small hospitals or referred out to larger facilities.
• Long-term care provided in VA hospital -
• Psychiatric problems may be referred to larger military hospitals. 
• System uses trained, but non-physician and non-nursing, personnel whenever possible.  Services are provided by salaried employees in facilities owned and operated by the system.
• Dependents of military personnel are provided care through an extensive health insurance plan - Civilian Health and Medical Program of the Uniformed Services (CHAMPUS)

4.  Veteran’s Administration Health care System

• System for retired, disabled or otherwise deserving veterans of previous military service
• Not as complete or well integrated as military health system.  Focuses primarily on hospital care, mental health services, and long term care.
• Patients are primarily older males with multiple and chronic physical and emotional problems
• Services are provided by salaried full-time medical and nursing personnel
• Largest single provider of long term care in the country.
• Eligibility for entrance into the system is sometimes unclear and open to interpretation.
• Other sub-systems exist such as the Indian Health Services

In recent years, there has been much attention to health care reform - several approaches:

1. Laissez faire - let everything alone and the market forces will eventually play out and force the health care system to reorganize.
2. Another approach is for the government to assume control and create a single system, much as in Great Britain or Canada or the other industrialized countries in the world.
3. Health planning approach - comprehensive health planning
4. Withhold financial reimbursement to providers who do not comply with efforts to improve the system.
5. Public utility approach - all components of the system would be placed under regulatory supervision of public bodies that would have control over licensing, financing, mode of function, packaging of services, personnel development.
6. Incremental tinkering of the present system.  This is the approach we most often use.