The Health Care Industry: A Primer for Board Members / Edition 1 available in Hardcover
The Health Care Industry: A Primer for Board Members / Edition 1
- ISBN-10:
- 0787967211
- ISBN-13:
- 9780787967215
- Pub. Date:
- 11/05/2003
- Publisher:
- Wiley
The Health Care Industry: A Primer for Board Members / Edition 1
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Overview
- Explains board responsibilities
- Describes organizations that provide health services such as ambulatory care facilities, physician practices, hospitals, nursing homes, home health agencies, health systems and public health agencies
- Clarifies how money moves through the system: insurance, health plans, Medicare, Medicaid and HMOs.
- Describes the characteristics and training of health professionals including physicians, nurses, dentists, pharmacists, chiropractors, and physicians assistants
- Provides a glossary of health care terms, concepts, and acronyms
Product Details
| ISBN-13: | 9780787967215 |
|---|---|
| Publisher: | Wiley |
| Publication date: | 11/05/2003 |
| Pages: | 160 |
| Product dimensions: | 6.25(w) x 9.32(h) x 0.70(d) |
About the Author
Stephen J. Williams is a consultant to numerous health care organizations, associations, and governmental agencies. Dr. Williams is Professor of Public Health and Head of the Division of Health Services Administration in the Graduate School of Public Health at San Diego State University.
Read an Excerpt
The Health Care Industry
A Primer for Board Members
By Dennis D. Pointer Stephen J. Williams
John Wiley & Sons
Copyright © 2003
Dennis D. Pointer
All right reserved.
ISBN: 0-7879-6721-1
Chapter One
Foundations
Health care is one of our economy's largest industries; it contributes
significantly to the nation's competitiveness and productivity in addition
to enhancing citizens' well-being and quality of life.
AT A GLANCE
The industry is a complex mix of government; nonprofit and commercial
organizations; and individual efforts to finance, provide, and regulate health
care services. Major industry sectors include:
Financing sector Organizations that reimburse health care providers,
such as the Centers for Medicare and Medicaid Services (a federal agency),
state workers' compensation programs, health insurance companies, and
health maintenance organizations
Institutional providers Organizations that provide personal health care
services, such as physician offices, medical groups, hospitals, mental health
facilities, nursing homes, and home health agencies
Individual providers Professionals who offer personal health care services,
such as physicians, dentists, chiropractors, nurses, pharmacists, and
psychologists
Public healthagencies Government agencies that promote health and
prevent disease in populations, such as the Centers for Disease Control and
Prevention and state/local health departments
Enablers Organizations that support and facilitate the provision of
health services, such as trade and professional associations (for example,
the American Hospital Association and American Medical Association),
special interest groups (American Heart Association), research organizations
(National Institutes of Health), and educational institutions (medical
and nursing schools)
Suppliers Organizations that provide products and services, such as
pharmaceutical manufacturers, hospital supply and equipment companies,
and consulting firms
Regulators Government agencies and private organizations that regulate
health care institutions and professionals, such as medical specialty
societies, state licensing boards, state insurance departments, and the Joint
Commission on Accreditation of Healthcare Organizations
This classification is not precise; definitions of who belongs where are often
fuzzy and membership in the various sectors can overlap.
Table 1.1 is an overview of the U.S. health care industry's magnitude and
scope.
SOME HISTORY
The country's first hospital opened its doors in 1756. Over the past 250
years, hospitals have undergone many profound changes; the key stages are
summarized in Table 1.2. Each stage entailed its own challenges, and the
group best equipped to deal with them exercised the greatest power.
Refuge Stage
This stage spans approximately 170 years, from the mid-1700s to the late
1920s.
Pennsylvania Hospital, the nation's first, opened in 1756; New York Hospital,
the second, was founded in 1776. It was not until the mid-1850s that
there were more than a handful of organizations devoted to providing inpatient
health care. A survey conducted in 1873 identified only 178 hospitals.
Medical knowledge was primitive and physicians could do little of
value; treatments were primarily supportive and many were detrimental.
Those patients able to pay received care in their homes, because hospitals
were very dangerous places because of infections.
This was a period of institution building. Hospitals were new types of
organizations with missions different from that of almshouses (warehouses
for the poor, aged, and infirm), from which they evolved. Their survival depended
on gaining community acceptance and raising funds. Nearly all hospitals
were charitable organizations, and the money needed to create and
operate them was donated.
Hospital boards, composed of a community's social and financial elite,
were the only groups capable of performing these critical tasks. Consequently,
they possessed power and exercised influence hard to imagine
today.
By 1909, there were forty-three hundred hospitals; in 1923, there were
more than seven thousand. This growth, plus dramatic advances in biomedical
science, precipitated the next stage and significantly altered the
locus of power in hospitals.
Physician Workshop Stage
This stage began in the early 1930s and concluded in the 1960s.With the
task of institution building complete, hospitals sought to improve their clinical
efficacy. Physicians acquired power by controlling the knowledge, skills,
and technologies that transformed hospitals from offering supportive care
to producing cures.
Basic biomedical knowledge, accumulating throughout the middle and
late 1800s, reached critical mass in the first decades of the twentieth century.
Hospitals were revolutionized in three ways. First, because infections
could be partially controlled, hospitals became much safer places. Second,
treatments were developed that could alter the course of disease. Third,
thanks to the development of anesthesia, surgery could be safely and effectively
performed. The late John Knowles, M.D., former CEO of Massachusetts
General Hospital, observed, "It was not until about 1915 that the
average patient with a common disease entering the average hospital, being
treated by the typical physician had a better than 50/50 chance of benefiting
from the experience."
Those able to pay began seeking care in hospitals. Physicians controlled
the knowledge base and flow of patients on which hospitals relied. Accordingly,
hospital success became far more dependent on physicians than on
trustees. Boards and administrators established the setting and resources
employed by physicians; hospitals became doctors' workshops.
Because all but the simplest cases were treated by them, hospitals became
the epicenter of America's health care system.
Business Stage
This stage ran from the mid-1960s through the 1980s. To provide physicians
what they required to practice, hospitals had to become more business-oriented.
As a consequence, far better managerial talent and systems were
needed.
Exponentially expanding medical knowledge and skills increased the
hospital's size, scope, and complexity. As medical practice became more specialized,
the amount and sophistication of facilities, equipment, and support
personnel increased dramatically. Additionally, the growth of private
health insurance, combined with enactment of Medicare and Medicaid in
the mid-1960s, infused huge amounts of money into the industry and increased
the regulations with which hospitals had to comply.
The most important challenges facing hospitals were managing growth
and improving operational effectiveness and efficiency. Professional health
care managers acquired power and influence in the process; they moved from
being servants of the board (in the refuge stage) and lieutenants of the medical
staff (in the physician workshop stage) to full-fledged executives responsible
for directing the affairs of complex, multimillion dollar organizations.
At the beginning of this stage, a little more than 5 percent of the nation's
gross domestic product was spent on health care; by 1985 the figure was 10
percent. Health care was now big business.
System Stage
This stage began in the mid-1980s and continues to the present day. Three
developments define it: increasing consolidation, greater competition, and
dramatic changes in the nature and form of payment.
First, health care organizations consolidated. For example, many hospitals
merged and then combined with physician practices, nursing homes,
and health insurance plans. Health systems were created.
Second, the industry became far more competitive. Not only did health
systems and hospitals compete with each other but they also began competing
with their own medical staffs, insurance companies, and managed
care organizations.
Third, change occurred in how providers were paid, as purchasers sought
to control double-digit inflation in their health care expenditures. Through-out
the 1960s and 1970s, hospitals were reimbursed on the basis of their
charges or incurred costs; physicians received fees or customary charges. In
the 1980s, hospitals started being paid rates that were set prospectively (irrespective
of their incurred costs), assuming some of the financial risk associated
with providing services. Additionally, doctors, hospitals, and other
health care organizations had to cooperate in order to offer the full spectrum
of services demanded by purchasers.
The key challenge faced by health systems was to form and manage a diverse
array of enterprises and relationships that would allow them to compete
in markets undergoing significant change. This required high levels of
coordination among boards, between management teams and physicians,
and across organizations. As a consequence, power and influence was increasingly
shared.
HEALTH AND DISEASE
Health is defined by the World Health Organization (WHO) as complete
physical, mental, and social well-being, not merely the absence of disease
or infirmity.
Disease impairs the functioning of a person. It can be caused by genetic
flaws; the natural, preprogrammed and progressive breakdown in biological
systems that increases with age; external agents (chemical, biologic, radiological);and trauma (such as accidents).
A person's health is affected by genetic predisposition, age, context (including
such things as income level, education, housing, nutrition, sanitation,
environment), and the use of health care services. These factors are
listed here in decreasing order of importance; genetics, age, and context have
a far greater impact on a person's health status than the amount and type
of health care services consumed. The reason is that health care services primarily
come into play only after the horse is out of the barn, when an illness
or condition has already occurred. Meanwhile, other factors affect the
probability that an illness or condition will appear in the first place.
Table 1.3 portrays selected indicators of Americans' health and disease
status.
HEALTH SERVICE NEED, DEMAND, AND UTILIZATION
What affects the utilization of health care services? Figure 1.1 depicts the
key relationships.
The factors and stages are:
Need: recognition of an underlying abnormal condition judged to
warrant care and treatment
Demand: motivation and the means to seek care
Utilization: consumption of health care services
The presence of a disease or condition does not necessarily cause need.Need
may not precipitate demand, and demand may not result in utilization.
Condition [arrow] demand Example: A person may have a condition that
goes undetected because it is asymptomatic. Or
the underlying condition may not be defined as
a disease (as was the case for many mental disorders
in the early part of the last century).
Need [arrow] demand Example: Individuals can demand care without
needing it (as in the case of hypochondriacs).
They also might need care and not demand
it because the condition is thought to be
inconsequential.
Demand [arrow] utilization The conversion of demand into consumption
of health care services is most affected by
the two-sided coin of access: individual wherewithal
(knowledge, time, and money); and
by how health services are organized, financed,
and provided (industry structure
and functioning).
A host of factors have been shown to affect the demand for, and utilization
of, health care services. Here are a few important ones:
Age
Insurance coverage
Race/ethnicity
Number and distribution of providers
Education level
Provider referral patterns
Income level
Attitudes and beliefs
As an illustration, Table 1.4 presents data on ambulatory care usage (total
doctor's office, hospital emergency room, and home health visits per year)
and how it varies by population group.
BOARDS AND GOVERNANCE
There are approximately six thousand hospital and health system boards,
with about one hundred thousand people serving on them. Here is some
basic information.
Board Composition
Health Systems Hospitals
The typical health care system The average hospital board is
board is composed of fourteen composed of fifteen members:
members: one inside director one insider, three medical staff
(who holds a board seat ex officio directors, and eleven outsiders.
by virtue of a full-time administrative
position), two medical staff
directors (physicians who hold
board seats because of their
membership on the medical staff),
and eleven outside directors (board
members who are neither inside
nor medical staff directors).
Eighty-two percent of systems Fifty percent of hospitals have
limit the number of consecutive term limits (the median is three
terms a director can serve (the terms).
median is three terms).
Twenty-one percent of system Eighteen percent of hospital
directors are female; 94 percent of directors are female; only 6 percent
system boards have at least one of hospitals have no female
female member. members.
Minorities hold 7 percent of system Minorities compose 7 percent of
board seats; 5 percent are Black, hospital directors; 6 percent are
1 percent are Hispanic, 0.7 percent Black, 0.7 percent are Hispanic,
are Asian, and 0.1 percent are and 0.3 percent are Asian. Fifty
Native American. Thirty-seven percent of hospital boards have no
percent of system boards have at racial or ethnic minority members.
least one minority member.
Board Functioning
Health Systems Hospitals
Ninety-six percent of systems have Ninety-four percent of hospitals
a person assigned to provide staff have a person assigned to extend
support to the board; 10 percent staff support to the board. In
of systems have a designated board hospitals with governance staff
coordinator. Staff support to the support, 15 percent have a formally
board is from an executive assistant designated board coordinaintor;
in 60 percent of systems; this 80 percent use an executive
person is typically attached to the or administrative assistant or
office of the president or CEO.
Continues...
Excerpted from The Health Care Industry
by Dennis D. Pointer Stephen J. Williams
Copyright © 2003 by Dennis D. Pointer.
Excerpted by permission.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.
Table of Contents
List of Tables and Figures.Preface.
About the Authors.
1. Foundations.
At a Glance.
Some History.
Health and Disease.
Health Service Need, Demand, and Utilization.
Boards and Governance.
2. Health Care Organizations and Services.
Distinctive Characteristics.
Ambulatory Care.
Hospital Care.
Long-Term Care.
Mental Health Care.
Health Systems.
Public Health Services.
3. Health Care Financing.
Changing Economic Dynamics.
Flow of Funds Through the System.
Health Insurance.
Types of Health Insurance Plans.
Voluntary Health Insurance.
Social Health Insurance (Medicare).
Welfare Insurance (Medicaid).
Health Maintenance Organizations.
4. Health Care Personnel.
Physicians.
Nurses.
Ancillary Nursing Personnel.
Dentists.
Pharmacists.
Other Health Professionals.
5. Predictions and Challenges.
Appendixes.
A. Glossary of Health Care Terms.
B. Medical Specialties.
C. Recommendations for Learning More.
References.
Index.