TABLE 1.1 – Brief History of the US Healthcare System
| Milestone | Time Period | Events |
| Founding of the American Medical Association (AMA) | 1847 | * Boosted medical scientific research and improved medical education |
| Emergence of modern medicine | Early 1900s | * Standards for medical licensure * Standards for hospitals * Government regulation of pharmaceuticals |
| Emergence of health insurance | 1920–1939 | * Baylor Plan: a prepaid plan similar to health insurance * Farmers' Cooperative Health Association was the first health maintenance organization * No national health insurance program, but private programs were favored |
| Growth and advancement | 1940–1969 | * Many medical and technological breakthroughs: widespread use of penicillin, polio vaccine, pacemaker, first heart transplant, electronic medical records (EMR) * Expansion of private insurance * Creation of Medicare and Medicaid programs to provide health care insurance for the elderly, the poor, the blind, and people with disabilities |
| Looming crisis and the rise of health maintenance organizations (HMOs) | 1970–1989 | * Emergence of new diseases * Fragmented, inefficient system * Rising costs causing serious concerns * Expansion of HMOs and changes to the payment system to control costs |
| Towards universal health care | 1990s to present | * Increased use of expensive technologies and higher demand for drugs and medical services (digital twins) * A significant proportion of the US population unable to afford health insurance * Sustainability of the Medicare program questioned * Quality of care under question * Enactment of the Patient Protection and Affordable Care Act (PPACA): Everyone must be insured or pay a penalty; cost control and quality improvement measures implemented |
2. IDENTIFYING THE CHALLENGES FACING THE HEALTHCARE INDUSTRY TODAY
2.1 How High Are Costs?
The increase in spending is driven by multiple factors, including the greater use of expensive healthcare technologies, injuries in young people, the aging of overweight Americans, rising drug costs, and waste.
a. Healthcare Technology
Spending on health information technology is also increasing rapidly.
In 2009, the Health Information Technology for Economic and Clinical Health (HITECH) Act introduced incentive payments for adopting electronic health records (EHRs) and achieving "meaningful use" (a set of standards regulating the use of EHRs and allowing providers to receive incentives by meeting preset criteria).
Providers, payers, and physician groups are investing billions of dollars in health information technology (HIT). Initial cost-benefit analyses show that HIT is having a positive impact on effectiveness and efficiency (Buntin, Burke, Hoaglin & Blumenthal, 2011).
In summary, advances in both medical technology and health IT bring clear benefits, but they face many implementation issues and are costly.
- b. Injuries and Traumas in Young People
Deaths before the age of 50 account for about two-thirds of the life expectancy gap between U.S. males and males in 16 other developed countries, and about one-third of the gap for females. Countries included in the analysis are Canada, Japan, Australia, France, Germany, and Spain.
Motor vehicle accidents, gun violence, and drug overdoses are the main reasons Americans under 50 lose many years of life.
Traumatic brain injury is a leading cause of death and lifelong disability in this age group. For survivors, lifetime costs can reach up to $4 million (Brain Injury Alliance of Utah, 2016).
c. The Aging of Overweight American
The older the age, the higher the number of illnesses, and therefore the demand for healthcare services also increases. Some of the most common health problems in the elderly are heart disease, diabetes, arthritis, dementia, and respiratory issues.
Higher spending on older adults in the U.S. may be due to higher obesity rates in this group. About 35% of adults aged 65 and older are obese (Fakhouri, Ogden, Carroll, Kit, & Flegal, 2012).
Healthcare costs for overweight older adults are from 6% to 17% higher compared to those with normal weight (Yang & Hall, 2008).
d. High Drug Costs
In 2009, drug manufacturers began increasing prices at their fastest pace in years to boost profits before Congress passed the ACA as a cost-containment measure (Wilson, 2009).
In 2012, drug prices increased at twice the rate of inflation, driven by both high research and development costs and advertising expenses.
Spending growth was projected to increase by 8.8%, followed by 6.6% annually from 2015 to 2021 (CMS, 2012a).
e. Waste
It is estimated that about 20% of total healthcare spending stems from various inefficient factors such as unnecessary treatment, poor care coordination, administrative complexity, fraud, and abuse.
Poor care coordination in patient transfers may have caused between $25 billion and $45 billion in unnecessary spending in 2011 due to readmissions, complications, and duplicate testing. Incompatible computer systems, a lack of accountability for not sending inpatient records to outpatient physicians upon discharge, and payment policies that do not encourage team cooperation in patient care are major causes.
2.2 How Does Quality Fail to Meet Requirements?
The notable quality indicators used in this report are effectiveness, safety, coordination, and patient-centeredness.
a. Effectiveness
Providing science-based services to all who could benefit; getting it right from the start.
Focus on public reporting -> progress in controlling chronic conditions like blood pressure, and in hospitals using evidence-based treatment methods for heart disease and pneumonia, etc.
Shortcomings in primary care and mental health fields. Regarding mental health, more than one-third of adults and 40% of children do not receive the necessary care. The lack of mental health services has even led to prisons sometimes being considered the largest mental health service providers in their state (O'Shea, 2012).
Disparities in effectiveness often fall along racial and ethnic lines. In general, minority groups receive lower quality of care and have worse outcomes compared to white people, even after controlling for factors such as insurance coverage, socioeconomic status, and comorbidities (IOM, 2002).
In short, as our society becomes increasingly diverse, it is imperative to seriously address these disparities.
b. Safety
Refers to avoiding harm to patients.
Patient safety has become a top priority in healthcare.
The rate of medical errors remains high, with updated estimates showing that the number of annual deaths related to preventable harm in hospitals ranges from 210,000 to 400,000 (James, 2013).
Pressure ulcers, post-operative infections, and persistent back or leg pain following surgery are among the most common and costly errors to treat (Van Den Bos et al., 2011); adverse drug effects (contraindicated prescriptions and/or poor monitoring) and unnecessary antibiotic use are also common.
Of all adverse medical events, nearly half are preventable (de Vries et al., 2008).
c. Coordination
Communication and cooperation among providers as patients transition across different settings and contexts.
Care coordination is a decisive factor in quality.
The healthcare delivery system lacks communication between facilities, and payment structures that are unfavorable for coordinated care cause complications, treatment delays, medication overdoses or interactions, lack of monitoring, poor discharge planning, and medication review issues (California Healthcare Foundation, 2007).
-> Enhancing primary care: physicians, physician assistants, or nurse practitioners provide continuous care for patients and coordinate their care according to a pre-established service plan (Craig, Eby & Whittington, 2011).
d. Patient-Centeredness (Human-Centeredness?)
Care that respects patient preferences, needs, and values.
Patient-centeredness "encompasses qualities of compassion, empathy, and responsiveness to the expressed needs, values, and preferences of each individual patient" (IOM, 2001).
Healthcare facilities must understand and address patient needs, and patients must understand diagnoses and treatment recommendations. According to a report by the Commonwealth Fund (2011), the performance of healthcare facilities in listening to patients, communicating with them, and respecting their opinions is 25% lower than the benchmark.
2.3 How is Access Untimely?
A popular model of healthcare access (Penchansky & Thomas, 1981) identifies five core dimensions of access: availability, acceptability, affordability, accommodation, and accessibility.
The timeliness of care determines many health outcomes:
Mortality and long-term disability from stroke are affected by the time from symptom onset to successful treatment application (Schellinger & Warach, 2004).
The timing of care for heart attack patients, trauma victims, and those with severe infections can determine whether a patient lives or dies (Houck & Bratzler, 2005).
Even timely outpatient care can determine the outcomes of many chronic health conditions.
a. Availability
The supply of healthcare facilities in relation to the demand for their services.
A shortage of healthcare facilities will certainly limit accessibility.
Health Professional Shortage Areas (HPSAs) are "designated as areas lacking primary care providers, dentists, or mental health providers" (Health Resources and Services Administration, 2013;
http://datawarehouse.hrsa.gov/tools/analyzers/hpsafind.aspx
b. Acceptability
The attitudes of patients and providers toward each other's features.
Acceptability is defined as the "relationship of clients' attitudes to personal and practice characteristics of providers to the actual characteristics of existing providers, as well as providers' attitudes about acceptable personal characteristics of clients" (Penchansky & Thomas, 1981).
Many factors influence these perceptions: gender, ethnicity, values, type of healthcare facility, etc.
c. Affordability
The ability of patients to pay for healthcare services.
Lack of insurance or high out-of-pocket costs is often considered the most important reason for untimely access to healthcare services.
Even insured patients may find their access to services limited by the design of their insurance plan.
d. Accommodation and Accessibility
Accommodation: Patients' perception of the ease with which they can obtain timely and convenient care.
Accessibility: Refers to the physical proximity to healthcare facilities and the ease of reaching them using means of transportation.
Long wait times, lack of transportation to see a doctor, difficulty making appointments, and/or asking for time off work... are all major obstacles preventing you from receiving timely care.
A report from the Centers for Disease Control and Prevention (CDC; Gindi, Cohen, & Kirzinger, 2012) indicated that 79% of adults aged 18 to 64 visited the emergency room because they lacked access to other medical facilities. The main reasons are:
the doctor's office was closed,
there was nowhere else to go where they live,
the emergency room was the closest service provider, and
they thought only a hospital could help them.
Solutions include better scheduling through:
studying patient volume throughout the year to identify patterns,
measuring the time between patient arrival and departure to identify bottlenecks,
conducting follow-ups via phone, email, or video chat,
pre-registering by phone or online instead of registering at the healthcare facility (Beck, 2010).
3. Describing Effective Operations Management
a. Operations
The core activities of an organization or business.
Examples:
General Motors participates in parts, sales, and financial services. These are supplementary support services for core activities. They enhance the core service and turn it into a more attractive "package" for customers.
Similarly, a healthcare system can provide health maintenance programs, education, and funding for research and development projects.
-> This paramount role of operations in a business organization makes management quality a prerequisite for survival and competition.
b. Operations Management
The practice of designing, operating, and controlling the most efficient transformation processes leading to the production of goods or services.
Operations management is a "black box," or managing the transformation process, which can create efficiency in delivering healthcare services.
c. Effective System
The conversion of inputs into outputs.
A system related to converting inputs into outputs of greater value.
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