Chapter 6 Structure and Economics of Community Health Services

Historical Influences 1500 BC: Hebrew hygienic code: personal and community sanitation 1000 to 400 BC: Athenian emphasis on personal hygiene, diet, and exercise Romans: environmental sanitation laws, aqueducts, & sub-surface drainage Middle Ages: body thought of as evil, leading to neglect of sanitation & development of epidemics; quarantine 1800s: in England, enforcement of laws for sanitation; development of view of public health responsibility at community level

Public Health Care System Development in the U.S. Understanding of the relationship between living conditions and health (see Table 6.1) Precursors to a health care system: need for systems to address community issues (see Table 6.2) Calls for sanitary reforms (Shattuck Report) Recent calls to action (Institute of Medicine)

Public Health Care System Development in the U.S. (cont.) Official health agencies (government-funded; later called public health agencies) Voluntary health agencies (private agencies or nongovernmental organizations [NGOs]; privately funded) Health-related professional associations (NPHA, ASDTDN, ASTHO, ANA, ACHNE)

Health Organizations in the U.S. Four levels: local, state, national, and international Each level generally classified as public or private Public sector health services (see Fig. 6.3) Local: vary depending on needs, size, and resources of the community State: vary in structure and how core functions are carried out; most pivotal role in health policy formation National: Public Health Service; 8 functional branches: CDC, FDA, NIH, SAMSHA, HRSA, AHRQ, Indian Health Service, ATDSR

Question Is the following statement true or false? Voluntary health agencies are typically funded by the government.

Answer False Official health agencies are government-funded; voluntary health agencies are privately funded.

Health Organizations in the U.S. (cont.) Private sector health services Proprietary health services: privately owned and managed For-profit Not-for-profit Functions Detecting unserved needs or exploring better methods for meeting needs already addressed Piloting or subsidizing demonstration project Promoting public knowledge Promoting health legislation

Health Organizations in the U.S. (cont.) Private-sector health agencies Functions Assisting official agencies with innovative programs not otherwise possible Evaluating official programs; assuming public advocacy role Planning and coordinating to promote collaboration among voluntary services and between voluntary and official agencies Developing well-balanced community health programs for more relevant and comprehensive services

International Health Organizations World Health Organization Pan American Health Organization UNICEF UNESCO

Significant Legislation Shepard-Towner Act of 1921 Social Security Act of 1935 Hill-Burton Act (Hospital Survey and Construction Act) of 1946 Maternal and Child Health and Mental Retardation Planning Amendments of 1963 Heart Disease, Cancer, and Stroke Amendments of 1965 Social Security Act Amendments of 1965

Significant Legislation (cont.) Comprehensive Health Planning and Public Health Service Amendments Act (Partnership for Health Act) of 1966 Health Manpower Act of 1968 Occupational Safety and Health Act of 1970 Professional Standards Review Organization Amendment to the Social Security Act of 1972 Health Maintenance Organization Act of 1973 National Health Planning and Resource Development Act of 1974

Significant Legislation (cont.) National Center for Health Statistics of 1974 Omnibus Budget Reconciliation Act of 1981 Social Security Amendments of 1983 Consolidated Omnibus Budget Reconciliation Act of 1985 Omnibus Budget Reconciliation Act Expansion of 1986 Medicare Catastrophic Coverage Act of 1988 Family Support Act of 1988

Question Is the following statement true or false? Proprietary health services can be for-profit or not- for-profit.

Answer True Proprietary health services are privately owned and managed and can be nonprofit or for-profit.

Significant Legislation (cont.) Health Objectives Planning Act of 1990 Preventive Health Amendments of 1992 Personal Responsibility and Work Opportunity Reconciliation Act of 1996 Health Insurance Portability & Accountability Act (HIPAA) of 1996 Nurse Reinvestment Act of 2002 Medicare Prescription Drug, Improvement, and Modernization Act of 2003

Economics of Health Care Interaction of two basic theories Microeconomics Supply & demand Allocation & distribution Macroeconomics Broad variables that affect the status of the total economy Focus on employment, income, prices, and economic growth rates Health insurance concepts

Health Care Financing Third-party payments Private insurance companies (trend toward consumer-driven health plans and health savings accounts) Independent or self-insured health plans Government health programs Medicare, Medicaid, Federal Employees Health Benefits Plan, CHAMPUS SCHIP Other government programs

Payment Concepts Prospective Retrospective Fee established in advance Reimbursed after service rendered Abused through the requesting and ordering of unnecessary tests Encouraged sickness rather than wellness Prospective External authority sets rates Rates derived from predictions set in advance Fixed rates rather than cost coverage Imposes constraints on spending Providers at risk for losses or surpluses

Trends and Issues Influencing Health Care Economics High cost of health in America Cost-control measures Access to health services Uninsured Underinsured Medical bankruptcies Managed care

Question Which of the following characterizes retrospective payment for health services? External authority sets the rates. Rates of reimbursement vary. Wellness is encouraged. Fee is set up in advance.

Answer d. Fee is set up in advance. With retrospective reimbursement, the fee is established in advance and reimbursement occurs after the service is provided. This system also encouraged sickness rather than wellness. Prospective reimbursement involves rates that are set by an external authority, and rates are fixed.

Managed Care Types HMOs Preferred provider organizations (PPOs) Point of service (POS) plans Health care rationing Competition and regulation

Health Care Rationing Cause Effect Limited resources Need to establish eligibility for government health care programs At-risk groups use inequitable amount of limited services Effect Restrict people’s choices Deny access to beneficial services Exclude enrollees at greatest risk

Health Care Reform Possibilities Managed competition Pros: Acceptance of all; competition on price; tax incentives; tight regulation; minimum benefits package; outcome management standards board; improved access; expenditure reduction Cons: Untested; limits consumers’ choices; increased out-of-network costs; failure to provide equitable and universal coverage; opposed by many professional groups

Health Care Reform Possibilities (cont.) Universal coverage and single-payer system Pros: universal coverage; emphasis on prevention; control of costs; increased access; incentives for efficiency; administrative simplicity; combination of private/public; no tie to employment Cons: removal of competition model, which ensures a free market, individualism, and the right to choose

Question Is the following statement true or false? A major disadvantage of universal coverage involves tax incentives.

Answer False Universal coverage is disadvantageous because it removes the competition model, which ensures a free market, individualism, and the right to choose.

Effects of Health Economics on Community Health Practice Disincentives for efficient use of resources Incentives for illness care Conflicts with public health issues

Implications for CHN Need to adapt to constantly changing system Development of innovative modes of service delivery Variety of practice settings Development of skills in teamwork, leadership, and political activism Recognition of importance of outcomes

Internet Resources American Nurses Association: http://www.nursingworld.org CARE: http://www.care.org Center for Medicaid and Medicare Services: www.cms.hhs.gov Joint Commission on Accreditation of Healthcare Organizations: http://www.jointcommission.org National Center for Health Statistics: http://www.cdc.gov/nchs/ National Committee for Quality Assurance: www.ncqa.org Population Reference Bureau: http://www.prb.org