MZC1© 2005 by Lippincott Williams & Wilkins Unit I: Foundations of Community Health Chapter 7 Economics of Health Care

MZC2© 2005 by Lippincott Williams & Wilkins Objectives: Upon mastery of this chapter, you should be able to: Define the concept of health care economics Describe three sources of health care financing Compare and contrast retrospective and prospective health care payment systems

MZC3© 2005 by Lippincott Williams & Wilkins Objectives: Analyze the issues and trends influencing health care economics and community health services delivery Explain the causes and effects of health care rationing List the pros and cons of managed competition as opposed to a single-payer system Explain the philosophical implications of health care financing patterns on community health nursing’s mission and values

MZC4© 2005 by Lippincott Williams & Wilkins Concept of Health Care Economics 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 Reimbursement Systems Retrospective & Prospective (Covered in slide 6)

MZC5© 2005 by Lippincott Williams & Wilkins Three Sources of Health Care Financing Third-Party Payments Private Insurance Companies Independent Health Plans Government Health Programs Medicare (Table 7-1, p. 134) Medicaid (Services vary State to State with some mandatory services required) Other Government Programs

MZC6© 2005 by Lippincott Williams & Wilkins Retrospective and Prospective Payment Systems Retrospective Fee established in advance Reimburse 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

MZC7© 2005 by Lippincott Williams & Wilkins Causes and Effects of Health Care Rationing Cause Limited resources Need to establish eligibility for government healthcare 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

MZC8© 2005 by Lippincott Williams & Wilkins Pros and Cons of Managed Competition Pros Accept All Compete on Price Tax Incentives Highly Regulated Minimum Benefits Package Outcome Management Standards Board Will Reduce Expenditures and Improve Access Cons Untested Limit Consumers’ Choices Increased Out of Network Costs Failure to Provide Equitable and Universal Coverage Opposed by Many Professional Groups

MZC9© 2005 by Lippincott Williams & Wilkins Pros and Cons of Single Payer System Pros Universal Coverage Emphasize prevention Control Costs Increase Access Incentives for efficiency Administrative simplicity Combine private/public Eliminate tie to employment Cons Removes competition model, which ensures a free market, individualism, and the right to choose

MZC10© 2005 by Lippincott Williams & Wilkins Philosophical Implications of Financing Patterns Public Work within civil service restrictions Mandates & funding influenced by political pressures Focus on health promotion and disease prevention Private Accountability to stockholders, boards of directors, & employees Satisfaction of state & federal regulations Competition can lead to innovation

MZC11© 2005 by Lippincott Williams & Wilkins Case Study: Unit I #5 documents/CaseStudies/u1c5.asp It appears that in Adams County there is an increasing population of older adults occurring in Preston with the development of the continuing care center. Being aware of the existing services in Adams County, what additional services might a community health nurse recommend and/or make plans to initiate for this part of the county? Think about health care services, safety, educational, occupational, recreational, and spiritual needs. Find more information at the following websites: Elderhostel ; Medicare ; the American Therapeutic Recreation Association ; Reuters Health Information Services ; AARP. Elderhostel Medicare American Therapeutic Recreation Association Reuters Health Information Services AARP

MZC12© 2005 by Lippincott Williams & Wilkins Internet Resources American Nurses Association: Center for Medicare and Medicaid Services: Joint Commission on Accreditation of Healthcare Organizations: Kaiser Family Foundation: Medicaid: Medicare: National Committee for Quality Assurance:

MZC13© 2005 by Lippincott Williams & Wilkins Clinical Activities

MZC14© 2005 by Lippincott Williams & Wilkins Contact Information