chapter 05 economics of health care delivery
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Chapter 05 Economics of Health Care Delivery. Objectives. Relate public health and economic principles to nursing and health care. Describe the economic theories of microeconomics and macroeconomics. Identify major factors influencing national health care spending. - PowerPoint PPT PresentationTRANSCRIPT
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1Copyright © 2012 by Mosby, an imprint of Elsevier Inc. Copyright © 2008 by Mosby, Inc., an affiliate of Elsevier Inc.
Chapter 05
Economics of Health Care Delivery
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2Copyright © 2012 by Mosby, an imprint of Elsevier Inc. Copyright © 2008 by Mosby, Inc., an affiliate of Elsevier Inc.
Objectives
1. Relate public health and economic principles to nursing and health care.
2. Describe the economic theories of microeconomics and macroeconomics.
3. Identify major factors influencing national health care spending.
4. Analyze the role of government and other third-party payers in health care financing.
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3Copyright © 2012 by Mosby, an imprint of Elsevier Inc. Copyright © 2008 by Mosby, Inc., an affiliate of Elsevier Inc.
Objectives, Cont’d
5. Identify mechanisms for public health financing of services.
6. Discuss the implications of health care rationing from an economic perspective.
7. Evaluate levels of prevention as they relate to public health economics.
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4Copyright © 2012 by Mosby, an imprint of Elsevier Inc. Copyright © 2008 by Mosby, Inc., an affiliate of Elsevier Inc.
Introduction
Poverty can be directly related to poorer health outcomes.
Estimates indicate that public spending on health care makes a difference but needs the support of increased private health care spending to improve the overall health status of populations.
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5Copyright © 2012 by Mosby, an imprint of Elsevier Inc. Copyright © 2008 by Mosby, Inc., an affiliate of Elsevier Inc.
Public Health and Economics
Economics Health economics Public health economics Public health finance
Four principles that explain how it may occur:• Sourcing and use of monies controlled solely by
government• Government controls money but private sector controls
how money is used• Private sector controls money but government controls
how money is used• Private sector controls money and how it is used
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6Copyright © 2012 by Mosby, an imprint of Elsevier Inc. Copyright © 2008 by Mosby, Inc., an affiliate of Elsevier Inc.
Principles of Economics
Supply and DemandEfficiency and Effectiveness
MacroeconomicsMeasures of Economic Growth
Economic Analysis Tools
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7Copyright © 2012 by Mosby, an imprint of Elsevier Inc. Copyright © 2008 by Mosby, Inc., an affiliate of Elsevier Inc.
Supply and Demand
Shifts result of: Competition for goods
or services Increase in costs of
materials used to make a product
Technological advances
Change in consumer preferences
Shortage of goods or services
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8Copyright © 2012 by Mosby, an imprint of Elsevier Inc. Copyright © 2008 by Mosby, Inc., an affiliate of Elsevier Inc.
Efficiency and Effectiveness
Efficiency Suggests that inputs are combined and used in
such a way that there is no better way to produce the service, or output, and that no other improvements can be made
Effectiveness For example, effectiveness of a mass
immunization program is related to the level of “herd immunity” developed.
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9Copyright © 2012 by Mosby, an imprint of Elsevier Inc. Copyright © 2008 by Mosby, Inc., an affiliate of Elsevier Inc.
Macroeconomics
Focuses on the “big picture”—the total, or aggregate, of all individuals and organizations Aggregate is usually a country or nation
Business cycle and economic growth Human capital approach
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10Copyright © 2012 by Mosby, an imprint of Elsevier Inc. Copyright © 2008 by Mosby, Inc., an affiliate of Elsevier Inc.
Measures of Economic Growth
Economic growth reflects an increase in the output of a nation.
Gross national product (GNP) Gross domestic product (GDP)
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Economic Analysis Tools
Cost-benefit analysis (CBA) Considered the best of these methods
Cost-effectiveness analysis (CEA) Quality of adjusted life-years (QALYs)
Cost-utility analysis (CUA)
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Factors Affecting Resource Allocation in Health Care
The UninsuredThe Poor
Access to CareRationing Health Care
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The Uninsured
Forty-six million uninsured people in the United States in 2006 Mostly in low-paying jobs, part-time jobs,
temporary jobs, or small business jobs Uninsured persons typically are:
Young adults (especially young men) Minorities Under 65 years of age, in good or fair health Poor or near poor
The Patient Protection and Affordable Care Act (2010)
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The Poor
Socioeconomic status is inversely related to mortality and morbidity for almost every disease
Link between poor health and SES status because of: Poor housing Malnutrition Inadequate sanitation Hazardous occupations Cumulative effects of characteristics that explain
poverty
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Access to Care
Medicaid intended to improve access to health care for the poor
Reasons for delay, difficulty, or failure to access care: Inability to afford health care Lack of transportation Physical barriers Communication barriers Child care needs Lack of time or information Refusal of services by providers
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Rationing Health Care
Implies reduced access to care and potential decreases in acceptable quality of services offered For example, health provider refuses to accept
Medicare or Medicaid clients
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Primary Prevention
USDHHS argued that a higher value should be placed on primary prevention.
The goal of this approach is to preserve and maximize human capital by providing health promotion and social practices that result in less disease.
An emphasis on primary prevention may reduce dollars spent and increase quality of life.
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The Context of the United States Health Care System
First PhaseSecond Phase
Third PhaseFourth Phase
Challenges for the Twenty-First Century
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First Phase: 1800 to 1900
Infectious epidemics Inadequate and unsafe hospital care Minimal technology Experience-based training
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Second Phase: 1900 to 1945
Acute infections, trauma Specialty hospitals emerge Therapeutic advances Shift to science-based training
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Third Phase: 1945 to 1984
Chronic diseases Increasing numbers and types of facilities “Durable” technologies: therapeutics and
diagnostics Development of medical specialties, new
“types” of employees
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Fourth Phase: 1984 to Present
Emergence of new and old infectious diseases
Mergers, integration Super drug therapies, computerization,
service technologies Primary care, “turf” issues, multidisciplinary
care teams Managed care
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Challenges for the Twenty-First Century
Emergence of new and old communicable and infectious diseases, larger food-borne disease outbreaks, acts of terrorism
Chronic disease prevention programs Infrastructure to support more complex
technologies Hospital “intensivists” More care provided in the home Doctorate of Nursing Practice Emphasis on prevention and wellness
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Trends in Health Care Spending
National health expenditures reached $2.5 trillion in 2009
Predict total United States spending in 2019 will be $4.5 trillion
Health spending outpacing gross domestic product More than $17 of every $100 spent has been spent for
health care Largest portions of health care expenses for hospital
care and physician services Only a small fraction spent on home health, public health,
research, and construction.
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Distribution of United States Health Care Expenditures, 2007
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Factors Influencing Health Care Costs
Demographics Affecting Health CareTechnology and Intensity
Chronic Illness
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Demographics Affecting Health Care
Aging population Federal expenses for Social Security will increase
• Demands on Medicare and Medicaid increase Expected to affect health services more than any
other demographic factor Likely to experience multiple chronic conditions
that may become disabling Potential health policy reform
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Technology and Intensity
Enhances delivery of care Has potential to increase costs of care
Demands investment in personnel, equipment, and facilities
Adds to administrative costs Payers have attempted to restrict use of certain
technologies
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Chronic Illness
New factor impacting health care spending Accounted for 70% of deaths in 2007 Chronic conditions:
Cost the most Most number of bed days Most number of work-loss days Most activity impairments
Most common chronic condition was stroke
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Financing Health Care
Public SupportPublic Health
Other Public SupportPrivate Support
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Public Support
Marine Hospital Service (1798) National Board of Health (1879), renamed U.S.
Public Health Service (USPHS) Medicare (1965)
Provides hospital insurance and medical insurance to persons 65 years of age and older, to permanently disabled persons, and to persons with end-stage renal disease
Medicaid (1965) Provides financial assistance to states and counties to pay
for medical services for poor older adults, the blind, the disabled, and families with dependent children
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Public Health
Most public government agencies operate on an annual budget.
Public health agencies receive primary funding from taxes, with additional money for select goods and services through private third-party payers.
Select public health programs receive reimbursement for services.
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Other Public Support
Federal government finances health services for retired military persons and their dependents through TriCARE, Veteran’s Administration (VA), and Indian Health Service (HIS)
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Private Support
Private health care payer sources include: Insurance Employers Managed care Individuals
• Medical savings accounts
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Health Care Payment Systems
Paying Health Care OrganizationsPaying Health Care Practitioners
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Paying Health Care Organizations
Retrospective reimbursement Charge method Prospective reimbursement, or payment
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Paying Health Care Practitioners
Fee-for-service Capitation Reimbursement for nursing services
1998: Nurse practitioners (NPs) and Clinical Nurse Specialists (CNSs) granted third-party reimbursement for Medicare Part B services• Effort to control costs of medical care• Reimbursement rate set at 85% of physician rates for the
same service