1. Chapter 1
The Health Care System

2. Learning Objectives
Describe the organization of the health care system in the United States.
Describe the focus of public health services.
Define the three levels of prevention.
Discuss financing of health care in the United States, including Medicare and Medicaid programs.
Describe the components of the health care system that provide outpatient and inpatient care and the types of service each provides.
Describe the impact of cost-containment measures on the delivery of care.

3. Organization
Health care system consists of patient, patient’s family, community, governmental agencies, health care providers, insurance companies
Many health services funded by government or private agencies
Not all U.S. citizens eligible for government funds; some unable or unwilling to obtain private insurance
Are all the costs of health care covered by government funding and insurance?
Many people are unable to pay for care and may not receive the services they need.
In the United States, about 17% of the population is uninsured.
Forty-eight million (19%) of Americans under age 65 and 8.5 million (12%) of children under age 18 are uninsured.

4. Managed Care Provides comprehensive health care at a reasonable cost
Health maintenance organization (HMO)
Preferred provider organization (PPO)
Managed care has stimulated increased interest in wellness and prevention, increased outpatient and home health care, and increased cost sharing

5. Administration
1953: Department of Health, Education and Welfare was established to organize the health and we
lf are agencies of the U.S. government
1980: Department of Health and Human Services (DHHS) was created when education became a separate department
Today: DHHS programs are administered by the Public Health Service and Centers for Medicare & Medicaid Services, Administration for Children and Families, and the Administration on Aging
What is the role of the DHHS?
The major activities of the Public Health Service Agencies are to:
Support medical research
Support research on health care systems, health care quality and cost issues, access to health care, and effectiveness of medical treatments
Ensure the safety of foods and cosmetics
Ensure the safety and efficacy of drugs and medical devices
Monitor and prevent disease outbreaks
Provide health services to American Indians and Alaska Natives
Provide access to essential health care services for low-income uninsured persons with limited access to health care
Improve substance abuse prevention, addiction treatment, and mental health services
The Centers for Medicare and Medicaid Services (CMS) administer the services that provide health insurance and prescription drugs for older and disabled Americans.

6. Public Health
Improvement of the health of communities and aggregates (collections of people) rather than the individual
Main goals are to protect and improve the health of populations at risk in the community and to prevent disease and disability
How are the levels of prevention traditionally classified?

7. Primary Prevention To improve health; prevent disease and injury
Exercise programs to increase strength and cardiovascular fitness
Campaigns in schools to prevent children from smoking and to educate people to wear seat belts

8. Secondary Prevention
Focuses on early detection and treatment of disease to improve patient outcomes
Papanicolaou (Pap) smears and screening mammograms

9. Tertiary Prevention To prevent disease recurrence or complications
The use of physical therapy to prevent contractures in a stroke patient
Teaching proper diet and foot care to a person with diabetes

10. Financing U.S. health care most expensive in the world
In 2002, $1.6 trillion (equal to 14.9% of gross domestic product [GDP]) spent on health care, compared with 5% in 1960
By 2013, projected total health care expenditures of $3.6 trillion, accounting for 18.4% of GDP
Largest component of health care costs (32%) is hospital expenditures
The health care system of the United States is the most expensive in the world.
What measures can be taken to control what is spent on health care?

11. Financing
Many approaches to health care financing: HMOs, PPOs, and governmental agencies affect how health care is delivered
Capitation: designed to control costs
HMOs pay physicians a fixed amount each month for each member (patient) enrolled in the plan, regardless of whether the physician sees the patient that month
For the most part, health care systems have operated on a fee-for-service basis.
Such coverage tends to be costly, typically requires deductions and co-payments, and has limits that may not cover actual costs.
What are third-party reimbursements?

12. Medicare
Medicare: health insurance program offered by the U.S. government as part of the Social Security Act
Helps pay for health care of people ages 65 and older, those of any age with permanent kidney failure, and those younger than age 65 who qualify for Social Security disability benefits
Medicare insures more than 42 million older and disabled Americans.
A monthly premium is deducted from each worker’s paycheck, and the funds are matched by the federal government.
What is the difference between Medicare Part A and Medicare Part B?

13. Medicare Diagnosis-related groups (DRGs)
Hospitals reimbursed a flat fee for specified number of days based on predetermined diagnosis fee schedule
If the patient gets better faster, hospital makes money; if longer stay, hospital loses money
Medicare prescription drug coverage
Medicare typically pays about half an individual’s annual drug costs
Historically, hospitals billed Medicare for their costs after they were incurred, a process referred to as retrospective payment.
The system changed in 1983, and since that time hospitals have been advised in advance how much they would be reimbursed for treatment of a patient with a certain condition; this is referred to as prospective payment.
What if the patient doesn’t stay the number of days specified by the DRGs?

14. Medicaid Government insurance program for people of very low income
Funded by federal, state, and local taxes; administered by federal and state governments on a partnership basis
States develop and operate Medicaid programs within federal guidelines
Benefits vary from state to state
Medicaid was established in 1965 as part of the Social Security Act.
Who is eligible for Medicaid?

15. Medicaid
Benefits provided for needy, low-income disabled individuals younger than age 65 and their dependent children
Individuals older than age 65 who are below a specified income level may also receive benefits, including services that Medicare does not cover
What services are covered by Medicaid?
Medicaid is more likely than Medicare to cover long-term care.
Medicaid provides health coverage for nearly 45 million persons.

16. Physicians Offices
Physicians may practice in individual or group settings
Many group practices are made up of various medical specialties so that clients can have all their health care needs dealt with in one location
Many people, especially older adults, receive their primary medical care in physicians’ offices.
How is the cost of visits to physicians’ offices covered?

17. Clinics
Outpatient clinics are associated with community hospitals, teaching hospitals, or public health departments
Focus on people with chronic illnesses (diabetes or heart disease) but also treat people with acute illnesses
Care in clinics: diagnose and treat current illness
Clinics offer physician and nursing services, rehabilitation, prenatal care, well-baby checkups, immunizations, preventive dental and eye care, laboratory and diagnostic services
How are clinics in large hospitals usually organized?
For many people, especially older adults, specialty clinics can be a problem because older adults have many chronic illnesses and are seen in many different clinics.

18. Figure 1-1

19. Health Maintenance Organizations
Group practice with prepayment, voluntary enrollment, combination of hospital and outpatient facilities, emphasis on health promotion and illness prevention, and physician responsibility for direction of patient care
Federal government enacted the Health Maintenance Organization Act
Helps private agencies develop methods of health care delivery to control accessibility, quality, and cost
Because HMOs collect only a set fee from clients, they have an interest in promoting health and maintaining wellness.
HMOs employ physicians, nurses, and other health care providers and also have a broad group of specialists available for referral.
Clients are required to use only the services of the health care providers and hospitals associated with the HMO.
Who was the original HMO in the United States?

20. Ambulatory Care Centers
Alternative to inpatient surgery
Located in hospitals, freestanding clinics, health care centers, and physicians offices
Less costly and allows people to recover in their own homes
After recovery from anesthesia, patient is discharged, usually the same day
Many procedures such as cataract extraction, hernia repair, tonsillectomy, and the removal of foreign objects that once required hospitalization are now often performed in outpatient facilities.
What is the primary criticism of outpatient surgery?

21. Home Health Agencies History of home health care
1617: St. Vincent de Paul organized Daughters of Charity
Members went from house to house, taking food, education, and health care to the sick
Mid-1800s: William Rathbone organized first district nursing organization; opened the first training school for visiting nurses in 1859
1893: Lillian Wald, forerunner of modern public health nursing, founded Henry Street Settlement
Who was one of the first organized groups to provide health education to the poor and to help people help themselves?
Rathbone often is called the Father of the Visiting Nurses Association because he was the first to employ the district nursing concept.
The Henry Street Settlement was a place where the poor could come for care and was supported by funds from the wealthy.

22. Focus of Home Health Care
Services for clients in their homes or assisted living centers: promote, maintain, or restore health or minimize the effects of illness and disability
Home health care one of fastest-growing fields
Medical and dental care, nursing care, physical and occupational therapy, speech therapy, enterostomal therapy, social work, nutrition counseling, transportation, lab services, medical equipment and supplies, and the assistance of home health aides and homemakers
Fewer people are being admitted to hospitals, and they are being discharged sooner with more needs for special care.
Who provides home health care?

23. Funding of Home Care Services
Paid for by individuals, private insurance, Medicare, and Medicaid
Most nursing services paid for by Medicare must be skilled care; strict governmental guidelines define care that must be provided
Medicare regulations for home care identify standard duties of the LPN, including furnishing health services, preparing progress notes, assisting the RN in special procedures, and assisting the patient in learning self-care techniques
Regulations vary from state to state but are generally patterned after federal governmental regulations.
What discipline fills the case manager position for services provided in the home?

24. Voluntary Agencies First to deliver nursing care in the home
Financed by wealthy philanthropists in the community; mission was to care for the sick poor
Visiting Nurses Association: most common example of a voluntary agency
Usually governed by a community board of directors that determines service delivery policies and assists with fund-raising
Because board members are drawn from different areas and social strata within the community, services often reflect community needs.
Where does funding for voluntary agencies usually come from?

25. Official Agencies
Supported by tax dollars; authorized by law to deliver services to a defined area or community
State, regional, and local health departments are responsible for health promotion and disease prevention services, communicable disease investigation, environmental health protection
In most states, includes maternal and child services, sexually transmitted infection clinics, tuberculosis surveillance and treatment, and other health services as funds permit

26. Proprietary Agencies Organized to make a profit on their operation
May or may not participate in Medicare; most do
May be owned by individuals or corporate chains
Limitations imposed by the Balanced Budget Act (1997) decreased profitability, and many have closed
What are the sources of revenue for proprietary agencies?
The prospective payment system contributed substantially to the growth of home health care.

27. Hospital-Based Agencies
Usually governed by hospital’s board of directors
Most referrals from the hospital itself
Philosophy and policies usually consistent with those of parent institution
Hospitals that were losing money under the prospective payment system saw the opportunity to recoup lost profits by opening home health agencies.
Who usually governs the hospital-based agencies?

28. Outpatient Care

29. Home Health Care Services
Physical therapy
For patients recovering from health problems affecting mobility, such as hip fractures and strokes
Physical therapists assess need for walkers, wheelchairs, and grab bars and work with patients on therapies to regain strength and mobility
What are the requirements for a patient to receive services in the home?

30. Home Health Care Services
Speech therapy
Speech therapists work with patients who have speech or swallowing disorders
A common indication for speech therapy is aphasia
To receive speech therapy in the home that is reimbursed by Medicare, it is necessary to meet all of the criteria for Medicare.

31. Home Health Care Services
Occupational therapy
For conditions that impair upper-extremity movement
People with arthritis or stroke may benefit from assistive devices for dressing and other daily personal care and household activities
Occupational therapists also provide muscle reeducation, splinting, and improved control of fine motor movement
Timely occupational therapy can help the patient become safer and more independent in the home

32. Home Health Care Services
Social workers
Provide valuable assistance to families trying to manage chronic illness in the home
Work with families to identify problems that arise in managing illness at home and recommend referrals to community resources
May provide information about financial assistance and help with applications for community services such as Meals-on-Wheels and respite care

33. Home Health Care Services
Home health aide services
Provide personal care, such as bathing, ambulating, transferring, skin care, and oral hygiene, for the patient in the home
Measure and record vital signs and do other basic, nonskilled tasks
Homemaking tasks, such as making the bed and straightening the client’s room, are also common home health aide services
What services are inappropriate for home health aides?
Patients qualify for home health services if they already receive one of the three primary skilled services.

34. Home Health Care Services
Homemaker services
Usually provided by families or state and local assistance programs
Duties include common household chores, such as cooking, light housekeeping, laundry, shopping, and picking up medications

35. Home Health Care Services
Enterostomal therapy
Specialists in the care of all types of wounds, such as pressure ulcers, surgical wounds, and ostomies
Provide care to patients and consultation to nurses on how to manage wounds
Extensive knowledge of skin care products and ostomy appliances

36. Home Health Care Services
Other home health care service providers
Dietitians
Nurse practitioners
Psychologists

37. Home Health Care Services
Specialty home care services
Pediatric: small, compact pumps, ventilators, and monitors have enabled children with cancer, respiratory disease, and cerebral palsy to live more normal lives at home
Mental health: provide medication monitoring and teaching and perform mental status examinations and suicide assessments
Prospective payment systems and the use of DRGs have provided a stimulus for the development of specialty home care, especially for pediatric, psychiatric, and terminally ill patients.
Why are insurance companies becoming more interested in funding pediatric home care?

38. Hospice
May be delivered in the home, acute care hospital, or extended care facility
Provide care for terminally ill patients in the home and other specified facilities
Purpose: enable terminally ill patients to live as full a life as possible, with skilled personnel managing pain, discomfort, and other symptoms associated with the illness
The hospice concept is a concept of caring that originated in fifteenth-century Europe as the provision of respite and comfort for travelers.
Later this concept was extended to the dying in both hospitals and home settings.
What are the requirements for admission to hospice care?

39. Adult Daycare Centers Services and activities
Promote health and socialization
Benefit the elderly and mentally ill
May be associated with hospitals or nursing homes, or function independently
Allow older people to live supervised in the community during the day while the family is at work
Centers provide health-related services, health promotion programs, nutritional meals, and social activities
Fees are based on a sliding scale fee or free
Many of the services provided at day care centers are funded through the Older Americans Act, which was originally passed in 1965.
Mental health services are also offered through day care.
People who need counseling, follow-up care after hospitalization, and rehabilitation related to chemical dependence may benefit from day care programs.
What is the Older Americans Act of 1965?

40. Inpatient Care

41. Hospitals Vary greatly in size, shape, and organization
Some hospitals are public and financed by the local, state, or federal government; others are private and owned by churches, businesses, corporations, or charitable organizations
Most frequent reasons for hospitalization are infant delivery, cardiovascular disease, chest pain, pneumonia, and depression 
Transitional and subacute facilities provide intermediate levels of care after hospital discharge
Hospital care accounts for about 40% of personal health care expenditures in the United States.
The predominant sources of payment for hospital services are Medicare (34%), Medicaid (22%), and private insurance (36%).
About 5% of all hospitalizations are not covered by any type of insurance.
Transitional hospitals receive patients with acute but stable conditions who will need a lengthy minimum stay (often 25 days).
What are subacute care units?

42. Figure 1-3

43. Psychiatric Hospitals
Inpatient and outpatient treatment for acute psychiatric illnesses; focus on helping clients control their behavior or restore their behavior to what it was before entering the hospital
May be private, nonprofit organizations that are sponsored by organized churches or run by local, state, or federal governments
The cost of care is covered by most private insurance companies.
How long will private insurance companies cover services in a psychiatric hospital?

44. Rehabilitation Centers
Restore individuals to former level of functioning or maintain or maximize remaining function
Located within the hospital or nursing home or in a freestanding residential institution
May focus on physical problems, such as those caused by stroke, spinal cord injury, or amputation, or on mental health problems, such as drug dependency or mental illness
Rehabilitation can and should be carried out in all health care settings by a variety of health care professionals with the active involvement of patients and their families.
Who makes up the rehabilitation team?

45. Figure 1-4

46. Long-Term Care Facilities
Originally described institutions attached to hospitals for recovery from acute illness
Now describe several different kinds of institutions—nursing homes, convalescent homes, and some residential institutions—whose primary purpose is caring for people with chronic illnesses and physical impairments
Focus is on those who do not need hospitalization but cannot care for themselves
Modern long-term care for the elderly and disabled had its beginnings in nursing home care, which dates back at least to the turn of the twentieth century.
What type of standards did long-term care have when it first began?
Later, nursing home care became tied to the medical care system, and the nursing home increasingly became a place for patients needing skilled nursing and social services.

47. Figure 1-2

48. Long-Term Care Facilities
Independent living retirement centers
Offer services that permit residents to access the level of care needed at a given point in time
Boarding and personal care homes
Provide a room and meals and, in some cases, minimal assistance and supervision
Residents of these facilities usually come and go as they please

49. Long-Term Care Facilities
Assisted living facilities
Permit a high degree of independence but usually have limited access to nursing care
Help with medications; some treatments may be provided
Residents often have kitchens; some group meals are typically provided

50. Long-Term Care Facilities
Intermediate-care skilled nursing facility
Provides care from a licensed nursing staff, including rehabilitation for people who can regain function
Services: medical and nursing care; physical rehabilitation; long-term ventilator care; wound care; pharmaceutical, dietary, and social services; dental care; and activities
Federal regulations require an RN to serve as director of nursing and an LPN to be on duty at least 8 hours a day
This level of care is also referred to as extended care.
What type of nursing care is provided at an intermediate-care facility?

51. Skilled Nursing Facility
Residents must be in need of care that consists of observation during an acute or unstable phase of an illness, administration of enteral (tube) feedings or IV fluids, bowel and bladder retraining (for a limited period), administration of intramuscular or intravenous medications, or changing of sterile dressings
Can residents in need of custodial care receive benefits at a skilled nursing facility under Medicare?
A skilled nursing facility must have skilled health professionals available around-the-clock.
A skilled nursing facility requires physician supervision and the services of a registered nurse, physical therapist, or speech therapist.