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Chapter4-HospitalsOriginOrganization_Performance4.pptx

Chapter 4

Hospitals: Origin, Organization and Performance

CHAPTER OBJECTIVES

Understand origins of America’s hospitals

Understand reimbursement and other factors that shaped the current hospital system till today

Identify the many dimensions of hospital functions and financing

Review the quality and financial challenges in today’s hospital environment

Identify effects of the ACA on future hospital role and operations

Character of American Hospitals

Appreciated

Maligned

Poorly understood

Places of:

Treatment

Research

Education

Employment, community economy

Early History (1)

1700’s seaport cities: decrepit pesthouses segregated contagious, diseased sailors

Pesthouses commissioned by town boards housed mentally & physically ill who offended polite society

Although provided in the most deplorable of conditions by today’s standards, early “hospital” care reflected American concepts of “charity” and public responsibility providing for society’s most destitute and vulnerable members

Early History (2)

1736: Bellevue housed the “poor, aged, insane and disreputable,” originally “The Poor House of New York City”

1789: Public Hospital of Baltimore, later Johns Hopkins University Hospital

1835: Eloise Hospital, Michigan serving “old, young, deaf, dumb, blind, insane and destitute”

Early History (3)

Following upon municipal “pesthouses,” Physicians founded hospitals with citizen funding in the 1800s:

Protect the well from sick and “insane”

Provide centrally located “practice” teaching sites

Religious Orders (mid 1800s)

Protestant and Catholic Sisters played major roles in “professionalizing” nursing care: Sisters of Charity and German “Deaconesses”

Sources that Shaped the Hospital Industry: Health Insurance, Specialization, Hospital Expansion (1)

Private health insurance: Blue Cross, other plans changed “charitable” mission with business motives

In 1940, only 9% of U.S. population had hospital insurance

By 1960, billions $$ flowing into hospitals from insurance companies

Medical specialization, advances encouraged hospital use

Hill-Burton Act (1946): federal support for new construction & expansion

Sources that Shaped the Hospital Industry: Health Insurance, Specialization, Hospital Expansion (2)

Medicare & Medicaid fueled costs & utilization

Medicare payment rates became the national standard for hospital reimbursement

Changed prior “social role” of hospitals in caring for the most needy, the elderly and poor; hospitals transformed to lucrative business enterprises

Struggles to define the relative roles of voluntarism, government and business continue

Growth and Decline in Number of Hospitals

1873: 178; 1909: 4,300; 1946: 6,000+

1946 Hill-Burton Act expansions and new construction through 1980s yielded a high point of approx. 7,200 acute-care hospitals

1980s: medical advances transferred procedures to ambulatory settings, cost containment reduced numbers to approx. 5,700 through mergers and closures

Types of Hospitals

Acute care: avg. stay ≤30 days

Long-term care: psychiatric, rehabilitation

Teaching: medical school affiliation, student & resident clinical education (400-6% of all hospitals)

Non-teaching: not medical-school affiliated but may provide educational experiences for health-related students

Hospitals by Ownership Status, 2011

All U.S. Registered Hospitals: 5724

51%- Non-governmental not-for-profit

Teaching and non-teaching

21% -VA, State and local governments

Federal, state, city, county owned

18%- Investor-owned for profit

Management companies, physicians

10%-Non-federal psychiatric or long term care

Physician-owned Hospitals

Major growth since 1965 to over 1,000 in 2011; specialize in cardiology, orthopedics, surgery.

High-efficiency with many amenities

Focus on less complex, profitable cases

Concerns regarding financial incentives, competition with community hospitals

Supporters point out owners’ service to community hospitals and tax payments as for-profit entities

Financial Condition of Hospitals

Declining occupancy: major shifts to ambulatory settings

Private insurer and Medicare pressures to cut utilization and costs

Rising operational & capital costs for technology

Competition with physicians for profitable diagnostic and treatment services

Academic Health Centers, Medical Education and Specialization (1)

Academic health center (AHC): accredited, degree-granting institution composed of a medical school, one or more professional schools (dentistry, nursing, public health, pharmacy, allied health) with an owned or affiliated relationship with one or more teaching hospitals, health system or other organized care provider.

Academic Health Centers, Medical Education and Specialization (2)

Technologically advanced; sources of major clinical research and the sophisticated technology

Technical advancements fuel specialization

Training sites for all health professionals; high costs

Serve medically needy populations

Fragmented services result from training venues

Hospital System of the Department of Veterans Affairs (1)

The largest health care system in the U.S.: 153 hospitals, 135 nursing homes, 47 residential rehab facilities, 900+ outpatient clinics

Major teaching centers- most medical school affiliated

Insulated from other hospitals’ financial woes by strong Congressional support

Hospital System of the Department of Veterans Affairs (2)

Veteran’s Integrated Service Networks (VISNs): decrease cost & improve quality; 22 VISNs function as vertically integrated delivery systems.

Health Services Research & Development Service (HSR&D): spans clinical research to management policy

Structure and Organization of Hospitals (1)

Typical organization model is the not-for-profit hospital

Direction, control & governance rest on a three-legged platform:

Board of Directors (trustees)

Administration

Medical staff

Structure and Organization of Hospitals (2)

Major Operating Divisions

Medical

Nursing

Patient support

Diagnosis

Administration & Fiscal

Human resources

Hotel services

Community relations

Structure and Organization of Hospitals (3)

Medical staff organization: headed by physician President or Chief of Staff

Liaison between administration and physicians

Recommends physician appointments; oversees quality of care

“Attendings”: physicians in practice with hospital privileges

“House staff”: post-medical school trainees under Attending/academic supervision

Structure and Organization of Hospitals (4)

Nursing Division: Largest professional component of employees

Function in “units” by type of care

Units typically led by nurse managers who coordinate staff and patient service

Structure and Organization of Hospitals (5)

Patient support: e.g. pharmacy, social work, nutrition, discharge planning

Diagnostic: e.g. labs, imaging, non-invasive cardiology

Administrative and fiscal: board of directors’ relations, strategic planning, non-clinical service management, regulatory compliance, billing, records

Structure and Organization of Hospitals (6)

Human resources: employee hiring, orientation, training, termination, benefits management, regulatory compliance, labor relations

Hotel: e.g. plant facilities, housekeeping

Community relations: Media and public relations management, community services

Information Technology’s Impact on Hospitals

Hospital adoptions of EHRs more than doubled from 16% to 35% since HITECH Act of 2009

At mid-2012, 4,000+ hospitals enrolled in Medicare & Medicaid EHR incentive programs; received $ 5B in “meaningful use” payments

Seek duplication and error reductions, access to patient records, billing and reporting efficiencies

Complexity of the System

75% employ 1000+ persons; “systems” may employ 10,000+

Hundreds of inter-related services, personnel, functions and procedures

Complicated morass for patients and families

Patient advocates help navigate issues & concerns

Types and roles of Patients

Persistent historical perceptions of patients as needy and compliant with authoritarian professionals conditioned patients to assume submissive “sick role”

More educated and assertive patients increasingly reject passive role and demand participation in care

Patient Rights, Responsibilities

Rights protected by U.S. Constitution, state laws, regulations

“Bill of Rights” (AHA) provided to every patient upon admission

Patient responsibilities: accurate information, respect providers, other patients, financial obligations

Complexity challenges rights.

Patient Bill of Rights (Synthesis) (1)

Receive respectful, considerate treatment

Know names & titles of all individuals providing their care

Complete and understandable explanations of their diagnosis, treatment and prognosis

Receive from physician all information necessary to provide informed consent

Patient Bill of Rights (Synthesis) (2)

Request & receive consultation on their diagnosis & treatment or obtain a second opinion

Set limits on the scope of treatment or refuse treatment & be informed of consequences of such refusal

Leave the hospital, unless unlawful, even against physician’s advice & receive an explanation of responsibilities in exercising that right

Patient Bill of Rights (Synthesis) (3)

Request & receive information & assistance in discharging financial obligations & review a complete bill, regardless of payment source

Access their records on demand & someone capable of explaining records

Receive assistance in planning and obtaining post discharge services

Informed Consent

Legally recognized since 1914

Patient understands medical procedure to be performed, its necessity and alternatives and why

Benefits

Risks and consequences & likelihood

Consent freely given

Second Opinions

Insurers require for certain procedures

May be patient-generated

Guard against unnecessary, inappropriate or non-beneficial procedures

Diagnosis Related Group (DRG) Hospital Reimbursement

Retrospective reimbursement perverse to cost control, fueled utilization

Response to over-use, rising costs, corporate outcries

Shift to prospective reimbursement reversed financial incentives for overuse of treatments, services

Medicare adopted 1983; other insurers followed

Discharge Planning

Arranges post-hospital care

Involves physicians, social workers, insurance company and nursing

Right of discharge appeal: Medicare designated Quality Improvement Organizations (QIOs) protect patient rights to appropriate discharge planning

Post-DRG and Managed Care: Early Market Reforms (1)

Mid 1980s-2000: ~2,000 hospitals closed; inpatient days fell by 1/3, many consolidated into local/regional/multi-facility systems.

1980s-1990s “production line” concepts to gain efficiencies; research highlighted alienated patients and caregivers

2000-present: Refocus on personalized, patient care and amenities

Post-DRG and Managed Care: Early Market Reforms (2)

Horizontal Integration: hospital mergers under one or more corporate structures to allow economies of scale, enhanced expert recruitment and deployment, increased access to capital and stronger brand marketing

Crested in mid 1990s and slowed until 2002 when anticipated reforms refueled consolidations and mergers

Post-DRG and Managed Care: Early Market Reforms (3)

Vertical Integration: Operation of a variety of related businesses; in health care, ideal vertical system encompasses full continuum:

Primary and specialty diagnosis and treatment

Inpatient medical and surgical services

Short and long-term rehabilitation

Long term home and institutional services

Terminal care

Quality of Hospital Care (1)

Operational factors, indicators, value judgments

Historically: “degree of conformance with pre-set standards”

Peer review: implicit criteria with qualitative judgments

Avedis Donabedian: structure, process, outcome

Landmark studies revealed wide variations.

Quality of Hospital Care (2)

Hospital accreditation by the JCAHO initially structural; moved to process and most recently to outcomes

Computerized information & analytical techniques allow adjustment of findings to account for patient variables previously held to confound fair assessments of patient outcomes

Quality of Hospital Care (3)

Variations in medical care: John Wennberg, Alan Gittlesohn (1973): documented variations in the amounts and types of medical care provided to patients with the same diagnoses living in different geographic areas

Amount & cost of hospital treatment related more to number, specialties and preferences of physicians than to patients’ conditions

Quality of Hospital Care (4)

Leapfrog Group: Est. in 2000; 160 fortune 500 corporations, large public and private benefit purchasers w/Robert Wood Johnson Foundation support

Hospital Quality and Safety Survey: tracks progress in implementing 30 National Quality Forum safety practices; available free, online.

Quality of Hospital Care (5)

Hazards of hospitalization: IOM Report 1999: 44-98,000 annual deaths from errors

System deficiencies, not negligent providers

Types: diagnostic, treatment, preventive, other

Congressional, professional responses rapid, but short-lived

Improvement efforts continue with some successes but no “system-wide” uniformity

Quality of Hospital Care (6)

Nursing Shortage Crisis

Dissatisfaction with staff reductions, overwork, and inability to maintain quality patient care

Qualified individuals have many less demanding career options

1/3 of nursing workforce is 50+ years of age; young persons disinclined to enter the profession

Shortage improved 2002-2009 with 62% increase in employable RNs.

Research Efforts on Quality Improvement

JCAHO: quantitatively defined quality with measurable, results focus

Patient-focused hospital satisfaction studies

Studies on test, procedure appropriateness: On average, 1/3 or more of all procedures of questionable benefit (Fig. 4-1)

Responsibility of Governing Boards for Quality of Care

Boards carry ultimate responsibility for quality; oversee quality assurance & monitor indicators such as:

Mortality rates by department

Hospital-acquired infections

Patient complaints

Adverse drug reactions

Hospital-incurred traumas

Hospitalists: A Rapidly Growing Innovation

Substitute for patients’ primary physicians

Coordinate all in-hospital care

Most are qualified in internal medicine

Many assessments underway regarding quality & coordination of care

“Specialty designation” currently under consideration

Forces of Reform (1)

Cost, quality & access are hospital survival criteria of the future

Overuse of expensive technology without evidence-based patient benefits will be curtailed

Americans are more attuned than ever to shortcomings of the expensive, ineffective health care system

Hospital performance will be matters of public judgment based on published outcomes criteria

Forces of Reform (2)

ACA effects on hospitals

Population focus: shift to accountability for overall outcomes of patient care, not only within “hospital walls,” requires new levels of coordination

Market consolidations: Mergers and Acquisitions: Create new, larger systems for negotiating power with payers, increased efficiencies and control of population groups

Forces of Reform (3)

ACA effects on hospitals, cont’d.

Accountable care organizations: Hospitals join in legal arrangements with physicians, other providers, suppliers to coordinate patient care across full spectrum of needs

Reimbursement and payment revisions: ACO shared savings; hospital value-based purchasing; readmissions reduction program; bundled payments for care improvement initiative

Continuing Change (1)

Retain core roles

technologically advanced care

education of physicians & other health professionals

clinical research sites

Advance into new role

one component of integrated systems in continuum of community-based care

Continuing Change (2)

Results of government and private entity experiments with hospital roles in a population-focused, value-driven delivery system will inform about refinements affecting costs and quality.

Rising concerns about ACOs joining prior competitors, creating market power that may drive up costs

Continuing Change (3)

Positive reports on consolidated hospital systems note that system member hospitals outperform and improve faster than independent hospitals on important quality parameters.

Likely to be variation in capability of individual hospitals to adjust to reforms; not all will survive.