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Chapter 3 Mahima Ashok
Hospitals: Origin, Organization, and Performance September 4, 2006
Chapter Outline
· Historical Perspective
· Sources That Shaped the Hospital Industry
- Health Insurance
- Medicare and Medicaid
· Growth and Decline in Numbers of Hospitals
· Sources That Shaped the Hospital Industry
- Types of Hospitals
· Financial Condition of Hospitals
· Academic Health Centers, Medical Education and Specialization
- The Balanced Budget Act and Academic Medical Centers
· The Hospital System of the Department of Veteran Affairs
· Structure and Organization of Hospitals
- Medical Division
- Nursing Division
- Allied Health Professionals
Ø Diagnostic Services
Ø Rehabilitation Services
Ø Other Patient Support Services
Ø Nutritional Services
- Administrative Department
- Hotel Services
· Complexity of the System
· Types and Roles of Patients
- Rights and Responsibilites of Hospitalized Patients
- Informed Decisions, Informed Consent and Second Opinions
· Diagnosis-Related Group Hospital Reimbursement System
· Discharge Planning
· Subacute Care
· Market Driven Reforms Affecting Hospitals
- Managed Care
- Reengineering
- Patient-Focused Care
- Integrated Health Systems
- Horizontal Integration
- Vertical Integration
Ø Role of Physician
Ø Integrated Care Arrangements
- Market Response to Managed Care
· The Quality of Hospital Care
- Landmark Studies of Quality of Hospital Care
- Variations in Medical Care
- Hazards of Hospitalization
- Shortage of Nurses Creating Staffing Crisis
- Current Research Efforts in Quality Improvement
- Responsibility of Governing Boards for Quality of Care
- Incremental Quality Improvement
· Forces of Reform: Cost, Quality and Access
Summary
The hospital is one of the most important and familiar institutions in the US Health System. The negative perceptions that patients have towards hospitals can be traced historically. During the early years of America, hospitals primarily served as places of shelter for the elderly and a place for the dying and the seriously ill. The hospital would protect the community from those who were terribly ill. As populations grew in America, mental illness also became a problem. To contain those with mental illness, it was common to place them in a cell or strong house. Bellevue hospital was the first Poor House of New York City (est. 1736) and was built to “house the poor, aged, insane and disreputable.” As time went on, Doctors realized the importance of creating a place where the sick could be separated from the needy. Thus, hospitals such as The New York Hospital in New York City came into being. Doctors also wanted the creation of such hospitals so that they had a place where they could practice procedures and train students.
The growth of health insurance in the US transformed hospitals from places of charity into complex organizations. Advances in medical procedures also helped the hospital industry to grow tremendously. The Hill Burton Act of 1946 was instrumental in funding the expansion of the hospital facilities. Medicare (1966) and Medicaid (1965) were some of the most important legislative acts in the Healthcare arena of the USA. Medicare especially had a huge impact on hospitals since those over 65 increased their medical spending.
The growth of hospitals in the US reduced in the 1980s when spending was reduced and medical advances allowed several inpatient procedures to be performed as outpatient procedures. Health reform and managed care resulted in the closings of several hospitals and the number of US hospitals reduced from 7200 to around 5000.
There are different types of hospitals such as acute care and long-term care. Hospitals can also be teaching or non teaching hospitals. For-profit hospitals and tax-exempt hospitals are yet another category of hospitals. Public hospitals are operated by a city, country, the military, the US Department of Veterans Affairs or the US Public Health Service.
Hospitals now face the challenge of providing patient centric services while attempting to cut costs. At least a third of US hospitals are currently failing financially. Starting in the 1980s, hospitals began to participate in mergers and other deals to gain economic ground. It does not seem that these multihospital strategies have been of much benefit. The economic problems for hospitals were exacerbated by the Balanced Budget Act of 1997, which reduced Medicare payments for patients below the cost of treatment. Additional cuts proposed in the 2003 Medicare budget are also problematic to hospitals.
Most research in Medicine is conducted in health centers which are associated with Medical and allied health schools. Many advances in medicine are due to the extraordinary research conducted in such centers. Medical education encouraged Physicians to specialize more and more. This specialization has led to the reputable name that US medicine has received worldwide and has also led to too many tests and procedures being conducted.
The Veterans Health Administration of the VA is the country’s largest health care system. The VA is trying to reorganize to control costs. Included in the reorganization is the Health Services Research and Development Service (HSR&D).
The structure and organization of hospitals is very complex and consists of the following:
1. Medical division
2. Nursing division
3. Allied health professions such as lab technicians, behavioral scientists, radiologists etc.
4. Administrative servuces who manage the non-medical hospital services.
5. Hotel services include those hotels associated with a nearby hospital.
The role of the patient has changed considerably from the “unavoidable burden” they were initially considered to be. It is now recognized that Patients have various rights in hospitals. The Bill of rights is “not suspended when a citizen enters a hospital.” The AHA (American Hospital Association) published the “Statement on a Patient’s Bill of Rights” in 1972. It states that the hospital recognizes its responsibility towards the patient’s welfare.
Patient’s rights include the right to:
- receive respectful treatment
- receive understandable explanations of conditions
- know the names of Doctors and other caregivers
- receive all information necessary for treatment
- obtains second opinion
- set limits on treatment
- leave the hospital
- discuss medical records
Hospitals are responsible for planning the discharge of patients after their hospital stay. Discharge planners use information provided by the patients to obtain follow up services including home care. The discharge notice created by the hospital must include instructions on how the patient can ask the Peer Review Organization (PRO) to review the hospital’s decision. The PRO is in contract with the federal government to ensure that hospitals and Doctors follow Medicare rules. Subacute care includes rehab and convalescent facilities that require between 10 to 100 days of care. It requires care that is not appropriate to acute care hospitals or skilled nursing homes.
The Clinton-led Healthcare reforms of the 1990s were resisted by the Congress and the public. The Market continued to change the health system of the US. Demands for lower costs, better access, and increased quality led to a rise in competition in the market. Managed care continues to exert a strong influence on the healthcare community by striving to control cost without compromising quality. Hospitals are also working towards reengineering their entire organization to achieve significant improvements in performance. The change from a “production-line” concept of hospital care to a patient-focused system has also changed the nature of the hospital system. Beth-Israel Hospital in Boston and Cedars-Sinai Hospital in Los Angeles are two examples of patient-centric treatment centers. In both these hospitals, the importance of nursing care as part of well being is recognized. The 1960s and 1970s were two decades of intense competition between hospitals for market share. In the 1980s, these institutions began moving towards an integrated health system through consolidation and coordination of services. Both for profit and tax exempt hospitals began to involve themselves in horizontal integration, which refers to “organizations that produce the same goods or services.” Vertical integration refers to those organizations that include a variety of different “business entities.” In a healthcare scenario, this could include outpatient services, inpatient services, short-term care, long-term care, and terminal care.
In an integrated system, the types of hospital/physician/payer arrangements can be briefly divided as follows:
1. Management Services Organization (MSO) model
2. Physician-Hospital Organization (PHO) model
3. A hospital with large groups of primary care and specialty physicians.
Measuring the quality of hospital care is easier than evaluating quality in a medical office because of the availability of medical records and other relevant data. A common peer review quality assurance process was used until 1970s in the form of a chart audit. These were then found to be inefficient due to internalized standards and the lack of rational basis. The Donabedian Model for measuring the quality of care takes into consideration structure, process, and outcomes.
Important Quality Studies:
- The Teamsters Study of the Columbia University School of Public Health and Administrative Medicine was an analysis on hospital care quality. This study concluded that the care provided by hospitals affiliated with Medical schools was better than other the care provided by other hospital types.
- In 1973, Wennberg and Gittlesohn published papers on the variations in medical care to patients with the same diagnosis.
- The IOM reported that in 1997 between 44000 and 98000 deaths occurred because of medical errors (see figure 2).
The reduction in the nursing population threatens the quality if healthcare. Nurses are increasingly dissatisfied with staff reductions, are overworked and have little or no time to concentrate on quality. It is estimated that there will be a shortage of 1 million nurses by the year 2020 (see figure 1). The Governing boards of hospitals have the ultimate responsibility of maintaining the quality of the hospitals. The issues of quality, cost, and access continue to be the important benchmarks for hospital performance and the public debates on these issues will shape the nature of hospitals in the future.
Figure 1: Shortage of Nurses
Figure 2: Accidental Deaths per Year
“Incorporating data from the IOM report, this graph compares accidental medical deaths with those in other industries.”
Source: Medical Event Reporting System
Terms and Definitions
1. Veterans Health Administration: The largest health-care system in the USA. Delivers medical assistance through VA hospitals, clinics and other health-care facilities.
2. VISN: Veteran’s Integrated Service Networks
3. Balanced Budget Act of 1997: 1997 Act of Congress that has major consequences
through changes in Medicare financing.
4. Hill Burton Act of 1946: Hospital construction act was signed into Public Law in
1946 and was contributed to the expansion of the hospital industry.
5. PRO: Peer Review Organization. An organization in contract with the Federal
Government that reviews the quality of care provided through Medicare an
Medicaid.
6. Donabedian Model : Model to measure the quality of healthcare by considering
structure, outcomes and quality.
7. Acute Care Hospitals: Hospitals where average length of stay is less than 30 days.
8. Subacute care: A level of care that is a combination of rehab and convalescent
services.
10. DRG: Diagnosis Related Groups. An inpatient classification system. Under
Medicare prospective pay, hospitals are paid a fee for patients in a DRG irrespective
of actual services.
11. MSO: Management Services Organization. Uses a corporation to provide admin services to physician groups and manage various payment arrangements.
12. PHO: Physician-Hospital Organization. Physicians in a hospital establish a
corporate entity along with the hospital and negotiate wit purchasers.
13. PSRO: Professional Standards Review Organizations
14. AHA: American Hospital Association