Chapter 12
Cost, Access, and Quality
Introduction (1 of 2)
Cost, access, and quality are three major cornerstones of health care delivery.
An interactive relationship exists between:
The cost of health care
People’s ability to get health care when needed
The quality of services delivered
Introduction (2 of 2)
The premise is that cost and access go hand in hand.
Cost and access are primary U.S. concerns.
Quality is increasingly taking center stage.
Cost is a factor in quality.
Quality is achieved when accessible services are provided.
Cost of Health Care
“Cost” has three different meanings or perspectives:
Price: A physician’s bill or health care premium.
Health care expenditure or spending (P × Q = E):
Reflects the consumption of economic resources in the delivery of care.
Resources are health insurance, professionals’ skills, pharmaceuticals, medical equipment, discoveries.
Physician’s perspective includes staff salaries, capital, rental, supplies.
High in Cost (1 of 3)
Health care spending spiraled upward at double-digit rates during the 1970s following a massive growth in access created by the Medicare and Medicaid programs in 1965.
High in Cost (2 of 3)
The recent economic recession slowed health care spending growth substantially.
Simultaneously, however, federal health spending increased as more people became eligible for benefits and government revenues declined.
High in Cost (3 of 3)
National health expenditures are evaluated by comparing medical inflation to general inflation.
It is measured by annual changes in the consumer price index (CPI).
Compares changes in national health spending to changes in the GDP.
Reasons for High Cost (1 of 9)
Rising health care expenditures have been attributed to:
Third-party payment
Growth of technology
Increase in the elderly population
Medical model of health care delivery
Multipayer system and administrative costs
Defensive medicine
Waste and abuse
Variations in practice
Reasons for High Cost (2 of 9)
Third-party payment
Third parties, not consumers, pay the lion’s share for most of the services used.
Reasons for High Cost (3 of 9)
Growth of technology
Growth and intensive use of technology have a direct impact on the escalation of health care costs.
Once a new technology is developed, it creates demand for its use.
Technology raises the expectations of consumers about what medical science can do to diagnose and treat disease and prolong life.
Reasons for High Cost (4 of 9)
Increase in the elderly population
Health care costs for the elderly are nearly three times as high as those for the general population.
With increased life expectancy and the aging of the baby boomer generation, the elderly population will continue to increase.
Reasons for High Cost (5 of 9)
Medical model of health care delivery
Emphasizes medical intervention
Deemphasizes prevention
Health promotion and disease prevention have not been accorded their place in the U.S. health care delivery system
Reasons for High Cost (6 of 9)
Multipayer system and administrative costs
Administrative cost are costs associated with the management of the financing, insurance, delivery, and payment functions.
Can include managing enrollment; monitoring utilization; processing claims, denials, and appeals; marketing, and promotion.
Administrative costs can amount to about 25% of all health expenditures.
Reasons for High Cost (7 of 9)
Defensive medicine
Results because the United States has many legal risks for providers.
Leads to tests and services that are not medically justified but are performed by physicians to protect themselves against malpractice lawsuits.
Unrestricted malpractice claims add to health care costs.
Reasons for High Cost (8 of 9)
Waste and abuse
Fraud involves a knowing disregard of the truth. It typically occurs when billing claims or cost reports are intentionally falsified.
Fraud is a major problem in Medicare and Medicaid.
Examples of fraud include providing services not medically necessary or billing for a higher-priced service.
Reasons for High Cost (9 of 9)
Practice variations known as small-area variations
Differences in practice patterns
Associated with geographic areas of the country
Signal gross inefficiencies in the U.S. delivery system
Increase costs without better outcomes
Cost Containment (1 of 9)
Costs need to be controlled because Americans have to forgo other goods and services.
Economic resources should be directed toward their highest valued uses.
Cost Containment (2 of 9)
One reason that cost-control efforts in the United States have not been successful is cost shifting.
Providers make up for lost revenues by increasing utilization.
They charge higher prices in other areas free of controls.
Cost Containment (3 of 9)
Health planning
An undertaking by the government to align and distribute health care resources that would achieve health outcomes for all.
Market forces are allowed to govern the system.
Cost Containment (4 of 9)
Price controls
One of the most important undertakings to control price for inpatient hospital care was the conversion of hospital Medicare reimbursement from a retrospective to a prospective system.
A system based on diagnosis-related groups (DRGs) as authorized under the Social Security Amendments of 1983.
Costs, however, shifted from inpatient to outpatient.
Cost Containment (5 of 9)
Peer review
Process of medical review of utilization and quality carried out by, or under, the supervision of physicians.
A new system of peer review organizations (PROs) has been established to determine whether care was reasonable, necessary, of quality, and provided in an appropriate setting.
PROs can deny payment if care does not meet with their standards.
PROs are now called quality improvement organizations.
Cost Containment (6 of 9)
Competitive approaches
Competition is rivalry among sellers for customers.
Can be in the form of technical quality, amenities, access, or other factors.
In health care delivery, it means that providers of health care services try to attract patients who have the ability to choose from several different providers.
Cost Containment (7 of 9)
Competitive approaches
Demand-side incentives
Cost-sharing mechanisms that place a larger cost burden on consumers
Encouraging consumers to be more cost-conscious in selecting the insurance plan that best serves their needs and judicious in utilization
Cost Containment (8 of 9)
Competitive approaches (cont’d)
Supply-side regulation
Antitrust laws in the United States prohibit business practices that stifle competition among providers.
Examples: Price fixing, price discrimination, exclusive contracting arrangement, and mergers.
It forces health care organizations to be cost-efficient.
Payer-driven price competition
Utilization controls
Cost Containment (9 of 9)
Chronic disease prevention and management
Approximately 70% of all U.S. health care costs are generated by 10% of patients, who typically have one or more chronic diseases.
Improvement in management and delivery of care for chronic conditions is needed.
Steering the system toward a preventative and chronic disease-oriented model
Medical home model, accountable care organizations, electronic health records
Unequal Access to Health Care (1 of 10)
Access to care
The ability to obtain needed, affordable, convenient, acceptable, and effective personal health services in a timely manner
Unequal Access to Health Care (2 of 10)
Data on access
Population-based surveys supported by federal statistical agencies are the major data sources for conducting analyses on access to care.
With managed care, databases are critical in recording and evaluating access.
Unequal Access to Health Care (3 of 10)
Data on access (cont’d)
National Health Interview Survey (NIHS) and Medical Expenditure Panel Survey (MEPS) are leading data sources used to monitor access trends.
MEPS
Consists of surveys that have data on health care use and expenditures such as inpatient, outpatient, dental care, prescriptions, coverage, access payment sources, health status, disability, and demographics.
Unequal Access to Health Care (4 of 10)
Unequal Access to Health Care (5 of 10)
Data on access (cont’d)
Federal government collects data on:
Community health centers
HIV/AIDS
Mental health
States, associations, and research institutions also collect data on health services utilization, state managed care, etc.
Unequal Access to Health Care (6 of 10)
Access disparities
Both low socioeconomic status and minority group membership are associated with lower overall health care usage and access.
Racial/ethnic minorities are less likely than their white counterparts to have a specific source of ongoing care.
Unequal Access to Health Care (7 of 10)
Access disparities (cont’d)
Hispanics are less likely to have a primary care provider.
Nonwhite Medicare beneficiaries have fewer cancer screenings, flu shots, and ambulatory visits.
Unequal Access to Health Care (8 of 10)
Geographic disparities
Rural Americans have higher mortality and morbidity rates and a shorter life expectancy.
Lacking in services.
Main challenges:
Shortage and maldistribution of physicians.
Lack of primary and specialty care services.
Inability to pay for services.
Unequal Access to Health Care (9 of 10)
Access initiatives
Sheppard-Towner Act of 1921 sought to provide direct primary care to economically disadvantaged mothers and children.
Social Security amendments promote screening and preventive programs.
Unequal Access to Health Care (10 of 10)
Access initiatives (cont’d)
Great Society programs sought to improve access among disadvantaged populations.
Medicare
Cancer screenings and immunizations
State Children’s Health Insurance Programs (SCHIPS)
Health Care Quality (1 of 9)
Quality indicators can have micro perspectives and macro perspectives.
Micro perspectives
Focus on services at the point of delivery.
Look at the performance of an individual or organization.
Macro perspectives
Look at quality from the population’s standpoint.
Reflect the performance of the entire health care delivery system.
Health Care Quality (2 of 9)
Health Care Quality (3 of 9)
The Institute of Medicine defines quality as:
“The degree to which health services for individuals and populations increase the likelihood of desired health outcomes and are consistent with current professional knowledge.”
Leaves out the roles of cost and access in the evaluation of quality.
Health Care Quality (4 of 9)
The IOM definition has implications:
Quality occurs on a continuum (unacceptable to excellent).
Focus is on services provided by the system (not individual behaviors).
Quality may be evaluated from the individual or population’s perspective.
Emphasis is on desired health outcomes.
Professional consensus is used to develop measures of quality.
Health Care Quality (5 of 9)
Donabedian proposed three domains in which health care quality should be examined. All are important in measuring quality and are complementary, as such, they should be used collectively:
Structure
Process
Outcomes
Health Care Quality (6 of 9)
Figure 12.4 The Three Domains of Health Care Quality
Health Care Quality (7 of 9)
Structure: “The relatively stable characteristics of the providers of care, of the tools and resources they have at their disposal, and of the physical and organizational setting in which they work.”
Health Care Quality (8 of 9)
Process
The specific way in which care is provided.
Examples:
Correct diagnostic test
Correct prescriptions
Accurate drug administration
Main developments
Clinical practice guidelines
Critical pathways
Risk management
Health Care Quality (9 of 9)
Outcomes
The effects or final results obtained from utilizing the structure and processes of health care delivery.
Viewed as the measure of effectiveness of the health care delivery system.
Suggest overall improvement in health status.
Measures include infection rates, rates of rehospitalization, and patient satisfaction.
Quality Strategiesand Initiatives (1 of 4)
CMS Quality Strategy
Three broad aims of the National Quality Strategy
Accountable care organizations
Requires the U.S. Department of Health and Human Services to develop quality-focused data collection and reporting tools
Physician Quality Reporting System (PQRS)
Encourages reporting of quality of care of Medicare
Quality Strategies and Initiatives (2 of 4)
AHRQ Quality Indicators (QIs)
Consumer Assessment of Healthcare Providers and Systems (CAHPS) surveys
My Own Network, Powered by AHRQ (MONAHRQ)
Free software for health care performance and quality reporting
© 2010 Jones and Bartlett Publishers
Quality Strategies and Initiatives (3 of 4)
Alighting Forces for Quality (AF4Q)
Effort to enhance the overall quality of health care in selected communities, reduce racial and ethnic disparities, and provide models for national health care reform
Consumer-Purchaser Alliance
Promotes the use of performance measurement in health care
© 2010 Jones and Bartlett Publishers
Quality Strategies and Initiatives (4 of 4)
Informed Patient Institute (IPI)
Provides credible online information for consumers about health care quality, patient safety, and health care costs
Joint Commission Quality Check website
Measure Applications Partnership (MAP)
Provides input to the U.S. DHHS on selecting performance measures
© 2010 Jones and Bartlett Publishers
Developments in Process Improvement (1 of 6)
Clinical practice guidelines
Cost-efficiency
Critical pathways
Risk management
Developments in Process Improvement (2 of 6)
Clinical practice guidelines
Also called medical practice guidelines.
They are preferred clinical processes.
Constitute a plan for managing a clinical problem based on evidence.
Provide protocols to guide physicians’ clinical decisions.
Intention is to lower costs and improve outcomes.
Developments in Process Improvement (3 of 6)
Cost-efficiency
Also referred to as cost-effectiveness.
Cost-efficient when benefits received are greater than the cost incurred.
This point is optimal quality.
The demarcation between underutilization and overutilization.
Developments in Process Improvement (4 of 6)
Critical pathways
Interdisciplinary, outcome-based, and patient-centered case management tools that are interdisciplinary and facilitate coordination of care among multiple clinical departments and caregivers
Developments in Process Improvement (5 of 6)
Critical pathways (cont’d)
A timeline that identifies planned medical interventions along with expected patient outcomes for a diagnosis
Developments in Process Improvement (6 of 6)
Risk management
Proactive efforts to prevent adverse events related to clinical care and facilities operations, focusing on avoiding medical malpractice
Patient Safety (1 of 3)
Quality: Indicates higher performance and better clinical and health outcomes.
Safety: Emphasizes the absence of medical errors that could compromise performance and reduce clinical and health outcomes.
Patient safety event: Any process, act of omission, or commission that causes hazardous health care conditions or unintended harm to the patient.
© 2010 Jones and Bartlett Publishers
Patient Safety (2 of 3)
Key safety issues
Failure to capture and maintain accurate, comprehensive clinical information.
Failure to maintain medical equipment.
Processes associated with medications are sources of potential risk.
Diagnostic errors.
© 2010 Jones and Bartlett Publishers
Patient Safety (3 of 3)
Efforts to reduce patient safety risk
Pharmacist-led reviews of medication
Further improvement for accuracy in electronic prescriptions
Educational interventions in medical students and medical practitioners
Event reporting
Patient safety culture
© 2010 Jones and Bartlett Publishers
Conclusion
The greatest challenges to health care delivery are increasing costs, lack of access, and concerns about quality.
Health care costs in the United States are the highest in the world.
