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Health Care
I consider the question of the managing change with the healthcare issues in a way of curtain problems and theyre solutions. First of all, lets see some current issues in the USA health care system today. New diagnostic and treatment procedures flourish in the United States. Our medical schools are of the best, our physicians of the first rank. And why not, since we spend some 15 percent of our GDP on health care? Few would argue that theres a better place to get sick than in the United States if you can penetrate the system. Our system is the problem, and its only going to get worse. At dinner party, if you listen to people on the subway, if you talk with physicians, and if you talk with leaders of small business and big business, theyre all very unhappy and confused. Private insurance companies are happy about current trends, if not happy about where we are. In the present, theyre making money. Drug companies were happier six months ago. They think theyve been taken aback by the bad press that theyve been getting, and theyre searching for how they can do better. But by and large, until relatively recently, I think they were feeling again comfortable. The more-affluent people are also fully insured. While they grouse about the paperwork, they have reasonable ways of accessing the tremendous advances that have taken place in the biomedical sciences, which are increasingly translated into better diagnostic care, therapy, drugs. I use the word access advisedly, because it isnt always easy for them either to get to the right places because of the bureaucratic constraints, because of the third-party payers who say youve got to have your primary-care physician refer you before you can see a specialist. But when they do gain access to the system, this group feels reasonably satisfied. National medical errors database hits one million records milestone. Medmarkx, nongovernmental database of medication errors, has received over one million medication error records to date, the U.S. Pharmacopoeia (USP) announced recently. Medmarx is an anonymous, Internet-based program used by hospitals and other healthcare organizations to report track and analyze medication errors. Since the program began in 1998, more than 900 HCOs have contributed data to use an historical review of Medmarx data reveals that approximately 46 percent of the medication errors reported reached the patient; 98 percent of the reported errors did not result in harm. JCAHO Creates IT Panel. The Joint Commission on Accreditation of Healthcare Organizations has created an advisory panel to recommend ways the Oakbrook Terrace, Ill.-based organization can use its accreditation process to increase the role of IT in healthcare. The panel will conduct a benchmark survey on the existing state of IT adoption in healthcare, and track progress annually. The 39-member panel, chaired by William Jessee, M.D., president and CEO of MGMA, includes provider representatives and reps from health insurers, academia, think tanks, IT vendors and government agencies.
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If greater control is needed, governments must take a larger role in the healthcare system. This has been the trend over the past two decades, but has any government ever managed to browbeat part of the economy into efficiency? Governments are increasingly involved in hospital

decision-making; when healthcare is free, people do not hesitate to use the system. They request too many tests. They stay in hospitals too long. They consult too many physicians. The costs add up. Millions of Americans suffer from problems such as insomnia, back pain, chronic fatigue, severe headaches, and arthritis: there is a great potential for them to spend vast resources to little proven benefit. Most Americans are insured through their jobs. Employers used to buy the insurance from a third party, typically the local Blue Cross/Blue Shield not-for-profit plan. Recently the Blues have lost ground to more aggressive for-profit insurers. But their strongest competitor is now employers themselves, stung by rising health-care costs and the state authorities burdensome regulation of the insurance industry. Federal law allows employers who selfinsure (usually through an arms-length intermediary) to escape state regulation. Over half of Americas biggest employers have now made the switch, in effect paying their workers medical bills themselves. The other main insurer in America is the government. The old and the disabled are covered by a federal program, Medicare. Medicare, which will spend about $110 billion this year roughly twice the cost of Britains NHS , is divided into two parts: the first pays for most hospital care out of payroll taxes; the second pays for doctors fees out of general taxation and a premium paid by the patient. Medicaid, a state-federal program that will cost nearly $90 billion this year, pays all the medical bills of the poor, including those for long-term care. Retired and serving soldiers are covered by the Veterans Administration.The plight of the uninsured is bad, but not as bad as it sounds: most get care from hospitals that are, in theory, not allowed to turn anyone away. Figures from the census bureau and the American Hospital Association suggest that overall spending on the uninsured is comparable to spending on the insured, though it is unevenly distributed. Uninsured people can be bankrupted by big medical bills. And the bills they cannot or will not pay are a time-bomb passed among others involved in the system. The hospitals try to pass it to the insured in higher premiums; insurers try to pass it back in lower hospital profits, or to offload it on to state and local governments. The other flaw in the American way is caused by costs that are spinning out of control. At over $600 billion, the cost of health care in America now absorbs 12% of GDP. And whereas in other countries it has roughly stabilized, in America the share has been rising throughout the 1980s. Employers have reacted by trimming the health benefits they offer, especially undertakings to cover staff who have retired. Those undertakings will knock a $200 billion hole in profits when they have to be shown in company accounts from next year. One result is that in four-fifths of labor disputes in the past two years, the main fight has been over health benefits.
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Not everything about American health care is bad. Its quality is widely thought to be high which is why one opinion poll had 90% of respondents favoring major changes in the system, but over half satisfied with their own care. There is plenty of choice of doctors and hospitals: European indifference to patients is rare in America. America has made the biggest progress in developing quality assessment and output measures for health. It remains the world leader in innovation, experiment and new technology, both in medical care and in different ways of delivering and paying for it.

There is a host of other ideas on offer: Insurance reform. Some want to ban experience rating (skimming the cream of insurance risks) and insist on community rating. Others want to encourage the small-employer insurance market, perhaps by pooling risks. A third idea is an allpayer system such as Marylands, under which all insurers agree to pay the same price to hospitals an attempt to create the monophony power among purchasers that is common in most other countries. But the insurance market already suffers from too much regulation. And an allpayer system could stop the move towards cheaper selective contracts with providers. Medicaid expansion to cover more of the uninsured. This might include letting people above the poverty line, but who cannot otherwise find insurance, buy into the public program. An alternative is to expand Medicare to cover the whole population. But in deficit-ridden, taxophobic America, neither the federal nor any state government is in a position to take on a new spending commitment that could add up to $250 billion a year (even if it saves more in private spending). State governors have repeatedly asked Congress to stop expanding the coverage of Medicaid. Price and volume controls. The most successful of these has been Medicares prospective budgeting for hospitals, where payments are based not on the costs incurred but on fixed prices per case (known in the jargon as diagnosis-related groups, or DRGS). This has been copied by many private insurers. The average patient now stays in hospital for a shorter period in America than in any other country, and a recent Rand Corporation study confirmed that the quality of patient care has not been affected. A new set of Medicare price and volume controls on doctors comes into force next year. But though such controls might hold down spending in one place, bills have a nasty habit of popping up somewhere else as providers fight to maintain incomes. The most sophisticated single reform plan would be to encourage managed care to cap the tax exemption for health insurance at the cheapest insurance policy available. They would need to create state insurance pools under healthcare sponsors for those who cannot get coverage. Employers who did not give their workers insurance would have to contribute to a state pool an idea known as play-or-pay. But such employer mandates would increase business costs, and without firm cost controls they might lead to more overall spend on health care. Individual mandates. The Heritage Foundation, a right-wing think-tank based in Washington, DC, is touting a plan that would replace the employee-tax exemption by a tax credit to help people buy their
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own health insurance. The government would require everyone to take out catastrophic health insurance a long-stop protection against the biggest medical bills. Potting the burden on individuals sounds attractive, but it would make it harder to avoid adverse selection by both insurer and insured. As a variant, a government commission headed by Deborah Steelman has been considering replacing both Medicare and Medicaid with catastrophic coverage for all. More patient charges or what are known in the jargon as co-payments. But these are already high, in both the private and the public sectors (on some estimates, old people now pay as much out of their own pockets for health care as they did before Medicare). And if they are pushed too far, people simply take out extra private insurance. Managed care in HMOS or PPOS (preferredprovider organizations that offer more choice of doctor and hospital than most HMOS). This still looks the most promising option. About 70m Americans now belong to a managed-care plan. Some plans do little more than insist on second opinions before surgery. But the best of them

offer patients all the care they need for an annual prepayment, reversing fee-for-service medicines incentive to excessive treatment. But after a one-off cut in costs, their spending growth has since matched the inflation of the fee for-service sector. Many HMOS have lost money; some have gone bust. Is America ready to make any changes to its chaotic system at all? One day, it must: the uninsured are a growing embarrassment; spending cannot rise for ever; growing paperwork will become intolerable; increasing interference in doctors clinical judgments will provoke revolt. But the short-term prospects for reform are poor. The White House appears to think that any change would be politically riskier than letting the system bumble along as it is. As for the Democrat-controlled Congress, it was badly burnt when it expanded Medicare to cover catastrophic health-care costs in 1988, only to be forced to retract it in 1989 when the better-off elderly objected to paying extra taxes. In recent months the Democrats, especially in the Senate, have gingerly begun to discuss changes in health care. Some hope to make a version of national health insurance a big issue in the 1992 election campaign. The biggest problem for Republicans and Democrats alike is the mulish conservatism of Americas powerful interest groups. John Ring, president of the American Medical Association, says his organization is firmly against national health insurance, or any plan that involves a single payer. (It might horrors reduce doctors incomes from their present average of $150,000 a year.) Insurers and private hospitals similarly guard against invasion by socialized medicine.

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This document was downloaded from Coursework.Info - The UK's Coursework Database - http://www.coursework.info/ Viviana Rodriguez BUS 320_02 FALL 2010 Management Term Paper http://www.whitehouse.gov/blog/2010/03/30/meaningful-progress-american-people http://online.wsj.com/article/SB10001424052748704805204575594391358149522. html?KEYWORDS=health+care+bill http://online.wsj.com/article/SB10001424052748704117304575137370275522704. html

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