Introduction to Health Care Organization Ty Borders, Ph.D. and James Rohrer, Ph.D. Department of Health Services Research & Management School of Medicine.

Introduction to Health Care Organization

Ty Borders, Ph.D. and James Rohrer, Ph.D.Department of Health Services Research & Management

School of Medicine / Texas Tech Health Sciences Center

Health and Health Care in the United States

Objectives for today

• Define health, disease, disability, and illness

• Compare the health of the U.S. population to other countries’

• Compare spending on health care in the U.S. to other countries

• Describe why we spend so much on health care but gain so little in health

Intro. to Health Care Organization Ty Borders, Ph.D.

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I. Introduction – Basic Points 

A. Access problems

B. US care is expensive but good

C. Public not willing to pay for care for better care for poor

D. No consensus on what to do

E. Costs could be reduced by reducing illicit drug use, crime, illiteracy

Intro. to Health Care Organization Ty Borders, Ph.D.

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1. Intro (cont.)

H. Also could reduce unnecessary care

I. Japan has lower infant mortality rate, longer life expectancy, better health insurance coverage, less percent of GNP spent on health care, and lower health care expenditures per capita.

J. Survey Data from Harvard pct very satisf pct very satisf

W/ MD encounter w/hosp admUS 54 57England 63 67Canada 73 71

Intro. to Health Care Organization Ty Borders, Ph.D.

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II. Health and Health Care

A. promotion of health vs treatment of disease

B. Dfn of health: physical and mental well-being…freedom from defect, pain or disease

C. positive health vs negative health

D. disease vs illness

Intro. to Health Care Organization Ty Borders, Ph.D.

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II. HEALTH AND HEALTH CARE (CONT)

E. increase in life expectancy mainly due to decline in mortality at young ages

F. leading causes of death: heart disease, CA, stroke, injury, lung disease, diabetes, suicide, liver disease, HIV. Contributors are tobacco, diet, exercise, alcohol, microorgs, toxic agents, sexual behavior, motor vehicles, drugs.

Intro. to Health Care Organization Ty Borders, Ph.D.

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G. Determinants of health:

biology/environment(genetics), medical care, psychology (mind-body link), social factors, health care delivery system

H. definition of health care:

all of the activities of society designed to protect or restore health, whether directed to individual, the community, or the environment.

Intro. to Health Care Organization Ty Borders, Ph.D.

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I. I. Prevention goals, Healthy People 2000:

       reduce disparities in health,

       increase life span,

       increase access to prevention services

Intro. to Health Care Organization Ty Borders, Ph.D.

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J. J. Choices:

       care vs cure,

       health promotion vs technology,

       quality vs quantity of life,

       control vs paternalism,

       health vs other values

Intro. to Health Care Organization Ty Borders, Ph.D.

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III. Data Sources

A. purpose of quantification: description and program planning (clarify problem, define unmet need, design solution, make forecasts, evaluation). Requires creativity and ‘art’ as well technical competence

B. sources: census, NCHS (vital stats, rainbow series, MMWR, Health US), AHRQ (MEPS, HCUP)AHA (stats, guide)

What is health?

• A simple definition– The presence or absence of disease

• WHO definition – “complete physical, mental, and social

well-being, and not merely the absence of disease or injury”

What are disease and illness?

• Disease– Professionally defined

– Precise

– Used for treatment

• Illness– Lay definition

– Individual’s reaction to biological state

– Influenced by culture

How do we measure health?

• Population-level indicators– Mortality rates– Years of potential life lost– Life expectancy– Infant mortality rates– Morbidity rates– Disability rates

How do we measure health (cont.)?

• Individual-level indicators– Presence/absence of disease– Disability– General HRQL measures

• SF-36

• Sickness Impact Profile

– Disease specific HRQL measures– Psychiatric functioning measures

How healthy are we in the U.S.?

• U.S. ranks 18th with 79.1 expected years of life for a female – (# 1 is Japan with 83.0 years of life)

• U.S. ranks 23rd with 72.3 expected years of life for a male – (#1 is Japan with 76.3 years of life)

From Kindig, D.A. (1997). Purchasing Population Health.

From Kindig, 1997

From Kindig, 1997

Shift in causes of mortality

• Infectious diseases less common– because of public health interventions like

sanitation, better nutrition– not even because of immunizations

• Chronic diseases more common– increased reliance on medical care

From Kindig, 1997

Intro. to Health Care Organization Ty Borders, Ph.D.

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Why do we concentrate on medical care?

• Developing societies focus on health care to improve

health

• We assume that spending more on health care will

lead to health improvements

• Increases in health services may actually reduce

population health

• Health care is reactive

– Concerned with negative health status

– Poor health professionally defined as disease

From Kindig, 1997

Intro. to Health Care Organization Ty Borders, Ph.D.

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Medical care and health

• Does medical care make a difference?

– For some individuals = yes

– For society at large = yes, but not as much as

we think

• About 10% of population health status attributable

to medical care

Medical care and health

“A society that spends so much on health care that it cannot or will not spend adequately on other health enhancing activities may actually be reducing the health of its population.”

Evans and Stoddart, 1990

Medical care and health

• McKeown has shown through historical evidence that gains in life expectancy have been because of– better nutrition, sanitation, and water

supplies– these had a much bigger impact on health

than even immunizations and penicillin

Medical care and health

• McKinlay has argued that the effect of medical care on mortality is extremely small at the population level (only a few individuals really benefit)

• Others have argued that medical care may do more harm than good

From Kindig, 1997

Intro. to Health Care Organization Ty Borders, Ph.D.

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Rankings of health system attainment

Member state Overall system Health exp. Level of Health Performance per capitaFrance 1 4 4Italy 2 11 3San Marino 3 21 5Japan 10 13 9United Kingdom 18 26 24Canada 30 10 35Dominica 35 70 59Costa Rica 36 50 25USA 37 1 72

(World Health Organization, 2000)

From Kindig, 1997

From Kindig, 1997

From Kindig, 1997

What about other countries?

0

500

1000

1500

2000

2500

3000

3500

US Can Germ Jap UK

$ per capita

19851993

Where does all the $ go?

35%

20%5%

3%

8%

8%

5%

16%HospitalPhysicianDentalHome healthDrugsNursing homeAdministrativeOther

From Kindig, 1997

Other reasons for increasing expenditures

• Physician income and supply– Rising physician incomes– Canadians receive more services, but expenditures

are lower (physician salaries tend to be lower)– Excess of specialists, not enough primary care

providers– Too many physicians in general– Market failure

Assumptions for optimal competition• Market competition

– No negative externalities of consumption– No positive externalities of consumption– Consumer tastes predetermined

• Demand theory– Person is the best judge of his/her welfare– Consumers have sufficient information to make good choices– Consumers know with certainty the results of their consumption

decisions– Individuals are rational– Individuals reveal their preference through their actions– Social welfare is based solely on individual utilities, which in turn are

based solely on the goods and services consumed

Assumptions for optimal competition• Supply theory

– Supply and demand are independently determined– Firms do not have any monopoly power (there is a sufficient number of

suppliers)– Firms maximizing profits– There are not increasing returns to scale– Production is independent of the distribution of wealth– No barriers to entry

• Equity– Social welfare is based solely on individual utilities, which in turn are based

solely on the goods and services consumed– Distribution of wealth is approved by society

*from Thomas Rice, The Economics of Health Revisited

Other reasons for increasing expenditures

• Aging population

• New technology

• High rates of unnecessary utilization (we’ll talk more about this later)

Current economic incentives

• No incentives to limit utilization under FFS

• HCFA introduced DRGs in 1984

– Pays hospitals for an entire admission, not each hospital stay day

• Managed care incentives

Intro. to Health Care Organization Ty Borders, Ph.D.

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Global deaths attributable to risk factors

• Malnutrition 11.0% • Poor water supply 5.3%• Air pollution 1.1%• Tobacco 6.0%• Alcohol 1.5%• Occupation 2.2%• Hypertension 5.8%• Physical inactivity 3.9%• Illicit drugs 0.2%• Unsafe sex 2.2%• Other causes 60.1%