CHAPTER 2

U.S. Healthcare Systems Overview

Philip J. Kroth

   In this chapter, you will learn how to

•  Define major types of organizations through which healthcare is delivered in the United States

•  Identify the venues in which healthcare is delivered

•  Describe training and experience healthcare professionals require

•  Delineate the types of healthcare

•  Identify organizations that regulate healthcare

•  Discuss the major healthcare system changes that are occurring or will occur in the foreseeable future

This chapter is designed to provide a brief and high-level overview of how the U.S. healthcare system is structured and major changes that are occurring or will occur in the foreseeable future. Its target reader is a healthcare information technology (HIT) professional who is relatively new to working in the healthcare system. The chapter is by no means meant to be comprehensive. There are many other sources that you can look to for more information. These sources are referenced by topic throughout the chapter. The chapter is organized to allow you to use it either as an introductory primer on the healthcare system in general or as a reference or glossary. When using it as a reference or glossary, you may jump directly to topics of interest as you traverse other parts of the book. This chapter includes six major sections, with subsections as appropriate. The table of contents and the chapter outline will help you to quickly find sections of interest.

U.S. Healthcare Delivery Organizations and Management Structures

The U.S. healthcare system comprises many and very different healthcare delivery organizations with varied management structures. Many of these organizations provide the same or similar services but are targeted toward different populations and have different funding streams. Some are not-for-profit while others are for-profit. Some are public entities while others are corporate entities with public or private ownership. Most are in a state of transition as political, economic, and regulatory pressures seek to remake the patchwork quilt of services that has characterized the U.S. healthcare system.

Private Medical Practices

Private medical practices are perhaps what most Americans think of when they think about the healthcare system. These are privately owned and operated, ambulatory (outpatient) practices where a group of healthcare providers (most commonly physicians) are in a business partnership to provide medical care to members of a given community. These are also known as group practices. A solo practice is an ambulatory practice that has only one physician. A group practice may offer only one medical specialty, such as family medicine. Group practices may also be owned by larger healthcare organizations such as a hospital where the physicians are paid as hospital employees. A practice that includes many medical specialties, such as general internal medicine, ophthalmology, and pediatrics, is called a multispecialty practice. Many practices also have clinicians other than physicians to consult with patients, such as physician assistants (PAs) and nurse practitioners (NPs). These “midlevel” providers can assess and treat patients, write prescriptions, and order tests. In most states, midlevel providers must be under the supervision of a licensed physician. Group practices also employ non-medically trained staff to perform billing, collections, accounting, office management, payroll, and, increasingly, IT functions. As of 2012, approximately two-thirds of U.S. physicians worked in group practices.¹

The overhead required to operate group practices is increasing substantially. Government regulations in the form of increasingly complex billing requirements, quality reporting requirements, and electronic health record (EHR) systems requirements are combining to make it more difficult to start and continue operating small medical practices. Because of these factors, the number of physicians who become employees of larger healthcare organizations is likely to continue to increase. In fact, a recent survey of physicians reported that 21 percent of physicians are now employees of hospital systems.²

Health Maintenance Organizations (HMOs)

HMOs were created by the 1973 HMO Act. HMOs require covered patients to use the physicians and services approved by the HMOs (see Chapter 3 for details of HMO payment models). In the early years of managed care, HMOs typically had freestanding clinical facilities that provided “one-stop shopping” for patients. Primary care physicians, pharmacists, X-ray technicians, physical therapists, and some medical specialists were all employed by the HMO and worked in its facilities. This kind of organization is also known as a “staff-model” HMO because all of its healthcare providers are employees.

HMOs focus on defined populations of patients with presumably known medical risks and set premium levels using claims histories and patient population actuarial data. The concept is that the financial risk for covering the target population that had been previously borne solely by the insurance companies could be shared with the healthcare providers. Healthcare providers are therefore incentivized to improve the efficiency of care delivery and reduce costs.

Independent Practice Associations (IPAs)

Independent practice associations were also created by the 1973 HMO Act but, unlike HMOs, do not have the freestanding clinical facilities with “one-stop shopping” for its patients. IPAs can be thought of as HMOs without walls. IPA managed care organizations contract with existing physician practices and other healthcare providers to provide care to their members. Each IPA often requires participating providers to care only for its members.

Preferred Provider Organizations (PPOs)

Preferred provider organizations are similar to HMOs but with the significant exception that physicians and other healthcare providers (hospitals, pharmacies, etc.) do not share financial risk as with HMOs. Also, patients are not required to use physicians on the PPO’s approved provider list; they may use any provider but must pay higher copayments and/or deductibles if they use unapproved providers.

PPOs contract with physicians and other healthcare providers for individual services and then resell these services to employers and other insurance companies. PPOs profit by leveraging large economies of scale and purchasing power to negotiate payment rates with physicians and hospitals. Physicians and hospitals benefit from a predictable flow of patients, allowing a certain amount of reliable financial stability (e.g., the ability to predict the coming year’s patient volumes).

Hospitals

Hospitals are facilities that provide acute care where the average length of stay is generally less than 30 days. Hospitals may be not-for-profit or for-profit, may be sponsored by religious organizations or governments, and may have specially designated purposes. As of January 2016, the following list summarizes the 5,627 hospitals in the United States:³

•  Nongovernment not-for-profit community hospitals (2,870)

•  Investor-owned (for-profit) community hospitals (1,053)

•  State and local government community hospitals (1,003)

•  Federal government hospitals, including VA hospitals (213)

•  Nonfederal psychiatric hospitals (403)

•  Other, e.g., prison hospitals, college infirmaries, nonfederal long term care hospitals (85)

Of these, approximately 5 percent (or approximately 400) are teaching hospitals that are affiliated with U.S. medical schools.⁴ Teaching hospitals provide the venue for essential training of medical students and residents. Teaching hospitals and hospitals not formally affiliated with a medical school also provide educational venues for nurses, pharmacists, dentists, therapists of all kinds, as well as a host of other medical professionals. Despite the fact that they compose only 7 percent of U.S. hospitals, teaching hospitals provide 25 percent of all Medicaid hospitalizations, 35 percent of all hospital charity care, and 61 percent of all pediatric intensive care unit beds.⁴

Public hospitals can be sponsored by city, county, state, and federal agencies to provide acute healthcare to the poor and provide healthcare services that are typically expensive but not profitable. Trauma centers, burn units, psychiatric emergency services, and alcohol detoxification centers are examples of essential community services that are not profitable and usually require some kind of supplemental operational funding.

Private hospitals can be not-for-profit or for-profit. The Presbyterian and Catholic health systems in the United States are examples of not-for-profit hospital systems. For-profit hospitals often focus on types of specialty care that are fairly well reimbursed by insurance companies and therefore profitable. See the upcoming “Specialty Hospitals” section for more details.

Academic Health Centers

Academic health centers are usually portions of major universities where a hospital or hospitals are co-located with medical, nursing, pharmacy, dentistry, and many other medical training programs, along with a significant medical research infrastructure. The co-location of medical research, medical training, and university hospitals and their associated infrastructures provides synergies that drive the advancement of medical science and innovation in healthcare services in general. Academic health center hospitals and other facilities also provide a significant amount of specialized and charity care.

Specialty Hospitals

Specialty hospitals are healthcare centers that focus on particular diseases or services. They can be either not-for-profit or for-profit. “Heart hospitals” are an excellent example of specialty hospitals. Heart hospitals focus on cardiac care and are often owned by large cardiology group practices. They focus on streamlining the care of acute and chronic cardiac conditions by incorporating all the testing and treatment facilities for cardiac care under one roof. For example, heart hospitals have the facilities for procedures such as emergency heart catheterization to treat patients who experience acute myocardial infarctions (heart attacks). They also have many types of cardiac diagnostic equipment and services, including ultrasonography, exercise treadmill testing, cardiac imaging, and so forth. By leveraging economies of scale provided by high cardiac patient volumes as well as the relatively high reimbursement for cardiac procedures, these kinds of hospitals are usually quite profitable. Other types of for-profit specialty hospitals include cancer care centers, orthopedic hospitals, and plastic surgery centers.

Not-for-profit specialty hospitals include psychiatric hospitals that provide inpatient psychiatric care. While there are for-profit inpatient treatment centers specializing in the treatment of addiction to alcohol and other substances, many of these facilities are not-for-profit and receive government funding to offset their high costs, often-meager insurance company reimbursement, and high percentages of charity care for uninsured patients.

Public Health Departments

Public health departments are administrated at the city, county, state, and federal levels. They are government organizations that focus on the health of populations rather than individuals. The World Health Organization (WHO) defines public health as follows: “The science and art of promoting health, preventing disease, and prolonging life through the organized efforts of society.”⁵ To accomplish their mission, public health departments focus on prevention of disease and attempt to mitigate factors in society that foster disease in populations.

The National Association of County and City Health Officials (NACCHO) produced a report based on a survey it conducted of local health departments in 2013. The report puts activities of health departments into four categories (you are urged to review the report for more information):⁶

•  Programs and services

•  Emergency preparedness and response

•  Assessment, planning, and improvement

•  Public health policy

Just a very few examples of local health department activities include public vaccination programs and enforcement of food safety standards at restaurants and other facilities that prepare and handle food. They monitor for communicable disease outbreaks and foster public health education on healthy eating choices. They also advocate and attempt to influence politicians and geographic area planning experts to ensure adequate distributions of parks and walking and biking areas to encourage physical activity.

Public health departments have demonstrated their value repeatedly. Despite a history of significant accomplishments and the enormous savings incurred by promoting prevention over treatment, public health departments at all levels of government continually struggle for funding. Their budgets are often at the mercy of the whim of elected officials and state and local budget mandates. See Chapter 4 for a more detailed discussion of public health and public health departments.

Other Healthcare Organizations

There are many other healthcare organizations that provide health services to various communities in the United States and abroad. The U.S. Department of Defense provides healthcare to its 9.4 million service members all over the globe with 55 hospitals, 245 dental facilities, and 373 medical clinics.⁷ The Indian Health Service (IHS), a division of the U.S. Department of Health and Human Services (HSS), focuses on providing care to Native Americans. The U.S. Department of Veterans Affairs (VA) provides healthcare to veterans of the U.S. Armed Forces. There are many other healthcare organizations as well, but discussion of all of them is well beyond the scope of this chapter. Suffice it to say that the U.S. healthcare system is made up of a patchwork of many organizations that focus on different patient populations and organizational missions.

Healthcare Venues

There are many different types of venues through which healthcare is delivered in the United States. The following are brief descriptions of some of the major venues.

Ambulatory Care Centers

Ambulatory care centers are also known as outpatient care centers. Ambulatory care centers of medical group practices have long been the mainstay for primary care services where most patients go to see their primary care and specialty physicians for routine care. However, as medical technology has advanced and as managed care has pressured hospitals to discharge patients faster, many kinds of healthcare that were previously provided on an inpatient basis are now provided in outpatient centers to save money and improve outcomes. For example, many kinds of surgery that previously required at least a night’s stay in the hospital are now routinely performed in ambulatory surgery centers. Examples includes simple hernia repairs, some orthopedic procedures done through an arthroscope (a device that allows joint surgery to be performed with only one or two 1 cm incisions), and a variety of plastic surgery procedures. This allows patients to return home the same day as their surgeries were performed. This saves the cost of an overnight stay in the hospital and allows patients to recuperate at home.

Hospital Ambulatory Care Centers

To capitalize on the move from inpatient to outpatient care, many hospitals established ambulatory care centers to maintain their revenue as well as to leverage the use of their facilities by the patients who use these centers. Hospitals hire physicians as employees not only to generate revenue from outpatient care but also to funnel patients into their more traditional inpatient and ancillary services such as laboratories, X-ray services, and other diagnostic services. Often, such ancillary services are major sources of a hospital’s income compared with the income generated in the ambulatory care centers themselves.

Urgent Care Centers

Because of physician shortages in many areas, overcrowded emergency departments, and other factors, urgent care centers have become a popular alternative for patients seeking care for urgent but non-life-threatening medical issues. These centers are commonly established in convenient locations such as strip malls, with free parking and other amenities. Urgent care centers typically offer evening and weekend hours as well, to provide services during the times it is most difficult to be seen by a primary care physician. Many insurance plans encourage the use of urgent care centers over the much more expensive emergency departments. Urgent care centers are owned and operated by physician groups, insurance companies, and hospital systems. Hospital systems can leverage their ancillary services to make additional profit by funneling business from urgent care centers to these services.

Retail Clinics

A more recent development in the ambulatory care business is retail clinics. These are often located in pharmacies, supermarkets, airports, shopping centers, and “big box” stores such as Target and Walmart. They are most often staffed by midlevel providers (i.e., physician assistants and nurse practitioners) and are designed to handle simple medical conditions such as sore throats and ear aches, routine vaccinations, and physicals for school, sports, camp, and employment. According to a recent RAND Corporation study, there are over 2,000 retail clinics in the United States and 40 percent of the clinics’ visits are for low-acuity healthcare needs for which patients would otherwise see their own doctor.⁸ However, 60 percent of the visits are for issues for which patients would likely not seek help from their doctor. The study suggests that the increased convenience of these clinics is actually increasing healthcare costs despite the use of lower-level providers.

Similar to retail clinics, many pharmacies now offer vaccinations given by specially trained pharmacists. Patients can receive routine vacations in the store without a prescription and often without cost as the pharmacy charges the patient’s insurance and waives the copay. Pharmacies sometimes offer in-store discounts as part of the service. Some retail pharmacy chains offer retail clinics as well.

Acute Care

Acute care is defined as care that is of an emergent or life-threatening nature that cannot be provided in an outpatient setting. Most acute care settings are in hospitals. The following are a few examples.

Emergency Departments

Emergency care is provided in hospital emergency departments (EDs). Aside from providing immediate and life-sustaining treatment to those who need it, EDs essentially triage patients into three groups: 1) those requiring hospitalization and further acute care (e.g., a patient with a gunshot wound requiring surgery); 2) those who can be appropriately treated in the ED and then sent home (e.g., suturing a minor wound); and 3) those who do not need emergency care and are referred to follow up with appropriate practitioners in the ambulatory setting (e.g., a patient with a toothache).

By law, EDs accept all patients regardless of their ability to pay. Because of this, many uninsured patients attempt to use the ED as their source for primary care or present with medical conditions that could have been easily prevented had they sought treatment earlier in an ambulatory setting. These factors contribute significantly to the overcrowding conditions in EDs.

In an attempt to cope with overcrowding, EDs have developed “fast track” or streamlined processes of care for illnesses that often require less than 24 hours of treatment, such as an asthma exacerbation or chest pain that is unlikely to be due to a cardiac condition. Fast tracks are often administered by midlevel providers and follow strict protocols so that patients can be treated and discharged in a timely and safe manner. In addition to taking these measures to cope with overcrowding, EDs often now have several specialized teams to deal with certain emergent diagnoses that require urgent intervention. For example, stroke teams and cardiology teams work with the ED to ensure that patients who have strokes or myocardial infarctions (heart attacks) are seen and treated by an appropriate specialty team within a prescribed time frame. The deployment of such teams has shown significant improvement in both acute stroke and cardiac care.

Trauma Centers

Trauma centers are accredited hospital programs that treat acute trauma in all its forms. Trauma centers are accredited based on their capabilities of both facilities and personnel, with Level-1 being the most highly capable. Upon receiving notice that a trauma patient is expected, an interdisciplinary trauma team is assembled to evaluate and treat the patient, often before the patient even arrives in the ED (such as by air ambulance). Trauma centers focus on a seamless transition for the patient from rapid evaluation in the ED, to surgery in the operating room, to post-operative care in the trauma ICU, through to discharge and follow-up care. Trauma centers maintain patient registries and track outcomes so the system can continuously be evaluated and improved. Because trauma centers require a great deal of very expensive equipment and personnel, many states have only one Level-1 trauma center and require government subsidies to keep it solvent.

Burn Centers

Similar to trauma centers, burn centers involve an interdisciplinary team in the hospital to manage burn patients’ care from the moment they arrive in the ED through to post-discharge care and rehabilitation. Also like trauma centers, burn centers are expensive and therefore often require supplemental funding to operate.

Long-term Care Facilities

The Centers for Disease Control and Prevention (CDC) describes long-term care facilities (LTCFs) as “[n]ursing homes, skilled nursing facilities, and assisted living facilities…[that] provide a variety of services, both medical and personal care, to people who are unable to manage independently in the community.”⁹

Skilled Nursing Facilities

A skilled nursing facility (SNF) that is certified under Medicare or Medicaid is defined as “an institution (or a distinct part of an institution) which is primarily engaged in providing skilled nursing care and related services….”¹⁰ SNFs have 24-hour nursing care supervised by registered nurses (RNs) or licensed practical nurses (LPNs). Although patients of any age can use SNF services, most are elderly with multiple, chronic medical conditions requiring 24-hour nursing care.

Assisted Living Facilities

Although there is no universally accepted definition of assisted living, the National Center for Assisted Living provides the following: “In general, assisted living combines housing, personal care services, and nursing and health care in an environment that promotes maximum independence, privacy, and choice for people too frail to live alone but too healthy to require 24-hour nursing care.”¹¹ In short, assisted living facilities (ALFs) are designed for patients who require long-term care but not around-the-clock nursing care as with SNFs. Services typically include “24-hour assistance with scheduled and unscheduled needs, social and recreational activities, three congregate meals per day plus snacks, laundry service, housekeeping, transportation, assistance with activities of daily living…and the provision and/or coordination of a range of other services that promote quality of life.”¹¹

Home Care/Visiting Nursing Services

Home care is care provided in the home for patients who require long-term care. It can be full time, part time, or 24 hours per day. Often provided through a home healthcare agency, different healthcare personnel can be deployed for different patient needs. For example, a home health aide can assist the patient with activities of daily living (e.g., bathing, dressing, meal preparation, and eating) while a registered nurse can be dispatched on a regular or as-needed basis to assess the patient’s healthcare status (e.g., draw blood for routine lab testing, measure blood pressure and vital signs, assess the adequacy of pain control, medication setup and administration, and education). Home care agencies also can provide home-based physical therapy, occupational therapy, and respite care that provides occasional periods of home care so the patient’s family caregivers or other caregivers can have a break from providing 24-hour-a-day care.

Community/Population Care

Community or population care focuses on the health of communities and populations rather than individuals. Organizations that focus on community health may be funded by government or private charities and vary widely in the populations they focus on and in their missions. The following provide only a few examples.

Federally Qualified Health Centers

Federally Qualified Health Centers (FQHCs) are healthcare organizations that receive enhanced reimbursement from Medicare and Medicaid if they meet a number of requirements, which include targeting an underserved population, charging a sliding-scale fee based on income, providing comprehensive services, having an ongoing quality assessment program, and having a board of directors.¹² Some examples of FQHCs are Community Health Centers that focus on underserved populations, Migrant Health Centers that focus on workers who move frequently, and Health Care for the Homeless Centers that focus on homeless adults and children.

Hospice/Palliative Care

Hospice care may be provided in an inpatient unit specially designed for palliative care or at home. Hospice or palliative care is often another service provided by home care agencies. Hospice care is most commonly provided in the home with support of hospice caregivers, family, and/or friends. Palliative care focuses on managing pain, nausea, or other discomfort associated with terminal disease. Hospice care is instituted when the patient’s physician believes the patient has a life expectancy of less than six months and the patient does not desire further curative treatment. Patients with end-stage cancer often enter hospice care when further cancer treatment is not likely to yield any benefits and the patient wishes to be kept comfortable at home until death.

Types of Healthcare

There are many kinds of healthcare in the United States, many of which may occur in one or more of the aforementioned healthcare venues. A comprehensive review of all types of healthcare is beyond the scope of this chapter. We provide some salient examples here.

Primary Care

The vast majority of medical care occurs in primary care settings, also known as general medical care or personal healthcare. Primary care is where most patients first seek help for general medical problems. Primary care physicians (PCPs) are generally trained as family medicine physicians, general internal medicine physicians, or pediatricians.

General Medical Care

Primary care physicians deal with virtually every medical condition. The PCP’s role is to manage the whole patient by diagnosing and treating illnesses as well as referring patients to specialists when there is a particular need, such as surgery or other specialty care. It is also the role of the PCP to coordinate care among all specialists the patient may be seeing, to ensure the best possible overall care.

Preventive Medicine

While many patients go to their PCP when they are sick or injured, PCPs also work with patients to try to prevent illnesses. For example, a PCP may recommend the use of seatbelts, check a patient’s blood pressure, recommend that a patient quit smoking, or order a screening mammogram.

Medical Screening   Medical screening refers to performing tests on patients who have no signs or symptoms of a disease. The goal is to identify treatable diseases in the very early stages in order to start treatment as quickly as possible and avoid disease progression or complications. For example, all newborn infants are screened for rare metabolic diseases shortly after birth and all women are screened for breast cancer with mammograms beginning at age 50. Most patients are not aware that screening tests are not 100 percent accurate. Tests can be positive when no disease exists (false positive) and negative when disease does exist (false negative). Because screening tests are performed on large populations of patients, they are designed to be inexpensive and generally to favor false-positive results over false-negatives. Patients with positive screening tests generally are referred for “gold standard testing” that is much closer to 100 percent accurate. For example, a patient whose mammogram screens positive for a mass usually goes for further imaging and often a biopsy of the suspected tumor to confirm that the screening test is indeed positive. There are several breast conditions that mimic a tumor but are completely benign. However, because missing an actual cancer would be catastrophic for the patient, screening mammograms are recommended to ensure that as few cancers as possible are missed, despite the many false-positive results that will occur and end up causing unneeded biopsies.

Anticipatory Guidance Pediatricians give advice to parents based on the child’s age and risk factors. This is called anticipatory guidance. As an example, when parents bring in a newborn baby for his or her two-week checkup, the pediatrician often recommends that the parents lower the temperature on their home’s hot water heater to prevent accidentally scalding the baby. When the baby begins to crawl, the pediatrician typically recommends storing all home chemicals in unreachable locations or in child-safe cabinets. A family medicine physician may give anticipatory guidance to an 18-year-old patient by recommending, for example, to wear their seatbelt and refrain from using their phone when driving.

Behavioral Health

Behavioral health is provided in both inpatient (e.g., psychiatric hospital) and outpatient (e.g., behavioral health clinic) environments and focuses on psychiatric illnesses. Psychologists (usually doctoral-level providers who deliver talk therapy and behavioral therapy), psychiatrists (physicians who prescribe psychiatric medications), and social workers (who provide counseling and help with social issues) work in these venues, often as part of an interdisciplinary team.

Specialty Care

The American Board of Medical Specialties identifies 24 medical specialties (such as Surgery, Internal Medicine, and Pediatrics) and over 130 subspecialties (such as Addiction Psychiatry, Pain Medicine, Pediatric Emergency Medicine, and, notably, Clinical Informatics) for which it currently offers board certification.¹³ Specialists generally have broader areas of practice than subspecialists. As technology and the science of medicine continue to advance, even more subspecialties are likely to be created as knowledge in the fields increases. Generally, patients are referred to medical specialists and subspecialists by PCPs. However, specialists and subspecialists also make referrals, and often patients self-refer.

Emergency Care

Emergent medical issues are those that are immediately life-threatening (e.g., a heart attack, stroke, or severe burns) or require immediate attention (e.g., a severe skin laceration or small fracture). Most hospitals have emergency departments, including specialty hospitals (e.g., psychiatric emergency rooms in psychiatric hospitals, cardiac emergency rooms in heart hospitals, etc.). There are also pediatric EDs with board-certified physicians in pediatric emergency medicine who specialize in the emergency treatment of children. Patients without insurance or the ability to pay for medical services often resort to using the ED for nonemergent medical issues, such as for minor infections or uncomplicated urinary tract infections. This is a serious national problem because the cost of treating routine medical issues in the emergent setting is often many times higher than the cost of treatment in the primary care setting.

Urgent Care

Urgent care is the care of non-life-threatening but still emergent medical issues such as uncomplicated urinary tract infections, mild to moderate asthma exacerbations, and ear infections. Urgent care is usually available during regular business hours and after hours. Some urgent care centers may be open 24 hours per day. Because of the high cost of treating non-life-threatening emergencies in the emergency department, most insurance companies provide coverage for urgent care in its many forms.

Acute Care vs. Chronic Care

Acute care refers to the diagnosis and treatment of early or presenting stages of a disease or illness whose treatment is usually limited to a defined period of time. Presenting symptoms of acute illnesses often appear suddenly and can be severe. Pneumonia is an example of a disease that may require acute care as a patient becomes feverish and short of breath, requiring oxygen or even mechanical ventilation. Pneumonia is treated with antibiotics and usually resolves within a week or two.

Chronic care refers to the diagnosis and treatment of illnesses that can span years or decades of life. Chronic diseases usually have symptoms that often present very gradually and that are not severe. Diabetes is an example of a chronic illness that requires chronic care. Patients require education about diabetes so they can manage their blood sugar level with a wide range of medications and dietary modifications. Patients with diabetes require ongoing diabetic prescriptions and routine screenings for retinal, kidney, and heart diseases, to name a few. Patients often live for more than half a century with chronic diseases that require chronic care.

Patient Education

Patient education takes place in virtually all healthcare venues. Critical to the successful treatment of most diseases is patient understanding of their disease and treatment requirements. This is especially true for chronic diseases such as diabetes. Diabetics benefit greatly from improved lifestyle (diabetic diet and regular exercise) and knowledge of how to control blood glucose level (how to use a glucometer to measure blood glucose, how to use and dose insulin, etc.). Education is a significant component of the treatment of addiction, as patients who better understand the disease are more likely to maintain sobriety. Most hospitals have patient education departments to provide patient education to both inpatients and outpatients. Many group practices and specialty centers have full-time patient educators as well as certified diabetic educators in primary care clinics, ostomy nurses in surgical clinics, and so on.

Integrative Medicine

Integrative medicine is a relatively new term that describes healthcare where the same provider offers both complementary and mainstream medicine in a coordinated manner. An example of integrative medicine would be a physician prescribing both antihistamine drugs and treatment with an acupuncturist to treat seasonal allergies.

Complementary medicine is when a patient adds nonmainstream treatments to those prescribed by their physician. Complementary medicine is very popular in the United States. In 2012, data from the National Health Interview Survey (NHIS) indicated that 33 percent of adults and 12 percent of children used at least one complementary health approach, with dietary supplements being the most commonly used complementary medicine.¹⁴

Alternative medicine is the use of nonmainstream treatments in place of conventional medicine, usually without the supervision of a physician.¹⁵ An example would be forgoing chemotherapy for a cancer in favor of using only herbal supplements.

Telehealth

According to the Center for Connected Health Policy, “Telehealth encompasses a broad variety of technologies and tactics to deliver virtual medical, health, and education services. Telehealth is not a specific service, but a collection of means to enhance care and education delivery.”¹⁶ Telehealth is practiced by a wide variety of primary care and specialist physicians using a variety of technologies to connect patients to physicians who otherwise could not see each other in person. Just a few examples include tele-dermatology, where images of skin rashes are sent for diagnosis by dermatologists; tele-radiology, where X-ray images are sent for interpretation by radiologists; and tele-psychiatry, where psychiatrists interview and treat patients at a distance. Some retail clinics such as Walgreens are also beginning to use telehealth so they don’t have to maintain full-time onsite clinicians at all locations.

Healthcare Professions

There are myriad types of healthcare professionals. This section focuses on a few of the most common types of healthcare professionals and how they are trained and certified to practice.

Certification and Accreditation

Most healthcare professions have both certifying and accrediting bodies. Individuals receive certification indicating they possess the necessary education, training, and experience to practice in their specialty. Certification of individuals often requires passing a board exam that is maintained and administered by a board of experts. Training programs receive accreditation indicating that the design and operation of the training program meets the standards of the profession. Most certifying and accrediting bodies are independent, nonprofit organizations formed by professional organizations to ensure impartiality and limit any potential or perceived conflicts of interest. Some examples of the training and certification requirements of various healthcare professionals follow.

Physicians

Becoming a physician in the United States requires completion of the following educational sequence:

1. Undergraduate degree with premed required coursework in biology, chemistry, and math (4 years).

2. Medical degree from an Association of American Medical Colleges (AAMC) accredited medical school (4 years).

3. Accreditation Council for Graduate Medical Education (ACGME) accredited residency training program (3–6 years).

4. American Board of Medical Specialties (ABMS) certification in the specialty of the physician’s residency by passing a board exam.

5. Optional ACGME accredited fellowship for subspecialization, which can be in one or more subspecialties (1–4 years).

6. Optional certification in the subspecialty of the physician’s fellowship(s) by passing a board exam.

7. Maintenance of Certification (MOC) that includes ongoing required educational programs and recertification exams in each of the specialties and subspecialties in which a physician is certified (various educational activities and recertification board exam usually every 10 years). Many physicians maintain several specialty and subspecialty certifications.

As previously mentioned in the “Specialty Care” section, ABMS identifies 24 medical specialties and over 130 subspecialties for which it currently offers board exams.¹³ The U.S. Bureau of Labor Statistics reported a total of 708,300 physicians and surgeons practicing in the United States in 2014.¹⁷

Nurses

A registered nurse (RN) can be trained in a two-year associate degree program at a community college or a junior college, a two- to three-year diploma program offered through a hospital, or a four- to five-year bachelor’s of science degree program at a university or college. Nurses with a bachelor’s degree can undertake advanced studies in several clinical areas to develop the needed competence for teaching, supervision, or advanced practice. Advanced practice RNs take on various advanced practice roles such as nurse practitioners, clinical nurse specialists, nurse anesthetists, or nurse midwives. There are also master’s degree and doctoral programs for nurses who wish to specialize. In 2015, the American Nurses Association (ANA) estimated there were 3.4 million registered nurses in the United States.¹⁸ RNs must pass the National Council Licensure Examination for RNs (NCLEX-RN) to be licensed in the United States or Canada.¹⁹

Licensed practical nurses (LPNs) work under the direct supervision of an RN or physician. LPNs train for one year at state-approved technical/vocational schools or community/junior colleges. Like RNs, LPNs must pass an examination for licensure. In 2014, there were a total of 719,900 LPNs and licensed vocational nurses (LVNs) in the United States.²⁰

Pharmacists

Pharmacists must complete six years of training in a pharmacy school accredited by the American Council for Pharmacy Education that awards a PharmD degree. After graduation, pharmacists must pass a state-licensing exam and complete an internship with a licensed pharmacist before practicing. Some pharmacy schools also offer master’s and PhD degrees that allow pharmacists to specialize in one or more of eight specialty areas.

Dentists

Similar to physicians, dental school applicants require a bachelor’s degree. Dental students must complete four years at a dental school accredited by the Commission on Dental Accreditation (CODA). Passing a board exam given by the Joint Commission on National Dental Examinations (JCNDE), which administers the certification tests for dentists, is also required. There are nine recognized dental subspecialties for which a dentist must complete a dental residency to earn a subspecialty credential. In 2014, there was a total of 151,500 dentists practicing in the United States.²¹

Allied Health Personnel

Allied health personnel represent a varied and complex array of healthcare disciplines and support, complement, or supplement the professional functions of physicians. There are over 80 allied health professions. A few examples include laboratory technologists and technicians, therapeutic science practitioners (e.g., physical and occupational therapists), and speech language pathologists. There is a variety of training programs, and many states have licensing requirements. Approximately 60 percent of all healthcare providers are allied health personnel.²²

Healthcare Reform and Quality

As rapidly as care delivery is changing, the ways in which care is paid for and how the quality is measured are changing faster. These changes will lead to significant adaptations in the organizations of care delivery systems, the ways in which healthcare providers interact, and the process of care itself.

Costs—U.S. Expenditures Overall Compared to Other Countries

According to the World Bank, the United States spent 17.1 percent of its gross domestic product (GDP) on healthcare in 2014, which represents $9,403 annually per capita. This was up from 13.1 percent in 1995 and is the highest percentage of GDP that any major Western country spends on healthcare.²³ Despite its highest of costs, the United States ranks only 37th on WHO’s ranked country list of overall health system performance. The United States’ ranking is between 36th-ranked Costa Rica and 38th-ranked Slovenia.²⁴ The extremely high costs coupled with the relatively low quality of care delivered is the motivation for multiple government programs to either reduce costs or improve healthcare quality in the United States.

Affordable Care Act (ACA)

The Affordable Care Act (ACA), also known as “Obamacare,” was signed into law by President Obama on March 23, 2010. It is the federal government’s most comprehensive attempt to control the costs of healthcare and improve its quality. Most of the law has been implemented over the last six years. Some provisions will not go into effect until 2018. Examples of some of the law’s major provisions include²⁵

•  Requiring all Americans to have some basic form of health insurance or pay a federal tax penalty

•  Creating health insurance exchanges through which uninsured Americans can buy coverage in an arena where there is competition between insurance companies

•  Providing subsidies for the purchase of coverage through state exchanges to Americans who have the least ability to pay

•  Allowing young adults to continue coverage on their parents’ health insurance up to the age of 26

•  Ending preexisting condition exclusions (barring insurance companies from refusing to insure an applicant due to an existing medical condition)

•  Ending lifetime limits on insurance coverage

•  Providing preventative care at no cost

•  Removing insurance company barriers to emergency services

HITECH Meaningful Use Provision

On February 17, 2009, President Obama signed into law the Health Information Technology for Economic and Clinical Health (HITECH) Act as part of the American Recovery and Reinvestment Act (ARRA). The HITECH Act “provides HHS [Health and Human Services] with the authority to establish programs to improve health care quality, safety, and efficiency through the promotion of health IT, including electronic health records and private and secure electronic health information exchange.”²⁶ Part of HITECH was intended to incentivize the adoption of the “meaningful use” of electronic health records (EHRs) by physicians, physician groups, and hospitals by paying them a bonus if and when they reached 1 of 3 progressive stages of “meaningful use.” Each stage requires that physicians and healthcare organizations meet a defined set of objectives that make up each level. The complexity of the objectives increases with each stage. The program accelerated the adoption of EHRs, but by the end of November 2014, only 25.2 percent of physicians and 43.1 percent of hospitals had met stage 2 requirements.^{27, 28}

Medicare Access and CHIP Reauthorization Act of 2015

On April 16, 2015, President Obama signed into law the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). The law extended funding for Medicaid’s Children’s Health Insurance Program (CHIP) for two years and created a schedule that predictably specifies the inflation rate for Medicare physician reimbursements rather than having Congress address physician reimbursement annually.²⁹ MACRA is designed to help move Medicare reimbursement from the current, volume-based system (i.e., fee-for-service, where more services alone result in more payments) to a value-based system (i.e., value-based care, where providers are rewarded, or penalized, for the quality of patient outcomes). The clear goal is to incentivize quality of care over volume of care. MACRA combined three previous quality-reporting programs (including the Meaningful Use program) into one unified reporting system. Under MACRA, physicians may choose participation in one of the two MACRA payment systems described next.³⁰

Merit-based Incentive Payment System (MIPS)

MIPS allows individual physicians or physician groups to collect and report various quality metrics for reporting to CMS. The metrics essentially score physicians on the following:

•  Quality of care (30 percent of score)

•  Resource use (30 percent of score)

•  Clinical practice improvement activities (15 percent of score)

•  Meaningful use of certified EHR technology (25 percent of score)

The score will determine whether a physician or physician group will receive a financial bonus or penalty based on the amount of their Medicare reimbursement at the end of each year.³¹

Alternate Payment Models (APMs)

Those who choose to participate in the APMs program will not be subject to MIPS adjustments. Physicians choosing APMs will receive an annual incentive payment based on 5 percent of the previous year’s performance in the new payment model.³² See Chapter 3 for additional details.

Healthcare Regulatory and Research Organizations

Healthcare is a highly regulated industry with multiple government and private organizations involved in oversight of multiple aspects of the industry. In addition, healthcare delivery and medical research are tightly intertwined, adding complexity that has to be taken into account.

Regulation

There are numerous health regulatory agencies, and they exist at multiple levels of government. What follows are some of the regulatory bodies most relevant to healthcare in general and to health information technology in particular.

Centers for Medicare and Medicaid Services (CMS)

CMS is part of the federal government under the Secretary for Health and Human Services that administers Medicare (federal health insurance for Americans 65 and older and others with certain medical conditions) and Medicaid (federally subsidized, state-administered healthcare for low-income individuals). The estimated CMS budget for the 2016 fiscal year is $970.8 billion.³³

Because CMS is a very large source of healthcare funding, it exerts regulatory authority over the healthcare providers it reimburses for care. In addition, because CMS pays for such a large portion of healthcare in the United States, many other public healthcare agencies, and even private insurance companies, often follow many of CMS’s regulations. The Affordable Care Act, for example, is administered primarily through CMS. The MACRA and Meaningful Use programs are also administered by CMS. Although in the case of HIT, the Office of the National Coordinator for Health Information Technology (ONC) sets the regulations for meaningful use and EHR certification standards, while CMS enforces these by administering the financial aspects of the regulations.

Office of the National Coordinator for Health Information Technology (ONC)

The ONC is responsible for setting policies and standards for, as well as promoting the use of, HIT in the United States. According to its website:

There is a great deal of information about the ONC’s activities, programs, and standards on its website, www.healthit.gov.

U.S. Food and Drug Administration (FDA)

The FDA “is responsible for protecting the public health by assuring the safety, efficacy, and security of human and veterinary drugs, biological products, medical devices, our nation’s food supply, cosmetics, and products that emit radiation.”³⁵ With over 16,700 full-time employees, the 2017 FDA budget proposal is $5.1 billion. Notably, even though the adoption of HIT has been shown to hold the potential to affect patients’ health in a seriously negative manner,^{36, 37} the FDA does not regulate HIT as medical devices. HIT is primarily regulated by the ONC and the CMS.

The U.S. Centers for Disease Control and Prevention (CDC)

While not a regulatory agency of the government, the CDC “keeps America secure by controlling disease outbreaks; making sure food and water are safe; helping people to avoid leading causes of death such as heart disease, cancer, stroke, and diabetes; and working globally to reduce threats to the nation’s health.”³⁸ The CDC employs more than 14,000 people in 11 facilities. The CDC’s budget for fiscal year 2016 is $7 billion. The CDC also aggregates various health data sets from healthcare organizations around the country and throughout the world.

The CDC’s Emerging Infections Program (EIP) is a network of state and local health departments, academic institutions, and others that submit data on infectious diseases to contribute to a CDC database used to monitor invasive bacterial disease. A few examples of the data sets the CDC collects and maintains are as follows:³⁹

•  Active Bacterial Core surveillance (ABCs)   Active population-based laboratory surveillance for invasive bacterial disease, including groups A and B streptococcus, Haemophilus influenza, Neisseria meningitidis, Streptococcus pneumoniae, and methicillin-resistant Staphylococcus aureus (MRSA).

•  FoodNet   An active population-based laboratory surveillance database used to monitor the incidence of foodborne diseases. Surveillance is conducted for seven bacterial and two parasitic pathogens.

•  Healthcare-Associated Infections–Community Interface (HAIC) projects   Active population-based surveillance for Clostridium difficile and other healthcare-associated infections caused by bacteria such as MRSA, Candida, and multidrug-resistant gram-negative bacteria.

The Joint Commission (JC)

The Joint Commission is an independent, not-for-profit organization that is the accrediting body for most hospitals, ambulatory care centers, behavioral health centers, home healthcare, and other healthcare organizations in the United States. To maintain accreditation, healthcare organizations must undergo an onsite survey visit every three years. The survey focuses on structural, process, and outcome measures elements during the onsite visits. Structural elements evaluate the adequacy and safety of the physical facilities (e.g., whether the facilities are adequate to prevent patient falls). Process elements evaluate various clinical, administrative, and work processes (e.g., what fall-prevention processes are in place, such as asking patients who check into an ambulatory clinic if they feel steady on their feet). Outcome measure elements focus on various patient outcome metrics (e.g., what the rate of patient falls in the hospital is and whether the rate is increasing or decreasing). While the JC does not evaluate HIT specifically, many of the elements it evaluates require appropriate HIT deployment. JC accreditation is a requirement to receive reimbursement from Medicare and Medicaid.

Research

The last 50 years have seen remarkable growth of scientifically rigorous research in medicine, dentistry, nursing, and other health professions. This has fostered the move toward evidence-based medicine through which the practice of medicine is driven by scientific evidence, rather than just clinical impression, tradition, and anecdotal reports. There are essentially four types of research:

•  Basic science or “bench” research   Biochemists, physiologists, biologists, pharmacologists, and other scientists work on the myriad of biochemical processes that occur in disease and in health. Experiments are performed on animals, in petri dishes, or in test tubes.

•  Clinical research   Research performed on groups of humans. An example of clinical research is testing which of two drugs works better for controlling high blood pressure.

•  Population or epidemiological research   Research on how disease impacts populations and how the social determinants of health interact with disease in populations. An example of population research is how the children in Flint, Michigan, have been (and will be) affected by their water system’s lead poisoning.

•  Health services research   Studies the operation and outcomes of the healthcare system itself and ways to improve quality and reduce costs. An example of health services research is a study to determine the impact on cost or quality of the installation of an EHR system in a clinic.

Biomedical research is funded from a variety of sources. Most researchers at universities write applications for grants to fund their research, and the funders award grants to those researchers who they believe are working on appropriate and meaningful scientific problems and who are the best qualified to do the work. According to a 2015 analysis, total biomedical research funding in the United States was $117 billion in 2012 (4.5 percent of total U.S. healthcare expenditures).⁴⁰ However, the annual rate of growth of biomedical research spending declined from 6 percent per year (1994–2004) to 0.8 percent (2004–2012).⁴⁰ Although the United States is still the leader in dollars spent, the U.S. leadership role has been declining in recent years. The major sources of U.S. biomedical research funding are described next.

National Institutes of Health (NIH)

NIH is the primary federal funding source for biomedical research. NIH is composed of 29 individual institutes and centers. The total NIH budget for fiscal year 2016 is $31.3 billion. A complete list of all the institutes and centers, along with their functional statements and organizational charts, is available online.⁴¹

One of the NIH institutes, the National Library of Medicine (NLM), is the primary federal funder of biomedical informatics and health IT research. Among many other services, NLM maintains a curated index of most of the world’s biomedical literature, accessible via its search engine, PubMed.⁴²

Agency for Healthcare Research and Quality (AHRQ)

AHRQ is a relatively small government agency within HHS with an annual budget of just under $480 million.⁴³ However, it has an important mission to produce evidence to make healthcare safer, higher quality, more accessible, equitable, and affordable, and to work within the U.S. Department of Health and Human Services and with other partners to make sure that the evidence is understood and used.⁴⁴ In alignment with its mission, the AHRQ funds health services research as well as a substantial HIT portfolio that evaluates the effectiveness of HIT to improve the quality of healthcare and reduce its costs. The AHRQ also maintains over 11,000 evidence-based clinical practice guidelines that have met the AHRQ’s evaluation criteria. These have been collected in a database, organized by searchable topics, and made available online to healthcare professionals and the general public at the AHRQ’s National Guideline Clearinghouse (www.guideline.gov).

Others

There are many other sources of biomedical research funding in the United States, including other government agencies, charitable foundations, and private industry.

Chapter Review

This chapter provided a high-level overview of how the U.S. healthcare system is structured and major changes to expect. The structures are complex, in part due to the nature of the task, but also due to funding and regulatory intricacies. Even the terminologies, abbreviations, and implicit assumptions can be daunting to master, and it is safe to say that no one understands all aspects of healthcare deeply. Given the complexity and rapid rate of change in this area, no overview will be complete or fully up to date and the details will continue to change, but the basic concepts and characteristics should continue to hold true at least for multiple years. This change means that health IT systems need to be adaptable and to anticipate that the environment in which they are used will continue to evolve, adding yet another dimension to an already challenging field.

Questions

To test your comprehension of the chapter, answer the following questions and then check your answers against the list of correct answers at the end of the chapter.

    1.  Which of the following describes academic health centers?

         A.  Any healthcare venue where research is performed

         B.  Usually a portion of a major university where hospital(s) are co-located with schools such as medicine, nursing, and pharmacy

         C.  Limited to one institution per state

         D.  Required to conduct federally funded research or lose their accreditation

    2.  Which of the following does not characterize urgent care centers?

         A.  Usually open during late evening and weekend hours

         B.  Located in convenient locations in the community such as in shopping centers and malls

         C.  Designed for patients who need immediate but not life-threatening care

         D.  Owned only by public health agencies

    3.  Which of the following is not true about emergency departments?

         A.  Can refuse treatment to patients who are unable to pay

         B.  Are designed to provide immediate and life-sustaining treatment to patients who are seriously ill or injured

         C.  Are often overcrowded because many underserved patients use the emergency department as their source for primary care medical issues

         D.  Treat heart attacks, strokes, and traumatic injuries (e.g., people in serious traffic accidents)

    4.  Which of the following is true of hospice care?

         A.  Focuses on managing patients’ pain, nausea, and any other discomforts associated with a terminal illness (i.e., when the patient is believed to have less than six months to live)

         B.  Can be provided to patients who are still receiving active treatment for their disease (e.g., chemotherapy)

         C.  Is only provided in the inpatient setting

         D.  Is only provided by hospitals

    5.  Which of the following is not a provision of the Affordable Care Act (ACA):

         A.  Requires all Americans to have a basic form of health insurance or pay a federal tax penalty

         B.  Allows a young adult to continue coverage on their parents’ health insurance up to the age of 26

         C.  Requires all Americans to see only physicians assigned to them by the federal government

         D.  Ends preexisting condition exclusions so that insurance companies cannot refuse to insure an applicant due to an existing medical condition

    6.  Which of the following does not accurately describe the Office of the National Coordinator for Health Information Technology?

         A.  Is responsible for setting policies and standards for, as well as promoting the use of, health IT in the United States

         B.  Charges fines to physicians or hospitals that do not comply with its health IT regulations

         C.  Is also known as “the Office of the National Coordinator” or “the ONC”

         D.  Is organizationally located within the Office of the Secretary for the U.S. Department of Health and Human Services (HHS)

    7.  Which of the following is a true statement about medical screening?

         A.  Performs tests on patients who have no signs or symptoms of a disease with the goal to identify treatable diseases in the very early stages in order to start treatment as quickly as possible and avoid disease progression or complications

         B.  Cannot have “false positive” or “false negative” results

         C.  Is performed when a physician is fairly certain a patient has a particular disease

         D.  Is typically performed on patients suspected of having a disease in order to help the physician make an accurate diagnosis and begin treatment in a timely and cost-effective manner

    8.  Which of the following does not accurately describe Federally Qualified Health Centers (FQHCs)?

         A.  Healthcare organizations that receive enhanced reimbursement from Medicare and Medicaid if they meet a number of requirements

         B.  Include such examples as Community Health Centers that focus on underserved populations, Migrant Health Centers that focus on workers who move frequently, and Health Care for the Homeless Centers that focus on homeless adults and children

         C.  Target underserved populations, charge a sliding-scale fee based on income, and have ongoing quality assessment programs

         D.  Any health center that receives reimbursement from Medicare or Medicaid

Answers

    1.  B. It is a hospital or health system that has a formalized relationship with a university. Academic health centers usually support the training of many of the health professions, support and conduct research, and offer care not widely available in the regions they serve.

    2.  D. Urgent care centers are somewhat similar to emergency departments in that they provide care outside of the usual hours that ambulatory care providers are available, but urgent care centers are not designed to provide care for complex or life-threatening illnesses. In addition to offering longer hours, they tend to be located for convenient access. Pharmacies, health systems, private medical practices, and others can own and operate urgent care centers.

    3.  A. All emergency departments must treat patients regardless of their ability to pay.

    4.  A. Hospice care is provided in a variety of settings, including at home. The care is focused on palliative care, including the patient’s spiritual and emotional needs, and is not intended to cure or treat the patient’s illness.

    5.  C. The ACA includes many provisions but attempts to preserve patient choice of insurance plan and providers within the insurance plan’s provision.

    6.  B. While the ONC defines many of the technological criteria and coordinates across federal and nonfederal partners, the Center for Medicare and Medicaid Services, as the largest payer of healthcare in the United States, has created incentives for providers to adopt (and penalties for providers who do not adopt) HIT under the Meaningful Use program of the ACA, and will continue to do so under MACRA.

    7.  A. As part of preventive care, medical screening is one of the few healthcare activities targeted at healthy individuals rather than those with a disease.

    8.  D. FQHCs are established by a very specific federal program. There are many health centers that share many characteristics with FQHCs but do not meet all of the program requirements and, therefore, are not FQHCs.

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