Economic Issues & Healthcare Delivery Systems

Health care as big business

The U.S. health care system is complex, fragmented, and expensive; expenditures are high, yet quality and outcomes are often poor compared to other nations.

Rise in consumerism

Patients today are more educated and expect high-quality, affordable care with no restrictions.

Baby Boomer impact

Aging population increases demand for chronic and primary care services, straining resources geared toward specialty care.

Affordable Care Act (ACA, 2010)

Aimed to improve access and affordability of care but faces issues of cost, complexity, and political controversy.

Health disparities

Racial, ethnic, and socioeconomic differences persist in health care access and outcomes.

Public health funding

Prevention and public health departments remain underfunded, despite growing need.

Provider shortages

Lower reimbursement discourages general practice and rural providers, leading to shortages in primary care.

Health care economics

The study of how scarce resources are allocated to meet the population's health needs efficiently.

Scarcity

Occurs when health care resources are limited in relation to demand; fundamental problem in economics.

Supply and demand

In health care, demand is often infinite while supply is finite.

Why health care is different

Economic theory assumptions (supply, demand, and free markets) do not apply due to uncertainty, insurance, and asymmetric information.

Uncertainty in health care

Illnesses are unpredictable, and costs of care are difficult to forecast.

Asymmetric information

Providers know more about costs and quality than patients do, distorting consumer choice.

Moral hazard

When people take greater risks or use more services because they have insurance coverage.

Capitation

Payment system where providers receive a fixed fee per patient regardless of services used; encourages prevention and efficiency.

Premium

Regular payment to maintain insurance coverage (monthly or biweekly, often via payroll deduction).

Co-pay

Fixed amount paid by the patient for a service, with the rest billed to insurance.

Deductible

Amount a patient must pay out-of-pocket before insurance coverage begins.

Private insurance

Purchased individually or through employers; covers a portion of medical costs minus copays and deductibles.

Public insurance

Funded by the government; includes Medicare, Medicaid, SCHIP, and Veterans Health programs.

Medicaid (MA)

For low-income or disabled individuals; funded jointly by federal and state governments.

Medicare (MC)

Federal insurance for people aged 65+ or with disabilities; includes Parts A-D covering hospitalization, outpatient, and drug costs.

SCHIP

State Children's Health Insurance Program providing low-cost coverage for children whose families earn too much for Medicaid.

Veterans Health Administration (VHA)

The largest integrated health care system in the U.S., serving military veterans.

Fee-for-service (FFS)

Traditional payment model where providers bill for each service rendered; led to overuse and high costs.

Managed care

System introduced to control costs and improve efficiency through pre-set fees and utilization review.

HMO

Health Maintenance Organization requiring patients to use in-network providers and referrals from a primary care provider.

PPO

Preferred Provider Organization allowing patients to see specialists without referrals but at higher cost.

Case management

Role often filled by RNs or social workers to coordinate care and ensure efficient transitions between settings.

Population health model

Focuses on improving health outcomes for populations rather than individuals while lowering costs.

Demand-side cost sharing

Strategies like copays, coinsurance, and limited networks that encourage responsible use of health services.

Pay-for-performance (P4P)

Incentive system rewarding hospitals and providers for quality outcomes and patient satisfaction.

HCAHPS

National survey measuring patient satisfaction and hospital performance indicators.

Accountable Care Organization (ACO)

Physician-led model focusing on coordination, prevention, and reduced unnecessary ER visits.

Cost-benefit analysis

Compares the financial costs of a program to its benefits to determine if it's worthwhile.

Cost-effectiveness analysis

Compares resource use between interventions to identify the best outcome for the cost.

Horizontal integration

Mergers between hospitals or clinics to share costs, resources, and electronic records.

Vertical integration

Control over multiple levels of care, such as hospitals acquiring physician practices or pharmacies.

Defensive medicine

Ordering unnecessary tests or treatments to avoid malpractice lawsuits, increasing costs.

Trends in nursing workforce

Aging workforce, more BSN-prepared nurses, greater diversity, and expanded telehealth use after COVID-19.

Impact of COVID-19 on nursing

Increased salaries for travel nurses, job losses in long-term care, and expanded telemedicine use.

Nursing as a cost vs. investment

Nurses often seen as expenses, yet they are crucial for cost-effective, high-quality care.

Advanced practice nurses

NPs, CRNAs, and CNMs provide cost-effective alternatives to physicians in many settings.

Future of Nursing Report (2021)

Calls for nurses to lead in delivering evidence-based, equitable care across diverse communities.

Nursing roles in reform

Advocating for health care transformation, coordinating care, leading QI initiatives, and conducting policy research.

Quality improvement (QI)

Continuous efforts to enhance safety, effectiveness, and patient outcomes using evidence-based practice.

Root cause analysis (RCA)

Process of identifying underlying causes of errors or adverse events to prevent recurrence.

Common QI focus areas

Preventing falls, pressure injuries, infections, and medication errors through standardized care pathways.