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Component 1: Introduction to Health Care and Public Health in the U. S. 1. Component 1: Introduction to Health Care and Public Health in the U. S. 1. 1: Unit 4: Financing Health Care (Part 1) 4. 1 a: Overview

Objectives Of This Unit • Describe models of health care financing in the US Objectives Of This Unit • Describe models of health care financing in the US and in selected other countries • Describe the organization and function of Medicare and Medicaid • Describe the organization and structure of network-based managed care health insurance programs Component 1/Unit 4 a Health IT Workforce Curriculum Version 1. 0/Fall 2010 2

Overview • This unit begins the discussion of how health care is financed. It Overview • This unit begins the discussion of how health care is financed. It looks at insurance, third party payers, Medicare, Medicaid, and managed care as different ways to finance the provision of health services. • The next unit will look at coding, billing, and reimbursement processes for hospitals and providers. Component 1/Unit 4 a Health IT Workforce Curriculum Version 1. 0/Fall 2010 3

Health Care as a Business • Health Care Industry • Largest US Industry- In Health Care as a Business • Health Care Industry • Largest US Industry- In 2004, 16% of the country’s gross domestic product or $1. 9 trillion (gross domestic product=the dollar value of all the final goods and services produced in a country). Component 1/Unit 4 a Health IT Workforce Curriculum Version 1. 0/Fall 2010 4

Health Care as a Business • Health Care Industry- (cont’d) • Fastest growing US Health Care as a Business • Health Care Industry- (cont’d) • Fastest growing US Industry • Where the jobs are • 40% hospitals • 22% nursing homes or residential facilities • 16% in medical offices Component 1/Unit 4 a Health IT Workforce Curriculum Version 1. 0/Fall 2010 5

Health Care as a Business (cont’d) Economic Impact of Healthcare: 2002 - 2007 Column Health Care as a Business (cont’d) Economic Impact of Healthcare: 2002 - 2007 Column 1 2002 Number of Hospitals 2007 % Change 6, 411 6, 731 5 Hospital Revenue (millions) $500, 112 $713, 275 42. 6 Hospital Annual Payroll (millions) $197, 153 $263, 295 39. 6 5, 174 5, 535 7 489, 021 544, 735 11. 4 Outpatient Clinic Revenue (millions) $488, 613 $692, 136 41. 7 Outpatient Clinic Annual Payroll (millions) $203, 341 $280, 139 37. 8 4, 924 5, 791 17. 6 69, 342 75, 617 9. 1 $127, 113 $167, 973 32. 1 $58, 974 $74, 024 25. 6 2, 830 3, 055 8 Hospital- Paid employees (millions) Number of Oupatient Clinics Outpatient Cinics- Paid Employees (millions) Number of Long-term care facilities Long-term Care Revenue (millions) Long-term Care Annual Payroll (millions) Long-term Care- Paid Employees (millions) Component 1/Unit 4 a Health IT Workforce Curriculum Version 1. 0/Fall 2010 6

Health Care as a Business (cont’d) • The table above shows the US 2007 Health Care as a Business (cont’d) • The table above shows the US 2007 Economic Census compared to the 2002 Economic Census. The figures indicate that health care as a business exhibited double digit growth in revenue and payroll from 2002 – 2007. • The health care industry will continue to expand. The US Department of Labor predicts that 19% of new jobs will be created in healthcare. Component 1/Unit 4 a Health IT Workforce Curriculum Version 1. 0/Fall 2010 7

Health Care as a Business (cont’d) • Three reasons for health care growth – Health Care as a Business (cont’d) • Three reasons for health care growth – Aging of the population – Advances in medical technology – Continued interest to manage costs Component 1/Unit 4 a Health IT Workforce Curriculum Version 1. 0/Fall 2010 8

Health Care as a Business (cont’d) • The Government’s Role – Three policy drivers Health Care as a Business (cont’d) • The Government’s Role – Three policy drivers • Quality • Access • Cost Component 1/Unit 4 a Health IT Workforce Curriculum Version 1. 0/Fall 2010 9

Health Care as a Business (cont’d) • The Government’s Role – Government must make Health Care as a Business (cont’d) • The Government’s Role – Government must make trade-offs with these three issues when making policies – The role of government is significant, even though there is no national healthcare system. Component 1/Unit 4 a Health IT Workforce Curriculum Version 1. 0/Fall 2010 10

Health Care as a Business (cont’d) • The Government’s Role – Actually there are Health Care as a Business (cont’d) • The Government’s Role – Actually there are three roles played by the federal government • Provider of health care services – VA Health system, Military health system, Indian Health Service, grants for other models of health care providers Component 1/Unit 4 a Health IT Workforce Curriculum Version 1. 0/Fall 2010 11

Health Care as a Business (cont’d) • The Government’s Role • A payer for Health Care as a Business (cont’d) • The Government’s Role • A payer for services provided by others – Medicare, Medicaid, TRICARE • A regulator of health care providers – Regulates health care by passing laws. Component 1/Unit 4 a Health IT Workforce Curriculum Version 1. 0/Fall 2010 12

Health Care as a Business (cont’d) • The Government’s Role – Passing laws has Health Care as a Business (cont’d) • The Government’s Role – Passing laws has two objectives • Ensure fair competition – 1890 Sherman Anti-trust Act- prohibits restraint of trade and monopolization – 1914 - Clayton Act- restricts practices such as price discrimination, exclusive dealing Component 1/Unit 4 a Health IT Workforce Curriculum Version 1. 0/Fall 2010 13

Health Care as a Business (cont’d) • The Government’s Role – Passing laws has Health Care as a Business (cont’d) • The Government’s Role – Passing laws has two objectives • Protect the public – 1938 Federal Food, Drug, and Cosmetic Act – 1984 - Drug Price Competition – 1990 - Americans with Disabilities Act Component 1/Unit 4 a Health IT Workforce Curriculum Version 1. 0/Fall 2010 14

Health Care as a Business (cont’d) • The Government’s Role – Health Care Laws Health Care as a Business (cont’d) • The Government’s Role – Health Care Laws • 1965 Medicare/Medicaid: part of the Social Security Act; Medicare provides health care insurance (including hospitalization) for elderly and disabled patients; Medicaid provides health care for the poor Component 1/Unit 4 a Health IT Workforce Curriculum Version 1. 0/Fall 2010 15

Health Care as a Business (cont’d) • The Government’s Role – Health Care Laws Health Care as a Business (cont’d) • The Government’s Role – Health Care Laws • 1946 Hill-Burton Act: Also called the Hospital Survey and Construction Act; federal government funded construction of private facilities pursuant to a Certificate of Need; facility required to provide care to underserved populations; enforcement act passed in 1979. Component 1/Unit 4 a Health IT Workforce Curriculum Version 1. 0/Fall 2010 16

Health Care as a Business (cont’d) • The Government’s Role– Health Care Laws (cont’d) Health Care as a Business (cont’d) • The Government’s Role– Health Care Laws (cont’d) • 1989 “Stark I”- amendment to the Social Security Act that prohibits referrals to clinical lab service where provider has a financial interest. • 1993 - “Stark II”- Expands Stark I to include referrals to “designated health services” Component 1/Unit 4 a Health IT Workforce Curriculum Version 1. 0/Fall 2010 17

Health Care as a Business (cont’d) • The Government’s Role– Health Care Laws (cont’d) Health Care as a Business (cont’d) • The Government’s Role– Health Care Laws (cont’d) • 1996 HIPAA- (Health Information Portability and Accountability Act)- provides for health insurance portability and protects the privacy of health records Component 1/Unit 4 a Health IT Workforce Curriculum Version 1. 0/Fall 2010 18

Health Care as a Business (cont’d) • Integrating Business into Healthcare – Although managers Health Care as a Business (cont’d) • Integrating Business into Healthcare – Although managers can’t regulate the economy, they can adapt services to meet the demand. – Managers are also responsible for marketing services to potential patients – Healthcare facilities now have strategic plans that include business and non-business goals Component 1/Unit 4 a Health IT Workforce Curriculum Version 1. 0/Fall 2010 19