Surgery Grand Rounds

Robert Wolfson, MD, MSHA

Healthcare Systems: History, Management & Policy

April 20, 2009

Comparative Analysis Of

National Healthcare Systems

April 20, 2009

www.wolfsonconsulting.com/grandrounds

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Healthcare Crisis!"Report puts U.S. health care with

industrialized world's worst."(Family Practice News, 2008)

"The Coming Healthcare Collapse"

Obama Health Plan Unafforable: Income tax to rise by 90%!(Robert McIntosh: 4/14/2009, A.P.)

"The Healthcare Crisis in America"(Families USA – 2007)

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Healthcare Crisis!

"Lack of health insurance causes 18,000 unnecessary deaths every year."

(Institute of Medicine, January 14, 2004)

"To Err is Human" (IOM, 1999, 2003)

"44,000 – 98,000 People Die Each Year

In Hospitals as a Result of Medical Errors"

16%, or 43 Million Americans

Have No Medical Insurance (CDC)

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What’s Going On Here?Is This Problem Unique to the U.S.?

How Do Healthcare Systems Function In Other Comparable Nations?

Where Should We Turn For Examples

With Our Healthcare Reform Efforts?

This Morning:Compare U.S. Healthcare System With Healthcare

Systems In Other Nations

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Topics1. Define Terms & Methods

2. Evolution - Health Systems OECD Nations

3. Health System Models & Examples

4. Consistent Differences

5. Current Healthcare Debate

6. Discussion

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TermsI. OECD

II. Healthcare

III. Analytic Methods: "Systems Theory"

IV. Healthcare System

V. Individual Madate, Employer Mandate

VI. Single Payer System

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I. OECD:Organization for Economic Cooperation and

Development30 Countries Committed to 'Democracy & the

Market Economy'

Began in 1921, Expanded in 1960's

In the 20th Century, All OECD Countries

Extended Government’s Role in Financing & Organization of Health Services

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OECD - 30 Countries20 Nations Initially: (1921)

Austria, Belgium, Canada, Denmark, France,

Germany, Greece, Iceland, Ireland, Italy,

Luxembourg, Netherlands, Norway, Portugal, Spain,

Sweden, Switzerland, Turkey, U.K., U.S.A.

+ 10 Later:Australia, Czech Republic, Finland, Hungary,

Japan, Korea, Mexico, New Zealand, Poland,

& Slav. Repuplic

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II. Healthcare

All Goods & Services Delivered

Designed to Promote Health

Including: • Preventive, Curative & Palliative

Interventions • Directed to Individuals & Populations

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III. Methods

Healthcare Systems Can be Compared

Using Different Disciplines, or Methods:

1. Sociology: Distribution of Care per Sociologic Group

2. Economics: Most Data Available

3. Systems Theory: The Most Comprehensive

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Systems Theory:

"The Study of the Nature of Systems

In Nature, Society and Science"

A Framework by which One Can Analyze A Group of Objects,

Working in Concert To Produce a Result

Examples of Systems:

Cell, A Method, "Cardiovascular System"

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Characteristics of Systems:

1. Separate Objects Acting as an Integrated Whole

Often Reach Functional Equilibrium: (Closed Systems)

2. Objects in Systems are often Grouped into Categories:

Input, Processing, Output, Feedback

3. Parts of Systems Have: Functional & Structural Relationships to Each Other

Slide 144/20/2009

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IV. Healthcare System= All Resources Dedicated to Providing

Healthcare Services to Populations, Nations

Include:Patients, Providers,

Methods, Treatments

Institutions, Organizations, Buildings

Acting as an Integrated Whole to ProvideHealthcare Services to Populations &/or Nations

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Healthcare SystemsInputs: Funding, Patients, Physicans

Throughputs: Healthcare Organizations, Treatments

Outputs: Outcomes, Payments to Providers

Environment: Physical Environment,

Health Of Individuals & Community

Feeback: Patient Health, Satisfaction, Health of Community

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Input:$$$, Patients, Supplies,Information

Throughput:In Pt. & Out Pt.

Services, Information

Output:$$$, Patients

Clinical Outcomes, Information

EnvironmentPeople, Wellness, Illness, Risks

Feedback

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Healthcare System Model

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Terms (cont.)

V. Individual, Employer Mandates:

Individual citizens are required to have health insurance, one way or another.

Employers are required to provide health insurance to employees.

VI. Single Payer System

Payment for all Healthcare Expenses comes from a Single Source or Fund.

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Evolution of Health Systems

In U.S., Before & During World War II:

Labor Shortage,

Freeze on Prices and Wages

Employers Allowed to Offer Health Insurance

As a Tax Deductable Benefit to Employees

= Subsidy to Employers & Employees

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Following World War II:

Western European Nations & Japan:

Had to Rebuild From Scratch

Developed National Health SystemsThrough Socialist Governments

United States Chose Not to Build

A National Health System, But

Provided Subsidies to Their Healthcare System

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U.S. SubsidiesHospitals:

Hill Burton Act – Funding For Hospitals

Many Hospitals Granted Tax Exempt Status

Training of Health ProfessionalsSubsidized Through Governmental Grants

Employer-Sponsored Health Insurance: Remained Tax Decuctible

1960's: Medicare, Medicaid

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Health System Models

I. National Health Service (NHS)

II. National Health Insurance (NHI)

III. Mixed Funding, Mixed Coverage

Pvt. Insurance + Government Funding

Coverage is Not Universal

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I. National Health Service (NHS)"Nationalization of Healthcare":

Including Providers, Facilities & Services

Universal Coverage, Single Payer

Financing From:Income Tax, General Taxes & General Fund

District Budgets

Are Used to Control Spending

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Characteristics: NHS

Patients seen in Public Hospitals & ClinicsPhysicians work for NHS

Countries Include:Great Britain, Sweden, Norway,

Finland, Spain, Italy, Greece

Private Practices often Allowed

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United Kingdom:Population: 61 Million

Life expectancy at birth: 79

Health spending as % GDP: 8.3%

Coverage: Universal

Management: Government

Hospitals: Owned by Government

Physicians: Paid Salary by Government

Receive Fees from Private Insurance, Patients4/20/2009

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U.K.: SpendingHealth Spending per capita per yr.: $2,580$ 2,245 (87%) From Government

$335 (13%) From IndividualsFor Supplemental, Private Insurance,

Payments to Doctors, Self Pay for OTC drugs

Prescription drugs: 1/2 Population Receive Drugs for Free,

Exemptions: Age, Disability and Pregnancy

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U.K. (cont.)

Notable features:

1. Patients do not receive Bills: Or Insurance Premiums

2. National Inst. Health & Clinical Excellence:Advice For Treatments & Drugs to be Covered

3. Challenges: Inefficiencies, Old Infrastructure, Waiting Times,

Unequal Distribution of Resources Among Districts.

Professor Sir Bruce Keogh, 2/2/094/20/2009

II. National Health Insurance (NHI)

= Nationalization of Health InsuranceMay be Single or Multiple Payers, But

There is Universal Coverage withEmployer &/or Individual Mandates

Financing Comes From:Employment Taxes; Social Security

Less ‘Budgeted’ More Flexible form of Financing

Private & Public Hospitals/Clinics Exist284/20/2009

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NHI: Japan, FranceIndividuals Buy Coverage:

From Government Plan or Private Insurers

Universal Coverage, Individual Mandate

Consumers Pay Insurance Premiums

Government Provides Subsidies for: • Elderly• Those in Need • Small Businesses

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Japan:

NHI; Financing: Public & Private Insurance

Universal Coverage;

Individual & Employer Mandate

Funding: From Employment Taxes and Private Insurance Premiums

~ 4% of Salary => Nonprofit, Community-Based Insurance Plan.

Public Assistance For Small Businesses, Elderly & Poor

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Japan:

Population: 128 million

Life Expectancy at Birth: 82.1

Health Spending as % GDP: 8%

Coverage: Universal

Spending/capita/yr.: $2474

$ 2053 (83%) From Government,

$420 (17%) From Invividuals:

Gov't. Controls on Pharmaceutical Prices4/20/2009

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Japan (cont.)

Notable features: Frequent Doctor Visits; Long Hospital Stays.

Insurers Must Cover Everyone; Can't Deny a Claim.

Biggest challenges: Rapidly Aging Population. Overuse of Care.

Highest Number of Hospitals/Person in the world.

Shortage of Physicians in Many Specialties & Rural Areas.

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NHI, France:

Individual & Employer Mandate;13.1% of Employees’ Salary Goes to NIH Fund

Income Tax Fund Coverage for:

Retirees, Unemployed, Disabled, Poor.

87% Have Supplemental Insurance:Private, for-profit Insurers

Purchased by Employer or Individuals.

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France:Population: 61.7 Million

Life expectancy at Birth: 80.3

Health Spending as % GDP: 11.1%

Coverage: Universal

Health Spending per capita/yr.: $3,300

$2,644 (80%) From Government,

$440 (13%) From Individuals for Private Insurance,

$220 Consumer Out-of-Pocket Expenses

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France: Notable Features30 Chronic Conditions:

Including Diabetes: Fully Covered

Broad Choice of Physicians, Specialists

Case Management:Pre/Post Natal Care, Cancer, Other Conditions

Prescription Coverage: Co-pay Based on Demonstrated Effectiveness

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France:Physicians Organized into Unions

Government pays Fee-For-Service

Based on Negotiated Rates

Hospitals:

Government Sets Rates

Challenges:

Increasing Costs, Inefficiencies.

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Canadian System:NHI – of sorts.

Funded by Taxes From The General Fund

Single Payer SystemBudgets on a Provincial Level

Most Hospitals: Self Managed, Private“Funding without Organization”

Physicians: Salaried & Fee For ServiceCare is Publically Funded, Privately Delivered

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Canada:

Population: 33 Million

Life expectancy at Birth: 81.1 yrs.

Health Spending as % GDP: 10.3%

Health Spending per capita/yr.: $3460 $2, 422 (70%) From Government

$1100 (30%) Private Spending

Challenges:Increasing Costs; Waiting Times

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III. Mixed Funding, Mixed Coverage

U.S.A.

Funding From:Private Insurance, Individuals & Government

• Multiple Payers• No Individual or Employer Mandate• Coverage Not Universal

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United States:Population: 302 Million

Life Expectancy at Birth: 78.1

Health Spending as % of GDP: 15.3%

46 Million, or 16% UninsuredMedical Debt Is The #1 Cause of Bankruptcy

Spending/capita/yr. = $7,000$3220 (46%) From Government

$3780 (54%) Employer-Employees, Individuals

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United States:Highest Infant Mortality: in OECD

Coverage: Almost all people over 65 yrs. Old.

Approx. 80% of people under 65 yrs.old.

Total Health Spending/yr. = $3.16 Trillion

Physician & Hospital Fees:Predetermined in Government Programs &

Private Insurance

No Price Controls for Uninsured: Charged approximately 200%

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United States (cont.)

Notable Features:Individual Choice; Very Expensive

Advanced Technology, Drugs and Facilities

Insured Patients Choose Doctors & Hospitals

Challenges:1. The Uninsured

2. Discrepancy between Rich and PoorAccess & Quality of Care

3. Increasing Costs, Quality Concerns

4. Dysfunctional Payment System4/20/2009

Common U.S. Values and Opinions:

The ‘Rugged Individual’ Spirit

Anti-Entitlement

Anti-Government-Run Programs

“U.S. Has the Best Healthcare the World”

“Universal Coverage => Runaway Costs”

“We’re Different”

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0

1000

2000

3000

4000

5000

6000

7000 United StatesGermanyCanadaFranceAustraliaUnited Kingdom

Cost of Care Per Capita

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0

2

4

6

8

10

12

14

16

United StatesGermanyCanadaFranceAustraliaUnited Kingdom

Cost of Healthcare - % of GDP

4/20/2009

Health Spending/person %GDP

464/20/2009

Unite

d Sta

tes

Great

Brit

ain

Fran

ce

Germ

any

Nethe

rland

s

Switzer

land

Japa

n$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

Ave. Annual Spending/person

Hlth. Spending %GDP

Life Expectancy & Ave. Annual Spending/Person

474/20/2009Unite

d Sta

tes

Great

Brit

ain

France

Germ

any

Nether

lands

Switzer

land

Japan

76.0

77.0

78.0

79.0

80.0

81.0

82.0

83.0

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

78.1

79.0

80.3

79.0

79.4

81.3

82.1

Life Expectancy

Ave. Annual Spending/person

US Health Spending Projections

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

National Health Expenditures (billions)

484/20/2009

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Consistent Differences

Non U.S. Healthcare Systems:

Are Significantly Less Expensive

Have Acceptable (Better?) Outcomes

All Have:

1. Individual &/or Employer Mandates

2. Universal Coverage

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What's Happening Here?

I. Is There a Crisis?

Characteristics of U.S. Healthcare System

Are a Result Of:History, Structure, & Culture

II. No System Is Perfect

All Have Challenges, Problems

III. Is it Less Expensive:

To Mandate Participation?

To Provide Universal Coverage?4/20/2009

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Reform Efforts:

I. What Are Our Goals?

Reduce Cost?

Improve Quality?

Cover the Uninsured?

II. Can, or Should We Try

To Accomplish All of Them Concurrently?

How?

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What Are Our Options?

I. Answers

II. Questions

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