history and evolution of medical care institutions professor edward p. richards lsu law center
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History and Evolution of Medical Care Institutions
Professor Edward P. RichardsLSU Law Center
http://biotech.law.lsu.edu/
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Key Issues
Scientific medicine is about 120 years old Technology based medicine is less than 60 years old Doctors are not scientists and many do not practice
scientific medicine. Modern medicine is shaped by its history
Health care finance shapes medical care Special interests undermine cost-effective care Financial tinkering destabilizes primary health care
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1400s
Birth of Hospitals Places where nuns took care of the dying No medical care – against the Church’s teachings No sanitation – assured you would die
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1860-1880s - Development of the Germ Theory
Louis Pasteur Simple Germ Theory Vaccination For Rabies Pasteurization to kill bacteria in milk
Joseph Lister Antisepsis – surgeons should wash their hands and
everything else, then use disinfectants Koch
Modern Germ Theory
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Sanitation Movement - Modern Public Health: 1850s - 1900s
Lead by the Shattuck Report on Sanitation in Boston - 1850 Waste water disposal Drinking water treatment Pasteurization of milk
Food sanitation The Jungle - 1905
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The Business of Medicine in the 1800s
Physicians are Solo Practitioners Most Make Little Money Have Limited Respect
No bar to entry to profession Most medical schools are diploma mills Limited or no licensing requirements
Cannot make capital investments Training Medical equipment and staff
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Surgery Starts to Work in the 1880s
Surgery Can Be Precise - Anesthesia Patients Do Not Get Infected - Antisepsis
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Effect on Licensing and Education
Once there are objective differences (people live) between qualified and unqualified docs, people care You can make more money with better training You can make more money with better equipment and
facilities Effective Medicine Drives Licensing
Licensing Limits Competition Physicians Start to Make Money
Allows capital expenditures
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The Tipping Point - 1910
About 1910, going to the doctor, and particularly the hospital, shifted from being more dangerous than avoiding them to increasing your chance of survival.
Flexner Report - standardized medical education and shaped the modern training system
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Legal Limits on Physician Practice Organization - 1920s
Corporate practice of medicine Physicians working for non-physicians Concerns about professional judgment Cases from 1920 read like the headlines
Banned in most states
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Impact of Corporate Bans on Institutional Practice in Most States
Physicians do not work for non-governmental hospitals Independent contractors governed by medical staff
bylaws Sham of “buying” practices Not as much of a factor in LA
Charade of captive physician groups Managed care companies contact with group Group enforces managed care company’s rules Physicians can be as ruthless as anyone
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Reformation of Hospitals
Paralleled Changes in the Medical Profession Began in the 1880s Shift From Religious to Secular
Began in the Midwest and West Not As Many Established Religious Hospitals
Today, Religious Orders Still Control A Majority of Hospitals
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Technology in Hospitals - The Advantage of Hospital Care over Home Care
Driven by antisepsis - homes were safer before antisepsis
Started With Surgery Medical Laboratories
Bacteriology Microanatomy
Radiology Services and Sanitation Attract Patients
Internal Medicine Obstetrics Patients
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Post WW II Technology
Ventilators (Polio) Electronic Monitors Intensive Care Hospitals Shift From Hotel Services to
Technology Oriented Nursing
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Post World War II Medicine
Conquering Microbial Diseases Vaccines Antibiotics
Chronic Diseases Better Drugs Better Studies Childhood Leukemia
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Effect of Medical Science on Hospital Care
1930s Few effective treatments means no cures other than
surgery Long stays, hospitals act as nursing homes Care is nursing and palliative
Post-1960s Many effective treatments Much shorter stays - expansion of nursing homes Most care is technological
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Changes in Hospital Financial Models
Pre-1970s Mostly Charitable Built on donations, not debt or bonds Reduced operating costs and pressure on occupancy
Post 1970s Debt Stock market - pressure for performance Huge pressure on occupancy and profitability
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Joint Commission on Accreditation of Hospitals
1950s American College of Surgeons and American Hospital
Association Now Joint Commission (on Accreditation of Anything
that Makes Money in Health Care) Split The Power In Hospitals
Medical Staff Controls Medical Staff Administrators Control Everything Else
Enforced By Accreditation Depends on Medicare/Medicare waiver Seldom pulls accreditation
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Contemporary Hospital Organization
Classic Corporate Organizations CEO Board of Trustees Has Final Authority Part of Conglomerate
Medical Staff Committees Tied To Corporation by Bylaws Headed by Medical Director
Raises Conflict of Interest/Antitrust Issues
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Medical Staff Bylaws
Contract Between Physicians and Hospital Not Like the Bylaws of a Business Selection Criteria Contractual Due Process For Termination
Negotiated Between Medical Staff and Hospital Board
Limits corporate control as compared to employee models
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Paying for Medical Care
Pre-WW II Mostly Private Pay Some Employer Provided - Kaiser
WW II Price Controls
Post WW II Health Insurance As Benefit Private Insurance The Blues Medicare/Medicaid
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Blue Cross - Blue Shield
Developed by Docs and Hospitals Sold to Teachers Assure Access Assure Payment
Reimbursement Policy Pay Whatever Was Charged Subsidize the Rural Areas Subsidized Over-bedding and Over Treatment
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Social Security Income and Disability
1930s Lifted the elderly out of poverty Provided disability insurance for workers The disability is quite a big and valuable program
and pays for a lot of medical care
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Hill-Burton
Post-WWII Funded construction of community hospitals Had community service requirements, but those
have all expired Created the US emphasis on hospital based care Spent from the 1970s to the 1990s reducing
hospital beds to control costs Excess beds or Surge Capacity?
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The Great Society
Medicare Old People Certain disabled people
Medicaid Poor People Nursing Homes
About 40% of medical dollars Fought by the AMA Made Docs Rich
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No Good Old Days for Patients
Gaming the System under Fee For Service Right to Die As Example Cannot Just Open the Checkbook
Greed Is Not Good in Medical Care Fee for Service Drives Unnecessary Care Hospitals Have to Care More About Money
Than Patients Rich Docs Are Not Always Better Docs
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Federal Interventions
Feds Pay About 45% of Health Care Other Plans Follow the Feds Usual and Customary Charges for Docs
Based on the Community Adjusted for the Docs Previous Charges Complex
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Hospital Costs
Big dollars are in the hospital charges Docs only get 20-25% of the health care budget Hospitals get a lot of the rest Drugs are an increasing share Fee for service drove unnecessary care Open-end reimbursement drove high prices Hospitals did not even know what things cost
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Diagnosis Related Groups - DRGs - 1983
Watershed in Health Care Reimbursement Prospective Payment (Capitation) Based on Admitting Diagnosis Fixed Payment Some Adjustments
Encouraged health insurers to also manage physician care
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Making Money Under DRGs
Fewer Tests and Procedures Complete Reversal of Prior Reimbursement No Bump for ICU
Reduce Length of Stay Dropped About 20% at Once, continued to drop Ideal Is Out the Door, Dead or Alive Patients Discharged Much Sicker
Which Was Right, Then or Now?
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Federal Laws Enabling Managed Care for Docs
Federal HMO Act in the 1970s Preempted State Laws Banning Prepaid Care
ERISA Passed to allow labor unions to negotiate national
health plans with big employers Preempts state regulation of certain self-insured
health plans Gave self-insured plans an edge and drove most
employers to them
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Managed Care Organizations - MCOs
Insurance Plans That Control Patient Care Includes the Old Alphabet Soup
HMOs PPOs IPAs
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Two Major Variables
Employer or Contractor Do the docs work for the plan or a captive group? Do the docs contract with many plans, treating
patients based on different plan benefits? Open or Closed
Do the docs treat only patients from a single plan or a mix of plans?
Why do these matter? Leverage on the doc's decisions
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Direct Controls on Costs by the Plan
Pay Less for Services Use Market Power to Bargain Control Access Points Limit Hospital Stays Limit Tests, Procedures, and Referrals
Direct Control of Access Pre-approval Tell the Docs What to Do Most Honest
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Indirect Controls
Capitation CRF--Consultation and Referral Funds Withhold and Incentive Pools Stop-loss and Reinsurance Total Capitation
Economic Credentialing Dumb Down Services Free Ride on Other Plans or the Government
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The Cost of Medical Care in the United States
Health As % of GNP Has More than Doubled in 50 Years
It is 20%-50% Higher Than Europe Their Health Statistics Are Just As Good Do They Know Something We Don't?
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U.S. Has A Lower Life Expectancy than Most Other Industrialized Countries
Taken as a major criticism of the US system Is life expectancy really the right measure?
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Life Expectancy Is Not Health
Bias Weighted Toward the Young One Baby Is Worth Several Grannies
Only Life Counts Discounts Quality of Life Nursing Home Is As Good As the Ski Slopes Masks Aging Population Masks Improved Health
A Good Measure for Developing Countries
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What Complicates Health in the US?
We Have 3rd World Public Health Ineffective Prenatal Care Poor Immunization Practices Limited Access to preventive and routine care
Teen Pregnancy Prematurity Poor Parenting
Developed World Leader in AIDS
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Non-medical Issues
The Problem of the Poor Poor Education Poor Health Habits Cannot Afford Prevention
Geography Too Many Isolated Areas Expensive to Deliver Care
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How has the Health Care Umbrella been Expanded?
Sin to Sickness Alcoholism Drug Abuse
Miscatagorization Nursing Homes - housing? Vanity Surgery - life style?
Should Compare Total Social Welfare Budget with Europe
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The Core Problem
Public health and primary care does not work well Chronic diseases can be mitigated, but not
cured or prevented Shifts care to expensive technology and drugs
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Second Order Demographics
People live longer because of medical care and public health More old people More people with chronic illness do not die Old people need more Total cost goes up
Health is much more expensive than death
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Impact of Governmental and Private Plan Economics and Special Interests on Care
High tech care has the strongest interest groups Providers and suppliers have a lot of money Patient advocacy groups are easy to capture Captures every more of the budget
Primary care, prevention, and public health Not sexy Big savings are low tech, long term Not a good news story Providers do not have the money to fight
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Specialty Hospital Example
Pros Complex care is safer when regionalized Better care at lower prices
Cons Do not money losing services Do not take uninsured patients Shift the most valuable patients from community hospitals No EMTALA requirements if no ER
Dramatically increase unnecessary surgery No limits on construction in LA
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