Clinical Issues in Health Care Management

Health care management in the twenty-first century faces a complex web of interrelated issues. Among them are questions of organization (solo versus group practice; independent hospitals versus large regional systems); issues of payment; and the role for new information technologies (electronic health records, clinical decision support systems). These questions represent the critical issues facing health care providers in the health industry. The aim of this essay is to explore how the changes occurring in the delivery of health care affect physicians on an organizational and personal level.

Keywords Electronic Health Records; Evidence Based Best Practices; Evidence Based Medicine; Health Care Delivery; Managed Care; Physician Hospital Organization; Vertical Integration

Health Care Management > Clinical Issues in Health Care Management

Overview

For centuries, families provided medical care in the privacy of their homes. Doctors were called in as a last resort only when home remedies appeared to have no effect. Unfortunately, most doctors had few effective treatments beyond what untrained family members could provide. Doctors largely provided institutional care to the poor, the aged, or others without family resources.

This grim picture began changing as research in medicine expanded, resulting in the development of new treatments, tools, and technologies that were beyond the scope of the medical care that family members could provide. As the practice of medicine changed, corresponding changes in the organization and structures of health care delivery changed also. Hospitals became less like charitable institutions and more like scientific places where doctors were provided with requisite clean, antiseptic surgical suites and exam rooms, and nurses executed doctors' orders in the controlled environment of hospital wards.

An unchanging factor during this transformation of medical practice was the position of authority demanded by and provided to the doctor (Starr, 1982). Doctors maintained their authoritative position through strictly controlled access to medical education, licensing regulations promulgated by state governments (often at the behest of state medical societies), and a professional monopoly on clinical information. This authoritative position was reinforced by the professional esteem, trust, and respect bestowed on doctors by the public.

In the mid-1960s, a watershed event swept the healthcare industry with the establishment of Medicare and Medicaid, government programs that supplement or provide medical care for elderly and poor Americans. This event sparked explosive growth in the number of patients and the number of health facilities and providers ready to treat them. This was closely followed by explosive growth in health care costs. Health care costs (expressed as a percent of gross domestic product) grew from 5.7 percent in 1965 to 8 percent in 1975, to 10.3 percent in 1985, and has continued unabated to the present day (White, 1999). In 2011, health expenditures in the United States accounted for 17.9 percent of GDP (World Bank, 2013). With the rising costs of medical care, the dynamics among the key players in the health care industry began to change. Where doctors once practiced in solo or small group enterprises, large multi-specialty clinics were established to compete for the greater number of patients available. Where doctors once set their own fees and handled their own collections, third-party payers and alternative payment systems sprang-up in an effort to control rising costs. Hospitals, which once walked a fine line in their relationship to the medical staff, now began implementing quality improvement guidelines to address issues of risk management and to competitively position themselves as the best providers in regional health care markets. The medical staff was expected to follow the hospital administrator's lead and comply with new procedures in risk management and quality improvement.

In the following sections of this essay, the impact of these dynamic forces on physicians at the clinical care level is examined. First, the changes in the organization and practice of medical care are investigated followed by the effects of these changes on the individual physician at a personal level. Issues of autonomy and ethic are also considered.

Organization

Changes in Physician Practice Structures

Until approximately 1980, the organizational structure of a physician's practice was solo or small groups of single or multiple related specialties. Hospitals provided the physical facilities for inpatient care and outpatient care that required capital financing for major equipment such as sophisticated diagnostic and imaging technologies. The medical staff of hospitals was composed primarily of local doctors who were granted privileges to practice in the hospital. In exchange for these privileges, doctors would staff emergency rooms, share on-call responsibilities, and participate in medical education and training programs (Pham & Ginsburg, 2007). Privileges were granted based on licensing and accreditation requirements. Physicians were largely unaccountable to anyone but their professional colleagues and only the grossest of unethical, mistreatment, or malpractice incidents were cause for revoking privileges (Pham & Ginsburg, 2007).

In the 1980s, a shift occurred in the organization of physician practices from solo or small group practices to large group practices. In most cases, these large group practices were composed of specialty physicians as opposed to primary care physicians such as family medicine physicians, pediatricians, or general internists. An incentive for moving to large group practices was the incentive for increased billings under fee-for-service arrangements.

As the number of new medical technologies and treatments increased, the costs for providing these clinical advances increased correspondingly. Beginning with the Medicare prospective payment system, managed care organizations (MCOs) and health maintenance organizations (HMOs) and other third-party payment structures emerged to contain the rising costs of health care through capitation. In contrast to fee-for-service reimbursement, where the physician billed each service or medical event based on his/her experience or on what was considered to be “usual and customary” in his practice area, capitation set a fixed fee per patient negotiated in advance of any medical event. Under capitation, a physician provider or hospital knew in advance that the insurance plan or HMO will only pay for the predetermined contracted amounts for each service delivered or each medical event treated. In this arrangement, the risk of paying for a medical event is shared between the payer (the health plan) and the provider (physician or hospital).

One impact of these new payment structures was to restrict the patient's choice of doctor and frequently the doctor's choice of treatment based on what the payment provisions of the plan were. It is no surprise that as employer-contracted MCOs became the norm for financing health care, as there was a backlash by consumers and physicians objecting to these restrictions.

Move to Vertical Integration

As financial risk increased under capitated payment mechanisms, hospitals faced the need to exert more control over their operating expenses. This was accomplished by vertical integration. One approach to accomplishing this was to realign regional providers into an integrated delivery system. Integration can be achieved horizontally or vertically. Although horizontal integration did occur as stronger hospitals bought out their weaker and less financially viable competitors, vertical integration was the more dominant feature for health system integration. A primary vehicle for achieving vertical integration was the purchase of physician practices. This achieved two objectives: It served to decrease the competition that hospitals were facing by physicians who were providing advanced diagnostic and treatment services within their practice, and it strengthened the system's ability to exert greater control over costs. Purchase of physician practices was also supposed to guarantee a built-in referral base for hospital services. When practices were purchased and became part of the integrated system, doctors often became employees of the system rather than independent business persons.

There is some question as to whether vertically integrated health systems have proved to be the successful health care organization that they were first touted to be. In part, integration through purchase of physician practices did not provide the cost savings and efficiencies originally projected. High costs associated with operating expenses forced many systems to divest previously integrated providers. Due to the impact of risk-sharing on operating margins, physician practices were a primary target for divestiture. Physicians have historically run their practices including billing, collections, record-keeping, and referral relationships with complete autonomy. In an integrated delivery system, much if not all of that autonomy is lost. Thus, if not carefully managed, the relationship between the system and the physicians aligned with the system can result in confrontation dealing not only with issues of income and revenue, but also with issues of power and control.

New Practice Structures

In a Physician Hospital Organization (PHO) structure, physicians and hospitals unite to coordinate managed care contracting activities. The advantage of the PHO is that efficiencies and economies can be realized through streamlined billing and collections. The PHO is also a strategic alliance that can operate competitively within the managed care market. A further outgrowth of the PHO is the emergence of new physician practice management organizations. These companies contract to run the business end of a physician practice, and in some cases purchase the practice outright.

Health Care Delivery

Evidence-Based Best Practices

Evidence-based best practices (EBBP) are "diagnostic and treatment clinical guidelines that have been scientifically proven to provide for the best medical outcomes given the current state of practice" (Thibadoux, Scheidt & Lukey, 2007). EBBP grew out of increasing pressure from third-party payers to develop standards of care that would reduce unnecessary utilization of services (Kinney, 2001). In addition to the third-party payers, physicians, especially medical specialists, were interested in improving the scientific rationale for treatment interventions as well as increasing quality of care (Kinney, 2001). Evidence-based practice uses guidelines that have been compiled by Agency for Healthcare Research and Quality, the American Medical Association, and the American Association of Health Plans. The guidelines are used to support clinical decision-making based on "empirically derived standards of care" (Kinney, 2001).

While some physicians have criticized the use of EBBP guidelines as "cookbook" medicine, on the whole, doctors have accepted EBBP as part of an important component in the delivery of quality care (Flores, Lee & Kasther, 2002).

Information Technology

For all the advances made in medical technologies and treatment, one area of clinical practice that has lagged far behind in technological innovation has been the patient medical record. The medical record is the compendium of all data related to a patient's health status, diagnoses, treatment history, and treatment outcomes. Yet, for all its importance in the delivery of health care delivery, the medical record has been among the last medical care tools to undergo technological transformation.

Karen A. Wager, Frances W. Lee, and John P. Glaser (2005) state that the paper-based medical record that was the hallmark of medical practice is now a passive tool of health care. It is no longer sufficient for the practice of twenty-first- century medicine. Physicians need an active tool that is immediately available, supports clinical decision making, and can link to the latest medical information and research findings. This active tool is the electronic health record (EHR).

The electronic medical record is not a single flat linear designed database but a series of several linked data systems that allow providers to retrieve patient information, access clinical care guidelines (EBBP), provide decision support, and handle the logistics of care such as entering orders, making referrals, placing prescriptions, and generating reminders and alerts. Successful implementation of EHR systems transforms not only operating procedures within the hospital or the physician's practice, it can also transform the dynamics of the doctor-patient relationship. Overall, patients report satisfaction with the use of EHR by their doctors ("Americans prefer," 2007). William Ventres and Amit Shah (2007) caution that doctors must not only learn how to navigate the EHR system but must also learn ways of integrating use of the EHR into the doctor-patient relationship (Als, 1997). For example, it is important that the doctor focuses on the patient and not become absorbed solely with looking at the computer monitor. Studies have shown that doctors with good communication skills using a paper medical record retain these skills with the introduction of EHRs. However, communication skills were observed to deteriorate with the introduction of EHR for doctors whose communication skills were poor to begin with (Frankel, Altshuler, Kinsman & Robertson et al, 2005).

Personal Impacts on Physicians

Autonomy

One of the critical impacts that the changes in health care delivery and finance have made is the impact on physicians’ autonomy in their practice of medicine. Although formation of group practices continues to grow, the organizational culture of physician practice is still one of individualistic style and individual routines (Boone, 2000). Despite their limitations, integrated systems are still very much a feature of contemporary health care delivery and therefore still a major feature of a physician's day-to-day work. However, individualism is not a feature of these integrated systems. Conformity is. Conformity translates into compliance with rules, procedures, and operations of the system. These rules pertain not only to administrative and management procedures but also to the delivery of clinical care. Risk management plans cover not just medical malpractice but also negligent credentialing risks, antitrust issues, and other clinical and administrative liabilities. With a foot in both the individualistic culture of private practice and the culture of structure and conformity within the integrated health system, physicians often experience anger and frustration, which can lead to errors in clinical judgment and care. Health system administrators must undertake a program of physician compliance as part of the system's administrative responsibility (Wolper, 2004).

Ethics

Another dilemma physicians face among the many changes affecting health care delivery is the emphasis on cost control, quality improvement, and performance evaluation. Concerns about these issues go hand in hand with physician concern about movement away from the art and science of medicine and toward an overemphasis on the business of health care. Greg M. Thibadoux and his colleagues (2007) conducted a study on the application of standard cost-accounting procedures to evidence based practice methods in clinical care. This was an exploratory study using grounded theory, a qualitative methodology. Nine physicians were asked the question "As a physician working in a hospital environment, what are your reactions to and concerns with combining standard costing techniques with EBBP?" Analysis of the interviews revealed two themes: The ethics of applying standard cost accounting procedures to the practice of medicine and the implementation of cost accounting with EBBP.

Within the ethics theme, five basic issues were identified. The first was the problem of variance in performance evaluation. Respondents noted that variance could be attributed to a number of different factors such as a positive variance because inappropriate or inadequate treatment measures were used. On the other hand, concerns were expressed that a negative variance may have the effect of putting the costs of treatment above clinical judgment of the best treatment, especially if variance analysis was being used as an indicator of physician performance. The second basic issue identified concerned the issue of responsibility without authority. In the hospital setting, there are many providers involved in various aspects of patient care. The physician whose performance is being evaluated against cost standards may not have been the only provider to interact or order supplemental treatment. This is especially the case in a teaching hospital where residents and interns are seeing the same patient as the attending physician and are also responsible for the patient's welfare. A third issue dealt with differing values and beliefs between the patient and the clinical guideline suggested by EBBP. Also, respondents pointed out that EBBP standards were more often than not tested on Caucasian male patients, leaving open the variables of race, ethnicity, and gender that may affect the standards set in the clinical guidelines. In addition, patient lifestyles may also not be reflected in the clinical guidelines (e.g. smoking, failure to exercise, overeating).

A fourth issue identified was the issue of data collection and confidentiality. In order to track patient care over time and among a variety of providers, patient identifiers must be used. In the process of applying cost standards to physician performance, data will be shared not only with other providers but also with accountants, case managers, and others. The last issue identified is based on concern that the applications of cost standards would compromise clinical decision- making, and as stated earlier, move the practice more toward a business and decision-making in a business modality rather than a medical modality.

As the authors of this study state, it is an exploratory study. Nonetheless, the study is valuable as it does demonstrate the concerns of physicians working in an environment where the focus is on cost control. The perception is often that optimal clinical care is secondary to cost control.

The Effects of the Affordable Care Act The Affordable Care Act, a US federal law enacted in 2010, has effected major changes in health care management. This article will briefly discuss the primary effects of the implementation of the Affordable Care Act on health care management in the United States.

One of the principal elements of the Affordable Care Act is the implementation of the individual mandate and the expansion of Medicaid, which led to an estimated thirty million newly insured patients entering the health care marketplace. In order to accommodate the influx of newly insured patients, the improvement of practice efficiency is paramount for health care managers, and many practices have reviewed their patient no-show rates and increased the responsibilities of mid-level practitioners, such as physician assistants and nurse practitioners. The Affordable Care Act also emphasizes the prevention of Medicare fraud, so Medicare providers have retooled their billing practices in order to ensure compliance with the new rules.

The Affordable Care Act has also encouraged a shift away from fee-for-service payment systems, which had previously incentivized doctors to order extra tests and treatments, in favor of a system of bundled payments for each outpatient or hospital visit in order to ensure a flat fee regardless of the number of tests or procedures ordered by the attending physician. While this shift will help to control costs and ensure that treatment is reasonably priced for patients, it also results in lower per-patient reimbursements for doctors, especially specialists. The Affordable Care Act also promotes larger interdisciplinary provider structures, such as Accountable Care Organizations, which emphasize care coordination and cost reduction. With the rising costs of medical technology and malpractice insurance, solo practitioners are increasingly feeling pressured to merge with larger practices. Finally, the Affordable Care Act creates the Patient-Centered Outcomes Research Institute to coordinate comparative research on existing drugs and procedures in order to determine the best practices. The new research generated by the Patient-Centered Outcomes Research Institute will help physicians to make more informed decisions about their patients’ care.

Conclusion

This essay has attempted to show how the major organizational, political, financial, and technological changes in health care affect the clinical care of patients and the work of the physicians who provide that care.

Terms & Concepts

Electronic Health Records: Technological tool that makes patient medical records immediately available, supports clinical decision-making, and can link to the latest medical information and research findings to aid doctors in better performing their job.

Evidence Based Best Practices: An approach to the practice of medicine that use empirically derived standards of care to construct clinical care guidelines

Health Care Delivery: The activity of providing or supplying health care to individuals or groups of individuals.

Managed Care: An approach to health care finance that uses a third-party intermediary, such as an HMO, to coordinate and pay for health care services.

Physician Hospital Organization: An organizational structure uniting doctors and hospitals to coordinate managed care contracting activities

Vertical Integration: Realigning of regional providers into an integrated delivery system; done mostly through the purchase of physician practices. This integration achieves two objectives: It serves to decrease the competition that hospitals are facing by physicians who are providing advanced diagnostic and treatment services within their practice and it strengthens the system's ability to exert greater control over costs.

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Suggested Reading

Bohmer, R.M.J. (2005). Medicine's service challenge: Blending custom and standard care. Health Care Management Review, 30(4), 322-330. Retrieved January 29, 2008, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=18840890&site=ehost-live

Freymann Fontenot, S. (2013). The Affordable Car Act electronic health care records. Physician Executive, 39(6), 72–76. Retrieved November 25, 2013 from EBSCO online database Business Source Premier. http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=91985134

Rivers, P.A. & Frimpong, J. (2006). The impact of compensation methodology on physician clinical practice patterns. Journal of Health Care Finance, 32(4), 55-66. Retrieved January 29, 2008, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=22056047&site=ehost-live

Skoko, I., Devcic, A., & Sostar, M. (2011). Challenges of Management in Private Health Care Institutions. International Journal Of Management Cases, 13(3), 524-530. Retrieved November 5, 2014, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=65535186

Wang, X.S., Nayda, L. & Dettinger, R. (2007). Infrastructure for a clinical-decision-intelligence system. IBM Systems Journal, 46(1), 151-169. Retrieved January 29, 2008, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=24478489&site=ehost-live