John W. Hopkins, III
School of Business, Liberty University
BUSI 511: Healthcare Administration
Summer B 2021 Section B01
Major Characteristics of U.S. Health Care Delivery
Jessica, thank you for sharing your thoughts on the objectives and characteristics of the U.S.
Health Care Delivery. Your post was very well organized and easy to understand. I like how
instead of listing the ten characteristics of a health care delivery system, you broken them down
and discussed how each of them is a proponent of the system as a whole. Seeing as we live in a
nation where the healthcare system is greatly "influenced by politics, economics, technology,
society and culture, the physical environment and demographic and other population
characteristics" (Shi et al., 2019), it is important to make sure that our U.S. health care delivery
systems continues getting closer to a health system that is available to all citizens and is cost-
effective.
Vulnerable populations, particularly those who are poor and uninsured or of minority and
immigrant status, live in geographically or economically disadvantaged communities and receive
care from “safety net” providers. These providers include health centers, physicians’ offices, and
hospital outpatient and emergency departments; of these, health centers are expressly designed to
serve the underserved. Consistent with their unique role and mission, safety net providers offer
comprehensive medical and enabling (e.g., language translation, transportation, outreach,
nutrition and health education, social support services, case management, and child care)
services targeted to the needs of vulnerable populations.
For example, for over 30 years, federally funded health centers have provided primary and
preventive health services to rural and urban underserved populations. The Bureau of Primary
Health Care (BPHC), located in the Health Resources and Services Administration in the
Department of Health and Human Services (DHHS), provides federal support for community-
based health centers that include programs for migrant and seasonal farm workers and their
families, homeless persons, public housing residents, and school-aged children. These services
facilitate regular access to care for patients who are predominantly minority, low-income,
uninsured, or receiving Medicaid. By the end of calendar year 2002, the nationwide network of
843 reporting health centers delivered essential primary and preventive care at more than 3,500
sites, serving more than one fifth (more than 11 million) of the nation’s 50 million underserved
persons (Bureau of Primary Health Care, 2002). Health centers have contributed to significant
improvements in health outcomes for the uninsured and Medicaid populations and have reduced
disparities in health care and health status across socioeconomic and racial/ethnic groups
(Politzer et al., 2003; Shi et al., 2001). In addition to health centers, government health insurance
programs, such as Medicare, Medicaid, and State Children’s Health Insurance Program (SCHIP),
provide vulnerable populations with access to health care services. Medicare is one of the largest
sources of health insurance in the country, serving nearly 39 million people, who are either 65
years old or older and who are suffering from certain disabilities or are diagnosed with end-stage
renal disease. Managed by the Health Care Financing Administration (HCFA), another division
within the DHHS, Medicare is composed of three parts, Part A, Part B, and most recently Part D.
Part A and Part B were the original divisions of the Medicare program. Part A covers health care
received in hospitals, nursing facilities, hospice care, and some home health care with no
monthly premiums, while Part B covers doctors’ services and other outpatient care not included
in Part A with an additional monthly premium, which in 2008 cost about $96.40 per month. Part
D, or the Medicare Prescription Drug Plan, provides coverage for brand-name and generic
prescription drugs at pharmacies involved in the program. The program is designed to protect
those in Medicare burdened with very high drug costs or unexpected prescription bills in the
future.
The health care system of a nation is influenced by external factors, including the political
climate, stage of economic development, technologic progress, social and cultural values, the
physical environment, and population characteristics such as demographic and health trends. It
follows, then, that the combined interaction of these environmental forces influences the course
of health care delivery in the United States. This section summarizes the basic characteristics that
differentiate the U.S. health care delivery system from that of other countries. There are eight
main areas of distinction.
The U.S. health care system stands in conspicuous contrast to the health care systems of other
developed countries. The centrally controlled universal health care system that most developed
countries have authorizes the financing, payment, and delivery of health care to all residents. The
U.S. system, however, is not centrally controlled and therefore has a variety of payment,
insurance, and delivery mechanisms, and health care is financed both publicly and privately.
Private financing, which is predominantly through employers, accounts for approximately 55%
of total health care expenditures; the government finances the remaining 45% (National Center
for Health Statistics, 2002).
Centrally controlled health care systems are less complex. They are also less costly because they
can manage total expenditures through global budgets and can govern the availability and
utilization of services. Because the United States has such a large private system of financing as
well as delivery, the majority of hospitals and physician clinics are private businesses,
independent of the government. Nevertheless, the federal and state governments in the United
States play an important role in health care delivery. They determine public sector expenditures
and reimbursement rates for services provided to Medicaid and Medicare patients. The
government also formulates standards of participation through health policy and regulation,
which means that providers must comply with the standards established by the government in
order to deliver care to Medicaid and Medicare patients. Certification standards are also regarded
as minimum standards of quality in most sectors of the health care industry.
The United States has been the hotbed of research and innovation in new medical technology.
Growth in science and technology often creates a demand for new services despite shrinking
resources to finance sophisticated care. Other factors contribute to increased demand for
expensive technological care: Patients assume that current technologies offer the best care;
physicians want to try the latest gadgets. Even hospitals compete on the basis of having the most
modern equipment and are often under pressure to recoup capital investments made in
technology by using it. Legal risks for providers and health plans alike may also play a role in
the reluctance to deny new technology.
Although technology has ushered in a new generation of successful interventions, the negative
outcomes resulting from its overuse are many. For example, the cost of highly technical
interventions adds to the rising costs of health care, making it more difficult for employers to
extend insurance to part-time workers or for insurance companies to lower their premiums.
Because there are limited resources to invest in the American health care system, it is essential to
think twice before assuming that the best solution always involves technology. Considering the
broad benefits of primary care in preventing acute conditions that ultimately require
technological intervention, it seems essential to strive for a balanced investment in both high-
and low-technology medicine.
The United States spends more than any other developed country on health care (primarily
medical care), and costs continue to rise at an alarming rate. Despite spending such a high
percentage (13%) of the nation’s gross domestic product on health care, many U.S. residents
have limited access to even the most basic care (Anderson et al., 2003). Access means the ability
of an individual to obtain health care services when needed. In the United States, access is
restricted to those who (1) have health insurance through their employers, (2) are covered under
a government health care program, (3) can afford to buy insurance out of their own private funds,
and (4) are able to pay for services privately. Health insurance is the primary means for ensuring
access. In 2000, the number of uninsured Americans—those without private or public health
insurance coverage was estimated to be 40.5 million or 16.8% of the U.S. population (National
Center for Health Statistics, 2002). For consistent basic and routine care, commonly referred to
as primary care, the uninsured are unable to see a physician unless they can pay the physician’s
fees. Those who cannot afford to pay generally wait until health problems develop, at which
point they may be able to receive services free of charge in a hospital emergency department.
Uninsured Americans therefore are able to obtain medical care for acute illness. Hence, one can
say that the United States does have a form of universal catastrophic health insurance even for
the uninsured (Altman & Reinhardt, 1996, p. xxvi).
It is well acknowledged that the absence of insurance inhibits the patient’s ability to receive
well-directed, coordinated, and continuous health care through access to primary care services
and, when needed, referral to specialty services. Experts generally believe that the inadequate
access to basic and routine primary care services is the main reason that the United States, in
spite of being the most economically advanced country, lags behind other developed nations in
measures of population health such as infant mortality and overall life expectancy. For the health
care market to be free, unrestrained competition must occur among providers on the basis of
price and quality.
Generally speaking, free competition exists among health care providers in the United States.
The consolidation of buying power into the hands of private health plans, however, is forcing
providers to form alliances and IDSs on the supply side. As explained earlier, IDSs are networks
that offer a range of health care services. In certain geographic sectors of the country, a single
giant medical system has taken over as the sole provider of major health care services, restricting
competition. As the health care system continues to move in this direction, it appears that only in
large metropolitan areas will there be more than one large integrated system competing to get the
business of the health plans. A free market requires that patients have information about the
availability of various services. Free markets operate best when consumers are educated about
the products they are using, but patients are not always well informed about the decisions that
need to be made regarding their care.
Choices involving sophisticated technology, diagnostic methods, interventions, and
pharmaceuticals can be difficult and often require physician input. Acting as an advocate,
primary care providers can reduce this information gap for patients. Recently, health care
consumers have taken the initiative to educate themselves with the use of Internet resources for
gathering medical information. Pharmaceutical product advertising is also having an impact on
consumer expectations and increasing awareness of
available medications.
In a free market, patients have information on price and quality for each provider. Current
pricing methods for health care services further confound free market mechanisms. Hidden costs
make it difficult for patients to gauge the full expense of services ahead of time. Item-based
pricing, for example, refers to the costs of ancillary services that often accompany major
procedures such as surgery. Patients are usually informed of the surgery’s cost ahead of time but
cannot anticipate the cost of anesthesiologists and pathologists or hospital supplies and facilities,
thus making it extremely difficult to ascertain the total price before services have actually been
received. Package pricing and capitated fees can help overcome these drawbacks by providing a
bundled fee for a package of related services. Package pricing covers services bundled together
for one episode of care, which is less encompassing than capitation. Capitation covers all
services an enrollee may need during an entire year.
In recent years, the quality of care has received much attention. Performance rating of health
plans has met with some success; however, apart from sporadic news stories, the public generally
has scant information on the quality of health care providers. In a free market, patients must
directly bear the cost of services received. The purpose of insurance is to protect against the risk
of unforeseen major events. Because the fundamental purpose of insurance is to meet major
expenses when unlikely events occur, having insurance for basic and routine health care
undermines the principle of insurance. Health insurance coverage for minor services such as
colds, coughs, and earaches amounts to prepayment for such services. There is a moral hazard
that after enrollees have purchased health insurance they will use health care services to a greater
extent than if they were without health insurance. Even certain referrals to higher level services
may be foregone if the patient has to bear the full cost of these services.
In a free market for health care, patients as consumers make decisions about the purchase of
health care services. The main factors that severely limit the patient’s ability to make health care
purchasing decisions have already been discussed. At least two additional factors limit the ability
of patients to make decisions. First, decisions about the utilization of health care are often
determined by need rather than price-based demand. Need has generally been defined as the
amount of medical care that medical experts believe a person should have to remain or become
healthy (Feldstein, 1993, p. 74–75). Second, the delivery of health care can result in creation of
demand. This follows from self-assessed need that, coupled with moral hazard, leads to greater
utilization. This creates an artificial demand because prices are not taken into consideration.
Practitioners who have a financial interest in additional treatments also create artificial demand
(Hemenway & Fallon, 1985), commonly referred to as provider-induced demand.
In most other developed countries, the government plays a central role in the provision of health
care. In the United States, however, the private sector plays the dominant role. This can be
explained to some degree by the American tradition of reliance on individual responsibility and a
commitment to limiting the power of the national government. As a result, government spending
for health care has been largely confined to filling in the gaps left open by the private sector.
These gaps include environmental protections, support for research and training, and care of
vulnerable populations. Market justice and social justice are two contrasting theories that govern
the production and distribution of health care services in the United States.
The principle of market justice places the responsibility for the fair distribution of health care on
the market forces in a free economy. Medical care and its benefits are distributed on the basis of
people’s willingness and ability to pay (Santerre & Neun, 1996, p. 7). In contrast, social justice
emphasizes the well-being of the community over that of the individual; thus, the inability to
obtain medical services because of a lack of financial resources would be considered unjust. A
just distribution of benefits must be based on need, not simply one’s ability to purchase them in
the market place. In a partial public and private health care system, the two theories often work
well hand in hand, contributing ideals from both theories; however, market justice principles
tend to prevail. As mentioned before, Americans generally prefer market solutions to
government intervention in health care financing and delivery. Unfortunately, market justice
results in the unequal allocation of health care services; neglecting critical human concerns that
are not confined to the individual but have broader, negative impacts on society (see Chapter 2
for contrast between market and social justice).
The U.S. health services system involves multiple players. The key players in the system have
been physicians, administrators of health service institutions, insurance companies, large
employers, and the government. Big business, labor, insurance companies, physicians, and
hospitals make up the powerful and politically active special interest groups represented before
lawmakers by high-priced lobbyists. Each player has a different economic interest to protect. The
problem is that the self-interests of each player are often at odds. For example, providers seek to
maximize government reimbursement for services delivered to Medicare and Medicaid patients,
but the government wants to contain cost increases.
The fragmented self-interests of the various players produce counteracting forces within the
system. One positive effect of these opposing forces is that they prevent any single entity from
dominating the system. In an environment that is rife with motivations to protect conflicting self-
interests, achieving comprehensive system-wide reforms is next to impossible, and cost
containment remains a major challenge. Consequently, the approach to health care reform in the
United States is characterized as incremental or piecemeal and is sometimes regressive when
administrations change followed by its ripple effect on government health agencies.
Unlike countries with national health plans providing universal access, the United States’ access
to health care services is limited. Access is granted only to individuals who (1) have health
insurance through their employers, (2) are covered under a government health care program, (3)
can afford to buy insurance with their own private funds, and (4) can pay for services privately.
Although the United States offers some of the best medical care in the world, this care is often
available only to individuals
with health insurance plans that provide adequate coverage or sufficient resources to pay for the
procedures themselves.
In addition, there is a relatively large population of uninsured in the country. In 2006, 47 million
people (15.8% of the population) were uninsured, meaning they were not covered by any type of
insurance program, public nor private (DeNavas-Walt et al., 2006). This statistic does not
include individuals in the population who are underinsured or only intermittently insured in a
given year. The uninsured have limited options when seeking medical care. They can either (1)
pay physicians out of pocket that are typically at higher rates than those paid by insurance plans,
(2) access federally funded health centers, or (3) obtain treatment for acute illnesses at a hospital
emergency department for which hospitals do not receive direct payments unless patients have
the ability to pay. The Emergency Medical Treatment and Labor Act of 1986 require screening
and evaluation of every patient, necessary stabilizing treatment, and admitting when necessary,
regardless of ability to pay. Unfortunately, the inappropriate use of emergency department’s
results in cost-shifting, where patients able to pay for services, privately insured individuals,
employers, and the government ultimately cover the costs provided to the uninsured in the
emergency room. Also, the lack of insurance restricts the patients’ capability to receive well-
directed, coordinated, and continuous health care through access to primary care services, and
when necessary, referral to specialty services.
Americans as a society are quick to engage in lawsuits. Motivated by prospects of enormous jury
awards, people are easily prompted to drag alleged offenders into the courtroom because of the
slightest perceptions of incurred harm. Because private health care providers are increasingly
becoming more susceptible to litigations, risk of malpractice lawsuits is a serious consideration
in the practice of medicine. As a form of protection, most providers engage in what is known as
defensive medicine by prescribing additional diagnostic tests, scheduling checkup appointments,
and maintaining abundant documentation on cases. Many of these efforts are unnecessary and
only drive up costs and inefficiency.
Most Western European countries have national health care programs that provide universal
access. There are three basic models for structuring national health care systems. In a system
under National Health Insurance, such as Canada, the government finances health care through
general taxes,
but the actual care is delivered by private providers. In the context of the quad-function model
(see Figure 1.1), National Health Insurance requires a tighter consolidation of the financing,
insurance, and payment functions, which are coordinated by the government. Delivery is
characterized by
detached private arrangements.
In a national health system, such as the one in Great Britain, in addition to financing a tax-
supported national health insurance program, the government also manages the infrastructure for
the delivery of medical care. Under such a system, most of the medical institutions are operated
by the government. Most health care providers, such as physicians, are either government
employees or are tightly organized in a publicly managed infrastructure. In the context of the
quad-function model, a National Health System requires a tighter consolidation of all four
functions, typically by the government.
In a socialized health insurance system, such as in Germany, health care is financed through
government-mandated contributions by employers and employees. Health care is delivered by
private providers. Private not-for-profit insurance companies, called sickness funds, are
responsible for collecting the contributions and paying physicians and hospitals (Santerre &
Neun, 1996, p. 134). In a socialized health insurance system, insurance and payment functions
are closely integrated, and the financing function is better coordinated with the insurance and
payment functions than it is in the United States. Delivery is characterized by independent
private arrangements. The government exercises overall control.
Strengths
Your post was very well written and covered each of the characteristics individually. An
important factor that you noted is the concept of the "triple aim." In my research of this concept,
I found that in 2007 and 2008, the Institute for Healthcare Improvement (IHI) created 141
organizations including health care systems, hospitals, health care insurance companies, and
other key groups outside the health care system, such as public health agencies, social services
groups, and community coalitions to study the importance of integrated organizations. Through
these early integrated organizations, it was found that there were three major principles that
guided the organizations and communities working on the Triple Aim (WHITTINGTON et al.,
2015):
Creating the right foundation for population management.
Managing services at scale for the population.
Establishing a learning system to drive and sustain the work overtime.
Weaknesses
Your post covered all the information very well. There are no weaknesses that immediately stand
out while reading your post. If anything, I would say to go into a little more depth, giving some
specific examples of six factors that separate high and low performing ACOs. In reading your
cited article by D'Aunno, in addition to the six factors, including short interventions will improve
ACO performance. These shorter interventions can include timely feedback of performance data,
and use of embedded care coordinators (D'Aunno et al., 2018).
Conclusion
Great job on discussing this topic. You presented the information in a way that was thorough,
and you transitioned to your next point in a way that was easy to follow. While reading your
post, I was reminded of the verse ""For the poor shall never cease out of the land: therefore I
command thee, saying, Thou shalt open thine hand wide unto thy brother, to thy poor, and to thy
needy, in thy land"(DEUTERONOMY 15:11 KJV, n.d.). This passage correlates to the primary
objective for health delivery reform and how we need to continue to evolve to meet standards
amidst changes in various areas (social, cultural, and economical) (Shi et al., 2019).
