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CHAPTER TOPICS

History of the Hospital

The Scope of the Industry

Structure of Hospitals and Health Systems

Hospital Organization

The Hospital and Medical Staff

Key Issues Facing the Hospital Industry

LEARNING OBJECTIVES

Upon completing this chapter, the reader should be able to

1. Understand the role of the hospital in today’s health care system.

2. Appreciate the historical trends that have shaped the hospital industry.

3. Understand the types of hospitals, ownership patterns, and differentiating characteristics of various hospitals.

4. Comprehend the development of health systems and the role of hospitals in such systems.

5. Follow the impact of competitive pressures and other developments on the structure and operation of hospitals and health systems.

6. Understand the internal organizational structure of hospitals.

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CHAPTER 8

Hospitals and Health Systems

Stephen J. Williams and Paul R. Torrens

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The hospital’s role in the nation’s health care sys- tem has changed dramatically over the years. The hospital originated as an institution for the poor, of- fering little in the way of therapy, and then evolved into the center of the system and the primary tech- nology focus of health care. Now the hospital is a provider of highly specialized services and the hub of an assortment of other activities. The traditional independence of each hospital has been dramati- cally altered by horizontal and vertical integration within the health care system such that today few hospitals are truly freestanding entities. The technol- ogy to manage hospitals has likewise changed with an information systems focus and the application of complex parameters of performance measurement.

Expectations of consumers, providers, and pay- ers have also changed dramatically over the years with the anticipation of more effective interventions at more efficient and competitive pricing. Finally, as has always been the case in the past, the hospital in- dustry continues to face immense challenges, op- portunities, and expectations for the future.

The hospital has also changed from an island of care to an institutional octopus, with tentacles springing out throughout the community, affiliat- ing with other institutions and providers, and pro- viding outreach services for consumers. On the inpatient side, hospitals are increasingly providing the most complex of care to the most critically ill patients. On the outpatient side, most hospitals are broadening the array of services that they offer to better compete.

Hospitals face the challenges of sick and dying patients, demanding payers, government officials seeking accountability, physicians demanding the availability of the latest equipment and support, and many other crosscurrents. Some hospitals are for-profit entities, while others are not-for-profit. Some hospitals are highly specialized while others offer a broad range of services. Hospitals are often major employers in their communities and many provide the bulk of indigent care for low-income and disenfranchised citizens. Through it all, the backbone of hospital management has increasingly adopted the managerial principles of commercial

industry, seeking to provide services in an efficient, but cost-effective manner, and to offer competitive pricing to third-party and governmental payers. The challenges of this industry are immense and un- likely to recede in the decades that follow.

HISTORY OF THE HOSPITAL

Although the hospital today is in the forefront of technology and clinical medicine, the history of the nation’s hospitals actually began as facilities for housing the poor and the ill. These institutional warehouses for human suffering were the alms- houses, the pest houses, the poor houses, and the workhouses that sheltered the homeless, the poor, the mentally ill, those with serious degenerative dis- eases, and others for whom there was little to offer in the era before modern medicine. Isolation of in- dividuals during epidemics of cholera and typhoid, among other diseases, also led to the utilization of these institutions. Little medical knowledge was available and few individuals received any signifi- cant treatment.

The middle class avoided these institutions and received their care at home. Not until the 1700s and 1800s did hospitals emerge with a mission of providing some form of clinical medical care. Many of these early hospitals were supported by philan- thropic efforts and religious organizations. Also during this period, many public hospitals were es- tablished in various cities to provide for the social needs of local populations, laying the groundwork for our modern acceptance of local government as the provider of last resort.

Finally, by the early 1900s, with the introduction of scientific method in medical practice and the recognition that hospitals and clinical medicine must adhere to a stricter formulation of practice fo- cused on scientific discovery, was the era of the truly modern hospital established.

Throughout the twentieth century, the escalating advance of knowledge accelerated the focus of the

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hospital as a center for medical technology. After World War II, the hospital’s role as a center of tech- nology and innovation became firmly established. At this point, the practice of medicine itself was in- creasingly dependent on scientifically valid knowl- edge and training. Finally, over the past 30 years the degree of rigor of clinical practice and the scope of scientific knowledge has escalated greatly, and the hospital has become a center of high standards, scientific applications, and advanced technological capability.

At the same time, the increasing shift of services to an ambulatory care arena facilitated by technological advancement itself has left the hospital with an ever- more complex base of patient care, higher acuity, and higher costs. In addition, pressure from payers, as noted previously, has escalated greatly as has the expectation of providers and consumers alike. Indus- try consolidation, vertical and horizontal integra- tion, public policy concerns, and quality assessment and assurance have placed the operation of the na- tion’s hospitals under tremendous scrutiny. Yet, through it all, the nation’s hospitals have risen to the challenge of providing superlative care overall in a high-intensity, stressful atmosphere that has signifi- cantly contributed to our improved health status and well-being. This is a remarkable achievement in light of countervailing financial and political pressures that have always buffeted the hospital industry. We owe a great debt of gratitude to the nation’s hospitals and to those dedicated individuals who work within these institutional walls for achieving so much in an environment that started as a warehouse for the poor and sick, left to die without care and concern.

THE SCOPE OF THE INDUSTRY

Although the hospital industry has seen its share of the nation’s health care dollar decline some- what, hospital systems are still immense segments of the industry and of our nation’s economy. (See Table 8.1.)

In 2003, the hospital industry alone accounted for more than $500 billion of expenditures. In 1960, the industry counted for only $9.2 billion of eco- nomic activity annually.

The growth of private health insurance and gov- ernment entitlement programs, particularly Medi- care, has shifted the burden of paying for hospital care to third parties. In 1960, more than 20 percent of the hospital bill was paid by people out of their own pockets; by 2003, this percentage had dropped to 3.2 percent. Private health insurance now accounts for a little more than one-third of all hospital expenditures while government programs account for nearly 60 percent. Medicare alone counts for nearly a third of all hospital expendi- tures; in many facilities the Medicare program pays about half the bill overall. Certainly, for the nation’s seniors, Medicare is a critical source of support for paying for the enormous costs of hospitalization.

The number of hospitals in the United States has decreased dramatically. Table 8.2 illustrates this de- cline with the total number of hospital in 1975 at 7,156 dropping by 2003 to 5,764. A small number of the nation’s hospitals are owned and operated by the federal government. These include the Vet- eran’s Administration Hospitals and military facili- ties. The vast majority of hospitals are nonfederal and are nonprofit, for-profit, or owned by state and local governments. The information in this table

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Table 8.1. Hospital Expenditures by Source of Funds: United States, Selected Years

Source of Funds 1960 1990 2003

Amount in billions Hospital care expenditures $9.2 $253.9 $515.9

Percent Distribution All sources of funds 100.0 100.0 100.0 Out-of-pocket payments 20.8 4.4 3.2 Private health insurance 35.8 38.3 34.4 Other private funds 1.2 4.1 4.1 Government 42.2 53.2 58.3 Medicaid — 10.9 16.9 Medicare — 26.7 30.3

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Table 8.2. Hospital and Beds by Ownership and Hospital Size: United States, Selected Years

Type of Ownership and Size of Hospital 1975 1995 2003

Hospitals Number All hospitals 7,156 6,291 5,764

Federal 382 299 239 Nonfederal 6,774 5,992 5,525

Community 5,875 5,194 4,895 Nonprofit 3,339 3,092 2,984 For profit 775 752 790 State-local government 1,761 1,350 1,121

Bed size 6–24 beds 299 278 327 25–49 beds 1,155 922 965 50–99 beds 1,481 1,139 1,031 100–199 beds 1,363 1,324 1,168 200–299 beds 678 718 624 300–399 beds 378 354 349 400–499 beds 230 195 172 500 beds or more 291 264 256

reflects hospital ownership, and it should be noted that some hospitals, while owned by one type of entity, may be operated under contract by another entity, such as a hospital management company.

The largest grouping of hospitals in the nation are nonprofit community hospitals. Although their numbers have declined overall, they remain the pri- mary source of hospital care for most Americans. These hospitals are owned by nonprofit entities, although they are sometimes operated under con- tract by for-profit or other nonprofit corporations that specialize in managing hospitals and health systems.

Nonprofit entities, including hospitals, function under special provisions of corporation law in each state, and under federal and state tax provisions that recognize their community service function. The na- tion has approximately 1 million nonprofit entities of various sorts and hospitals have long been a tra- ditional service provider in the nonprofit sector.

Nonprofit entities serve a community service and have special recognition under the law due to

their role in our society. Nonprofit entities do not have owners and are governed by a community- based board that has ultimate authority for opera- tion of the entity. Nonprofit entities are generally exempt from most taxes at the federal, state, and local levels including income and property taxes. Many nonprofit entities have tax exempt status under Section 501C(3) of the federal tax code, al- lowing individuals to make potentially tax deductible donations to these organizations. Nonprofit enti- ties are able to raise funds through donations, re- tained earnings, and debt obligations, often on fa- vorable terms.

Nonprofit entities may be “sponsored” by vari- ous types of organizations. Many hospitals have traditions of religious sponsorship. However, they are not owned by such sponsors. Nonprofit entities may also affiliate with each other through various organizational arrangements. Most nonprofit hos- pitals operate in a manner similar to other types of hospitals by employing modern management tech- niques, sophisticated information systems, and other

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principles of twenty-first-century management. Non- profit entities are generally expected to provide some indigent care and serve the community in a variety of ways as well.

A much smaller percentage of the nation’s hos- pitals are operated as for-profit businesses. For- profit entities have owners and issue stock to those owners to reflect their equity position. For-profit en- tities, including hospitals, may be publicly or pri- vately held. Publicly held for-profit entities have stock that is available for purchase by anyone, typi- cally through the nation’s various stock exchanges. A variety of accountability and registration rules and regulations affect publicly owned for-profit entities, generally administered by the Securities and Exchange Commission at the federal level and similar entities at the state level. Privately held for-profit entities also issue stock, but that stock is not available to the general public for purchase. Accountability and other regulatory oversight are much less for privately held entities.

For-profit hospitals may be independent and his- torically in this country and throughout the world today many for-profit hospitals have been owned by the physicians who practiced in them. Today, however, due to the tremendous capital costs of building, maintaining, and operating a hospital, most hospitals in the United States that are for profit are part of large multihospital chains, most of which are publicly traded. For-profit hospitals are not just accountable to the community but must also provide a return on investment to the share- holders; therefore they expect to generate a profit to pay a return to the equity investors for their cap- ital. For-profit hospital companies may also man- age not-for-profit and governmental hospitals as a separate line of business.

The third category of ownership in Table 8.2 is state and local government hospitals. These are hospitals that are owned by state or local govern- ments, but again, may be managed under contract by other entities, either for-profit or not-for-profit management companies. Many local government hospitals are owned by counties or other local gov- ernment units. They are often the providers of last

resort, bearing the burden of indigent care in their communities.

In the western United States, hospital districts were created much like water districts to provide in- frastructure for communities as populations moved West. These local taxing districts were responsible for the construction and operation of hospitals for their communities. In recent years the taxing au- thority of these districts has accounted for a very small percentage of total hospital operational costs.

As reflected in Table 8.2, the majority of the nation’s hospitals are relatively modest in size as measured by licensed hospital beds. The very large institutions are typically teaching hospitals, often associated with medical schools, and have a range of residency programs for postgraduate medical ed- ucation. The small hospitals are typically in rural areas, raising particularly complex issues regarding financial viability.

Broadly speaking, large hospitals are more prevalent in the East as the trend over time has been to build smaller rather than larger facilities. Significant numbers of smaller hospitals, particu- larly in urban areas, have closed over the past 25 years due to financial and competitive pressures, and to the difficulty of efficiently operating a small number of hospital beds. Specifying the optimal side of a hospital is particularly difficult given the complexity of services now offered on an inpatient basis. Most likely, the very small and very large hos- pitals are the least efficient.

As reflected in Table 8.3, the total number of hospital beds has dropped from just under 1.5 mil- lion to just less than 1 million since 1975. This trend reflects a combination of closures and reduc- tions in operating licensed beds among those hos- pitals still in operation. Large hospitals, because of their size, account for a disproportionate share of the total number of hospital beds. About 70 per- cent of the nation’s hospital beds are in nonprofit facilities.

As reflected in Table 8.4, there are approximately 36 million admissions to the nation’s hospitals every year, of which 25 million are to nonprofit hospitals. The number of admissions has been remarkably

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Table 8.3. Hospital Beds by Ownership and Hospital Size: United States, Selected Years

Type of Ownership and Size of Hospital 1975 1995 2003

Beds by Ownership Number All hospitals 1,465,828 1,080,601 965,256

Federal 131,946 77,079 47,456 Nonfederal 1,333,882 1,003,522 917,800

Community 941,844 872,736 813,307 Nonprofit 658,195 609,729 574,587 For profit 73,495 105,737 109,671 State-local government 210,154 157,270 129,049

Bed size 6–24 beds 5,615 5,085 5,635 25–49 beds 41,783 34,352 33,613 50–99 beds 106,776 82,024 74,025 100–199 beds 192,438 187,381 167,451 200–299 beds 164,405 175,240 152,487 300–399 beds 127,728 121,136 119,903 400–499 beds 101,278 86,459 76,333 500 beds or more 201,821 181,059 183,860

Table 8.4. Hospital Admissions by Ownership and Hospital Size: United States, Selected Years

Type of Ownership and Size of Hospital 1975 1995 2003

Beds by Ownership Number in thousands All hospitals 36,157 33,282 36,611

Federal 1,913 1,559 973 Nonfederal 34,243 31,723 35,637

Community 33,435 30,945 34,783 Nonprofit 23,722 22,557 25,668 For profit 2,646 3,428 4,481 State-local government 7,067 4,961 4,634

By hospital bed size 6–24 beds 174 124 162 25–49 beds 1,431 944 1,098 50–99 beds 3,675 2,299 2,464 100–199 beds 7,017 6,288 6,817 200–299 beds 6,174 6,495 6,887 300–399 beds 4,739 4,693 5,590 400–499 beds 3,689 3,413 3,591 500 beds or more 6,537 6,690 8,174

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stable over the years, but the total number of hos- pital days has declined dramatically due to sharp reductions in the average length of stay. A relatively small proportion of admissions to hospitals are ac- counted for by the smaller hospitals.

Examining hospital utilization based on popu- lation data illustrates a significant decline in dis- charges per thousand U.S. population as reflected in Table 8.5. Overall explanation of this trend lies in changes in the number of Americans, which

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Table 8.5. Discharges and Days of Care, Nonfederal Short-Stay Hospitals: United States, Selected Years

Characteristic 1980 2003

Discharges per 1,000 population Total 173.4 119.5

Age Under 18 years 75.6 43.6 18–44 years 155.3 91.3 45–54 years 174.8 99.5 55–64 years 215.4 145.7 65 years and over 383.7 367.9

Sex Male 153.2 104.4 Female 195.0 135.1

Geographic Region Northeast 162.0 127.6 Midwest 192.1 117.1 South 179.7 125.8 West 150.5 103.9

Days of care per 1,000 population Total 1,297.0 574.6

Age Under 18 years 341.4 195.5 18–44 years 818.6 339.7 45–54 years 1,314.9 477.2 55–64 years 1,889.4 735.9 65 years and over 4,098.3 2,088.3

Sex Male 1,239.7 546.7 Female 1,365.2 605.2

Geographic Region Northeast 1,400.6 694.4 Midwest 1,484.8 507.9 South 1,262.3 609.8 West 956.9 476.4

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has led to a larger denominator. Declines in dis- charges are much more moderate for higher-age individuals.

Overall, changes in technological innovation combined with financial pressures from payers has led to an increasing proportion of medical care being provided on an ambulatory basis, and to much shorter lengths of stay for equivalent diag- noses for those patients who are admitted to the hospital. The impact of these trends is to yield a much higher intensity or complexity of care for hospitalized patients.

Table 8.6 presents hospital occupancy rates since 1975 for the nation’s hospitals. Even with shorter lengths of stay, the closure of many hospi- tals, and an overall reduction in the number of hos- pital beds, occupancy rates remain on the decline. On average, today, only about two-thirds of the nation’s hospital beds are filled with patients each

night. This trend is evident in virtually every cate- gory of hospital ownership.

In the days since September 11, 2001, and more recently since various epidemics and natural disas- ters, the issue of ideal targets for hospital occu- pancy rates has become much more complex. How much capacity should be maintained for potential utilization in emergency situations is a complex policy issue. Maintaining unused capacity costs money. As a result, the industry has some reluc- tance to do so. On the other hand, operating at a more efficient level of occupancy, say 85 or 90 per- cent, not only restrains the ability to respond to normal fluctuations in utilization but also signifi- cantly impacts the ability of hospitals to respond to a critical community emergency situation. Al- ternatives for providing reserve back-up capacity for community-based emergencies have become an important priority as communities prepare for

Table 8.6. Hospital Occupancy Rates by Ownership and Hospital Size: United States, Selected Years

Type of Ownership and Size of Hospital 1975 1995 2003

Occupancy Rates by Ownership Percent All hospitals 76.7 65.7 68.1

Federal 80.7 72.6 64.8 Nonfederal 76.3 65.1 68.3

Community 75.0 62.8 66.2 Nonprofit 77.5 64.5 67.7 For profit 65.9 51.8 59.6 State-local government 70.4 63.7 65.3

By hospital size 6–24 beds 48.0 36.9 31.9 25–49 beds 56.7 42.6 44.6 50–99 beds 64.7 54.1 57.2 100–199 beds 71.2 58.8 62.6 200–299 beds 77.1 63.1 67.0 300–399 beds 79.7 64.8 68.5 400–499 beds 81.1 68.1 70.7 500 beds or more 80.9 71.4 74.2

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unforeseen events without significantly impacting hospital cost structures.

STRUCTURE OF HOSPITAL AND HEALTH SYSTEMS

Although technological advancement and reim- bursement policy are among the key factors affect- ing the development of the hospital industry over the past half century, other dramatic changes in the corporate environment of health care and particu- larly of the hospital sector have served a prominent role in affecting hospital management. Horizontal and vertical integration and the affiliation of hospi- tals with each other and with other sectors of the health care system have been extremely important developments in the organizational structure in governance and in the operational management of the hospital industry. These changes in the legal and organizational environment have profoundly affected how the hospital industry is structured and lines of accountability. The introduction of an in- creasingly typical corporate environment for the hospital industry has, to an extent, changed the roles for the key players, affected the organizational design, and facilitated other related changes within the industry such as closures and consolidations.

Horizontal and Vertical Integration

The development of organizational and financial efficiency in the hospital industry has been most ac- celerated by both vertical and horizontal integra- tion. Because both of these forms of integration have been occurring, it is certainly fair to say that this is an industry in transition still seeking a level of equilibrium that can respond to changes in the health care marketplace and pricing as well as pro- viding an adequate response to the invested com- munity. Along with horizontal and vertical integra- tion, the industry has experienced a tremendous

phase of closures and consolidations, particularly affecting smaller institutions. The dramatic changes in the number of operating hospital beds and hospitals in the United States are a result of this process as the industry seeks to provide more competitive products and pricing, an increasingly market-driven health care economy dictated by such payers as the government programs and vari- ous forms of managed care.

Both horizontal and vertical integration have ex- perienced ebbs and flows over the past decades. The objectives of integration of resources have also varied depending on the participants involved and local market conditions. National integration of various types, particularly for horizontal integra- tion, has also been driven in part by the behavior of for-profit entities. To this day, the success of both vertical and horizontal integration varies tremen- dously across the country, and changing economic and market conditions suggest that such integra- tion is a dynamic rather than static process with players possibly assessing their assets and adding and subtracting from their portfolios.

In horizontal integration, similar units of produc- tion affiliate with each other. For example, for-profit and not-for-profit chains of hospitals under com- mon ownership operating in different geographic locations all providing similar hospital-based ser- vices would be a horizontally integrated system. Horizontal integration occurs in the for-profit and not-for-profit sectors and can involve various levels of organizational affiliation from direct ownership to looser affiliation arrangements. Horizontal inte- gration, designed to provide an enhanced level of ef- ficiency of scale across multiple institutions and in related geographic areas, may serve to reduce dupli- cation of services and marketplace competition. In a form of horizontal integration associated with re- gionalization of health services, smaller hospitals may feed into larger tertiary care facilities. Horizon- tal integration may also facilitate operational effi- ciency such as purchasing, information systems, quality assurance, and management capacity. Hori- zontally integrated multihospital networks may es- tablish contractual arrangements with other types of

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health care providers and participate in larger health care delivery systems.

Vertical integration implies the establishment of integrated health care delivery systems that incor- porate all or most aspects of the health care pro- cess. In this form of integration, inpatient hospital services, ambulatory care services, mental health, long-term care services, and other related health care products are incorporated into a comprehen- sive delivery system. Vertical integration, in many respects, is more complicated than horizontal inte- gration because it involves a range of highly diverse and not always easily integrated services.Vertical in- tegration was prompted by the objective of negoti- ating with insurers and managed-care providers such that the full range of services could be pro- vided in a contractual arrangement. In addition, vertical integration provides for feeding patient flows into hospital inpatient services and other crit- ical delivery components to ensure the financial viability of these institutions. Vertical integration al- lows for greater capture of patients within inte- grated systems and a more established institution- ally based relationship with physicians. Vertically integrated systems in managed-care settings typi- cally contract for a broad range of services rather than just for inpatient or other discrete care. Verti- cally integrated services provide a delivery chain for a range of health services rather than specializing in only one product. Vertically integrated systems have greater capture of premium dollars but at the same time, assume a greater degree of financial risk. This increased risk has represented a significant chal- lenge in recent years. Some vertically integrated sys- tems have also established their own health plans independently or in conjunction with insurance en- tities. However, this trend has faced significant challenges from financial and legal perspectives and they increase the risk to the institutional provider.

Both horizontally and vertically integrated sys- tems of care need to align physician interests with institutional objectives. This has always been a chal- lenge in health care and continues to be so, partic- ularly with today’s more competitive markets and

pricing pressures. Vertically integrated systems may have a greater likelihood of success in this regard because they can control a broader range of delivery systems and capture more of the health care dollar. Physician ownership initiatives such as for ambula- tory, surgery centers, or even specialty hospitals are an additional threat to hospital delivery systems.

HOSPITAL ORGANIZATION

The traditional organization of hospitals is cen- tered around three sources of power. These are the governing entity, the medical staff, and the administration.

Traditional hospital governance was predicated on independent institutions each with its own corporate-style board. Legally and structurally, the governing body has ultimate authority for all activ- ities and decision making within the organization, delegating certain tasks among administration and the medical staff. Among nonprofit entities, these boards were historically composed of well-to-do individuals who could provide a platform for fund- raising. Over time demands for accountability re- sulted in substantially ramped-up professional rep- resentation on these governing bodies. Physicians, accountants, attorneys, and others with a knowl- edge base relevant to institutional governance were elected to membership. Although frequently a volunteer activity with minimal, at least by corpo- rate standards, pay and fringe benefits, public ser- vice was the key motivation. For-profit entities have typically been components of larger corporations with advisory rather than legally binding governing boards.

Hospital governing entities have delegated day- to-day management of the institution to hospital administration and the clinical medical affairs to the medical staff, which itself is typically formally organized with by-laws, elected officials, and spe- cific duties and responsibilities.

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In recent years, considerable effort has been directed toward educating members of governing entities and hospitals to better understand the prin- cipals and legal responsibilities of hospital manage- ment and to more critically assess decision-making activities, particularly pertaining to large capital investments, organizational mission, the role and management of medical staff, and contractual ar- rangements with other entities.

With both horizontal and vertical integration, the ultimate governance responsibility is typically shifted to the highest level of organizational struc- ture. Depending on corporation status of compo- nents within the larger organization separate boards may exist with statutory authority or may serve primarily in an advisory capacity. In the for- profit sector, a parent organization governing board serves a corporate role analogous to that of any public or privately held for-profit corporation. In the publicly held environment, the corporate board has an additional legal responsibility at- tributable to securities; regulation and corporate governance are defined by state and federal laws.

For all governing entities, specific duties and re- sponsibilities are specified in the legal charter or other documents creating the organization and defining the duties, responsibilities, and member- ship of the board. With increased accountability for individual and collective acts of governance, board members must assume that they do have personal and professional liability to perform their corporate duties in an appropriate fiduciary manner.

Hospital administration has also changed appre- ciably over the years moving toward a more tradi- tional corporate operational approach. In addition, hospital management increasingly incorporates the delegation of responsibility to an array of other managers including, on the front lines, depart- mental administrators. Specific technical expertise is typically incorporated into the management structure in such areas as information systems, fi- nance, legal environment, quality assurance, mar- keting, and contracting. Traditional roles such as patient care, including the hotel function, physical plant, admissions, discharge, other operational

responsibilities, and various other key functions, are also represented.

Today’s hospital administrators are often de- fined by traditional corporate titles and attractive pay packages. In the not-for-profit sector, senior- level hospital managers typically earn from the $100,000s to more than $500,000 per year. In the for-profit sector, these managers may also receive stock and stock options and other equity-related benefits. In both nonprofit and for-profit sectors, managers typically receive valuable benefit pack- ages and in some instances, pay for performance and other types of bonuses. Hospital administra- tors usually have a management-related back- ground or have clinical training and have worked their way into a management position or some combination of both. Hospital managers, like their employees, work in a relatively high-stress and de- manding environment, answering not only to their formal bosses, but also to the public, consumers, physicians, and other constituencies.

THE HOSPITAL AND MEDICAL STAFF

With authority delegated from the governing entity, the hospital medical staff has specific responsibili- ties related to the clinical care provided in the facil- ity and regulation of those individuals who practice clinically. Hospital and medical staffs are typically organized with elected officials, various commit- tees, and with a leadership role represented by the president of the medical staff.

State medical practice laws generally prohibit di- rect employment of physicians by hospitals. As a consequence, and due to historical independence of physician practices, physicians and other health care professionals have affiliated with institutions such as hospitals in a variety of other ways. Histor- ically, these affiliations have primarily been through membership in hospital medical staffs. More re- cently, hospitals and physicians have affiliated

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through joint ventures such as physician/hospital organizations, indirect employment of practitioners in other contractual arrangements, hospital pur- chases of group practices, and a variety of other models.

Hospital medical staff membership has generally followed a model whereby physicians apply for hospital privileges in their area of specialty and are vetted by a committee of the hospital medical staff supported by administration. If found to be of good character and having a reputable clinical rep- utation, physicians are granted privileges, which is, in essence, the ability to admit and discharge pa- tients, provide care within the hospital facilities, and serve as a participating member of the medical staff. Although the governing entity is ultimately re- sponsible for granting privileges, this responsibility is usually delegated to the medical staff in recogni- tion of their knowledge of clinical practice and abil- ity to assess professional skills. The evaluation of individuals for the granting of privileges is one of the key and most important roles of the medical staff. Physicians, for example, are evaluated on their medical and specialty residency training, their track record of clinical care as reflected in medical malpractice and other quality assurance indicators, and their reputation in other respects.

When a physician is granted privileges, he or she remains subject to surveillance by the medical staff to ensure continued maintenance of a minimum level of quality of care. This surveillance typically consists of monitoring cases to assess any instances for patterns of poor quality of care as well as other indicators of difficulty such as being associated with a physician impaired with alcohol or drug or other abuse. Hospitals and their medical staffs also serve a regulatory role in reporting violations of clinical practice standards by physicians and other practitioners to state licensing agencies and other entities.

Physicians, as members of the medical staff, may participate in various committee assignments and historically were expected to provide some level of indigent care although this requirement in many in- stances has largely dissipated. In most hospitals

physicians are also expected to utilize their clinical privileges only in those areas in which they have proper training and credentialing.

Physicians and other professionals who are less frequently utilizing a specific hospital may be granted a separate category of privileges for occa- sional use with less expected participation and fewer responsibilities. Physicians who are inter- ested in clinical leadership positions may assume responsibility for medical staff committees or seek to be a leader in the medical staff hierarchy. In- creasingly, physicians who are interested in man- agerial roles may also be employed for that purpose by the hospital on the administration side, typically a position such as vice president for medical affairs.

In addition to credentialing physicians for hos- pital privileges, the medical staff is typically re- sponsible for ensuring the quality of care provided in the hospital under delegated authority from the governing entity. Various committees may be formed for this purpose, including a quality assur- ance committee or other peer review committee. The medical staff will seek to provide feedback to physicians and other clinicians who are not meet- ing expected standards of the quality of care in their clinical practices within the institution. This feedback can take many forms, including quantita- tive data assessment comparing each individual to the norms of other practitioners in their specialties, or even informal feedback from the medical staff president or a clinical department chief. Ultimately, hospital privileges may be revoked in extreme situ- ations where clinical standards are clearly not met. In this instance, appropriate due process must be followed utilizing specified procedures as outlined in the medical staff bylaws.

The increasing utilization of computerized infor- mation systems and a more interested younger gen- eration of clinicians have greatly accelerated the at- tention to data-based assessments of quality of care. National voluntary organizations have worked hard to promote these efforts so as to elevate the overall quality of care provided in the nation’s hospitals. Voluntary accrediting agencies, in partic- ular, have also increasingly pressured institutional

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providers to incorporate quality assurance mecha- nisms in their ongoing production methods. Many types of approaches have been developed in this re- gard, including a range of processes designed to en- courage the use of clinical approaches that are vali- dated from scientific and evidence-based research. Many clinical quality assurance and quality im- provement techniques have been adapted from the corporate environment, particularly industrial set- tings as well. Payers are also demanding enhanced quality surveillance and improvement.

In contrast to a typical corporate environment, hospitals do not directly employ most physicians, who are key decision makers and decide resource allocation and utilization. Thus, the medical staff serves an important role in aligning physician be- havior and objectives with institutional needs. Medical leadership is particularly important in today’s complex environment to facilitate this rela- tionship. Ultimately, the traditional hospital struc- ture, particularly with regard to the medical staff, is inconsistent with managing an organization that faces numerous competitive and pricing pressures. Some medical staff organizations, such as those in group practice, model HMOs that directly own all resources in their systems, and certain govern- mental entities such as the military and veteran’s administration hospitals, have more direct control over the medical staff.

KEY ISSUES FACING THE HOSPITAL INDUSTRY

The hospital industry almost continuously faces key critical issues that challenge its structure, viability, and roles in health care. This section discusses many of these issues.

Specialty Hospitals

In recent years, the development of highly special- ized hospitals has gained considerable traction.

Although not a new concept by any means, the more rapid recent development of these specialty hospitals poses a threat to community general hos- pitals to a much greater extent than in past years. The new specialty hospitals include those focused on cancer and heart disease and other highly dis- crete areas of practice in lucrative fields such as or- thopedic surgery.

To further complicate the controversy over spe- cialty hospitals, these institutions are increasingly partially owned by the physicians who practice within them. Ironically, in the early days of the modern development of hospitals, physician own- ership was not unusual. However, the popularity of physician-owned proprietary hospitals today has been challenged by two ramifications. The first is that these hospitals draw profitable patients from community hospitals, and the second potential conflict of interest is represented by physicians ad- mitting patients to hospitals in which they have an ownership interest.

Of course, our quality of care data suggest that high volumes of discrete services can enhance qual- ity. From some perspectives, highly specialized in- stitutions may in fact provide the best care. On the other hand, many of these specialty hospitals may siphon off insured and relatively healthier patients, leaving the less profitable and more complicated cases to community general hospitals.

Physician ownership of specialty hospitals raises concerns that financial incentives will affect the treatment decisions, such as the use of specialty and diagnostic services. In addition to providing care to the less complex and more profitable cases, these hospitals may also leave the uninsured and underinsured to community and public hospitals for treatment. The combination of adverse selection and less private insurance and public coverage for community general hospitals and government facil- ities does raise significant policy concerns.

Federal policy development has been slow to respond to this trend. Medicare has complex rules regarding physician ownership of health care re- sources and potential conflicts of interest. And both the Medicare and Medicaid programs have a valid

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CHAPTER 8 Hospitals and Health Systems 195

concern with respect to the distribution of health care costs across all facilities and patient groups. The impact of specialty hospitals on community general hospitals and governmental hospitals has yet to be fully assessed, but this development is po- tentially significant clinically and financially.

Changes in Technology

The hospital industry is all about technology. Al- though the hotel function of a hospital is in a way primary to its purpose, it is the provision of tech- nology that is its true mission. Technology has shaped the physical and operational structures of hospitals, has affected the lives of patients and fam- ilies, and has provided a delivery vehicle for physi- cians in clinical practice.

From its earliest days as a modern institution, the availability of technological resources has defined the services provided in hospitals. The discovery of anesthesia and of antisepsis clearly established the early stages of the provision of surgical care. The vast array of imaging technologies has had tremen- dous impact on effective intervention for patients seeking care in the hospital setting. Laboratory, di- agnostic, and other technological innovations have also greatly facilitated clinical medicine. Successful intervention is dependent on the technology of in- novative therapies including pharmacological inter- ventions and surgical techniques.

More recently, the huge range of technological advancements that have vaulted to the forefront of the tertiary care role of inpatient services within hospitals have included organ transplantation, a vast array of minimally invasive surgical technolo- gies, advanced cardiac treatments, primarily through a variety of surgical interventions, an impressive range of successes in advanced emergency and trauma care, and vast improvements in the underly- ing technologies related to information systems, medical records, and other aspects of hospital and health care operations to facilitate the delivery of services to patients. Technological advances have af- fected obstetric patients, pediatric care needs, pa- tients with terminal illnesses, and a range of other

problems that present to the inpatient side of hos- pital operations.

Technological advancement has led to the devel- opment of increased specialization and clinical practice, expansion of specialized services, new medical and surgical specialties, and treatments for many diseases for which little curative or other care could be provided in the past. Advanced technolo- gies including the many applications of lasers, the use of ultrasonic technology for treatment, and more recently, the development of automated surgi- cal assistant or robot technologies have all been revolutionary.

Hospitals operate in competitive markets and the pressure to provide a full range of technology, and to keep that technology current, yields signifi- cant cost pressures and even potential conflicts with medical staff members. Insurers and employ- ers as well as government entities seek to pay for the latest technologies, but at efficient pricing.

The continuing advancement of technology is a double-edged sword providing us with tremen- dous new capabilities, but at the same time, many challenges. The hospital, perhaps more than any other sector of the health care system, faces these opportunities and challenges in the most dramatic ways. And, ultimately, it is their customers, their patients, and their physicians who utilize these hospitals and health care systems, who have the highest expectations and often the least sensitivity about costs.

Clinical Practice Patterns

Hospital design and operations are significantly af- fected by accepted clinical patterns of practice. The increasing attention to best practices and practice norms of various types, particularly under quality assurance programs, requires institutional adher- ence to various protocols and guidelines. Informa- tion systems and other operational requirements must also be compliant with the need to provide evaluative information to assess and report on physician clinical patterns of practice. Medicare and many managed-care contracts require such

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reporting. Accreditation by the Joint Commission for Accreditation of Health Care Organizations and other specialty accreditation bodies also requires the availability and interpretation of data.

In addition to the availability of appropriate information to monitor and evaluate clinical proto- cols and practice guidelines, institutions are in- creasingly expected to offer a governance structure that assigns responsibility for these activities. Typi- cally, in most community hospitals, that responsi- bility is delegated from the governing body to the medical staff. The governing board and institutional administration, however, retain responsibility for successful compliance with these requirements. Individual practitioners are likewise increasingly being held accountable for their practice patterns and behavior through a variety of monitoring and feedback mechanisms.

The complexity of integrating all the require- ments pertaining to clinical practice is of itself a sig- nificant burden on institutional operations. Legal and ethical expectations, combined with reporting requirements contained in various contractual ar- rangements, further enhance the depth and com- plexity of this obligation. Physician independence has been significantly weakened by the introduc- tion of various external regulatory requirements.

Reimbursement Mechanisms

Hospitals and hospital systems are heavily con- strained by the reimbursement mechanisms that pay their bills. The most significant source of funds for most hospitals is the federal Medicare program. As discussed elsewhere in detail in this book, financial mechanisms for reimbursement under the Medicare program have become in- creasingly complex. Medicare has moved to reward efficiency and specialization while increas- ingly squeezing institutional cash flow. Medicare, being a federal program, also has significant regu- latory and force of law powers unknown to third- party insurers in the private sector. Medicare has imposed an array of requirements to reduce fraud and abuse, but these efforts have had secondary

effects in complicating organizational administra- tion and financial arrangements.

Nongovernmental sources of payment, primarily from managed-care organizations, have themselves become fraught with complexity and cost pres- sures. Most payers now seek a competitive market advantage in pricing in an attempt to drive down the cost of health care, while at the same time shift- ing an increased burden of cost to the consumer. The negotiated per diem rates are heavily dis- counted and many insurers exclude a range of re- imbursements for various specific services.

Many third parties also require reporting from institutional providers on utilization patterns, use of resources and services, and other parameters of the care process. Hospitals are generally expected by payers to provide extensive oversight of practi- tioners through aggressive credentialing efforts and other responsibilities. All these developments have resulted in pressure to improve efficiency, reduce waste and duplication, and provide care as quickly as possible and at the lowest possible cost.

While payers are increasingly squeezing pay- ments to all providers, hospitals in particular are susceptible to financial pressures. Hospitals pro- vide services that require a high degree of capital in- vestment, have limited control over the cost of many of their products due to such considerations as shortages of nursing and other specialized per- sonnel and the high cost of innovative products, and finally, the expectations on the part of both consumers and individual practitioners for reason- able ambience and excellent outcomes.

Academic Medical Centers

Academic medical centers typically consist of med- ical schools and their primary teaching hospitals. Academic medical centers provide tertiary, sec- ondary, and primary care but have a principal focus on biomedical research, teaching of medical resi- dents and medical students, and often an array of other professional training, research, and service ac- tivities. These organizations are highly complex

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with a multitude of power structures, funding sources, and sometimes conflicting missions.

Hospitals that are part of academic medical cen- ters are operationally constrained by the demands of the teaching mission, particularly with regard to medical students and postgraduate medical educa- tion, and a mandate to conduct both basic biomed- ical and applied clinical research. Financial effi- ciency and consumer satisfaction are not typically the top priorities. Physicians and researchers place considerable demands on these organizations to provide the latest technology and staffing and to allow for teaching and clinical investigation.

The success of academic medical centers in achieving their missions should be a national pri- ority. The long-term strengths and successes of our health care system depend on this. Although not necessarily widely acknowledged, financial effi- ciency in fact should probably not be a top priority from a national health policy perspective. Unfortu- nately reimbursement policies by Medicare and other government and private payers typically do not overtly allow enough latitude for academic med- ical centers. In addition, academic medical centers are frequently the providers of last resort, further re- straining cash flows and viability. Local government and, to an extent, private insurers through cost shifting, pick up part of the tab.

A lot of attention has been directed toward academic medical centers in recent years. The chal- lenge is to reconcile the needs for medical education and research with the fiscal realities of available resources in a manner that will meet our nation’s educational and clinical needs. This remains a huge challenge for the nation’s health care system.

SUMMARY

The hospital industry has faced numerous chal- lenges over the years and will continue to do so in the future. Markets have changed, pricing pres- sures have increased, and consumer and payer expectations have evolved. Yet, through it all, our nation’s hospitals have continued to provide the best hospital-based care in the world, delivering a

technology that is second to none with top-notch staff dedicated to patient care.

REVIEW QUESTIONS

1. Describe the historical development of hospitals in the United States.

2. Describe the differences between nonprofit and for-profit hospitals.

3. List the major trends that have occurred within the hospital sector.

4. What is horizontal integration, and why is it used?

5. What is vertical integration, and why is it used?

6. Describe the internal organization of community hospitals.

7. Describe the key issues facing the hospital industry.

REFERENCES & ADDITIONAL READINGS

Birkmeyer, J. D., Siewers, A. E., Finlayson, E. V. A., Stukel, T. A., Lucas, F. L., Batista, I., Welch, H. G., & Wennberg, D. E. (2002). Hospital volume and surgical mortality in the United States. New England Journal of Medicine, 346, 1137–1144.

Davis, M., & Heineke, J. (2003). Managing services: Using technology to create value. Boston: McGraw- Hill/Irwin.

Gapenski, L. (2004). Healthcare finance: An introduction to accounting and financial management (3rd ed.). Chicago: AUPHA Press/Health Administration Press.

Halm, E. A., Lee, C., & Chassin, M. R. (2000). How is volume related to quality in health care? A systematic review of the research literature. Prepared for National Academy of Sciences, Interpreting the volume-outcome relationship in the context of health care quality workshop. Washington, DC.

Kelly, D. L. (2003). Applying quality management in healthcare: A process for Improvement. Chicago: AUPHA/Health Administration Press.

Martin, L. L., & Sage, R. (Eds.). (1993). Total quality management in human service organizations. New York: Sage Publications.

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CHAPTER TOPICS

Definition of Long-Term Care

Clients of Long-Term Care

How Long-Term Care Is Organized

Service Categories

Integrating Mechanisms

Long-Term Care Policy

LEARNING OBJECTIVES

Upon completing this chapter, the reader should be able to

1. Describe who uses long-term care and under what circumstances.

2. Explain the role and scope of services included in long-term care.

3. Articulate how long-term care services are organized, operated, financed, and integrated.

4. Evaluate model delivery system approaches to long-term care for the future.

5. Articulate national policy issues pertinent to long-term care.

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CHAPTER 9

The Continuum of Long-Term Care

Connie J. Evashwick

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WHAT IS LONG-TERM CARE?

■ A child with cerebral palsy attends a special needs classroom in a public school, with ther- apy available on-site, and her parents care for her when she is at home.

■ An 85-year old recovering from a broken hip receives meals on wheels during the week and relies on her daughter for meals over the weekend.

■ A young man with schizophrenia lives in shel- tered housing, with financial assistance provided through a public housing voucher program and medication or counseling assistance available from an on-site staff when needed.

■ An elderly couple, one of whom is blind from advanced glaucoma and one of whom is crippled with severe arthritis, uses a money- management service from a local community agency to pay their bills, since neither can write a check.

■ A middle-aged woman with multiple sclerosis has a live-in attendant to assist her with the activities of daily living.

All these are examples of long-term care pro- vided by formal or informal sources. Long-term care is defined as health, mental health, residen- tial or social support provided to a person with functional disabilities on an informal or formal basis over an extended period of time with the goal of maximizing the person’s independence. Services change over time as the person’s and caregivers’ needs change.

The goal of long-term care is to help people achieve functional independence, in contrast to the goal of acute care, which is to cure. People of all ages and a wide range of clinical diagnoses need long-term care. The vast majority of long-term care (80 to 90 percent) is provided by friends and fam- ily. However, formal services are essential to enable

the informal system to be sustained. The formal ser- vices that provide long-term care are described in this chapter using a conceptual framework referred to as “the continuum of long-term care.” The ideal is an integrated set of services that provides continu- ity of care over time and across settings. In reality, services are highly fragmented due to financial drivers, local community variation, and a lack of uniform federal and state policies. This chapter pro- vides an overview of the ideal continuum of care juxtaposed with the reality of existing services, structure, and policies.

WHO NEEDS LONG-TERM CARE?

The clients of long-term care are growing rapidly. They represent a mosaic of population segments of those with functional disabilities. Three intersecting concepts warrant explanation to understand the users of long-term care.

The fundamental reason that a person needs long-term care is because they suffer from one or more functional disabilities. Functional ability is a person’s ability to perform the basic activities of daily living (ADLs) or instrumental activities of daily living (IADLs). ADLs include the ability to bathe, dress, perform personal care and grooming, walk, transfer from bed to chair, maintain bowel and bladder continence, and eat. ADLs were initially de- fined by Katz and colleagues through research (Katz et al., 1963), and years of study have produced com- monly accepted measures and scales of functioning. ADLs tend to involve large motor skills, and they are lost in a predictable order. IADLs are more loosely defined (Lawton & Brody, 1969) but typically involve cognitive reasoning and finer motor skills. IADLs include telephoning, managing money, tak- ing medications, grocery shopping, housekeeping, doing chores, and using transportation.

The conditions that underlie the need for long- term care may be physical health, mental health,

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or a combination, as well as family situation and environmental context. Of the 288 million people in the United States in 2005, more than 12 percent, or more than 35 million people suffered from some type of disability that limited their ability to per- form basic activities of daily living (National Center for Health Statistics, 2005). Limitations in func- tional ability affect people of all ages but increase with age and the concomitant chronic conditions that accumulate with aging. Figure 9.1 shows the estimated number of people with disabilities. How a person manages a functional disability depends on several factors, including other health condi- tions, age, family and social support, economic sta- tus, housing, and personal preference.

Chronic is defined by the National Health Inter- view Survey as any condition that lasts 3 months (or 90 days) or more (National Center for Health Statistics, 2007). Chronic conditions may derive from physical or mental conditions. Over the

progression of a disease, both may occur. Chronic conditions may be as life-threatening as coronary artery disease or as harmless as mild arthritis. In 2005, an estimated 133 million people had some type of chronic condition (Hoffman, Rice, & Sung, 1996). Chronic conditions often (although not al- ways) result in functional disabilities.

An impairment as used by the National Health Interview Survey is defined as “a chronic or perma- nent defect, usually static in nature, that results from disease, injury, or congenital malformation. It often represents a decrease in or loss of ability to perform various functions.” Permanent impair- ments, such as limb amputation or blindness, may require an initial adjustment and are then more or less stable. People may attain a level of indepen- dence by learning special skills to overcome the dis- ability or by using adaptive devices. For example, a person with myopia can have their vision corrected by wearing glasses or contact lenses and thus suffer

200 PART THREE Providers of Health Services

0 20 40 60 80

Under 15

25– 44

55– 64

70 –74

80� 57.6%

38% 57.7%

28.3% 46.6%

30.7% 44.9%

24.2% 35.7%

13.9% 22.6%

8.1% 13.4%

5.3% 10.7%

3.8% 7.8%

73.6%

Severe Disability

Any Disability

Figure 9.1. DDiissaabbiilliittyy PPrreevvaalleennccee bbyy AAggee,, 11999977 SOURCE: From Health, United States, 2005 (Special Excerpt), Trend Tables on 65 and Older Population (DHHS Pub. No. 2006-0152) (Table 58, p. 243), National Center for Health Statistics.

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no disability as a result of their impairment. Nonetheless, impairments are closely associated with functional disability.

Impairment, chronic condition, and functional ability are intertwined. For example, a person who is blind, who lives with a supportive family, learns Braille, and masters the immediate environment, may achieve a fair degree of independence on a daily basis. However, if that person ages and be- comes cognitively diminished, he or she may no longer be able to remember the environment, and without the ability to use the visual clues (or just simple notes or lists) that a person with sight can use to help overcome cognitive weaknesses, is less able to function independently. If that person then slips and breaks a hip, suffers a permanent impair- ment, and has to use a walker, they will lose more functional ability than a sighted person or a person without cognitive impairment who is able to un- derstand rehabilitation routines.

In addition to a person’s health and mental health, social situation, finances, housing, and community context all affect the extent to which a person can perform ADLs and IADLs indepen- dently and the type of assistance they may need. Contrast a male veteran in a wheelchair who lives with a spouse, can afford a personal caregiver, re- sides in a one-story home, and lives in a large urban community served by a community-based agency coordinating services for the disabled and a Veterans Affairs hospital that provides a full range of health care for people with disabilities with an elderly widow who breaks her hip, has no family nearby, has no income except Social Secu- rity, resides in a two-story walk-up in a small rural town, and must travel 30 miles to reach a hospital with an orthopedic service. The man will main- tain his independence by working with a multi- faceted support system; the older woman will most likely end up moving to a relative’s home or an assisted living facility for those with low income and be forced to move away from her friendship network.

The United States makes no single, constant, routine count of people needing long-term care

that factors in all the variables that determine if, what type, and how much care a person needs to perform ADLs and IADLs. Rather, subsets are counted, and each subset of the total population has a segment that may require long-term care at some point from formal or informal sources. Pop- ulation segments at high risk of needing long- term care are growing steadily. They include the aged (especially those age 75 and older), those with certain chronic conditions (such as stroke, mental illness, degenerative neurological condi- tions, Alzheimer’s disease), people positive for HIV/AIDS, and children with special health care needs, to mention just a few. For each group, and each individual, the care needed will vary and will be some combination of informal care provided by family and friends and formal care provided by external organizations. The rationale for structur- ing the long-term care system for specific seg- ments of the population rather than a single en- compassing system is based on the differing needs of each segment and the multiple factors that shape service delivery, particularly financing.

Users of long-term care services are called by dif- fering terms, depending on the service. Table 9.1 shows the terms used by various services.

CHAPTER 9 The Continuum of Long-Term Care 201

Table 9.1. TTee rrmmiinnoollooggyy ffoorr UUsseerrss ooff SSeelleecctt SSeerrvv ii cc ee ss

SS ee rrvv ii cc ee TTee rrmm ffoorr CClliieennttss

Nursing homes Residents Hospitals Patients Adult day services Participants Home care Clients Hospice Patients Outreach Consumers Wellness programs Clients Disease management programs Enrollees Durable medical equipment Customers Assisted living Residents

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HOW IS LONG-TERM CARE ORGANIZED?

One of the greatest challenges of long-term care is that there is no single organized formal delivery sys- tem. As noted earlier, the vast majority of long-term care is provided by friends and family. Care is orchestrated around the unique needs of each indi- vidual and family, as well as the resources of the par- ticular community. A person may require multiple services, provided in a range of settings, and by pro- fessionals representing a broad spectrum of disci- plines. Moreover, services can be expected to change over time as the client’s and family’s needs change or as new technologies arise. Thus patterns of care vary, for population segments as well as individuals.

To analyze long-term care service delivery, the conceptual framework of an ideal continuum of long-term care is used. The continuum of care is defined as

A client-oriented system composed of both services and integrating mechanisms that guides and tracks clients over time through a comprehensive array of health, mental health, and social services spanning all lev- els of intensity of care. (Evashwick, 1987)

The ideal continuum of care is the formal care system that complements the informal services pro- vided by friends and family. The ideal continuum of care is a comprehensive, coordinated system of care designed to meet the multifaceted needs of persons with complex and/or ongoing problems efficiently and effectively. A continuum is more than a collec- tion of fragmented services. It includes mechanisms for organizing those services and operating them as an integrated system.

The purpose is to facilitate the client’s access to the appropriate services at the appropriate time, quickly and efficiently. Ideally, a continuum of care does the following:

■ Matches resources to the client’s health and fam- ily circumstance.

■ Monitors the client’s condition and changes ser- vices as needs change.

■ Coordinates the care of many professionals and disciplines.

■ Integrates care provided in a range of settings. ■ Enhances efficiency, reduces duplication, and

streamlines client flow. ■ Pools or otherwise arranges financing so that

services are based on need rather than narrow eligibility criteria.

■ Maintains a comprehensive record incorporating clinical, financial, and utilization data.

A true continuum should serve three major goals: (1) Provide the health and related support services that foster independence, for the client as well as the family, (2) achieve cost-effectiveness by maximizing the use of resources, and (3) enhance quality through appropriateness and continuity of care. Some clients may use only select components of the system and may remain involved with the or- ganized system of care for a relatively short period of time; others may use only a limited and stable set of services over a prolonged period of time.

Continuum Overview

More than 60 distinct services can be identified in the complete continuum of care. For simplicity, the services are grouped into seven categories, as shown in the schematic and in Table 9.2. The seven categories represent the basic types of health care and related services that a person could need over time, through periods of both wellness and illness. Table 9.2 lists select services within each category but should not be interpreted as the complete list of all health and mental health services. The table does not include social support services, which also comprise a lengthy list.

By definition, the continuum of care is more than a collection of fragmented services; it is an in- tegrated system of care. The United States health care delivery system has evolved historically as highly fragmented. Integration of services does not happen automatically. For providers, payers, and clients to gain the system benefits of efficiencies of

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CHAPTER 9 The Continuum of Long-Term Care 203

Table 9.2. CCaatteeggoorriieess aanndd SSeerrvviicceess ooff tthhee CCoonnttiinnuuuumm ooff CCaarree**

Extended Skilled nursing facility Step-down unit Swing bed Nursing home follow-up Intermediate care facility for the mentally retarded Long-term care hospital Psychiatric hospital (residential model)

Acute Medical/surgical inpatient services Psychiatric acute inpatient services Rehabilitation short-term inpatient services Interdisciplinary assessment team Consultation service

Ambulatory Physician’s office Outpatient clinics ■ Primary care ■ Specialty medical care ■ Rehabilitation ■ Mental health ■ Surgery Psychological counseling Day hospital Adult day services

Home Care Home health—Medicare Home health—Private Hospice High-technology home therapy Durable medical equipment Home visitors Homemaker and personal care In-home caregiver

Outreach and Linkage Screening Information and referral Telephone contact Emergency response system Transportation Senior services program Meals on Wheels Mail order pharmacy

Wellness and Health Promotion Educational programs Exercise programs Recreational and social groups Senior volunteers Congregate meals Support groups Disease management

Housing Continuing care retirement community Independent senior housing Assisted living Congregate care facility Adult family home Group home Board and care facility Alcohol and substance abused facility

*Lists of services within each category are not exhaustive.

From “Definition of the Continuum of Care,” by C. Evashwick, 2005, in The Continuum of Long-Term Care, C. Evashwick (Ed.), Albany, NY: Delmar.

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operation, smooth client flow, and quality of ser- vice, formal structural integrating mechanisms are essential. Four integrating management systems are required: inter-entity structure and management, care coordination, integrated information systems, and integrated financing (Figure 9.2).

SERVICE CATEGORIES

This section briefly describes each of the seven ser- vice categories and presents data, when available, on major or select services within each category. Not every client will use every service. However, the ideal is that the services are available and accessible if a person should need them. There is no set order for the services, since each client will use ones ap- propriate for his or her individual and unique needs.

A significant aspect of the services is that each has its own operating characteristics, even within

the same category. Services vary according to inten- sity of care offered, professional and support staffing, predominant financing, licensing, certifica- tion, accreditation, equipment, space, and signifi- cant other management dimensions. This variation poses a challenge to managers trying to coordinate services, as well as to payers and clients who are trying to achieve continuity of care.

Extended Inpatient Care

Extended inpatient care is for people who are so sick or functionally disabled that they require on- going nursing and support services provided in a formal health care institution, but who are not so acutely ill that they require the technological and professional intensity of a hospital. The majority of extended inpatient care facilities are referred to “nursing facilities” or “nursing homes,” although this is a broad term that includes many levels and types of programs. Specialty facilities range from subacute units in hospitals to intermediate care fa- cilities for the mentally retarded or developmentally

204 PART THREE Providers of Health Services

INTER-ENTITY STRUCTURE AND

MANAGEMENT CARE

COORDINATION

INTEGRATED INFORMATION

SYSTEMS INTEGRATED FINANCING

AMBULATORY

ACUTE

HOME

OUTREACH

WELLNESS

HOUSING

EXTENDED

Figure 9.2. SS ee rrvviicceess aanndd IInntteeggrraattiinngg MMeecchhaanniissmmss ooff tthhee CCoonnttiinnuuuumm ooff CCaarree SOURCE: From “Definition of the Continuum of Care.” by C. Evashwick, 1987, in Managing the Continuum of Care, by C. Evashwick and L. Weiss (Eds.), Gaithersburg, MD: Aspen Publishers.

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disabled to psychiatric hospitals caring for the severely mentally ill on an indefinite basis. Nursing facilities in the nation number about 16,100, with about 1.4 million residents at any given time (American Association of Homes and Services for the Aging, 2007).

The cost of a nursing facility ranges from $4,000–7,000 per month, depending on location and scope of services rendered. Medicaid pays for about 47 percent of all nursing facility care, and residents and their families pay for about one-third (Center for Medicare and Medicaid Services, 2007).

The lifetime probability of ever being admitted to a nursing home (under the present U.S. standard of care) is about 50 percent. However, average length of stay has decreased dramatically over the past 30 years, just as likelihood of admission has increased. Both reflect the trend for nursing facili- ties to become technologically more sophisticated and to function as short-term stopping places in be- tween home and hospital rather than as permanent residential settings.

Nursing facilities can be accredited by the Joint Commission and can be certified by Medicare and Medicaid to participate as providers to those en- rolled in these government programs.

Two excellent sources of information about nurs- ing home are the trade associations that represent for-profit and not-for-profit nursing homes, respec- tively: http://www.ahca.org, http://www.aahsa.org, and the Federal Centers for Medicare and Medicaid Services, http://cms.nhs.gov

Hospitals

The nation’s hospitals are a broad array of institu- tions that provide care for those with acute prob- lems and emergencies, but that also care for many people with chronic conditions and long-term health problems. The most current information can be found on the website of the American Hospital Association at http://www.aha.org. Community general hospitals are the most preva- lent type, numbering about 4,936 of the 5,756 total U.S. hospitals existing in 2005 (American

Hospital Association, 2007a). However, various types of hospitals specialize in long-term care, in- cluding categories of psychiatric, rehabilitation, chronic disease, orthopedics, and long-term (de- fined as average length of stay of 23 days or more). Hospitals also provide extensive outpatient services, including many used by those needing long-term care, ranging from rehabilitation to mental health counseling to outpatient surgery. Hospitals have evolved from a focus on strictly acute care to promoting health with disease man- agement and health education programs.

Hospitals admit more than 37 million people each year, but this number includes those who are readmitted who are those most likely to be long- term care users. Average length of stay is 4 to 5 days for adults under the age of 65 and about 6 days for those age 65 and older. The leading causes of hospital admissions are chronic condi- tions: heart problems, cancer, mental illness, stroke, respiratory conditions, and fractures derived from osteoporosis.

Medicare and private insurance are the primary payers for hospital services, with individuals paying relatively little from out-of-pocket. However, hospi- tal costs are the largest single category of expendi- ture for Medicare, other government health pro- grams, and private insurance. Hospitals are accredited by the Joint Commission.

Ambulatory Care

Ambulatory care services are provided in a formal health care facility, whether a physician’s office or the outpatient clinic of a hospital or an adult day pro- gram. They include a wide spectrum of preventive, maintenance, diagnostic, and recuperative services for people who manifest a variety of conditions— from those who are entirely healthy and simply want an annual checkup to those with major health problems who are recovering from hospitalization to those with chronic conditions who need ongo- ing monitoring. Outpatient visits to hospitals alone numbered nearly 600 million in 2005 (American Hospital Association, 2007b).

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Adult day services (ADS) are particularly rele- vant to long-term care. ADS represent a daytime program of personal care, therapeutic activities, su- pervision, socialization, assistance with ADLs, midday meals, and perhaps health-related skilled care. ADS enable frail people who cannot be alone in their own homes to remain in the community. By attending adult day services, people who are functionally disabled due to physical or mental dis- orders and/or are moderately ill but not in need of round-the-clock nursing care can remain in their homes at night with their families or friends while receiving the care they need during the day. ADS participants may attend on an indefinite basis or just while recovering from an acute episode of ill- ness. They may attend each day, or just 2 or 3 days per week. The goals are to foster the maximum possible health and independence in functioning for each participant and to provide respite and support for each caregiver and family. For many, ADS programs provide an alternative to nursing home care.

ADS programs have grown exponentially since the first formal programs began in the 1970s. Cur- rently, there are about 3,400 ADS programs throughout the nation (Cox, 2006). The average daily census is about 25, but capacity ranges up to 38 or more people, with about three times as many people enrolled as attend on any given day. This means that ADS serve about 85,000 people per day. More than 150,000 people throughout the United States are enrolled in ADS at any given time (National Adult Day Services Association, 2007).

ADS average daily charges were about $56 per day in 2007, but relatively few programs make a profit. Most depend on donations, grants, and other subsidies. Medicare does not pay for ADS; Medicaid pays in selective states, and many individ- uals pay out-of-pocket.

Licensure varies across states. Some states li- cense ADS as a health service; some license it as a social service. ADS can be accredited by the Com- mission on Accreditation of Rehabilitation Facili- ties (CARF). ADS are still gaining recognition by professionals and lay people alike.

A key source of information about adult day services is the National Association for Adult Day Services at http://www.aahsa.org/naads.

Home Health

Home health care is one of the oldest components of the continuum of care. A number of home health agencies across the nation have celebrated their cen- tennials. Home care today consists of several types of services: skilled nursing care and therapies; home- maker/personal care/chore services; high-technology home therapy; durable medical equipment; and hos- pice.The services may all be provided by one agency, or an agency may specialize in only one. Each service has distinct operating characteristics.

Home health agencies certified by Medicare must serve people who are homebound, have a progno- sis of improvement/recovery; have home care or- dered by a physician; need skilled nursing, physical therapy, or speech-language therapy; require inter- mittent care only; and meet conditions of participa- tion specified by the federal Medicare legislation. These home care agencies offer skilled services pro- vided by registered nurses, physical therapists, oc- cupational therapists, speech therapists, social workers, and home health aides. They do not pro- vide personal care or functional support on an in- definite basis. Nearly 3 million people are served by Medicare-certified home care agencies each year (National Association of Home Care, 2007).

Medicare-certified home health agencies num- bered about 7,628 in 2004 (National Association for Home Care, 2007). Home health agencies may be freestanding or owned by hospitals, health de- partments, assisted living complexes, or other com- munity agencies. Nearly one-half are for profit; the others are not-for-profit or government affiliated.The national average payments in 2004 were $129 per visit and $4,050 per patient. Medicare is the largest single payer, although many managed-care and commercial insurers also pay for home care pro- vided by Medicare-certified agencies. Medicare cer- tified home health agencies may be accredited by the Joint Commission or the Community Health

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Accreditation Program (CHAP). Detailed informa- tion can be found from the National Association for Home Care and Hospice at http://www.nahc.org and from Medicare at http://cms.gov.

Private home care agencies are not certified by Medicare and are thus not restricted by federal regu- lations. Consequently, they provide a broader spec- trum of home services ranging from highly skilled to basic personal support, homemaker, and chore ser- vices. Private home care agencies bill by the hour or the service. Many individuals pay privately. In addi- tion, private home care agencies may have contracts with managed-care plans, commercial insurers, Medicaid, or other local government agencies. Statistics on private home care agencies are limited. Private agencies are estimated to number more than 12,000 and to care for more than 5 million people per year. The largest association representing both Medicare-certified and private home care agencies is the National Association for Home Care, which can be accessed at http://www.nahc.org.

High-tech home therapy refers to specialty care provided in the home that requires sophisticated equipment and pharmaceuticals. Examples are chemotherapy, antibiotic therapy, enteral and par- enteral nutrition, and home dialysis. High-tech home therapy may be provided by a Medicare-certified or private home care agency or by a company that spe- cializes only in high-tech home care. This service is mentioned separately because it has grown expo- nentially over the past 30 years and is expected to continue to do so as therapies are moved from in- patient to outpatient venues. Also, high-tech home care requires additional licenses, personnel, and pay- ment mechanisms from those required of standard home care agencies because of the pharmaceuticals and equipment involved, as well as the high level of intensity of illness of the clients.

Hospice

Hospice is a philosophical approach to care rather than a place. Ideally, hospice care occurs in the per- son’s home, including in a nursing home, assisted living complex, or other group residential setting.

Hospice is a concept of comprehensive and pallia- tive care for someone whose death is imminent. The goals are to make the person as comfortable as possible, including using drugs to alleviate pain; achieve emotional acceptance of death by the per- son and the family; and comfort and assist the fam- ily after the person’s death. Hospice uses an inter- disciplinary team, including pastoral care and bereavement counselors.

The concept of hospice was developed in Great Britain by Dr. Cicely Saunders. The first hospice in the United States opened in 1971. Hospice can be organized independently or from the base of any health care entity, including home health agencies. Medicare has a special hospice provision. This en- tails detailed regulations for those organizations that seek to be certified Medicare hospice providers, a complex payment system, and certain expectations of and benefits for enrollees. Commercial insurance companies and Medicaid have tended to mirror the Medicare benefit in covering hospice care. For a per- son to enroll in hospice, he or she must be eligible for Medicare and have a projected life expectancy of 180 days or less. Both the Joint Commission and CHAP accredit hospice programs.

The number of hospices and hospice patients has grown steadily over the past 35 years. In 2007, there were 3,078 hospices certified by Medicare and numerous others that did not seek certification (Hospice Association of America, 2007). The Medi- care hospices served more than 890,000 people in 2005, or more than one-third of all those who die during the year. The median length of stay in hos- pice was less than 21 days in 2006, indicating that many people do not get the benefits of hospice as early as they might.

Detailed information about hospice can be found at http://www.nahc.org, http://www.cms .gov, and http://hhpco.org.

Durable Medical Equipment

Durable medical equipment (DME) is equipment that enables a person to accommodate a disability and maintain independence. DME encompasses a

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wide range of devices, from simple walkers and canes to sophisticated wheelchairs and beds. DME is paid for by Medicare, Medicaid, and private in- surance under conditions specified by each insurer. It may be rented or purchased, depending on the insurer, the person’s condition, and whether the need for the equipment is expected to be short-term or indefinite. Companies that provide DME are dis- tinct from other health care agencies, but home health agencies will often assist in arranging for DME that is needed by a person to remain in his or her own home while receiving home care services. DME is an important component of the continuum of care because it enables people with disabilities who might otherwise be dependent on others for assistance to maintain their independence. Detailed information about Medicare’s DME provisions can be found at http://cms.gov/center/dme.asp.

Outreach

Outreach programs make health and social services readily available in the community rather than within the formidable walls of a large institution. Health fairs at community events, senior member- ship programs, emergency response systems, nurse practitioners stationed by health care systems in se- nior housing complexes, and vans for transporta- tion to medical appointments are all forms of out- reach. They are targeted at those who are living in the community for the purpose of keeping them connected with the health care system.

Many outreach programs are provided at no or low charge to the consumer. They may be paid for by a hospital, medical group, managed care com- pany, or other health care organization as a com- munity benefit or a loss leader to market other ser- vices. Regardless of the purpose, clients identified through outreach activities should ideally be linked back to the organization’s core businesses for pur- poses of continuity of care.

Wellness

Wellness programs span a wide spectrum from ac- tivities provided for those who are basically healthy

and want to stay that way by actively engaging in health promotion to disease management for those with chronic illnesses who want to remain as healthy as possible. Wellness programs include health education classes, exercise programs, health screenings, and disease management regimes of- fered at health care sites or to be used at home.

Wellness activities may be provided at no or low charge to the client. With a few notable exceptions, wellness activities are not paid for by third-party payers. They tend to be provided free of charge as a public relations tool or because the organization of- fering the activity appreciates that they will save money on providing care if they can help someone stay healthy.

Disease management (DM) programs have be- come pervasive and sophisticated in recent years. They are one method for empowering consumers who have diagnosed health problems to control their condition so they do not become severely ill. DM programs may also be structured so that they are a means of facilitating clients with access to the services clients need, when they need them. Health plans and medical groups have been prominent proponents of disease management and often bear the costs.

Housing

Housing is an integral component of the contin- uum of care, because a person’s housing situation affects his or her functional independence and health status, and vice versa. For example, a woman who lives in two-story house in New Eng- land with front steps that have no railing might slip on the ice and break her hip. She may not be able to go home from the hospital as soon as possible because she cannot negotiate the front steps or ac- cess the bathroom on the second floor. In contrast, a women who lives in a one-story Southern Cali- fornia bungalow with a flat path from the driveway to the house might not slip on the ice in the first place and, if she did break her hip for other rea- sons, could go home from the hospital more quickly and easily because indoor and outdoor

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access are all on one level and inclement weather is not likely to inhibit egress mobility.

Housing accommodations for long-term care range from modifying existing independent housing to independent apartments with support services to formal assisted living (with support services incorpo- rated into the building and the pricing) to group homes. Services may be available within a commu- nity, such as within continuing care requirement communities (CCRCs) or naturally occurring retire- ment communities (NORCs); within a facility, such as within independent apartment buildings; or within a person’s home, such as board and care homes. Various levels of housing are defined by states, and are typically licensed under housing or so- cial service agencies, not as health care providers. In 2006, the United States had approximately 39,500 assisted living facilities and 2,240 continuing care re- tirement communities (American Association of Homes and Services for the Aging, 2007).

Payment for housing is usually the responsibility of the individual. In a few states, Medicaid pays for assisted living as a less-expensive alternative to nurs- ing home care, and group homes for the develop- mentally disabled or mentally ill may be paid for by Medicaid or a state mental health program. Recog- nizing the frailty of populations served by some types of housing, assisted living facilities may be accredited by either the Joint Commission or CARF.

Despite its close relationship to health status, housing operates for the most part in a different sphere of licensing, regulation, and financing. This separation often poses challenges for those who need integration of housing and health care in order to manage long-term care needs optimally. Two websites pertaining to assisted living are http://www.aahsa.org and http://www.alfa.org.

Characteristics of Major Services

These categories encompass more than 60 distinct services. Each service has its own operating charac- teristics. Table 9.3 summarizes select operating characteristics of a few of the major services.

The differences pose challenges to organizations and individuals in attempting to manage care in a unified way, as well as to clinicians in attempting to achieve continuity of care across settings and over time for clients. Differences in financing, licensing, regulatory enforcement, and accreditation all pose structural barriers to integration. The integrating mechanisms, described next, are deliberate man- agement actions that can be taken to facilitate clin- ical integration of the care for the individual client.

INTEGRATING MECHANISMS

From a client’s perspective, the many services of the continuum should be seamlessly connected. Multi- ple services might be used at the same time, and they should be coordinated. Changes in service over time, due to a change in the client’s condition, should be accomplished with a smooth transition and a flow of essential information from one provider to the other. Payment should not inhibit access to services.

In reality, at the present time in the U.S. health care delivery system, services are highly frag- mented. Access is limited by payment constraints, availability of select services in some geographic areas, capacity of available services, limited health care personnel, and other factors. Moreover, be- cause services have evolved in an individualistic manner, services are not automatically integrated. Thus, to accomplish the seamlessness that is im- portant to a client’s care, formal structural integrat- ing mechanisms are essential. The conceptual framework of the continuum of care includes four basic integrating mechanisms, described next.

Inter-Entity Structure and Management

Integrated management of services must be struc- tured both within an organization and across organizations. Client services are not likely to be

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210 PART THREE Providers of Health Services

coordinated unless the units that are providing the services are coordinated administratively, particu- larly when budgeting and financial issues arise. For example, a person with a hip fracture may be cared for by the emergency department of a hospital, acute care inpatient unit of the same or a different hospital, skilled nursing facility, rehabilitation hos- pital or unit, home health agency, Medicare-certified home health agency, private home care agency, and durable medical equipment company. Even when all these services are within the same parent orga- nization, the client with fee-for-service insurance will fill out admission papers eight different times, deal with eight different sets of clinicians and

administrators, and receive bills from eight or more distinct provider entities. (A person with managed- care insurance may have a somewhat less compli- cated experience, but most managed-care plans don’t cover long-term care, so fragmentation is the most common model.)

Administrative structures are necessary for a con- tinuum of care to (1) ensure channels of communi- cation and cooperation; (2) establish clear lines of authority, accountability, and responsibility for client services; (3) negotiate budgets and financial trade-offs; (4) address issues of risk management and liability; (5) gather and share data efficiently; and (6) present a cohesive, consistent message in

Table 9.3. SSaammppllee OOppeerraattiinngg CChhaarraacctteerriissttiiccss ooff SSeelleecctt SSeerrvv ii cc ee ss

SS ee rrvv ii cc ee SSttaafffifinn gg TToopp PPaayyeerrss LLiicceennssiinngg AA cc cc rreeddiittaattiioonn**

Skilled nursing facility

Home health, Medicare certified

Home care, private

Hospice

Adult day services

Assisted living

CORF

Meals on Wheels

1 RN/shift; LVNs, Aides

RN, PT, OT, SP, MSW, HHA

On-call staff, profes- sional or support persons

Interdisciplinary team of professionals led by MD

Activity director, aides, may or may not have skilled profes- sionals

Personal care staff

Rehabilitation therapists

Volunteers

Medicaid; private

Medicare; commercial insurance; other government

Private pay; commer- cial insurance; gov- ernment but not Medicare

Medicare; all insurers

Private pay; Medicaid; Fund-raising

Private pay (Medicaid in a few states)

Medicare; commercial insurance

Older Americans Act

By state department of health

May be only local business license

May be separate or part of health orga- nization

Varies by state; may be only business license, state health department, or state social services

State housing depart- ment; varies by state

By state health department

Not licensed

Joint Commission

Joint Commission CHAP

Regional

Joint Commission CHAP

CARF

Joint Commission CARF

CARF

None

*CARF—Commission on Accreditation of Rehabilitation Facilities. CHAP—Community Health Accreditation Program.

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interactions with the patient, external agencies, and the community.

Administrative mechanisms within an organiza- tion that promote seamless functioning of a contin- uum of care include

■ a designated senior administrator responsible for decisions that affect several different depart- ments or units.

■ an integrated budget that recognizes the contri- bution of each unit to the performance of the whole, including losses in one unit that produce larger gains in another unit.

■ interdepartmental/interentity planning and man- agement teams and committees that cut across services.

■ interdisciplinary and interdepartmental task forces focusing on specific short-term issues, in- cluding planning new programs or solving oper- ating problems.

■ product line management or a matrix structure that spans internal and external service units or- ganized as a continuum of care from the patient perspective.

■ contracts articulating transfer agreements.

Management integration is at least in part driven by public policy at the federal, state, and local lev- els. In efforts to streamline long-term care, several states have enacted programs to reduce the frag- mented regulations that often produce lack of ac- cess to care and the resulting frustration and poor quality. State efforts have focused on reducing bar- riers to access caused by removing conflicting eligi- bility criteria, creating a single entry point or single assessment form, and incorporating funding from several distinct streams into one.

Care Coordination

The clinical care for a person with long-term, multi- faceted illness is ideally coordinated over time, across settings, and among various professionals. Quality is enhanced when information is commu- nicated among all the professionals caring for a

person, and efficiencies are achieved when dupli- cation of services is avoided. Several techniques have evolved for coordinating clinical care, includ- ing case management, interdisciplinary teams, clinical liaisons, single-entry access points, ex- tended care pathways, and some disease manage- ment programs.

The most common form of care coordination is case management. Over time this has evolved into a fairly standard process with the following ele- ments (White, 2005):

■ case identification ■ assessment ■ care planning ■ service arrangement ■ monitoring ■ reassessment

The purpose of case management is to have a single individual professional work directly with clients and families over time to assist them in ar- ranging and managing the complex set of resources that the client requires to maintain health and in- dependent functioning. Ideally, the case manager guides the client and family through the maze of services, matches service need with funding autho- rization and availability, coordinates with clini- cians, negotiates with payers, and facilitates changes as the client’s needs change over time.

A case manager may be a nurse, social worker, or health care professional trained specifically as a case manager. The range of a case manager’s au- thority varies from the ideal comprehensive role based on the organizational auspice of the case manager and who is paying for this service. Case management is paid for by some third-party payers, by individuals and families, or by a combination. Medicare pays for case management only for highly specialized services. Medicaid and other govern- ment sources vary by state and locality but often cover limited case management for those with long- term care needs. Private pay for case management is now so common that associations of private case managers have grown to national presence.

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Interdisciplinary teams are another mechanism for coordinating clinical care; these are typical of rehabilitation and hospice programs. As noted earlier, disease management has grown markedly over the past decade and is a structured way of em- powering the individual to monitor and coordinate his or her own care with the support of self-help tools backed up by access to professionals.

The cost-effectiveness of care coordination pro- grams has been well documented. Nonetheless, they are often perceived as additional, rather than core services and may not be accessed until the complexity of a person’s care overwhelms the indi- vidual or family.

Integrated Information Systems

Information systems that compile data over time and across settings are essential for efficient man- agement of the care of individuals with complex and chronic illnesses and the management of orga- nizations. To implement quality assurance and utilization review programs, assess efficiency of operations, track and aggregate client experiences, and calculate the long-term costs of care, compre- hensive and integrated data systems and accompa- nying management reporting systems are impera- tive. Nonetheless, the United States is only now on the verge of developing and implementing the information systems technology to provide ade- quate data for long-term care client management. Many health and social service agencies still main- tain separate clinical, financial, and management information and reporting systems. Moreover, many small community agencies that are critical providers of long-term care support services do not yet have automated clinical records, let alone ones integrated within the organization, and are far from being able to integrate automated informa- tion across organizations.

The financing of long-term care, to be discussed later, cannot evolve until more predictable infor- mation is available on the financial costs of care over time and the interaction effect of multiple sup- port services. This type of expansive information

over time cannot be achieved until integrated infor- mation systems are in place in more organizations and communities. Conceptually, comprehensive in- formation could be maintained by the health care provider, the insurer, or the patient himself.

Computer technology advances that enable stor- ing great quantities of information in small and in- expensive devices and the exponential growth in the availability of the Internet make it possible for providers and consumers alike to maintain com- puterized health records. Yet, for comprehensive in- formation about the use of services across settings and over time to occur, many providers must be willing to automate their records and use a com- mon format. Privacy concerns and regulations, many implemented by the Health Insurance Pri- vacy and Accountability Act, must be incorporated into a secure means of sharing information. Sev- eral forefront activities show great progress toward eventual access to comprehensive, integrated auto- mated health information.

Electronic health records (EHR) are not new but have not yet replaced the prevalence of paper records, despite great advances in computer tech- nology during the past two decades. A movement to speed up adoption of computerized medical records received a national push in 2003 when the president of the United States declared as a federal goal that all citizens should have an electronic health record and then appointed a physician leader as the National Coordinator of Health In- formation Technology. This attention, along with federal funding, helped bring experts together to determine both content and electronic details for a standardized electronic health record. However, consensus on content has not yet been achieved, and implementation remains the decision and cost of each individual organization.

Regional health information systems (RHIOS) are another advancement that had an earlier life in the form of community health networks. RHIOS, which are collaboratives of private or private and public providers, are being promoted as a way to create the organizational infrastructure needed to bring health organizations within a community

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together to share health-related information across settings and over time.

Meanwhile, government initiatives by Medicare (adding prescription drug coverage) and Medicaid (continued expansion to managed-care models) may provide unanticipated benefits in enabling ac- cess to aggregate and individual data pertaining to the use of health care services by the chronically ill.

Integrated Financing

The financing of long-term care is responsible for the availability of so many services as well as the fragmented way in which the services of the contin- uum operate. There is no single category of expen- ditures denoted in federal or state budgets as “long- term care,” nor is there a single source of payment. Financial information about long-term care is thus a mosaic of pieces from which to infer the total pic- ture. Table 9.4 shows the expenditures for two types of long-term care, nursing home and home care, as categories of national data on Personal Health Expenditures. As is evident, costs for these two types of services have expanded over time. The magnitude of the costs of long-term care would ap- pear significantly greater if the costs for the full spectrum of continuum services were included and if hospital and physician expenditures were differ- entiated between acute care and chronic care.

Two perspectives on financing are useful: the ser- vice perspective, that is, from whom a provider gets paid, and the payer perspective, that is, what ser- vices each source covers.

Who Pays?

Table 9.5 shows just a few of the numerous sources that pay for long-term care, reflecting in part the array of clients described earlier and the public poli- cies driven by advocacy groups that provide re- sources for specific client populations. Medicaid is the largest single third-party payer of long-term care. Covered services vary by state and even locality but include at minimum nursing home care, home care, durable medical equipment, hospice, and in some states, assisted living and adult day services. Other public programs that provide and/or pay for select long-term care services are Veterans Affairs, Title XX of the Social Security Act, the Aging Network estab- lished by the Older Americans Act, state and local mental health services, Ryan White Act (AIDS/HIV), and numerous others. Each public program has spe- cific regulations that cover who is eligible for services and what services can be provided.

In addition to public program support, many in- dividuals pay out-of-pocket for long-term care. For example, nursing home care is the largest single category of long-term care expenditures, and about one-fourth is paid by individuals and their families. Except for a few state Medicaid programs, almost all assisted living is paid for directly by individuals. Other long-term care services that are heavily paid for directly by consumers include private home care, adult day services, and the array of support services engaged by caregivers to help them care for loved ones.

Contrary to what many people believe, Medicare was intended to cover short-term acute episodes of

CHAPTER 9 The Continuum of Long-Term Care 213

Table 9.4. SSeelleecctteedd NNaattiioonnaall HHeeaalltthh EExxppeennddiittuurreess:: UUnniitteedd SSttaatteess,, 11996600––22000022 ((aammoouunntt iinn bbiilllliioonnss))

EExxppeennddiittuurree 11996600 11997700 11998800 11999900 22000000 22000044

Personal health care $23.3 $62.9 $215.3 $607.5 $1,139.9 $1,560.2 Home health care 0.1 0.2 2.4 12.6 30.6 43.2 Nursing home care 0.9 4.0 19.0 52.6 95.3 115.2

From National Health Care Expenditures by Type of Expenditure: United States, 1960–2004 (DHHS Pub. No. 2006-1232) (Table 123), retrieved May 19, 2007, from http://cdc.gov/nchs/hus.htm.

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care, and by law, excludes coverage of services for prolonged illness. To be eligible for standard Medi- care services, the patient must have a prognosis of improvement or recovery. The majority of people who are eligible for Medicare are either over age 65 or are legally disabled. Medicare is thus faced with creating an artificial distinction of providing acute care for the purposes of “cure” to people with

chronic illnesses. In recent years, Medicare has rec- ognized that this distinction is unrealistic and inef- fective. The Medicare Prescription Drug and Mod- ernization Act of 2003 (MMA) recognized the need to restructure the legislation to match client needs more appropriately. The MMA now pays for pre- scription drugs, a particular asset to those with chronic conditions, as well as increased screenings for prevention and health maintenance. When first passed, the MMA also included demonstration projects for disease management and chronic care coordination. Nonetheless, Medicare still has strict limits on its authority to pay for nursing home care, home care, assisted living, adult day services, and most other long-term care services.

Commercial health insurance companies and managed care health plans tend to follow Medi- care. They may cover more than Medicare in select program areas, but they tend to be legislatively mandated by state or federal authorities to pay for services associated with acute episodes of care rather than chronic care.

How Do Services Get Paid?

Figure 9.3 shows major payers for select services of the continuum. As is evident, any given service may have several distinct payment sources; furthermore, payers and payment details vary in each geographic locality. This makes management extremely difficult for the individual client, as well as for the provider organizations. Moreover, the fragmented payment system and the detailed regulations that accom- pany each law inhibit creating a single national pol- icy on long-term care or a single template for long- term care management.

In addition to funding difference services, pay- ment sources affect how a provider operates. All the organizations that participate in the Medicare pro- gram must comply with the Conditions of Partici- pations (CoP). Medicare has also implemented spe- cific payment systems that complicate the ability for a provider to combine the costs for a single pa- tient. As a result of the Balanced Budget Act of 1997, Medicare payment mechanisms for providers other than hospitals and physicians were connected

214 PART THREE Providers of Health Services

Table 9.5. SSeelleecctt MMaajjoorr FFeeddeerraall GGoovveerrnnmmeenntt PP rrooggrraammss PPaayyiinngg ffoorr VVaarriioouuss LLoonngg--TTee rrmm CCaarree SS ee rrvviicceess**

PP rrooggrraamm SS ee rrvviicceess CCoovveerree dd

Medicare** Skilled nursing—100 days only Home care—skilled only Hospice LTC hospital Rehabilitation Mental health

Medicaid Skilled nursing Home care—skilled or support care Hospice Rehabilitation therapies Mental health Adult day health care Assisted living (some states only) Case Management

Veterans Affairs Skilled nursing Home care Hospice Rehabilitation therapies Mental health Adult day care Respite

Older American Act Congregate meals Meals on Wheels Homemaker Case management

Title XX Home care Chore service

*Not intended to be complete; illustrative only. **Assumes short-term prognosis of improvement.

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to specific patient assessment tools. These tools serve to limit financing, information sharing, and care across settings, as each service is required to use a different metric to measure client health status and progress. Moreover, Medicare payment systems are continually being revised and refined, making trend data on individuals or groups all the more difficult to track. Table 9.6 shows the name of the payment systems and the accompanying assess- ment tools as of 2007.

Models of Integrated Financing

Fragmented financing results in fragmented care, particularly when the payment sources have strict eligibility criteria that inhibit clients from accessing the services they need when they need them or pay- ment systems that must be maintained separately. Under the ideal concept of the continuum of care, financial resources would be pooled so that neither the amount nor the restrictions of payment for care

would prevent a person from getting the care they need to manage an illness effectively over time. Despite the barriers to integrating financing from multiple streams, a few examples demonstrate that integrated financing is both possible and cost- effective.

Federal Initiatives. Under Medicare, the fed- eral government established the Social HMOs (S/HMOs), the Program of All-Inclusive Care for the Elderly (PACE), and hospice. Each program targets a different client group but has the legislative authority to blend financing streams or to offer service based on client need rather than regulatory restrictions. All have demonstrated enhanced quality of care and cost-effectiveness compared to care under regular fee-for-service payment systems. PACE and hospice have been incorporated into core Medicare pro- grams; the Social HMO program is being phased out over time.

CHAPTER 9 The Continuum of Long-Term Care 215

Services Potential Payers

Private Individual

Families

Medicaid

Medicare

Commercial Insurance

Health Plan

Veterans Affairs Health System

Workers’ Compensation

Older Americans Act

Title XX

Skilled Nursing

Home Care

Hospice

Adult Day Care

Assisted Living

Case management County Government

HUD

Private LTC Insurance

Figure 9.3. PPootteennttiiaall PPaayyeerrss ffoorr SSeelleecctt LLoonngg--TTee rrmm CCaarree SSeerrvv ii cc ee ss SOURCE: Adapted from “Training Modules for Geriatrics,” n.d., U.S. Department of Health and Human Services.

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Continuing care retirement communities (CCRCs) represent a private model of pooled financing and service. CCRCs provide several levels of housing on the same campus, with a range from entirely in- dependent houses or apartments, to assisted living, to skilled nursing. Home care, chore service, con- gregate housing with meals, transportation, and other support services may also be available. Physi- cian and hospital care are not typically components of the CCRC service package. Individuals pay a substantial entry fee to buy into the CCRC, with supplemental fees typically charged for additional services and paid directly to the CCRC who is the provider or pays the providers. Long-term care, Medicare supplement, or other health insurance may be required for entry. The CCRC arranges ser- vice delivery and coordinates on-site services. CCRCs target the middle- to upper-economic-class

clientele. They establish financial ability to pay for services as a requirement for admission and then assist the residents in accessing the services they need when they need them.

LONG-TERM CARE POLICY

The United States has no single public policy on long-term care per se. Rather, a myriad of policies at federal, state, and local levels impact care for spe- cific target populations or select components of the health care delivery system. Table 9.7 is a short list of some of the many federal policies pertaining to long-term care.

216 PART THREE Providers of Health Services

Table 9.6. MM ee dd ii cc aa rree PPaayymmeenntt SSyysstteemmss,, bbyy SSeerrvv ii cc ee

SS ee rrvv ii cc ee PPaattiieenntt AAsssseessssmmeenntt CCllaassssiifificcaattiioonn** PPaayymmeenntt SSyysstteemm****

Hospital

Inpatient psychiatry

Rehabilitation

Long-term care hospital

Skilled nursing facilities

Home health

Discharge diagnosis data

Discharge diagnosis data (only specific condi- tions qualify)

Patient assessment instrument (IRF PAI) (only specific condi- tions qualify)

Discharge diagnosis data

Minimum data set (MDS)

Outcome and assessment information set (OASIS)

Diagnostic related groups (DRGs)

Diagnostic related groups (DRGs) (1 of 15)

Case mix groups

Long-term care hospital diagnostic related groups (LTCH DRGs)

Resource utilization groups—III (RUGS)

Home health resource groups (HHRG)

IPPS

IPF PPS

IRF PPS

LTCH PPS

SNF PPS

HH PPS

*DRG—Diagnostic related groups. These are a combination of discharge diagnosis, surgery, age, sex, and discharge disposition. **Prospective payment systems: Inpatient PPS, Inpatient psychiatric facility PPS, Inpatient rehabilitation facility PPS, Long-term care hospital PPS, Skilled nursing facility PPS, Home health PPS.

NOTE: Medicare has yet additional payment systems for various types of ambulatory care services, such as outpatient rehabilitation and outpatient psychiatric services.

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Legislation tends to have one (or more) of four major thrusts:

■ Direct payment for services (such as Medicare for those age 65 and older).

■ Regulations (such as the Balanced Budget Acts of 1997 and 1999).

■ Creation of resources (such as the Hill-Burton or Health Manpower Act).

■ Direct provision of service (such as the acts cre- ating the hospitals and services provided by Vet- erans Affairs).

Different advocacy groups have, at different times, lobbied for different types of legislation. The piecemeal approach to public policy to date has produced the fragmented long-term care delivery system that currently exists in the United States. The lack of coordination across services has created the imperative for the four integrating mechanisms that are essential to achieving coordination of care from the perspective of the individual client.

Despite an array of federal laws pertaining to various aspects of long-term care, overall, long- term care is primarily an issue dealt with by state governments. States have recognized the detrimen- tal impact of fragmentation on the quality of care provided to individuals and on the cost to govern- ment. Several states have thus implemented sys- tems to streamline their long-term care service de- livery. Wisconsin, for example, has long had a single entry point, uniform assessment and case management system that brings together health, social services, and mental health programs. The Robert Wood Johnson Foundation sponsored a nationwide program in the late 1990s that pro- moted coordination of care at the state level for those with chronic illnesses, particularly for those receiving Medicaid. Efforts to achieve coordination through government programs are likely to con- tinue, but at local, rather than national levels. For the foreseeable future, the individual and family will remain those ultimately responsible for coordi- nating the long-term care of a person with chronic illness and functional disability.

SUMMARY

The services available to provide assistance to those with long-term disabilities and chronic conditions have grown significantly during the past three decades. However, the population needing long- term care has also grown, and the greatest burst of expansion is anticipated with the aging of the Baby Boom generation. As a nation, the United States is not prepared to provide extensive long-term care that is efficient, effective, and affordable. The

CHAPTER 9 The Continuum of Long-Term Care 217

Table 9.7. MMaajjoorr FFeeddeerraall LLeeggiissllaattiioonn PP ee rrttaaiinniinngg ttoo LLoonngg--TTee rrmm CCaarree

Social Security Act, 1935 Veterans Administration, 1963, 1972, 1975, 1980 Mental Health Acts, 1963, 1967, 1971, 1986 Title XVIII (Medicare), Social Security Act, 1965 Title XIX (Medicaid), Social Security Act, 1965 Older Americans Act, 1965, 2001 Housing and Urban Development Act, 1965, 1974 Developmental Disabilities Services and Facilities Act, 1970 Title XVI (Supplemental Security Income), Social Security

Act, 1972 Rehabilitation Act, 1973 Title XX, Social Security Act, 1974 Omnibus Budget Reconciliation Act, 1987 Medicare Catastrophic Coverage Act, 1988 (repealed, 1990) Americans with Disabilities Act, 1990 Patient Self-Determination Act, 1991 Family Medical Leave Act, 1993 Health Insurance Portability and Accountability Act, 1996 Balanced Budget Act, 1997 National Caregiver Support Act, 2000 Ryan White Care Act, 1990, reauthorized 2000 Medicare Prescription Drug, Improvement, and Modernization

Act, 2003 Olmstead vs. L.C., 1999 (Supreme Court decision)

SOURCE: From The Continuum of Long-Term Care, 3rd Ed., by C. Evashwick (Ed.), 2005, Albany, NY: Delmar Publishers.

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challenges to clinicians, administrators, policy mak- ers, and payers demand attention. Nonetheless, they pale in contrast to the challenges faced by families and individuals trying to orchestrate and pay for long-term care on a daily basis.

The following summarizes the current state of long-term care in the United States.

1. Managing a seamless continuum of care is challenging from the perspective of the indi- vidual client due to fragmentation of services, different eligibility criteria, and varying pay- ment streams.

2. Managing the continuum of services is diffi- cult for an organization due to the need to co- ordinate with external organizations and even to coordinate internally.

3. Public policy is not likely to provide any over- arching continuity for long-term care in the near future. Meanwhile, federal, state, and local policies are likely to continue to change, requiring constant reorientation of manage- ment procedures and policies.

4. The portending swell of people with chronic conditions and multigeneration caregiver needs will add stress to the system.

5. The current and future shortage of health care personnel will add further challenge of long-term care services, which are heavily manpower-intense.

6. LTC services will continue to evolve individu- ally, with emphasis on quality of care, evidence- based performance, and financial viability.

7. Individuals must be engaged in personal planning and policy dialogue in order to forge a better system for the future. Health care executives should thus address their own personal actions and promote personal plan- ning by employees as models and as a basis for knowledge that can be shared with clients.

REVIEW QUESTIONS

1. Describe the continuum of care framework. 2. What is long-term care? 3. Who needs long-term care? 4. Describe and differentiate the roles of hospi-

tals and nursing homes in providing long- term care.

5. Explain the contributions and drawbacks of adult day services.

6. Contrast home health agencies certified by Medicare and private home health agencies.

7. Delineate the components of hospice care and the patients served by hospice.

8. Define the four basic integrating mechanisms and explain why they are essential to achiev- ing a seamless continuum of care.

9. Critique the current state of long-term care policy in the United States.

REFERENCES & ADDITIONAL READINGS

American Association of Homes and Services for the Aging. (2007). Aging services: The facts. Retrieved May 17, 2007, from http://www.aahsa.org.

American Health Care Association. http://www.ahca.org. American Hospital Association. (2007a). Fast facts.

Retrieved May 16, 2007, from http://www.aha.org. American Hospital Association. (2007b). Trendwatch

chartbook 2007. Chart 3.12. Chicago: American Hospital Association.

Assisted Living Facilities of America. http://www.alfa.org. Centers for Medicare and Medicaid Services. (2007).

The chart series chartbook 2007. Table 1.11. Retrieved May 14, 2007, from http://www .cms.hhs.gov.

Cox, Nancy. (2006). Lessons learned: Sustainability of Partners in Caregiving: The Adult Day Services Program. Princeton, NJ: The Robert Wood Johnson Foundation.

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Evashwick, C. (1987). Definition of the continuum of care. In C. Evashwick, & Weiss, L. (Eds.), Managing the continuum of care. Gaithersburg, MD: Aspen Publishers.

Evashwick, C. (Ed.) (2005). The Continuum of Long- Term Care. Albany, NY: Delmar Publishers.

Hoffman, C., Rice, D. P., & Sung, H. Y. (1996). Persons with chronic conditions: Their prevalence and costs, Journal of the American Medical Association, 276(18), 1473–1479.

Hospice Association of America. (2007). Hospice facts and statistics. Retrieved May 17, 2007, from http://www.nahc.org/facts.

Katz, S., Ford, A., Moskowitz, R., Jackson, B., & Jaffe, M. (1963). Studies of illness in the aged. Journal of the American Medical Association, 185, 914–919.

Lawton, M. P., & Brody, E. M. (1969). Assessment of older people; Self-maintaining and instrumental activities of daily living. The Gerontologist, 9, 179–186.

Lu, S., & Green, A. (2000). Projection of chronic illness and cost inflation. Santa Monica, CA: Rand.

National Adult Day Services Association. (2007). Adult day services: The facts. Retrieved May 27, 2007, from http://www.nadsa.org.

National Association for Home Care. Home care and Hospice facts. Retrieved May 17, 2007, from http://www.nahc.org.

National Center for Health Statistics (NCHS). (2005). Health, United States, 2005. Table 56. Hyattsville, MD: U.S. Department of Health and Human Services.

National Center for Health Statistics. (2007). Definitions. Retrieved May 21, 2007, from http://www.nehs.gov/definitions.

National Hospice and Palliative Care Organization. http://www.nhpco.org.

White, Monika. (2005). Case management. In C. Evashwick (Ed.), The continuum of long-term care. Albany, NY: Delmar Publishers.

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220

CHAPTER TOPICS

Origins of Mental Health

The Fundamentals of Mental Health

Types of Mental Illness

Epidemiology of Mental Illness

Organization and Financing of Mental Health Services

Mental Health Financing

The Future of Mental Health Services

LEARNING OBJECTIVES

Upon completing this chapter, the reader should be able to

1. Understand the basis for defining mental health services.

2. Appreciate the history of mental health.

3. Assess the epidemiology of mental health.

4. Understand the various settings and arrangements for delivering mental health services.

5. Appreciate the financing issues in mental health.

6. Assess present and future challenges in mental health.

CHAPTER 10

Mental and Behavioral Health Services*

Stephen J. Williams and Paul R. Torrens

*Chapter adapted from Mental Health: A Report of the Surgeon General—Executive Summary, Rockville, MD: U.S. Department of Health and Human Services, 1999, and websites of Substance Abuse and Mental Health Services Administration, Center for Mental Health Services, National Institutes of Health, and National Institute of Mental Health.

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CHAPTER 10 Mental and Behavioral Health Services 221

The nation’s contemporary mental health enter- prise, like the broader field of health, is rooted in a population-based public health model. The public health model is characterized by concern for the health of a population in its entirety and by aware- ness of the linkage between health and the physical and psychosocial environment. This chapter de- scribes mental health services and systems in the United States. Definitions and historical perspectives on mental health, delivery systems, and many com- plex issues are discussed. Examples of various mental and behavioral illnesses are described to illustrate the complex and evolving nature of these conditions.

Many ingredients of mental health may be iden- tifiable, but mental health is not easy to define. What it means to be mentally healthy is subject to many different interpretations that are rooted in value judgments that may vary across cultures.

Mental illness is the term that refers collectively to all diagnosable mental disorders. Mental disor- ders are health conditions that are characterized by alterations in thinking, mood, or behavior (or some combination thereof) associated with distress and/or impaired functioning. Alzheimer’s disease exemplifies a mental disorder largely marked by al- terations in thinking (especially forgetting). Depres- sion exemplifies a mental disorder largely marked by alterations in mood. Attention-deficit/hyperac- tivity disorder exemplifies a mental disorder largely marked by alterations in behavior (over activity) and/or thinking (inability to concentrate).

Considering health and illness as points along a continuum helps one appreciate that neither state exists in pure isolation from the other. In another, but related, context, everyday language tends to en- courage a misperception that “mental health” or “mental illness” is unrelated to “physical health” or “physical illness.” In fact, the two are inseparable.

Seventeenth-century philosopher René Descartes conceptualized the distinction between the mind and the body. He viewed the “mind” as completely separable from the “body” (or “matter” in general). The mind (and spirit) was seen as the concern of organized religion, whereas the body was seen as the concern of physicians.

Instead of dividing physical from mental health, the more appropriate and neutral distinc- tion is between “mental” and “somatic” health. Somatic is a medical term that derives from the Greek word soma for “body.” Mental health refers to the successful performance of mental functions in terms of thought, mood, and behavior. Mental disorders are those health conditions in which alterations in mental functions are paramount. Somatic conditions are those in which alterations in nonmental functions predominate. While the brain carries out all mental functions, it also car- ries out some somatic functions, such as move- ment, touch, and balance. That is why not all brain diseases are mental disorders. For example, a stroke causes a lesion in the brain that may produce disturbances of movement, such as paral- ysis of limbs. When such symptoms predominate in a patient, the stroke is considered a somatic condition. But when a stroke mainly produces alterations of thought, mood, or behavior, it is considered a mental condition (e.g., dementia). The point is that a brain disease can be seen as a mental disorder or a somatic disorder depending on the functions it perturbs.

ORIGINS OF MENTAL HEALTH

Stigmatization of people with mental disorders has persisted throughout history. It is manifested by bias, distrust, stereotyping, fear, embarrass- ment, anger, and/or avoidance. Stigma leads oth- ers to avoid living, socializing, or working with, renting to, or employing people with mental dis- orders. It reduces patients’ access to resources and opportunities (e.g., housing, jobs) and leads to low self-esteem, isolation, and hopelessness. It de- ters the public from seeking, and wanting to pay for, care. Explanations for stigma stem, in part, from the misguided split between mind and body first proposed by Descartes. Another source of stigma lies in the nineteenth century separation of

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the mental health treatment system in the United States from the mainstream of health.

In colonial times in the United States, people with mental illness were described as “lunatics” and were largely cared for by families. There was no con- certed effort to treat mental illness until urbaniza- tion in the early nineteenth century created a soci- etal problem that had previously been relegated to families scattered among small rural communities. Social policy assumed the form of isolated asylums where persons with mental illness were adminis- tered the reigning treatments of the era. Throughout the history of institutionalization in asylums (later renamed mental hospitals), reformers strove to im- prove treatment and curtail abuse. Several waves of reform culminated in the deinstitutionalization movement that began in the 1950s with the goal of shifting patients and care to the community.

In the 1950s, the public viewed mental illness as a stigmatized condition and displayed an unscien- tific understanding of mental illness. The public was not particularly skilled at distinguishing mental illness from ordinary unhappiness and worry and tended to see only extreme forms of behavior— namely psychosis—as mental illness. Mental illness carried great social stigma, especially linked with fear of unpredictable and violent behavior.

By the mid-1990s Americans had achieved greater scientific understanding of mental illness. But the increases in knowledge did not defuse so- cial stigma. The public learned to define mental ill- ness and to distinguish it from ordinary worry and unhappiness. It expanded its definition of mental illness to encompass anxiety, depression, and other mental disorders. The public attributed mental ill- ness to a mix of biological abnormalities and vul- nerabilities to social and psychological stress.

There is likely no simple or single panacea to eliminate the stigma associated with mental illness. Overall approaches to stigma reduction involve programs of advocacy, public education, and con- tact with persons with mental illness through schools and other societal institutions. Another way to eliminate stigma is to find causes and effective treatments for mental disorders. History suggests

this to be true. When pellagra was traced to a nu- trient deficiency, and nutritional supplementation with niacin was introduced, the condition was eventually eradicated in the developed world. Pella- gra’s victims with delirium had been placed in men- tal hospitals early in the twentieth century before its etiology was clarified.

Ironically, the mental health field was adversely affected when causes and treatments were identi- fied. As advances were achieved, each condition was transferred from mental health to another med- ical specialty. For instance, dominion over syphilis was moved to dermatology, internal medicine, and neurology upon advances in etiology and treat- ment. Dominion over hormone-related mental dis- orders was moved to endocrinology under similar circumstances. The mental health field became the repository for mental disorders whose etiology was unknown. Yet the stigma surrounding other mental disorders not only persists but may also be inad- vertently reinforced by leaving to mental health care only those behavioral conditions without known causes or cures.

When people understand that mental disorders are not the result of moral failings or limited will power but are legitimate illnesses that are respon- sive to specific treatments, much of the negative stereotyping may dissipate. As stigma abates, a transformation in public attitudes should occur. People should become eager to seek care. They should become more willing to absorb its cost. And, most importantly, they should become far more receptive to the messages that mental health and mental illness are part of the mainstream of health, and they are a concern for all.

THE FUNDAMENTALS OF MENTAL HEALTH

The past 25 years have been marked by several dis- crete, defining trends in the mental health field. These have included the extraordinary pace and

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CHAPTER 10 Mental and Behavioral Health Services 223

productivity of scientific research on the brain and behavior; the introduction of a range of effective treatments for most mental disorders; a dramatic transformation of our society’s approaches to the organization and financing of mental health care; and the emergence of powerful consumer and fam- ily movements.

The brain has emerged as the central focus for studies of mental health and mental illness. New scientific disciplines, technologies, and insights have begun to weave a seamless picture of the way in which the brain mediates the influence of bio- logical, psychological, and social factors on human thought, behavior, and emotion in health and in ill- ness. Molecular and cellular biology and molecular genetics, which are complemented by sophisticated cognitive and behavioral sciences, are preeminent research disciplines in the contemporary neuro- science of mental health.

These disciplines are affording unprecedented opportunities for “bottom-up” studies of the brain. This term refers to research that is examining the workings of the brain at the most fundamental lev- els. Studies focus, for example, on the complex neu- rochemical activity that occurs within individual nerve cells, or neurons, to process information; on the properties and roles of proteins that are ex- pressed, or produced, by a person’s genes; and on the interaction of genes with diverse environmental influences. All these activities are now understood, with increasing clarity, to underlie learning, mem- ory, the experience of emotion, and, when these processes go awry, the occurrence of mental illness or a mental health problem.

Equally important to the mental health field is “top-down” research; here, as the term suggests, the aim is to understand the broader behavioral con- text of the brain’s cellular and molecular activity and to learn how individual neurons work together in well-delineated neural circuits to perform mental functions.

As information accumulates about the basic workings of the brain, it is the task of translational re- search to transfer new knowledge into clinically rele- vant questions and targets of research opportunity—

to discover, for example, what specific properties of a neural circuit might make it receptive to safer, more effective medications. To elaborate on this ex- ample, theories derived from knowledge about basic brain mechanisms are being wedded more closely to brain imaging tools such as functional magnetic resonance imaging (MRI) that can ob- serve actual brain activity. Such a collaboration would permit investigators to monitor the specific protein molecules intended as the “targets” of a new medication to treat a mental illness or, indeed, to determine how to optimize the effect on the brain of the learning achieved through psychotherapy.

In its entirety, the new “integrative neuroscience” of mental health offers a way to circumvent the an- tiquated split between the mind and the body that has historically hampered mental health research. It also makes it possible to examine scientifically many of the important psychological and behav- ioral theories regarding normal development and mental illness that have been developed in years past. The unswerving goal of mental health re- search is to develop and refine clinical treatments as well as preventive interventions that are based on an understanding of specific mechanisms that can contribute to, or lead to, illness but can also protect and enhance mental health.

Mental health clinical research encompasses stud- ies that involve human participants, conducted, for example, to test the efficacy of a new treatment. A noteworthy feature of contemporary clinical research is the new emphasis being placed on studying the effectiveness of interventions in actual practice settings. Information obtained from such studies increasingly provides the foundation for services research concerned with the cost, cost-effectiveness, and “deliverability” of interventions and the design— including economic considerations—of service deliv- ery systems.

The multifaceted complexity of the brain is fully consistent with the fact that it supports all behavior and mental life. Proceeding from an acknowledg- ment that all psychological experiences are recorded ultimately in the brain and that all psy- chological phenomena reflect biological processes,

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the modern neuroscience of mental health offers an enriched understanding of the inseparability of human experience, brain, and mind. Mental func- tions, which are disturbed in mental disorders, are mediated by the brain. In the process of transform- ing human experience into physical events, the brain undergoes changes in its cellular structure and function. Few lesions or physiologic abnormal- ities define the mental disorders, and for the most part their causes remain unknown. Mental disor- ders, instead, are defined by signs, symptoms, and functional impairments. Diagnoses of mental dis- orders made using specific criteria are as reliable as those for general medical disorders.

TYPES OF MENTAL ILLNESS

Mental disorders are common in the United States and internationally. An estimated 22.1 percent of Americans ages 18 and older suffer from a diag- nosable mental disorder in a given year. The more prominent of these illnesses are described in this section and some are listed in Table 10.1.

Depressive Disorders

Depressive disorders encompass major depressive disorder, dysthymic disorder, and bipolar disorder. Bipolar disorder is included because people with this illness have depressive episodes as well as manic episodes. Approximately 18.8 million Amer- ican adults, or about 9.5 percent of the U.S. popu- lation age 18 and older in a given year, have a de- pressive disorder. Nearly twice as many women as men are affected by a depressive disorder each year. Depressive disorders often co-occur with anxiety disorders and substance abuse. Major depressive disorder is the leading cause of disability in the United States and established market economies worldwide. Symptoms of dysthymic disorder (chronic, mild depression) must persist for at least 2 years in adults (1 year in children) to meet crite- ria for the diagnosis. About 40 percent of adults with dysthymic disorder also meet criteria for major

depressive disorder or bipolar disorder in a given year. Dysthymic disorder often begins in child- hood, adolescence, or early adulthood.

The economic cost for a depressive illness is high, but the cost in human suffering cannot be es- timated. Depressive illnesses often interfere with normal functioning and cause pain and suffering not only to those who have a disorder, but also to those who care about them. Serious depression can destroy family life as well as the life of the ill per- son. But much of this suffering is unnecessary. Most people with a depressive illness do not seek treat- ment, although the great majority—even those whose depression is extremely severe—can be helped. There are now medications and psychoso- cial therapies such as cognitive/behavioral, “talk” or interpersonal that ease the pain of depression.

Types of Depression

Major depression is manifested by a combination of symptoms that interfere with the ability to work, study, sleep, eat, and enjoy once pleasurable activi- ties. Such a disabling episode of depression may occur only once, but more commonly occurs several times in a lifetime. A less severe type of depression, dysthymia, involves long-term, chronic symptoms that do not disable but keep one from functioning well or from feeling good. Many people with dysthymia also experience major depressive episodes at some time in their lives. Another type of depression is bipolar disorder, also called manic- depressive illness. Not nearly as prevalent as other forms of depressive disorders, bipolar disorder is characterized by cycling mood changes: severe highs (mania) and lows (depression). Sometimes the mood switches are dramatic and rapid, but most often they are gradual. When in the depressed cycle, an individual can have any or all of the symptoms of a depressive disorder. When in the manic cycle, the individual may be overactive, over- talkative, and have a great deal of energy. Mania often affects thinking, judgment, and social behav- ior in ways that cause serious problems and embar- rassment. Bipolar disorder affects approximately 2.3 million American adults, or about 1.2 percent of the U.S. population age 18 and older in a given

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Table 10.1. PPrreevvaalleennccee RRaatteess ((PPeerrcceenntt ooff GGrroouupp)) ffoorr SSeelleecctteedd MMeennttaall DDiissoorrddeerrss aammoonngg AAdduullttss,, PPaasstt 1122 MMoonntthhss,, National Health Interview Survey, 11999999

SSeelleecctteedd MMeennttaall DDiissoorrddeerr

MMaajjoorr GGeenneerraalliizzeedd PPaanniicc DDeemmooggrraapphhiicc CChhaarraacctteerriissttiicc DDeepprreessssiioonn AAnnxxiieettyy AAttttaacckk

Total 6.3 2.8 2.7 Age

18–24 years 6.5 2.7 2.9 25–44 years 6.6 3.1 3.2 45–64 years 7.2 3.1 2.9 65� years 3.7 1.5 0.9

Sex Male 4.5 1.9 1.7 Female 8.0 3.6 3.6

Race/Ethnicity White 6.6 2.8 2.8 Black 6.2 2.6 2.9 Hispanic 4.8 2.9 2.0

Family Income $20,000 or more 5.6 2.2 2.4 Less than $20,000 9.5 5.1 3.9

Education Less than high school 7.0 3.8 2.9 High school or some college 6.9 2.9 3.1 College graduate 4.1 1.5 1.7

Marital Status Married 4.7 2.2 2.1 Divorced/Separated/Widowed 10.2 4.4 3.7 Unmarried/Single 7.3 3.1 3.4

SOURCE: From Mental Health, United States, 2002 [DHHS Pub. No. (SMA) 3938], by R. W. Manderscheid and M. J. Henderson, eds., 2004, Rockville, MD: Substance Abuse and Mental Health Services Administration.

year. The average age at onset for a first manic episode is the early twenties.

Some types of depression run in families, sug- gesting that a biological vulnerability can be inher- ited. This seems to be the case with bipolar disorder. In some families, major depression also seems to occur generation after generation. However, it can also occur in people with no family history of de- pression. People who low self-esteem, who consis- tently view themselves and the world with pes- simism, or who are readily overwhelmed by stress,

are prone to depression. In recent years, researchers have shown that physical changes in the body can be accompanied by mental changes as well. Medical illnesses such as stroke, a heart attack, cancer, Parkinson’s diseases, and hormonal disorders can cause depressive illness, making the sick person apathetic and unwilling to care for his or her physi- cal needs, thus prolonging the recovery period. Also, a serious loss, difficult relationship, financial problem, or any stressful (unwelcome or even de- sired) change in life patterns can trigger a depressive

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episode. Very often, a combination of genetic, psy- chological, and environmental factors is involved in the onset of a depressive disorder.

In 2003, 31,484 people died by suicide in the United States. More than 90 percent of people who kill themselves have a diagnosable mental disorder, commonly a depressive disorder or a substance abuse disorder. Four times as many men as women die by suicide; however, women attempt suicide two to three times as often as men.

Women with Depression. Women experi- ence depression about twice as often as men. Many hormonal factors may contribute to the increased rate of depression in women—particularly such fac- tors as menstrual cycle changes, pregnancy, miscar- riage, postpartum period, premenopause, and menopause. Many women also face additional stresses such as responsibilities both at work and home, single parenthood, and caring for children and for aging parents.

Men with Depression. Although men are less likely to suffer from depression than women, 3 to 4 million men in the United States are affected by the illness. Men are less likely to admit to de- pression, and doctors are less likely to suspect it. Men’s depression is often masked by alcohol or drugs, or by the socially acceptable habit of work- ing excessively long hours. Depression typically shows up in men not as feeling hopeless and help- less, but as being irritable, angry, and discouraged.

Depression in the Elderly. Depression in the elderly, undiagnosed and untreated, causes needless suffering for the family and for the indi- vidual who could otherwise live a fruitful life. When he or she does go to the doctor, the symptoms de- scribed are usually physical, for the older person is often reluctant to discuss feelings of hopelessness, sadness, loss of interest in normally pleasurable ac- tivities, or extremely prolonged grief after a loss.

Children with Depression. Only in the past two decades has depression in children been taken

very seriously. The depressed child may pretend to be sick, refuse to go to school, cling to a parent, or worry that the parent may die. Older children may sulk, get into trouble at school, be negative, be grouchy, and feel misunderstood. Because normal behaviors vary from one childhood stage to an- other, it can be difficult to tell whether a child is just going through a temporary “phase” or is suffering from depression.

Treatment

The first step to getting appropriate treatment for depression is a physical examination by a physi- cian. Treatment choice will depend on the outcome of the evaluation. There are a variety of antidepres- sant medications and psychotherapies that can be used to treat depressive disorders. Some people with milder forms may do well with psychotherapy alone. People with moderate to severe depression most often benefit from antidepressants. Most do best with combined treatment: medication to gain relatively quick symptom relief and psychotherapy to learn more effective ways to deal with life’s prob- lems, including depression. Electroconvulsive ther- apy (ECT) is useful, particularly for individuals whose depression is severe or life threatening or who cannot take antidepressant medication. In re- cent years, ECT has been much improved. A muscle relaxant is given before treatment, which is done under brief anesthesia.

There are several types of antidepressant medica- tions used to treat depressive disorders. These include newer medications—chiefly the selective serotonin reuptake inhibitors (SSRIs)—the tricyclics, and the monoamine oxidase inhibitors (MAOIs). The SSRIs—and other newer medications that affect neurotransmitters such as dopamine or nore- pinephrine—generally have fewer side effects than tricyclics. Lithium has for many years been the treat- ment of choice for bipolar disorder, as it can be ef- fective in smoothing out the mood swings common to this disorder. Other mood-stabilizing drugs are anticonvulsants, carbamazepine, and valproate.

In the past few years, much interest has risen in the use of herbs in the treatment of both depression

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and anxiety. St. John’s wort (Hypericum perfora- tum) is an herb used extensively in the treatment of mild to moderate depression in Europe.

Many forms of psychotherapy, including some short-term (10–20 week) therapies, can help de- pressed individuals gain insight into and resolve their problems through verbal exchange with the therapist. “Behavioral” therapists help patients learn how to obtain more satisfaction and rewards through their own actions and how to unlearn the behavioral patterns that contribute to or result from their depression. Two of the short-term psychother- apies that research has shown helpful for some forms of depression are interpersonal and cognitive/ behavioral therapies. Interpersonal therapists focus on the patient’s disturbed personal relationships that both cause and exacerbate (or increase) the depression. Cognitive/behavioral therapists help patients change the negative styles of thinking and behaving often associated with depression. Psycho- dynamic therapies, which are sometimes used to treat depressed persons, focus on resolving the patient’s conflicted feelings. These therapies are often reserved until the depressive symptoms are signifi- cantly improved.

Schizophrenia

Approximately 2.2 million American adults, or about 1.1 percent of the population age 18 and older in a given year, have schizophrenia. Schizophrenia is a chronic, severe, and disabling brain disease. Approximately 1 percent of the pop- ulation develops schizophrenia during their life- time. Schizophrenia affects men and woman with equal frequency but often appears earlier in men. People with schizophrenia often suffer terrifying symptoms such as hearing internal voices not heard by others, or believing that other people are reading their minds, controlling their thoughts, or plotting to harm them. These symptoms may leave them fearful and withdrawn. Their speech and behavior can be so disorganized that they may be incomprehensible or frightening to others. Most people with schizophrenia continue to suffer some

symptoms throughout their lives; it has been esti- mated that no more than one in five individuals re- covers completely. Research is gradually leading to new and safer medications and unraveling the com- plex causes of the disease. Schizophrenia is found all over the world. The severity of the symptoms and long-lasting, chronic pattern of schizophrenia often cause a high degree of disability. Medications and other treatments for schizophrenia, when used regularly and as prescribed, can help reduce and control the distressing symptoms of the illness.

The sudden onset of severe psychotic symptoms is referred to as an “acute” phase of schizophrenia. “Psychosis,” a common condition in schizophrenia, is a state of mental impairment marked by halluci- nations, which are disturbances of sensory percep- tion, and/or delusions, which are false yet strongly held personal beliefs that result from an inability to separate real from unreal experiences. Less obvious symptoms, such as social isolation or withdrawal, or unusual speech, thinking, or behavior, may pre- cede, be seen along with, or follow the psychotic symptoms.

Causes of Schizophrenia

There is no known single cause of schizophrenia. Many diseases, such as heart disease, result from an interplay of genetic, environmental, and behavioral factors, and this may be the case for schizophrenia as well. It has long been known that schizophrenia runs in families. People who have a close relative with schizophrenia are more likely to develop the disorder than are people who have no relatives with the illness. It appears likely that multiple genes are involved in creating a predisposition to develop the disorder. In addition, factors such as prenatal diffi- culties like intrauterine starvation or viral infec- tions, perinatal complications, and various nonspe- cific stressors, seem to influence the development of schizophrenia. Several regions of human genome are being investigated to identify genes that may confer susceptibility for schizophrenia. Some evi- dence has suggested that chromosomes 6, 8, and 13 may be involved. Identification of specific genes involved in the development of schizophrenia will

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provide important clues into what goes wrong in the brain to produce and sustain the illness and will guide the development of new and better treatments.

Treatment

Because schizophrenia may not be a single condi- tion and its causes are not yet known, current treat- ment methods are based on both clinical research and experience. These approaches are chosen on the basis of their ability to reduce the symptoms of schizophrenia and to lessen the chances that symp- toms will return. Antipsychotic medications have been available since the mid-1950s. They have greatly improved the outlook for individual patients. These medications reduce the psychotic symptoms of schizophrenia and usually allow the patient to function more effectively and appropriately. Antipsy- chotic drugs are the best treatment now available, but they do not “cure” schizophrenia or ensure that there will be no further psychotic episodes.

A number of new antipsychotic drugs (the so- called “atypical antipsychotics”) have been intro- duced since 1990. The first of these, clozapine, has been shown to be more effective than other an- tipsychotics, although the possibility of severe side effects—in particular, a condition called agranulo- cytosis (loss of the white blood cells that fight infection)—requires that patients be monitored with blood tests every 1 or 2 weeks. Even newer antipsychotic drugs, such as risperidone and olaza- pine, are safer than the older drugs or clozapine, and they may also be better tolerated. Antipsy- chotic drugs are often very effective in treating certain symptoms of schizophrenia, particularly hallucinations and delusions; unfortunately, the drugs may not be as helpful with other symptoms, such as reduced motivation and emotional expres- siveness. It is with these psychological, social, and occupational problems that psychosocial treat- ments may help most. While psychosocial approaches have limited value for acutely psy- chotic patients, they may be useful for patients with less severe symptoms or for patients whose psychotic symptoms are under control.

Very often, patients with schizophrenia are dis- charged from the hospital into the care of their fam- ily, so it is important that family members learn all they can about schizophrenia and understand the difficulties and problems associated with the ill- ness. Self-help groups for people and families deal- ing with schizophrenia are becoming increasingly common. Although not led by a professional thera- pist, these groups may be therapeutic because members provide continuing mutual support as well as comfort in knowing that they are not alone in the problems they face.

Anxiety Disorders

Anxiety disorders include panic disorder, obsessive- compulsive disorder (OCD), posttraumatic stress disorder (PTSD), generalized anxiety disorder, and phobias (social phobia, agoraphobia, and specific phobia). Approximately 19.1 million American adults ages 18 to 54, or about 13.3 percent of peo- ple in this age group in a given year, have an anxi- ety disorder. Anxiety disorders frequently co-occur with depressive disorders, eating disorders, or sub- stance abuse. Many people have more than one anxiety disorder. Women are more likely than men to have an anxiety disorder. Approximately twice as many women as men suffer from panic disorder, posttraumatic stress disorder, generalized anxiety disorder, agoraphobia, and specific phobia, although about equal numbers of women and men have obsessive-compulsive disorder and social phobia.

Approximately 2.4 million American adults ages 18 to 54, or about 1.7 percent of people in this age group in a given year, have panic disorder. Approxi- mately 3.3 million American adults ages 18 to 54, or about 2.3 percent of people in this age group in a given year, have OCD. The first symptoms of OCD often begin during childhood or adolescence. Approximately 5.2 million American adults ages 18 to 54, or about 3.6 percent of people in this age group in a given year, have PTSD. About 30 percent of Vietnam veterans experienced PTSD at some point after the war. The disorder also frequently occurs after violent personal assaults such as rape,

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mugging, or domestic violence; terrorism; natural or human-caused disasters; and accidents.

Approximately 5.3 million American adults ages 18 to 54, or about 3.7 percent of people in this age group in a given year, have social phobia which typ- ically begins in childhood or adolescence. Agora- phobia involves intense fear and avoidance of any place or situation where escape might be difficult or help unavailable in the event of developing sud- den paniclike symptoms. Specific phobia involves marked and persistent fear and avoidance of a spe- cific object or situation. Approximately 6.3 million American adults ages 18 to 54, or about 4.4 per- cent of people in this age group in a given year, have some type of specific phobia.

Eating Disorders

The three main types of eating disorders are ano- rexia nervosa, bulimia nervosa, and binge-eating disorder. Females are much more likely than males to develop an eating disorder. Only an estimated 5 to 15 percent of people with anorexia or bulimia and an estimated 35 percent of those with binge- eating disorder are male.

Attention-Deficit/ Hyperactivity Disorder

Attention-deficit/hyperactivity disorder (ADHD), one of the most common mental disorders in chil- dren and adolescents, affects an estimated 4.1 per- cent of youths ages 9 to 17 in a 6-month period. About two to three times more boys than girls are affected. ADHD usually becomes evident in preschool or early elementary years. The disorder frequently persists into adolescence and occasion- ally into adulthood.

Autism

Autism affects an estimated 1 to 2 per 1,000 peo- ple. Autism and related disorders (also called autism spectrum disorders or pervasive develop- mental disorders) develop in childhood and are generally apparent by age 3. Autism is about four

times more common in boys than girls. Girls with the disorder, however, tend to have more severe symptoms and greater cognitive impairment.

Alzheimer’s Disease

Alzheimer’s disease, the most common cause of de- mentia among people age 65 and older, affects an estimated 4 million Americans. As more and more Americans live longer, the number affected by Alzheimer’s disease will continue to grow unless a cure or effective prevention is discovered. The dura- tion of illness, from onset of symptoms to death, averages 8 to 10 years.

EPIDEMIOLOGY OF MENTAL ILLNESS

About one in five Americans experiences a mental disorder in the course of a year. Approximately 15 percent of all adults who have a mental disorder in one year also experience a co-occurring sub- stance (alcohol or other drug) use disorder, which complicates treatment. Range of treatments of well- documented efficacy exists for most mental disor- ders. Two broad types of intervention include psychosocial treatments—for example, psychother- apy or counseling—and psychopharmacologic treat- ments; these are often most effective when com- bined. In the mental health field, progress in developing preventive interventions has been slow because, for most major mental disorders, there is insufficient understanding about etiology (or causes of illness) and/or there is an inability to alter the known etiology of a particular disorder. Still, some successful strategies have emerged in the absence of a full understanding of etiology.

About 10 percent of the U.S. adult population use mental health services in the health sector in any year, with another 5 percent seeking such services from social service agencies, schools, or religious or self-help groups. Yet critical gaps exist

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between those who need service and those who re- ceive service. Gaps also exist between optimally ef- fective treatment and what many individuals receive in actual practice settings. Mental illness and less severe mental health problems must be understood in a social and cultural context, and mental health services must be designed and delivered in a man- ner that is sensitive to the perspectives and needs of racial and ethnic minorities.

The consumer movement has increased the in- volvement of individuals with mental disorders and their families in mutual support services, consumer- run services, and advocacy. They are powerful agents for changes in service programs and policy. The notion of recovery reflects renewed optimism about the outcomes of mental illness, including that achieved through an individual’s own self-care efforts, and the opportunities open to persons with mental illness to participate to the full extent of their interests in the community of their choice.

Persons with mental illness and, often their families, welcome a proliferating array of support services—such as self-help programs, family self- help, crisis services, and advocacy—that help them cope with the isolation, family disruption, and pos- sible loss of employment and housing that may accompany mental disorders. Support services can help dissipate stigma and to guide patients into formal care as well.

Mental health and mental illness are dynamic, ever-changing phenomena. At any given moment, a person’s mental status reflects the sum total of that individual’s genetic inheritance and life experi- ences. The brain interacts with and responds—both in its function and in its very structure—to multiple influences continuously, across every stage of life. At different stages, variability in expression of men- tal health and mental illness can be very subtle or very pronounced. As an example, the symptoms of separation anxiety are normal in early childhood but are signs of distress in later childhood and be- yond. It is all too common for people to appreciate the impact of developmental processes in children yet not to extend that conceptual understanding to older people. In fact, people continue to develop

and change throughout life. Different stages of life are associated with vulnerability to distinct forms of mental and behavioral disorders and also with distinctive capacities for mental health.

Even more than is true for adults, children must be seen in the context of their social environments, that is, family and peer group, as well as that of their larger physical and cultural surroundings. Childhood mental health is expressed in this con- text, as children proceed along the arc of develop- ment. A great deal of contemporary research fo- cuses on developmental processes, with the aim of understanding and predicting the forces that will keep children and adolescents mentally healthy and maintain them on course to become mentally healthy adults. Research also focuses on identifying what factors place some at risk for mental illness and, yet again, what protects some children but not others despite exposure to the same risk factors. In addition to studies of normal development and of risk factors, much research focuses on mental dis- orders in childhood and adolescence and what can be done to prevent or treat these conditions and on the design and operation of service settings best suited to the needs experienced by children.

For about one in five Americans, adulthood—a time for achieving productive vocations and for sustaining close relationships at home and in the community—is interrupted by mental illness. In years past, the onset, or occurrence, of mental illness in the adult years was attributed principally to observable phenomena—for example, the bur- den of stresses associated with career or family, or the inheritance of a disease viewed to run in a par- ticular family. Such explanations may now appear naive at best. Contemporary studies of the brain and behavior are racing to fill in the picture by elucidating specific neurobiological and genetic mechanisms that are the platform upon which a person’s life experiences can either strengthen mental health or lead to mental illness.

It now is recognized that factors that influence brain development prenatally may set the stage for a vulnerability to illness that may lie dormant throughout childhood and adolescence. Similarly,

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no single gene has been found to be responsible for any specific mental disorder; rather, variations in multiple genes contribute to a disruption in healthy brain function that, under certain environmental conditions, results in a mental illness. Moreover, it is now recognized that socioeconomic factors affect individuals’ vulnerability to mental illness and mental health problems. Certain demographic and economic groups are more likely than others to ex- perience mental health problems and some mental disorders. Vulnerability alone may not be sufficient to cause a mental disorder; rather, the causes of most mental disorders lie in some combination of genetic and environmental factors, which may be biological or psychosocial.

The fact that many, if not most, people have ex- perienced mental health problems that mimic or even match some of the symptoms of a diagnosable mental disorder tends, ironically, to prompt many people to underestimate the painful, disabling na- ture of severe mental illness. In fact, schizophrenia, mood disorders such as major depression and bipolar illness, and anxiety often are devastating conditions. Yet relatively few mental illnesses have an unremitting course marked by the most acute manifestations of illness; rather, for reasons that are not yet understood, the symptoms associated with mental illness tend to wax and wane. These pat- terns pose special challenges to the implementation of treatment plans and the design of service systems that are optimally responsive to an individual’s needs during every phase of illness. Enormous strides are being made in diagnosis, treatment, and service delivery, placing the productive and creative possibilities of adulthood within the reach of per- sons who are encumbered by mental disorders.

Late adulthood is when changes in health status may become more noticeable and the ability to compensate for decrements may become limited. As the brain ages, a person’s capacity for certain mental tasks tends to diminish, even as changes in other mental activities prove to be positive and re- warding. Well into late life, the ability to solve novel problems can be enhanced through training in cog- nitive skills and problem-solving strategies.

The promise of research on mental health pro- motion notwithstanding, a substantial minority of older people are disabled, often severely, by mental disorders including Alzheimer’s disease, major de- pression, substance abuse, anxiety, and other con- ditions. In the United States today, the highest rate of suicide—an all-too-common consequence of un- recognized or inappropriately treated depression— is found in older males. This fact underscores the urgency of ensuring that health care provider train- ing properly emphasize skills required to differenti- ate accurately the causes of cognitive, emotional, and behavioral symptoms that may, in some in- stances, rise to the level of mental disorders, and in other instances be expressions of unmet general medical needs.

As the life expectancy of Americans continues to extend, the sheer number—although not necessar- ily the proportion—of persons experiencing mental disorders of late life will expand, confronting our society with unprecedented challenges in organiz- ing, financing, and delivering effective mental health services for this population. An essential part of the needed societal response will include recognizing and devising innovative ways of sup- porting the increasingly more prominent role that families are assuming in caring for older, mentally impaired and mentally ill family members.

ORGANIZATION AND FINANCING OF MENTAL HEALTH SERVICES

A broad array of services and treatments exists to help people with mental illnesses—as well as those at particular risk of developing them—to suffer less emotional pain and disability and live healthier, longer, and more productive lives. Mental disorders and mental health problems are treated by a variety of caregivers who work in diverse, relatively inde- pendent, and loosely coordinated facilities and services—both public and private.

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About 15 percent of all adults and 21 percent of U.S. children and adolescents use services in the system each year. The system is usually described as having four major components or sectors. The spe- cialty mental health sector consists of mental health professionals such as psychiatrists, psychologists, psychiatric nurses, and psychiatric social workers who are trained specifically to treat people with mental disorders (Table 10.2).

The great bulk of specialty treatment is now pro- vided in outpatient settings such as private office- based practices or in private or public clinics. Most acute hospital care is now provided in special psy- chiatric units of general hospitals or beds scattered throughout general hospitals (Table 10.3). Private psychiatric hospitals and residential treatment cen- ters for children and adolescents provide additional intensive care in the private sector. Public sector fa- cilities include state/county mental hospitals and multiservice mental health facilities, which often co- ordinate a wide range of outpatient, intensive case management, partial hospitalization, and inpatient services. Altogether, slightly less than 6 percent of the adult population and about 8 percent of chil- dren and adolescents (ages 9 to 17) use specialty mental health services in a year.

The general medical/primary care sector consists of health care professionals such as general internists, pediatricians, and nurse practitioners in office-based practice, clinics, acute medical/surgical hospitals, and nursing homes. More than 6 percent of the adult U.S. population use the general medical sector for mental health care, with an average of about 4 visits per year—far lower than the average of 14 visits per year found in the specialty mental health sector. The gen- eral medical sector has long been identified as the initial point of contact for many adults with mental disorders; for some, these providers may be their only source of mental health services. However, only about 3 percent of children and adolescents contact general medical physicians for mental health services; the human services sector (discussed later) plays a much larger role in their care.

The human services sector consists of social ser- vices, school-based counseling services, residential

rehabilitation services, vocational rehabilitation, criminal justice/prison-based services, and religious professional counselors. For children, school men- tal health services are a major source of care, as are services in the child welfare and juvenile justice sys- tems. The voluntary support network sector, which consists of self-help groups, such as 12-step pro- grams and peer counselors, is a rapidly growing component of the mental and addictive disorder treatment system.

Public and Private Sectors

The de facto mental health service system is divided into public and private sectors. The term “public sector” refers both to services directly operated by government agencies (e.g., state and county mental hospitals) and to services financed with govern- ment resources (e.g., Medicaid, a federal-state pro- gram for financing health care services for people who are poor and disabled, and Medicare, a federal health insurance program primarily for older Amer- icans and people who retire early due to disability). Publicly financed services may be provided by pri- vate organizations. The term “private sector” refers both to services directly operated by private agen- cies and to services financed with private resources (e.g., employer-provided insurance).

State and local governments have been the major payers for public mental health services his- torically and remain so today. Since the mid-1960s, however, the role of the federal government has in- creased. In addition to Medicare and Medicaid, the federal government funds special programs for adults with serious mental illness and children with serious emotional disability. Although small in re- lation to state and local funding, these federal programs provide additional resources. They in- clude the Community Mental Health Block Grant, Community Support programs, the PATH program for people with mental illness who are homeless, the Knowledge Development and Application Pro- gram, and the Comprehensive Community Mental Health Services for Children and Their Families Program.

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234 PART THREE Providers of Health Services

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Number of mental health organizations

State and county mental hospitals 285 229 Private psychiatric hospitals 314 348 Nonfederal general hospital psychiatric services 1,351 1,707 Department of Veterans Affairs medical centers 139 145 Residential treatment centers for emotionally

disturbed children 437 461 All other organizations* 2,221 2,832

Number of beds State and county mental hospitals 119,033 63,769 Private psychiatric hospitals 30,201 34,154 Nonfederal general hospital psychiatric services 45,808 55,145 Department of Veterans Affairs medical centers 26,874 13,742 Residential treatment centers for emotionally

disturbed children 24,547 33,997 All other organizations* 21,150 65,922

*Includes freestanding psychiatric outpatient clinics, partial care organizations, and multiservice mental health organizations.

These federally funded public sector programs buttress the traditional responsibility of state and local mental health systems and serve as the mental health service “safety net” and “catastrophic insurer” for those citizens with the most severe problems and the fewest resources in the United States. The public sector serves particularly those individuals with no health insurance, those who have insur- ance but no mental health coverage, and those who exhaust limited mental health benefits in their health insurance.

Each sector of the de facto mental health service system has different patterns and types of care and different patterns of funding. Within the specialty mental health sector, state- and county-funded men- tal health services have long served as a safety net for people unable to obtain or retain access to pri- vately funded mental health services. The general medical sector receives a relatively greater propor- tion of federal Medicaid funds, while the voluntary

support network sector, staffed principally by peo- ple with mental illness and their families, is largely funded by private donations of time and money to emotionally supportive and educational groups.

Effective functioning of the mental health service system requires connections and coordination among many sectors (public–private, specialty–general health, health–social welfare, housing, criminal justice, and education). Without coordination, it can readily be- come organizationally fragmented, creating barriers to access. Adding to the system’s complexity is its dependence on many streams of funding, with their sometimes competing incentives.

Patterns of Use

Americans use the mental health service system in complex ways, or patterns. A total of about 15 per- cent of the U.S. adult population use mental health services in any given year. About 6 percent of the

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adult population use specialty mental health care; 5 percent of the population receive their mental health services from general medical and/or human services providers, and 3 to 4 percent of the popu- lation receive their mental health services from other human service professionals or self-help groups. Nineteen percent of the adult U.S. popula- tion have a mental disorder alone (in one year); 3 percent have both mental and addictive disor- ders; and 6 percent have addictive disorders alone. A substantial majority of those with specific mental disorders do not receive treatment.

Although 9 percent of the entire child/adolescent sample received some mental health services in the health sector (i.e., the general medical sector and specialty mental health sector), the largest provider of mental health services to this population was the school system. Many children served by schools do not have diagnosable mental health conditions; some may have other diagnoses such as adjustment reactions or acute stress reactions. One percent of children and adolescents received their mental health services from human service professionals, such as those in child welfare and juvenile justice.

The mental health treatment system is a dynamic array of services accessed by patients with different levels of disorder and severity, as well as different social and medical service needs and levels and types of insurance financing. Disparities in access are due to sociocultural factors. In a system in which substantial numbers of those with even the most severe mental illness do not receive any men- tal health care, the match between service use and service need is far from perfect. But not everyone with a diagnosable mental disorder perceives a need for treatment, and not all who desire treat- ment have a currently diagnosable disorder. Provid- ing access to appropriate mental health services is a fundamental concern for mental health policy mak- ers in both the public and private arenas.

The Costs of Mental Illness

Mental disorders impose an enormous emotional and financial burden on ill individuals and their families. They are also costly for our nation in

reduced or lost productivity (indirect costs) and in medical resources used for care, treatment, and re- habilitation (direct costs).

The indirect costs of all mental illness reflects morbidity costs—the loss of productivity in usual activities because of illness. But indirect costs also include mortality costs (lost productivity due to pre- mature death), and productivity losses for incarcer- ated individuals and for the time of individuals providing family care. Indirect cost estimates are conservative because they do not capture some mea- sure of the pain, suffering, disruption, and reduced productivity that are not reflected in earnings.

The fact that morbidity costs comprise about 80 percent of the indirect costs of all mental illness indicates an important characteristic of mental dis- orders: Mortality is relatively low, onset is often at a younger age, and most of the indirect costs are de- rived from lost or reduced productivity at the work- place, school, and home.

Disability adjusted life years (DALYs) are now being used as a common metric for describing the burden of disability and premature death resulting from the full range of mental and physical disorders throughout the world. Mental disorders account for more than 15 percent of the burden of disease in es- tablished market economies; unipolar major depres- sion, bipolar disorder, schizophrenia, and obsessive- compulsive disorder are identified as among the top 10 leading causes of disability worldwide.

Mental health expenditures for treatment and re- habilitation are an important part of overall health care spending but differ in important ways from other types of health care spending. Many mental health services are provided by separate specialty providers—such as psychiatrists, psychologists, so- cial workers, and nurses in office practice—or by fa- cilities such as hospitals, multiservice mental health organizations, or residential treatment centers for children. Insurance coverage of mental health ser- vices is typically less generous than that for general health, and government plays a larger role in fi- nancing mental health services compared to overall health care.

A majority of private health insurance plans have a benefit that combines coverage of mental

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illness and substance abuse. However, most of the treatment services for mental illness and for sub- stance abuse are separate (and use different types of providers), as are virtually all the public funds for these services. This separation causes problems for treating the substantial proportion of individuals with comorbid mental illness and substance abuse disorders, who benefit from being treated for both disorders together.

Alzheimer’s disease and other dementias have historically been considered as both mental and somatic disorders. However, efforts to destigmatize dementias and improve care have removed some insurance coverage limitations. Once mostly the province of the public sector, Alzheimer’s disease now enjoys more comprehensive coverage, and care is better integrated into the private health care system.

MENTAL HEALTH FINANCING

Funding for the mental health service system comes from both public and private sources. Approxi- mately 53 percent of the funding for mental health treatment comes from public payers. Of the 47 per- cent of expenditures from private sources, more than half are from private insurance. Most of the re- mainder is out-of-pocket payments. These out-of- pocket payments include copayments from individ- uals with private insurance, copayments and prescription costs not covered by Medicare, and payment for direct treatment from the uninsured or insured who choose not to use their insurance cov- erage for mental health care.

Among the fastest-rising expenses for mental health services are outpatient prescription drugs. Although these medications are prescribed in both specialty and general medical sectors, they are in- creasingly being covered under general medical rather than mental health private insurance bene- fits. The higher than average growth rate of spend- ing for prescription drugs reflects, in part, the

increasing availability and application of medica- tions of demonstrable efficacy in treating mental disorders. Only one-third of psychotropic medica- tions are prescribed by psychiatrists, with two- thirds prescribed by primary care physicians and other medical specialists.

During the past two decades there have been im- portant shifts in what parties have final responsibil- ity for paying for mental health care. The role of direct state funding of mental health care has been reduced, whereas Medicaid funding of mental health care has grown in relative importance. This is in part due to substantial funding offered to the states by the federal government. One consequence of this shift is that Medicaid program design has be- come very influential in shaping the delivery of mental health care. State mental health authorities, however, continue to be an important force in mak- ing public mental health services policy, working together with state Medicaid programs.

Health Insurance

Private insurance coverage has played a somewhat more limited role in mental health financing in the past decade. Various cost-containment efforts have been pursued aggressively in the private sector through the introduction of managed care. Private insurance coverage for prescription drugs has ex- panded dramatically over the past 15 years. Insur- ance coverage for mental health treatments is on par with coverage for other illnesses. Accompany- ing this pattern of private insurance coverage are the availability of innovative new prescription drugs aimed at treating major mental illnesses and a shift in mental health spending in private insur- ance toward pharmaceutical agents.

Private health insurance is generally more re- strictive in coverage of mental illness than in cover- age for somatic illness. This is motivated by several concerns. Insurers fear that coverage of mental health services could result in high costs associated with long-term and intensive psychotherapy and extended hospital stays. They are also reluctant to pay for long-term, often custodial, hospital stays

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CHAPTER 10 Mental and Behavioral Health Services 237

that are guaranteed by the public mental health sys- tem, the provider of “catastrophic care.” These fac- tors have encouraged private insurers to limit cov- erage for mental health services.

Some private insurers refuse to cover mental ill- ness treatment; others simply limit payment to acute care services. Those who do offer coverage choose to impose various financial restrictions, such as separate and lower annual and lifetime lim- its on care (per person and per episode of care), as well as separate (and higher) deductibles and co- payments. As a result, individuals pay out-of-pocket for a higher proportion of mental health services than general health services and face catastrophic financial losses (and/or transfer to the public sec- tor) when the costs of their care exceed the limits.

Federal public financing mechanisms, such as Medicare and Medicaid, also impose limitations on coverage, particularly for long-term care, of “ner- vous and mental disease” to avoid a complete shift in financial responsibility from state and local gov- ernments to the federal government. Existence of the public sector as a guarantor of “catastrophic care” for the uninsured and underinsured allows the private sector to avoid financial risk and focus on acute care of less-impaired individuals, most of whom receive health insurance benefits through their employer.

The purpose of health insurance is to protect in- dividuals from catastrophic financial loss. While the majority of individuals who use mental health services incur comparatively small expenses, some who have severe illness face financial ruin without the protection afforded by insurance. For people with health insurance, the range of covered benefits and the limits imposed on them ultimately deter- mine where they will get service, which, in turn, af- fects their ability to access necessary and effective treatment services. Adequate mental health treat- ment resources for large population groups require a wide range of services in a variety of settings, with sufficient flexibility to permit movement to the ap- propriate level of care.

Health insurance, whether funded through private or public sources, is one of the most

important factors influencing access to mental health services. Most Americans have some sort of insurance coverage—primarily private insurance obtained through the workplace. However, ade- quacy for mental health care is extremely variable across types of plans and sponsors.

Low-income individuals on public support re- ceive Medicaid coverage. The average cost of this coverage is 2.5 times higher than that in the private sector. An explanation for this higher average cost is the severity of illness of this population and greater intensity of services needed to meet their needs. Finally, funds from state/local government and from other federal government block grants and Veterans Affairs cover mental health services for the uninsured. Most of the uninsured are members of employed families who cannot afford to pur- chase insurance coverage. Individuals with severe and persistent mental illness who are uninsured have the highest annual costs, leaving few resources for treatment for those with less severe disorders.

From the time they were introduced in 1929 until the 1990s, fee-for-service (indemnity) plans, such as Blue Cross/Blue Shield, were the most com- mon form of health insurance. Insurance plans would identify the range of services they considered effective for the treatment of all health conditions and then reimburse physicians, hospitals, and other health care providers for the usual and customary fees charged by independent practitioners. To pre- vent the overuse of services, insurance companies would often require patients to pay for some por- tion of the costs out-of-pocket (i.e., co-insurance) and would use annual deductibles, much as auto insurance companies do, to minimize the adminis- trative costs of processing small claims.

For most health insurance plans covering so- matic illness, to protect the insured, costs above a certain “catastrophic limit” are borne entirely by the insurance company. To protect the insurer against potentially unlimited claims, however, “annual” or “lifetime limits” are imposed for most medical or surgical conditions. It is expected that any expenses beyond that limit are the responsibility of the patient’s family.

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In contrast, in the case of coverage for mental health services, insurance companies often set lower annual or lifetime limits to protect them- selves against costly claims leaving patients and their families exposed to much greater personal financial risks. The legacy of the public mental health system safety net as the provider of catas- trophic coverage encourages such practices. Fur- ther, when federal financing mechanisms such as Medicare and Medicaid were introduced, they also limited coverage of long-term care of “nervous and mental disease” to avoid shifting financial responsi- bility from state and local government to the fed- eral government.

For potential insurers of mental health care or general health care, two financial concerns are key: moral hazard and adverse selection. Moral hazard reflects a concern that if people with insurance no longer have to pay the full costs of their own care, they will use more services—services that they do not value at their full cost. To control moral hazard, insurers incorporate cost sharing and care manage- ment into their policies. Adverse selection reflects a concern that, in a market with voluntary insurance or multiple insurers, plans that provide the most generous coverage will attract individuals with the greatest need for care, leading to elevated service use and costs for those insurers independent of their efficiency in services provision. To control ad- verse selection, insurers try to restrict mental health coverage to avoid enrolling people with higher mental health service needs.

While these economic forces are important, in- surer responses to them may have been exagger- ated. In the fee-for-service insurance system, for ex- ample, some insurers have addressed their concerns about moral hazard by assigning higher cost shar- ing to mental health services. Coverage limitations, imposed to control costs, have been applied un- evenly, however, and without full consideration of their consequences. In particular, higher cost shar- ing, such as placing a 50 percent copayment on outpatient psychotherapy, may reduce moral haz- ard and inappropriate use, but it may also reduce

appropriate use. Limits on coverage may reduce adverse selection but leave people to bear catas- trophic costs themselves.

Managed Care and Mental Health

Managed care represents a confluence of several forces shaping the organization and financing of health care. These include the drive to deliver more highly individualized, cost-effective care; a more health-promoting and preventive orientation (often found in health maintenance organizations); and a concern with cost containment to address the prob- lem of moral hazard. Managed care implies a range of financing and payment strategies that depart in important ways from traditional fee-for-service indemnity insurance.

Health maintenance organizations (HMO) ini- tially treated only those mental disorders that were responsive to short-term treatment, but they re- duced copayments and deductibles for any brief therapy. There was an implicit reliance on the pub- lic mental health system for treatment of any chronic or severe mental disorder—especially those for whom catastrophic coverage was needed.

In carve-out managed behavioral health care, seg- ments of insurance risk—defined by service or dis- ease—are isolated from overall insurance risk and covered in a separate contract between the payer (in- surer or employer) and the carve-out vendor. Even with highly restrictive admission criteria, many HMOs have recently found it cost effective to carve out mental health care for administration by a man- aged behavioral health company, rather than relying on in-house staff. This arrangement permits a larger range of services than can be provided by existing staff without increasing salaried staff and manage- ment overhead costs. Carve-outs generally have sep- arate budgets, provider networks, and financial in- centive arrangements. Covered services, utilization management techniques, financial risk, and other features vary depending on the particular carve-out contract. The employee as a plan member may be

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unaware of any such arrangement. These separate contracts delegate management of mental health care to specialized vendors known as managed be- havioral health care organizations (MBHOs).

There are two general forms of carve-outs: payer carve-outs and health plan subcontracts. In payer carve-outs, an enrollee chooses a health plan for coverage of health care with the exception of men- tal health and must enroll with a separate carve-out vendor for mental health care. In health plan sub- contracts, administrators of the general medical plan arrange to have mental health care managed by a carve-out vendor or MBHO; the plan member does not have to take steps to select mental health coverage.

Managed-care arrangements (HMO, PPO, or POS plans), which fundamentally alter the way in which health care resources are allocated, now cover the majority of Americans. Managed care has also made significant inroads into publicly funded health care. In Medicaid, growth is primarily fo- cused on the population receiving Temporary Aid to Needy Families (TANF) support as opposed to the population with severe and chronic mental ill- ness, eligible for Medicaid because of Supplemental Security Income.

The administrative mechanisms have changed the incentive structure for mental health profession- als, with “supply-side” controls (e.g., provider in- centives) replacing “demand-side” controls (e.g., benefit limits) on service use and cost. In addition, the privatization of service delivery is increasing in the public sector. As a result of these changes, access to specific types of mental health services is increasingly under the purview of managed behavioral-care companies and employers.

As the states have adopted Medicaid managed care for mental health, at least two distinct models have emerged. States that entered managed care early have tended to issue contracts to private sec- tor organizations to perform both administrative (payments, network development) and manage- ment (utilization review) functions. States that en- tered managed care more recently have tended to

contract administrative functions with administra- tive services organizations (ASOs), while retaining control of management functions.

In a managed-care system, the moral hazard of unnecessary utilization need not be addressed through benefit design. Utilization is typically con- trolled at the level of the provider of care, through a series of financial incentives and through direct management of the care. For example, managed care reduces cost in part by shifting treatment from inpatient to outpatient settings, negotiating dis- counted hospital and professional fees, and using utilization management techniques to limit unnec- essary services. In this fashion, at least theoretically, unnecessary utilization, the moral hazard, is elimi- nated at the source, on a case-by-case basis.

Adverse selection may be addressed through reg- ulations, such as mandates in coverage that require all insurers in a market to offer the same level of ser- vices. In this way, no one insurer runs the risk that offering superior coverage will necessarily attract people who are higher utilizers of care. Efforts to regulate adverse selection may not produce the in- tended effect, however, when insurers that offer the same services use management techniques to con- trol costs by restricting care to those who use ser- vices most intensely—effectively denying care to those who need it most. In such instances, patients with the greatest needs might become concentrated in plans with the most generous management of care. This may lead to financial losses for such plans or encourage them to cut back on services for those who need care most or to divert resources from other beneficiaries.

The range of management controls currently ap- plied to enrollees in covered plans extends from simple utilization review of hospitalizations on an administrative services only (ASO) contract to pre- paid, at-risk contracts with extensive employee as- sistance plan (EAP) screening and networks of eli- gible mental health specialists and hospitals providing services for discounted fees.

Managed care demonstrably reduces the cost of mental health services. That was one of its goals—to

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remove the excesses of overutilization, such as unnecessary hospitalization, and to increase the number of individuals treated by using more cost- effective care. This was to be accomplished through case-by-case “management” of care. The risk of cost containment, however, is that it can lead to under- treatment. Excessively restrictive cost-containment strategies and financial incentives to providers and facilities to reduce specialty referrals, hospital admissions, or length or amount of treatment may ultimately contribute to lowered access and quality of care. These restrictions pose particular risk to people on either end of the severity spectrum: Individuals with mental health problems may be denied services entirely, while the most severely and persistently ill patients may be undertreated.

The term “access to mental health services” refers generally to the ability to obtain treatment with appropriate professionals for mental disor- ders. Having health insurance—and the nature of its coverage and administration—are critical deter- minants of such access. But so are factors such as the person’s clinical status and personal and socio- cultural factors affecting desire for care; knowledge about mental health services and the effectiveness of current treatments; the level of insurance copay- ments, deductibles, and limits; ability to obtain ad- equate time off from work and other responsibili- ties to obtain treatment; and the availability of providers in close proximity, as well as the avail- ability of transportation and child care. In addi- tion, because the stigma associated with mental disorders is still a barrier to seeking care, the avail- ability of services organized in ways that reduce stigma—such as employee assistance programs— can provide important gateways to further treat- ment when necessary.

Current incentives both within and outside man- aged care do not generally encourage an emphasis on quality of care. Nonetheless, some managed mental health systems recognize the potential uses of quality assessment of their services. These in- clude monitoring and ensuring quality of care to public and private oversight organizations; devel- oping programs to improve services or outcomes

from systematic empirical evaluation; and permit- ting reward on the basis of quality and perfor- mance, not simply cost. Clinical outcome data sys- tems, although more expensive and complicated than administrative data systems, have potential for evaluating how programs and practices actually af- fect patient outcomes.

Another way to measure quality takes into ac- count outcomes outside the mental health specialty sector. When management and financial incentives limit access to mental health care or encourage a shift to general health care services for mental health care, disability may increase and work per- formance decline. These losses to employers may well offset management-based savings in mental health specialty costs.

Many of the administrative techniques used in managed care (such as case management, utiliza- tion review, and implementation of standardized criteria) have the potential to improve the quality of care by enhancing adherence to professional con- sensus treatment guidelines and possibly improv- ing patient outcomes. However, little is known about what happens when management is intro- duced into service systems in combination with high cost sharing.

Parity in Mental Health

“Parity” refers to the effort to treat mental health fi- nancing on the same basis as financing for general health services. The fundamental motivation be- hind parity legislation is the desire to cover mental illness on the same basis as somatic illness. A par- ity mandate requires all insurers in a market to offer the same coverage, equivalent to the coverage for all other disorders. The potential ability of man- aged care to control costs (through utilization man- agement of moral hazard) without limiting benefits makes a parity mandate more affordable than under a fee-for-service system.

Managed care coupled with parity laws offers opportunities for focused cost control by eliminat- ing moral hazard without unfairly restricting cover- age through arbitrary limits or cost sharing and by

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controlling adverse selection. However, continued use of unnecessary limits or overly aggressive management may lead to undertreatment or to restricted access to services and plans.

Despite both the cost-controlling impact of man- aged care and advocacy to expand benefits, in- equitable limits continue to be applied to mental health services. Parity legislation in the states and federal government has attempted to redress this in- equity.

Federal legislative efforts to achieve parity in mental health insurance coverage date from the 1970s and have continued through to the present time. The drive for mental health parity culmi- nated in passage of the Mental Health Parity Act in 1996. Implemented in 1998, this legislation focused on only one aspect of the inequities in mental health insurance coverage: “catastrophic” benefits. It prohibited the use of lifetime and an- nual limits on coverage that were different for mental and somatic illnesses. As federal legisla- tion, it included within its mandate some of the nation’s largest companies that are self-insured and otherwise exempted from state parity laws because of the Employment Retirement Income Security Act.

Although it was seen as an important first sub- stantive step and rhetorical victory for mental health advocacy, the Parity Act was limited in a number of important ways. Companies with fewer than 50 employees or that offered no mental health benefit were exempt from provisions of the law. The parity provisions did not apply to other forms of benefit limits, such as per episode limits on length of stay or visit limits, or copayments or deductibles, and they did not include substance abuse treatment. In addition, insurers who experi- enced more than a 1 percent rise in premium as a result of implementing parity could apply for an exemption.

State efforts at parity legislation paralleled those at the federal level. A growing number of states have implemented parity. Some target their parity legislation narrowly to include only people with severe mental disorders; others use a broader defi-

nition of mental illness for parity coverage and in- clude, in some cases, substance abuse. Some states focus on a broad range of insured populations; others focus on only a single population.

Evidence of the effects of parity laws shows that their costs are minimal. Introducing or increasing the level of managed care can significantly limit or even reduce the costs of implementing such laws. Within carve-out forms of managed care, parity re- sults in less than a 1 percent increase in total health care costs. In plans that have not previously used managed care, introducing parity simultaneously with managed care can result in an actual reduction in such costs.

THE FUTURE OF MENTAL HEALTH SERVICES

Mental health is fundamental to health and human functioning. Mental illnesses are real health condi- tions that are characterized by alterations in think- ing, mood, or behavior—all mental, behavioral, and psychological symptoms mediated by the brain. Mental illnesses exact a staggering toll on millions of individuals, as well as on their families and communities and our nation as a whole. Appropriate treatment can alleviate, if not cure, the symptoms and associated disability of mental illness. With proper treatment, the majority of peo- ple with mental illness can return to productive and engaging lives. There is no “one size fits all” treat- ment; rather, people can choose the type of treat- ment that best suits them from the diverse forms of treatment that exist.

Even as we approach the end of the decade, the majority of those who need mental health treatment do not seek it. The reluctance of Americans to seek care for mental illness is all too understandable, given the many barriers that stand in their way.

The nation has realized immense dividends from five decades of investment in research focused on mental illness and mental health.Yet to realize further

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advances in treatment and, ultimately, prevention, the nation must continue to invest in research at all levels. Today, integrative neuroscience and molecular genetics present some of the most exciting basic re- search opportunities in medical science. Molecular and genetic tools are being used to identify genes and proteins that might be involved in the origins of mental illness and that clearly are altered by drug treatment and by the environment. Genes and gene products promise to provide novel targets for new medications and psychosocial interventions. The opportunities available underscore the need for the mental health research community to strengthen partnerships with both the biotechnology and the pharmaceutical industries. A plethora of new phar- macologic agents and psychotherapies for mental disorders affords new treatment opportunities but also challenges the scientific community to develop new approaches to clinical and health services in- terventions research.

Responding to the calls of managed mental and behavioral health care systems for evidence-based interventions will have a much needed and dis- cernible impact on practice. Research is a potent weapon against stigma, one that forces skeptics to let go of misconceptions and stereotypes concern- ing mental illness and the burdens experienced by persons who have these disorders.

Special effort is required to address pronounced gaps in the mental health knowledge base. Key among these is the urgent need for research evi- dence that supports strategies for mental health promotion and illness prevention.

Americans are often unaware of the choices they have for effective mental health treatments. There exists a constellation of treatments for most mental disorders. Treatments fall mainly under several broad categories—counseling, psychotherapy, med- ication therapy, rehabilitation—yet within each cat- egory are many more choices.

All human services professionals, not just health professionals, have an obligation to be better in- formed about mental health treatment resources in their communities. Managed-care companies and

other health insurers need to publish clear informa- tion about their mental health benefits (usually called “behavioral health benefits”). At present, many beneficiaries appear not to know if they have mental health coverage, much less where to seek help for problems.

The service system as a whole, as opposed to treatment services considered in isolation, dictates the outcome of treatment. The fundamental com- ponents of effective service delivery include inte- grated community-based services, continuity of providers and treatments, family support services (including psychoeducation), and culturally sensi- tive services. Effective service delivery for individu- als with the most severe conditions also requires supported housing and supported employment. For adults and children with less severe condi- tions, primary health care, the schools, and other human services must be prepared to assess and, at times, to treat individuals who come seeking help. All services for those with a mental disorder should be consumer oriented and focused on pro- moting recovery. That is, the goal of services must not be limited to symptom reduction but should strive for restoration of a meaningful and produc- tive life.

The supply of well-trained mental health profes- sionals is also inadequate in many areas of the country, especially in rural areas. Particularly keen shortages are found in the numbers of mental health professionals serving children and adoles- cents with serious mental disorders and older peo- ple. More mental health professionals also need to be trained in cognitive-behavioral therapy and in- terpersonal therapy, two forms of psychotherapy shown by rigorous research to be effective for many types of mental disorders.

To be effective, the diagnosis and treatment of mental illness must be tailored to individual cir- cumstances, while taking into account, age, gender, race, culture, and other characteristics that shape a person’s image and identity. Services that take these demographic factors into consideration have the greatest chance of engaging people in treatment,

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CHAPTER 10 Mental and Behavioral Health Services 243

keeping them in treatment, and helping them to re- cover thereafter. The successful experiences of indi- vidual patients will positively influence attitudes to- ward mental health services and service providers, thus encouraging others who may share similar concerns or interests to seek help.

While women and men experience mental disor- ders at almost equal rates, some mental disorders such as depression, panic disorder, and eating dis- orders affect women disproportionately. The men- tal health service system should be tailored to focus on women’s unique needs.

Members of racial and ethnic minority groups account for an increasing proportion of the na- tion’s population. Mental illness is at least as prevalent among racial and ethnic minorities as in the majority white population. Yet many racial and ethnic minority group members find the orga- nized mental health system to be uninformed about cultural context and, thus, unresponsive and/or irrelevant.

The mental health service system is highly frag- mented. Many who seek treatment are bewildered by the maze of paths into treatment; others in need of care are stymied by a lack of information about where to seek effective and affordable services. In re- cent years, some progress has been made in coordi- nating services for those with severe mental illness, but more can be accomplished. Public and private agencies have an obligation to facilitate entry into treatment. There are multiple “portals of entry” to mental health care and treatment, including a range of community and faith-based organizations. Pri- mary health care could be an important portal of entry for children and adults of all ages with mental disorders. The schools and child welfare system are the initial points of contact for most children and adolescents and can be useful sources of first-line as- sessment and referral, provided that expertise is available. The juvenile justice system represents an- other pathway, although many overburdened facili- ties tend to lack the staff required to deal with the magnitude of the mental health problems encoun- tered. Of equal concern are the adult criminal jus-

tice and corrections systems, which encounter sub- stantial numbers of detainees with mental illness. Individuals with mental disorders are often ne- glected or victimized in these institutions.

It is essential for first-line contacts in the com- munity to recognize mental illness and mental health problems, to respond sensitively, to know what resources exist, and to make proper referrals and/or to address problems effectively themselves. For the general public, primary care represents a prime opportunity to obtain mental health treat- ment or an appropriate referral. Yet primary health care providers vary in their capacity to recognize and manage mental health problems. Many highly committed primary care providers do not know re- ferral sources or do not have the time to help their patients find services.

Some people do not seek treatment because they are fearful of being forced to accept treatments not of their choice or of being treated involuntarily for prolonged periods. For most, these fears are un- warranted: Coercion, or involuntary treatment, is restricted by law only to those who pose a direct threat of danger to themselves or others or, in some instances, who demonstrate a grave disability. Co- ercion takes the form of involuntary commitment to a hospital; in about 40 states and territories, it in- cludes certain outpatient treatment requirements. Advocates for people with mental illness hold di- vergent views regarding coercion. Some advocates crusade for more stringent controls and treatment mandates, whereas others adamantly oppose coer- cion on any grounds. One point is clear: The need for coercion should be reduced significantly when adequate services are readily accessible to individu- als with severe mental disorders who pose a threat of danger to themselves or others.

Financial obstacles discourage people from seek- ing treatment and from staying in treatment. Re- peated surveys have shown that concerns about the cost of care are among the foremost reasons why people do not seek care. Mental health coverage is often arbitrarily restricted. Individuals and families are consequently forced to draw on relatively—and

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substantially—more of their own resources to pay for mental health treatment than they pay for other types of health care. This inequity is a deterrent to treatment and needs to be redressed.

SUMMARY

Mental health celebrates scientific advances in a field once shrouded in mystery. These advances have yielded unparalleled understanding of mental illness and the services needed for prevention, treat- ment, and rehabilitation. The journey ahead must firmly establish mental health as a cornerstone of health; place mental illness treatment in the main- stream of health care services; and ensure con- sumers of mental health services access to respect- ful, evidenced-based, and reimbursable care.

REVIEW QUESTIONS

1. What have been the fundamental changes in our understanding of mental health services over the past 50 years?

2. Describe the structure of the U.S. mental and behavioral health system.

3. Describe the patterns of mental health service use in the United States.

4. How do we pay for mental health services? 5. Describe the concepts of moral hazard and

adverse selection. 6. What does parity refer to in mental health,

and how has it influenced legislation in the United States?

7. What are the major challenges facing mental health services for the future?

REFERENCES & ADDITIONAL READINGS

Brown, R. S., Snyder, D. M., & Peterson, D. W. (2000). Textbook for mental health: A narrative approach. Boston: Pearson Cuystom Publishers.

Drake, R. E. (2005). Evidence based mental health prac- tice: A textbook. New York: W.W. Norton.

Grob, G. (1994). The mad among us: A history of the care of America’s mentally ill. New York: Free Press.

Grob, G. N. (1997). Deinstitutionalization: The illusion of policy. Journal of Policy History, 19(1), 48–73.

Grob, G. (1998). Psychiatry’s holy grail: The search for the mechanisms of mental diseases. Bulletin of the History of Medicine, 72(2), 189–219.

Kornstein, S. G., & Clayton, A. H. (Eds.). (2002). Women’s mental health. New York: Guilford Press.

Manderscheid, R. W., & Henderson, M. J. (Eds.). (2004). Mental health, United States, 2002. [DHHS Pub. No. (SMA) 3938]. Rockville, MD: Substance Abuse and Mental Health Services Administration.

Mechanic, D. (1999). Mental health and social policy: The emergence of managed care (4th ed.). Boston: Allyn and Bacon.

President’s Commission on Mental Health. Report to the President from the President’s Commission on Mental Health (4 vols.). (1978). Washington, DC: U.S. Government Printing Office.

Tsuang, M. T., & Tohen, M. (Eds.). (2002). Textbook in psychiatric epidemiology. New York: Wiley-Liss.

U.S. Department of Health and Human Services. Health people 2010: Understanding and improving health (2nd ed.). (2000). Washington, DC: U.S. Government Printing Office.

Welfel, E. R., & Ingersoll, R. E. (Eds.). (2001). The mental health desk reference. New York: Wiley.

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read6-7-8

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CHAPTER 8: Hospitals and Health Systems

HISTORY OF THE HOSPITAL
THE SCOPE OF THE INDUSTRY
STRUCTURE OF HOSPITAL AND HEALTH SYSTEMS
HOSPITAL ORGANIZATION
THE HOSPITAL AND MEDICAL STAFF
KEY ISSUES FACING THE HOSPITAL INDUSTRY
SUMMARY
REVIEW QUESTIONS
REFERENCES & ADDITIONAL READINGS

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CHAPTER 9: The Continuum of Long-Term Care

WHAT IS LONG-TERM CARE?
WHO NEEDS LONG-TERM CARE?
HOW IS LONG-TERM CARE ORGANIZED?
SERVICE CATEGORIES
INTEGRATING MECHANISMS
LONG-TERM CARE POLICY
SUMMARY
REVIEW QUESTIONS
REFERENCES & ADDITIONAL READINGS

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CHAPTER 10: Mental and Behavioral Health Services

ORIGINS OF MENTAL HEALTH
THE FUNDAMENTALS OF MENTAL HEALTH
TYPES OF MENTAL ILLNESS
EPIDEMIOLOGY OF MENTAL ILLNESS
ORGANIZATION AND FINANCING OF MENTAL HEALTH SERVICES
MENTAL HEALTH FINANCING
THE FUTURE OF MENTAL HEALTH SERVICES
SUMMARY
REVIEW QUESTIONS
REFERENCES & ADDITIONAL READINGS