The burden of health care costs: business, households, and governments

In this article, the authors recast health care costs into payer categories of business, households, and Federal and State-and-local governments which are more useful for policy analysis. The burden that these costs place upon the financial resources of each payer are examined for 1989 and for trends over time. For businesses, their share of health care costs continues to creep upward compared with other payers and relative to their own resources, despite many changes they are making in the provision of employer-sponsored health insurance to their employees.     

The relationship between hospitals and health plans organizations in the scope of ANS Health Insurance Qualification Program

In Brazilian health insurance sector, the fee-for-service model still remains the major payment method for health services, and predominates in the relationship between hospitals and private health insurance companies. After the creation of Health Insurance Qualification Program (HIQP), which focuses on the quality of the assistance given to consumers, the health insurance companies will be evaluated by health care performance indicators, established by this program. The present study discusses the impact of this pattern on the relationship between health insurance companies and hospitals, by analyzing data from interviews carried through with 18 health insurance managers, regarding the use - in hospital management - of performance indicators compatible to those adopted by HIQP. According to the managers perception, only three hospitals use this sort of indicators, two of them which are hospitals managed by the health insurance companies. The alignment of interests between health plans organizations and health care providers, at the HIQP proposed template, will imply changes in payment models between these market players, towards the inclusion of performance and quality of assistance given to users by providers, as components of wage determination.     

Financial and operational ratios for bond-insured hospitals

Few, if any, researchers have analyzed the performance indicators of companies that offer bond insurance to hospitals and healthcare systems. The authors of this study analyzed the key financial and operational indicators of independent hospitals and hospitals within large multihospital systems that are insured by the 5 major bond insurance companies. The authors examined 87 insured bond issues; the results of this study show that some insurers cover healthcare facilities that have strong operational traits and others focus on financial factors.     

Assessing business responses to HIV / AIDS in Kenya

A consulting firm conducted interviews with managers of 16 businesses in 3 Kenyan cities, representatives of 2 trade unions, focus groups with workers at 13 companies, and an analysis of financial/labor data from 4 companies. It then did a needs assessment. The business types were light industry, manufacturing companies, tourism organizations, transport firms, agro-industrial and plantation businesses, and the service industry. Only one company followed all the workplace policy principles recommended by the World Health Organization and the International Labor Organization. Six businesses required all applicants and/or employees to undergo HIV testing. All their managers claimed that they would not discriminate against HIV-infected workers. Many workers thought that they would be fired if they were--or were suspected to be--HIV positive. Lack of a non-discrimination policy brings about worker mistrust of management. 11 companies had some type of HIV/AIDS education program. All the programs generated positive feedback. The main reasons for not providing HIV/AIDS education for the remaining 5 companies were: no employee requests, fears that it would be taboo, and assumptions that workers could receive adequate information elsewhere. More than 90% of all companies distributed condoms. 60% offered sexually transmitted disease diagnosis and treatment. About 33% offered counseling. Four companies provided volunteer HIV testing. Almost 50% of companies received financial or other external support for their programs. Most managers thought AIDS to be a problem mainly with manual staff and not with professional staff. Almost all businesses offered some medical benefits. The future impact of HIV/AIDS would be $90/employee/year (by 2005, $260) due to health care costs, absenteeism, retraining, and burial benefits. The annual costs of a comprehensive workplace HIV/AIDS prevention program varied from $18 to $54/worker at one company.     

Commercial health insurance: smart or simply lucky?

Changes in the commercial health insurance industry are less a strategic shift than a defensive reaction to forces the industry cannot control and risky opportunities the industry cannot pass up. Diversification into the public sector presents short-term gains for the insurance industry but leaves unchanged the fundamental challenge it faces: rapid and apparently uncontrollable growth in health care costs. Commercial insurers have not proved to be any better than public payers at controlling costs. Unfortunately, unless the drivers of health care cost are tamed, the main benefits that people seek from insurance-stable coverage and financial protection--will erode further.     

Health insurance and use of diagnostic related groups

One of the ways to improve measures aimed at population health protection may be the development of insurance medicine in our country. This is a system of curative and preventive measures realized through insurance payments made by citizens and on the basis of target payments by employers, employees and state grants. The international experience of insurance medicine indicates that the existing principle of grouping diseases according to the basic diagnosis no longer provides the effective use of resources and not precisely enough assess to the outcomes of hospital performance. The search of ways to solve this problem led to the necessity of using the method of assessing financial and economic activities of curative and preventive institutions on the basis of diagnosis related groups of diseases (DRG) which unite the cases of similar diseases having approximately the same technology of examination and treatment of patients and consequently the same cost of treatment. This system originated in the USA and is widely used in many countries of Western Europe. With the help of DRG system health institutions can acquire more full information on the results of treatment, costs of treatment and prospects for development. The introduction of DRG system permits to improve the financial and economic performance of institutions and to collaborate with organizations realizing health insurance programmes.     

The finance-strategy relationship.

The connection between the finance function and strategy in health systems is explored through discussions with chief financial officers (CFOs). The integration of finance into strategy is explored through the use of balanced scorecards, strategic investments and the analysis of core competencies and core enterprises. Divestiture of investments in health plans, physician practices and long-term care facilities is common, while outsourcing activity is increasing.     

Balancing the nation's health care scorecard: the National Healthcare Quality and Disparities Reports

BACKGROUND: In January 2005, the U.S. Agency for Healthcare Research and Quality (AHRQ) released the congressionally mandated reports on the United States health care system--the 2004 National Healthcare Quality and Disparities Reports (NHQR and NHDR). They are intended to summarize the current state of the science of health care quality and disparities for a broad audience, including providers, consumers, researchers, and policy makers. BALANCING THE HEALTH CARE SCORECARDS: The NHQR and NHDR are designed as balanced scorecards, yet measure imbalance is evident with respect to relative attention to the quality dimensions, condition/clinical areas, and priority population. For example, heart disease and nursing home/home health each represent more than 20 measures of the total of 179 measures, whereas mental health and HIV/AIDS care are tracked with a total of six. USING THE SCORECARD FOR QUALITY IMPROVEMENT (QI): The measures making up the scorecards are derived directly from current national initiatives aimed at improving specific performance measures in hospitals, nursing homes, and home health agencies, which facilitates performance benchmarking at different levels of the health care system. CONCLUSION: Much work remains to be done if these reports are to be used to their fullest potential as balanced scorecards for the United States.     

Foster Higgins National Survey: trends in behavioral benefits

Most employer-sponsored health insurance plans provide some coverage for mental health and addiction treatment. However, analysis of over 3,000 employer benefit plans reveals wide variation in the level and scope of behavioral health benefits. Of all commercially insured employees and dependents, 77 percent are currently enrolled in health maintenance organizations (HMOs), preferred provider organizations (PPOs), or point-of-service (POS) managed care plans. This article documents the differences among behavioral health coverage packages in these three different types of managed care organizations (MCOs), and the lower levels of behavioral health coverage compared with coverage for other medical care. The author states that some employers are selecting single-specialty managed behavioral carve-out plans specifically to increase benefit levels and improve quality of care.     

Enhancing employee capacity to prioritize health insurance benefits

OBJECTIVE: To demonstrate that employees can gain understanding of the financial constraints involved in designing health insurance benefits. BACKGROUND: While employees who receive their health insurance through the workplace have much at stake as the cost of health insurance rises, they are not necessarily prepared to constructively participate in prioritizing their health insurance benefits in order to limit cost. DESIGN: Structured group exercises. SETTING AND PARTICIPANTS: Employees of 41 public and private organizations in Northern California. INTERVENTION: Administration of the CHAT (Choosing Healthplans All Together) exercise in which participants engage in deliberation to design health insurance benefits under financial constraints. MAIN OUTCOME MEASURES: Change in priorities and attitudes about the need to exercise insurance cost constraints. RESULTS: Participants (N = 744) became significantly more cognizant of the need to limit insurance benefits for the sake of affordability and capable of prioritizing benefit options. Those agreeing that it is reasonable to limit health insurance coverage given the cost increased from 47% to 72%. CONCLUSION: It is both possible and valuable to involve employees in priority setting regarding health insurance benefits through the use of structured decision tools.     

An examination of employer-provided benefits in the health care industry

Organizations that depend on a highly-skilled, stable workforce must be attuned to the needs of their employees and provide adequate compensation and benefits that enhance job satisfaction and lessen job mobility. Hospitals, like other organizations that compete for hard-to-find workers, use both traditional and non-traditional benefits to attract and keep skilled employees. This nationwide survey of hospital human resource managers assesses the types of benefits offered to health care workers and gauges the perceived impact of those benefits on job satisfaction and employee retention. Survey findings reveal that certain basic benefits, such as health insurance, are provided to all hospital employees. Other benefits, such as signing bonuses and reimbursement of relocation costs, are used as inducements to attract individuals in hard-to-fill job categories.     

Corporate characteristics and worksite health promotion programs: survey findings from Fortune 500 companies

A study was carried out to assess the nature and extent of worksite health promotion programs in Fortune 500 companies. Growth and interest in worksite health promotion continues at a remarkable rate. Fortune 500 firms are a good barometer of the state of the art of programs in work settings because these companies have large numbers of employees, an interest in cost savings, and expertise to invest in innovative efforts. Data collection consisted of questionnaires sent to the medical officer or Chief Executive Officer of all companies appearing on the 1984 Fortune 500 list. The following issues were addressed: whether companies offered worksite programs; what health promotion activities were provided in their programs; whether organizations had plans to start up or expand programs; what organizational support existed for programs (i.e. who pays, on whose time employees participate, when activities are offered, and what types of personnel are hired to staff programs); and whether these companies applied needs assessments, evaluation and cost analysis in their programs. Differences in these characteristics were examined in relation to the organizational variables of size (number of employees), Fortune 500 rank and type of industry (low-technology versus high-technology). The response rate for the survey was 49.4% (n = 247). Results of the study indicate a high level of health promotion activity in Fortune 500 firms. Out of the total group of respondents, two-thirds (n = 164) report having worksite programs and two-thirds of organizations with programs have plans to expand their health promotion offerings. One-third of responding organizations without programs planned to initiate them. The health promotion activities provided are numerous and varied, and within units that have programs rates of employee eligibility are reported to be high. However, the participation rates reported are appreciably lower. It is of special interest that, in general, the higher ranked, larger and high-technology companies are more likely to have programs; offer more activities in programs; have plans for program expansion; use a model of sharing costs of, and time to participate in program activities; make greater use of health professionals; and utilize more often needs assessment, evaluation and cost analysis techniques. The results of this study underscore the importance of examining a broad constellation of factors surrounding worksite programs. Given the organizational literature reviewed, it is likely that the characteristics of Fortune 500 programs documented here will serve as models for programs in midsize and smaller companies.     

Comparing excess costs across multiple corporate populations

The purpose of this study was to examine the relationship of health risk level to charged medical costs and determine the excess cost of higher risk individuals compared to low risk. Two years of medical claims from six corporations were used to determine costs of health risk assessment (HRA) participants and nonparticipants. A total of 165,770 employees, 21,124 of which took an HRA, were used for the study. Costs increased as risk level increased. There were no significant differences within a risk level between companies for the cost ratio. Percent of medical costs due to excess risk ranged from 15.0-30.8% for HRA participants and 23.8-38.3% for the study population. Cost patterns were consistent across companies. Excess cost as the result of increased risk level accounted for a substantial portion of the cost at each company. These results can be used to justify the need for a health-promotion program and to estimate potential savings as the result of excess risk. Even without the use of an HRA, health practitioners should feel confident stating that excess risk accounts for at least 25% to 30% of medical costs per year across a wide variety of companies, regardless of industry or demographics. The numbers can be used as a realistic estimate for any health promotion program financial proposal.     

Relationship marketing of health care plans: retaining corporate customers in a competitive environment

Corporate employers have become major purchasers of health care. They are gatekeepers who decide whether to retain or drop an insurance company from the choice set offered to employees as well as whether to include new insurers into this choice set. If marketers of health maintenance organizations are to maintain their market share in this competitive environment, they need to understand issues considered important to corporate employers. This paper identifies the key drivers of satisfaction among corporate employers and shows the impact these key drivers have on overall satisfaction. More importantly, it demonstrates both theoretically and empirically that the impact of performance attributes on satisfaction is asymmetrical. Positive performances of attributes are shown to have smaller impacts on satisfaction than negative performances. The theoretical underpinnings of these phenomena are shown to lie in prospect theory. Finally, quantitative indicators are computed to aid managerial decision-making. Marketing managers of health insurance companies will optimize returns on their investment by understanding this asymmetric effect and eliminate existing deficiencies.     

Integrating smoking control policies into employee benefits: a survey of large California corporations.

OBJECTIVES. Public health policy promotes the use of risk-rating health insurance and payment for smoking cessation as economic incentives to encourage smoking cessation. This study was undertaken to learn more about the adoption of these policies in large corporations. METHODS. A random sample survey of 280 private California corporations with more than 500 employees was undertaken to document the prevalence of policies integrating smoking control into employee benefit designs. RESULTS. Only 8.6% of large corporations had ever considered risk-rating health insurance premiums using smoking status and only 2.15% had implemented a risk-rating policy. Nearly 20% of the companies offered health insurance plans that covered smoking cessation services. Subsidization or payment for smoking cessation outside health insurance was provided by over 37% of the companies surveyed, and 87% had adopted formal work-site smoking policies. CONCLUSION. Benefit policies that provide financial support to smokers to participate in smoking cessation services are much more prevalent and are viewed more positively by the benefits managers in large corporations than are policies to risk-rate health insurance premiums on the basis of smoking.     

Strikes by physicians: a historical perspective toward an ethical evaluation.

Current conditions surrounding the house of medicine-including corporate and government cost-containment strategies, increasing market-penetration schemes in health care, along with clinical scrutiny and the administrative control imposed under privatization by managed care firms, insurance companies, and governments-have spurred an upsurge in physician unionization, which requires a revisiting of the issue of physician strikes. Strikes by physicians have been relatively rare events in medical history. When they have occurred, they have aroused intense debate over their ethical justification among professionals and the public alike, notwithstanding what caused the strikes. As physicians and other health care providers increasingly find employment within organizations as wage-contract employees and their work becomes more highly rationalized, more physicians will join labor organizations to protect both their economic and their professional interests. As a result, these physicians will have to come to terms with the use of the strike weapon. On the surface, many health care strikes may not ever seem justifiable, but in certain defined situations a strike would be not only permissible but an ethical imperative. With an exacerbation of labor strife in the health sector in many nations, it is crucial to explore the question of what constitutes an ethical physician strike.     

Employer perspectives on the preferred provider organization concept

The goal of preferred provider organizations (PPOs) is to identify cost effective physicians, hospitals and other providers and form them into healthcare delivery systems. Widespread interest in PPOs stems from the belief that they can contain costs while offering consumers a choice of physicians and hospitals. But there is little information available about the demand by employers to offer PPOs as a health plan option. This study gathered information on employers' attitudes toward PPOs through a survey of companies in the Minneapolis metropolitan area. Most of the surveyed firms were found to be self-insured and offered a choice of healthcare plans, including HMOs. Contrary to some previous studies, healthcare costs are a major concern by all of the firms. PPOs are viewed as one part of an overall strategy to reduce those costs while maintaining quality of care and convenient access to providers. Although somewhat skeptical about potential savings and concerned over the administrative costs of offering a new health plan, most of the firms indicated support for the PPO concept. The greatest market opportunity for PPOs is to offer the plan as an alternative within the company's existing indemnity plan, wherein employees who use the preferred providers are exempt from at least a portion of the coinsurance and deductible requirements.     

A review of data on the health sector of the United States January 2002.

This report presents data on the state of U.S. health care at the end of 2001. It provides information on access to health care, inequalities in incomes and medical care, the increasing costs of health care and health insurance, and the role of corporate money in the provision of health care and the development, marketing, and patenting of pharmaceuticals. The author also looks at the state of health maintenance organizations, the results of some recent surveys on physicians' and public opinion on managed care, and news about the nursing professions. Also provided is an update on Congressional activity on health care legislation, the role of health care industry money in politics, and some developments in health care systems elsewhere in the world.     

A comparison of systemwide and hospital-specific performance measurement tools

Balanced scorecards are being implemented at the system and organizational levels to help managers link their organizational strategies with performance data to better manage their healthcare systems. Prior to this study, hospitals in Ontario, Canada, received two editions of the system-level scorecard (SLS)--a framework, based on the original balanced scorecard, that includes four quadrants: system integration and management innovation (learning and growth), clinical utilization and outcomes (internal processes), patient satisfaction (customer), and financial performance and condition (financial). This study examines the uptake of the SLS framework and indicators into institution-specific scorecards for 22 acute care institutions and 2 non-acute-care institutions. This study found that larger (teaching and community) hospitals were significantly more likely to use the SLS framework to report performance data than did small hospitals (p < 0.0049 and 0.0507) and that teaching hospitals used the framework significantly more than community hospitals did (p < 0.0529). The majority of hospitals in this study used at least one indicator from the SLS in their own scorecards. However, all hospitals in the study incorporated indicators that required data collection and analysis beyond the SLS framework. The study findings suggest that SLS may assist hospitals in developing institution-specific scorecards for hospital management and that the balanced scorecard model can be modified to meet the needs of a variety of hospitals. Based on the insight from this study and other activities that explore top priorities for hospital management, the issues related to efficiency and human resources should be further examined using SLSs.