Table of Contents
Preface xxiii
Acknowledgments xxvii
Section I Foundations of the Ecosystem 1
Chapter 1 Introduction 3
The Intro and the Outro 3
Healthcare: Not Your Typical Industry 4
There's Good News and Bad News 5
Summary 6
Overview of the Volume 6
Chapter 2 A Guide Through the Wilderness 11
The Need for a Guide 11
The Healthcare Quadrilemma 11
Murky Relationships Among Goals 14
Trade-Offs are Everywhere 15
Health and Wealth 17
All Healthcare Is Local 19
Terroir 19
Watch Out for the B.S 20
Why Healthcare Is So Hard to Change 22
"Solutions" That Only Squeeze the Balloon 22
Importance of History and History Repeating 23
Two Historical Lessons Worth Remembering 25
Summary 27
Chapter 3 What Is a Healthcare System? 31
What Is a Healthcare System? 31
Frameworks for Analyzing Healthcare Systems 32
Nested Ecosystems 44
Summary 48
Chapter 4 Population Health 51
Introduction 51
Health Disparities in the US Population: Access, Utilization, and Health Status 51
Disparities in Health Status: United States Versus the World 56
Drivers of Health Status 57
The Burden of Chronic Illness 61
Population Health Management 63
Summary 67
Chapter 5 Goals of Healthcare 71
Major Goals of Healthcare 71
Triangle 1: Access, Quality, and Cost 71
Triangle 2: Care, Health, and Cost 76
Dueling Triangles? 77
Summary 78
Chapter 6 The 800-Pound Gorilla: Rising Healthcare Costs 81
Introduction to the Problem 81
Examining the Trends 81
Drivers of Healthcare Spending 87
Degree of Past Success in Cost Containment 92
Cycles in Healthcare Spending 93
Targets for Cutting Costs 93
Prognosis for Cutting Costs 94
Stakeholders: My Expense Is Your Income 95
Summary 97
Chapter 7 Managing Quality: Another 800-Pound Gorilla? 101
Introduction 101
Quality Management Versus Medical Management 101
Why the Need for Quality Management? 101
Historical Progression of Quality Management Efforts 104
Prognosis for Quality Improvement 117
Summary 121
Section II Provider Sectors in the Ecosystem 125
Chapter 8 Healthcare Providers 127
What Is a Provider? 127
Number and Diversity of Providers 127
Summary 134
Chapter 9 The Medical Profession 137
The Central Role of Physicians 137
The Big Disconnect: Physicians Don't Feel Central 138
How Physicians Are Trained 139
Demography of the Medical Profession 139
Trends in Physician Supply and Demand 141
Addressing the Physician Shortage 143
Where Do Physicians Practice? 144
The Economics of Physician Practice 145
Physician Practice Challenges 149
Physician Engagement 150
New Kid on the Block: The Patient-Centered Medical Home 150
Getting Physicians to Change their Behavior 151
Multiple Agency Roles 153
Summary 154
Chapter 10 Primary Care: Physicians, Nurses, and Pharmacists 159
The Case for Primary Care 159
New Models of Primary Care Delivery by Primary Care Physicians 162
Nursing 164
Pharmacists 173
Summary 177
Chapter 11 Hospitals 181
Overview and Types of Hospitals 181
Distinguishing Nonprofit and For-Profit Hospitals 183
The Importance and Centrality of Hospitals 184
Functions That Hospitals Perform 185
The Complex Hospital Structure 186
Hospital-Physician Relationships 190
The Challenge of Managing a Professional Organization 192
Trends in Hospital Capacity and Utilization 193
Hospital Finances 196
Hospital Efforts to Deliver Value 200
The Hospital's Regulatory Environment 202
Summary 203
Chapter 12 Hospital Diversification, Restructuring, and Integration 205
Introduction 205
Diversification of Services 205
Corporate Restructuring 209
The 1990s Push for Integration 209
Renewed Push for Integration in the New Millennium 215
Summary 222
Chapter 13 Organized Ambulatory Care 227
Introduction 227
Consumer-and Industry-Sponsored Group Practices 227
Community Health Centers and Federally Qualified Health Centers 228
Rural Health Clinics 229
Community Mental Health Centers 230
Urgent Care Centers 231
Stand-Alone Emergency Departments 233
Ambulatory Surgery Centers 233
Retail Clinics 236
Retail Pharmacies 241
Summary 245
Chapter 14 Post-Acute Care 249
The Continuum of Post-Acute Care (PAC) 249
Early Federal Efforts to Promote and (Then) Curb PAC Spending 249
Home Health Agencies 250
Skilled Nursing Facilities 251
Inpatient Rehabilitation Facilities 252
Long-Term Care Hospitals 252
Hospices 253
PAC Growth Under Prospective Payment 254
PAC Growth Drivers 255
Recent Federal Efforts to Contain PAC Spending 256
Strong PAC Tailwinds 259
Summary 263
Section III Payer Sectors in the Ecosystem 269
Chapter 15 Employer-Based Health Insurance 271
Overview of Chapters 15-19 271
Historical Origins of Private Health Insurance 271
Understanding Employer Health Coverage Today 274
Employer Cost and Quality Approaches 283
Health Promotion Efforts 286
Summary 290
Chapter 16 Contracting for Prescription Drug Benefits: Role of Employers, Insurers, and Pharmacy Benefit Managers 295
Introduction 295
The Rise of Managed Care and Drug Benefits 295
The Rise of Pharmacy Benefit Managers 295
The Need for Cost Control Over the Drug Benefit 297
Medical and Pharmacy Benefit Contracting by Employers 298
Prescription Drug Benefit Design in ERISA Health Plans 300
Cost Sharing for Drugs 305
The Brouhaha Over the Gross-to-Net Price Disparity 307
The Pharma Manufacturers Strike Back 315
Summary 316
Chapter 17 Private Health Insurance and Managed Care Organizations 319
Taxonomy of Insurance 319
What Do Insurers Do? 319
Brief History: Rise of Health Insurance 320
Changing Role of Insurers: From indemnity to Managed Care 323
Types of Managed Care Health Plans 323
Managed Care Lines of Business 328
The Internal Value Chain of a Managed Care Organization 331
Business Models of Managed Care Organizations 333
New Horizons in Private Health Insurance 340
Summary 343
Chapter 18 Medicare 345
Introduction 345
Medicare Benefits and Components 345
Medicare Financing 348
Medicare Beneficiaries 349
Medicare Advantage 352
Efforts to Control Medicare Spending 357
Other Budget Remedies Going Forward? 361
Dual Eligibles 361
Summary 361
Chapter 19 Medicaid and the Patient Protection and Affordable Care Act 365
Overview: Medicare Versus Medicaid 365
Origins of Medicaid 365
Historical Growth and Expansion 368
Overview of Patient Protection and Affordable Care Act 370
PPACA Impact on the Iron Triangle 372
Medicaid issues: Balancing Acts 375
Medicaid Today 375
Medicaid Eligibility 376
Services Covered 377
State Initiatives to Control Medicaid spending via Managed Care 378
Impact of Medicaid Managed Care on the Iron Triangle 380
Innovative State-Managed Care Approaches 381
Summary 382
Section IV Technology Sectors in the Ecosystem 385
Chapter 20 The Healthcare Technology Sectors 387
The Hunt for Biomedical Innovation 387
Innovation in the Healthcare Value Chain 387
Similarities Among the Technology Sectors 388
Differences Among the Technology Sectors 389
Commonalities in the Innovation Process 389
The Technological Imperative in Healthcare 392
The Innovation Challenge 395
Why Study the Producers of Healthcare Technology? 395
Impact of Technology Sectors on Local and National Economies 398
Summary 399
Chapter 21 The Pharmaceutical Sector 403
Distinguishing Pharmaceuticals and Biologies 403
Why the Pharmaceutical Sector Is So Interesting 403
Overview of Pharma: The Big Picture 404
Market Structure of Pharma 407
Research and Development 409
R&D Pipeline Productivity 414
Commercialization 417
Generic Drug Companies 420
Drug Product Manufacturing 421
Rising Drug Prices 421
Summary 423
Chapter 22 The Biotechnology Sector 427
The Growing Role of Biologies and Biotechnology 427
Inside Biotech 430
Orphan Drugs 434
Biosimilars and the Threat of Generics 435
Biotech Organization and Management 438
Biotech Investment: The Big Picture 439
Biotech Business Models 440
New Biotech Venture Geation 441
Summary 446
Chapter 23 The MedTech Sector 449
What Is MedTech? 449
MedTech Versus Pharma 449
The MedTech Sector Today 451
Technological Innovation 451
Business Model Innovation 451
The Twin Pillars in Action 455
Summary 466
Chapter 24 Healthcare Information Technology 471
The Information Technology Imperative 471
Small Sector, Growth Sector 472
Electronic Medical Records and Their Controversies 474
Other information Technology Subsectors 483
Big Tech Dancing With Elephants 494
Summary 500
Section V The Public Sector of the Ecosystem 505
Chapter 25 The Federal Bureaucracy, the US Congress, and Healthcare Policy 507
Introduction 507
The Federal Government's Diverse Roles 507
Consequences of Federal Involvement 508
The US Congress's Role 508
Overview of the Legislative Process 510
Implementation of Healthcare Policy 511
Regulation 513
Other Federal Initiatives 519
Summary 524
Chapter 26 The Public Health System 527
Introduction 527
Problems Addressed by Public Health 527
Progress and Continued Problems 528
The History of Public Health in the United States 535
The Core Functions and Essential Services of Public Health 537
The Federal Government's Role in Public Health 538
State and Local Government's Role in Public Health 541
The Public Health Workforce 546
Sources of Tension Facing Public Health 547
Summary 549
Index 551