Health System of United States

The existing health-care delivery system in the United States is a conglomerate of health practitioners, agencies, and organizations, all of which share the mission of healthcare delivery but operate more or less independently. The greatest portion of all patient services, approximately 80%, is provided in offices and clinics by physicians who sell their services on a fee-for-service basis. About two thirds of all active physicians – some 480 000 practitioners out of a total of 717 500 – are involved in direct patient care in an office- or clinic-based practice,rift gold while the remainder are mostly residents in training, or fulltime staff members of hospitals.

The next most prominent form of health-care delivery consists of services provided by hospitals.With the exception of tax-supported government institutions, hospitals, like physicians, charge patients according to a fee-forservice system. Nonprofit hospitals charge patients for hospital services using the standard of recovering the full cost of services provided and meeting the hospital’s general expenses. Profit-making or proprietary hospitals not only calculate the cost of services rendered but also operate to realize a profit from those services. Nonprofit and profit-making hospitals rely heavily on third-party sources, either private health insurance or government agencies, to pay most or all of a patient’s bill.

Besides office-based medical practices and hospitals, the other types of organizations involved in the delivery of health care to the American public are official agencies, voluntary agencies, health maintenance organizations, preferred provider organizations, allied health enterprises in the business community, and traditional healing services. Official agencies are public organizations supported by tax funds, such as the U.S. Department of Health and Human Services, the Centers for Disease Control and Prevention, the U.S. Public Health Service, and the Food and Drug Administration, which are intended to support and conduct research, develop educational materials, and provide services designed to minimize public health problems. Official agencies also have the responsibility for the direct medical care and health services required by special populations like reservation Indians, the military, veterans, the mentally ill, lepers, tuberculosis patients, alcoholics, and drug addicts.

Voluntary agencies are charitable organizations, such as the Multiple Sclerosis Society, the American Cancer Society, the American Heart Association, and the March of Dimes, who solicit funds from the general public and use them to support medical research and provide services for disease victims.

Health maintenance organizations (HMOs) are managed care prepaid group practices in which a person pays amonthly premium for comprehensive health-care services. HMOs are oriented toward preventive and ambulatory services intended to reduce rates of hospitalization. Under this arrangement, HMOs derive greater income from keeping their patients healthy and not having to pay for their hospital expenses than they would if large numbers of their subscribers were hospitalized. There is evidence that HMOs and other managed care organizations reduce hospital use and produce lower overall medical costs than the traditional open-market fee-for-service pattern (Wholey and Burns, 2000). Most of the savings are due to lower rates of hospitalization, but surgical rates and other fees may be lower for HMO populations. Physicians participating in HMOs may be paid according to a fee-for-service schedule, but many are paid a salary or on a capitation (set amount per patient) basis. Membership entitles patients to receive physicians’ services, hospitalization, laboratory tests, X-rays, and perhaps prescription drugs and other health needs at little or no additional cost.

There are some disadvantages to HMOs, namely, that patients (especially at night or on weekends) may be treated by whoever is on duty rather than their personal doctor, and a patient may need a referral from his or her primary care practitioner to consult a specialist. HMOs have attracted considerable attention because of their cost control potential and emphasis on preventive care. The number of HMOs and their enrollment have been rapidly increasing in the last few years. In 1970 there were 37 HMOs serving 3 million people; in 2003 there were 454 HMOs enrolling 71.8 million people. The peak year was 1999, when there were 651 HMOs with 81.3 million enrollees, or 31% of all Americans. The failure to meet expenses or make profits, along with patient dissatisfaction, has caused a decline in the number of both HMOs and patients, leaving HMOs with some 24.6% of the population as their clients. Included in this percentage are patients seen by individual practice associations (IPAs) which are solo practitioners or small groups of physicians who contract independently with HMOs to provide care to patients enrolled in their plans.

Preferred provider organizations (PPOs) are a form of managed care health organization in which employers who purchase group health insurance agree to send their employees to particular hospitals or doctors in return for discounts. PPOs have the advantage of being imposed on existing networks of hospitals and physicians without having to build clinics or convert doctors into employees. Doctors and hospitals associated with a PPO are expected to provide their usual services to PPO members, but lower charges are assessed against the members’ group health insurance. Thus, the health-care providers obtain more patients and in return charge less to the buyer of group insurance.

Allied health enterprises are the manufacturers of pharmaceuticals and medical supplies and equipment
which play a major role in research, development, and distribution of medical goods. Traditional healing services are healing options outside biomedicine that constitute forms of complementary and alternative medicine (CAM). CAMrefers to the use of treatments that are not commonly utilized by the medical profession, such as visits to chiropractors, faith healers, folk healers, acupuncturists, homeopaths, naturopaths, and the use of dietary supplements to cure or prevent disease. CAM also includes ayurveda, aromatherapy, shiatsu, crystal healing, biofeedback, and various other nonmedical techniques. The National Center for Complementary and Alternative Medicine was established by the U.S. Congress in 1992 to facilitate research, evaluate, and disseminate information on CAM techniques. The proportion of the population who use CAMis not known, although it is popular among some people (Baer, 2001). However, in relation to other health professionals, CAM practitioners occupy a marginal position in U.S. health-care delivery. The majority of Americans have health insurance benefits provided through their place of employment and paid for by contributions from both the employee and employer. In 1984, some 96% of all insured workers were enrolled in traditional health plans that allowed them to choose their own doctors and have most of their costs for physician and hospital services covered in an unmanaged fee-for-service arrangement. However, this situation changed dramatically because of soaring costs of health care and limitations being placed on the insurance benefits provided. By 1998, only 15% of all insured workers had unmanaged fee-for-service health plans, while the remainder had managed fee-for-service plans in which utilization was monitored and prior approval for some benefits, like hospitalization, was required. The day in which doctors and their patients decided just between themselves what care was needed without considering cost appears over, as financial concerns are increasingly influencing how patients are cared for.

Some features of the health-care delivery system in the United States remain unchanged. The system is pluralist, that is, it has more than one major client. It serves a substantial private sector, the elderly and the poor with government-sponsored health insurance, and a large uninsured population. But there has also been widespread change. As employers, both government and private corporations are the major purchasers of health services and so dominate health policy. Managed care is now the primary form of medical practice. This development means
that more people with private health insurance are limited in their use of health services to a particular managed care network, such as an HMO or PPO. Physician practice has shifted away from its historical roots in self-employment toward group and salaried arrangements that are better positioned to meet the current demands on providers stemming from both the change to managed care and the growth of medical technology (Gold, 1999). Physician incomes are increasing less rapidly than in the past, and professional autonomy is declining as well.
Given the magnitude of these changes – the reorganization of medical practice into managed care, along with constraints on income and autonomy – it is not surprising, as Gold (1999: 14) points out, that the satisfaction of physicians with their work situation has decreased. However, as Warren and her associates (1998: 364) explain,

‘‘Whereas physicians twenty years ago may have been horrified at the prospect of managed care, physicians now accept it as the rules of the game – at least in areas in which high percentages of patients belong to such plans – and recognize that the price of refusing to play by those rules is bankruptcy.’’

Thus, many physicians have had to make the adjustment to managed care, and the revenue, especially capitation fees, from this type of practice now constitutes a growing percentage of physician incomes.

Traditionally, doctors and hospitals have been paid on a fee-for-service basis. This method of payment is consistent with the principle of the open market, in which the consumers of health care, like the consumers of other products, are free to choose which health-care providers offer the best services at prices they can afford. Highquality services and affordable prices are supposed to result from competition among providers. Theoretically, physicians who are incompetent or who charge excessive fees and hospitals with lower-quality services would be driven out of the market by more competent, reasonably priced, and more effective physicians and better hospitals. To eliminate or reduce free choice would supposedly undermine the incentive of physicians and hospitals to satisfy patients.

The fee-for-service system is a highly attractive situation for doctors. It allows physicians to decide how much money they should charge for their services, how many patients they should have, how many hours they should work per week, what branch of medicine they should specialize in, and where they should practice medicine. The market, professional ethics, and sense of duty to their patients are supposed to block any desire to make as much money as possible.

Fee-for-service health-care delivery, however, is not a good example of a competitive marketplace. The fundamental law of the marketplace is supply and demand. When the supply of a product exceeds the demand for it, prices should drop. However, that law does not apply to medicine because physicians define what patients need and provide their services at prices they, their employers, or the federal government set. Therefore, doctors and hospitals create their own demand. Organized medicine has traditionally opposed changing the fee-for-service system because of the advantages it provides the profession. Yet fee-for-service discriminates against those people who are unable to pay the fees,rift gold making them dependent on welfare or charity. It also contributes to increased costs through high fees and the unnecessary duplication of technology and services by various providers and hospitals seeking to gain or maintain income.

Rising costs and lack of universal access to quality care finally forced changes, beginning with Medicare and Medicaid in the 1960s, and continuing today with the dominance of managed care systems charging a set capitation fee to patients each month. However, as noted, managed care constraints have eroded, leading to higher contributions for health insurance benefits on the part of both employers and employees, as well as higher costs for the care itself. Not surprising, the number of people without health insurance continues to increase. Light (2004) depicts the American health-care delivery system as the most costly, inefficient, wasteful, and inequitable system of health care in the industrialized world, while Mechanic (2004) describes it as disorganized and irrational. ‘In the final analysis,’ states Mechanic (2004: 83), ‘fault is in the failure of the United States to introduce a rational system of universal health care.’