Current System Issues and Their Impacts Introduction Before we can discuss change and innovation in our health care delivery system, a strong understanding of the current system is necessary, including how it functions, what types of incentives are at work, and how the different entities inside it work with and impact each other. What Elements Drive Our Current System? There are several key drivers of the existing system, and among these are the money, providers, payers, and consumers. When examining the behavior of any system, it is useful to look at the series of rewards and consequences that drive behavior. In health care, this means that much can be learned about the system's behavior by following the money trail. What things are reimbursed, under what circumstances, and with what outcomes? Under what circumstances are consequences, such as not getting paid, applied? In the current system, payments are highest for procedures, and proceduralists such as surgeons, gastroenterologists, and interventional cardiologists are all paid much higher fees than are family practice physicians, pediatricians, or hospitalists, all of whom manage medical care. Hospitals function under the same premise. Approximately 75% of the revenue for the average community hospital comes from surgeries, and another 12% comes from diagnostic imaging procedures. Additional amounts come from cardiac diagnostic and interventional procedures. So, approximately 90% to 95% of revenue comes from performing procedures on patients rather than providing management of diseases through medications or other noninvasive treatments. Thus, the system is focused on rewarding procedures that lead to "curing" and focused away from medical management of chronic diseases or prevention of disease and illness. Financial Elements Without doubt, money is one of, if not the, most powerful drivers of system functioning. For a classic example, we can look at the old fee-for-service payment methodology prevalent in the 1960s and 1970s, and contrast it with Medicare's implementation of diagnosis-related groups (DRGs) as a payment mechanism in 1983. Under fee-for-service health care, providers used whatever procedures, equipment, and supplies they felt were needed for care, and they submitted a bill that charged for each item. The payors received the bill, corrected any errors, and then issued a check for the corrected amount to the providers. If a provider wished to make a larger profit, they could provide more services or billable items to increase the payment. It comes as no great surprise to note that utilization of services and cost both rose rapidly under this methodology, since there was no incentive to be frugal. When Medicare changed its reimbursement to DRGs, the system began to experience the impact of being paid one flat fee, set by DRG, for the entire admission, regardless of how much care was rendered. For example, if a hospital provided care at a cost below the DRG payment, it was ab.

1. Current System Issues and Their Impacts
Introduction
Before we can discuss change and innovation in our health care
delivery system, a strong understanding of the current system is
necessary, including how it functions, what types of incentives
are at work, and how the different entities inside it work with
and impact each other.
What Elements Drive Our Current System?
There are several key drivers of the existing system, and among
these are the money, providers, payers, and consumers. When
examining the behavior of any system, it is useful to look at the
series of rewards and consequences that drive behavior. In
health care, this means that much can be learned about the
system's behavior by following the money trail. What things are
reimbursed, under what circumstances, and with what
outcomes? Under what circumstances are consequences, such as
not getting paid, applied? In the current system, payments are
highest for procedures, and proceduralists such as surgeons,
gastroenterologists, and interventional cardiologists are all paid
much higher fees than are family practice physicians,
pediatricians, or hospitalists, all of whom manage medical care.
Hospitals function under the same premise. Approximately 75%
of the revenue for the average community hospital comes from
surgeries, and another 12% comes from diagnostic imaging
procedures. Additional amounts come from cardiac diagnostic
and interventional procedures. So, approximately 90% to 95%
of revenue comes from performing procedures on patients rather
than providing management of diseases through medications or
other noninvasive treatments. Thus, the system is focused on
rewarding procedures that lead to "curing" and focused away
from medical management of chronic diseases or prevention of
disease and illness.
Financial Elements
Without doubt, money is one of, if not the, most powerful

2. drivers of system functioning. For a classic example, we can
look at the old fee-for-service payment methodology prevalent
in the 1960s and 1970s, and contrast it with Medicare's
implementation of diagnosis-related groups (DRGs) as a
payment mechanism in 1983. Under fee-for-service health care,
providers used whatever procedures, equipment, and supplies
they felt were needed for care, and they submitted a bill that
charged for each item. The payors received the bill, corrected
any errors, and then issued a check for the corrected amount to
the providers. If a provider wished to make a larger profit, they
could provide more services or billable items to increase the
payment. It comes as no great surprise to note that utilization of
services and cost both rose rapidly under this methodology,
since there was no incentive to be frugal. When Medicare
changed its reimbursement to DRGs, the system began to
experience the impact of being paid one flat fee, set by DRG,
for the entire admission, regardless of how much care was
rendered. For example, if a hospital provided care at a cost
below the DRG payment, it was able to make a profit by
keeping the payment left after costs were covered. On the other
hand, if a hospital provided care that cost more than the DRG
payment, it lost money. The risk is all on the hospital or other
provider under a DRG model. DRGs are still the Medicare
method of paying for care, and Medicaid entities use them also.
Some private insurers are using a form of these, called case-rate
payments. They are still flat fees for the episode of care. The
goal of this methodology is to encourage providers to manage
their costs downward. However, a consequence of this approach
can be limiting some aspects of care for some patients. For
example, not everyone would qualify for certain procedures; a
patient with cancer may not qualify for a separate liver
transplant if the cancer has spread inside the body, for instance.
Providers may also choose to limit the types of drugs,
procedures, and supplies they provide. For example, a pharmacy
formulary may only allow two types of antibiotics for general
use rather than the whole spectrum of available antibiotics.

3. Another financial methodology that was popular in the 1990s is
called capitation. In this methodology, a health care provider
would assume care responsibilities for a pool of patients. The
insurer would pay the provider a monthly premium per member
at a set rate, and the provider would provide health care
services to members out of the premium pool of money. In some
arrangements, there would be carve-outs for new technology or
new pharmacology, which would add some reimbursement, but
in general, all regular costs would be borne by the provider
from the pool of premium dollars. The incentive in this model
shifts from providing procedures toward managing care so as to
decrease the demand for services. There are several
consequences to a capitation model. If the goal is to decrease
service demand, it imposes a type of rationing on which patients
qualify to receive what services. Cost/benefit ratios for services
are a frequent analytic tool in this model. For example, is there
a higher cost/benefit ratio to provide $100,000 for
immunizations, or is it better to use that $100,000 to provide a
kidney transplant to a patient with end stage renal disease?
Another consequence can occur from the makeup of the patient
population in the pool. If the pool insures primarily younger and
healthy patients, it tends to be very financially successful for
the provider rather than a pool that is heavily weighted toward
patients who have chronic diseases requiring multiple care
interventions. The difficulty of managing care appropriately has
made many capitation plans unsustainable for the long term.
In the current system of health care delivery, there is a mix of
compensation models in operation, and this is a factor in the
complexity of the system. There are still a few discounted fees
for service payers, and these are highly valued by the providers
in the system. The insurers may have negotiated significant
discounts from billed charges, but they still pay for the items
billed. There are also per diem types of payment contracts,
which pay a set fee for each day the patient is receiving
services. The fee may be relatively low per day, and this can
encourage longer lengths of stay, since typically the highest

4. costs per patient episode of care occur on the first one to two
days of the stay, particularly for surgery patients. Preferred
provider organizations may pay by case rate or per diem but
typically have very steep discounts negotiated with providers.
However, they also have rates that are negotiable rather than a
"take it or leave it" approach, and they are more open to
negotiating carve-out payments for special requirements, new
technology payments, or new ways of providing care. Since the
incentives and financial consequences for these various models
are different from each other, it makes the financial
management of health care very difficult. There is currently no
standard way of managing care, costs, and expenses across
financial models, other than the governmental payors for
Medicare and Medicaid. Hospitals juggle costs across payors
and negotiate higher rates with commercial, fee-for-service and
per diem payors to offset the losses from Medicare, Medicaid,
and patients with no insurance at all and little capacity to pay
their bills.
No discussion of the financial impacts on the current delivery
system can be complete without a review of the impact of the
number of Americans who are uninsured for health care
benefits. The rise of uninsured patients places a very large load
on the system, as providers must negotiate rates for insured
patients that cover their costs plus some of the costs of the
uninsured. The federal government has created some programs
to assist some hospitals to offset their costs for uninsured
patients, and a part of the requirement for nonprofit health care
entities is that they provide a certain amount of charity
care/uncompensated care in return for their tax-exempt status.
The rise in the number of uninsured patients who may not
qualify for Medicaid or other government assistance challenges
all providers in the system, since other forms of reimbursement
are not keeping up with the increase in uncompensated costs.
Private insurers and employers that offer health care insurance
are also balking at the increased premiums being requested by
providers who are trying to limit their losses. This is one of the

5. aspects of health care that the health care reform legislation has
tried to address by requiring Americans to have insurance or
pay a fine. It remains to be seen whether this will actually work
or not.
Providers
There are basically two main groups of providers in the system:
hospitals/clinics and physicians/other providers. Hospitals are
revenue generators in the current model, due to the focus on
payment for procedures, instead of being cost centers, which
would be true under capitation. Given the large variety of
payment approaches, hospitals are not always very focused on
managing the utilization of care, although this is done more and
more for hospitals with a high proportion of Medicare/Medicaid
patients in their mix. These entities also focus almost
exclusively on the episode of care, which begins when the
patient enters the hospital and ends when the patient leaves.
There is presently little focus on what happens before
admission, although there is some burgeoning interest in better
medical management to keep patients healthier and out of the
hospital whenever possible. Hospital costs are also increased by
the increasing regulatory focus leveled on them. The number of
coders, verifiers, and auditors of bills, charges, and charts are
growing as fast as and faster than many direct caregiver roles.
Hospitals are also beginning to shift care to an outpatient basis
where they can in order to reduce costs. The best way to
describe the role of hospitals in the current system is to imagine
it as a complex dance in which the steps constantly change, the
music can alter at a moment's notice, and no one knows where
the dance is actually going or what it is supposed to look like.
The other group of providers is the professionals, such as
physicians, surgeons, midlevel providers (physician assistants
and nurse practitioners), and other providers of care. Physicians
relate that they are having to work harder and longer for less
money. They feel controlled by insurance companies that
demand oversight of their care and preauthorization for many
services, and they have to increase their costs to manage the

6. complexities of getting paid, including meeting insurance
documentation requirements, preauthorizations for care,
verifications that care is appropriate and meets criteria, and
actually collecting their bills. Historically, physicians have
been able to select the care and procedures that they felt
patients needed and provide them without any necessity to
justify the choices. However, as the financial reimbursement
methodologies changed, so did the autonomy of physicians in
terms of the care that could be provided without outside
scrutiny. This has been a major dissatisfier, particularly for
older physicians who still remember the previous system.
Younger physicians who are just coming into practice have
largely just learned to accept and work within the new reality.
In addition, physicians struggle with arbitrary reductions in
reimbursement, particularly from Medicare and Medicaid. Some
physicians will no longer provide care to patients insured by
these government entities, since the reimbursement is low and
the documentation and verification demands are high.
Insurance Companies and Employers Who Provide Health
Insurance to Employees
Insurance companies, in general, are businesses that operate to
make a profit. They have shareholders to report to, and their
mindset is profit-oriented, unlike many providers, such as
nonprofit hospitals. In the current model, insurance companies
seek to insure large populations so that risk can be more evenly
distributed among a large group, which should have a
significant number of healthy people who will not require
services. Most insurance contracts in the current system are set
up to pay for procedures, and most contracts do not have a
significant focus on prevention or health maintenance. This is
changing as costs for providing care escalate, but it is still the
predominant approach. There is little control over utilization,
although many insurance companies have active utilization
review staff. The big leverage that insurance companies have is
the ability to deny payment based on some infraction of the
contract or based on care that is not covered in the contract.

7. Insurance companies would also like to expand their base of
contracted physicians, since those physicians have agreed to
accept a prenegotiated rate for specific services. At present, the
only exceptions to this are physicians providing emergency
care, who can bill and collect close to fee-for-service rates, and
physicians who are not contracted with a particular plan but
who "balance bill" the patient for the difference between their
charges and the insurance payment. This tends to enrage
patients, who thought that their health care insurance would
cover all the costs of care, only to discover that they have to
pay a noncontracted physician the balance of the bill. The
amounts for balance billing can easily run into five or six
figures for a complicated emergency, such as a trauma case.
Issues for insurance companies in the current system include the
need to contract with more and more physicians to provide care
to the large pool of insured people, the need to put tighter
controls in place to manage utilization of services and remove
unnecessary care, how to manage patient care so that the patient
may avoid expensive hospitalizations, how to negotiate with
hospitals for contracted rates when hospitals are attempting to
shift some of their costs for uncompensated care into the
payment to make up the difference, and worries about quality,
medical errors, and the costs that attach to those. Finally,
insurance companies have great worries about government
mandates for particular aspects of care, without any designated
funding to cover those mandates.
Businesses that offer health care insurance to their employees
face many of the same challenges. It is an important benefit,
and employees expect to get it. However, the costs of premiums
increase every year, and businesses are seeing a significant
portion of money that would otherwise be profit shifted to cover
the employer portion of the premium.
Consumers of Care
While patients are the recognized primary consumers of care,
the government (both state and national) has a vested interest in
the way the health care system operates. For one thing, health

8. care spending is a considerable portion of the gross national
product, and the percentage spent on health care continues to
rise. The public's fears of not having adequate coverage should
they become ill, of not being able to pay large unexpected bills
from noncontracted providers, and of losing access to insurance
if they move or lose their jobs all resonate with politicians and
were major driving forces in the health care reform legislation
of 2010. Government regulates health care in a major way,
ensuring that quality-of-care indicators are now publically
reported by the Centers for Medicare and Medicaid Services
(CMS). The goal of this is to improve the quality of health care
and reduce or eliminate errors that worsen patient conditions or
result in death. CMS has begun the push for improved quality,
partially driven by the Institute of Medicine's report on
preventable deaths from health care errors. Government also
ensures care for patients in emergency situations, with the
Emergency Medical Treatment and Active Labor Act, which
specifies that any emergency patient must receive an exam and
medical care to stabilize their condition before any request for
payment or financial authorization is done (Showalter, 2007).
CMS is also instituting pay for performance by withholding
payment for never-events, which are specified mistakes that, if
they occur, the portion of the hospitalization that results from
the error will not be paid to the provider.
Conclusion
The current design of our national health care system is clearly
a complex, intertwined tangle of competing interests, heavy
regulation, financial confusion and complications, lack of
alignment among providers and insurers, and confused patients
who simply want to get the care they need in a safe environment
with no large financial surprises at the end of it. It is very
difficult to measure the quality of different providers and to
determine who has the best cost structure for those who must
pay out of pocket. The story of the $7 aspirin and other such
stories continue to drive concerns about a system that is heavily
weighted toward complications and complexity and is very

9. difficult to navigate easily for any of the participants. As this
course continues, ways that the current system can be improved,
both on the micro and macro levels, and the changes that are
already in play that will destabilize the current system, will be
discussed. The question is: Will they make the new system
better?
References
Showalter, J. S. (2007). The law of healthcare administration
(5th ed.). Chicago: Health Administration Press.
Copyright 2011. Grand Canyon University. All Rights Reserved.
Current System Issues and Their Impacts
Introduction
Before we can discuss change and innovation in our health care
delivery system, a strong understanding of the current system is
necessary, including how it functions, what types of incentives
are at work, and how the different entities inside it work with
and impact each other.
What Elements Drive Our Current System?
There are several key drivers of the existing system, and among
these are the money, providers, payers, and consumers. When
examining the behavior of any system, it is useful to look at the
series of rewards and consequences that drive behavior. In
health care, this means that much can be learned about the
system's behavior by following the money trail. What things are
reimbursed, under what circumstances, and with what
outcomes? Under what circumstances are consequences, such as
not getting paid, applied? In the current system, payments are
highest for procedures, and proceduralists such as surgeons,
gastroenterologists, and interventional cardiologists are all paid
much higher fees than are family practice physicians,
pediatricians, or hospitalists, all of whom manage medical care.
Hospitals function under the same premise. Approximately 75%
of the revenue for the average community hospital comes from

10. surgeries, and another 12% comes from diagnostic imaging
procedures. Additional amounts come from cardiac diagnostic
and interventional procedures. So, approximately 90% to 95%
of revenue comes from performing procedures on patients rather
than providing management of diseases through medications or
other noninvasive treatments. Thus, the system is focused on
rewarding procedures that lead to "curing" and focused away
from medical management of chronic diseases or prevention of
disease and illness.
Financial Elements
Without doubt, money is one of, if not the, most powerful
drivers of system functioning. For a classic example, we can
look at the old fee-for-service payment methodology prevalent
in the 1960s and 1970s, and contrast it with Medicare's
implementation of diagnosis-related groups (DRGs) as a
payment mechanism in 1983. Under fee-for-service health care,
providers used whatever procedures, equipment, and supplies
they felt were needed for care, and they submitted a bill that
charged for each item. The payors received the bill, corrected
any errors, and then issued a check for the corrected amount to
the providers. If a provider wished to make a larger profit, they
could provide more services or billable items to increase the
payment. It comes as no great surprise to note that utilization of
services and cost both rose rapidly under this methodology,
since there was no incentive to be frugal. When Medicare
changed its reimbursement to DRGs, the system began to
experience the impact of being paid one flat fee, set by DRG,
for the entire admission, regardless of how much care was
rendered. For example, if a hospital provided care at a cost
below the DRG payment, it was able to make a profit by
keeping the payment left after costs were covered. On the other
hand, if a hospital provided care that cost more than the DRG
payment, it lost money. The risk is all on the hospital or other
provider under a DRG model. DRGs are still the Medicare
method of paying for care, and Medicaid entities use them also.
Some private insurers are using a form of these, called case-rate

11. payments. They are still flat fees for the episode of care. The
goal of this methodology is to encourage providers to manage
their costs downward. However, a consequence of this approach
can be limiting some aspects of care for some patients. For
example, not everyone would qualify for certain procedures; a
patient with cancer may not qualify for a separate liver
transplant if the cancer has spread inside the body, for instance.
Providers may also choose to limit the types of drugs,
procedures, and supplies they provide. For example, a pharmacy
formulary may only allow two types of antibiotics for general
use rather than the whole spectrum of available antibiotics.
Another financial methodology that was popular in the 1990s is
called capitation. In this methodology, a health care provider
would assume care responsibilities for a pool of patients. The
insurer would pay the provider a monthly premium per member
at a set rate, and the provider would provide health care
services to members out of the premium pool of money. In some
arrangements, there would be carve-outs for new technology or
new pharmacology, which would add some reimbursement, but
in general, all regular costs would be borne by the provider
from the pool of premium dollars. The incentive in this model
shifts from providing procedures toward managing care so as to
decrease the demand for services. There are several
consequences to a capitation model. If the goal is to decrease
service demand, it imposes a type of rationing on which patients
qualify to receive what services. Cost/benefit ratios for services
are a frequent analytic tool in this model. For example, is there
a higher cost/benefit ratio to provide $100,000 for
immunizations, or is it better to use that $100,000 to provide a
kidney transplant to a patient with end stage renal disease?
Another consequence can occur from the makeup of the patient
population in the pool. If the pool insures primarily younger and
healthy patients, it tends to be very financially successful for
the provider rather than a pool that is heavily weighted toward
patients who have chronic diseases requiring multiple care
interventions. The difficulty of managing care appropriately has

12. made many capitation plans unsustainable for the long term.
In the current system of health care delivery, there is a mix of
compensation models in operation, and this is a factor in the
complexity of the system. There are still a few discounted fees
for service payers, and these are highly valued by the providers
in the system. The insurers may have negotiated significant
discounts from billed charges, but they still pay for the items
billed. There are also per diem types of payment contracts,
which pay a set fee for each day the patient is receiving
services. The fee may be relatively low per day, and this can
encourage longer lengths of stay, since typically the highest
costs per patient episode of care occur on the first one to two
days of the stay, particularly for surgery patients. Preferred
provider organizations may pay by case rate or per diem but
typically have very steep discounts negotiated with providers.
However, they also have rates that are negotiable rather than a
"take it or leave it" approach, and they are more open to
negotiating carve-out payments for special requirements, new
technology payments, or new ways of providing care. Since the
incentives and financial consequences for these various models
are different from each other, it makes the financial
management of health care very difficult. There is currently no
standard way of managing care, costs, and expenses across
financial models, other than the governmental payors for
Medicare and Medicaid. Hospitals juggle costs across payors
and negotiate higher rates with commercial, fee-for-service and
per diem payors to offset the losses from Medicare, Medicaid,
and patients with no insurance at all and little capacity to pay
their bills.
No discussion of the financial impacts on the current delivery
system can be complete without a review of the impact of the
number of Americans who are uninsured for health care
benefits. The rise of uninsured patients places a very large load
on the system, as providers must negotiate rates for insured
patients that cover their costs plus some of the costs of the
uninsured. The federal government has created some programs

13. to assist some hospitals to offset their costs for uninsured
patients, and a part of the requirement for nonprofit health care
entities is that they provide a certain amount of charity
care/uncompensated care in return for their tax-exempt status.
The rise in the number of uninsured patients who may not
qualify for Medicaid or other government assistance challenges
all providers in the system, since other forms of reimbursement
are not keeping up with the increase in uncompensated costs.
Private insurers and employers that offer health care insurance
are also balking at the increased premiums being requested by
providers who are trying to limit their losses. This is one of the
aspects of health care that the health care reform legislation has
tried to address by requiring Americans to have insurance or
pay a fine. It remains to be seen whether this will actually work
or not.
Providers
There are basically two main groups of providers in the system:
hospitals/clinics and physicians/other providers. Hospitals are
revenue generators in the current model, due to the focus on
payment for procedures, instead of being cost centers, which
would be true under capitation. Given the large variety of
payment approaches, hospitals are not always very focused on
managing the utilization of care, although this is done more and
more for hospitals with a high proportion of Medicare/Medicaid
patients in their mix. These entities also focus almost
exclusively on the episode of care, which begins when the
patient enters the hospital and ends when the patient leaves.
There is presently little focus on what happens before
admission, although there is some burgeoning interest in better
medical management to keep patients healthier and out of the
hospital whenever possible. Hospital costs are also increased by
the increasing regulatory focus leveled on them. The number of
coders, verifiers, and auditors of bills, charges, and charts are
growing as fast as and faster than many direct caregiver roles.
Hospitals are also beginning to shift care to an outpatient basis
where they can in order to reduce costs. The best way to

14. describe the role of hospitals in the current system is to imagine
it as a complex dance in which the steps constantly change, the
music can alter at a moment's notice, and no one knows where
the dance is actually going or what it is supposed to look like.
The other group of providers is the professionals, such as
physicians, surgeons, midlevel providers (physician assistants
and nurse practitioners), and other providers of care. Physicians
relate that they are having to work harder and longer for less
money. They feel controlled by insurance companies that
demand oversight of their care and preauthorization for many
services, and they have to increase their costs to manage the
complexities of getting paid, including meeting insurance
documentation requirements, preauthorizations for care,
verifications that care is appropriate and meets criteria, and
actually collecting their bills. Historically, physicians have
been able to select the care and procedures that they felt
patients needed and provide them without any necessity to
justify the choices. However, as the financial reimbursement
methodologies changed, so did the autonomy of physicians in
terms of the care that could be provided without outside
scrutiny. This has been a major dissatisfier, particularly for
older physicians who still remember the previous system.
Younger physicians who are just coming into practice have
largely just learned to accept and work within the new reality.
In addition, physicians struggle with arbitrary reductions in
reimbursement, particularly from Medicare and Medicaid. Some
physicians will no longer provide care to patients insured by
these government entities, since the reimbursement is low and
the documentation and verification demands are high.
Insurance Companies and Employers Who Provide Health
Insurance to Employees
Insurance companies, in general, are businesses that operate to
make a profit. They have shareholders to report to, and their
mindset is profit-oriented, unlike many providers, such as
nonprofit hospitals. In the current model, insurance companies
seek to insure large populations so that risk can be more evenly

15. distributed among a large group, which should have a
significant number of healthy people who will not require
services. Most insurance contracts in the current system are set
up to pay for procedures, and most contracts do not have a
significant focus on prevention or health maintenance. This is
changing as costs for providing care escalate, but it is still the
predominant approach. There is little control over utilization,
although many insurance companies have active utilization
review staff. The big leverage that insurance companies have is
the ability to deny payment based on some infraction of the
contract or based on care that is not covered in the contract.
Insurance companies would also like to expand their base of
contracted physicians, since those physicians have agreed to
accept a prenegotiated rate for specific services. At present, the
only exceptions to this are physicians providing emergency
care, who can bill and collect close to fee-for-service rates, and
physicians who are not contracted with a particular plan but
who "balance bill" the patient for the difference between their
charges and the insurance payment. This tends to enrage
patients, who thought that their health care insurance would
cover all the costs of care, only to discover that they have to
pay a noncontracted physician the balance of the bill. The
amounts for balance billing can easily run into five or six
figures for a complicated emergency, such as a trauma case.
Issues for insurance companies in the current system include the
need to contract with more and more physicians to provide care
to the large pool of insured people, the need to put tighter
controls in place to manage utilization of services and remove
unnecessary care, how to manage patient care so that the patient
may avoid expensive hospitalizations, how to negotiate with
hospitals for contracted rates when hospitals are attempting to
shift some of their costs for uncompensated care into the
payment to make up the difference, and worries about quality,
medical errors, and the costs that attach to those. Finally,
insurance companies have great worries about government
mandates for particular aspects of care, without any designated

16. funding to cover those mandates.
Businesses that offer health care insurance to their employees
face many of the same challenges. It is an important benefit,
and employees expect to get it. However, the costs of premiums
increase every year, and businesses are seeing a significant
portion of money that would otherwise be profit shifted to cover
the employer portion of the premium.
Consumers of Care
While patients are the recognized primary consumers of care,
the government (both state and national) has a vested interest in
the way the health care system operates. For one thing, health
care spending is a considerable portion of the gross national
product, and the percentage spent on health care continues to
rise. The public's fears of not having adequate coverage should
they become ill, of not being able to pay large unexpected bills
from noncontracted providers, and of losing access to insurance
if they move or lose their jobs all resonate with politicians and
were major driving forces in the health care reform legislation
of 2010. Government regulates health care in a major way,
ensuring that quality-of-care indicators are now publically
reported by the Centers for Medicare and Medicaid Services
(CMS). The goal of this is to improve the quality of health care
and reduce or eliminate errors that worsen patient conditions or
result in death. CMS has begun the push for improved quality,
partially driven by the Institute of Medicine's report on
preventable deaths from health care errors. Government also
ensures care for patients in emergency situations, with the
Emergency Medical Treatment and Active Labor Act, which
specifies that any emergency patient must receive an exam and
medical care to stabilize their condition before any request for
payment or financial authorization is done (Showalter, 2007).
CMS is also instituting pay for performance by withholding
payment for never-events, which are specified mistakes that, if
they occur, the portion of the hospitalization that results from
the error will not be paid to the provider.
Conclusion

17. The current design of our national health care system is clearly
a complex, intertwined tangle of competing interests, heavy
regulation, financial confusion and complications, lack of
alignment among providers and insurers, and confused patients
who simply want to get the care they need in a safe environment
with no large financial surprises at the end of it. It is very
difficult to measure the quality of different providers and to
determine who has the best cost structure for those who must
pay out of pocket. The story of the $7 aspirin and other such
stories continue to drive concerns about a system that is heavily
weighted toward complications and complexity and is very
difficult to navigate easily for any of the participants. As this
course continues, ways that the current system can be improved,
both on the micro and macro levels, and the changes that are
already in play that will destabilize the current system, will be
discussed. The question is: Will they make the new system
better?
References
Showalter, J. S. (2007). The law of healthcare administration
(5th ed.). Chicago: Health Administration Press.
Copyright 2011. Grand Canyon University. All Rights Reserved.