This document provides an overview of hospitals and the healthcare delivery system. It discusses the evolution of hospitals from places where people went to die to modern multiservice institutions. Hospitals are classified by type, ownership, size and services provided. Trends include consolidation, outpatient care replacing inpatient care, and increased partnerships between hospitals and other providers. Challenges include rising costs, physician decision making, and ensuring access to care.

1. INTRODUCTION TO THE
HEALTHCARE INDUSTRY: CHAPTER 2
Dr. Mandato

2. Hospitals
• Institutional setting of the healthcare delivery
system for personal healthcare
• Center of undergraduate and graduate
clinical training for health professions and CE
• Place where physicians are subject to peer
evaluations of professional work
• Middle Ages-place of refuge for poor, sick and
weary (hotel), rather than treating illness

3. Hospitals
• Have evolved from a place where a person went to die to
a multiservice institution providing interdisciplinary
medical care
• 1st public institution established for care of sick “pest
house”-1794 on Manhattan Island-Belle Vue; Ben Franklin
established first hospital in Philadelphia in 1751
• After turn of 20th century (1910), physicians stopped
carrying medical bags…as medical advancements grew, so
too did hospitals
• 1850-acute, chronic & psych hospitals-mold took shape
• AHA: primary agency that counts and classifies hospitals in
the US; AHA Guide-classification of hospitals

4. Hospitals
• Classification: general, special, rehab, chronic disease
and psychiatric
• 2009-5,008 community hospitals out of 5,795 of all
types
• 13 types of hospitals by medical condition (p. 38)
• Two principal types of control or ownership: private
and public
• Private: investor-owned, for-profit (proprietary) or
not-for-profit (voluntary)
• Public: federal, state, and local

5. Hospitals
• Beds: hospitals classified by number of beds regularly
maintained for inpatients (8 categories) see p. 38
• LOS: long term and short term (stays of 30 days or
more) # of inpatient days /# of admissions (total
facility LOS includes nursing home admissions and
inpatient days from nursing home types)
• Census: average number of people served on an
inpatient basis on a single day during the reporting
period- # of inpatient days/# of days in the reporting
period

6. Hospitals: Trends
• After 1975, a smaller number of hospitals were admitting
more patients in 2009-LOS dropped from 7.7 to 5.4
• Higher fixed costs in staff, facilities and equipment for
hospitals that adversely affected the smaller hospitals,
• Increased difficulty of hiring/retaining appropriate staff in
rural hospitals,
• Increased economies of scale for larger hospitals as the
availability of technology grew
• Increased quality of procedures-more frequently
performed

7. Hospitals
• Public Hospital: short term, general and certain
special hospital excluding federal-provide care
for those unable to be treated elsewhere;
homeless, poor, and uninsured (EDs filling gap)
• *Still primary health services resource for the
nation’s poor and those with no health
insurance
• Shrinking today-in serious trouble/play an
important role for a nation without universal
healthcare coverage-safety net

8. Hospitals
Hospital Distribution & Bed Supply:
• Hill-Burton-hospital construction program post
WWII
• Rural hospitals built where there were no
healthcare outlets previously
• No planning system
• Many small hospitals have gone bankrupt in last
20 yrs-low occupancy rates, inefficient, non-
competitive, #s continue to decline

9. Hospitals
Health Conditions of Hospitalized Patients:
• 2009-Six conditions accounted for 1/5 of
national hospital bill (p. 43)
• Certain procedures increased from 1997-
2009 and others decreased-reflective of
changes in technology, more effective
treatments replacing older ones

10. Hospitals
Hospital Structure:
• Admin, Medical (physicians), nursing and other
diagnostic and therapeutic services
• Admin: keeps institution running in all areas other
than in direct patient care: finance, personnel,
housekeeping, maintenance, public relations and
development (fundraising)etc.
• Medical Division: p. 45-organized by medical
specialties; additional med specialties & depts
organized around organs & organ systems where
physicians use both surgical and non-surgical
interventions (ophthalmology, urology)

11. Hospitals
Medical Staff Organization:
• Physicians order tests and treatments deemed necessary
• In recent years, certain limitations, ex: formularies, limited lists of
pharmaceuticals that will be provided by hospital pharmacy for
physician prescriptions (to keep # in stock under control and to
ensure that meds are being used correctly)
• Physicians affecting costs
• Medical Staff Committees: Exec-overall coordination and sets
general policy; Conference Committee-serves as a liaison between
medical staff and hospital governing board; Credentials
Committee-review applications and re-appointments; Infections
Committee, Pharmacy & Therapeutics, Tissue, Medical Records,
and Quality Assurance (p. 47)

12. Hospitals
Other Hospital Divisions:
• Nursing
• Diagnostic & Therapeutic Services
• Lab
• Others (p. 47)
Hospital Governance in Private Sector:
• Board of Trustees for not-for-profit
• Leader of Board or paid CEO
• Board of Directors-set policy and CEO carries it out
• For-profit-similar structure-board made up of owners

13. Hospitals: Trends in Hospital Sector
• Growth of multi-unit hospital systems
• Increased affiliations with non-hospital
medical providers in order to coordinate care
• Widespread use of ambulatory, home health
and community care in place of traditional
inpatient services and expanded use of new
communication and monitoring techniques

14. Hospitals
Complimentary Medicine:
• Large amounts of $ being spent on non-
allopathic medicine (acupuncture, massage,
pet therapy)
Luxury Medicine:
• Patients that pay cash and go anywhere-
luxurious accommodations

15. Hospitals: Issues
• Costly to build
• Imbalances among acute, long-term and ambulatory care (where to go
after acute care?) inadequate supply of affordable intermediate or long-
term care facilities
• Appropriate housing with social and supportive services for elderly who
cannot live entirely on own
• Physician-makes decisions about hospital resources but gets paid by
patients/insurance companies-does not have responsibility for hospital
financial health
• Problems with vertically organized admin structures that are not
integrated at service levels
• Programmatic and philosophical isolation of many hospitals of the real
health and medical problems of their communities
• Formation of mergers, closings and hospital networks as a result of
MCOs

16. Hospitals
Hospital Reform Solutions
• Mission-Oriented Hospital:
1. Mission defined by needs of community
2. Rational planning process provides
individuality and flexibility
3. Health center rather than illness center

17. Hospitals
Long Term Care:
-range of supportive, rehab, nursing and palliative
care services provided to people-from young to
old- capacity to perform daily activities is restricted
due to chronic disease or disability
-Nursing homes decreasing in numbers-more than
half funded by public funds (Medicaid)
-Solution: improve home healthcare services and
health promotion

18. Ambulatory Care
• Healthcare given to a person who is not a bed
patient-covers all health services other than
community health services and personalized
health services for institutionalized patient
• Private physicians-fee for service basis or
working with managed care-capitation
• Hospital-based ambulatory services

19. Hospital Outpatient Departments
1. Emergency services-EDs
2. Clinic services for outpatient depts (OPDs)
• Organized by specific disease, organ, or organ system-specific
clinics
• Overlap between two categories of services is increasing. MCO’s
are refusing to pay for unapproved, non-urgent care.
• Originally, hospital OPDs were staffed on a rotating basis by
hospital staff working without pay. Today, more sophisticated-
important part of training and educational needs of medical
students and house staff-most clinics found in teaching hospitals
• 3 categories of clinics (teaching hospitals): medical, surgical, and
other.

20. Ambulatory
5 Functional Categories of Physician Staff in
Teaching Hospital Clinics:
• Attending medical staff to draw clinical duty
• Medical School Faculty
• Assign inpatient physicians (junior staff)
• Residents, fellows and interns
• Hire outside physicians to exclusively work in
them on sessional or part-time basis

21. Ambulatory
Problems:
• Fragmented care
• Specialty clinics-higher compensation,
decreases future development of primary
care
• Not in tune with community and health
needs

22. Hospital Emergency Services
• Provide care to critically ill or injured
• Secondary well-equipped private physician
offices
• Source of patient admission to hospital
• Not critically ill but cannot reach private
physician
• Geographically out of region
• Have no insurance-nowhere else to go

23. Hospital Emergency Services
3 Categories of Patients:
1. Non-urgent, non-acute-minor in severity
2. Urgent, acute, but not severe
3. Emergent
Hospital Ambulatory services Outside of Hospital Walls:
-local gov’t provides personal ambulatory health services in
public hospitals or through local health departments or in
other venues-satellite locations
-Through advances in medicine-can offer services through
outpatient departments and ambulatory surgical centers

24. Public Health Agency Clinics &
Community Health Centers
-local gov’t provides personal ambulatory health
services in public hospitals or through local health
departments or in other venues-satellite locations,
TB, STDs and immunizations
-1970’s-NHCs movement emerged-one-stop
shopping for comprehensive ambulatory care and
educational programs
-global term (community health centers) for all the
diverse public and non-profit organizations and
programs that receive federal funding

25. Community Health Centers
5 Characteristics:
• Must be located in medically underserved area
• Provide comprehensive care services and supportive
services such as transportation/translation
• Must be available to all residents of service area with
fees adjusted upon patient’s ability to pay
• They must be governed by a community board with
health center patients comprising majority
• Must meet other performance and accountability
standards regarding their admin, financial and clinical
operations

26. Industrial Health Service Units &
School Health Clinics
• Industrial hazards/harmful substances
(asbestos, lead)
• In-plant health units
• Staffed with trained industrial nurses
• In school clinics-very little disease treatment-
focus is on screening for vision and hearing
difficulties and immunizations

27. Home Care & Hospice
• Hospitals without walls
• Medicare-largest single payer
• Hospice care-a program of palliative and
supportive care services that provides
physical, psychological, social and spiritual
care for dying persons, their families and
other loved ones

28. Summary
• Bulk of the need for medical care and the provision of
health services occurs in the ambulatory setting
• In US, disproportionate share of healthcare resources
is devoted to inpatient care, both acute and long
term-imbalance needs to be addressed
• Significant improvements could be achieved by the
widespread implementation of known health-
promotive and disease-preventive measures in the
ambulatory setting

29. QUESTIONS?