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Management Foundations of Healthcare

4 Contact Hours
This course is applicable for the following professions:
Advanced Registered Nurse Practitioner (ARNP), Certified Registered Nurse Anesthetist (CRNA), Clinical Nurse Specialist (CNS), Licensed Practical Nurse (LPN), Licensed Vocational Nurses (LVN), Midwife (MW), Nursing Student, Occupational Therapist (OT), Occupational Therapist Assistant (OTA), Other, Physical Therapist (PT), Physical Therapist Assistant (PTA), Registered Nurse (RN), Respiratory Therapist (RT)
This course will be updated or discontinued on or before Monday, January 24, 2022
CEUFast Inc. did not endorse any product, or receive any commercial support or sponsorship for this course. The Planning Committee and Authors do not have any conflict of interest.

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To earn of certificate of completion you have one of two options:
  1. Take test and pass with a score of at least 80%
  2. Reflect on practice impact by completing self-reflection, self-assessment and course evaluation.
    (NOTE: Some approval agencies and organizations require you to take a test and self reflection is NOT an option.)
Author:    Jeanna Winchester (Author)

Outcomes

Learners will understand and be able to apply foundational concepts in healthcare at any level across the healthcare continuum and in any area of administration.

Objectives

After completing this continuing education course, the participant will be able to meet the following objectives:

  1. Discuss the fundamental components of the Just Culture.
  2. Identify each pillar of the Seven Pillars of Patient Safety in everyday clinical practice.
  3. Document examples of private and government-based insurance programs available to American patients.
  4. Discuss how each of the 10 recommended steps in public health services can be implemented in healthcare practice.
  5. List the ways that a fictional case study in outpatient practice has been affected by changes in healthcare regulation, operations, and financing.

Introduction

Emma Seppala fromThe Washington Post1 discussed the effect that attitudes have on patient outcomes, e.g., compassion and demeanor. In her article, she describes how she and others have found that physicians who are kind and warm had patients who were happier with their healthcare experience and improved patient outcomes. In general, patients tended to have better outcomes that also coincided with reduced treatment times, and the physicians had less frequent “burn out.1

Seppala’s article is just one example of the vital role of healthcare practitioners. It shows how impactful being empathetic can be on a patient’s future outcomes. It should not be surprising that practitioners had reduced “burn out” rates as well.1 Nor should it be surprising that those patients who received compassionate care had lower medical expenditures by nearly half. These patients recovered from their symptoms more quickly with fewer visits, tests, and referrals,1 which kept them returning to the same practitioner for their healthcare, again and again.

These types of studies concluded that compassionate healthcare practice brings about a two-way benefit to the patients and the practitioners based on the empathy and activation of the brain’s reward centers in both parties involved.

The current course will be discussing many of the Foundations of Healthcare that a clinician or allied health professional may benefit from learning in order to improve their healthcare practice and the lives of the patients they treat. The Foundations of Healthcare are rooted in some history, some business concepts, and of course, ethical considerations in healthcare operations and clinical practice.

Foundational Concept #1: The Health Professional and Patient Relationship

The relationship between health professionals and patients is mediated in complex ways by an array of values and social norms. Sometimes these norms are explicit and overt, as when physicians take an oath to look after the welfare of their patients. In many cases, however, these values remain largely implicit and unarticulated, embedded in the culture and the institutions in which we work, learn, or live and in the roles that persons inhabit within those institutions. Sometimes scientists seek to understand these norms, to explain their origins and the myriad ways in which they shape the expectations, responses, emotions, and other dispositions of the persons who are affected by them. Understanding this factual information is also of fundamental importance for bioethics because medicine and the biosciences are not isolated fields that operate on an ideal frictionless plane. They are concrete social activities that take place within specific institutions, with their histories and traditions.2,3

Bioethics: the ethics of biological and medical research.1

For someone who considers the ethical side of the situation, however, this information is not the end of the inquiry. Instead, it provides the background against which a more fundamental set of questions is posed2,3:

  1. How should we think about the bond uniting healthcare providers and patients?
  2. How should we organize the larger concrete social institutions in which this bond is forged?
  3. What are the values that should shape the way people perceive and respond to others in these settings?
  4. Consider the different values implicit in the metaphors that have been used to describe the relationship between healthcare providers and patients: parent-child, teacher-student, seller-buyer, priest-penitent, oppressor–victim, friends, contractors.

The process of critical reflection in which latent norms are made explicit so that they can be discussed and evaluated publicly. This begins by understanding that a particular way of conceiving of the “patient” shapes the way we are disposed to perceive and respond to persons so labeled.2,3

The choice between these and other possible “models” of the provider-patient relationship will profoundly shape both our general outlook on medical ethics and our views on particular controversies. Not long ago, the patient-provider relationship was conceived almost exclusively in terms of patient-centered consequentialism that traced its roots back to the Hippocratic tradition. If we turn to the Hippocratic oath, we see that the [provider] pledges to “apply dietetic measures for the benefit of the sick according to [his/her] ability and judgment,” and he/she promises to keep their patients from “harm and injustice.” This “moral core” of the oath admirably commits the provider, above all else, to the health and well-being of their patients, as opposed to, for example, the advancement of medical science, profits, or cost containment. Unlike utilitarianism, a form of consequentialism that instructs agents to evaluate the consequences of their actions for some sizeable social group, patient-centered consequentialism enjoins providers to evaluate their conduct based on its consequences for the welfare of the individual patient.2,3

Consequentialism: the doctrine that the morality of an action is to be judged solely by its consequences.2,3

Utilitarianism: the doctrine that actions are right if they are useful or for the benefit of a majority.2,3

Perhaps the most controversial element of traditional Hippocratic ethics is the way it identifies the patient’s welfare with physical health. This strikingly narrow way of thinking about a person’s welfare allows the patient to be conceived of as a mostly passive recipient of the [provider’s] expert ministrations which are determined by the principles of [his/her] art and own “ability and judgment.” In this model, providers are thought to be better suited to make health-related decisions for their patients than are the patients themselves because the patient’s welfare is defined in terms of physical health, a subject about which provider, and other health professionals, have specialized technical knowledge.2,3

As a result, the medical tradition based on this oath has hardly considered lying or shielding the patient from the truth, a form of “injustice.” The following passage from the “Decorum,” another Hippocratic text, strikingly show this fact: “Perform [these duties] calmly and adroitly, concealing most things from the patient while you are attending to him. Give urgent orders with cheerfulness and serenity, turning his attention away from what is being done to him; sometimes reprove sharply and emphatically, and sometimes comfort with solicitude and attention, revealing nothing of the patient’s future or present condition.2,3

This perspective, however, is highly paternalistic because it entails that healthcare providers can legitimately restrict or dictate the conduct of even competent adults for the sake of that person’s good. On the traditional model, the physician’s duty to tell the truth to patients is subordinated to, and derived from, the more fundamental duty to “no harm.” If in the physician’s judgment, telling the truth would result in depression or otherwise adversely impact the care of a patient, then the physician would be duty-bound to withhold such information.2,3

Paternalism: the policy or practice on the part of people in positions of authority of restricting the freedom and responsibilities of those subordinate to them in the subordinates’ supposed best interest.2,3

In the 1960s and 1970s, however, the prevailing paternalism of American medicine was subjected to increased public scrutiny as a broad range of reform movements encouraged the public to question the authority of many dominant social institutions and the values embedded in the roles those institutions assigned to persons. Also, during these decades, a number of prominent research scandals came to light in which physicians had performed medical experiments on vulnerable populations such as2,3:

  1. The indigent, elderly patients of the Jewish Chronic Disease Hospital who were injected with live cancer cells without their consent
  2. The mentally disabled children of the Willowbrook State School who were purposefully infected with hepatitis
  3. The 600 poor, African American males whose syphilis was deliberately left untreated for forty years so that a generation of physician-researchers could study the natural history of the disease

High-profile revelations like this fueled distrust of the authority wielded by the medical profession, and out of the resulting scrutiny, there emerged a trenchant and multifaceted critique of medical paternalism.2,3

The question of truth-telling became a lightning rod for criticism as an increasingly skeptical public began to question the assumptions of traditional medical practice. Some critics attempted to refute the paternalistic approach to truth-telling on its terms, by demonstrating through opinion polls and empirical research that many patients want to be told the truth. Contrary to the assumption that physicians are well qualified to assess the risks and benefits of withholding the truth, it was argued that they rarely possess good evidence for their customary refusal to disclose the truth and that they have no specialized training to make such difficult value-laden decisions regarding what is really best for patients and their families.2,3

Controversially, this view equates welfare with physical health, ignoring the fact that how people value health is itself shaped by their broader values and life projects. Providers and patients do not always share the same values or aim at the same treatment goals. Whereas many providers tend to regard the extension of life as the absolute value, their patients might well value the quality of their future life more than its quantity.2,3

On a more fundamental level, though, paternalism fails to recognize the independent value of self-determination and the respect that people are entitled to as “choosing beings.” Because the traditional view leaves no room for self-determination as an essential aspect of a patient’s welfare, it fails to treat patients as the moral equals by denying them the information they need to make informed decisions about their person. Without sufficient information upon which to base a judgment, a patient’s consent to treatment will not be informed, and in the absence of informed consent, a patient’s self-determination is effectively thwarted.2,3

From this perspective, the provider always has an active duty to be truthful with patients—a duty that is grounded ultimately on the patient’s dignity as a choosing being. All the various tried and true forms of deceit—from outright lying to withholding information, to using medical jargon (“no need to worry; it is just a little carcinoma”)—undermine the status of the patient as an autonomous agent. In the vast majority of cases, respecting patient autonomy by engaging the patient’s powers of deliberation, choice, and agency is not just consistent with the desire to benefit the patient but is itself a means of doing so.2,3

As a result, the importance of respect for autonomy is widely recognized in contemporary medicine and can fairly be described as the cornerstone of contemporary bioethics.2,3

Placing respect for autonomy at the core of the provider-patient relationship represents the ideal of treating both providers and patients as responsible moral agents capable of making important decisions that will have a bearing on their lives.2,3

Now exists a perspective of the provider-patient relationship that is based on the metaphor of a contract or covenant. Contrary to the paternalistic or Hippocratic model, the patient is the party within the “contractual” relationship charged with making critical value-laden decisions that will affect the overall direction of treatment. The provider is responsible for presenting the available treatment options to the patient and carrying out the details of the agreed-upon plan of care with professional expertise. Importantly, the provider retains his/her moral integrity within the contractual model and is not reduced to a mere “body mechanic” or “engineer” doing the bidding of patients. Since a contractual relationship is a two-way street, the provider may decide to terminate the relationship if, for example, the patient makes unreasonable demands or is flagrantly non-compliant with treatment.2,3

The contractual understanding of the provider-patient relationship has proven to be a powerful counterpoint to traditional provider ethics. One of the most attractive features of the contractual model is its commitment to the fundamental moral equality of providers and patients.2,3

Some scrutinize that the contractual model is insensitive to the “transforming effects of illness.2,3” In order to fully respect patients as moral equals, providers will have to be far more active in influencing not only the decision-making process of individual patients but potentially the dynamics of the family or the institutional context in which patients make those decisions. Additionally, some have scrutinized that2,3:

  1. The primary responsibility of providers is to provide patients with the information that they need in order to make the relevant decision.
  2. The idea that apart from serving as a knowledge resource, providers respect the autonomy of patients by not interfering in the process of deliberation through which the patient arrives at a final decision.

These features are problematic. They profoundly ignore how sickness and disease can dampen and impede the ability of ill people to marshal the cognitive, affective, and social capabilities that they need in order to make decisions that accurately reflect the application of their values and priorities to their particular situation.2,3

For instance, denial, depression, guilt, fear, and even the desire not to give up hope can impede the ability of patients to process information effectively. This can be exacerbated by having to absorb large amounts of information that may be complex or technical and, therefore, utterly foreign to the patient. Similarly, illness can also impair the ability of patients to arrive at decisions that accurately reflect their values and priorities. Illness can be overwhelming. On top of the pain and fatigue that may be associated with the underlying condition, the medical intervention itself can involve unpleasant, painful, and even humiliating experiences. In order to cope with so many physical and emotional challenges, patients sometimes may seek to abdicate essential decisions to others, such as family members or physicians themselves. Alternatively, when patients become dependent on family for care and emotional or financial support, it can be challenging to prevent the values and priorities of those family members from crowding out, or supplanting, the values of the patient.2,3

Respect for autonomy, therefore, requires providers to be more than information delivery devices. They have to recognize the potential for abuse that is created by the functional inequalities that characterize their relationships with their patients. Providers have more knowledge than patients. They often face lower affective and intellectual barriers to decision making and fewer institutional hurdles to self-governance.2,3

Bringing this topic back to the idea of compassionate care, a provider can balance the moral and ethical considerations of maintaining a patient’s autonomy by providing care and compassionate experience. Taking the extra time to provide information to a patient and maintain their autonomy over their body, future, and decisions should be delivered in a caring and genuine way that promotes improved outcomes. Seeking the advice of mentors or other experience clinical staff in your facility or organization may help learn how to discuss these problematic topics while maintaining the respect of the patient.

Foundational Concept #2: Truth Telling and the Role of Informed Consent

In order to treat their patients as their moral equals in the face of these practical inequalities, providers may have to actively support patient decision making in a way that fosters or brings about greater patient autonomy.2,3

Here, the provider’s role is analogous to that of a counselor who engages the patient in a mutual effort to understand what the patient’s values are and to discern which medical interventions will best advance those values. The provider role can be conceptualized as that of a teacher or moral guide who, though shunning coercive methods, recommends to the patient the medically best choice. For example, instead of merely laying out all the pros and cons of gluttony and smoking, a “deliberative” provider will directly recommend that the patient eat in moderation and stop smoking altogether.2,3

Approaching the patient-provider relationship, this way, treats patients and physicians as moral equals, capable of reflecting together on the values that are relevant to a decision and justifying their decision to allow specific values to drive a particular decision ultimately.2,3

It embodies essential insights about the power of reasoning and shared reflection to shape an individual’s decision-making process. In practice, however, individual patients may neither possess the argumentative skills and intellectual bent required by this model nor welcome the challenge of defending their values to their provider. Therefore, there remains significant room for debate about which of these models best facilitates autonomy and avoids backdoor paternalism.2,3

The ethical cornerstone of the contractual and interpretive relationship is the insistence that the patient should make value-laden decisions bearing on his or her body and future life. The philosophical bases for this position are two distinct values: the advancement of the patient’s well-being and respect for the patient’s autonomy. Critics of the contractual and relationship contend that the patient, if adequately informed, is usually the best judge of his or her own best interests and should, therefore, possess the ultimate decision-making authority. Most of us value the ability to make decisions on our behalf, quite apart from the consequences.2,3

At the heart of all healthcare, practice is the idea of self-determination. It has received legal sanction in the doctrine of informed consent. As articulated by Justice Cardozo in a justly celebrated formulation in the case of Schloendorff v. Society of New York Hospital in 1914,2,3 “Every adult human being of adult years and sound mind has a right to determine what shall be done with his own body.” In order to consent freely, the patient must not be subject to any coercion or undue influence, and in order, the patient’s consent is informed, the patient must, as we shall see in the readings, receive adequate information on which to base his or her choice. A final threshold condition for informed consent, in the words of Cardozo, is that the patient has a “sound mind.2,3

How much information is required in order to render the patient’s consent truly informed? The law’s attempt to answer this difficult question can be found in the 1972 California Supreme Court case of Cobbs v. Grant. Mr. Cobbs, the plaintiff, had the misfortune of experiencing a number of remote “maloccurrences” incidental to his first surgery for a peptic ulcer. Since none of his physicians had warned him of any of these risks, Mr. Cobbs sued on the ground that his right to informed consent had been violated.2,3

At the time, he brought suit; however, the hapless Mr. Cobbs had little reason to think that his claim would hold up in court. In determining the scope of a physician’s duty to inform patients, most American jurisdictions had adopted a “professional standard” approach that placed lay claimants at a severe disadvantage. Under this rule, a physician’s conduct in disclosing information was to be judged by the standards observed by members of the local medical community. If it was not common practice to disclose a given risk, then the patient could not recover damages for breach of informed consent. Under this legal doctrine, ethical medical practice (as defined by the local medical community) made good law.2,3

Mr. Cobbs sued nonetheless, arguing that the “professional standard” approach placed too much discretion in the hands of physicians. Happily, for Mr. Cobbs, he again found himself on the cutting edge, but this time of a revolution in the law of informed consent. His case, Cobbs v. Grant, along with several others decided in the early 1970s, made the patient’s right of self-determination the measure of the doctor’s duty to reveal. Doctors were found to have a duty to disclose “all information relevant to a meaningful decisional process.” Instead of asking, “What do physicians ordinarily disclose around here?” the Cobbs court asked, “What information would a competent patient need to make a reasonable decision?2,3

In response to those critics who debunk the informed consent requirement as a sheer impossibility, presiding Judge Mosk noted that a “minicourse” in medicine is not required, nor is a useless list of unknown minor risks, but the patient must be told what a reasonable person would need to know about the procedure and its attendant risks in order to make a rational decision based on his or her values. In a passage strongly influenced by the contractual model, Mosk noted that the physician’s expert medical function is limited to describing the nature of the procedure and its risks; the actual decision must incorporate those risks, must weigh them against a patient’s values, hopes, and fears, and must, therefore, be left to the patient.2,3

Caregivers must find a delicate balance between being a source of strength and support to patients and a champion of the patient’s health interests while at the same time actively facilitating and respecting the autonomous decision making of patients. Crucial to this balance is the capacity of healthcare providers to recognize and to come to terms with their human limitations and fallibility, both on a personal, psychological level, as well as on an institutional and professional level.2,3

Previous reports on medical errors have estimated that upwards of 100,000 people die in U.S. hospitals annually as a result of medical errors.2,3 If these figures are accurate, medical mistakes surpass motor vehicle accidents, breast cancer, and AIDS as a cause of death in the United States. Increased public spotlight has occurred, as a result, as to the question of whether and to what extent medical professionals are obligated to disclose the occurrence of mistakes to patients or their families. It has also raised the issue of how mistakes ought to be dealt with inside the medical profession. Disclosing medical errors can isolate a caregiver, making him/her subject to recrimination and scapegoating from colleagues while opening up the possibility of litigation from patients. Many health professionals avoid disclosing mistakes to patients out of a fear of being sued, even though many patients report that a critical factor in their decision to litigate was the perception that caregivers were less than candid with them.2,3

Undoubtedly, the pursuit of individual excellence is a laudable and exemplary goal, but the activities of physicians, nurses, and other caregivers are often structured by more extensive systems, protocols, or routines that it may be possible to redesign in order to minimize the likelihood of error. The process of examining and testing these systems can only begin, however, with the recognition of deficiencies, and this will require a change in the way the medical profession and the public it serves to think about fallibility. Sweeping mistakes under the institutional rug can foster a perception of concealment and incubate resentment that may erode public trust and rob healthcare teams of their best chance to learn and improve. Profound social, psychological, and institutional hurdles to truth-telling can arise in almost any clinical setting.2,3

Foundational Concept #3: A Just Culture

In 2010, the Congress on Nursing Practice and Economics put out a position statement that has since been adopted by the American Nurses Association (ANA) Board of Directors. The purpose was to interpret the Just Culture concept in nursing and healthcare practice across the continuum of care. The ANA supports, “…the Just Culture concept and its use in healthcare to improve patient safety. The ANA supports the collaboration of state boards of nursing, professional nursing associations, hospital associations, patient safety centers, and individual healthcare organizations in developing regional and state-wide Just Culture initiatives.4

In 1997, John Reason wrote that a Just Culture creates an atmosphere of trust, encouraging and rewarding people for providing essential safety-related information.2-4 A Just Culture is also explicit about what constitutes acceptable and unacceptable behavior. Therefore, a Just Culture is the central component between patient safety and safety culture. Here, discipline needs to be tied to the behavior of individuals, and the potential risks their behavior presents more than the actual outcome of their actions.2-4

The Just Culture model addresses two questions2-4:

  1. What is the role of punitive sanction in the safety of our healthcare system?
  2. Does the threat and/or application of punitive sanction as a remedy for human error help or hurt our system safety efforts?

The model acknowledges that humans are destined to make mistakes, and because of this, no system can be designed to produce perfect results. Given that premise, human error and adverse events should be considered outcomes to be measured and monitored with the goal being error reduction (rather than error concealment) and improved system design. Also, the model describes three classes of human behavior that create predictability in error occurrence. The first is a simple human error, e.g., inadvertently doing other than what should have been done. The second, at-risk behavior, occurs when a behavioral choice is made that increases risk where risk is not recognized or is mistakenly believed to be justified. Finally, reckless behavior is an action taken with conscious disregard for a substantial and unjustifiable risk.2-4

Under the Just Culture model, creating an open, fair, and Just Culture relies on developing managerial competencies that appropriately hold individuals accountable for their behaviors, and investigates the behavior that led to the error. Concerning human error, managers console the individual, then consider changes in processes, procedures, training, and design. At-risk behavior suggests the need for coaching and managing through removing incentives for at-risk behavior, creating incentives for healthy behaviors, and increasing situational awareness. With reckless behavior, it is necessary to manage through remedial action and/or punitive action. Ultimately, the Just Culture model is about creating an open, fair, and Just Culture, creating a learning culture, designing safe systems, and managing behavioral choices.2-4

The model sees events not as things to be fixed, but as opportunities to improve understanding of both system risk and behavioral risk. It is also about changing staff expectations and behaviors to ones such as looking for the risks in the environment; reporting errors and hazards; helping to design safe systems; and making safe choices, including following procedure; making choices that align with organizational values; and never signing for something that was not done.2-4

The Just Culture is supported by the ANA because The Just Culture concept correlates with nurses’ critical thinking skills and the nursing process in determining the root cause of an error. Since nursing relies heavily on assessing a situation, diagnosing a problem, and creating a plan to improve or avoid that problem, the Just Culture concept is a natural fit for any environment where nursing care is delivered.2-4

For staff nurses and students, the concept allows feeling more at ease reporting problems and a sense of accountability for system improvement. For nurse administrators and educators, the Just Culture concept represents an opportunity to improve care delivery systems for patients/individuals, and to improve the environment for those that work in that system, including nurses but extending to all others that work within it. Intimidation and disruptive behaviors can foster medical errors, contribute to poor patient satisfaction and preventable adverse outcomes, increase the cost of care, and cause qualified clinicians, administrators, and managers to seek new positions in more professional environments. Safety and quality of patient care are dependent on teamwork, communication, and a collaborative work environment.2-4

To ensure quality and promote a culture of safety, healthcare organizations must address the problem of behaviors that threaten the performance of the healthcare team. All healthcare organizations should implement a zero-tolerance policy related to disruptive behavior, including a professional code of conduct and educational and behavioral interventions to assist nurses in addressing disruptive behavior.2-4

The Just Culture concept establishes an organization-wide mindset that positively impacts the work environment and work outcomes in several ways. The concept promotes a process where mistakes or errors do not result in automatic punishment, but rather a process to uncover the source of the error. Errors that are not deliberate or malicious result in coaching, counseling, and education around the mistake, ultimately decreasing the likelihood of a repeated error. Increased error reporting can lead to revisions in care delivery systems, creating safer environments for patients and individuals to receive services, and giving the nurses and other workers a sense of ownership in the process. The work environment improves as nurses and workers deliver services in safer, better-functioning systems, and the culture of the workplace is one that encourages quality and safety over immediate punishment and blame.2-4

Thus, the ANA Recommended2-4:

  1. That the ANA officially endorse the Just Culture concept as a strategy to reduce errors and promote patient safety in healthcare.
  2. That the ANA promotes and disseminates information about the Just Culture concept in ANA publications, through constituent member associations, and ANA affiliated organizations.
  3. That the ANA promotes the collaboration of state government, boards of nursing, all healthcare professional associations, and hospital and long-term care associations in the development and implementation of Just Culture initiatives in each state.
  4. That the ANA encourages continued research into the effectiveness of the Just Culture concept in improving patient safety and employee performance outcomes.
  5. That nurse administrators in any level of oversight act on their dual role as representatives of nursing and stewards of the organization to promote safe systems in the spirit of Just Culture to promote safe patient outcomes and protect employees from failure.
  6. That direct-care registered nurses advocate for the use of the Just Culture concept in their practice settings.
  7. That educators incorporate Just Culture concepts into nursing curricula at every level and adhere to the Just Culture concepts in the academic setting.
  8. That ANA collaborates with other healthcare professionals to develop Just Culture joint statements.
  9. That the ANA encourages all healthcare organizations to implement a zero-tolerance policy related to disruptive behavior, including a professional code of conduct and educational and behavioral interventions to assist nurses in addressing disruptive behavior.

It is important to note that The Just Culture concept is also supported by every medical professional and allied health licensure association or organization2,3. This perspective has proven, time and again, to be essential to providing quality medical care and is a foundational concept in healthcare. Every provider or medical professional can benefit from implementing this concept in their everyday clinical practice.

Foundational Concept #4: The Pillars of Patient Safety

For the healthcare manager, administrator, practitioner, clinician, or allied health professional, another foundational concept is patient safety. Patient safety is a primary focus in healthcare and bioethics; as such, the Seven Pillars of Patient Safety have been established.2,3

The Seven Pillars of Patient safety have been established because, in the healthcare industry, many healthcare practitioners have been actively engaged in a culture of silence about essential concerns, such as patient incidents, reporting, and disclosure. Understandably, practitioners and administrative staff do not wish to have this process go forward if it is going to be conducted in such a way that an innocent person is erroneously punished, but they also do not want to see unsafe practices continue. The Seven Pillars is a perspective that can facilitate talking about these issues, as well as implementing some ways to prevent them from repeating in the future without perpetuating a punitive culture that continues to result in unreported incidents.2,3

The Seven Pillars of Safety: an approach that consists of seven processes that are deployed in the wake of a patient harm event, including2,3:

  1. incident reporting
  2. investigation while holding hospital bills and professional fees
  3. early communication with patient/family
  4. full disclosure, apology, and rapid remedy if appropriate
  5. system improvement
  6. data tracking and evaluation
  7. education and training

The driving hypothesis is that early and consistent communication with patients and/or family members after an adverse event will serve to maintain trust between the patient and the health system and yield improved learning, patient outcomes, and reduced medical liability.2,3

The Seven Pillars of Safety begins with incident reporting because healthcare as a community is tasked with creating a more open and Just culture. As previously discussed, in a Just Culture, individuals must be able to feel as if they can fess up to an incident, early on, and address it before it becomes something that might spiral out of control. The next pillars include investigation and communication/ full disclosure, helping to promote an atmosphere of information sharing among departments, staff, and even healthcare entities. If everyone on the team is behind the same goal of reducing medical error and improving patient care processes, then the entire team can help with these pillars. Apologies, systematic changes, and more extensive interaction with the community to improve operations are just some of the basic things involved in the Seven Pillars of Patient Safety. It all begins with being open and honest about how medical errors can occur in medicine.2,3

The Sixth Pillar is Data Tracking. A well-protected and functional database of patient information can prove to be invaluable in tracking patient outcomes and reducing medical error. Data tracking can help establish quality risk management policies and processes and help us learn from past errors and risky situations. After the risk management process has run its course, we move onto the Education/Training pillar. This pillar changes the course of the future and helps us grow as a healthcare community in ways that will only improve our patient care processes and our patients’ clinical outcomes!2,3

Improving our patient care processes frees up providers to establish and continue a caring and compassionate approach to healthcare.1 If a provider and a patient can navigate through the healthcare process more efficiently, more thought and focus can be devoted to supporting the patient, rather than the process itself.

A Just Culture, compassion, autonomy, empathy and safety are of the utmost priority to a provider. For a patient, the cost of treating their condition may be a major hurdle to recovery. Next, let’s take a look at the hurdles outside the patient-provider relationship that can impede or interrupt recovery.

Foundational Concept #5: Financing Healthcare Drives Healthcare Delivery

In healthcare, illnesses requiring expensive treatments and hospitalization pose a substantial financial risk to most people. Similarly, the cost of most surgeries and subsequent treatment would be beyond the means of many people to pay out of pocket. Insurance, in a general sense, is primarily designed to protect people against such eventualities. Healthcare providers are also subject to substantial risks when they are required to treat the sick and injured who cannot pay.5-10

The complexity of financing is one of the primary characteristics of medical care delivery in the United States. Single-payer systems in countries such as Australia, Canada, and the United Kingdom simplify healthcare financing: taxes are raised by the government to provide health insurance to the citizens, and private financing plays a minor role for those who want more extensive coverage than what the government offers. In the United States (US), both public and private financing play substantial roles.5-10

In the US public sector, the government has created a multitude of tax-financed programs; each program serves a defined category of citizens provided they meet the established qualifications. Insurance overlap is also relatively common. For example, a significant number of Medicare beneficiaries either qualify for Medicaid or have purchased private supplementary insurance to pay for expenses not covered by Medicare. In the private sector, financing for health insurance is shared between the employer and the employee; the employer provides the bulk of the funding. Self-employed people purchase health insurance in the open market.5-10

In 2014, for the unemployed or the underemployed (those working part-time who do not qualify for employer-sponsored health insurance), the government attempted to facilitate the purchase of health insurance with The Affordable Care Act (ACA).2,3

NOTE: For this course, ACA will not be evaluated in-depth. This is a complicated and ever-changing piece of legislation. However, subsequent sections will address some aspects of ACA that are consistent in today's culture, such as the change from the retrospective payment system to the prospective payment system and the current changes to Medicare. This will be covered in more depth later on.

Overall, the actual payments to providers of care are handled in numerous ways. Patients generally pay a portion of the costs directly, but the bulk of these costs are paid through a variety of insurance plans and government programs. The government and some large employers use the services of third-party administrators to process payment claims from providers.5-10

Many Americans have a combination of both government-based insurance and private insurance. For example, government-financed programs, such as Medicare and Medicaid, integrate the functions of financing and insurance, but contracted third-party administrators make the actual payments to the providers after services have been delivered. Traditional insurance plans integrate the functions of insurance and payment, whereas both employers and employees provide financing. Managed care has gone one step further in integrating all four functions of healthcare delivery, e.g., financing, insurance, delivery, and payment.5-10

Foundational Concept #6: It All Begins with Insurance

Insurance: a mechanism for protection against risk. In the contest of insurance, risk refers to the possibility of a substantial financial loss from some event. 5-10

Insurance, in general, is based on a few fundamental principles.5-10

  1. Risk is unpredictable for the individual insured.
  2. Risk can be predicted with a reasonable degree of accuracy for a group or a population.
  3. Insurance provides a mechanism for transferring or shifting risk from the individual to the group through the pooling of resources.

Actual losses are shared on some equitable basis by all members of the insured group. Based on underwriting, the insurer determines a fair price to ensure against specified risks. The amount charged for insurance coverage is called a premium, which is usually paid every month.5-10

As its central role, health services financing pays for health insurance premiums. Providers generally rely on the patients’ insurance to get paid for the services they deliver. The various methods used to determine how much providers should be paid (i.e., reimbursement) for their services are also closely intertwined with the broad financing function. To a large extent, financing determines who has access to healthcare and who does not, although many uninsured people have access to charitable care, and the charity will continue to play a unique role for a sector of the population in the United States.5-10

In general, experts agree there always will be a certain amount of uninsured people in America, e.g., illegal immigrants, young, healthy individuals who choose not to buy insurance, and those who do not qualify for Medicaid based on income. The demand for healthcare greatly influences its financing. Health insurance increases the demand for covered services; the demand would be less if those same services were paid out of pocket. Increased demand means more significant utilization of health services, given adequate supply.5-10

According to economic theory, insurance lowers the out-of-pocket cost of medical care to consumers; hence, they will consume more medical services than if they had to pay the entire price out of their own pockets. Consumer behavior that leads to higher utilization of healthcare services when the services are covered by insurance is referred to as moral hazard. Financing also exerts powerful influences on supply-side factors, such as how much healthcare is produced in the private sector. Healthcare services and technology proliferate when services are covered by insurance. Even new services and technologies may start emerging, and new models of an organization may form.5-10

Conversely, when reimbursement is cut, the supply of healthcare services can also be curtailed. Issues pertaining to reimbursement for services are critical in health services management decision making. Demand-side factors, including reimbursement, typically guide health services managers in evaluating the type and extent of services to offer. The amount of reimbursement needed to recoup capital costs over time also heavily influences decisions such as the acquisition of new equipment, renovation or expansion of facilities, and launching of new services.5-10

Similarly, financing can influence the supply and distribution of healthcare professionals. As an example, employer financing for dental insurance spawned the growth of dentists and dental hygienists. Mechanisms for reimbursing physicians, such as the resource-based relative value scale (RBRVS) used by Medicare, directly affect physicians’ incomes. One of the main goals of RBRVS, implemented in 1992, was to entice more medical residents into general practice by increasing the reimbursement for services provided by generalists. Due to other factors, however, the imbalance between generalists and specialists has persisted. Financing eventually affects—both directly and indirectly—the total healthcare expenditures incurred by a healthcare delivery system.5-10

In the United States, multiple subsystems of healthcare delivery have developed, either through market forces or through government action, to address the unique needs of specific population segments.5-10

The insured may also be referred to as the enrollee or member (in a private health insurance plan) or the beneficiary (in a public health insurance plan). The insuring agency that assumes risk is called the insurer or underwriter. Underwriting is a systematic technique for evaluating, selecting (or rejecting), classifying, and rating risks.5-10

Insurance requires some cost-sharing so that the insured assumes at least part of the risk. The purpose of cost-sharing is to reduce the misuse of insurance benefits. Three main types of cost-sharing are utilized in private health insurance: premium cost-sharing, deductibles, and copayments. In employer-sponsored health insurance, the employee is generally required to share in the total cost of the premium. In addition to paying a share of the cost of premiums through payroll deductions, insured individuals also pay a portion of the actual cost of medical services out of their own pockets. These out-of-pocket expenses take the form of deductibles and copayments and are incurred only if and when medical care is used. A deductible is the amount the insured must first pay before any benefits by the plan are payable. In most cases, the deductible must be paid on an annual basis.5-10

The deductibles, however, vary considerably by the type of plan. A plan may also have separate deductibles for hospitalization and outpatient surgery. With few exceptions, all health insurance plans must provide certain recommended preventive services and immunizations without cost-sharing, as mandated by the ACA. Another type of shared cost is the copayment—the amount that the insured has to pay out of pocket each time health services are received after the deductible amount has been paid. For example, a plan could require a copayment of $25 for a primary care visit and $35 for a visit to a specialist.5-10

A copayment is cost-sharing in the form of a dollar amount; cost-sharing in the form of a percentage amount is called coinsurance. A plan with an 80:20 coinsurances, for example, pays 80% of all covered medical expenses after the deductible requirement has been met; the insured pays the remaining 20%. Most plans include a stop-loss provision, which is the maximum out-of-pocket liability an insured would incur in a given year.5-10

The ACA mandates health plans (with some exceptions) to limit the stop loss to a specific amount for single plans and a specific amount for family plans. It is vital to check on these current rates each year. Under the ACA, lifetime limits are prohibited for all health plans sold or renewed on or after September 23, 2010.1-4 The rationale for cost-sharing is to control the utilization of healthcare services. Because insurance creates a moral hazard by insulating the insured from the cost of healthcare, making the insured pay part of the cost promotes more responsible behavior in healthcare utilization.5-10

The modern health insurance industry is pluralistic; that is, private insurance includes many different types of health plan providers, such as commercial insurance companies (e.g., Aetna, Cigna, Metropolitan Life, Prudential), Blue Cross/ Blue Shield, self-insured employers, and managed care organizations (MCOs). The nonprofit Blue Cross and Blue Shield Associations function much like private health insurance companies.5-10

Group insurance can be obtained through an organization such as an employer, a union, or a professional organization. A group insurance program anticipates that a substantial number of people in the group will participate in purchasing insurance through its sponsor. The members of the group share risk and often, the cost of insurance.5-10

A large employer often has a workforce that is big enough and sufficiently well diversified in terms of risk to warrant offering its insurance. Rather than pay insurers a dividend to bear the risk, large employers can assume the risk by budgeting funds to pay medical claims incurred by their employees. This practice, which is referred to as self-insurance, gives employers better control over the health plan. Self-insured employers can protect themselves against any potential risk of high losses by purchasing reinsurance from a private insurance company.5-10

Although most Americans obtain health insurance coverage through employer-sponsored group plans or government programs, individually purchased (nongroup), private health insurance is an essential source of coverage for many Americans. The family farmer, the early retiree, the employee of a business that does not offer health insurance, and the self-employed make up the bulk of the people who rely on private nonemployer-related health insurance.5-10

Insurance companies, MCOs, Blue Cross/ Blue Shield, and the government (for Medicare and Medicaid) are referred to as third-party payers, with the other two parties in the arrangement being the patient and the provider. Payment made by third-party payers to the providers of services is called a reimbursement.5-10

Fee-for-service reimbursement is based on the assumption that services are provided in a set of identifiable and individually distinct units of services. For example, physician services may include units such as an examination, x-ray, urinalysis, and a tetanus shot. For surgery, individual services may include an admission kit, numerous medical supplies (each accounted for separately), surgeon’s fees, anesthesia, anesthesiologist’s fees, recovery room charges, etc. Each of these services is separately billed. Initially, fee-for-service charges were set by providers, and insurers passively paid the claims. Later, insurers started to limit reimbursement to a usual, customary, and reasonable amount that was determined by each payer.5-10

A Fictional Case Study of a Healthcare Entity’s Revenue Cycle

In another course by Jeanna Winchester, Ph.D. (Fundamentals of Business Management for the Healthcare Professional11), a generic fictional case study of a healthcare entity’s theoretical revenue cycle was discussed. Here, we can expand on this case study by integrating many of the concepts we have learned so far and continue to build on them throughout this exploration of Foundational Concepts in Healthcare.

In the previous course, we proposed a generic company named called “Healthcare Entity #1.”

healthcare_entity

Figure 1. Original Figure by J. Winchester Ph.D. Proposed Revenue Cycle for a Fictional Case Study of a Generic Outpatient Clinic or Small Healthcare Entity explored in the course, Fundamentals of Business Management for the Healthcare Professional.11

Key Points About the Fictional Case Study/Healthcare Entity’s Revenue Cycle11:

  1. Revenue cycle management is a complicated process that we need to be familiar with to run Healthcare Entity #1 successfully.
  2. There are some basic revenue cycle management steps Healthcare Entity #1 will need to take, and we have an option to accomplish this with a third party or by taking care of it in-house with our software system.
  3. Managing the revenue cycle in a healthcare environment begins with the pre-authorization of patients since we cannot offer services without taking care of this key task.
  4. We can avoid billing issues after providing services by having a policy always to verify eligibility and benefits.
  5. It is best to submit claims using a system that has a denied claims manager, so Healthcare Entity #1 can fix errors quickly and get paid in a timelier manner.
  6. Healthcare Entity #1’s revenue cycle management software should make it easy to customize financial reports for the organization so we can quickly get an overview of the state of our practice.

Case Study Conclusions: the revenue cycle self-propels this healthcare entity's revenue cycle forward. At each step, this entity can evaluate and improve the process, thereby increasing their Patient Capture rates and increase revenue. Consistency with this cycle is the key to success! No matter how excellent a job your team is doing in your medical practice/healthcare entity/etc., you can not keep the lights on, and the doors open just based on the quality of care being provided! For additional details and explorations, see Fundamentals of Business Management for the Healthcare Professional.11

Now that you have a good overview of the steps in the healthcare revenue cycle management process, we are going to apply what we have previously learned and incorporate it into Healthcare Entity #1’s Revenue Cycle. This cycle represents the quality of care, efficiency of service, and other barriers that may exist between having a practice and being able to sustain that practice with a consistent flow of patients. As a reminder, it is essential to note that in healthcare, providing better care with a compassionate viewpoint, from the perspective of a Just Culture and taking into account the Seven Pillars of Patient Safety, all help to drive the revenue cycle, not hinder it.11

These foundational principles establish that the quality of care and improved patient outcomes continues to bring more patients into one’s practice/healthcare entity. The revenue cycle represents the way a healthcare entity is managed from an operational, financial, and business viewpoint, all of which contribute to the efficiency and quality of the patient’s experience as they are receiving healthcare services. Thus, we can work with the constraints of financing healthcare, while still incorporating the ethical and foundational lessons we have learned so far. Thankfully we all work in a business where better care and more ethical principles can result in more revenue and sustainability for those providing the care. Both the patient and the provider can have improved outcomes and quality of life.11

The Fictional Case Study’s revenue cycle is affected by governmental, political, sociological, economic, and ethical constraints placed on healthcare as a whole; these factors can influence the flow of patients in the door.5-10 As healthcare becomes more unstable with rules and regulations that little to no system is in place, patient capture rates go down, and cash flow is affected. As healthcare rules and regulations are incorporated, systems are established, and companies can adjust to the changes, patient capture rates increase, and stability in cash flow is more easily attained. Many outpatient/private practice providers must weather these ebbs and flows in healthcare.

For example, our healthcare entity could be an outpatient physical therapy practice in Adults that took both Medicare and most private insurances, but not Medicaid. Physical therapists, like speech therapists, can practice privately independent of a Physician’s oversight.5-10,12

This outpatient physical therapy clinic would need all the steps covered in our Healthcare Entity # 1’s Revenue Cycle. The physical therapists would have a defined scope of practice, and they would also be tasked with promoting a Just Culture. There are online patient-provider portals that come with outpatient billing services to facilitate accounts receivables/denials management and can be very helpful to the physical (or speech!) therapist in private practice. Assistants and technicians are available to support the physical therapist to see multiple patients at a time and improve patient capture rates.5-10

Several of their patients may have Managed Care health maintenance organizations (HMO). Others may utilize their Medicare and Medicare Supplement plans. Some, yet, may need to bill their Workman’s Compensation plans because their injuries were due to a work-related accident. Additionally, disabled or pediatric patients may utilize Medicaid benefits. Patients may communicate with the provider through the patient portal and direct face to face contact during their physical therapy sessions. The patients’ electronic medical record (EMR) is stored in the database, available for data tracking and future improved patient outcomes.

From there, the billing service can pull relevant financial, insurance, and other service-related information for the coding/billing submission process. They are also the point of contact for all remission/denials management steps to get that revenue into the clinic’s accounting books. Finally, correspondence and other at-home tasks or telemedicine may be delivered to the patient from there.5-10

Health maintenance organization (HMO): a network or organization that provides health insurance coverage for a monthly or annual fee. An HMO is made up of a group of medical insurance providers that limit coverage to medical care provided through doctors and other providers who are under contract to the HMO.

If the independent physical therapy outpatient practice is not aware of current insurance regulations and practices, this can detrimentally affect their revenue cycle. Errors in coding and billing can occur. Submissions may be rejected and have long delays or fines associated with the errors. This would throw off the remaining steps in the revenue cycle until, eventually, it circled back around and affected the scheduling, pre-registration, charge entry, and patient capture steps. A scenario like this could spiral out of control until the practice is no longer solvent and able to stay open. Thankfully, continuing education on these topics is widely available on the state and national conference level, as well as online methods, such as this one.5-10

In general, when the services covered by insurance are less than the cost of the services, providers would balance the bill—that is, they ask the patients to pay the difference between the actual charges and the payments received from insurers. Historically, providers preferred the fee-for-service method, which fell into disfavor with payers because of cost escalations. In response, private payers, as well as the government, have devised other methods aimed at limiting the amount of reimbursement. Some modified versions of fee-for-service reimbursement are still in use.5-10

In bundled payments or package pricing, a number of related services are included in one price. For example, standard vaginal delivery may have one set fee that provides for predelivery and postdelivery care. Optometrists sometimes advertise package prices that include the charges for eye exams, frames for eyeglasses, and corrective lenses. Research has shown that bundled payments can align incentives for providers to work closely together across specialties and healthcare settings.5-10

Foundational Concept #7: The Rise of Managed Care in America

Managed Care seeks to achieve efficiency by integrating the essential functions of healthcare delivery, and it employs mechanisms to control (manage) utilization and cost of medical services. Managed care is the dominant healthcare delivery system in the United States today. It covers most Americans in both private and public health insurance programs through contracts with a managed care organization (MCO), such as an HMO or a preferred provider organization (PPO). The MCO, in turn, contracts with selected healthcare providers—physicians, hospitals, and others—to deliver healthcare services to its enrollees. The term enrollee (member) refers to the individual covered under a managed care plan. The contractual arrangement between the MCO and the enrollee—including descriptions of the various health services to which enrollees are entitled—is referred to as the health plan (or plan for short).5-10

Preferred provider organization (PPO): a medical care arrangement in which medical professionals and facilities provide services to subscribed clients at reduced rates. PPO medical and healthcare providers are called preferred providers.5-10

Managed care organization (MCO): an organization that practices managed care principles. It is a health plan or health company that works to provide quality care at a cost-effective price.5-10

The MCO pays providers either through a capitation (per head) arrangement, in which providers receive a fixed payment for each enrollee under their care or via a discounted fee arrangement. Providers are willing to discount their services for MCO patients in exchange for being included in the MCO network and being guaranteed a patient population. As part of their planning process, health plans rely on the expected cost of healthcare utilization, which always runs the risk of costing more than the insurance premiums collected. By underwriting this risk, the plan assumes the role of the insurer.5-10

Foundational Concept #8: Major Public Health Systems in America

The mission of the public health system is to improve and protect community health. The Institute of Medicine’s Future of Public Health in the 21st Century has outlined the need for a more robust public health infrastructure and a population-based health approach for a healthier America.5-10

The National Public Health Performance Standards Program identifies ten essential public health services that a system needs to deliver5-10:

  1. Monitoring health status to identify and solve community health problems
  2. Diagnosing and investigating health problems and hazards
  3. Informing, educating, and empowering people about health problems and hazards
  4. Mobilizing the community to identify and solve health problems
  5. Developing policies and plans to support individual and community health efforts
  6. Enforcing laws and regulations to protect health and safety
  7. Providing people with access to necessary care
  8. Assuring a competent and professional health workforce
  9. Evaluating the effectiveness, accessibility, and quality of personal and population-based health services
  10. Performing research to discover innovative solutions to health problems

The military medical care system is available mostly free of charge to active-duty military personnel of the U.S. Army, Navy, Air Force, and Coast Guard, as well as to members of certain uniformed nonmilitary services such as the Public Health Service and the National Oceanographic and Atmospheric Association.5-10

It is a well-organized system that provides comprehensive services, both preventive and treatment-oriented. Services are provided by salaried healthcare personnel. Various types of essential services are provided at dispensaries, sick bays aboard ships, first aid stations, medical stations, and base hospitals. Advanced medical care is provided in regional military hospitals. Families and dependents of active-duty or retired career military personnel are either treated at the hospitals or dispensaries or are covered by TriCare, a program that is financed by the U.S. Department of Defense. This insurance plan permits the beneficiaries to receive care from both private and military medical care facilities.5-10

The Veterans Administration (VA) healthcare system is available to retired veterans who have previously served in the military, with priority given to those who are disabled. The VA system focuses on hospital care, mental health services, and long-term care. It is one of the largest and oldest (dating back to 1930s) formally organized healthcare systems in the world. The entire VA system is organized into 21 geographically distributed Veterans Integrated Service Networks (VISNs). Each VISN is responsible for coordinating the activities of the hospitals and other facilities located within its jurisdiction. Each VISN receives an allocation of federal funds and is responsible for equitable distribution of those funds among its hospitals and other providers. VISNs are also responsible for improved efficiency and cost containment.5-10

Subsystems for Special populations, also called vulnerable populations, refer to those with health needs but inadequate resources to address those needs. For example, they include individuals who are sick and uninsured, those belonging to certain minority groups or of special immigration status, or those living in geographically or economically disadvantaged communities. They typically receive care through the nation’s safety net, which includes public health insurance programs such as Medicare and Medicaid, and providers such as community health centers, migrant health centers, free clinics, and hospital emergency departments. Many safety net providers offer comprehensive medical and enabling services—such as language assistance, transportation, nutrition and health education, social support services, and childcare—according to individual needs. Health centers have contributed to significant improvements in health outcomes for the uninsured and Medicaid populations and have reduced disparities in healthcare and health status across socioeconomic and racial/ ethnic groups.5-10

Medicare is one of the largest sources of public health insurance in the United States, serving the elderly, the disabled, and those with endstage renal disease. Managed by the Centers for Medicare and Medicaid Services (CMS), another division within the DHHS, Medicare offers coverage for hospital care, post-discharge nursing care, hospice care, outpatient services, and prescription drugs. Medicaid, the third-largest source of health insurance in the country, provides coverage for low-income adults, children, the elderly, and individuals with disabilities.5-10

This program is also the largest provider of long-term care to older Americans and individuals with disabilities. The program has seen significant expansion under the ACA. In 1997, the U.S. government created the Children’s Health Insurance Program to provide insurance to children in uninsured families. The program expanded coverage to children in families that have modest incomes but do not qualify for Medicaid.5-10

Vulnerable populations residing in communities without safety net providers (e.g., public health programs) must often forgo care or seek services from hospital emergency departments if available nearby. Safety net providers (such as those discussed above), in turn, face enormous pressure from the increasing number of poor and Medicaid-insured in their communities. In response to this issue, Integrated delivery systems (IDSs), or health networks, started in the early 2000s. An IDS has been defined as a network of healthcare providers and organizations that provides or arranges to provide a coordinated continuum of services to a defined population and is willing to be held clinically and fiscally accountable for the clinical outcomes and health status of the population served. By gaining ownership of or forming strategic partnerships with hospitals, physicians, and insurers, IDSs aim to deliver a range of services.5-10

The ACA includes payment reform initiatives that encourage physician-hospital integration and coordination of services. It is hoped that integrated and coordinated care will increase cost-effectiveness and quality. A newer model of an integrated organization called an accountable care organization (ACO), is tasked with responding to new payment incentives and being held accountable for better quality outcomes at reduced costs under a new Medicare Shared Savings Program.5-10 ACOs will be discussed in more detail in subsequent courses. For our purposes, we need to know that they exist; they are a significant component in American healthcare today. Additionally, more ACOs are forming every day, and this trend is unlikely to stop in the next five to ten years.5-10

Medicare is undertaking bundled payment initiatives that link payments for multiple services beneficiaries receive during an entire episode of care. Implemented in 1992 by Medicare, the resource-based relative value scale (RBRVS) reimburses physicians according to a relative value assigned to each physician service. Relative values are based on the time, skill, and intensity it takes to provide a service, and the actual reimbursement is derived using a complex formula.5-10

Each year, Medicare publishes the Medicare Fee Schedule, which gives the reimbursement amount for each of the services and procedures identified by a current procedural terminology (CPT) code. The reimbursement amounts are adjusted for the geographic area in which the practice is located. Reimbursement Under Managed Care Three distinct approaches are used by MCOs. PPOs use a variation of the fee-for-service method, in which the PPO establishes fee schedules based on discounts negotiated with providers participating in its network. HMOs sometimes have physicians on their staff who are paid a salary.5-10

Capitation is another mechanism used by HMOs. Under this reimbursement scheme, a provider is paid a set monthly fee per enrollee (sometimes referred to as per member per month [PMPM] rate), regardless of whether an enrollee sees the provider or not and regardless of how often an enrollee sees the provider. Capitation removes the incentive for provider-induced demand. It makes providers prudent and encourages them to provide only the necessary services. From Retrospective to Prospective Reimbursement Traditionally, Medicare and Medicaid established per diem (daily) rates for reimbursing hospitals, nursing homes, and other inpatient facilities. The per diem rates were based on the actual costs the providers had incurred during the previous year.5-10

Because rates were set after evaluating the costs retrospectively, the method was referred to as retrospective reimbursement. Home health was also reimbursed based on cost. Because the retrospective method was based on costs that were directly related to the length of stay, services rendered, and the cost of providing the services, providers had no incentive to control costs. Services were rendered indiscriminately because healthcare institutions could increase their profits by increasing costs. Because of the perverse financial incentives inherent in retrospective cost-based reimbursement, it has been primarily replaced by prospective methods of reimbursement. In contrast to retrospective reimbursement, where actual costs are used to determine the amount paid to providers, prospective reimbursement uses specific pre-established criteria to determine in advance the amount of reimbursement. Medicare has been using the prospective payment system to reimburse inpatient hospital acute care services under Medicare Part A since 1983.5-10

In general, long-term care (LTC) consists of medical and nonmedical care that is provided to individuals who have chronic health issues and disabilities that prevent them from doing regular daily tasks. Hence, LTC includes both healthcare and support services for daily living. It is delivered across a wide variety of venues, including patients’ homes, assisted living facilities, and nursing homes. Also, family members and friends provide the majority of LTC services without getting paid for them. Medicare does not cover LTC; thus, costs associated with this form of care can impose a significant burden on families. Medicaid covers several different levels of LTC services, but a person must be indigent to qualify for Medicaid. LTC insurance is offered separately by insurance companies, but most people do not purchase these plans because premiums can be unaffordable.2,3

Foundational Concept #9: Medical Staff & Allied Health Professionals

In a given healthcare organization, there will be a large number of administrative, financial, operational, clinical, allied health, and other essential staff. We will bring a brief overview of many of the types of medical and allied health professionals that can be expected, overall, in America.

Psychologists, Psychiatrists, and Counselors: The ultimate recognition is the diplomate in psychology, which requires a doctor of philosophy (Ph.D.) or doctor of psychology (PsyD) degree, a minimum of 5 years of postdoctoral experience, and the successful completion of an examination administered by the American Board of Examiners in professional psychology. Psychologists may specialize in several areas, such as clinical, counseling, developmental, educational, engineering, personnel, experimental, industrial, psychometric, rehabilitation, school, and social domains.2-4, 6-8, 12-14

Doctor of Medicine (MD): the highest level of a medical degree, given to those who seek the role of a physician.5-10

Doctor of Osteopathic Medicine (DO): fully licensed physicians who received an alternative route of education than the traditional medical degree. DOs treat the whole person, as opposed to an MD who looks at medicine allopathically.5-10

Osteopathic Medicine: a distinct pathway to medical practice in the United States that provides all of the benefits of modern medicine and the use of technology, as well as provides the benefits of hands-on diagnosis and treatment through osteopathic manipulative medicine. Osteopathic medicine emphasizes helping each person achieve a high level of wellness by focusing on health promotion and disease prevention.5-10

Allopathic Medicine: a system in which medical doctors and other healthcare professionals treat symptoms and disease using modern techniques. Also called biomedicine and Western medicine.5-10

Nurses constitute the largest group of healthcare professionals: The nursing profession developed around hospitals after World War I, and it primarily attracted women. Before World War I, more than 70 percent of nurses working in private duty, either in patients’ homes or for private-pay patients.2-4, 6-8, 12-14

The term advanced practice nurse (APN) is a generic name for nurses who have education and clinical experience beyond that required of an RN. Four areas of specialization for APNs exist: clinical nurse specialists (CNSs), certified registered nurse anesthetists (CRNAs), nurse practitioners (NPs), and certified nurse-midwives (CNMs). NPs and CNMs are also categorized as non-physician practitioners; they are discussed in the next section. Besides being direct caregivers, APNs perform other professional activities such as collaborating and consulting with other healthcare professionals, educating patients and other nurses, collecting data for clinical research projects, and participating in the development and implementation of total quality management programs, critical pathways, case management, and standards of care.2-4, 6-8, 12-14

The term nonphysician practitioner (NPP)—also called nonphysician clinician and midlevel provider—refers to clinical professionals who practice in many of the areas in which physicians also practice, but who do not have an MD or a DO degree. NPPs receive less advanced training than physicians but more training than RNs. They are also referred to as physician extenders because, in the delivery of primary care, they can, in many instances, substitute for physicians.2-4, 6-8, 12-14

NPPs often work in close consultation with physicians. NPPs typically include physician assistants (PAs), NPs, and CNMs. NPs work predominantly in primary care, whereas PAs are evenly divided between primary care and specialty care. PAs are licensed to perform medical procedures only under the supervision of a physician. PAs assist physicians in the delivery of care to patients; the supervising physician may be either onsite or offsite. The major services provided by PAs include evaluation, monitoring, diagnostics, therapeutics, counseling, and referral. The American Nurses Association defines NPs as individuals who have completed a program of study leading to competence as RNs in an expanded role. NPs constitute the largest group of NPPs and have also experienced the most growth. The primary function of NPs is to promote wellness and good health through patient education. NPs spend extra time with patients to help them understand the need to take responsibility for their health.2-4, 6-8, 12-14

Hence, they are an important adjunct to the practice of primary care physicians. Another area where they provide service is nursing homes. NPs have statutory prescribing authority in almost all states. CNMs are RNs with additional training from a nurse-midwifery program in areas such as maternal and fetal procedures, maternal and child nursing, and patient assessment. CNMs deliver babies, provide family planning education, and manage gynecologic and obstetric care. They often substitute for obstetricians/ gynecologists in prenatal and postnatal care but refer to abnormal or high-risk patients to obstetricians or jointly manage the care of such patients.2-4, 6-8, 12-14

Efforts to formally establish the roles of NPs, PAs, and CNMs as nonphysician healthcare providers began in the late 1960s when it was widely recognized that they could improve access to primary care, especially in rural and medically underserved areas. It helps alleviate some of the problems created by the geographic maldistribution of physicians. Studies have confirmed the efficacy of NPPs, as many studies have demonstrated that they can provide both high-quality and cost-effective medical care. Compared to physicians, NPPs spend more time with patients and establish a better rapport with them.2-4, 6-8, 12-14

Among the issues that remain to be resolved before NPPs can be used to their full potential are legal restrictions on the practice, reimbursement policies, and relationships with physicians. The lack of autonomy to practice is a noteworthy barrier facing midlevel providers, as many states require physician supervision as a condition for practice. In some states, midlevel providers lack prescriptive authority. NPPs also face financial barriers related to reimbursement. Reimbursement for their services is generally indirect; that is, payments are made to the physicians with whom they practice.2-4, 6-8, 12-14

In the early part of the 20th century, the healthcare provider workforce consisted of physicians, nurses, pharmacists, and optometrists. The growth in technology and specialized interventions subsequently placed greater demands on the time physicians and nurses could spend with their patients. Such time constraints created a need to train other professionals who could serve as adjuncts to or as substitutes for physicians and nurses. Allied health professionals received specialized training, and their clinical interventions were meant to complement the work of physicians and nurses. Thus, physicians and nurses were relieved of time pressures so that they could attend to functions that they had the expertise to perform. The extra time also allowed them to keep abreast of the latest advances in their disciplines.2-4, 6-8, 12-14

An allied health professional is someone who has received a certificate, associate’s, bachelor’s, or master’s degree; doctoral-level preparation; or post-baccalaureate training in a science-related to healthcare and has responsibility for the delivery of health or related services. These services may include those associated with the identification, evaluation, and prevention of diseases and disorders, dietary and nutritional services, rehabilitation, or health system management.2-4, 6-8, 12-14

Allied health professionals can be divided into two broad categories: technicians and/or assistants and therapists and/or technologists. Typically, technicians and assistants receive less than two years of postsecondary education and are trained to perform procedures. These individuals require supervision from therapists or technologists to ensure that care plan evaluation occurs as part of the treatment process. This group includes physical therapy assistants (PTA), certified occupational therapy assistants (OTA), medical laboratory technicians, radiological technicians, and respiratory therapy technicians (RT).2-4, 6-8, 12-14

Technologists and therapists receive more advanced training, including education in how to evaluate patients, diagnose problems, and develop treatment plans. They must also have training that enables them to evaluate the appropriateness and the potential side effects of therapy treatments and to teach procedural skills to technicians.2-4, 6-8, 12-14

Some key allied health professionals are graduates of programs accredited by their respective professional bodies. For example, such programs train physical therapists (PT), whose role is to provide care for patients with movement dysfunction. The earlier bachelor’s degree has been phased out, and those pursuing this profession now enter a master’s degree (MPT or MSPT) or doctoral degree (DPT) programs in physical therapy. Passing a licensure examination administered by the American Physical Therapy Association is also required for licensure.2-4, 6-8, 12-14

Occupational therapists (OTs) help people of all ages improve their ability to perform tasks in their daily living and work environments. OTs help rehabilitate individuals who have conditions that are mentally, physically, developmentally, or emotionally disabling. OT interventions help people live independently or become more productive in their workplace. A bachelor’s or master’s degree in occupational therapy and passing a certification examination administered by the National Board for Certification in Occupational Therapy constitute the minimum requirements for entering the OT profession. Dietitians, or nutritionists and dietetic technicians, ensure that institutional foods and diets are prepared following acceptable nutritional standards.2-4, 6-8, 12-14

The Commission registers dietitians on Dietetic Registration of the American Dietetic Association. Dispensing opticians fit eyeglasses and contact lenses. They are certified by the American Board of Opticianry and the National Contact Lens Examiners.2-4, 6-8, 12-14

Speech-Language Pathologists treat patients with speech and language problems, whereas audiologists treat patients with hearing problems. The American Speech-Language-Hearing Association is the credentialing association for audiologists and speech-language pathologists.2-4, 6-8, 12-14

For more information on the American Speech-Language-Hearing Association, go to asha.org.12 For more information on the American Physical Therapy Association (APTA), go to apta.org.13 These associations oversee standards of practice, the scope of these NPPs, as well as their licensure and renewals.12-13 It is helpful to check with these organizations whenever there is an operational, financial, ethical, or management-related question.

Athletic Trainers render services or treatment, under the direction of or in collaboration with a physician. Services provided include primary care, injury and illness prevention, wellness promotion and education, emergent care, examination and clinical diagnosis, therapeutic intervention and rehabilitation of injuries and medical conditions. Athletic trainers improve functional outcomes and specialize in patient education to prevent injury and re-injury. ATs are able to reduce injury and shorten rehabilitation time for their patients, which translates to lower absenteeism from work or school and reduced health care costs.15

Athletic trainers can be found in many settings including public and private secondary schools, colleges and universities, professional and Olympic sports; physician practice, similar to nurses, physician assistants, physical therapists, and other professional clinical personnel; clinics with specialties in sports medicine, cardiac rehab, medical fitness, wellness and physical therapy; police and fire departments and academies, municipal departments, branches of the military; and, Occupational Health.16

Social workers help patients and families cope with problems resulting from a long-term illness, injury, and rehabilitation, to name a few. The Council on Social Work Education accredits bachelor’s and master’s degree programs in social work in the United States.2-4, 6-8, 12-14

Healthcare Entity #1’s Revenue Cycle & the Lessons We’ve Learned So Far

Let us imagine for a moment that our Healthcare Entity #1 has grown. We have a few physicians, some supporting NPPs, and a myriad of other allied health professionals and technicians. Additionally, we have an administrative and management team, building and maintenance staff, as well as other contractors on site. Healthcare Entity #1 provides a number of both primary care and specialty care outpatient services and sees the entire gambit of patients across the lifespan. Healthcare Entity #1 is in medium to the vast metropolitan area in Florida, with a large patient population left unserved.

For this reason, our healthcare entity accepts a large number of private insurances as well as Medicare, Medicaid, and Workman’s Compensation. The local VA clinic is next door, and we can provide low-cost private pay bundled screenings to veterans and appropriate referral to the VA, next door, for more extensive services. We subsidize the unrecouped costs from the veteran’s screenings through payments received from other providers for other patients’ services. Overall, it works out to a solvent healthcare business model that can handle a consistent stream of patients through the revenue cycle.

Let us imagine that our healthcare entity is looking to improve the registration steps, the charge entry process, and the coding/billing submission that comes later on. They may consider the incorporation of more health information technology (HIT) and/or health information management (HIM) professionals. Overall, this could reduce denials, thereby improving the flow of patient services a given patient may receive. Additionally, if they have fewer conversations with insurance companies or fewer hiccups in the process, they are more likely to report a high patient quality experience.2-4, 6-8, 12-14 This foundational concept in customer service can significantly affect the solvency of a healthcare organization or entity.

In order to improve the quality of patient experience, Healthcare Entity #1 employs several contractors and other individual private practitioners from the community to utilize a designated space within the clinic to utilize regularly. Healthcare Entity #1’s patients can get access to a broader range of services without having to travel to several locations, and Healthcare Entity #1 is better able to capture patients/patient services in their location. Perhaps the contractors that are utilizing the space pay a low rental fee, providing an additional revenue stream into Healthcare Entity #1’s Revenue Cycle.

These foundational concepts are vital to understanding how healthcare works, why it works the way that it does as well as our place in its system. Whether you are a practitioner, an allied health professional, or staff, understanding these foundational principles can facilitate your career!

Foundational Concept #10: Health Information Management & HIPAA

Health information is the data related to a person’s medical history, including symptoms, diagnoses, procedures, and outcomes. Health information records include patient histories, lab results, x-rays, clinical information, and notes. A patient’s health information can be viewed individually, to see how a patient’s health has changed; it can also be viewed as a part of a more extensive data set to understand how a population’s health has changed, and how medical interventions can change health outcomes.5-10

Health information management (HIM): the practice of acquiring, analyzing, and protecting digital and traditional medical information vital to providing quality patient care. It is a combination of business, science, and information technology.5-10

HIM professionals are highly trained in the latest information management technology applications and understand the workflow in any healthcare provider organization from large hospital systems to smaller outpatient practice. They are vital to the daily operations management of health information and electronic health records (EHRs). They ensure a patient’s health information and records are complete, accurate, and protected.5-10

HIM professionals work in a variety of different settings and job titles. They often serve in bridge roles, connecting clinical, operational, and administrative functions. These professionals affect the quality of patient information and patient care at every touchpoint in the healthcare delivery cycle. HIM professionals work on the classification of diseases and treatments to ensure they are standardized for clinical, financial, and legal uses in healthcare. Health information professionals care for patients by caring for their medical data.5-10

HIM professionals are responsible for the quality, integrity, and protection of patient’s health information.5-10

Having skilled HIM professionals on staff ensures a healthcare entity has the right information on hand when and where it is needed while maintaining the highest standards of data integrity, confidentiality, and security. As technology advances, the role of the HIM professional expands. The HIM professional’s duty is to adapt to new methods of capturing healthcare information, storing that information, and quickly accessing it electronically. Their role is essential in order to maintain organized and accurate electronic data that allows daily healthcare routines to carry on smoothly with the new technological advancements.5-10

Health information technology (HIT) refers to the framework used to manage health information, and the exchange of health information in a digital format. Professionals who work in HIT are focused on the technical side of managing health information, working with software and hardware used to manage and store patient data. HIT professionals are usually from information technology backgrounds and provide support for EHRs and other systems that HIM professionals use to secure health information. As technology advances, HIT professionals are necessary to ensure the electronic data HIM professionals manage is maintained and exchanged accurately and efficiently.5-10

Health Informatics (HI) is a science that defines how health information is technically captured, transmitted, and utilized. Health informatics focuses on information systems, informatics principles, and information technology as it is applied to the continuum of healthcare delivery. It is an integrated discipline with specialty domains that include management science, management engineering principles, healthcare delivery, and public health, patient safety, information science, and computer technology. Health informatics programs demonstrate uniqueness by offering varied options for practice or research focus.5-10, 14

The American Health Information Management Association (AHIMA) claims that HIM professionals are no longer centralized in one single department, but rather span several departments in order to provide services and expertise across a broad range of healthcare departments. The HIM professional’s role is evolving concerning emerging technologies and available jobs. HIM is one of America’s fastest-growing health occupations, with upwards of 6,000 HIM professionals needed each year to fill new positions and replace vacant positions. Nearly 75 percent of the AHIMA workforce survey respondents that manage or employ HIM professionals indicated there are not enough qualified applicants to fill open HIM positions in their organizations.14

HIM professionals fulfill a wide range of job positions and increasingly work in critical and influential positions. Job specializations include14:

  1. Enterprise-wide data and information policy development
  2. Clinical data quality oversight; Organizational privacy/security officer
  3. Document specialist responsible for monitoring accuracy and completeness of electronic and personal health records and other clinical databases
  4. Chief information officer
  5. Organization-wide clinical coding and revenue cycle management
  6. Data mining and analytics
  7. Information access and disclosure specialist, including the release of protected patient information.

There are four major focus research areas in informatics education, reflecting various disciplines: Medical/Bioinformatics, Nursing Informatics, Public Health Informatics, and Applied Informatics. Medical/Bioinformatics is both physician and research-based. Applied informatics addresses the flow of medical information in an electronic environment and covers process, policy, and technological solutions.14

Ensuring the privacy, security, and confidentiality of personal health information has been a fundamental principle for the HIM profession throughout its 80-year history. Today, HIM professionals continue to face the challenge of maintaining the privacy and security of patient information, an effort that grows in complexity as information becomes more and more distributed in electronic systems. The challenge of this responsibility has also increased due to the constantly changing legislative and regulatory environment. Regulations that have impacted privacy and security include the Health Insurance Portability and Accountability Act of 1996 (HIPAA), the American Recovery and Reinvestment Act of 2009 (ARRA) and additional modifications to the HIPAA Privacy, Security, and Enforcement Rules the Health Information Technology for Economic and Clinical Health Act (Final Rule).5-10, 17

Health Information Protection, Portability and Accountability Act: HIPAA

In 1996, HHS was required to implement privacy and security measures that best helped to protect the clinical information gathered when patients use healthcare services. Together, The Privacy Rule and the Security Rule, ensure that the gathering, storage, and transmission of information is done to the highest standard that prevents it from being shared with individuals or entities that the patient has not consented for it to be shared with. For example, The Security Rule focuses on the technical and non-technical safeguards facilities must have in place to protect the “electronic protected health information” (e-PHI). Within HHS, the Office for Civil Rights (OCR) enforces compliance with these rules and standards. Later, this Act would be expanded by the HITECH Act, which expanded healthcare informatics forever.3, 6, 7, 17-21

There are several types of safeguards that HHS states must be in place. The necessary administrative safeguards include the security management process, information access management, workforce training, and management. Each entity must have a form of evaluation to assess compliance. Some physical safeguards include facility access and control, workstation, and device security. Technical safeguards include access control, audit controls, integrity controls, transmission security, and required and addressable implementation specifications.3, 6, 7, 17-21

Another major revision came in 2013 when the Omnibus Rule went into effect. The major components of the HIPAA Omnibus Rule of 2013 address are3, 6, 7, 17-21:

  1. Business associates’ liability and requirement changes
  2. Marketing and protected health information
  3. Sale of protected health information
  4. Compound authorizations for research, and authorizing for future research studies
  5. Decedents and protected health information
  6. Disclosures to decedent’s protected health information to family members and others involved in decedent’s care
  7. Disclosure of immunization information to schools
  8. Fundraising and protected health information
  9. The need to update and distribute the notice of privacy practices
  10. Patients’ right to restrict protected health information to a health plan
  11. Access to protected health information in electronic formats
  12. Breach notification rule updates
  13. Genetic information is considered protected health information and underwriting impacts

HIM professionals, like other clinical staff in a healthcare organization, follow a code of ethics. These are set forth by AHIMA, and guidelines for each ethical standard are a non-inclusive list of behaviors and situations that can help to clarify the standard. They are not meant to be a comprehensive list of all situations that can occur. They focus on being comprehensive, compliant, accurate, and ethical. HIM professionals are encouraged to not distort or participate in improper preparation, alteration, or suppression of coded information. They are not to misrepresent the patient’s information or supporting documentation. They must also gather and report all data required in standards of reporting, to name a few ethical guidelines. They are also encouraged to act professionally and ethically when performing their duties at all times.3, 6, 7, 17-21

Working closely with HIM professionals and incorporating HIT is vital to the future of medicine. Understanding how it plays into your healthcare organization may be necessary for your future career development!

Summary of Main Concepts

  1. Patients who received compassionate care had lower medical expenditures by nearly half. They recovered from their symptoms more quickly with fewer visits, tests, and referrals. Further, providers had less burnout.1
  2. Providers and patients do not always share the same values or aim at the same treatment goals. Whereas many providers tend to regard the extension of life as the predominant value, their patients might well value the quality of their future life more than its quantity.
  3. The importance of respect for autonomy is widely recognized in contemporary medicine and can fairly be described as the cornerstone of contemporary medical bioethics.
  4. The contractual patient-provider relationship states that the patient is the party within the relationship charged in making important value-laden decisions that will affect the overall direction of treatment. The provider is responsible for presenting the available treatment options to the patient and carrying out the details of the agreed-upon plan of care with professional expertise.
  5. Simply put, the patient must be told what a reasonable person would need to know about the procedure and its attendant risks in order to make a rational decision on the basis of his or her own values.
  6. The model acknowledges that humans are destined to make mistakes, and because of this, no system can be designed to produce perfect results. Given that premise, human error and adverse events should be considered outcomes to be measured and monitored with the goal being error reduction (rather than error concealment) and improved system design. In addition, the model describes three classes of human behavior that create predictability in error occurrence. The first is simple human error - inadvertently doing other than what should have been done. The second, at-risk behavior, occurs when a behavioral choice is made that increases risk where risk is not recognized or is mistakenly believed to be justified. Finally, reckless behavior is action taken with conscious disregard for a substantial and unjustifiable risk.
  7. The Seven Pillars of Patient safety have been established because, in the healthcare industry, many healthcare practitioners have been actively engaged in a culture of silence about important concerns, such as patient incidents, reporting, and disclosure. Understandably, practitioners and administrative staff do not wish to have this process go forward if it is going to be conducted in such a way that an innocent person is erroneously punished, but they also don’t want to see unsafe practices continue. The Seven Pillars is a perspective that can facilitate talking about these issues, as well as implementing some ways to prevent them from repeating in the future without perpetuating a punitive culture that continues to result in unreported incidents.
  8. Cost-sharing main terms: Deductibles, copayments, group Insurance, reimbursement, Fee for Service, bundled Payments.
  9. Managed Care seeks to achieve efficiency by integrating the basic functions of healthcare delivery, and it employs mechanisms to control (manage) utilization and cost of medical services. Managed care is the dominant healthcare delivery system in the United States today. It covers most Americans in both private and public health insurance programs through contracts with a managed care organization (MCO), such as an HMO or a preferred provider organization (PPO). The MCO, in turn, contracts with selected healthcare providers—physicians, hospitals, and others—to deliver healthcare services to its enrollees. The term enrollee (member) refers to the individual covered under a managed care plan. The contractual arrangement between the MCO and the enrollee—including descriptions of the various health services to which enrollees are entitled—is referred to as the health plan (or plan for short).
  10. The MCO pays providers either through a capitation (per head) arrangement, in which providers receive a fixed payment for each enrollee under their care or via a discounted fee arrangement. Providers are willing to discount their services for MCO patients in exchange for being included in the MCO network and being guaranteed a patient population. As part of their planning process, health plans rely on the expected cost of healthcare utilization, which always runs the risk of costing more than the insurance premiums collected. By underwriting this risk, the plan assumes the role of the insurer.
  11. The National Public Health Performance Standards Program identifies 10 essential public health services that a system needs to deliver: Monitoring health status; Diagnosing and investigating; Informing, educating, and empowering people; Mobilizing the community; Developing policies and plans; Enforcing laws and regulations; Providing people with access to necessary care; Assuring a competent and professional health workforce; Evaluating the effectiveness, accessibility, and quality; Discover innovative solutions.
  12. Government-provided healthcare solutions include healthcare to active military, the VA, Medicare, and Medicaid.
  13. Medical professionals and Allied Health Staff to know: Physicians, nurses, therapists, assistants, technicians, and additional clinical staff.
  14. Lessons from a Fictional Case Study of a Healthcare Entity’s Revenue Cycle:
    1. This cycle represents the quality of care, efficiency of service, and other barriers that may exist between having a practice and being able to sustain that practice with a consistent flow of patients. As a reminder, it’s important to note that in healthcare, providing better care with a compassionate viewpoint, from the perspective of a Just Culture and taking into account the Seven Pillars of Patient Safety, all help to drive the revenue cycle, not hinder it.
    2. The Fictional Case Study’s revenue cycle is affected by governmental, political, sociological, economical, and ethical constraints placed on healthcare as a whole; these factors can influence the flow of patients in the door.5-10 As healthcare becomes more unstable with rules and regulations that it little to no systems in place to handle, patient capture rates go down, and cash flow is affected. As healthcare rules and regulations are incorporated, systems are established, and companies are able to adjust to the changes, patient capture rates increase, and stability in cash flow is more attainable. Many outpatient/private practice providers must weather these ebbs and flows in healthcare.
    3. Taking this back to our Healthcare Entity #1’s Revenue Cycle, our healthcare entity could possibly be an outpatient physical therapy practice in Adults that took both Medicare and most private insurances, but not Medicaid. Physical therapists, like speech therapists, can practice privately independent of a Physician’s oversight.5-10,12 This outpatient physical therapy clinic would need all the steps covered in our Healthcare Entity #1’s Revenue Cycle. The physical therapists would have a defined scope of practice, and they would also be tasked with promoting a Just Culture. There are online patient-provider portals that come with outpatient billing services to facilitate accounts receivables/denials management and can be very helpful to the physical (or speech!) therapist in private practice. Assistants and technicians are available to support the physical therapist see multiple patients at a time, a process called group rates.
    4. Let us imagine for a moment that our Healthcare Entity #1 has grown. We have a few physicians, some supporting NPPs, and a myriad of other allied health professionals and technicians. Additionally, we have an administrative and management team, building and maintenance staff, as well as other contractors on site. Healthcare Entity #1 provides a number of both primary care and specialty care outpatient services and sees the entire gambit of patients across the lifespan. Healthcare Entity #1 is in medium to large metropolitan area in Florida, with a large patient population left unserved.
    5. For this reason, our healthcare entity accepts a large number of private insurances as well as Medicare, Medicaid, and Workman’s Compensation. The local VA clinic is next door, and we are able to provide low-cost private pay bundled screenings to veterans and appropriate referral to the VA, next door, for more extensive services. We subsidize the unrecouped costs from the veteran’s screenings through payments received from other providers for other patients’ services. Overall, it works out to a solvent healthcare business model that can handle a consistent stream of patients through the revenue cycle.
    6. Let us imagine that our healthcare entity is looking to improve the registration steps, the charge entry process, and the coding/billing submission that comes later on. They may consider the incorporation of more health information technology (HIT) and/or health information management (HIM) professionals. Overall, this could reduce denials, thereby improving the flow of patient services a given patient may receive. Additionally, if they have fewer conversations with insurance companies or fewer hiccups in the process, they are more likely to report a high patient quality experience.2-4, 6-8, 12-14 This foundational concept in customer service can significantly affect the solvency of a healthcare organization or entity.
    7. In order to improve the quality of patient experience, Healthcare Entity #1 employs a number of contractors and other individual private practitioners from the community to utilize a designated space within the clinic. Healthcare Entity #1’s patients are able to get access to a wider range of services without having to travel to several locations, and Healthcare Entity #1 is better able to capture patients/patient services in their location. Perhaps the contractors that are utilizing the space pay a low rental fee, providing an additional revenue stream into Healthcare Entity #1’s Revenue Cycle.

Important Acronyms to Know

  • ANA: American Nursing Association
  • ACA: Affordable Care Act
  • RBRVS: Resource-based relative value scale
  • MCO: Managed care organization
  • HMO: Health management organization
  • EMR: Electronic medical record
  • PPO: preferred provider organization
  • VA: veterans association
  • VISN: Veterans integrated service network
  • CMS: Center for Medicare and Medicaid Services
  • IDS: Integrated delivery systems
  • ACO: Accountable care organizations
  • CPT code: Current procedural terminology
  • PMPM: Per member per month
  • PPS: Prospective payment system
  • LTC: Long-term care
  • RN: Registered nurse
  • APN: Advanced practice nurse
  • CNS: Clinician nurse specialists
  • CRNA: Certified nurse anesthetists
  • NP: Nurse practitioner
  • CNM: Certified nurse-midwives
  • NPP: Non-physician practitioner
  • MD: Medical degree; Doctorate of Medicine
  • DO: Doctorate of Osteopathy
  • PA: Physician assistant
  • PTA: Physical Therapy Assistant
  • PT: Physical Therapist
  • MPT: Master’s Degree in Physical Therapy
  • MSPT: Master’s of Science Degree in Physical Therapy
  • DPT: Doctorate of Physical Therapy
  • OT: Occupational Therapy
  • AT: Athletic Trainer
  • HIT: Health Information Technology
  • HIM: Health Information Management
  • HI: Health Information science
  • AHIMA: American Health Information Management Association
  • HIPAA: Health Insurance Portability & Accountability Act
  • ARRA: American Recovery and Reinvestment Act of 2009
  • e-PHI: Electronic protected health information
  • HHS: Health & Human Services

Conslusion

Ethical, just, and respectful interdisciplinary medicine can coexist with sound healthcare business, financial, management and occupational practices. Growing your career by understanding how healthcare works is essential!

Select one of the following methods to complete this course.

Take TestPass an exam testing your knowledge of the course material.
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References

  1. Emma Seppala (2019) Doctors Who Are Kind Have Healthier Patients Who Heal Faster, According to New Book. The Washington Post. Aug 2019. Visit Source.
  2. Allhoff A., Borden, S.L. (2019) Ethics and Error in Medicine: Routledge Research in Applied Ethics. Routledge, Taylor & Francis Group. New York and London.
  3. Buppert, C (2018) Nurse Practitioner’s Business Practice and Legal Guide. Jones & Bartlett Learning. Burlington, MA.
  4. American Nursing Association. Position Statement: Just Culture. Congress on Nursing Practice and Economics. 2019 Dec. Visit Source.
  5. Shi L, Singh DA (2019) Delivering Health Care in America: A Systems Approach. Jones & Bartlett Learning. Burlington, MA.
  6. Leibler JG, McConnell CR (2017) Management principles for health professionals. Jones & Bartlett Learning. Burlington, MA.
  7. Zelman WN, McCue MJ, Glick ND, Thomas MS (2019) Financial Management of Health Care Organizations: An Introduction to Fundamental Tools, Concepts and Applications. Kindle Edition. Wiley Higher Ed. San Francisco, CA.
  8. Barringer BR, Ireland RD (2018) Entrepreneurship: Successfully Launching New Ventures. Pearson. Boston, MA.
  9. Hatten TS (2018) Small Business Management: Entrepreneurship & Beyond. Cengage Learning. Boston, MA.
  10. Kimmel PD, Weygandt JJ, Keiso DE (2019) Accounting: Tools for Business Decision Making, Kindle Edition. Wiley Higher Ed. San Francisco, CA.
  11. Winchester, J (2019) Fundamentals of Business Management for the Healthcare Professional. CEUFast ©. Florida, USA.
  12. American Speech-Language Hearing Association.The Outpatient Medicare Physician Fee Schedule. 2019 Dec. Visit Source.
  13. American Physical Therapy Association (2019) Payment. Visit Source.
  14. Ferrand, C.T. (2018) Speech Science: An Integrated Approach to Theory and Clinical Practice. Pearson. Boston, MA.
  15. National Athletic Trainers’ Association. Athletic Training. Visit Source.
  16. National Athletic Trainers’ Association. Job Settings. Visit Source.
  17. AHIMA. AHIMA & Our Work. 2019 Dec. Visit Source.
  18. AHIMA. Embracing the Future: New Times, New Opportunities for Health Information Managers; Summary Findings from the HIM Workforce Study. 2019 Dec. Visit Source.
  19. Department of Health & Human Services. HIPAA. 2019 Dec. Visit Source.
  20. HIPAA Journal. New HIPAA Regulations. 2019 Dec. Visit Source.
  21. Stratis Health. HIPAAOmbibus Rule of 2013. 2019 Dec. Visit Source.