The Changing Face of Health Care (1995)
Across the country, in hospitals, nursing homes, home health services, and mental health and mental retardation centers, major changes are taking place that affect the quality of patient care and the jobs of health care workers. As more Americans get their health care from managed care health plans, and as providers seek every possible cost savings, health care workers are being laid off, and those still employed are experiencing drastic changes in the type of work they do.
What is Managed Care?
Managed care is the term applied to virtually any health care reimbursement plan other than traditional, fee-for-service, medicine. It includes health maintenance organizations (HMOs), preferred provider organizations (PPOs), point-of-service, and any other arrangements that emphasize prevention and seek to control or modify health care usage and costs.
Managed care turns the financial incentives in medicine upside down. Under managed care, some health plans receive a preset fee to meet all medical needs. Often this is a “capitation” fee–a flat fee per person, regardless of how much care they need. Under a fee-for-service system, providers made more money by providing more services. This led to problems as providers sometimes ordered unnecessary tests and procedures. Under managed care, providers can now profit by providing fewer services.
What Is the Effect on Our Facilities?
Across the country, facilities represented by AFSCME are facing difficult times:
- The Regional Medical Center in Memphis, Tennessee (the Med), is laying off employees. What was the primary reason for this upheaval? Tennessee’s TENNCARE program requires every Medicaid recipient to get health care from a managed care company. Med officials were slow to join the managed care bandwagon and, consequently, saw the number of patients they serve drop substantially.
In New York City, the country’s largest public hospital system is under orders from the mayor to sell three of its 11 hospitals. Major layoffs have been averted thus far. However, 20 percent of the city’s hospital beds lie empty –this in a city that has been very slow to move to managed care.
Boston City Hospital, a public facility, will merge with Boston University’s Medical Center, a private hospital. The University of Wisconsin Hospital in Madison seeks to privatize its operations.
These are only the tip of the iceberg. The list goes on.
How Are Providers Controlling Costs?
- Change in Legal Governance
In the face of the changing health care marketplace, public hospitals around the country are desperately seeking strategies that they hope will help them compete. The strategies often include moving from direct state or local government operation to private operation.
Advocates of these changes say that rigid public sector purchasing policies and budgeting practices, for example, hinder a hospital in today’s competitive environment. Some of these problems are real, but solving them does not require a change in governance. If hospital management has been negligent in responding to the new health care realities, a change in governance will never be a solution. Hospitals with a mission to provide high-cost services, such as trauma or burn units, will not instantly become competitive because of a change in governance.
- Practice Parameters
Practice parameters, also called practice protocols or appropriateness reviews, are a way of standardizing decisions about medical care. They are, in effect, a “decision tree” used to determine whether the patient’s condition and prior history warrant a certain type of treatment. They are often applied to expensive or over utilized procedures like open heart surgery or caesarean sections.
These parameters, in most instances, have a sound medical base. However, they are also the source of much controversy within the medical community. Critics note that standardized protocols may not be appropriate for all patient populations and that they eliminate individual clinical decision-making by doctors and nurses.
- Information Technology
Advances in information technology allow providers to compare costs department by department. Productivity can be measured, taking into account staffing levels and the patient census. Personnel costs account for more than 50% of total hospital costs. If a department has higher staffing costs relative to the patient load than similar departments in other hospitals, management may look to reduce the number of employees or their skill mix.
Since patients treated at public hospitals tend to be poorer and, consequently, sicker than at suburban community hospitals, simply comparing census and staffing does not show the whole picture. Yet, because these factors are hard to quantify, they are often not considered.
- Work Redesign
From 1945 until the early 1980’s, when health care dollars were flowing freely, hospitals went on a major building spree, creating tremendous bed capacity. At the same time, registered nurses’ salaries were relatively low, so providers could afford to use them more. Hospitals, in fact, advertised their use of RNs as a way of drawing patients to fill the beds they had built.
We are now seeing the effect of these actions. Nationally, 34% of hospitals beds are unfilled. Nursing jobs are disappearing through attrition or layoffs, or these jobs are being redesigned, often without any input from the nurses. Duties performed in the past by nurses are now performed by fewer, lower paid and less skilled personnel. Aides are being asked to perform duties beyond their traditional jobs, often without proper training or compensation. These changes are sometimes called “patient-focused care,” a system where a few nurses oversee care, assisted by teams of aides and other personnel.
While the redesign of hospital work can create more interesting jobs and potential career advancement for some staff, the true “focus” of these moves is the bottom line. Management consultants claim that if patient-focused care systems were enacted across the board, 100,000 nursing jobs would be eliminated and $2 billion or more a year would be saved. Hospital staffs could be cut by one third.
- Nurse Practice Acts
State laws, called nurse practice acts, regulate nursing care. Modifications to these acts have been introduced in a number of states, usually allowing RNs to delegate nursing duties to non-nurses. An Oregon bill, for example, would limit situations in which RN supervision of nursing assistants is required. Supervision is now required when “patient care” is being provided. The bill would require supervision only when “nursing care” is provided.
- Hospital Utilization
More and more care is now provided in outpatient settings, continuing a trend that began years ago. Proponents of managed care say that preventive care leads to improved medical outcomes and reduces the length of stay and cost needed to treat conditions. Some hospitals now open their administrative department on weekends in order to be able to discharge patients sooner.
Critics charge that there is too much pressure to push people out of the hospital too soon–or to not admit them in the first place.
Nursing homes and home health care will continue to see patients who are sicker than the patients of only a few years ago.
- Formation of Networks
With the growth in managed care, in which health plans send their members only to hospitals which they are affiliated with, it is important for hospitals to become part of a managed care network in order to maintain a patient base. Acute care hospitals are marketing themselves to HMOs, insurance plans, smaller hospitals without specialized facilities, clinics, doctors’ groups, and other sources of patients.
- Growth in For-Profit Health Care
As health care becomes very big business, and the market share becomes increasingly important, for-profit hospital chains and managed care companies are taking over. It is estimated that excess hospital capacity may eliminate as many as half of the nation’s hospitals. The for-profits intend to be in the surviving half.
- Waivers
Medicaid waivers to provide home and community-based services have been operational in some states for many years, allowing those states to fund their deinstitutionalization efforts and provide services in the community. A newer approach is for states to seek waivers to use managed care to control costs in the Medicaid program and, in some cases, provide access to people who have been outside the program.
Since community-based services are typically subject to less oversight than institution-based services, the result is that more and more individuals–elderly, developmentally disabled, mentally ill, and acute care patients–are being treated in less regulated environments.
What Can We Do?
- Bargain for Job Security and Quality
Recently a precedent-setting collective bargaining agreement was reached by AFSCME 1199C, the National Union of Hospital and Health Care Employees, and several Philadelphia hospitals. The agreement preserves jobs while permitting the hospitals the flexibility to adapt to the new landscape.
The agreement lasts until the year 2000. It establishes an Employment, Training and Job Security Fund to provide services to meet industry work force needs. It requires 30 days’ notice when jobs are restructured, with union membership portable whenever union and non-union jobs are combined. Employees who lose their jobs or are transferred to a lower paid position are compensated.
- Watch for Waivers
Medicaid managed care waivers (“1115 waivers”) are now in effect in 10 states. While they have often meant trouble for our members, that need not be the case. Massachusetts recently was required to include the Boston City and Cambridge Hospitals (both public hospitals serving the poor and uninsured) as “essential community providers” in its waiver, guaranteeing them some funding. Waivers can also be structured to include employee protections.
States must apply to the federal government for a waiver. The responsible state agency can tell you whether a waiver application has been filed and may be able to provide a copy of the state’s comprehensive health plan.
- Watch for Changes in Market Share
Health care today is about attracting the patients who pay the bills, so every attempt must be made to draw patients to AFSCME-represented facilities. Many health care workers do not use the facilities at which they work. Nor do other AFSCME bargaining units, and other unions. These groups have significant clout in the health care marketplace. That clout can be used to ensure that quality (including adequate numbers of staff who are adequately compensated) is as important a factor as cost in deciding which providers to use.
As managed care, private for-profit corporations, and government cost-cutting transform the delivery of health care services, AFSCME must ensure that our front-line health care workers are part of this change and that the quality of care all of our members receive through their benefits plans is protected.