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Basic Concepts of the U.S. Health Care Delivery System

© 2010 Jones and Bartlett Publishers, LLC
Basic Concepts of the U.S. Health
Care Delivery System: Student
Activity Workbook
Chapter 5
Inpatient and Outpatient Services
Nancy J. Niles
• Inpatient services are services that involve an overnight
stay of a patient.
• The U.S. health care industry was based on the provision
of inpatient services provided by hospitals and
outpatient services provided by physicians.
• Over the past two centuries, hospitals have evolved from
serving the poor and homeless to providing the latest
medical technology to serve the seriously ill and injured.
• Although their primary revenue is derived from inpatient
services, as a result of cost containment and consumer
preferences, more outpatient services are being offered
by hospitals.
• Many hospitals have evolved into medical centers which
provide the most advanced service. Hospitals can be
classified by who owns them, length of stay, and the type
of services they provide.
• Inpatient services typically focus on acute care which
includes secondary and tertiary care levels that most
likely require inpatient care. Inpatient care is very
• Hospitals began offering more outpatient services which
do not require an overnight stay and were less expensive.
• Outpatient services have become more popular because
they are less expensive and they are preferred by
History of Hospitals
• The word hospital comes from the Latin word
“hospes” which means a visitor or host who receives
a visitor. From this root word, the Latin “hospitalia”
evolved which means an apartment for strangers or
guests. The word “hospital” was a word in the Old
French language.
• As it evolved, England began a shift in the 15th
century to mean a home for the infirmed, poor or
History of Hospitals
• Over five thousand years ago, Greek Temples were
the first type of hospital with similar institutions in
Egyptian, Hindu and Roman cultures.
• They were the precursor of the almshouses or
poorhouses that were developed in the 1820s to
serve the poor primarily.
• Pesthouses, operated by local governments, were
used to quarantine people who had contagious
diseases such as cholera, etc. The framework of
these institutions set up the concept of the hospital.
History of Hospitals
• 1789: the Public Hospital of Baltimore was
established for the indigent. In 1889, it became Johns
Hopkins Hospital, which exists today as one of the
best hospitals in the world.
• 1850s: a hospital system was finally developed but
their conditions were deplorable because there were
unskilled providers. Hospitals were owned primarily
by physicians.
History of Hospitals
• In the early 20th century, with the establishment of
more standardized medical education, hospitals
became more accepted across socioeconomic classes
and became the symbol of medicine.
• With the establishment of the American Medical
Association who protected the interests of providers,
the reputation of providers became more
• In the 1920’s, the development of medical
technological advances, increased quality of medical
training and specialization.
History of Hospitals
• During the 1930s-1940s, the ownership of the
hospitals changed from physician owned to churchrelated and government operated.
• Religious orders viewed hospitals as an opportunity
to perform their spiritual good works. Several
religious orders established hospitals that still exist
History of Hospitals: Milestones
• In 1973, the first Patient Bill of Rights was introduced to
represent health care consumer representation in hospital
• In 1972, the American Hospital Association had all hospitals
display a “Patient Bill of Rights” in their institutions.
• In 1974, the National Health Planning and Resources
Development Act: required states to have Certificate of Need
(CON) laws to ensure the state approved any capital
expenditures associated with hospital/medical facilities’
construction and expansion.
• The Act was repealed in 1987 but 36 states still have some
type of CON mechanism . The concept of CON was important
because it encouraged state planning to ensure their medical
system was based on need.
History of Hospitals
• Hospitals are the foundation of our health care
system. The first type of insurance was hospital
• Although hospitals are still an integral part of our
health care delivery system, the method of their
delivery has changed. “Hospitalists”, created in 1996,
are providers that focus specifically on the care of a
patient when they are hospitalized
• More hospitals have recognized the trend of
outpatient services and have integrated those types
of services in their delivery.
History of Hospitals
• In 2000, as a result of the Balanced Budget Act cuts
of 1997, the federal government authorized an
outpatient Medicare reimbursement system which
has supported hospital outpatient services efforts.
• In 2007, hospitals employed over five million
individuals, were the second largest source of private
sector jobs, provided outpatient care to over 600
million patients and performed 27 million surgeries.
Hospital Types
• There are three major types of hospitals by ownership: 1)
public, 2) voluntary and 3) proprietary hospitals.
• Public hospitals are the oldest type of hospital and are
owned by the federal, state or local government.
• Federal hospitals generally do not serve the general
public but operate for federal beneficiaries such as
military personnel, veterans and Native Americans. The
Veterans Affairs hospitals are the largest group of federal
• County and city hospitals are open to the general public
and are supported by taxes. Many of these hospitals are
located in urban areas to serve the poor and the elderly.
Hospitals Types by Ownership
• Voluntary hospitals are non government owned, private
and not for profit and target community care. They are
considered “voluntary” because their financial support is
the result of community organizational efforts.
• Private not for profit hospitals are the largest group of
hospitals. In 2007, there were nearly 3,000 not for profit
• Proprietary hospitals or investor-owned hospitals are for
profit institutions and are owned by corporations,
individuals or partnerships. They have the lowest
utilization rates. In 2007, there were 873 proprietary
Hospitals by Specialty
• Hospitals may be classified by what type of services
they provide and their target population.
• A general hospital provides many different types of
services to meet the general needs of their
population. Most hospitals are general hospitals.
• Specialty hospitals are hospitals that provide
services for a specific disease or target population
such as psychiatric, children’s, women’s, cardiac,
cancer, rehabilitation, and orthopedic hospitals.
Other Hospital Classifications
• Hospitals can be classified by single or multi
unit operations.
• Two or more hospitals may be owned by a
central corporation. Multi unit hospitals have
resulted in the merging or acquiring of other
hospitals that have financial problems.
• These chains can be operated as for profit, not
for profit, or government.
Other Hospital Classifications
• In 2007, there were over 2,700 hospital
• A short stay or acute care hospital focuses on
patients who stay on an average of less than
30 days.
• Community hospitals are short term facilities.
Other Hospital Classifications
• A long term care hospital focuses on patients who stay
on an average greater than 30 days.
• Rehabilitation and chronic disease hospitals are examples
of long term. More than 90% of hospitals are acute or
• Hospitals can be classified by geographic location—rural
or urban.
• Urban hospitals tend to pay higher salaries and
consequently offer more complex care because of the
highly trained providers and staff. In 2007, there were
nearly 3,000 urban hospitals.
Other Hospital Classifications
• Rural hospitals tend to see more poor and elderly and
consequently have financial issues.
• In 2007, there were nearly 2,000 rural hospitals
( As a result of this issue, the Medicare
Rural Hospital Flexibility Program (MRHP) was created
as part of the Balanced Budget Act of 1997.
• The MRHP allows some rural hospitals to be classified
as critical access hospitals.
• This classification enables them to receive additional
Medicare reimbursement called cost plus. Cost plus
reimbursement allows for capital costs which enables
facilities to expand.
Other Hospital Classifications
• Teaching hospitals are hospitals that have one or more
graduate resident programs approved by the American
Medical Association.
• Academic medical centers are hospitals organized around a
medical school.
• There are approximately 400 teaching hospitals including 64
Veteran’s Affairs Medical Centers that are members of the
Council of Teaching Hospitals and Health Systems in the U.S.
and Canada.
• These institutions offer substantial programs and are
considered elite teaching and research institutions affiliated
with large medical schools
Other Hospital Classifications
• Church related hospitals are developed as a way to
perform spiritual work. The first church affiliated
hospitals were established by Catholic nuns. These
hospitals are community general hospitals. They
could be affiliated with a medical school.
• Osteopathic hospitals focus on a holistic approach to
care. The emphasize diet and environmental factors
that influence health. Their focus is preventive care.
There are approximately 200 osteopathic hospitals in
the U.S.
Hospital Governance
• Hospitals are governed by a Chief Executive
Officer (CEO), a board of trustees or board of
directors, and the chief of medical staff.
• The Chief Executive Officer or President is
ultimately responsible for the day to day
operations of the hospital and is a Board of
Trustee member.
Hospital Governance
• The Board of Trustees is legally responsible for
hospital operations.
• The chief of medical staff or medical director
is in charge of the medical staff/physicians
that provide clinical services to the hospital.
• The medical staff is divided according to
specialty such as obstetrics, cardiology,
radiology, etc.
Licensure, Certification and
• State governments oversee the licensure of health
care facilities including hospitals. States set their own
• State licensure focus on building codes, sanitation,
equipment and personnel. Hospitals must be
licensed to operate a certain number of beds.
• Certification of hospitals enables them to obtain
Medicare and Medicaid reimbursement.
Licensure, Certification and
• This type of certification is mandated by the
Department of Health and Human Services.
• All hospitals that receive Medicare and Medicaid
reimbursement must adhere to conditions of
participation which emphasize patient health and
• Accreditation is a private standard developed by
accepted organizations as a way to meet certain
International Organization for
Standardization (ISO)
• Established in 1947 in Geneva, Switzerland, the
International Organization for Standardization (ISO) is a
worldwide organization that promotes standards from
different countries.
• Although this is not an accrediting organization, those
organizations that register with the ISO, are promoted as
having higher standards. ISO 9000, quality management
focus, and ISO 14000, environmental management focus
are management standards that are applicable to health
care organizations.
• More health care organizations are registering with the
Patient Rights
• The Patient Self-Determination Act of 1990 requires
hospitals and other facilities that participate in the
Medicare and Medicaid programs to provide patients, on
admission, with information on their rights which is
referred to as the Patient Bill of Rights.
• If you enter any hospital, you will see the Bill of Rights
posted on their walls. This law requires that the hospital
maintains confidentiality of their personal and medical
• The patient also has the right to be provided accurate
and easy to understand information about their medical
condition so they may make an informed consent about
any of their medical care.
Current Status of Hospitals
• Many hospitals have become the “dinosaurs”
of the health care industry.
• Nearly two thirds of hospitals have financial
• In the 1990s, many hospitals merged with
other hospitals, were acquired by other
hospitals or became part of a hospital chain.
Current Status of Hospitals
• Unfortunately, as a result of the economic recession,
there are fewer insured citizens and therefore less
inpatient care and fewer patients who can pay for
their care.
• A 2008 American Hospital Association survey of 736
hospitals from 30 states indicated that 40% of the
respondents reported a drop in overall admissions.
• Uncompensated care in 2008 was up 8% from July to
September compared to 2007 data, and there was a
moderate to significant decline in elective
Outpatient Services
• As discussed earlier, outpatient services are services
that are provided that do not require an overnight
stay. Often, the term ambulatory care is used
interchangeably with outpatient services.
• Ambulatory means literally a person is able to walk
to receive a service which may not always be
necessarily true. The term “outpatient’ is a more
general term for services other than inpatient
• Hospitals also offer outpatients services in their
emergency departments and their outpatient clinics.
Physician Offices
• The basic form of an outpatient service is a patient
seeing their physician in their office.
• Traditionally, physicians established solo practices
but the cost of running a practice became too
expensive so more physicians are establishing group
practices. Approximately two thirds now operate as a
group practice.
• Approximately 70% of group practices are single
specialty groups with the remaining 30% formed as
multispecialty group practices
Hospital Emergency and Outpatient
• Hospitals traditionally provide inpatient services
although nearly all community hospitals provide
emergency services which are considered outpatient
• Although emergency departments have the
technology to treat emergency situations, many
emergency rooms are used for non emergency
• Individuals who are 75 years or older use an
emergency room 66% more frequently than the
general population.
Hospital Outpatient Clinics
• Many outpatient clinics are found in teaching hospitals.
They use outpatient clinics as an opportunity to teach
and perform research.
• The clinics are categorized as surgical, medical and other.
Larger teaching hospitals may have 100 specialty and
subspecialty clinics. They may operate as part of the
hospital or as a hospital owned entity.
• Also, any type of rehabilitation service, elective surgery
such as cosmetic procedures, kidney dialysis, substance
abuse treatment, sports medicine and other specialty
services are offered as an ambulatory service.
Urgent/Emergent Care Centers
• Urgent/emergent care centers were first established in
the 1970s. Urgent/emergent care centers are used for
consumers who need medical care but their situation is
not life threatening. This would take the place of the
hospital emergency room visit.
• The medical issue usually occurs outside traditional
physician office hours so they see patients in the
evenings, weekends and holidays.
• Many of these centers are both walk-in and appointment
facilities. They may be in strip malls or medical buildings
so they are accessible for consumers.
Urgent/Emergent Care Centers
• Many managed care organizations will reimburse
member visits because they are less expensive than an
emergency room visit
• The Urgent Care Association of America estimates there
are 8,000 urgent care centers in 2008.
• According to the Urgent Care Association of America
recent survey, approximately 54% of urgent centers are
owned by physicians; 25% are hospital owned, and 18%
are corporately owned.
• Approximately 85% of the centers have a physician on
site at all times, and 75% of the physicians are board
certified in a primary specialty.
Ambulatory Surgery Centers (ASCs)
• Ambulatory surgery centers are surgeries that
do not require an overnight stay.
• Approximately eight million surgeries are
performed in 4,000 ASCs annually. Ambulatory
care centers contribute to health care cost
• Procedures at ASCs cost nearly 50% less than
inpatient surgeries
Community Health Centers
• CHCs often are located in urban and rural areas
where there is a designated need. They enter a
contract with the state or local health
department to provide services to these
• Community Health Centers receive funding under
section 330 of the Public Health Service Act with
grants from the Department of Health and
Human Services of approximately $1 billion.
Community Health Centers
• It is estimated one of every 19 individuals in the U.S
rely on CHCs for primary care. Nearly 16 million were
treated at CHCs in 2008.
• On March 2, 2009, President Barack Obama released
$155 million in grant money to support 126
additional Community Health Centers nationwide
• It is anticipated that within a two year period, an
additional $2 billion will be invested in Community
Health Centers to support investments in health care.
Home Health Agencies
• Home health agencies and visiting nurse agencies
provide medical services in the patient’s home.
• The earliest form of home health care was developed
by Lillian Wald who created the Visiting Nurse
Service of New York established in 1893 to service
the poor.
• In 1909, she persuaded the Metropolitan Life
Insurance Company to include nursing home care in
their policies.
Home Health Services
• This care often is provided to the elderly,
disabled or a patient that is too weak to come
to the hospital or physician’s office.
• Services include skilled nursing care and home
health aide care such as dispensing
medications, assisting with ADLs and meal
Home Health Services
• Physical, speech and occupational therapy can
also be provided at home. Medical equipment
such as oxygen tanks, hospital beds, etc may
also be provided.
• Annually, approximately seven million people
receive home health services which are
provided by approximately 20,000 agencies.
Home Health Care Agencies
• Although most states offer licensing for home health
agencies, it is important that home health agencies
are Medicare certified because they are required to
comply with the Center for Medicare and Medicaid
Service regulations.
• They can also receive accreditation from the
Community Health Accreditation program (CHAP).
• Approximately 40% of home health care agencies are
certified by Medicare. Nearly 70% of individuals who
received home health care are over 65 years of age.
Occupational Health Programs
• Occupational health programs are often
located at employer sites. Their purpose is to
maintain the safety of the employee.
• Larger companies may provide physical exams,
drug screenings and basic health care.
• Employee assistance programs (EAPs) are a
type of occupational health program.
Other Health Services – Respite Care
• This continuous care often becomes stressful for
those caregivers. These caregivers may still be
working full-time and have other family members
that need their attention.
• As a result of this issue, respite care or temporary
care programs were formally established in the
1970s to provide relief to those caregivers.
• These programs provide systematic relief to those
caregivers who need a mental break.
• Hospice care provides care for those who have a life
threatening illness and the patient’s family.
• Medicare, private health insurance, and Medicaid (in 43
states) cover hospice care for qualified patients. A typical
hospice care team includes the following:
– Doctor, Nurses
– Home health aides
– Clergy or other spiritual counselors , social workers
– Volunteers
– Occupational, physical, and/or speech therapists.
Adult Day Care
• Adult day care centers are day programs that
provide a medical-social model which provides social
interaction and intensive medical related activities.
• These centers were developed in the 1960s based on
research that indicated adult day care centers were
an opportunity provide a break for their informal
• The average age of the adult day care center
recipient is 72 years old and two thirds are female.
Senior Centers
• Established by the Older American Act of 1965, senior centers
provide a broad array of services for the older population.
• According to 2004 statistics, there are 5,000 senior centers in
the U.S. Approximately 70% of users are women. Users spend
three hours per day, one to three times per week.
• The average age is 75 years of age.
• Funding is received from state and local governments, grants
and private donations.
• They serve as community focal points for seniors. Services
provided include meal and nutrition programs, education,
recreational programs, volunteer opportunities, counseling,
and other services.
Women’s Health Centers
• Women seek health care services more frequently
than men. They have unique health needs that can
be provided by a medical facility that focuses on their
• Recognizing this need, in 1991 the U.S. department
of Health and Human Services established an Office
on Women’s Health (OWH).
• Their mission is to promote women’s and girl’s health
by gender specific health activities.
Meals on Wheels Association of
America (MOWAA)
• The first Meals on Wheels program was started in
Philadelphia, PA in 1954 and is the largest and oldest
organization in the U.S. that provides meal services
those seniors in need.
• Most of the volunteers were high school students.
They were dubbed “Platter Angels”.
• Eventually cities nationally established similar
programs, which are continued today and represent
an important component of senior citizen home
health services.
Planned Parenthood Federation of
• The Planned Parenthood Federation of America is a
90 year old organization provides family services to
their local communities regarding sexual health and
family health.
• They accept Medicaid but also provide services
based on a sliding fee scale. Their outreach provides
over one million individuals with important health
American Red Cross
• Founded in 1881 and headquartered in Washington,
DC, the American Red Cross provides emergency
response to victims of war and natural and manmade disasters.
• Approximately 91 cents of every dollar spent is
invested in humanitarian programs.
• There are over 700 local chapters with 35,000
employees supported by 500,000 volunteers
Doctors Without Borders
• Established in 1971 by physicians and journalists,
Doctors Without Borders is an international medical
organization provides quality medical care to those
individuals who are threatened by violence,
catastrophe, lack of health care, natural disasters,
epidemics or wars.
• The organization won the Nobel Peace Prize in 1999.
A U.S. component of this organization was
established in 1990. It recently raised $152.1 million
in funding.
Remote Area Medical (RAM)
• Remote Area Medical was founded in 1985 to develop a
mobile efficient work force to provide free health care to
areas of need worldwide.
• Volunteer physicians, nurses and other health care
professionals provide general medical, surgical, eye,
dental and veterinary care to thousands of individuals
• They determine where they are needed the most and set
up a mobile health care unit for weekend services only.
As a result of the economic downturn in the U.S., there
continues to be a huge need for their services.
• Telehealth uses technology for providing health care
services is an efficient method of providing
outpatient care. Telemedicine is a new model for
delivering health care —it moves information
electronically to consumers quickly and efficiently
without a patient physically seeing a health care
• Using technology is an efficient and cost effective
way to target underserved populations.
SwiftMD- An example of Telehealth
• SwiftMD, a telemedicine organization, was recently
founded by a group of board-certified emergency
physicians, who have developed a membership
based model for providing health care.
• An emergency trained physician returns the call or
contact within 30 minutes to determine if it is an
emergency or not. The service is available 24/7.
• They do not treat pregnancy-related problems or
mental health disorders. They treat conditions that a
patient would normally go to their physician for in
their office.
Summary of Chapter 5
• Although hospitals admit 35 million individuals
annually, the health care industry has recognized
that outpatient services are a cost effective method
of providing quality health care and has evolved into
providing quality outpatient care.
• This type of service is the preferred method of
receiving health care by the consumer.
• In 2006, there were over 900 million visits to their
doctor’s offices which is the traditional method of
ambulatory care.
Summary of Chapter 5
• As discussed earlier, there are more outpatient surgical
centers, imaging centers, urgent/emergent care centers,
and other services that used to be offered on an
inpatient basis.
• There will continue to be an increase in outpatient
services being offered.
• As a consumer, technology will only increase the quality
and efficiency of your health care.
• The implementation of the patient’s electronic health
record nationwide will be the impetus for the
development of more electronic health care services
being offered.
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