Foundations of Health Care Management

Principles and Methods

Bernard J. Healey, Marc C. Marchese

• Publisher: Jossey-Bass
• Year: 2012
• ISBN:
  9781118235195
• Edition: 1
• Topic: Médecine
• Subtopic: Santé publique, administration et soins

Foundations of Health Care Management

Leaders and managers throughout the health care system are facing ever more challenging changes in the way care is delivered, paid for, and evaluated. Foundations of Health Care Management: Principles and Methods offers an innovative, concise, reader-friendly introduction to health care management and administration. It addresses the need for new skills in managers of health care facilities and for those planning to enter health care management positions. The book covers such critical topics as leadership training, change management, conflict management techniques, culture building, quality improvement, and communications skills, as well as collaboration in the improvement of population health.

Foundations of Health Care Management also concentrates on innovations and describes steps in the transition to more decentralized and creative approaches to the management of health care facilities. The book covers physician management from the physician's viewpoint, a valuable perspective for health care managers.

The book serves important dual purposes for faculty and students by providing both insights into the health care field as well as foundational content on essential management and leadership competencies. A full set of support materials is available for instructors at the book's companion Web site.

PART 1
Introduction to Health Care Management

This book begins with an introduction to management principles, followed by an explanation of the various problems managers in the health care industry encounter. The two chapters in Part One address issues that are pivotal in determining the future of health care in the United States as well as the fundamentals of health care management. The intent of this first section is to give the reader an overview of the many issues facing those who work and supervise individuals in the delivery of health services. A secondary purpose of this Part One is to share the history, principles, and forces that affect the management of the largest sector of the U.S. economy.

Chapter One covers many of the critical issues confronted by both managers and nonmanagers who work in health care delivery. This chapter begins with a complete explanation of how the health care system will change as the effects of health care reform become evident. The delivery of effective and efficient health services is discussed at length, as is the role of the health care manager in making the necessary changes to the U.S. health care system a reality. Chapter One places a great deal of emphasis on the building of new processes in health care delivery that are capable of reducing costs while improving the quality of those services.

Chapter One also offers a comprehensive review of the changes made to the delivery of health services, many of which will affect the way health services are produced, delivered, and paid for. Managers will be given greater responsibility for making certain that the health care organization adheres to legal requirements and operates efficiently and effectively. Several of the current errors found in health care delivery are also discussed, along with recommendations for how better management can rectify them.

Chapter Two covers the fundamentals of health care management. This chapter starts with an overview of management theory that includes the history of management, along with a discussion of human relations theory and reengineering theory in particular. A great deal of the research found in the development of management theory is discussed in depth, all of which is then applied to the individuals who become managers in health care organizations.

The discussion then moves into management innovation as well as managerial skills and the functions of a manager. Chapter Two also discusses at great length, among other topics, system coordination and management of health care delivery. The management of technology, including electronic medical records and telemedicine, is also covered.

The goal of Part One is, in other words, to provide the reader with a sound understanding of the principles—and an introduction to the methods—of health care management.

1
Critical Issues for the Future of Health Care in the United States

Bernard J. Healey

LEARNING OBJECTIVES

• Understand the major problems found in the U.S. health care system
• Recognize the need for efficiency in the delivery of health services
• Understand the value of better management in the health care industry
• Become aware of the need to reform the present health care system
• Be able to explain how the problems of cost, access, and health levels in our health care system are interrelated

This is a book about the skills necessary to become a successful health care manager. It is a very special time in the history of health care—one in which we are faced with enormous change in the way health services are delivered to over three hundred million Americans. To deal with this never-ending environmental change, it is time for everyone responsible for those who deliver these very special services to better understand what these individuals need to consistently deliver quality health care to their patients. A health care manager must be able to improve the system of health care delivery while simultaneously helping his or her staff achieve personal growth in their chosen field of employment.

There are many problems found in our current health care system. Spending on health care has become one of the greatest predicaments to ever face our nation, and there is no definitive solution to this growing problem. This one category of spending has grown from an insignificant amount fifty years ago to almost 18 percent of GDP on an annual basis. In 1960 this spending represented a total cost of $26.9 billion, representing a per capita cost of $141. Today this cost has risen to $2.7 trillion, with $8,160 per capita expenditures. The Kaiser Family Foundation (Kaiser Family Foundation & Health Research & Educational Trust, 2010) reports that spending in health care will reach $4.3 trillion in 2018. In that year this expense will represent 20.3 percent of GDP, or $13,100 for each resident. This type of cost escalation for one category of spending is clearly not sustainable. There are many reasons for the cost escalation, but I believe that most Americans are far more interested in solving the problem for the future rather than blaming poor decisions that were made in the past. This book is about one very important potential solution to the problem: better management of scarce health care resources. We must consider the best way to improve the skills of the individuals chosen to manage these human and material resources.

Reform and improvement of the current health care system will require a greater emphasis on cost control. Costs continue to rise much more quickly than inflation, indicating that something is very wrong with productivity in the health care sector of our economy. These rates of increase cannot continue over the long term without doing very serious damage to our overall economic growth. Many years ago Victor Fuchs (1998) of Stanford University pointed out these major problems in our health care system: cost, access, and health levels. The rising cost of health care delivery—and the related problems of access for millions of Americans—are now leading factors in the recently passed health care reform legislation. As we analyzed the health care sector and compared it to other countries, it became very evident that our entire health care system was not performing very well: not only do we spend more on health care than any other country but also we are not very healthy as a nation. According to Fuchs (2009), coordinated care is necessary to get health care costs under control. Such coordination will require the three “I’s”: information, infrastructure, and incentives. To improve these components in health care delivery there is a need for better management of the entire health care system.

There is overwhelming evidence that improved information technology can enhance efficiency in businesses. The investment in information technology in the private sector is intended to improve bottom-line performance by reducing costs and increasing profits. However, the vast majority of health care facilities in our country have generally resisted making such an investment. There are many reasons for this resistance by special interest groups in health care, but this is no longer an acceptable strategy for health care organizations to follow as we implement health care reform efforts. In fact, a sizeable chunk of the new federal and state dollars going to health care is dedicated to the development of information technology to reduce costs, eliminate medical errors, and improve outcomes.

The infrastructure designed to deliver health services to consumers is in need of modernization. The world of work—including in the realm of health care delivery—is changing at a faster pace than anyone ever imagined. These changes are affecting workers and managers as they try to come together to deliver quality outcomes at a reasonable price. The majority of health care facilities are trying to deal with the rapid change in health care through better control by managers. They are also realizing that health care managers supervise the activities of employees, who serve guests of the health care facility. This puts the onus on managers to foster greater empowerment of the health care worker.

The rapidly changing health care system has made change very difficult, but I would argue that the changing health care industry is quite capable of exploiting this upheaval in ways that lead to a healthier population at a lower cost. This should allow wasted health care resources to be better used in satisfying unmet needs in other areas, such as education or environmental initiatives.

We need incentives to push managers to become catalysts in the process of bringing together new forms of technology used in the production of health services, resulting in lower-priced, better-quality health services being delivered to the buyer or consumer. According to Drucker (2010), management is the least understood of our basic tools required to improve outcomes. It is ironic that many large organizations are unaware of what management does or even what it is supposed to be doing. Of all the resources used in production, the only resource that is capable of growing on its own is human resources. Each human being determines what he or she will contribute to the production process.

New managers in health care are being recruited from pools of already-practicing health care professionals or new college graduates who have majored in health care administration or business administration. There are advantages and disadvantages to being from either of these two groups. Lombardi (2001) argues that a health care professional moves through numerous transition factors to become a health care manager. These factors, found in Figure 1.1, are very useful to show the new manager the transitions that need to take place as he or she moves into a managerial position in health care.

Figure 1.1 Transition Factors

Source: Lombardi, 2001, p. 11. Reprinted with permission of John Wiley & Sons, Inc.

There are four basic transition factors: selfless service; circumstantial control; qualitative outcomes; and overall, comprehensive goals (Lombardi, 2011). These transitions involve moving from responsibility for only your own performance to responsibility for others, as circumstances rather than your own work flow determine your routine. Your output is now very difficult to measure, and your goals are now comprehensive rather than definite outcomes associated with your individual input.

Although the future of cost-effective health care delivery is uncertain, there are tremendous opportunities presented daily for reducing costs and improving the quality of the health care experience. These opportunities are being found in both the private and public sectors as everyone is finally realizing that health care delivery has become the greatest problem facing all Americans. According to Oberlander and White (2009), the Obama administration continues to push for the cost savings from prevention, comparative effectiveness research, disease management, and improved information technology. These are all potential reforms that should reduce health care costs over the long term because they are investments in better health for the population. What is needed in the short term is better management of scarce resources. This book is designed to help both new and experienced managers in their crucial task of improving efficiency and quality in health care delivery, which will go a long way toward improving the health of all Americans.

As I have already stated, there is no question that the health care industry is in trouble. According to Shi and Singh (2010), the United States spends more than any other country on health care delivery, and costs continue to rise at an alarming rate. They note that despite our spending well over $2 trillion on health services, the outcomes resulting from this enormous expense do not do very well when subjected to cost-benefit analysis, and our outcomes have been worse than those found in every other industrialized nation. Serious infrastructure problems in health care delivery have increased costs while allowing the quality of health care to diminish. Buchbinder and Shanks (2007) argue that leaders as well as managers must reform this system: the leaders will provide the vision for a new health care system, and the managers will improve efficiency and patient satisfaction by making the best use of health care resources. Although numerous books published in recent years have addressed the importance of leadership in health care, there is still an overriding need for better management techniques. It is truly an exciting time as we explore new ways to improve the management of the largest sector of the U.S. economy.

Health care costs are going to continue to rise, despite our best attempts to control them. Managed care programs have sought to reduce costs in past years, and they were actually successful in decreasing the rate of cost escalation in health care delivery—for a short period of time. Most health economists are not very optimistic about controlling these escalating costs in the future. Their pessimism stems from two major triggers of cost increases: rising labor costs and new technology development. Callahan (2009) argues that 50 percent of the increase in health care costs each year can be attributed to the development and use of advanced technology. The cost of technology is projected to increase at least 6 percent per year into the distant future, leaving us with a perpetual cycle of cost escalation. Better health care management is our only hope of success in the battle to reduce the cost of healt...