## THIS PAGE LEFT BLANK INTENTIONALLY 

## HOSPITALS AND HEALTH CLINICS

+--------------+-------------+-------------+-------------+-------------+
|              | 2002        | 2003        | 2004        | Increase    |
|              |             |             |             |             |
|              | Actual      | President's | Estimate    | or Decrease |
|              |             |             |             |             |
|              |             | Budget      |             |             |
+--------------+-------------+-------------+-------------+-------------+
| BA           | \$1,        | \$1,        | \$1,        | +           |
|              | 153,206,000 | 188,540,000 | 194,600,000 | \$6,060,000 |
+--------------+-------------+-------------+-------------+-------------+
| FTE          | 6,634       | 6,672       | 6,625       | -47         |
+--------------+-------------+-------------+-------------+-------------+
|              |             |             |             |             |
+--------------+-------------+-------------+-------------+-------------+
| HIV-AIDS     | (\          | (\          | (\          | (+\$49,000) |
| (\$)         | $2,531,000) | $2,567,000) | $2,616,000) |             |
+--------------+-------------+-------------+-------------+-------------+
| HIV-AIDS     | \(14\)      | \(14\)      | \(14\)      | \(0\)       |
| (FTE)        |             |             |             |             |
+--------------+-------------+-------------+-------------+-------------+
|              |             |             |             |             |
+--------------+-------------+-------------+-------------+-------------+
| Activity:    |             |             |             |             |
+--------------+-------------+-------------+-------------+-------------+
| \# of        |             |             |             |             |
| Inpatient    |             |             |             |             |
| Adms:        |             |             |             |             |
+--------------+-------------+-------------+-------------+-------------+
| IHS Direct   | 43,112      | 40,568      | 38,175      | -2,393      |
+--------------+-------------+-------------+-------------+-------------+
| Tribal       | 17,199      | 16,637      | 16,093      | -544        |
| Direct       |             |             |             |             |
+--------------+-------------+-------------+-------------+-------------+
| Total        | 60,311      | 57,205      | 54,268      | -2,937      |
| Admissions   |             |             |             |             |
+--------------+-------------+-------------+-------------+-------------+
|              |             |             |             |             |
+--------------+-------------+-------------+-------------+-------------+
| \# of        |             |             |             |             |
| Outpa        |             |             |             |             |
| tientVisits: |             |             |             |             |
+--------------+-------------+-------------+-------------+-------------+
| IHS Direct   | 4,418,954   | 4,418,954   | 4,220,000   | -198,954    |
+--------------+-------------+-------------+-------------+-------------+
| Tribal       | 3,740,162   | 3,740,162   | 3,572,000   | -168,162    |
| Direct       |             |             |             |             |
+--------------+-------------+-------------+-------------+-------------+
| Total Visits | 8,159,116   | 8,159,116   | 7,792,000   | -367,116    |
+--------------+-------------+-------------+-------------+-------------+

# **PURPOSE AND METHOD OF OPERATION**

In FY 2003 the discretionary base funding of this Hospital and Health
Clinics budget is \$1.18 billion and 6,672 FTE. These funds are provided
to 12 Area (regional) Offices which in turn provide resource
distribution, program monitoring and evaluation activities, and
technical support to over 240 federal and tribal Operating Units (local
level) for nearly 600 health care facilities providing care to 1.6
million American Indians and Alaska Natives. The Hospitals and Health
Clinics budget supports essential personal health services including
in-patient care, routine and emergency ambulatory care, and medical
support services including laboratory, pharmacy, nutrition, diagnostic
imaging, medical records, physical therapy, etc. In addition, the
program includes public health initiatives targeting special health
conditions disproportionately affecting American Indians and Alaska
Natives such as specialized programs for diabetes, maternal and child
health, youth services, communicable diseases including AIDS,
tuberculosis, and hepatitis, and a continuing emphasis on women\'s and
elder health and disease surveillance.

####### Performance Measures Demonstrate Effectiveness

Staffs of the health facilities establish performance indicators and
routinely monitor, analyze, and intervene if the desired outcome is not
achieved. Process and outcome measures monitor programs such as
obstetrics and childcare, management of acute cardiac events, and
emergency situation response. The level and quality of services provided
to over 80,000 diabetics throughout the IHS are audited annually to
improve standardized care and patient outcomes. Reviewing a wide range
of performance measures including foot care, eye care, end organ status,
and adequacy of blood sugar control, these IHS developed audit measures
have been incorporated into the National Council on Quality
Assurance/American Diabetes Association national performance diabetes
care benchmarks. Supplemental funding, key tribal involvement,
collaboration with other federal agencies and community emphasis have
all contributed to the IHS achieving or exceeding the proposed goals for
each diabetes GPRA element.

Continuing success from accrediting bodies (Joint Commission on
Accreditation of Healthcare Organizations (JCAHO), Accreditation
Association for Ambulatory Health Care (AAAHC), and the Centers for
Medicare and Medicaid Services) on in-depth quality reviews conducted
regularly show average IHS and tribal hospital accreditation grid scores
consistently at or above the average score for all U.S. hospitals. The
most frequently cited area for improvement is the physical plant safety
and efficiency which is due to old, undersized facilities. The average
age of IHS facilities is greater than 30 years. Limited increases in
funding will make it difficult to maintain this high standard.

The Hospitals and Health Clinics budget activity supports continuing
medical education for a wide variety of the health professionals
employed by the IHS and tribes to include specialized training in
quality management and case management in addition to
discipline-specific training. The FY 2003 budget provides for some
advanced and specialized training for nurses in intensive care and
operating room skills, and in nursing management, and for the upgrading
of Indian individuals from licensed practical nursing to registered
nursing. The budget enables IHS to support residency training for IHS
physicians, residency training for pharmacists, and continuing education
of mid-level providers (physician assistants, nurse practitioners, and
pharmacy practitioners). These activities will be continued in FY 2004.

[Managed Care at Work]{.underline}

The IHS provides comprehensive services with \$1,600 per person per
year, a cost roughly\
50 percent below that of common public and private health insurance
plans. While the agency continues to increase collections from third
party payors, the agency minimizes and avoids costs through negotiated
rates for purchased services, medical products, and pharmaceuticals to
squeeze value from limited resources. To further manage growing
pharmaceutical costs that grow between 8-15 percent per year, the IHS
uses limited formularies at the service sites, bulk purchasing
agreements, and other cost containment approaches.

# Community Oriented Primary Care Attacks Changing Disease

The IHS program continues to focus on increasing access to preventive
and curative services for the underserved in Indian communities through
a strategy targeting health programs reflecting community health status
to provide the most useful services to the most people.

In recent years the diseases affecting American Indians and Alaska
Natives have changed and required a change in service focus as the
disease burden due to acute illness decreases and the chronic disease
burden increases. Significant behavioral determinants often accompany
chronic disease. Of particular concern are disease patterns that disrupt
families and communities including accidents, suicides, homicides,
family violence and chemical dependency. Prevention of these conditions
requires a different set of precepts and disciplines, as they are less
susceptible to traditional medical model interventions. These prevention
strategies are often difficult to maintain since the impact of the
programs is often distant in time and community attention to these
efforts may wane in the face of more immediate concerns (such as
treatment for trauma associated with family violence).

**[ACCOMPLISHMENTS]{.underline}**

The agency made significant progress in addressing chronic diseases. The
primary focus has been in treatment and prevention of diabetes. The
increases provided have allowed greater access to more sophisticated
interventions. This includes more effective pharmaceuticals, more
aggressive screening for the secondary effects of diabetes, earlier
intervention when complications are identified, and greater patient
compliance with care regimens.

Additional funding was provided for podiatric services in FY 2001. The
funds have allowed the addition of a number of podiatrists to provide
services at the community level. The most important impact of these
funds however was to raise the awareness of all providers of the
importance of screening, prevention, and early intervention in changes
associated with diabetes. In FY 2001, IHS staff also published material
documenting the effectiveness of these strategies in reducing
amputations in American Indian and Alaska Native populations. They are
being actively disseminated as standards of care for prevention and
treatment of diabetic complications.

The agency has examined the underlying causes and risk factors
contributing to the development of diabetes and heart disease. Of
particular interest is a report provided to Congress exploring the scope
and impact of obesity as a risk factor in the development of chronic
disease. This report noted that obesity is three times more frequent
among American Indian and Alaska Native children and this disparity
persists into adult life. This high rate of obesity clearly contributes
to the development of diabetes and heart disease. The report also
provided information on promising interventions that may reduce the risk
for chronic disease. Some are as simple as the promotion of
breast-feeding in infancy and others involve wider community commitment
to dietary and exercise interventions. The agency is examining means to
disseminate these interventions on a wider basis. The agency has also
entered into a partnership with the National Heart, Lung, and Blood
Institute in three communities to demonstrate the efficacy of community
based interventions and plans to provide training for many more Indian
communities in the near future to disseminate materials and intervention
strategies learned from these pilot sites.

Other promising partnerships with the National Institutes of Health have
emerged. Of significance was the funding of Native American Research
Centers in Health (NARCH). This program developed in partnership with
the National Institute of General Medical Studies (NIGMS) will provide
support for tribally controlled research centers to focus on the
diseases disparately affecting American Indian and Alaska Native people.
It has the added advantage of developing American Indian and Alaska
Native researchers who will focus on the communities from which they
come. This will help assure that the impact of disease in this unique
population is explored scientifically and that new treatments and
interventions are disseminated.

Promising partnerships were also developed with the Centers for Disease
Control and Prevention. Of particular significance in this partnership
is the enhancement of a variety of public health capabilities serving
American Indian and Alaska Native communities. For example, a strong
partnership with the CDC diabetes activities is designed to assure that
best practices in diabetes management are identified and disseminated
using the joint resources of the CDC Diabetes Translation and
Dissemination Program and the IHS Diabetes Program. Another example is
the partnership aimed at surveillance and prevention of Hepatitis C.
This critical effort is needed since the rates of Hepatitis C appear to
be higher in American Indian and Alaska Native populations, and it is a
preventable disease. Another of the collaborative activities between CDC
and IHS is support for the developing tribal epidemiology centers. This
public health capacity is vital to informing tribal leadership and other
policy makers about the specifics of health needs and efficacious
interventions. It has increased the tribal capacity to exercise their
governmental public health functions.

The agency has also taken great strides in addressing pharmacy. This
includes analysis of the factors leading to the steep rise in
pharmaceutical costs and the implementation of some interventions to
assume greater control of these costs. The interventions initiated or
enhanced to control costs include greater use of bulk purchasing
methods, increased use of a limited but more efficacious formulary, and
education of providers about specific pharmacoeconomic strategies. This
effort was enhanced by the provision of resources for expansion of the
IHS pharmacy residency activities. The residency programs now operate in
11 communities and stimulate innovative thinking about the control of
pharmaceutical costs and less expensive, but more effective approaches
to patient care. Of particular significance is the increase in
pharmacist care programs for anti-coagulation and cancer chemotherapy
management. This provides more in-depth care (under physician
supervision) that capitalizes on the unique skills of pharmacists with
specialized technical training in these areas.

Emergency services also utilized an increase in FY 2001 to improve
programs at the community level. The Congress provided funds that
assisted the EMS programs in a variety of communities to assure the
stability of staffing and the maintenance of vital equipment. It also
stimulated new analysis that was completed in FY 2002 that identifies
the EMS needs of IHS and Tribal programs. Many community ambulance
services in rural America are struggling to survive (both Indian and
non-Indian), and the IHS is looking for creative ways to create
partnerships that will strengthen local EMS efforts. IHS has entered
into a partnership with the Health Resources and Services Administration
(HRSA) to jointly examine these issues.

Lastly, the agency has explored and resolved a number of policy issues
with the Centers for Medicare and Medicaid Services (CMS). These issues
included such matters as eligibility and co-payment concerns in the
State Children's Health Insurance Program (SCHIP). These efforts were
aimed at assuring the greatest possible utilization of resources
available to eligible American Indian and Alaska Native patients for
services. CMS and IHS are also collaborating in educating tribes on
assessing long term care (LTC) needs and on the availability of
resources for LTC services which are greatly needed in Indian
communities.

#### **[PERFORMANCE MEASURES]{.underline}** 

The Hospitals and Health Clinics budget contributes to the
accomplishment of the following FY 2004 performance measures:

[Indicator 1]{.underline}: During FY 2004, continue tracking (i.e., data
collection and analyses) Area age-specific diabetes prevalence rates to
identify trends in the age-specific prevalence of diabetes (as a
surrogate marker for diabetes incidence) for the American Indian and
Alaska Native population.

[Indicator 2]{.underline}: During FY 2004, increase the proportion of
I/T/U clients with diagnosed diabetes that have demonstrated improved
glycemic control by 2% over the FY 2003 level.

[Indicator 3]{.underline}: During FY 2004, increase the proportion of
I/T/U clients with diagnosed diabetes who have achieved blood pressure
control standards by 2% over the FY 2003 level.

[Indicator 4]{.underline}: During FY 2004, increase the proportion of
I/T/U clients with diagnosed diabetes assessed for dyslipidemia (i.e.,
LDL cholesterol) by 2% over the FY 2003 level.

[Indicator 5]{.underline}: During FY 2004, increase the proportion of
I/T/U clients with diagnosed diabetes assessed for nephropathy by 2%
over the FY 2003 level.

[Indicator 6]{.underline}: During FY 2004, increase the proportion of
American Indian/Alaska Native diabetics who receive an annual diabetic
retinal examination at designated sites by 3% over the FY 2003 rate.

[Indicator 7]{.underline}: During FY 2004, maintain the proportion of
eligible women who have had a Pap screen within the previous three years
at the FY 2003 levels.

[Indicator 8]{.underline}: During FY 2004, maintain mammography
screening at the FY 2003 rate.

[Indicator 16]{.underline}: During FY 2004 the IHS will address domestic
violence, abuse, and neglect by assuring that:

a\. at least 65% of I/T/U medical facilities (providing direct patient
care) will provide training

to the direct clinical staff on the application of domestic violence
policies and procedures

b\. a standard data code set for domestic violence screening is
implemented into the RPMS

data system

c\. 15% of women between the ages of 18 and 40 are screened for domestic
violence at direct care facilities.

[Indicator 17]{.underline}: During FY 2004, implement a national program
to improve the quality, accuracy and timeliness of Resource Patient
Management System (RPMS) Patient Care Component (PCC) clinical data to
support the Agency's GPRA clinical measures by:

a\. Implementing a "regional" office RPMS PCC "data quality" assessment
training at each IHS regional office;

b\. Expand the current automated data quality assessment "package" to
include 2 new additional clinical measures.

[Indicator 20]{.underline}: During FY 2004, maintain 100 percent
accreditation of all IHS hospitals and outpatient clinics.

[Indicator 21]{.underline}: During FY 2004, the IHS will continue the
development of a standardized non

-punitive anonymous medication error reporting system and will develop
system improvement recommendations to lower the rate of medication
errors to improve the quality of healthcare by:

a\. Establishing baseline data for medication error reporting for all
IHS Areas using an approved instrument and compare this national data
with other national benchmarks.

b\. Pilot test a standardized anonymous medication error reporting
system in two areas.

[Indicator 22]{.underline}: By the end of FY 2004, improve consumer
satisfaction rates by 2% over the FY 2003 baseline.

[Indicator 24]{.underline}: During FY 2004:

a\. increase the rates for all recommended immunizations for American
Indian and Alaska Native children ages 3‑27 months by 2% over the FY
2003 rates

b\. establish baseline rates for recommended immunizations for American
Indian and Alaska Native children 19‑35 months.

[Indicator 25]{.underline}: In FY 2004, maintain the FY 2003 rate for
influenza vaccination levels among non-institutionalized adults age 55
years and older.

[Indicator 26]{.underline}: In FY 2004, maintain the FY 2003 rate for
pneumococcal vaccination levels among non-institutionalized adults age
65 years and older.

[Indicator 30:]{.underline} During FY 2004, the IHS will continue
collaboration with NIH to assist three

American Indian and Alaska Native communities to implement culturally
sensitive community-directed pilot cardiovascular disease prevention
programs and initiate expansion into one new American Indian and Alaska
Native site.

[Indicator 31]{.underline}: During FY 2004 continue the incremental
implementation of all components of the Indian Health Service Obesity
Prevention and Control Plan that was developed in FY 2001. This includes
IHS Area or regional planning meetings; staff development and IT
development to monitor American Indian and Alaska Native BMI (height
weight data); an infrastructure to collect, interpret, and diffuse the
approaches from obesity related demonstration projects and studies to
IHS Areas and I/T/Us.

a\. Each IHS Area is responsible for implementation for an Area wide,
long range, comprehensive Obesity Prevention and Control Plan

b\. Each Area will decrease height and weight measurement omission rates
and will report BMIs on children and adults.

c\. Area Offices to host National and Area training(s) among I/T/U
stakeholders that emphasize Area wide Obesity Prevention and Control
Plan.

[Indicator 32:]{.underline} By the end of 2004, the IHS and its
stakeholders will have implemented the identified activities as
specified by the five-year plan for tobacco control in American Indian
and Alaska Native communities.

[Indicator 34:]{.underline} During FY 2004, determine the percentage of
high-risk sexually active persons who have been tested for HIV at an
additional 10 sites.

[Indicator 43:]{.underline} By the end of FY 2004, the IHS will increase
by 10% over the FY 2003 level the proportion of IHS facilities who have
implemented Hospital and Clinic Compliance Plans to assure that claims
meet the rules, regulations, and medical necessity guidance for Medicare
and Medicaid payment.

[Indicator 46:]{.underline} During FY2004, the IHS will systematically
work to improve nurse attrition rates by:

a\. Implementing the National Council of Nurses Recruitment and
Retention Plan in all IHS Areas and Headquarters.

b\. Assessing Area vacancy and attrition rates, on-line exit interviews,
and job satisfaction surveys to include salary and benefits analysis to
identify those locations where nursing vacancy and attrition rates are
most problematic.

**Following are the funding levels for the last 5 fiscal years:**

[Year]{.underline} [Funding]{.underline} [FTE]{.underline}

1999. \$949,140,000 8,067

2000. \$1,005,407,000 6,877

2001. \$1,121,202,000 6,687

2002. \$1,153,206,000 6,634

2003. \$1,188,540,000 6,672

**[RATIONALE FOR BUDGET REQUEST]{.underline}**

**[TOTAL REQUEST]{.underline}** \-- The request of \$1,194,600,000 and
6,625 FTE is a net increase of \$6,060,000 and a decrease of 47 FTE over
the FY 2003 President's Budget request of \$1,188,540,000 and 6,672 FTE.

[Pay Cost Increase: +\$23,381,000]{.underline}

The request of \$23,381,000 will fund federal and tribal pay costs which
will assist the IHS in maintaining access to services for the IHS
patient population. Provision of these funds is necessary to maintain
the current I/T/U health system which works to eliminate disparities in
health status between the American Indian and Alaska Native population
and the rest of the U.S.

#### [Phasing-In of Staff for New Facilities: +\$12,849,000]{.underline}

The request for phasing-in of staff and related costs for new facilities
will allow IHS to expand provision of health care in those areas where
existing capacity is most overextended. The following table displays the
requested increase.

+-----------------------------------+---------------+------+----------+
| **[Facilities]{.underline}**      | **[Dollars]{  | *    | **[Triba |
|                                   | .underline}** | *[FT | l]{.unde |
|                                   |               | E]{. | rline}** |
|                                   |               | unde |          |
|                                   |               | rlin |          |
|                                   |               | e}** |          |
+-----------------------------------+---------------+------+----------+
| Ft. Defiance, AZ Hospital         | \$3,443,000   | 41   | 0        |
|                                   |               |      |          |
| Pawnee, OK Health Center          | 2,771,000     | 33   | 0        |
|                                   |               |      |          |
| # Winnebago, NE Health Center     | [6,635,000    | [74] | [5]{.un  |
|                                   | ]{.underline} | {.un | derline} |
| Total                             |               | derl |          |
|                                   | **\           | ine} | **5**    |
|                                   | $12,849,000** |      |          |
|                                   |               | **1  |          |
|                                   |               | 48** |          |
+-----------------------------------+---------------+------+----------+

[Management Savings: -\$20,888,000 and -195 FTEs]{.underline}

HHS\'s FY 2004 budget supports the President\'s Management Agenda and
includes cost savings from consolidating administrative functions,
organizational delayering to speed decision making processes,
competitive sourcing, implementation of effective workforce planning and
human capital management strategies, and adoption of other economies and
efficiencies in administrative operations.

The savings will come from IHS, Tribal and Urban programs. The IHS
programs will absorb their share through the elimination of 195 FTEs.
Every effort will be made to minimize the impact at the service delivery
level of the organization, however, some impact on programs and services
may occur.

The agency will also judiciously control and reduce costs associated
with administrative travel, overtime, copying, and the purchase of
administrative equipment and supplies, while carefully controlling
training costs and promoting distance learning and training at the local
level whenever applicable.

[Information Technology Savings: -\$9,282,000]{.underline}

The IHS FY 2004 President\'s Budget includes funding to support
Departmental efforts to improve the HHS Information Technology
Enterprise Infrastructure. The request includes funds to support an
enterprise approach to investing in key information technology
infrastructure such as security and network modernization. These
investments will enable HHS programs to carry-out their missions more
securely and at a lower cost. Agency funds will be combined with
resources in the Information Technology Security and Innovation Fund to
promote collaboration in planning and project management and to achieve
common goals such as secure and reliable communication and lower costs
for the purchase and maintenance of hardware and software.

Our budget request includes savings in the Information Technology (IT)
Budget from ongoing IT consolidation efforts, and additional reduced
spending through the streamlining or elimination of lower priority
projects. We will fully implement Information Technology (IT)
infrastructure consolidation by October 2003, therefore reducing
infrastructure expenditure in FY 2004. See page [IHS-66]{.underline} of
the Information Technology narrative for more information.