Yonago Acta medica 1999;42:141–145—Address at the Tottori University College of Medical Care Technology—
Transformation of the US Health Care Delivery System and It’s Consequences for the Health Professions
Betty K. Mitsunaga*
University of Wisconsin, School of Nursing, Milwaukee, WI 53201, USA

I have been asked to discuss the trends in the US
health care system and in the health profession.
I will attempt to do this within the time constraints, but my discussion of the issues will besuperficial at best. The US system has become
extremely complex, defying easy description.
Its structure, functions and operations haveundergone major changes which, in turn, haveaffected professional practice education and research.
The impetus for the system changes has
been to improve efficiency, thereby reducing
health care expenditures which had increased
very rapidly to alarming proportions. They
were a major concern in the 1970’s, but in theearly part of this decade it seemed that government intervention was necessary to curb medical inflation. Between 1970 and 1989, employer spending on wages and salaries, controllingfor inflation, rose 1% but for health benefits
employer spending rose 163% (Peterson,1993). In the early 1990’s, the US was spending 50% more on health care per capita than
Canada, Japan and Germany, 60% more thanmost Scandinavian countries, and 70% morethan the United Kingdom (Roberts, 1993). The
experts forecasted that without intervention US
health care spending would be up to 20% ofgross domestic product (GDP) by the year
2010. In 1993, we were at 14% of GDP while
the other countries mentioned were between 8%
and 9%. However, despite our spending in theUS, our life expectancy is shorter, and infantmortality rates are worse. So the high costs ofour health care does not mean that our health isbetter.
The big growth in costs began after 1965
when government health care programs grew.
The Medicaid and Medicare programs began
then, Medicaid for the poorest segment in our
population, and Medicare for the population
segment age 65 years and older. In 1993, thesewere the fastest growing programs at bothfederal and state levels, exceeding expenditures
for education for the first time. As these programs grew over time, since 1965, business became interested in the market that was available
to the health care industry. Their entry into theindustry meant that the provision of health carebecame a business with increased importance ofthe bottom line, meaning profits. Managed care
was introduced which means standardized
benefit packages that are sold by insurancecompanies to employers, both private andpublic, and to individuals as well. The packages are insurance plans for payment of healthcare, including payments to physicians, tohospitals, some nurses, pharmacies and otherproviders who participate in the plans.
In this decade, the high costs of health carebegan to affect the middle class, business andgovernment (Roberts, 1993). As employers or
corporations tried to control costs, they limited
the amount of insurance they would provide,* Consultant at Centro de Amistad, Incorporado, Formerly Associate Dean at University of Wisconsin,
School of Nursing, Graduate Program.
This paper was presented at the Tottori University College of Medical Care Technology in October 1998,
and submitted to Dr. Kenzo Takeshita, Dean of the Faculty of Medicine, Tottori University and Professorof the Division of Child Neurology, Institute of Neurological Sciences, Faculty of Medicine, Tottori
University.

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B. K. Mitsunaga

raised the amount employees had to pay, andexcluded preexisting conditions from coverage.
Many employers also discontinued health carebenefits for retirees. The middle class experienced these cutbacks, and some faced loss ofhealth care benefits due to loss of employment
with corporate downsizing. Manufacturing
which once provided the best health insurance
was shrinking its share of all employment sothat fewer people had benefits. Our occupational structure had changed, and the part that grew
was in the service industries such as restaurants
where health insurance is less likely to be abenefit to employees.
In government and the business community,
managed care became common. In 1992, lessthan 40 million employees were in managed
care plans (Peterson, 1998). In 1995, 161 million were enrolled in some sort of managed carearrangement. Thirty-five percent of all state
government employees and 73% of the recipients of employer-sponsored coverage were inmanaged care plans. The consequences of managed care and corporate downsizing have been:

4. Corporatization became dominant, i.e., forprofit enterprises, regional and national.

1. Lack of free choice of doctors and hospitals
has been increasing.

8. Savings that have occurred: thorough managed care has been in alcohol, drug and psychiatric treatment, drug prices and cutbacks
in care generally as compared with a fee forservice plans where insurers paid the prices
determined by the care providers (Hefty,l993).

2. There has been a restructuring of providersof care (Perterson, 1998). In 1986, 57% ofphysicians were not involved in managed
care. In 1995, more that 80% had at least one
such contract, and at least one-third were ingroup practices, which the American Medical Association had opposed previously.
Physician incomes have been lowered, andmore medical students are selecting primarycare because managed care largely relies on
primary care to keep costs down.
3. Managed care discounting has affected operations of hospitals, especially publicly supported and academic health center hospitals.
The flow of funds was altered so there wasless cost shifting possible. Mergers and acquisitions of hospitals occurred at a rapid
pace which meant some employees lost theirjobs.

5. There was a rise in numbers without insurance. In 1990, 34.7 million had no healthinsurance, but the number rose to 40.3 million in 1995 (15% of the population). Further, 14.2% of children under 18 years of age
lacked insurance.
6. There is a current backlash against managed
care by the middle class and health care
professionals who are demanding reform of
the system.
7. Spiraling cost increases have slowed down.
While 14%–15% of GDP went to health carepreviously, the proportion of GDP now is
13.7%. The overall health care inflation rate
dropped to 2% in 1996. The perceived savings here is illusory though since GDP expanded rapidly during that period, and costshifting by employers to employees and retirees also recurred.

What drives health care costs? Many think: thecost increases are due to provider fraud, recipient fraud (Medicaid), malpractice, drug pricegouging or physician income (Roberts, 1993).
None of these is key. Drugs cost –8% of healthcare budget. Malpractice premiums minus costless than l%. The costs are due to the fact that:
1. It is often unclear what physicians should do
in a given case. They are paid by piece workso there is incentive to do more.
2. The population is heavily insured so they
demand more.

Abbreviation: GDP, gross domestic product142

US health care delivery system & health professions

3. We have a high degree of psychological anxiety, fear illness and death so we ask for morecare with little knowledge or concern about
costs.
4. Political power of providers is still anotherreason underlying costs such as the power ofphysicians. Thus, little money is spent for
health promotion and disease prevention.
5. Technological change is always in process.
No sooner is a new kind of technology available while another is already being developed.
6. Our fragmented and competitive system contributes to costs. Although 50% of hospitalbeds are unoccupied, new construction is formore beds. We have a declining birth rate
but new maternity services are added so that
hospitals can be full-line producers.
7. We have high administrative costs explainedby a plethora of forms, heavy marketing,strategic planning, regulation and dealing
with physicians. All these activities require
employees, some of whom are the bosses who
in turn have several assistant bosses, etc.
These costs are twice as high as in Canada.
In 1968, hospitals on a daily basis employed
435,000 managers and clerks to take care ofl.4 million inpatients. By 1990, the daily
average of patients was 850,000 but administrators, clerks and others in the bureaucracy
increased 5 times to 1.2 million (Whitburn,1993).
With these major transitions in the system,changes have followed that have affected practice. One is the changing character of the patient population in the hospital. Formerly, almost any person was admitted who was deemedby the physician to require hospitalization. This
is no longer true. Physician’s treatment or diagnostic plans for in-hospital are screened against
criteria established by payor or insurance organizations, either government or private. If
the plan is not approved, the patient must pay orsome other means for payment must be soughtor the plan must be altered. Minor surgical procedures are performed on an ambulatory basis,
either in the physician’s office or in the surgicalunit of an ambulatory clinic. Cataract surgery,for example, is performed on an outpatient basis. Patients are admitted and discharged thesame day. In hospitals, the consequence has
been very sick patients, many of them elderly
comprising the hospital population while others
are provided care in the community. The latteris known as community-based care.
At the same time that these changes havebeen occurring, patients are being discharged
earlier from the hospital, many of them withtubes still in place or with equipment that they
still require. Further, they may or may not havefollow-up services in the community. For instance, a colleague of mine had to be hospitalized for removal of a nonmalignant tumor in thesinus between the ear and brain. Because of the
supply of nerves and blood vessels in the sinus,
the surgery that was entailed was very delicate,calling for the specialized skills of a neurosurgeon. Because of inflammation of her throat
post-surgically, due to intubation during thelong surgery, she had difficulty in breathing so
a tracheostomy was performed. She was discharged with the tracheostomy 7 days following
surgery. She did not believe she was ready fordischarge but had no alternative. She lived
alone so she had no key person staying with her.
If it were not for friends who were nurses andwho could give her assistance with self-care,her recovery probably would have been prolonged.
In the past, women who gave birth in hospitals were usually discharged on the 3rd day
postpartum. When earlier discharges began, thewomen were discharged on the 1st day postpartum in many hospitals, while some hospitals
discharged these patients on the same day after
delivery. These practices raised strong objections from health care professionals and others.
The government stepped in then to mandate thatthe women and infants should remain at thehospital at least 2 days postpartum unless they
themselves requested earlier discharges.
Yet another strategy to reducing costs has
been downsizing or reduction of hospital per-143

B. K. Mitsunaga

sonnel, which has included professional nurses
and occasionally physicians. In turn, nurses
have been replaced by either untrained, unlicensed assistants or by certified nursing assistants who have had minimal training, or 6
weeks on average, to perform some very basic
activities.
As a consequence of these changes that haveaffected practice in the hospitals as well as community clinics, professional nurses have had toassume increased responsibilities. Not only are
the patients very ill and still requiring monitoring, but also the nursing assistants must be carefully supervised. Essentially, professional
nurses are accountable for care of the patients
but have fewer opportunities to observe and tointeract with the patients. They must rely on
nonprofessionals to be alert to patient responses
and to report them accurately and in a timely
manner to the nurse.
Increased responsibilities have also meant
fewer opportunities for patient education, a primary function of the nurse. Because discharges
occur so early, discharge planning is often notas thorough as it should be, and in some cases it
needs to begin before admission. The growth inambulatory care facilities has meant increased
demand for primary care nurses as well as physicians for community-based practice. Nurses’
training in community health nursing which ispertinent to outpatient or ambulatory care nursing may or may not have been a strong component in the educational program, however. Programs for patient education, coordination ofservices with the hospital and in the community, and knowledge about the community haveneed to be developed such as cultural patterns,
health status, life styles and other characteristics of the community. Further, primary nursing means that assessment and differential diagnosis skills, both physical and psychological,
must be a substantial part of the nurses’
competencies. These are not to be equated withhome health care though they are useful for thatpractice.
Nursing education programs were not fully
prepared for these changes. Students were being instructed for the practice of nursing in a
relatively slower paced, stable environment inwhich a one-to-one relationship with the patient
was paramount, and was heavily oriented tohospital care. However, the urgency for curriculum changes was made evident by our nursing
leaders, and the programs responded quickly.
Most schools have either completed or are completing the time-consuming process of curriculum change now. The goal is to give more emphasis to primary care content through both
separate courses and integration of some of thecontent in other courses. The clinical experiences, too, have been revised to incorporate
more community health and primary care experiences. Although development of criticalthinking abilities has been an important consideration in teaching methods, how these cognitive skills be fostered in the instructional
process is also being given more attention. The
increased complexity of patient care makes useof critical thinking imperative.
Medical education, too, has changed to include more primary care experience for students and residents. I mentioned the Medicare
program earlier, which provides for health careof those 65 and older. Medicare funds havecontributed to medical training since the program began but now mandates residencies inprimary care, whether family practice, internal
medicine or primary care. That is, a certain
proportion of the training monies that support
medical residents must be allocated to thosetraining for primary care. In nursing, too, acertain proportion of monies that the government provides for clinical training at the master’s degree level is designated for those inpractitioner training. This means specialization
in some area of primary care whether in adult
health, pediatrics, midwifery, geriatrics or psychiatric/mental health nursing.
The current issues which continue to confront us and are basic to controlling health carecosts are: i) Health care cost containment
means health income limitation. Who will pay?
We can control the supply but not the demand.
We need to understand and acknowledge thatcost controls, affordability, accessibility anduniversality of care are interrelated. We need todeal with all these factors. Otherwise, we can
not make effective change in the system; and ii)

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We need to deal with the unrealistic expectations of the public. We don’t want to pay for
health care and to have limits on our choices ofphysicians and other providers. We want thebest possible care without impact on our economy or our taxes, and we want access to care forall.
The American public needs to be educatedabout the facts of health care and to be given
opportunities to discuss these basic issues. Because these are difficult, it is unlikely that ourpoliticians will provide thoughtful leadership.
They are difficult issues because they force us
to reflect on our value systems regarding equality, our responsibilities for those who are lessfortunate than we, our sense of fairness, andwillingness to give up some advantages in orderthat others may have benefits. Reflections on
the values we hold will bring to our awarenessour attitudes toward the elderly, handicapped
persons, immigrants and other special populations. Perhaps you can understand that thebasic issues regarding health care are not favorite topics for discussion. We cannot continue toresolve them incrementally though because
health care costs are again getting out of hand.
Therefore, we can only hope that current distractions from addressing these vitally important issues will be resolved quickly so that

health care reform will be given highest priority
on our national agenda.
We expect our students to participate in thedecision-making process because they will be
our health care providers in the near future. The
system should be one that enables them toprovide care that will effectively promote thewell-being of those who seek their services.
References
1 Hefty T. Business perspective. In: Schenker E,
ed. Proceedings of the Tenth Annual Marcus
Common Interest Forum. Milwaukee: School ofBusiness Administration, University of WisconsinMilwaukee; 1993. p. 24–30
2 Peterson MA. The politics of health care policy:
over-reaching in an age of polarization. In: Weir
E, ed. The social divide. Washington, DC:
Brookings Institution Press; 1998. p. 181–229
3 Roberts M. Keynote address: business survival
in health care: restructuring and reform. In:
Schenker E, ed. Proceedings of the Tenth Annual
Marcus Common Interest Forum. Milwaukee:
School of Business Administration, University of
Wisconsin-Milwaukee; 1993. pp. 81–94.
4 Wbitburn G. Comments on the issue: businesssurvival in health care: Restructuring and reform.
In Schenker E, ed. Proceedings of the Tenth Annual Marcus Common Interest Forum. Milwaukee:
School of Business Administration, University of
Wisconsin-Milwaukee; 1993. p. 6–13.

(Received December 17, 1998, Accepted January 26, 1999)

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