The Emerging Health Care World: Implications for Social Work Practice and Education

The cost of health care in the United States is approaching $1 trillion a year, 15 percent of the gross national product (Shortell, Gillies, & Devers, 1995). Public and private entities are calling for reforms that will limit these rising costs. The acute care hospital, once the central institution of health care delivery, is particularly challenged by today's calls for controls. In response, the decentralization of expensive diagnostic services to out-of-hospital sites has accelerated, and the use of ambulatory care for procedures that were once done only on an inpatient basis has increased. These measures have resulted in cost savings by limiting the numbers of patients hospitalized and by reducing inpatient lengths of stay. Between 1984 and 1992 hospital admissions declined 11 percent and inpatient days 20 percent (Shortell et al., 1995). Currently, it is estimated that 98 percent of all medical encounters occur in nonhospital settings and that outpatient surgeries represent approximately 70 percent of all surgical procedures (Shortell et al., 1995). Empty inpatient beds have already contributed to the downsizing of hospital staff and the closing of facilities. Between 1980 and 1993, 949 hospitals closed (American Hospital Association [AHA], 1994). These dramatic changes in patient care delivery have been stimulated significantly by advances in technology and new approaches to the financing of health care, including managed care programs insuring specific populations. Growth of Managed Care "Managed care" refers to a number of organizational structures, various financing arrangements, and regulatory devices (Mechanic, Schlesinger, & McAlpine, 1995). The key idea underlying managed care is the limiting of unnecessary health service utilization by altering treatment processes in various ways: through budget restrictions and utilization controls, through financial incentives for providers to limit services, through case management review of treatment plans against pre-established criteria, and through the use of primary care physicians as gatekeepers for access to care (Mechanic et al., 1995; Society for Social Work Administrators in Health Care, 1994). The use of managed care organizations for the administration of private medical benefits is a fast-growing trend. It is estimated that by the year 2000, 90 percent of all medical benefits administration will be handled by managed care organizations (White, Simmons, & Bixby, 1993). Physicians are challenged by the structural constraints and inherent limitations of managed care. Choices traditionally made exclusively within the patient - physician relationship are now made through the institutional arrangements of managed care (Rodwin, 1995). As a result, many providers are trying to treat patients at that point in the continuum of care at which the greatest value is added. For the most part, this point is outside of inpatient hospital services (Shortell et al., 1995). Capitation One particularly significant change in managed care financial arrangements is capitation. Under this form of payment, a provider system is paid a fixed amount to care for patients over a given period. In the fee-for-service payment system, greater volume is associated with more revenue. In the new world of capitation, revenue is earned up front when the care contract is negotiated on the basis of a predetermined amount of money per member per month for a defined population of enrollees (Shortell et al., 1995). Capitation is designed to provide an incentive to providers to keep patients healthy, thereby controlling the costs of patient care by staying within a budget. Although it is assumed that under capitation this flat fee will exceed the cost of some patients' care and be insufficient to cover the cost of others, it is expected that this cost differentiation will balance out and that the provider will be adequately reimbursed. Although capitation arrangements currently account for only 7 percent of the revenues of hospitals and medical groups, capitation growth is projected to reach 17 percent over the next two years (Shortell et al. …