Health Care Delivery in the United States

Health Care Delivery in the United States

James R. Knickman Anthony R. Kovner Editors

Jonas & Kovner’s

11th Edition

Health Care Delivery in the United States James R. Knickman, PhD · Anthony R. Kovner, PhD Editors

Steven Jonas, MD, MPH, MS, FNYAS, Founding Editor

Knickm an


Jonas & Kovner’s 11th Edition

11th Edition

9 780826 125279

ISBN 978-0-8261-2527-9

11 W. 42nd Street New York, NY 10036-8002

“Health care managers, practitioners, and students must both operate as effectively as they can within the daunting and con- tinually evolving system at hand and identify opportunities for reform advances… Health Care Delivery in the United States has been an indispensable companion to those preparing to manage this balance. The present edition demonstrates once again why this volume has come to be so prized. It takes the long view – charting recent developments in health policy, and putting them side-by-side with descriptions and analysis of existing programs in the United States and abroad.” Health Care Delivery in the United States

— Sherry Glied, PhD, Dean and Professor of Public Service, NYU Wagner, From the Foreword


T his fully updated and revised 11th edition of a highly esteemed survey and analysis of health care delivery in the United States keeps pace with the rapid changes that are reshaping our system. Fundamentally, this new edition presents the realities that impact our nation’s achievement of the so-called Triple Aim: better health and better care at

a lower cost. It addresses challenges and responses to the Affordable Care Act (ACA), the implementation of Obamacare, and many new models of care designed to replace outmoded systems. Leading scholars, practitioners, and educators within population health and medical care present the most up-to-date evidence-based information on health disparities, vulnerable populations, and immigrant health; nursing workforce challenges; new information technology; preventive medicine; emerging approaches to control health care costs; and much more.

Designed for graduate and advanced undergraduate students of health care management and administration and public health, the text addresses all of the complex core issues surrounding our health care system in a strikingly readable and accessible format. Contributors provide an in-depth and objective appraisal of why and how we organize health care the way we do, the enormous impact of health-related behaviors on the structure, function, and cost of the health care delivery system, and other emerging and recurrent issues in health policy, health care management, and public health. The 11th edition features the writings of such luminaries as Michael K. Gusmanno, Carolyn M. Clancy, Joanne Spetz, Nirav R. Shah, Michael S. Sparer, and Christy Harris Lemak, among others. Chapters include key words, learning objectives and competencies, discussion questions, case studies, and new charts and tables with concrete health care data. Included for instructors is an Instructor’s Manual, PowerPoint slides, Syllabus, Test Bank, Image Bank, Supplemental e-chapter on the ACA, and a transition guide bridging the 10th and 11th editions.

Key Features: • Integration of the ACA throughout the text, including

a supplementary e-chapter devoted to this major health care policy innovation

• The implementation of Obamacare • Combines acute and chronic care into organizations

of medical care • Nursing workforce challenges • Health disparities, vulnerable populations, and

immigrant health • Strategies to achieve the Triple Aim (better health and

better care at lower cost)

• New models of care including accountable care organizations (ACOs), patient homes, health exchanges, and integrated health systems

• Emerging societal efforts toward creating healthy environments and illness prevention

• Increasing incentives for efficiency and better quality of care

• Expanded discussion of information technology • A new 5-year trend forecast

Jonas & Kovner’s

H ealth Care Delivery in the U

nited States

Jonas & Kovner’s

Health Care Delivery in the United States

Brief Contents


Chapter 1 The Challenge of Health Care Delivery and Health Policy 3

Chapter 2 A Visual Overview of Health Care Delivery in the United States 13

Chapter 3 Government and Health Insurance: The Policy Process 29

Chapter 4 Comparative Health Systems 53


Chapter 5 Population Health 79

Chapter 6 Public Health: A Transformation for the 21st Century 99

Chapter 7 Health and Behavior 119

Chapter 8 Vulnerable Populations: A Tale of Two Nations 149


Chapter 9 Organization of Care 183

Chapter 10 The Health Workforce 213

Chapter 11 Health Care Financing 231

Chapter 12 Health Care Costs and Value 253

Chapter 13 High-Quality Health Care 273

Chapter 14 Managing and Governing Health Care Organizations 297

Chapter 15 Health Information Technology 311


Chapter 16 The Future of Health Care Delivery and Health Policy 333

Appendix Major Provisions of the Patient Protection and Affordable Care Act of 2010 343 Health Care Delivery in the United States

Glossary 363

Index 379

James R. Knickman, PhD, is president and chief executive offi cer of the New York State Health Foundation (NYSHealth), a private foundation dedicated to improving the health of all New Yorkers, especially the most vulnerable. Under Dr. Knickman’s leadership, NYSHealth has invested more than $90 million since 2006 in initiatives to improve health care and the public health system in New York state. Central to the foundation’s mission is a commitment to sharing the results and lessons of its grantmaking; informing policy and practice through timely, credible analysis and commentary; and serving as a neutral convener of health care leaders and stakeholders throughout New York. Before joining NYSHealth, Dr. Knickman was vice president of research and evaluation, Robert Wood Johnson Foundation, and served on the faculty of New York University’s Robert F. Wagner Graduate School of Public Service. He serves on numerous boards, including the National Council on Aging and Philanthropy New York.

Anthony R. Kovner, PhD, is professor of management at New York University’s Robert F. Wagner Graduate School of Public Service. He has directed the executive MPA in manage- ment, the concentration for nurse leaders, the program in health policy and management, and the advanced management program for clinicians at NYU/Wagner. He was a senior program consultant to the Robert Wood Johnson Foundation’s rural hospital program and was senior health consultant to the United Autoworkers Union. He served as a manager for 12 years in all, in a large community health center, a nursing home, an academic faculty practice, and as CEO at a community hospital. Professor Kovner is the author or editor, with others, of 11 books, 48 peer-reviewed articles, and 33 published case studies. He was the fourth recipient, in 1999, of the Filerman Prize for Educational Leadership from the Association of University Programs in Health Administration. Health Care Delivery in the United States

Jonas & Kovner’s

Health Care Delivery in the United States 11th Edition

James R. Knickman, PhD

Anthony R. Kovner, PhD


Steven Jonas, MD, MPH, MS, FNYAS

Founding Editor

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For Professors: Instructors’ Manual: ISBN 978-0-8261-7155-9 Transition Guide for the 11th Edition: ISBN 978-0-8261-2628-3 Test Bank: ISBN 978-0-8261-7159-7 PowerPoints: ISBN 978-0-8261-7157-3 Syllabus: ISBN 978-0-8261-7158-0 Please email to request these fi les.

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Jonas and Kovner’s health care delivery in the United States / [edited by] James R. Knickman, Anthony R. Kovner.—11th edition. p. ; cm. Health care delivery in the United States Editors’ names reversed on the previous edition. Preceded by: Jonas & Kovner’s health care delivery in the United States. Includes bibliographical references and index. ISBN 978-0-8261-2527-9—ISBN 978-0-8261-2529-3 (e-book) I. Knickman, James, editor. II. Kovner, Anthony R., editor. III. Title: Health care delivery in the United States. [DNLM: 1. Delivery of Health Care—United States. 2. Health Policy—United States. 3. Health Services—United States. 4. Quality of Health Care—United States. W 84 AA1] RA395.A3 362.10973—dc23 2014045558

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FOREWORD Sherry Glied xiii






Context 3 Th e Importance of Good Health to American Life 4 Defi ning Characteristics of the U.S. Health System 5 Major Issues and Concerns 6 Key Stakeholders Infl uencing the Health System 8 Organization of Th is Book 11 Discussion Questions 12 Case Study 12 Bibliography 12


Th e U.S. Health Care System: A Period of Change 13 Th e Shared Responsibility for Health Care 14 Where the Money Comes From, and How It Is Used 16 A Comparative Perspective 16 Population Health: Beyond Health Care 17 Access to Care and Variation in Health Outcomes 19 Health and Behavior 20 Th e Health Care Workforce 21 Variations in Health Care Delivery 22 Health Care Quality 23 Health Care Cost and Value 24 Th e Future of Health Care Delivery 26 References 27


C o n t e n t svi


Context 29 Th e Government as Payer: Th e Health Insurance Safety Net 30 Government and Health Insurance: Th e Policy Process 41 Conclusion 49 Discussion Questions 49 Case Study 50 References 50

CHAPTER 4 COMPARATIVE HEALTH SYSTEMS 53 Michael K. Gusmano and Victor G. Rodwin

Overview 53 Health System Models 55 NHS and NHI Systems Compared With the United States 57 Th e Health Systems in England, Canada, France, and China 58 Lessons 70 Discussion Questions 71 Case Study 72 References 72



Context 79 Th e Population Health Model 80 Th e Medical Model 82 Comparing the Medical and Population Health Models 83 Th e Infl uence of Social Determinants on Health Behavior and Outcomes 85 Leading Determinants of Health: Weighting the Diff erent Domains 89 Health Policy and Returns on Investment 90 Conclusion 94 Discussion Questions 95 Case Study 96 References 97

CHAPTER 6 PUBLIC HEALTH: A TRANSFORMATION FOR THE 21ST CENTURY 99 Laura C. Leviton, Paul L. Kuehnert, and Kathryn E. Wehr

Who s in Charge of Public Health? 99 A Healthy Population Is in the Public Interest 102 Core Functions of Public Health 106 Governmental Authority and Services 108 Rethinking Public Health for the 21st Century 112 Discussion Questions 116 Case Study 117 References 117

C o n t e n t s vii

CHAPTER 7 HEALTH AND BEHAVIOR 119 Elaine F. Cassidy, Matthew D. Trujillo, and C. Tracy Orleans

Behavioral Risk Factors: Overview and National Goals 120 Changing Health Behavior: Closing the Gap Between Recommended and Actual Health Lifestyle Practices 126 Changing Provider Behavior: Closing the Gap Between Best Practice and Usual Care 137 Conclusion 142 Discussion Questions 143 Case Study 144 References 144

CHAPTER 8 VULNERABLE POPULATIONS: A TALE OF TWO NATIONS 149 Jacqueline Martinez Garcel, Elizabeth A. Ward, and Lourdes J. Rodríguez

Understanding Vulnerable Populations and Th eir Context 150 Th e Growing Number of Vulnerable Populations 153 Organization and Financing of Health Care and Other Services for Vulnerable Populations 158 Social Service Needs 162 Federal and State Financing of Care for Vulnerable Populations 164 Challenges for Service Delivery and Payment 165 Emerging and Tested Ideas for Better Health Delivery 167 Conclusion 174 Discussion Questions 175 Case Study 176 References 176


CHAPTER 9 ORGANIZATION OF CARE 183 Amy Yarbrough Landry and Cathleen O. Erwin

Description of the Current Care Delivery System 184 Th e Future of the Delivery System 202 Best Practices 207 Looking Forward 208 Discussion Questions 209 Case Study 209 References 210

CHAPTER 10 THE HEALTH WORKFORCE 213 Joanne Spetz and Susan A. Chapman

Who Is Part of the Health Workforce? 214 Traditional Approaches to Health Workforce Planning 215 Health Workforce Education 216 Critical Issues for the Health Workforce 218 Conclusion: Building the Future Health Care Workforce 224

C o n t e n t sviii

Discussion Questions 224 Case Study 225 References 225


General Overview of Health Care Financing 232 What the Money Buys and Where It Comes From 234 How Health Insurance Works 235 How Providers Are Paid for the Health Services Th ey Deliver 240 Specialized Payment Approaches Used by Payers 241 Issues Shaping the Future of Health Care Financing 244 Conclusion 249 Discussion Questions 250 Case Study 251 References 251

CHAPTER 12 HEALTH CARE COSTS AND VALUE 253 Thad Calabrese and Keith F. Safi an

Th e Issue of Health Care Spending Growth 254 Conclusion 269 Discussion Questions 269 Case Study 270 References 270

CHAPTER 13 HIGH-QUALITY HEALTH CARE 273 Carolyn M. Clancy and Irene Fraser

Defi ning Quality 274 How Are We Doing? 274 How Do We Improve Quality? 275 How Do We Incentivize Quality Care? 281 What Are Major Recent Developments Aff ecting Quality? 289 Core Competencies for Health Administrators 292 Conclusion 293 Discussion Questions 294 Case Study 294 References 295


Governing Boards and Owners 298 Management Work 301 Conclusion 308 Discussion Questions 308 Case Study 309 References 309

C o n t e n t s ix


HIT Defi ned 312 Th e Backing of Government 315 Transformative Powers of HIT 316 HIT at the VA 321 Th e New York Experience 322 Implementing HIT 323 Challenges and Shortcomings of HIT 324 Toward the Future 325 Discussion Questions 326 Case Study 327 References 327



Dynamics Infl uencing Change 334 Aspects of the Health System Th at Are Set to Change by 2020 335 Future Prospects for Diff erent Stakeholders in the Health Enterprise 339 Conclusion 341 Discussion Questions 341 Case Study 342 Bibliography 342

APPENDIX Major Provisions of the Patient Protection and Aff ordable Care Act of 2010 343




List of Tables and Figures

Chapter 2

Table 2.1 Th e diverse U.S. health care workforce. 22 Figure 2.1 Consumer perceptions of the U.S. health care system. 13 Figure 2.2 Th e role of government in health care. 14 Figure 2.3 Signifi cant health policy milestones, 1965–present. 15 Figure 2.4 Sources and uses of health care funding, 1970 and 2012. 17 Figure 2.5 Association between health care spending per capita and life expectancy. 18 Figure 2.6 Growth in obesity rates, 2000–2010. 18 Figure 2.7 Usual source of care by income level. 19 Figure 2.8 Adequate control of cholesterol by income level. 20 Figure 2.9 UWPHI county health rankings model of health improvement. 21 Figure 2.10 Th e Commonwealth Fund’s scorecard on local health system performance. 24 Figure 2.11 Th e factors that infl uence a patient’s choice of hospital. 25 Figure 2.12 Adjusted charges and discount prices for uncomplicated caesarean sections across

California hospitals, 2011. 26 Figure 2.13 Consumer perception of Aff ordable Care Act next steps. 27

Chapter 4

Table 4.1 Health system provision and fi nancing. 56 Table 4.2 Health care expenditure as a share of GDP: Selected countries, 2011. 66

Chapter 5

Figure 5.1 A guide to thinking about determinants of population health. 81 Figure 5.2 Association between health care spending per capita and life expectancy. 82 Figure 5.3 Gradients within gradients: Education is linked with health. 87 Figure 5.4 Health-related behaviors and education both aff ect health. 88 Figure 5.5 County health rankings model. 91

Chapter 6

Table 6.1 Ten great public health achievements: United States, 1900–1999. 103 Table 6.2 Diff erences between the roles of individual medical care and public health. 105 Figure 6.1 Th e public health system at the local level. 101 Figure 6.2 Th e circle of public health activities and 10 essential services. 106

Chapter 7

Table 7.1 Selected Healthy People 2020 objectives: Behavioral risk factors. 122 Table 7.2 Th e population-based intervention model. 133 Figure 7.1 Comprehensive approach to changing provider practice. 140

L i s t o f T a b l e s a n d F i g u r e sxii

Chapter 8

Figure 8.1 Projection of growth in chronic illness prevalence. 154

Chapter 9

Table 9.1 Registered hospitals in the United States by type and ownership status. 191 Table 9.2 Standards for patient-centered medical homes. 203 Figure 9.1 Domains in acute care. 187

Chapter 10

Table 10.1 Largest health care occupations in the United States. 215

Chapter 11

Table 11.1 National health expenditures (in $ billions), selected categories and years, 1970–2020. 234

Figure 11.1 U.S. national health expenditure as a share of GDP, 1970–2020. 234 Figure 11.2 Medicaid enrollments and expenditures for year 2010. 237

Chapter 12

Table 12.1 Average annual after-tax expenditures by consumer units/households, 2012. 256 Table 12.2 Health care spending as a percentage of GDP for OECD countries. 257 Figure 12.1 Annual change in health care spending and GDP, 1963–2012. 254

Chapter 13

Figure 13.1 Improving care through system redesign. 276 Figure 13.2 Number of state public-reporting mandates by provider category. 284



Th is, the 11th edition of Health Care Delivery in the United States, appears at an unprecedented moment in the evolution of the U.S. health care system. After decades of relentless increases in the number of uninsured residents, more Americans today hold health insurance coverage than at any time in the past. In the wake of the Aff ord- able Care Act coverage expansion, which began in January 2014, the share of the popu- lation uninsured has fallen to levels last seen more than 30 years ago. On the cost front, real per capita spending over the past 4 years has grown at the slowest rate on record. For the 8th year in a row, the Congressional Budget Offi ce has revised down- ward its projections of Medicare cost growth. Although the exceptional slowdown of overall health spending is largely due to the eff ects of the Great Recession, changes to payment policies and levels enacted in the health reform law may claim credit for some of the good Medicare news.

Th e new law, as well as changes in private insurer practices, also seems to have encouraged the proliferation of novel forms of health care delivery that seek to gen- erate the quality and cost benefi ts long associated with high-performing vertically integrated health care institutions. Some evidence suggests that these incentives have contributed to reductions in readmission rates and health care-acquired infections.

On the public health front, decades of educational eff orts, incentives, and inter- ventions, often based on academic evidence, have also led to signifi cant improve- ments. Teen and adult smoking rates are at all-time lows, and the teen birth rate has fallen almost continuously over the past 20 years. Th ese improvements are testimony to vibrant and creative eff orts in health fi nancing, delivery, and public health.

It is comforting and reassuring to imagine that the U.S. health system has settled into a more sustainable, equitable, and eff ective path. But that sanguine image belies both the condition of our health system and the history of health reform elsewhere. It is true that uninsurance rates have dropped dramatically in some states—but many others have rejected the coverage expansions. A concerted eff ort in the courts and in Congress seeks to roll back the gains that have already been made. Slower cost growth off ers the system some breathing room, but almost all analysts predict that the changes in payments and organizations will not be suffi cient to hold spending at supportable levels. Even under the most optimistic scenarios, as the baby boom generation ages, health care will consume a growing share of the gross domestic product and of the fed- eral budget. Health reform and insurer ingenuity have brought an abundance of new organizational forms, but the jury is out on whether these will actually improve quality and reduce costs. U.S. health outcomes, especially for the most vulnerable popula- tions, remain abysmally low in a comparative perspective, and the evidence suggests that inequality in health outcomes is growing.

Students of health care policy and delivery need to chart a middle course: nei- ther complacently optimistic about the promise of a new regime, nor overly discour- aged by the still-dismal U.S. context. Instead, as the experience of other countries suggests, we should recognize that health care system reform is a never-ending task. After all, Chancellor Otto von Bismarck initiated the German health insurance system in 1883—and Chancellor Angela Merkel completed the most recent German health insurance reform, building on Bismarck’s model, in 2011. Similarly, even though much

F o r e w o r dxiv

has changed, our health care system continues to resemble (quite closely) the system described in the fi rst edition of Health Care Delivery in the United States, published in 1977. No doubt a student of the future, scanning this 11th edition in 2050, will recog- nize many similarities to the health system he or she knows and will also see evidence of the decades of reform that will consume policymakers and delivery system manag- ers between now and then.

Health care managers, practitioners, and students must both operate as eff ectively as they can within the daunting and continually evolving system at hand and identify opportunities for reform advances. For nearly 40 years—27 of them at least in part under the stewardship of Tony Kovner—Health Care Delivery in the United States has been an indispensable companion to those preparing to manage this balance. Th e present edition demonstrates once again why this volume has come to be so prized. It takes the long view—charting recent developments in health policy and putting them side-by-side with descriptions and analysis of existing programs in the United States and abroad. Novelty gets its due, but so does context. Th e text recognizes that health is, after all, the ultimate object of health care delivery, and so provides a thorough assessment of population health. It explores the key elements of the health care deliv- ery system, from both the supply and the demand sides. In addition, it recognizes that the delivery system doesn’t stand alone and examines the structures and processes— technological, governmental, and organizational—that underpin the system.

Health Care Delivery in the United States profi ts from the editorship of two highly experienced observers of the health care system: James Knickman and Anthony Kovner. Jim, once a faculty member at Wagner, is now president and CEO of the New York State Health Foundation, which, under his stewardship, has been an impor- tant contributor to reform of the New York state health system. Tony is, to my delight, my colleague at the Wagner School. He has been a mentor and guide to generations of health care managers and policymakers, both at a distance, as contributor and editor to this text, and as a classroom teacher and adviser. He has transformed the lives of his students, and they, as leaders in health care institutions around the country, have transformed their institutions and the lives of their patients. Tony inculcates in his students—as he has in me—a conviction that policy and management can, should, and must be founded on the best possible evidence. Founding decisions on evidence is not just a mantra—it means asking the right questions, identifying the appropriate literature, and assessing the applicability and quality of this research. In this volume, Tony and Jim have put that system to work, and it is this foundation in rigorous evi- dence that allows the text to stand the test of time and to be responsive and useful in addressing current developments.

Sherry Glied, PhD Dean, New York University

Robert F. Wagner School of Public Service New York, New York



Th e editors would like to express deep appreciation to the team of people who made this book possible. First, we thank our 29 authors of the 16 chapters that comprise the book. Th ey are all noted experts in their fi elds, and we appreciate their willingness to translate their knowledge into chapters that introduce future leaders to the workings of the U.S. health system. Second, we wish to acknowledge the superb editorial role played by Sheri W. Sussman and the quality control of production under Joanne Jay’s direction at Springer Publishing Company. We appreciate Sheri’s insights about how to publish a textbook and have benefi ted from Joanne’s keeping the process moving in creating an eff ective and enjoyable learning experience for HCDUS readers. Christine Kovner frequently helped to strengthen the book, reading various chapters and off er- ing advice from her vantage as one of the leading nursing researchers in the country. At the New York State Health Foundation, Susan Illman, Emily Parker, and Amy Shefrin each provided valued assistance gathering current data to inform the book. Finally, we would like to acknowledge Steve Jonas, who originated this book 11 editions ago.


Organization of This Book

Th is is the 11th edition of Jonas and Kovner’s Health Care Delivery in the United States, which, although its title has evolved in the last 35 years, has stayed true to its original purpose: helping instructors and students better understand the complicated, expen- sive, and ever-changing U.S. health care delivery system and the public health system. It is a privilege to be able to work with instructors around the world to introduce the leaders of tomorrow to the health fi eld.

Our nation is embarked on an ambitious attempt to reshape how we go about taking care of the health concerns of our population. On the one hand, there is a new energy to develop initiatives that focus on keeping people healthy. On the other hand, there is a great deal of experimenting with the organization of the care system that addresses the needs of people who have medical problems associated with injuries and disease. Th e aim of this experimentation is to improve the quality of medical care and to bring costs in line with what Americans can aff ord and want to spend on the health sector. Health Care Delivery in the United States

Th is text is organized to address both the challenge of keeping people healthy (Part II) and the challenge of delivering good medical care that helps people recover from medical conditions that do occur (Part III). In addition, we have included a sec- tion that describes the current status of the U.S. health care system and explains the complicated public policy process that has so much infl uence on the way health care is delivered and fi nanced in this country (Part I). Th e text ends with a consideration of where the health system might be headed in the years to come (Part IV).

Each chapter starts with a list of key words that are central to the chapter’s focus, a list of the learning objectives addressed by the chapter, and an outline of what is to come. Each chapter ends with a list of discussion questions and a case study, encourag- ing the reader to apply the ideas of the chapter to real-life issues and challenges that face health care leaders focused on management issues and policy issues Health Care Delivery in the United States.

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