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A Short History of Health Care in America A Short History of Health Care in America

A Short History of Health Care in America - PowerPoint Presentation

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A Short History of Health Care in America - PPT Presentation

Philip Madvig MD Associate Executive Director 1 Who knew healthcare was this complicated Photo httpwwwpoliticocomstory201702trumpnobodyknewthathealthcarecouldbesocomplicated235436 ID: 916540

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Slide1

A Short History ofHealth Care in America

Philip Madvig, MD

Associate Executive Director

1

Slide2

“Who knew healthcare was this complicated?”

Photo: http://www.politico.com/story/2017/02/trump-nobody-knew-that-health-care-could-be-so-complicated-235436

2

Slide3

3

Some Disasters are Natural…

Slide4

…Some are man made

US Health Care Has Many Challenges

Large uninsured populationHighest costs in worldDisplaces other potential goodsGenerally lower health status than most industrialized countriesSeeming inability to solve problems

4

Slide5

US Healthcare is fragmented, semi-cottage industry, with dysfunctional payment system

Could have turned out different:

Public health systemGovernment sponsored insuranceHighly integrated, “corporate” systemBut it didn’t…

5

Slide6

How did we get where we are?

If we understand how we got here, perhaps we can chart our better future

“Those who cannot remember the past are condemned to repeat it”

6

Slide7

What forces shaped American health care?

Unique American culture Emergence of a powerful medical profession

Central function of the hospitalEscape from corporatizationEvolution of American health insuranceCost Crisis

7

Slide8

Unique American Culture

8

Slide9

Self-relianceWho needs a health care system?

DemocraticRepudiate authority and traditional hierarchyNaturalisticLack of scientific basis for medical practice

American Culture: Pre-Industrial

NET RESULT

Little need for health care system, and everyone can be a doctor — housewife, clergy, hat maker, brewer…

9

Slide10

Rise of citiesPopulation concentrated

Loss of family structureScientific Advances and general respect for scienceDisease originsAntisepsisAnesthesia

Diagnostic toolsPost Industrial America

10

Slide11

Emergence of a Powerful Medical Profession

11

Slide12

What is definition of a profession?What does it mean to be professional?

12

Slide13

Historically weak and not cohesive

“Everybody can be a doctor”No authority in scienceNo barrier to entryNo standardized trainingNo interdependenceInefficient/costly

Emergence of a powerful medical profession

13

Slide14

Gains in authority

Scientific advances and knowledge and especially therapeuticsDeclining self-relianceWeakened competitionNo scientific credibilityIncreased interdependence Specialization leading to referrals

Hospital as central institution for care

Emergence of a powerful medical profession

14

Slide15

Barriers to entry

LicensureSupplyStandardization of trainingElevates competence leading to greater authorityReduces supply

Emergence of a powerful medical profession

15

Slide16

How many medical schools and annual graduates in 2017?How many in 1900?

16

Slide17

RESULTS

Standardization of Training

John’s Hopkins opened in 1893. It had a 4-year program

AMA makes educational reform a top priority

1904 Council on Medical Education

1906 inventory and grade medical school

REPORT

CARD

A

s

B

s

C

s

82

46

32

“Imperfect, but redeemable”

“Beyond repair”

17

Slide18

Flexner Report (1910)

Large discrepancy between medical science and medical education

AMA Council effectively becomes national accreditorMedical education becomes standardized more or less as we know it today

As a result of Flexner and other actions:

The number of medical schools and medical students plunge

The profession becomes more uniform and cohesive (with less socio-economic and ethnic diversity. For example, pre Flexner there were 7 black medical schools; post Flexner there were 2)

Supply of doctors declines

“ Society reaps at this moment but a small fraction of the advantages which current knowledge has the power to confer.”

18

Slide19

Schools and Graduates

Trend in US Medical Schools and Graduates

1850

1925

Schools

Grads

19

1900

Slide20

Central Function of a Hospital

20

Slide21

Transformation of Hospitals

Johns Hopkins

Past

Modern

21

Slide22

How many hospitals in US?

22

Slide23

Transformation of Hospitals

Hospitals transformed from “places of dreaded impurity and exiled human wreckage into awesome citadels of science”

Hospitals transformed from social welfare institutions to medical science institutionsHospitals transformed from charities to businesses

23

Slide24

Transformation of Hospitals

The following changes which occurred in the late 19th century contributed to the transformation of the hospital:

Industrialization accompanied by the rise of the city and the loss of the family of location of careScientific improvements contributing to surgical care (antiseptic technique and general anesthesia)The emergence of nursing as a profession

Medical education requirements

24

Slide25

$1,200

per bed

These changes lead to an explosion in the number, complexity, and cost of hospitals

Transformation of Hospitals

1870

1905 - 1910

2015

178

hospitals

$4,400

per bed

4,000

hospitals

$3,000,000

per bed

5,564

hospitals

Source: Number of hospitals, AHA, FY2015; cost is that of Kaiser Oakland in 2010

25

Slide26

Physicians as hospital owners

Formal organization of medical staffTension between medical staff and hospital administration

Interactions between hospitals and medical profession

26

Slide27

Doctors come to stand between the hospital and its market

Hospital’s revenue comes from patients, but doctors control where patients go. In essence, doctors obtained control of the hospital assets without needing to invest capital

Hospitals did not become systematized partly because of the influence of physicians (noted above), but also because hospitals often developed unique themes (e.g. provided care to specific religious or ethnic groups, or specific medical services)

27

Slide28

Failure to develop strong public health system

Origins in sanitary reform:

Formation of government health departmentsLate 1800s: in response to epidemics of cholera and yellow feverAddressed conditions favoring epidemics like waste disposal, squalid living conditions, water supply, and use of quarantine

Webster’s dictionary definition

“ Public health refers to the health of the population as a whole especially as monitored, regulated, and promoted by the state.”

28

Slide29

Physicians resisted public health expansion to provide broader medical care. Sanitary engineering was OK. But, when public health started providing vaccinations and health exams, physicians defended their own interests

Physician resistance

29

Slide30

Escape from Corporatization

30

Slide31

Physicians did not want to be subjected to the kind of hierarchical controls that typically prevail in industrial capitalism

But did want control of emerging technology and other professions, e.g. laboratory medicine, imaging, etc.

Escape from Corporatization

“Where physicians become employees and permit their services to be peddled as commodities, the medical services usually deteriorate, and the public which purchases such services is injured.” – AMA 1935

31

Slide32

Private business had interest in providing medical care

To their own employees through company doctors, and…Potentially to the public for profit, but…

Physicians opposed “Contract Practice”

32

Slide33

There were other forms of “Contract Practice”

Industrial medicine: the prevention or treatment of industrial injuries could have expanded to address the general health of employeesWelfare capitalism was also attractive to business as a way to resist unions, enhance employee loyalty and guard against socialism

Fraternal associations also represented a form of “contract practice”Group practice (Mayo Clinic and others)

33

Slide34

Preserving Physician Autonomy

All of these forms were actively resisted by organized medicine, in order to preserve physician autonomy. In particular, to preclude entry of third parties who might control physician practice and extract profit

Bar on corporate practice of medicineLegal decisions in early 20th century held that corporations could not be licensed practitioners, therefore, could not engage in medical practice even if they employed physicians

34

Slide35

Evolution of AmericanHealth Insurance

35

Slide36

Bismarck in Germany

Origins in “sick pay” (i.e. protection against wage loss)Part of social protection including unemployment, old age pension, etc.Response to political and social discontentNot regarded as charity but as inherent right to certain benefits and requiring compulsory contribution

Health insurance emerged in Europe in the late 19

th

century

36

Slide37

In the US, government had little role in social welfare

Federal government relatively weakSocialist movement in US relatively weak

Public health system had been restricted

37

Slide38

In early 20th century American Progressives proposed insurance system for workers

Cost shared between employee, employer, and stateBenefits to include sick pay, medical costs, maternity costs for spouses, death benefits

CompulsoryExpected to stimulate prevention and result in economic benefit

38

Slide39

Met with Strong Opposition

AMA supported but objected to capitation as payment and later opposed entire proposalLabor opposed the proposal as a paternalistic intrusion of the state and because the proposal was in competition with the union role of providing social benefits

Business opposedInsurance industry opposed, that is the life insurance industry opposed the proposal because of the death benefit

39

Slide40

Rising Costs

In the 1930s rising medical costs became a more prominent reason to consider insurance than wage loss. This meant the middle class, not just workers, might benefit from insurance, especially since medical costs are highly unevenly distributed

Committee on the costs of medical care led by Lyman Wilbur, MD, President of Stanford University, findings:National health expenditures equal $3.7 billion, 4% of GDP in 1929Health care costs distributed unequally

Poorest people went without medical care

40

Slide41

In 1929, 3.5% of the population accounted for 1/3 of all costs. How does this compare to today?

41

Slide42

Group practice and group payment, but no compulsory health insurance

Wanted to address delivery system first because without improvement healthcare and insurance were too expensiveFelt that it was easier to start with voluntary insurance rather than compulsory insurance

 AMA described the Committee’s proposal as “an incitement to revolution” 

Committee Recommendations

42

Slide43

Unemployment insurance

Old age pensions“Health insurance will have to wait.” – Committee on Economic SecurityAMA began to describe terms under which they endorse an insurance proposal:Voluntary not compulsory

Under control of local medical societiesNo third party involved in physician business

The US Depression revised the priorities for social reform

43

Slide44

End of WWII Truman calls for national program with compulsory insurance

“Medical services absorb only 4% of national income. We can afford to spend more for health.”Under this plan “people would continue to get medical and hospital services just as they do now.”Effort to differentiate from socialized medicine given threat of communism

AMA reacts with largest lobbying campaign in historyTruman plan failed to pass

The Truman Plan

44

Slide45

Private employer-based insurance emerges partly as a result of union negotiations

Veterans health system createdPre-paid plans emergeGroup Health in SeattleHIP in NYCKaiser Permanente on west coast. “The closed panel colossus”

Plans Emerge

45

Slide46

Great Society / War on Poverty, President Lyndon Johnson

Creation of Medicare 1965Association with Social Security and acknowledgement of disproportionate health needs of agedCreation of Medicaid 1965 for the extremely impoverished population

Physician interests accommodated by allowing usual and customary payment through fiscal intermediary (aka Blue Shield)Hospital interests accommodated by reimbursement based on cost, including cost of capital, and use of fiscal intermediary (aka Blue Cross)

Great Society / War on Poverty

Therefore, there is no incentive to manage cost of care or to rationally organize a more efficient system of health care

46

Slide47

Cost Crisis

47

Slide48

1970s health care cost crisis

$69 billion (7.2% of GDP) in 1970By 1980 $230 billion (9.4% of GDP)Government is now responsible for much larger share of cost

Cost crisis continues

48

Slide49

Changing costs over time

49

Trend in Health Care Costs, Percent of GDP

1929

2014

COSTS, % GDP

$3.7 Billion

$3.021 Trillion

Slide50

Reactions

Interest in pre-paid, organized health care systems — HMO ActWage and price freeze

Certificate of Need and other regulationsResumed call for national health insurance — Richard Nixon vs Ted KennedyWatergate put an end to the call for national health insurance

50

Slide51

Corporate transformation of medicine,sort of…

As health care becomes more than 10% of GDP, controlling costs and extracting profit gain interest

Hospital systems emergeInsurance industry consolidates and converts to for-profitVertical integration attemptedBut, many of these changes are seen as gaining market power without transferring efficiencies to consumers

51

Slide52

Quality Questioned: IOM reports

To Err is Human100,000 deaths/year from harmCrossing the Quality Chasm

“Between the health care that we now have and the health care that we could have lies not just a gap, but a chasm”.

52

Slide53

Clinton, Obama

53

Photo: https://www.nbcnews.com/meet-the-press/why-obama-campaigning-so-hard-against-trump-n593111

Slide54

Repeal and replace

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Slide55

Trump, Republicans

“Who knew healthcare was this complicated?”

Photos: http://nymag.com/daily/intelligencer/2016/11/under-president-trump-big-changes-are-on-the-way-for-america.html; https://www.today.com/video/lindsey-graham-devin-nunes-conducting-an-inspector-clouseau-investigation-908139075543

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