Gaming the System & Adverse Incentives

Gaming the System & Adverse Incentives Chapters 14 & 15 Code Blue Health Science Edition 4

Examples of Gaming the System • There is evidence that some doctors who own labs or x-ray facilities have, at times, ordered unnecessary tests to increase their personal income.

Examples of Gaming the System • There is evidence that unnecessary surgery has often been performed to increase surgeon’s income.

Gaming the System • There is evidence that when hospital occupancy is low, that administrators can often successfully pressure doctors to: • Admit more patients (patients that might have been treated in the doctor’s office or in an outpatient clinic), or • Increase the length of time they keep the patient in the hospital.

Gaming the System • Under fee-for-service, gaming the system was possible because . . . • The more products and services the physicians ordered for patients, the more revenue doctors and hospitals generated. • Patients had little or no control over what procedures they purchased. • Someone else (the insurance company or government) was paying the bill.

Proposed Solutions • The proposed solutions we are going to discover involve: • Managing care so that payment is based on outcomes (if the patient gets well), rather than what products and services are provided • Establishing better systems for review of the way physicians practice medicine • Providing more incentives for doctors to provide preventive medical care, which lowers costs • Paying doctors in a way that encourages them to efficiently use medical resources while curing the patients • Managed care • National Health Insurance

Systems Appendix to Chapter 15

Systems • Note to teachers and students. The author used the national health skill standards developed as a pilot project by the U.S. Department of Labor in determining what topics should be included in Code Blue. • A test on these standards leading to a Healthcare Foundation Skills Certificate can be taken by students wishing this certification (www.nocti.org).

Systems • After completing Code Blue, the author took the exam and felt that all of the skill standards were covered in sufficient detail in this textbook/novel, except for systems. • While the author did not write Code Blue to provide specific answers found on the test, systems is such a broad area that it felt advisable to add an appendix focusing specifically on those systems topics NOCTI felt relevant for the exam. • Although this appendix was written specifically for students interested in taking the test, the material should be useful to any health occupations student.

Systems Appendix to chapter 15

A System • A system is an orderly and complex arrangement of parts. • There are many types of systems including: • Physiological systems: the digestive system, the neurological system, and the circulatory system • Economic systems: capitalism and socialism • Computer systems: network, mainframe, and PC computer systems

Common Elements • Most systems have the following elements: • Input – resources entering the system • Throughput – the processes and resources used to create a product • Output – the final product • Feedback – information taken from the output to control or correct errors in throughput

Illustration

Systems Thinking • Systems thinking is one approach to problem-solving. • It is also known as systems analysis.

Systems Thinking • Systems thinking is a way of solving problems by looking at a problem from a broad perspective, looking not only at the individual parts of the system, but also at the way these parts relate to each other.

Systems Thinking • Systems thinking recognizes the whole is greater than the sum of its parts, and often results in different conclusions than those reached by traditional problem-solving models.

The American Healthcare Delivery System • The American healthcare delivery industry is a system. • System components include doctors, hospitals, insurance companies, and so on. • In addressing problems within the healthcare delivery system, it is important to look at the system as a whole, and not just focus on one or more of its components.

Backwards Thinking • Systems thinking involves backwards thinking. • It begins with the final goal and works backwards, analyzing the relationship of each part or activity to the goal.

Backwards Thinking • For example, if the goal of a team is to produce low-cost, yet high-quality medical products, then backwards thinking starts with the final product, and evaluates each input and activity involved in producing the product.

Advantages of Systems Thinking • Globalism: It provides a global approach to problem-solving. • Systems thinking helps employees “see the forest for the trees.” • It enables team members to see the big picture.

Advantages of Systems Thinking • Focus: Systems thinking allows problem solvers to identify cause and effect relationships. • It focuses on the activities needed for change.

Advantages of Systems Thinking • Team building: Systems thinking helps team members identify the goal of the team, and understand how their individual activities contribute to that goal.

Healthcare System Inputs • Human resources include the professionals who diagnose and treat the patients. • Financial resources are the funds to pay the salaries of the healthcare workers. • Patients, of course, are the people who enter the system for diagnosis, treatment, and so on.

Finance mechanisms are an important throughput • By this, we mean the individuals, insurance companies, government agencies, and so on, who must pay the bills.

How does America finance healthcare? • Self payment—some patients pay their own doctor and hospital bills. • Employers—many companies provide health insurance. • Private insurance—some people buy their own health insurance coverage. • Government insurance—Medicare, Medicaid and, soon, the subsidies provided by the Patient Protection and Affordable Care Act.

The American Healthcare Delivery System • Outputs include • Healthy patients • Healthy lifestyles

The healthcare delivery system is like a mobile • Movement or pressure exerted on one component exerts pressure on others.

For example . . . • Pressure to cut cost, for example, affects the volume of patients entering the system. • Greater volumes of patients entering the system puts pressure on finance mechanisms such as Medicare and Medicaid.

For example . . . • More resources spent preventing illness will cut resources needed for diagnosis and treatment. • Staff shortages can raise wages and put pressure on financing mechanisms.

Summary • The healthcare industry is a complex system of many parts. • It is impossible to change one part of the system without influencing others. • Historically, some people have attempted to fix the system by focusing on one or more broken parts.

Summary • By failing to take a systems approach and failing to consider the big picture, however, they often reap unintended consequences. • Those wishing to address quality, cost, and accessibility must adopt a systems approach to problem solving.

The End

Gaming the System & Adverse Incentives