Learning Objectives
By the end of this section, you will be able to:
- Describe the organization of healthcare delivery systems
- Recognize the structure of healthcare delivery systems
- Explain the components for integrated healthcare delivery
The way an individual understands and defines healthcare organization, structure, and delivery varies widely based on who they are; where they live; if they are insured, uninsured, or underinsured; and who controls the healthcare system they use. This section covers healthcare delivery system organization, structure, integration, and providers. In the United States, there is fluidity among the levels of care, and physicians may work at several levels based on the needs of their patients (Bodenheimer & Grumbach, 2016). However, in many parts of the world, primary, secondary, and tertiary care are managed by entirely separate practitioners (Bodenheimer & Grumbach, 2016). Yet, the concepts exist universally. In this section, consider how those interactions affect opinions and experiences within the healthcare system.
Most countries use one of four basic models to structure and organize their healthcare systems (Chung, 2017). By contrast, the United States combines elements of each of these models. Table 3.6 provides a brief introduction to these models.
| Model Name | Primary Characteristics | Countries Using |
|---|---|---|
| Beveridge model: single-payer national health service |
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| Bismarck model: social health insurance model |
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| National health insurance: single-payer national health insurance |
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| Out-of-pocket model: market-driven health care |
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Link to Learning
The American Hospital Association (AHA) offers Fast Facts on U.S. Hospitals Infographics that compare U.S. hospitals using a variety of metrics. Explore some of their visuals comparing different types of hospitals.
Organization of Healthcare Delivery
A healthcare delivery organization is a single facility or group of facilities that provide medical care for some portion of a population. There are three types of healthcare delivery systems in the United States: not-for-profit, for-profit, and state/local government (Table 3.7) (Yarbrough Landry et al., 2019). To determine which delivery system applies to an organization, three economic questions and one healthcare question can help:
- Where do the funds to operate the organization come from?
- Are profits (money left after all bills, including staff salaries, are paid) expected?
- Are taxes (money paid to the local, state, or federal government for property and purchase of goods) paid by the organization?
- Is the organization required to function as a safety-net hospital (a facility that is required to provide care for a patient no matter their ability to pay)?
| For-Profit | Not-for-Profit | State and Local Government Hospitals | |
|---|---|---|---|
| Where do operating funds come from? | Investors | Donors | Government |
| How are profits managed? | Returned to shareholders | Reinvested in the hospital or in the community | Reinvested in the hospital or in the community |
| Are taxes paid? | Yes | No | No |
| Is it a safety-net hospital? | Rarely | Maybe, if it is a university or teaching hospital | Yes |
For-Profit Systems
For-profit hospitals represent 20 percent (1,228) of the hospitals in the United States (see Figure 3.8) (AHA, 2022). These hospitals are funded by investors who expect to have a return on their investment. In this type of system, an investor is a stakeholder, or person with an interest in the success of the organization. While for-profit systems serve their communities, they are also under pressure to earn a profit at the end of the year, which is then returned to the investors (Cheney, 2019). As a result, their leadership structures tend to include representatives of their investors and community leaders, which creates a push–pull relationship between patient care and financial outcomes. Further, for-profit facilities must pay local, state, and federal taxes on their facilities, earnings, and purchases.
For-profit facilities are often efficient, supplying high-quality services that are needed in large quantities (such as medical imaging or cardiac stress testing). Yet, they often leave tertiary care to other organizational types due to the expense and lack of profit margin for these types of procedures (Cheney, 2019; Gee & Waldrop, 2021). Some studies have shown that for-profit facilities may choose not to offer unprofitable services even when there is a demonstrated need in the community (Horwitz & Nichols, 2022). Legally, they have more flexibility in what services they provide than their counterparts (Masterson, 2017).
All hospitals are required to treat critically ill patients who come to their emergency departments. However, most for-profit hospitals will stabilize patients who are underinsured or without insurance and transfer them to other facilities (usually either not-for-profit or state/local government–run facilities). Rarely will a for-profit facility function as a safety-net hospital (Moura, 2021).
Often, for-profit hospitals are concentrated into large healthcare systems and/or group their facilities geographically. In 2016, four for-profit hospital groups owned 520 (42 percent) of the for-profit hospitals in the United States (Cheney, 2017). This consolidation of care by the hospital groups can be beneficial for patients. When there are many within one group, there are opportunities for sharing knowledge between facilities. However, there is also evidence that for-profit facilities will leave communities when their facilities no longer create a profit, regardless of the community’s need for a hospital (Masterson, 2017). For example, in 2019, only 10 percent of for-profit hospitals were in rural communities (AHA, 2021).
Not-for-Profit Systems
A not-for-profit (NFP) hospital does not have to pay federal, state, or local taxes but is required to provide charity care (free or discounted care) and serve their communities (Gee & Waldrop, 2021). Funding for these facilities comes from private donations, fundraisers, public funding, and payments for their services. Profits are not returned to shareholders but are expected to be turned back into the facility for improvements, salaries or services for employees, or community services. Because they have a mandate to serve their communities and do not have to answer to shareholders, NFP hospitals are more likely to offer services with poor profitability, such as emergency or trauma care, burn units, or obstetrics (Gee & Waldrop,2021; Horwitz & Nichols, 2022).
NFP hospitals account for 49 percent (2,960) of hospitals in the United States, the largest percentage of any type of hospital system (Figure 3.8) (AHA, 2022). Their focus on community creates an environment of long-term planning and deep attachment to their communities. Most NFP hospitals remain in their communities and are less likely to close if they become unprofitable because they are needed to meet the needs of the community (Cheney, 2019). Unfortunately, some NFP hospital programs have been accused of not providing enough charity care, and there is lack of regulation around the concept of community services. Consequently, regulations vary between states and territories (Ollove, 2020; Rapfogel & Gee, 2022).
As with their for-profit counterparts, NFP hospitals are required to treat critically ill or injured patients, regardless of their ability to pay, until they are stable. Then, many of them will transfer these patients to state and local government institutions. Other NFP hospitals, particularly large university and teaching hospitals, provide safety-net care for patients who are unable to pay (Moura, 2021).
State and Local Government Institutions
State and local government healthcare institutions are funded entirely or in part with public money (collected taxes) and charitable donations. The institutions are controlled by the state/local government in which they are built (Tikkanen et al., 2020). They include roughly 16 percent of U.S. hospitals (Figure 3.8) (AHA, 2022). These types of hospitals are tax exempt because they are government agencies, and profits are generally unexpected. These institutions do attempt to bill patients and accept insurance; however, they are also safety-net facilities and provide care for the uninsured or underinsured regardless of ability to pay (Moura, 2021).
Link to Learning
Explore the informational sections of the following healthcare delivery systems to learn how different hospital structures represent themselves. The “Company Overview” for Community Health Systems presents details about this large, for-profit health system. The “About” section for Vanderbilt University Medical Center and Network provides details about this large university and teaching NFP hospital and system. The “About Us” section for Grady Health System gives more information about this large local government–run hospital in Atlanta, Georgia.
Structure of Healthcare Delivery
Another way to explore healthcare delivery is based on the concept of public versus private. In health care, an institution is public if it is run and largely funded by the government and is for the good of the people it serves. An institution is private if it is run and funded by a group other than the government and can be either a for-profit or a NFP institution. However, the differences between the two sectors are much more complex.
Public Health Institutions
Public health institutions include state and local hospitals. However, public health institutions go far beyond hospitals. The federal government’s Department of Health and Human Services branch has nine agencies that focus on public health, five of which are the Centers for Disease Control and Prevention (CDC) (Figure 3.9), the Food and Drug Administration, the Administration for Strategic Preparedness and Response, the Agency for Healthcare Research and Quality (AHRQ), and the Centers for Medicare and Medicaid Services (CMS). These agencies set policies and provide governance for all other types of healthcare systems in the United States (both for-profit and NFP systems) and set policy at a population level (all individuals within a given population).
At the local and regional levels, state and local health departments are critical public health institutions. These agencies offer health services such as immunizations and well-baby and family planning services. They also administer programs such as WIC (a food supplement program for women, infants, and children), monitor communicable diseases, and manage testing and reporting of communicable diseases. Additionally, they provide health education programs, are active in regional emergency preparedness activities, and store and provide vital records (birth, marriage, divorce, and death certificates) for individuals in their communities. They are also responsible for license certification, verification, and renewal for nurses and other medical health professionals. The programs they offer vary between the states, but they all share the common goal of supporting the overall health and well-being of the citizens of that region.
Private Health Institutions
Private health institutions include both for-profit and NFP hospitals and facilities, such as doctors’ offices, outpatient clinics, pharmacies, same-day surgery centers, and other types of healthcare institutions that are not funded by any government or governed by a public agency and do not set health policy at a population level. Almost 70 percent of U.S. hospitals are private health institutions, as are most other types of healthcare providers (Figure 3.8).
Integrated Delivery Systems
An integrated delivery system (IDS) is a network of providers and agencies who collaborate with each other to provide care to an individual or a community (Figure 3.10) (Yarbrough Landry et al., 2019). They can be large or small and organized and run by a single group or a partnership between groups. They attempt to meet the care needs of their patients at primary, secondary, and tertiary levels. Their goals include sharing information, responsibility, and resources to ensure the best care (Yarbrough Landry et al., 2019). The primary care medical home is one example of the integration of delivery systems.
Nonfederal Hospitals and Systems
Many hospital groups include additional facilities and physician offices that function as IDSs. They provide primary, secondary, and tertiary care for individuals in their communities or networks. They share information through electronic health records that can be pulled up by any provider in the system to improve the quality of care throughout the healthcare process.
One example of a large, well-integrated hospital system is Kaiser Permanente. This large, NFP system includes 39 hospitals and 737 additional medical offices and facilities across nine states plus the District of Columbia (Kaiser Permanente, 2020). Patients can access care at whatever level they need—primary, secondary, or tertiary—through this one system.
Community Hospitals
Community hospitals include all hospitals that are not federal hospitals and offer both short-term and/or specialty care that is available to the general public (Yarbrough Landry et al., 2019). They can be public or private, for-profit, NFP, or state/local hospitals. While most community hospitals are part of IDSs, they may also be stand-alone hospitals without additional affiliated groups.
Federal Hospitals and Systems
The U.S. federal government does not run public hospitals that can be accessed by any citizen. However, it does run IDSs for several specific populations: the Veterans Health Administration (VHA), the Indian Health Service (IHS), and the U.S. military all have their own IDS structures run by the federal government, and eligible persons can receive any level of care they need within those IDS structures.
Veterans Health Administration
Established by Abraham Lincoln after the American Civil War, the VHA handles medical care for veterans of the U.S. armed forces. With 171 hospitals and 1,113 outpatient clinics, the VHA is the second largest IDS in the nation and treats nine million veterans every year (Falvey, 2023; VHA, 2023). VA facilities treat veterans and their family members who are covered under the medical plan, including those from all branches of the U.S. armed forces: Army, Navy, Air Force, Marines, and Coast Guard.
Indian Health Service
The federal government’s involvement in health care for indigenous populations grew from the relationships developed between the U.S. government and tribal populations in the late 1700s. It is based on treaty agreements codified in Article 1, Section 8 of the U.S. Constitution. The IHS consists of 24 federally run and 22 tribally run hospitals, and numerous health centers, clinics, and treatment centers throughout the continental United States and Alaska (Falvey, 2023). It provides comprehensive care for 2.6 million American Indian and Alaskan Native people from 574 federally recognized tribes (IHS, 2020).
Cultural Context
Health Services for Urban American Indian People
Most IHS facilities are on or near reservations populated exclusively by American Indian and Alaskan Native people. But, in 1973, American Indian community leaders living off reservations and in urban areas became concerned about the health needs of American Indian people living in cities. In response, Congress passed a law expanding the IHS into urban environments with large groups of American Indian and Alaskan Native people. The Urban Indian Organizations are funded by the IHS and provide a variety of services including primary care, behavioral health, traditional healing and medicine, and social and community services (IHS, 2022).
Defense Health Agency
The Defense Health Agency integrates the medical services of the Army, Navy, and Air Force to provide comprehensive health care to members of the U.S. military and their families (spouses and children) all over the world. It includes over 400 hospitals, medical centers, and clinics worldwide. The Defense Health Agency provides care for over 9.6 million active and retired military members and their families annually (DHA, 2023). Figure 3.11 shows the Landstuhl Regional Medical Center, the largest military hospital outside of the United States.
Providers
Healthcare providers include licensed practitioners who can legally diagnose conditions and prescribe medications, nursing care staff who care for ill or injured patients, and other support personnel. Licensed practitioners include medical doctors, doctors of osteopathic medicine, nurse practitioners, and physician assistants. Nursing staff and various allied health professionals support them (Vorvick, 2022). Like hospitals, licensed practitioners operate in a variety of practice types.
Independent Practice
An independent practice, also known as solo practice, is a medical office owned and run by a single physician who treats patients. The physician may be supported by other providers, such as nurse practitioners or physician assistants, and the office usually includes a small group of nurses and support staff (American College of Physicians [ACP], 2022). While most physician offices were once independent practices, their numbers are rapidly diminishing, down to approximately 20 percent of U.S. physician practices in 2013 (Yarbrough Landry et al., 2019) and down to 14 percent in 2020 (Yegian & Green, 2022). These changes are often due to the entire burden of the practice falling on a single physician as well as complications in arranging agreements with the myriad of health insurance companies (ACP, 2022). Plus, there is a large financial risk in independent practice, particularly when group practices often have better resources and enough physicians to provide on-call assistance for patients. Independent practices are most common in suburban and rural areas where there are fewer choices of providers for patients (ACP, 2022).
Single-Specialty Practice
A single-specialty group practice is currently the most common type of physician practice in the United States (Yarbrough Landry et al., 2019). In 2020, 42.6 percent of physicians in the United States were in this type of practice (Yegian & Green, 2022). In this type of practice, two or more physicians provide patients with the same category of care, such as primary care or specialty care (ACP, 2022). These group practices can be quite large and see much higher numbers of patients than independent practices. They often have multiple nursing and support staff members. They may be owned by one or more of the physicians within the group or by outside agencies. Single-specialty group practices spread their responsibilities (such as seeing their patients who are hospitalized or responding to patients who need care after business hours) across multiple providers (ACP, 2022).
Multispecialty Groups
A multispecialty group practice includes multiple different specialties within one organization (ACP, 2022). For example, a multispecialty group might include primary care, pulmonology, general surgery, and physical therapy all in one location or in several related locations. Multispecialty groups are common in IDSs. They may be physician owned or owned by outside agencies. Approximately 26 percent of U.S. physicians work in multispecialty groups (Yarbrough Landry et al., 2019; Yegian & Green, 2022).