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By Root 3008 0

are forced to focus on cost containment. They make it hard for doctors to get approval for diagnostic tests like MRIs, PET scans, and even routine CT scans—in some cases, physicians personally have to call another physician at the insurance company to get approval for diagnostic tests. Medicare and Medicaid reimbursements are decreasing for health care providers due to budgetary cuts and financial crises in the state and national governments. Insurance companies are following suit with government cuts and further reducing reimbursements. Health care services that require more cognitive ability like family medicine, internal medicine, and pediatricians are hit the worst by these cost-cutting initiatives. These services perform very few invasive procedures. Invasive procedures are reimbursed at a higher rate than noninvasive cognitive decision-making procedures. With each reimbursement cut, these professionals are forced to see a larger number of patients in a short time to compensate for the lower reimbursement. Government is making insurance companies a scapegoat for most of the health care system problems.

Hospitals’ Perspective

These cost-cutting initiatives are also hurting hospitals, especially the community-based hospitals and some teaching hospitals. Many hospitals are restructuring to remain viable. A few years ago, the hospitals were buying out private practices and developing integrated health care models. Now several hospitals are outsourcing their emergency room departments by allowing physicians to buy out the practice. Similarly, laboratory and radiology services have been separated from the hospital. Some teaching hospitals have restructured specialty services like orthopedics, neurosurgery, plastic surgery, otolaryngology and head, neck surgery, cardiology, hematology and oncology, oral and maxillofacial surgery, dentistry, and pathology, allowing the departments to run independently like for-profit private practices.

Business Owners’ Perspective

Many business owners pay a portion or all of their employees’ insurance premiums. As the cost of providing health care benefits increases, they must raise the prices of their products or services and thus lose their competitive advantage. Some small businesses have even gone bankrupt.

Governments’ Perspective

All levels of government are under a lot of pressure from different stakeholders. Many people feel that it is government’s responsibility to provide health care coverage for all the uninsured patients or to reduce the financial burden of health benefits on business owners. The business owners’ assumption is that this government action will allow business owners to reduce their costs and prices to make U.S. business more competitive in the world economy.

The overall impact of the different stakeholders each making decisions for their own best interest is that the current health care system is fragmented with no one accountable to provide integrated total care for the patients. To improve care, Lean, Six Sigma, and the Balance Score Card methodologies have been applied to healthcare but they have not created breakthrough results for the overall health care system. Lean, Six Sigma, and Business Process Re-engineering (BPR) have resulted in process improvements. However, these local improvements have not translated into significant reductions in cost or improvement in the health area. The cost of care is continually rising and overall stakeholder satisfaction with the health care services is very low.

Defining the Goal of the Health Care System

A clear goal and a vision of the future are prerequisites for any system to embark upon the Process of Ongoing Improvement (POOGI). One also needs a view of the system itself. In healthcare, the goal is to increase the percentage stock of the healthy population. Several factors7 are necessary to achieve this goal. The key factors are preventive care and velocity of cure rate as indicated in the system model provided in Fig. 31-1. The model is based upon a system dynamic model with rates