Posted: June 13th, 2022

Final Policy

The final policy is cumulative and covers Chapters 1 – 16 of McLaughlin and McLaughlin (2014) textbook. Choose four policy analysis processes and apply each one to a policy case.
Provide details on the other policy processes that were not utilized in your research. How could they be applied? Why would they be applicable?
All applicable information from previous weeks must be included.
A conclusion MUST be included at the end of the paper summarizing the key aspects of health policy.
Chapter 14
Double-Checking for Contextual Change
Even when a specific policy had been thoroughly analyzed, it still has to be checked against a scenario about what is likely to happen to the system as a whole. Alternative visions, which we call scenarios, need to be considered. For example, a concern about moves that take us closer to universal coverage—whether that means the Affordable Care Act (ACA) as it is more fully implemented or future efforts (such as, potentially, a single-payer system)—is that we could be worse off unless there are concurrent system changes that reduce waste, expand primary care services, and address the impact on prices of treatment access for additional millions of low- and middle-income people. Various provisions of the ACA attempt to address each of these areas, but critics often say it does not do enough to control costs.
A comparison of two offsetting effects of an alternative decision is a trade-off analysis. That is one step in comparing outcomes, but it is still a very narrow picture in terms of the transparency of unintended consequences and secondary and tertiary effects. Trade-offs should be considered throughout the analysis. After the trade-offs have been evaluated and the alternatives narrowed down, the relevant scenarios will become apparent.
In the field of health policy, consensus is hard to come by, and even harder to sustain. There are certain conclusions, however, that seem to be inescapable:
•Without major interventions, health care will be near or at 20% of GDP over the next decade. No government is likely to risk too radical a change in that large a portion of the economy, especially while contending with other issues, such as international competition, immigration, terrorism, and government deficits.
•The moves of employers away from responsibility for paying health insurance premiums for workers, workers’ families, and pensioners will continue despite the mandates in the ACA. The availability of an alternative path to coverage for employees of small businesses—namely the exchanges—is likely to accelerate this trend. Some larger employers may also chose to pay the penalty rather than provide “shared responsibility” coverage for all full-time employees.
•Insurance companies will come up with less expensive products for individuals (with lesser coverage) to adapt to the changing market. The risk has always been that these basic packages and new exclusions create another class of underinsured individuals and possibly drive up the premiums for the chronically ill and others who require more comprehensive coverage. This process will be shaped by the “minimum value” and “minimal essential coverage” provisions of the ACA.
•The unique aspects of health care in terms of uncertainty, agency conflict, and market failure will constrain the degree to which free-market solutions will take hold.
•Consolidation will increase the possibilities for better coordination of care but risk further increase in the market power of providers.
•Communicable disease events in other countries will affect the United States much more rapidly because of global transfers of people, foodstuffs, money, and information.
•The flow of physicians into the United States for training and their subsequent experiences practicing here will set up the potential for a competent workforce elsewhere, as we now see returnees performing hip and heart valve replacements in a number of countries at a third of the cost, with international middlemen brokering such services.
•Similarly, but more darkly, the illicit market in transplantable organs is growing rapidly, again through middlemen. There is also the international trade in prescription drugs, which is primarily attributed to Canada but is really wider and has great growth potential. Unfortunately, it opens up an entryway for counterfeit drugs as well.
•The perceived future insolvency of the Medicare “insurance” system will put pressure on the federal government, but that reckoning will likely be postponed because it will be beyond the reelection time horizons of most politicians. States will continue to deal with the burden of the working poor under the ACA and Medicaid. Even states not participating in Medicaid expansion are expected to see increased enrollment and a rise in associated costs as a result of the ACA, and those participating in the expansion will pay 10% of related costs after 2016. That and the problems of local disasters, especially if a pandemic occurs, will lead to pressures on the federal government to provide more leadership. If the states are generally successful, the federal government will not seek a comprehensive solution. If the states fail, and that, in turn, threatens their fiscal integrity, Congress will be more likely to act.
•The states will continue to be a laboratory for implementing health policies, either through waivers or policies that are not directly related to Medicaid. The ACA allows each state to set up its own coverage system within the framework of federal law. In the wake of the ACA’s passage, for example, Vermont began to develop its own system for universal coverage.
The greatest uncertainties, therefore, are not on the financing side, but on the cost-control side. Many cost-oriented measures that seem to work over time have been described previously. They could involve the following:
1.Removing provider incentives and opportunities for overutilization
2.Reducing contribution margins and incomes of providers and suppliers to levels comparable for other professional services through administered pricing or competition
3.Reducing the costs of malpractice coverage and the need for defensive medicine
4.Allowing more international competition to drive down prices
5.Constraining treatment choices to those that are most effective and efficient
6.Encouraging labor substitution for those process steps that can be made routine
7.Empowering primary care providers to control utilization and selfreferral
8.Increasing the supply of providers to levels available in other countries
9.Allowing some longer waiting periods for elective procedures to slow consumption
10.Increasing use of information technology to avoid waste and medical error, but also trying to avoid the implementation of these systems in ways that are anticompetitive at both the provider and equipment supplier levels
If the states find they must demand more stringent measures from Washington, or if there is another economic meltdown, then we are likely to see further implementation of measures with more impact. Such measures could include the following:
•Full transparency in health care pricing, including bundled prices for all stages of a specific medical condition
•Legislation to amend the Employee Retirement Income Security Act (ERISA) to allow states to regulate self-insured plans
•Regionalization of care for complex or rare medical conditions, which would require greater patient travel but produce much less waste and better outcomes
•Stronger control of the referral process by primary care providers
•Other aspects of value-based competition (Porter & Teisberg, 2006) in the marketplace, including the following:
•Integrated IT systems reporting bundled prices and quality performance for many more procedures and diagnoses.
•Attention to the total process of care, making it better coordinated and more effective.
•Shifting research budget priorities from developing and evaluating new treatments to evaluating methods already in use and innovating more in process improvement rather than in new product development (Chin et al., 2013).
•Limitations on allowable price discrimination, perhaps along the lines of the Robinson-Patman antitrust law, but applied to individuals.
•Phasing out of laws governing corporate practice of medicine, as well as other restrictive regulations, in order to open up competition on price and results. This needs to be accompanied by licensure procedures that are more closely linked to performance.
Are we saying that the future of our health care depends more on the willingness of others to underwrite our debt—factors that if they change significantly could precipitate an economic breakdown—than on our own democratic processes? That is possible. Noted health economist Victor Fuchs (2002) has suggested that major health system change, such as national health insurance, will come only after the “kind of change that often accompanies a war, a depression or large scale civil unrest” (p. 1824).
It is popular to talk about a country, if not a world, divided over values, but that is not the entire story. This book illustrates that there are many tradeoffs—trade-offs everywhere one turns. Table 14-1 lists a number of these, showing the two sides, the impacts of the current status quo, and some possibilities for responding to them. The fact that these trade-offs have been issues for as long as they have shows that they are currently at an equilibrium position (or an impasse). Some would argue that having a less than rational system with unresolved conflicts and continuing inefficiencies is not all bad because it provides high-income employment. It does that, but one might also question how productive much of that employment is.
Table 14-1 Illustrative List of Trade-offs, Impacts, and Some of the Proposed Solutions
We expect that managing trade-offs, rather than implementing radical changes, will be grist for health policy analysts’ mill for some years to come. Each time a new program or regulation is proposed to deal with one aspect of health care access, cost, and quality, the policy analyst must present to the interested parties the trade-offs that have to be made, their magnitude, and their consequences, intended and otherwise. The policy analyst will have to look at the desired impact, the unintended consequences, the distributional effects, the ethical issues, the technological impact, the financial feasibility, the political feasibility, and the best way to implement the proposal, and from that come up with a justified recommendation to the parties involved, the politicians, and the public. Such analyses do not necessarily lead to earthshaking decisions because there is no one answer. However, they are necessary if we are to make things better rather than worse. If they succeed, it will be a product of leadership as much as anything else; however, those who would lead, especially from a professional position, must participate both in effective analysis and in rational leadership.
Someone could push the policy envelope by considering extreme scenarios against the status quo and seeing what kind of health care system might result; however, getting single-event estimates is only one step in the process. An event may be acceptable on its own, but its interaction with other events may result in an overall outcome that is totally unacceptable. For example, encouraging kidney transplants for end-stage renal disease patients is one thing, but if the supply is totally inadequate and promotes a sizable international traffic in involuntarily harvested human kidneys, would that be acceptable? We have set up an illustrative example with multiple scenarios to compare. We have provided five scenarios, three of which are extreme:
A.Extrapolating current trends
B.Extreme reliance on free market
C.Extreme industrialization
Table 14-2 Building Some Scenarios for Cost Reduction
Y = likely, N = not likely, and? = not predicted
Scenario A is the extrapolation of the current trends in the current system.
Scenario B is the case of an extremely strong move toward a free-market health care system.
Scenario C is the case of an extremely strong move in the direction of industrialization and corporate governance of health care.
Scenario D is the case of a major economic crisis that leads the country to a major overhaul of government programs, including health care, and major changes in the tax code, such as a shift from the income tax to a value-added or some other form of consumption tax.
Scenario E provides all citizens a voucher for basic health coverage, replacing current insurance and Medicaid and ultimately Medicare. It would be financed with a value-added tax and add administrative systems to oversee coverage, technology assessment, and quality measurement and to replace the current tort system for malpractice with administrative law.
D.National economic crisis resulting in major tax code reform
E.The Emanuel-Fuchs proposal
In Table 14-2, we have provided, by way of illustration, event predictions for 15 changes that fit the first four of these scenarios. A rational person can certainly come up with others, and thus we have included Table 14-3, which encourages you to build your own predictions, redefining the scenarios and then assessing the impact of a set of events that you are free to augment.
Scenario A: The Status Quo Extrapolated
As you look down column A of Table 14-2, you see that not much new is happening to reduce costs. We might expect to see some responses as volume increases due to access improvements under the ACA, reductions in malpractice insurance costs, and international competition to reduce the prices of some procedures. There are also possibilities that as consumers and insurers find it harder and harder to pay their bills provider incomes will fall further, along with institutional contribution margins. Health information technology (IT) will move into place, but it may still be subject to the complaint that despite increased deployment of health IT the motivation to share information in still lacking. Thus, one might see some internal waste and medical error reduced, but very high investment costs with relatively little immediate impact on operating costs. Some major changes might occur on the funding side, however; thus, you might want to repeat the exercise with an added set of rows representing programmatic changes on the funding side.
Scenario B: Extreme Reliance on the Free Market
Here we would be likely to see little or no action to reduce costs, except to increase the competitive pressures from foreign competition and to increase the supply of providers. The primary argument for consumer-centered health care—that consumers will make choices to lower their own costs of care—is not addressed in this listing. Again, you might want to repeat the exercise with some events related to consumer-driven health care as an additional set of rows; however, with the lower resulting profit margins and professional incomes, more providers are likely to improve efficiency to compete on cost, resulting in staffing changes, better use of information technology for scheduling and coordination, and more use of volunteers.
Table 14-3 Your Exercise on Building Cost-Reduction Scenarios
Y = likely, N = not likely, and? = not predicted
Scenario A is the extrapolation of the current trends in the current system.
Scenario B is ____________________________________________________.
Scenario C is ____________________________________________________.
Scenario D is ____________________________________________________.
Scenario C: Extreme Industrialization
Under the corporate, industrializing scenario, the resulting oligopolistic firms will likely try to resist and/or seek protection from a number of cost-reduction pressures, such as foreign competition and increasing the supply of providers. At the same time, they will likely make a number of internal policy choices that limit provider options, restrict capital investment, constrain institutional budgets, and break jobs down into repetitive tasks doable by lower-level, lower-paid personnel. They will also be likely to resist and lobby against measures to limit overutilization, as long as those limits affect their revenues.
Scenario D: National Economic Crisis Resulting in Major Tax Code Reform
In this scenario, the nation is in severe economic difficulties, and radical change is in the air. There is near universal coverage. At the same time, there is a much higher level of regulation affecting choices of treatments, capital availability, and staffing coupled with a defined minimum acceptable coverage. Resources will be very tight; thus, waiting lines will lengthen, and there will be pressures to put hospitals on fixed budgets, reduce services that are not absolutely necessary, and concentrate specialized treatment capacities to increase throughput and effectiveness.
Scenario E: The Emanuel-Fuchs Proposal
In a one-page article in Fortune, Emanuel and Fuchs (2006) offered a suggestion on “How to cure U.S. health care.” They offered a comprehensive five-part program, the centerpiece of which would be a health care voucher for every citizen currently younger than age 65. It would cover currently accepted levels of care with existing or new health plans. Each individual would then have a choice of 5 to 10 plans that would have to accept all comers.
The vouchers would be paid for by an earmarked 10% value-added tax that would be offset by replacing current employment-based insurance premiums, Medicaid expenditures, and individual and corporate tax deductions for health care premiums. Medicare recipients would be grandfathered (so to speak) under the current system, but those in the new program would stay with it past age 65, and Medicare would gradually be phased out.
To administer it, there would be a new system of federal and regional boards, much like the Federal Reserve System, to provide accountability, specify and modify the benefit package, and oversee technology assessment and quality evaluations. Malpractice cases would be assigned to a separate administrative system that would adjudicate and pay claims and oversee linkages to quality measurement and the licensure process. We have left column E of Table 14-2 blank for you and your colleagues to assess and fill in.
Interpreting the Cost-Reduction Scenarios
As you can see, virtually every scenario in Table 14-2 has elements to which U.S. patients would strongly object, and each is likely to generate strong opposition from one or more interest groups. That is why the most radical departures from current trends of more intramarket competition and more industrialization are likely to occur only if there is a continuing economic crisis or a more serious meltdown of the economic system, forcing a return to bipartisanship and evoking new, strong domestic leadership with the will to take the government in a very different direction; however, it is apparent that each of the first three scenarios is weak in terms of its likely effects on health care costs, and, ultimately, draconian measures may be taken. In other words, nothing in these scenarios is likely to work until the society either runs out of money or reaches some consensus as to when enough health care is enough. Economists differ on whether that will be 10, 20, or 25 years from now (Hall & Jones, 2007).
We purposely offered scenarios that omitted some key policy possibilities (such as consumer-oriented health care) in hopes that you and your associates would undertake your own evaluative process and (1) flesh out your own list of changes to be tried, (2) match them against your own list of scenarios, (3) debate the effects of each change on the outcome of each scenario, and (4) come up with your own concepts of what would or would not work in the United States under various conditions. There are no pat answers. Most alternatives have been tried elsewhere in the world with mixed results. What would you want the United States to try next, perhaps on a small scale, to see how it works here?
This chapter emphasized the importance of putting event forecasts into scenarios to highlight how events and measures will interact. The initial step is to outline and evaluate the trade-offs involved with each alternative. A number of examples of health care trade-offs are provided. Possible outcome scenarios can be developed from your own lists of trade-offs. Four illustrative outcome scenarios were considered dealing with the status quo ante, more industrialization, more governmental involvement, and more of a free market; however, even these were not examined exhaustively, and further examination would be warranted on your part.
Case 14 Partnership for a Healthy North Carolina
In early February 2013, the administration of newly elected Republican governor Pat McCrory began the process of Medicaid reform with a request for information (RFI). Based on those responses, the newly appointed leaders of the state Department of Health and Human Services, Aldona Wos, MD (secretary), and Carol Steckel, MPH (Medicaid director), held a number of information-gathering meetings around the state. On April 3, 2013, the governor and the heads of both legislative houses held a press conference to announce that they would seek legislative approval of a Medicaid waiver request to Washington to substantially change the state’s Medicaid system.
The governor and the secretary had referred to this effort as a “Partnership for a Healthy North Carolina.” This was also the title of a report published by the John Locke Foundations and the Foundation for Government Accountability (Ingram & Restropo, 2013). Art Pope, a significant contributor to the John Locke Foundation and other libertarian causes and Republican candidates, was the governor’s newly appointed associate budget director.
That report viewed as positive recent reforms in Florida, Louisiana, and Kansas. It suggested that North Carolina could save $1 billion annually, or 8% of its Medicaid costs, using the design cited in the report, as follows:
•The state awards contracts to three or four comprehensive care entities (CCE).
•CCEs operate statewide, ensuring fair and equal access for patients in both rural and urban areas.
•All CCEs use the same financial vendor to reimburse medical providers, increasing speed and efficiency of repayments.
•Patients can choose from among the several plans available and pick the one that best meets their individual health concerns.
•Plans compete for patients based on the value and quality of the service they can provide.
•Patients unhappy with their plans can drop them and choose new ones that will better serve them.
•These plans would be paid on a risk-adjusted, capitated basis. (Ingram & Restropo, 2013)
Many of North Carolina’s Medicaid patients had already been enrolled in a medical home program that was fee-for-service with a permember-per-month (PMPM) management fee. This nonprofit system of local networks, organized and operated by community physicians, named Community Care of North Carolina, has been credited with saving the state close to a billion dollars over a 4-year period. It has also been recognized as a national leader in improving Medicaid quality and cost and has been expanding to serve other populations as well.
The governor had frequently stated that Medicaid was “broken” and that he envisioned a system “to provide care for the whole person by uniting physical and behavior health, increase administrative ease and efficiency for providers, create a predictable and a sustainable Medicaid program for taxpayers” (Office of the Governor, 2013). House Speaker Tom Tillis (R-Mecklenburg) was quoted as saying, “We cannot continue to have frequent unplanned Medicaid shortfalls that wreak havoc on the budgeting process. Medicaid must stop being a budgetary time bomb.”
Senate President Pro Tempore Phil Berger (R-Rockingham) was quoted as saying, “Medicaid‘s out-of-control costs are undermining our ability to fund core constitutional obligations like education, transportation and our judicial system. The budget we introduce next week must include over $1 billion in additional funding for out-of-control Medicaid costs.”
The governor’s administration could also point to an audit of the Medicaid program conducted by State Auditor Beth Wood (D). It had been commissioned by his predecessor, Governor Bev Perdue (D), but the report was not issued until January 17, 2013. The audit discovered that there had been major overruns in the Medicaid entitlement program and that administrative costs paid directly were high compared to other states. North Carolina’s population was growing and had been hard hit by the Great Recession, thus enrollment had increased rapidly. The Kaiser Family Foundation credited North Carolina with the smallest per capita costs in the Southeast and the nation’s slowest growth in program costs (Hoban, 2013a). Assertions about the relative level of administrative cost varied greatly. Some states contracted out administrative functions that others produced directly with budgeted resources. Some state health and human services departments loaded allowable collateral costs into the Medicaid budget to maximize the inflow of federal dollars. For example, North Carolina was charging half of the cost of the Medicaid-eligibility specialists in county social services departments back to Medicaid.
The disastrous 2013 rollout of a new computerized Medicaid payment system was also cited as a symbol of the need for change. In the interest of full disclosure, we must note that one author of this text served as chair of the North Carolina Medicaid Medical Care committee some 30 years ago, and the department had severe problems using its data for systematic analysis then, as now. It could not compete effectively in the IT labor market and had trouble even administering its IT contracts to get necessary management information out of what was essentially a transactional system.
There were also widely acknowledged problems with the state’s mental health system, which depended largely on Medicaid. For example, mental health provider agencies, called local management entities (LMEs), had for the past 2 years been bearing the risk of providing mental health care services using a set amount of money each month. However, given the financial problems that many of these LMEs suffered, as evidenced by the failure of the Asheville-based Western Highlands Network, Steckel decided that this was not the most effective way of managing financial resources that had been set aside for mental health (Hoban, 2013b).
Critics of the governor were quick to suggest that he was using the “Medicaid is broken” issue as a cover for his refusal to develop a state insurance exchange under the ACA.
The last state health maintenance organization (HMO) contract for Medicaid recipients, serving only Mecklenburg County, including
Charlotte, ended in 2006. A number of other HMO contracts, mostly serving urban areas, had been in operation between 1986 and 2002.
Community Care North Carolina (CCNC) and its earlier version, called ACCESS, has been credited with increasing the number of physicians accepting Medicaid patients. According to the Kaiser Family Foundation (2009), “CCNC was adopted as an alternative to capitated managed care that was embraced by physicians and was able to successfully operate in both urban and rural areas.”
Since 1991, a 1915(b) waiver from the Centers for Medicare & Medicaid Services (CMS) has been in effect for primary care case management programs. The state launched a successful pilot program that was then expanded statewide. The participating providers were paid a PMPM management fee for coordinating care and compensated fee-for-service for treatment. This system evolved and expanded and was spun off from state government into CCNC. This system of 14 primary care provider (PCP) networks serves as the medical home for more than half of the state’s Medicaid enrollees. The networks are nonprofit and managed locally but fall under the umbrella of the nonprofit, statewide CCNC organization, which develops procedures and standards and provides information services, education, and evaluation. The system also had a Section 646 waiver to serve dual eligibles and high-risk uninsureds.
As of 2013, the state Department of Health and Human Services requirements for a Medicaid PCP to participate included the following:
A candidate for participation must meet the criteria below:
•Perform primary care that includes certain preventative services;
•The ability to create and maintain a patient/doctor relationship for the purpose of providing continuity of care;
•Establish hours of operation for treating patients at least 30 hours per week;
•Provide access to medical advice/services 24/7;
•Maintain hospital admitting privileges or have a formal agreement with another doctor based on ages of the members accepted;
•Refer or authorize services to other providers when the service cannot be provided by the PCP;
•Use reports provided by the DMA managed care section as guides in maintaining the level of care that meets the goals of CCNC and patient needs. Reports are available via the web and paper copies that are mailed. (NC DHHS, 2013, p. 9)
The responsibility of managing care rested with the network. Physician leaders had been developing evidence-based tools for the networks, including implementing best practices and disease management for
•Congestive heart failure
•Ischemic vascular/cardiovascular disease
Physicians also sought to develop case management procedures for high-risk/high-cost patients.
Process performance measures were in place for all of these, and almost 30,000 chart reviews supporting quality improvement were conducted among the 1.3 million (out of 1.8 million) Medicaid enrollees and 1,350 PCP practices in a recent year. CCNC had had a streamlined electronic medical record system available since 2009. Reviews were conducted randomly within diagnosis, and several registries were supported.
The PCPs had a limited gate-keeping role:
… the PCP is contractually obligated to refer patients and authorize treatment for patients when unable to provide the necessary service. It is the domain of the PCP to refer/authorize treatment and define the scope … which includes the number of visits being authorized and the extent of the diagnostic evaluation. The PCP should be informed if a secondary referral … should be made. A provider who has received a referral should consult the PCP before referring to a secondary provider for situations not related to the diagnosis of the first referral. The PCP may authorize care retroactively; however, it is at the discretion of the PCP. (NC DHHS, 2013, p. 9–10)
The document then proceeds with a page-long list of “Exempt from Authorization by the PCP”; the list includes emergency departments, hospital-owned urgent care centers, hospices, hospital-based lab and diagnostic procedures, and health departments.
The governor’s announcement created considerable concern, especially in the medical community. For example, one letter from a physician in the Raleigh News & Observer read:
I appreciate the governor’s desire to control Medicaid spending. I know of few physicians who would argue against reining in medical costs or making improvements. But the governor’s proposal runs counter to what North Carolina has been doing with its award-winning approach to Medicaid.
The national Kaiser Family Foundation even recently reported that North Carolina had the lowest rate of growth in Medicare spending in the nation.
So why change direction now? And why use private managed care companies that have been shown to be more costly and less effective in many cases? (George, 2013)
The Triangle Business Journal commented:
… health care providers say Medicaid reimbursements barely cover costs as it is, so it’s difficult to see where a potential CCE could find real savings…. The state has a history of making health care demands that private companies find unachievable. Last year, the state put out requests to outsource inmate health care, but abandoned the idea when Corizon Inc., one of the largest providers of such services, said that the state’s requests “contain several provisions that are either completely unattainable or add significant and unnecessary cost that will likely mitigate any savings that can be achieved.” (deBruyn, 2013)
Later in the year, Secretary Wos was involved in other controversies, and in October, Medicaid Director Steckel resigned to go into the private sector. On November 6, 2013, the governor invited 30 state health care leaders to the governor’s mansion to discuss Medicaid reform. The governor reported that there was a new advisory group working on a proposal. It would hold public hearings and recommend a waiver request to the legislature on March 17, 2014. One participant reported that the governor felt that no one state had all the answers and that North Carolina had resources that could be leveraged, including CCNC and the LMEs currently delivering mental health services. The number of entities would probably be reduced. The medical care managers would probably number five to seven, and physical and mental health would be integrated. The legislature would likely act in May 2014 and waivers submitted to Washington soon after so that requests for proposals could go out in time to put the system in place in late 2015 or early 2016 (Dihoff, 2013).
Discussion Questions
1.What are the apparent strengths and weaknesses of the current Medicaid care management system in North Carolina?
2.How does one separate out the effects of IT failures, budget overruns, and exogenous changes in enrollment?
3.What would be the governor’s likely proposal to the legislature? Why?
4.What should CCNC do to prepare for the changes that seem to be in the wind?
5.How does one best integrate physical and mental health services?
Chapter 15
Health Professional Leadership
Normal is getting narrower and narrower.
—Personal observation by an experienced nurse practitioner
Health professionals can be important participants in health policy processes. They bring their experiences, their knowledge of both science and art, their ability to distinguish between the two, and their commitment to the patient. Typically, they also bring a commitment to lifelong learning. The power of the professions, especially physicians, has been waning of late, but that has a lot to do with the height of their dominance in the past. In an open, market-driven, information-rich society, the old monopoly power described by Starr (1982) is not sustainable. Health professionals now need to undertake new leadership roles or else their status will be further undermined by those actively seeking a greater share of the pie. Those new roles will have to focus more on collaboration and coordination of care.
Much of the diminished respect for health professionals stems from the public’s perception of reduced disinterestedness. Current fashion in economics seems to deny the concept of disinterestedness—the concept of lack of bias and freedom from special interests, the ability to set aside one’s own interests and to seek the best possible outcome for others. The opposite is the oft-repeated phrase, “All they care about is money.” Money is harder to come by in most parts of the health care system because of utilization controls and deep discounts to health care plans, and thus the increased concern is understandable; however, that is not reassuring to the public. Much of the literature on the rising costs of care blames the current fee-for-service system for making it in the providers’ interest to promote overutilization. Schlesinger (2002) argued that this loss of faith seemed to intensify with the advent of Medicare and Medicaid, and that that has led to a loss of political power as well. One parameter of successful professional leadership will be the ability to engender faith that the professional and the profession have the interests of other constituencies in mind.
Disintermediation in general and direct-to-consumer advertising in particular have affected the informational monopoly of the health professions. This is not a one-way street. The claims and counterclaims of the various interested parties can be hard to sort out. One leadership role for the health professional is to guide the general public through that welter of information. This is not just a physician’s task. It involves all health professionals. An article in BusinessWeek asked, “How Good Is Your Online Nurse?” and compared the online patient portals of the three largest health insurers: WellPoint, United Health Group, and Aetna (Weintraub, 2006). The trends reported in the article included greater integration with patient records, more add-on purchased counseling, and more personalized responses. It concluded, “A bit like Big Brother? Sure. But as health care gets more complex, it’s comforting to have a virtual coach” (p. 89). Despite the word “nurse” in the title, the article compared the companies’ automated systems that tailored the information. One insurer did offer written and telephone nutritional consultations for a fee, but the professional component was largely invisible in the process. Maintaining the power of the professions in the future will require efforts to maintain acceptance as a unique and relevant information domain. There is relatively little art in computerized communications, and the public might well want more in the way of art, if it is offered. Procedural control alone is a slender reed upon which to stake the future of a profession. Conceding the informational domain to others is risky. The countertrend is the rise of boutique medical services, which offer more access and attention for an annual fee.
The health professional’s power to participate effectively in the political process is earned through leadership in one’s profession, in one’s institution, and in one’s community. Although some leaders and spokespersons appear to have burst onto the national scene directly—Dr. Donald Berwick in government and health quality improvement, for example; Dr. Atul Gawande with his New Yorker articles and his books; and Dr. Paul Farmer in international health—most rise slowly through the ranks of their profession as team players. The routes to leadership positions are varied. Health professionals are in leadership roles in medical centers, community hospitals, government agencies, and insurance companies. Each presumably came by his or her position by training, intelligence, hard work, and usually trustworthiness. They were able to convince others to work beside them and for them because they could be trusted to take the interests of others into account.
Leadership career paths often overlooked in the health policy arena include those in corporations and in entrepreneurial ventures. A number of very influential health professionals have stopped delivering care directly and have moved into the management of health institutions, insurance companies, occupational health, medical device and supply companies, pharmaceutical companies, and government agencies. They represent those institutions, and many seem able to do so without negating the trust of health care decision makers. Their leadership roles may have been thrust upon them, or they may have sought them. In either case, they took a prepared mind and a sense of what they wanted to accomplish in an arena of health care policy.
The press seems to emphasize the importance of careers in publicly held companies, as considerable wealth can be created by developing a company and taking it public. After the company goes public, however, it is beholden primarily, if not solely, to one set of stakeholders, the stockholders; therefore, there is still a major role in health care for the nonprofit organization that does not have stockholders and can balance a number of competing interests. A deeper knowledge of nonprofit organizations and their behaviors is necessary for determining their role in setting and implementing health policy. This is especially true of entrepreneurial nonprofit organizations that can participate in the marketplace as fully as a stock corporation. Leaders must understand the similarities and differences in how these types of organizations function. The term governance is often applied to the roles of management, staff, and boards of both for-profit and nonprofit organizations. The professional leader must be able to function effectively and help govern effectively in one or the other or both.
There seems to be a consensus developing that there is great potential in the area of process innovation. This goes well beyond improving current processes and moves into major changes that meet the criteria outlined by the Institute of Medicine’s (IOM) Learning Health System initiative and its Innovation Collaborative (IOM, 2012a, 2012b). Those criteria included:
•A participatory, team-based transparent culture
•Patient-anchored and patient-tested processes
•Fully active and engaged patients and the public
•Informed, facilitated, shared, and coordinated decisions
•Care that starts with best practice every time
•Transparent and constantly assessed outcomes
•Incentives aligned for value
•Knowledge that is an ongoing, seamless product of services and research
•Health information that is a reliable, secure, and reusable resource for the patient and the common good
•Leadership that is multifocal, networked, and dynamic
There is plenty there to work on locally and nationally.
Moving out of a traditional professional role requires dealing with new classes of risks and accepting success as well as failure. There are many successful health professional entrepreneurs and leaders and also some unsuccessful ones. Recent events have shown us situations where successful professional leadership has been followed by failure. An example is the rise of large physician practice management organizations that grew very rapidly in the 1990s but failed as their leaders strayed from their areas of expertise and listened, not to their customers, but to those who were concerned only with increasing stock prices. Chin et al. (2013) point out that the innovators have to accept failure as a natural learning experience and keep trying until things work. That is very different from practicing defensive medicine.
Participating in policy discussions and analyses can also help prepare one for leadership. By reviewing and critiquing the alterative scenarios provided by scholars—such as the consumer-oriented free-market approach of Herzlinger (1997) versus the community-based planning approach of Shortell and colleagues (1996) versus new approaches being undertaken by the various states—one can learn a great deal. These debates offer a number of intellectual leadership roles for trained policy analysts with professional backgrounds and skills.
Evaluating the alternatives calls for an understanding of the types of risks that health care organizations and health care managers may choose to handle or not handle in the design of their system. These risks have been described as follows (McLaughlin, 1997; McLaughlin & Kaluzny, 1997):
•Clinical operations
The would-be professional leader has to think through the following questions:
•Which of these risks am I now comfortable handling?
•Which other ones do I need and want to learn to handle?
•How can I use my work or educational experiences to learn to handle those that I want to or will need to handle?
This exercise can help the potential professional leader outline what he or she needs to learn about managerial skills and activities. One must learn to analyze the various organization forms used for health care delivery in terms of how to allocate these risks and facilitate their handling.
Not only do health care professional leaders make decisions, they also provide what Karl Weick (1995) called “sensemaking” for those being led. They must be able to understand and articulate the role of the governance process in their operation. Health care professionals guard and maintain the technological core of their organizations. They demand a role in their governance processes and governance mechanisms, which are the keys to effective technical and organizational change. Their leaders must understand how these processes operate and how their professions and the other actors can best work together in the policy-making process. Through understanding the risks to be encountered, analyzing the nature of local markets and delivery organizations, and meeting the governance needs of organizations delivering care, health profession leaders can become equipped to analyze local health care systems and how they are best led.
Professional leaders must analyze policy issues for specific communities and specific segments of health care. These have to be analyzed against specific criteria of quality, access, and cost. One can also master less familiar risks, such as pricing. Leaders must consider quality measurement and improvement and disease-management approaches. Imbedded in such studies are opportunities to develop insights about the ability or inability of organizations to handle high levels of inherent variability in definitions, patients, events, costs, and so on. This needs to be a continuing theme in analysis, one relating back to the issues of art versus science and Deming’s (1986) notions about special cause variation and common cause variation. Health care professions have historically treated all situations, whether art or science, as if they were science. Consequently, they have assumed that any negative consequences were the result of special cause variation, holding the individual practitioner responsible for adverse events. What future managers have to learn from the Deming approach is that health care is a field that will have high variability, even without special cause variation, and that administrative systems have to be tailored to that reality. Success in health care is as much dependent on a team’s functioning in an effective system as it is on any individual professional. Deming, a pioneer in continuous quality improvement, noted (1986) that most quality problems were not due to worker errors, but to problems in the design of the production system that failed to handle inherent variability effectively. Professional leaders must come to understand that assessing and adapting to this inherent variability is a key element of the manager’s role in health care delivery.
If professionals are to manage populations rather than just individuals, they must develop a sense of how that can be done in a community setting. They must experience and participate in change processes undertaken by groups involving payers, providers, public health agencies, and patient organizations in their own community. They need to understand the limits of community-based cooperation and planning in a market-driven health care system. Leaders must develop sufficient respect among their colleagues to be trusted with data needed for community health improvement when it might otherwise be seen as proprietary information for competitive use.
Professional performance in health policy roles can be enhanced in a number of ways, including the following:
•Skills development
•Training others
•Educating the public
•Practicing leadership
Preparing to Learn and to Lead
Professionals need opportunities to adapt to policy analysis roles above and beyond those normally associated with clinical care. Potential leaders have to walk in the shoes of those who are leading, consider the multiple sides of the issues, use hard facts and fit them into conceptual and mathematical models that allow one to reduce and refine the array of available alternatives, and then select those that are likely to succeed in the field. Health policy analysis invites the potential leader to step back from narrow professional roles, think in terms of what is best for the patient and for society, and see the changes in health care more in the sweep of time. Intellectual integrity also is needed as a bulwark against being swept along with the fads.
One very important role for the health care professional is as a team member. Policy analysis teams require a wide range of skills, including management, economics, operations, and medicine. As the owners of the technological core of medicine, health care professionals can always claim a place at the table; however, they must also be prepared to contribute to the overall progress of process analysis and improvement efforts.
Developing Skills
The policy analyst must also understand the financial implications of what is being discussed; think in terms of markets and competition; adjust to social, economic, and political change as they play out in U.S. society; analyze and optimize processes; and motivate individuals and teams. All of these move in the direction of exhibiting the competence, demonstrating the mastery, and gaining the respect of one’s peers and colleagues expected of a potential contributor to a senior management team. Another skill of senior leadership is that of sensemaking; that is, being able to interpret publicly what is going on in a way that supports positive outcomes. One practice arena would be in explaining the changes in the health care landscape, such as the implementation of the remaining provisions of the Affordable Care Act (ACA), to one’s peers, patients, and the public.
Learning and Training Others
One function of professional leadership is training the next generation of professionals. For example, if health policy is going to focus on motivating the system to reduce waste, as suggested by Porter and Teisberg (2006), then the present and the next generation are going to have to think in terms of value-based patient care and focus on managing the entire medical condition from start to finish. Paul Batalden and others at Dartmouth have already started to incorporate this into their training of physicians there and elsewhere. They refer to it as employing microsystems strategies as compared with organization-centered or issue-centered strategies for process improvement (Mohr & Batalden, 2006). They suggest that there are eight dimensions of effective microsystems (Mohr, Batalden, & Barach, 2006, p. 408):
1.Constancy of purpose
2.Investment in improvement
3.Alignment of role and training for efficiency and staff satisfaction
4.Interdependence of the care team to meet patient needs
5.Integration of information and technology into workflows
6.Ongoing measurement of outcomes
7.Supportiveness of the larger organization
8.Connection to the community to enhance care delivery and extend influence
These eight dimensions align very well with the concepts of the value-based competition model offered by Porter and Teisberg (2006). Adopting that approach in both clinical process improvement and in clinical training is one way to walk the talk, to learn the full implications of such an approach, and to develop the skills and insights applicable at higher levels of policy analysis. If one does not normally use something, one of the best ways to come to understand it fully is to try to teach it to others.
Building Networks
An intriguing part of health policy analysis is that it takes place in a virtual network of participants, professions, and organizations. One learns how influence is exerted nationally, locally, and in one’s work group by knowing when to speak up and when to hold back, when to be the advocate and when to be the analyst, and how to support and move forward the multi-disciplinary team—the key element of health care leadership for many years to come. By doing so, one develops skill at working with other disciplines and the contacts that become important assets as one attempts to exert leadership at higher and higher levels in the policy analysis process.
Practicing Leadership
Potential professional leaders have many opportunities to experiment with leadership roles in their interactions with program peers inside and outside their usual work setting. They can try out new concepts and compare experiences with their colleagues. Buttressed by the knowledge and skills gained, they can gradually assume leadership based on competency and commitment to personal and institutional change. One need not wait for a senior management opening to put that new knowledge to use.
Professionals play a very important role in policy analysis; however, they need to acquire those skills necessary to achieve positions of leadership in health policy making. Professionals, especially physicians, must learn to take a disinterested view in many of their interactions with others, offsetting the growing public perception that they are much too concerned with the monetary aspects of care. If they fail to do so, their professional and political influence will continue to wane as their informational and procedural monopolies weaken.
To start, professionals must begin to influence health policy locally. They have to gain experience and leadership skills at that level before moving up to higher levels. As they move up, they will learn about the governance processes of both for-profit and nonprofit organizations and the suitability of each for specific purposes. They will gain knowledge about managing nonclinical types of risks in the health care setting and about how to become a member of a team that can deal with the entire medical condition rather than their subspecialty’s aspect of it.
Learning by doing is available in all settings, especially in training newer health professionals, improving local care processes, and health policy leadership at the community level. There is plenty of room for professional leaders in the health policy process, if they are willing to invest time and effort into learning to manage and lead in it.
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Case 15: Australian Surgery Indicator Ma…
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Case 15 Australian Surgery Indicator Makes the Front Page
The front page of the Sydney Morning Herald of February 28, 2011, carried an exclusive headlined, “Thousands Hit as Hospitals Cancel Surgery” (Wallace, 2011). It cited public records from NSW Health, the ministry responsible for monitoring New South Wales’ state health system. The records indicated that same-day surgery cancellations were “occurring regularly at three times the accepted standard.” Many patients showed up at public hospitals operated by area health services expecting to go into the operating room, only to be sent home after fasting and having blood samples sent to the lab. In many instances, surgeries were canceled because the hospitals did not have beds waiting for the patients after their surgeries.
The article noted that the ministry’s “Surgery Dashboard,” a monthly snapshot of key performance indicators, sets a target of less than 2% for surgery cancellations. This is a stretch or “aspirational” goal, and some NSW hospitals were not meeting the previous standard of less than 5%.
The Surgical Service Taskforce developed the dashboard, and NSW Health incorporated it into its Pre-Procedure Preparation Toolkit, a guideline issued by the ministry’s Health Service Performance Improvement Branch. Table 15-1 lists the key performance indicators for both state and local levels.
The guideline indicators and targets were reviewed in November 2012, and the canceled surgeries target remained unchanged.
The reporter interviewed the chair of the local Australian Medical Association hospital practice committee, who was also a medical school faculty member. He suggested that the problem was worse than indicated, because patients who wanted surgery but were never booked were not counted. He observed that the benchmark percentage was “ambitious but clearly double or triple that figure is unacceptable.” He called a ministry plan to add 400 public hospital beds per year insufficient.
The deputy director-general of NSW Health told the reporter that 40–45% of the cancellations were for “patient reasons,” such as the patient not showing up or being ill on the day of surgery. He also noted that there were multiple reasons why hospitals could not accommodate surgery patients—when trauma patients unexpectedly tied up ICU beds, for example, or when necessary supplies and equipment were not available. He noted that when the benchmark had been less than 5% nearly all the hospitals had met it, so it was raised to an “aspirational” level of less than 2% in 2007.
Data extracted from the monthly reports by the newspaper indicated that some hospitals were usually failing to meet the less than 5% target and few had come close to the less than 2% level on a consistent basis. The same-day cancellation rate for six of the nine local hospitals was around 4%. This suggests that almost 9,000 same-day surgeries are canceled in New South Wales each year. The deputy observed that a cancellation rate of 4–5% was typical of other Australian states and that 91% of elective surgeries were “completed on time.”
Table 15-1 Key Surgical Performance Indicators
State Level

Booked patient cancellations on the day of surgery for any reason
< 2.0% Patients canceled due to medical conditions (included above) < 1.0% Suggested for Local Level Patients through the preprocedure preparation process 100% Percentage of patients processed by: Target locally determined Telephone interview General preadmission clinic Multidisciplinary preadmission clinic Average time spent by patient in preadmission clinic General (anesthetist and nurse) 2 hours Multidisciplinary 4 hours Other Patients who “do not attend” on the day of surgery < 0.5% Source: Data from: NSW Department of Health, Guideline: Pre-Procedure Preparation Toolkit, Document GL-2007_018, 02-Nov-2007, p. 18. Accessed December 9, 2013, at Discussion Questions 1.Do the conclusions you draw from the case justify the headline? Why or why not? 2.Evaluate the indicators shown in Table 15-1. These are not the only indicators. Others included the waiting times for elective surgery by urgency category. 3.What do you estimate is the avoidable rate of canceled surgeries, and how would you develop an indicator for that? 4.How would you factor in the biases of both the doctors and NSW Health? 5.How might you manage the phenomenon that raising the benchmarks to “aspirational” levels means reporting more failures to the public? 6.Investigate the overlapping of private and public hospital systems in Australia. How does this complicate the issues of performance evaluation and improvement? In New South Wales, the Department of Health regulates private facilities and also manages the public ones. What are the strengths and weaknesses of such an arrangement Chapter 12 The Policy Analysis Process: Analysis of Values An analysis that considers technological capabilities, economic outcomes, and political support will usually point toward a single health policy recommendation. Yet any final recommendation must take into account values, especially where there are competing trade-offs. You might ask this: Does not the political process, which a recommendation often goes through before it can be adopted and implemented, take care of those value concerns? Do not decision makers reflect their personal values and those of their constituencies in the positions they take during a policy debate and in their votes? Yes, the political process will reflect the current wider conflicts in American society over social mores, the nature of human life, the role of government, the economic marketplace, and collective versus individual rights. In this chapter, however, we consider some value issues relating specifically to health care and the health care professions. These values may or may not be considered in the political process and should be assessed as part of any robust analysis. Value issues discussed briefly in this chapter include: •Equitable access •Efficiency and value •Patient privacy and confidentiality •Informed consent •Personal responsibility •Quality, variability, and malpractice reform •Professional ethics •Consumer sovereignty Social welfare •Rationing •Process equity This chapter ends with the broader question of how a wide range of social institutions might be influenced by the growth of the medical sector of the economy. 12.1 EQUITABLE ACCESS Priester (1992) suggested that the United States should reorder its values to give the greatest emphasis to fair equity, which he defined as giving each individual access to an “adequate level of care.” Skipping over issues of residency and eligibility, he argued, “Assuring access to health care, regardless of cause or source of need, is society’s responsibility”; however, he added that “this does not require access to all potentially beneficial care” (p. 92). He maintained that this is the only approach that would not exceed the available resources or deprive some segments of society of their opportunity for a reasonably full life. He saw this as a floor, not a ceiling; someone with more personal resources could choose to consume more health services. He saw the U.S. system as overemphasizing provider autonomy, individualism, and assumed abundance. He felt that we have too often let economic considerations outweigh ethical ones. A similar argument could be made for removing health disparities; among the major causes of which is differential access to care. The Affordable Care Act (ACA) has made a step in the direction of fair access by moving toward universal coverage and by calling for a defined essential benefit package. 12.2 EFFICIENCY AND VALUE If resource scarcity leads society to overlook some populations or to restrict necessary services to them, then efficiency is important. “Waste not, want not” is not always a fundamental value in a system in which one person’s waste is another person’s enhanced income. Porter and Teisberg (2006) argued against a “zero-sum” mentality that attempts to maximize each individual provider’s share of the existing pie and favored reducing waste to enhance the value received by individual consumers. One could also promote the collective view that the services available to consumers collectively form a “zero-sum” game in which all will get more if the collective waste is minimized. One way or another, there is considerable merit in viewing waste negatively, rather than as enhanced income. Because it is so hard to get individuals to pull together on efficiency and cost minimization, some policy experts have tended to emphasize “value.” We now have value-based compensation experiments that allow sharing of the savings with providers and provide compensation for higher-quality outcomes. The sense here is that there is value created when you get greater quality for the same cost or the same quality for lower cost, or both positive outcomes concurrently. In a survey that asked health industry leaders to rank 11 areas of innovation for their potential impact in terms of quality and cost over the next 5 years, the highest ranking went to process improvement. The other innovation areas likely to contribute to both improved quality and cost were data analytics, nonphysician delivery alternatives, disease management, and alternatives to fee-for-service. The respondents believed innovations in diagnostics, pharmaceuticals, and electronic medical records would help with costs but not quality, and they forecasted a low likelihood of help along either dimension from consumer incentives or from basic research (Chin et al., 2013). The good news is that process improvement is an area where any provider who wants to make a difference can contribute. 12.3 PATIENT PRIVACY AND CONFIDENTIALITY Increasingly, electronic patient records, digitized information already collected for billing and claims, and specialized databases offer potential for finding out more about disease processes and care outcomes. At the same time, they offer possibilities for excluding individuals from care or for breeches of the confidentiality that one expects when encountering the health care system and is often guaranteed by laws such as the Health Insurance Portability and Accountability Act (HIPAA). News stories about stolen laptops with personal data crop up frequently. This is an area where trade-offs will continue to be difficult and frustrating, and it will continue to be important in policy analysis and decision making. 12.4 INFORMED CONSENT Requirements for informed consent for patients and human subjects in research represent a constraint on provider autonomy. They add to the staff burden, but are a regulatory requirement. Table 12-1 illustrates part of the federal regulations governing informed consent by research subjects in federally funded research. You might ask yourself this: What values are represented here, and why were they made an added requirement of all research in the first place? Table 12-1 Code of Federal Regulations Section 50, Subpart B, Informed Consent of Human Subjects §50.20: General requirements for informed consent Except as provided in 50.23 and 50.24, no investigator may involve a human being as a subject in research covered by these regulations unless the investigator has obtained the legally effective informed consent of the subject or the subject’s legally authorized representative. An investigator shall seek such consent only under circumstances that provide the prospective subject or the representative sufficient opportunity to consider whether or not to participate and that minimize the possibility of coercion or undue influence. The information that is given to the subject or the representative shall be in language understandable to the subject or the representative. No informed consent, whether oral or written, may include any exculpatory language through which the subject or the representative is made to waive or appear to waive any of the subject’s legal rights, or releases or appears to release the investigator, the sponsor, the institution, or its agents from liability for negligence. Section 50.24 Basic elements of informed consent. (a)In seeking informed consent, the following information shall be provided to each subject: (1)A statement that the study involves research, an explanation of the purposes of the research and the expected duration of the subject’s participation, a description of the procedures to be followed, and identification of any procedures which are experimental. (2)A description of any reasonably foreseeable risks or discomforts to the subject. (3) A description of any benefits to the subject or to others which may reasonably be expected from the research. (4)A disclosure of appropriate alternative procedures or courses of treatment, if any, that might be advantageous to the subject. (5)A statement describing the extent, if any, to which confidentiality of records identifying the subject will be maintained and that notes the possibility that the Food and Drug Administration may inspect the records. (6)For research involving more than minimal risk, an explanation as to whether any compensation and an explanation as to whether any medical treatments are available if injury occurs and, if so, what they consist of, or where further information may be obtained. (7)An explanation of whom to contact for answers to pertinent questions about the research and research subjects’ rights, and whom to contact in the event of a research-related injury to the subject. (8)A statement that participation is voluntary, that refusal to participate will involve no penalty or loss of benefits to which the subject is otherwise entitled, and that the subject may discontinue participation at any time without penalty or loss of benefits to which the subject is otherwise entitled. (b)Additional elements of informed consent. When appropriate, one or more of the following elements of information shall also be provided to each subject: (1)A statement that the particular treatment or procedure may involve risks to the subject (or to the embryo or fetus, if the subject is or may become pregnant) which are currently unforeseeable. (2)Anticipated circumstances under which the subject’s participation may be terminated by the investigator without regard to the subject’s consent. (3)Any additional costs to the subject that may result from participation in the research. (4)The consequences of a subject’s decision to withdraw from the research and procedures for orderly termination of participation by the subject. (5)A statement that significant new findings developed during the course of the research which may relate to the subject’s willingness to continue participation will be provided to the subject. (6)The approximate number of subjects involved in the study. (c)When seeking informed consent for applicable clinical trials, as defined in 42 U.S.C. 282(j)(1)(A), the following statement shall be provided to each clinical trial subject in informed consent documents and processes. This will notify the clinical trial subject that clinical trial information has been or will be submitted for inclusion in the clinical trial registry databank under paragraph (j) of section 402 of the Public Health Service Act. The statement is: “A description of this clinical trial will be available on, as required by U.S. Law. This Web site will not include information that can identify you. At most, the Web site will include a summary of the results. You can search this Web site at any time.” (d)The informed consent requirements in these regulations are not intended to preempt any applicable Federal, State, or local laws which require additional information to be disclosed for informed consent to be legally effective. (e)Nothing in these regulations is intended to limit the authority of a physician to provide emergency medical care to the extent the physician is permitted to do so under applicable Federal, State, or local law. Source: Reproduced from: Code of Federal Regulations (2013, April 1). Protection of human subjects. Washington, D.C: Government Printing Office. Title 21, Volume 1, Part 50. Retrieved on December 17, 2013, at bpartNode=21: 12.5 PERSONAL RESPONSIBILITY A significant portion of the cost of health care can be attributed to lifestyle choices, such as smoking, lack of exercise, overeating or poor nutrition, not wearing seat belts or cycling helmets, and use of drugs and alcohol. Many policy proposals seek to change the behavioral risk factors or shift those costs to the individuals at risk. Smokers pay higher insurance premiums for long-term care, for example. Some analysts have suggested that those involved in risky behaviors, such as not wearing motorcycle helmets, post a bond to cover their incremental medical care costs in case of an accident. Most people would agree that individuals should take more responsibility for their behavior rather than have it borne as a collective risk, but there is less agreement on the effort society should expend to make healthy choices more attractive. There is considerable evidence, for example, that the development choices we make—our built environment—can encourage or discourage physical activity. A politician asked to support a bill to encourage “walkability” or “multimodal transportation hubs,” however, may be inclined to attribute lack of exercise solely to, as one state legislator put it, “a lack of personal fortitude.” The question of personal responsibility comes up repeatedly in debates about health reform and the ACA in particular. Key elements of the reform can be seen as an attempt to balance a society’s responsibility to ensure equitable access with an individual’s responsibilities. The individual mandate legislates personal responsibility, using tax fines to ensure that young, healthy people can pay for their own care if they need it and do their share to support a larger system they will likely rely on as they age. When Governor Mitt Romney was considering the individual mandate as part of the Massachusetts reforms, he noted that the personal mandate was about personal responsibility, which is a fundamental Republican value (Starr, 2011). Yet, in a video released by Mother Jones during the campaign, Romney said that 47% of the population feel entitled to government handouts. “I’ll never convince them that they should take personal responsibility and care for their lives,” he said (Mother Jones, 2012). In his acceptance speech after winning another term, President Obama emphasized social responsibility: What makes America exceptional are the bonds that hold together the most diverse nation on earth. The belief that our destiny is shared; that this country only works when we accept certain obligations to one another and to future generations. The freedom which so many Americans have fought for and died for come with responsibilities as well as rights. And among those are love and charity and duty and patriotism. That’s what makes America great. Previous sectionNext section 12.6 QUALITY, VARIABILITY, AND MALPRACTICE REFORM We hear a lot about malpractice reform and frivolous lawsuits and unreasonable awards for pain and suffering. We see local television advertisements by law firms seeking to represent clients “wronged” by providers and insurers. State and federal legislatures and courts debate whether to cap the size of awards or determine when they are excessive. Funding flows freely into campaign coffers from organizations on both sides of the debate; trial lawyers favor the Democratic Party, whereas insurers and organizations representing health providers and facilities favor the Republican Party. Putting political posturing aside, however, several values-related policy issues recur in the debates on this area, including the following: •The value of a human life lost and of other negative consequences suffered unnecessarily •The allocation of the responsibility for error between the individual provider and the overall care system •The amount of variability in outcomes and events that is unavoidable and how much is unacceptable •The appropriate way to compensate advocates for patient rights and to overcome inappropriate provider behavior •How much to let the provider community police itself and how much and when to intervene in the public interest. 12.7 PROFESSIONAL ETHICS Access and rationing are aspects of distributive justice. Confidentiality, truthfulness, informed consent, respect for patient and professional autonomy, and the safety of the patient are all topics cited in discussions of professional ethics and in professional codes of ethics. Most professionals have had some indoctrination in biomedical ethics and are aware of key issues. Most professions have an ethical code or statement. Most such statements have become more general over time as patient autonomy has become more respected and monopolistic practices have come under government scrutiny. At the same time, professional societies may take strong positions without incorporating them into a code. For example, the American Nurses Association has long supported health care as a basic right delivered through a single-payer system. What About Health Policy Experiments? Daniels (2006) raised an interesting ethical question for health policy professionals: What if we required that health system transformations had to undergo an ethical review process similar to that required of medical research experiments? He noted that these social experiments can put significant populations at risk. He did not suggest what the mechanism for such reviews might be; however, he raised the issues of balancing the social value of the experimental policy changes with the risks to which those affected are exposed and how we might go about conducting such a review. He suggested three levels of analysis: 1.Select benchmarks for the ethical analysis in terms of their effect on: a.Equity b.Efficiency c.Accountability 2.Conduct an ethical evaluation of how well the design of the proposed reform meets its goals: a.How good is the evidence used to justify the intervention? b.Is the implementation planned adequate to test the results? c.Will the intervention measure the effect with sufficient sensitivity to evaluate the results? d.Are the key implementers involved in the planning and committed to an unbiased evaluation? 3.Determine whether there is sufficient oversight to protect the rights of those involved in the experiment. Informed consent might be impractical in many settings. He mostly offered examples of international situations, but, overall, he noted, “Unfortunately, there is little experience in measuring how systems establish transparency, accountability, and fair process in decisions involving resource allocation” (p.450). 12.8 CONSUMER SOVEREIGNTY Those who want a highly competitive marketplace want the consumer to make decisions rather than the government. The examples in the box on the next page illustrate views of health policy analysts on both sides of this economic and political ideological divide. The typical health professional is in a bit of a straddle here. Most believe in patient autonomy but also recognize that consumer sovereignty often comes at the expense of professional power and influence, which some would call paternalism, but may positively affect patient compliance and clinical outcomes as well. 12.9 SOCIAL WELFARE Interest groups at the table during policy formulation may or may not adequately represent the public’s interests. There are a number of ways of evaluating outcomes in terms of social welfare. Some are economic; some are not. Economic models that would base policy decisions on benefit–cost or cost-effectiveness criteria raise issues of valuation, such as CONTRASTS IN ECONOMIC AND POLITICAL IDEOLOGY Cannon and Tanner (2005) agreed in one respect with many who support a greater government role in health: that the health care sector of the economy is special. But they argued that because it is special, reliance on competition is even more critical: Unlike software, wireless communications, or banking, health care involves very emotional decisions, which often entail matters of human dignity, life, and death. However, we do not see the gravity of these matters as a reason to divert power away from individuals and toward government. Rather we see the special nature of health care as all the more reason to increase each consumer’s sphere of autonomy. (pp. 146–147) Richmond and Fein (2005) concluded otherwise. They would prefer to use public policy to create a more equitable society: Health and health care are vitally important in influencing life’s chances and one’s income and wealth should not determine the amount and quality of care one receives. We seek a system in which the financing and distribution of health services reflect our image of a just society, a society in which economic arrangements reflect a moral dimension. (p. 4) •Willingness to pay •Contribution to gross domestic product •Social costs avoided, as in the case of support of a family when the breadwinner dies At the same time there are other considerations, such as •Lives saved •Quality-adjusted life-years (QALYs) •Longevity •Pain and suffering avoided In this arena, there are counterattacks to the economic arguments (Ackerman & Heinzerling, 2004): Cost–benefit analysis of health and environmental policies trivializes the very values that gave rise to these policies in the first place. Moreover, through opaque and intimidating concepts like willingness to pay, quality-adjusted life-years, and discounting, economic analysts have managed to hide the moral and political questions lying just under the surface of their precise and scientific-looking numbers. It is time to blow their cover. (p. 234) Discounting is easy to do mathematically but difficult to interpret practically, politically, and ethically. The problem is in the trade-off between the present and the future, a difficult problem in all policy making. The standard economists’ approach of bringing the costs and benefits back to a net present value explicitly biases the analysis against future events. Some advocates, therefore, argue for a discount rate of 0%. Ackerman and Heinzerling also questioned the use of QALY metrics because they discriminate against the older population, who will naturally have fewer years ahead of them. The same can be said of any analysis dealing with contribution to gross domestic product, because the older population generates little output or will soon stop generating it and the output of children is so far into the future that any reasonable discount rate obliterates the benefits. This is why some suggest that economic analysis is useful for payers and for comparing treatment alternatives for specific illness, but that it really does not work well when comparing an array of different alternative public investments. 12.10 RATIONING Bodenheimer and Grumbach (2005) suggested a two-part definition of rationing: (1) limiting care that is likely to be beneficial due to scarce resources, including money, and (2) a method of fairly distributing the resources that are available. To this we would add a third condition: (3) that the decision-making method is determined by society rather than a corporation or an individual. Bodenheimer and Grumbach noted that popular use of the term rationing tends to equate it with withholding of care and ignores the second necessary condition. That distinction separates arbitrary actions to decrease the cost of care from situations in which the system attempts to distribute its limited resources in a systematic and equitable way. There are a variety of notions of equity, and thus a rationing system may be designed to •Reduce overall costs to a targeted level •Maximize access •Maximize the social welfare based on the contributions of the individuals within the population •Maximize medical effectiveness: •Subject to a cost constraint •Subject to other resource limitations •Combinations of the above For example, the attempt of the British National Health Service (NHS) to limit the costs of care has led to at least one charge of rationing in which a woman with breast cancer was denied the drug Herceptin by a local health authority on the basis of cost. An account of this has been included in Table 12-2. Reducing Overall Health Care Costs to a Target Level An effective rationing system is not aimed at minimizing health care costs. They cannot be driven to zero; however, when there is a budgetary limitation or a fixed-revenue situation, a system must be in place to decide which services will not be provided to which individuals. In many cases, this is done by limiting the population served and limiting the services offered. For example, one of the largest Medicaid expenses is paying for longterm care for older people, a service not covered by Medicare. States have quietly limited the amount they pay by limiting the number of new nursing home beds they license. They know that there is a strong linear relationship between the number of beds available and the amount of Medicare claims received. Maximize the Social Welfare When transplanted organs first became available, it was clear that there were not enough to go around. Institutions doing transplants set up committees of individuals concerned with medical effectiveness and medical ethics to determine who would get the next available organ. This process provides an example of how social welfare considerations can influence rationing and access decisions. The committees examined a mixture of personal, family, and medical data to determine literally who should live and who would, in all probability, die. Considerations included family status, work status, medical factors such as alcoholism and comorbidities, and psychiatric factors. Outside observers were also suspicious that ability to pay might be creeping into the decision making. Table 12-2 Rationing and the Courts Ann Marie Rogers, 54, sued the Swindon Primary Care Trust after it refused treatment for her early-stage HER2 breast cancer with the drug Herceptin (trastuzumab), even after her doctor prescribed it. The Roche drug is licensed for late-stage breast cancer, but some studies showed it to be effective for early-stage cancer as well. Ms. Hewitt, the British Health Secretary, had praised the efforts of other women to get the treatment, and the Health Department had ordered the local health services “not to withhold it solely on the grounds of cost,” even while a government-appointed review panel was in the process of setting new guidelines for the use of the drug. Treatment with Herceptin costs $36,000–47,000 a year for each patient and was supplied under very different circumstances by the local health trusts. The Swindon trust had a policy of supplying Herceptin for early-stage breast cancer only in “exceptional circumstances.” Ms. Rogers had pointed to her cancer being of the type responsive to the drug and the risk factors of the death of her mother and a cousin from cancer. When the trust refused to fund her treatment, Ms. Rogers starting paying for the drug on her own, but had to stop when her own resources were used up. Thus, she sued the authority, citing the “postal code lottery,” which determined who got treated and who did not. A lower court judge ruled in February 2006 that the Swindon health service’s denial was lawful. In April, however, a three-judge appeals court overturned that verdict and said the local health service had acted unlawfully, noting that “once the Primary Care Health Trust decided, as it did, that it would fund Herceptin for some patients and that the cost was irrelevant, the only reasonable approach was to focus on the patient’s clinical needs and fund patients within the eligible group who were properly prescribed by their physician.” It observed that there had been “no rational basis for distinguishing between patients within the eligible group on the basis of exceptional clinical circumstances any more than on the basis for personal, let alone, social circumstances” (Lyall, 2006). The National Institute for Clinical Excellence (NICE) issued a press release on April 12, 2006, in which NICE Chief Executive Andrew Dillon reaffirmed the importance of ensuring that new drugs are both safe to use, by having an effective system for licensing, and used in the right way through the work that NICE does. “Without these things, we risk exposing patients to risks and the health service to using its money unwisely,” he said (NICE, 2006a). After a public comment period that closed in June 2006, NICE issued guidance in August 2006. “Trastuzumab, given at 3-week intervals for 1 year or until disease recurrence (whichever is the shorter period), is recommended as a treatment option for women with early-stage HER2-positive breast cancer following surgery, chemotherapy (neoadjuvant or adjuvant), and radiotherapy (if applicable)” (NICE, 2006b, p.4). In June 2012, NICE again addressed the breast cancer issue with Technical Appraisal 257, “Breast cancer (metastatic hormone receptor)—lapatinib and trastuzumab (with aromatiase inhibitor).” It stated that NICE did not recommend this as first-line treatment for post-menopausal women who have metastatic breast cancer that is hormone-receptor and HER2 positive. It explained its response as follows: NICE looks at how well treatments work, and also at how well they work in relation to how much they cost the NHS. NICE applies special considerations to treatments that can extend the lives of people who are nearing the end of their life. Lapatinib and trastuzumab (herceptin) do not provide enough benefit to patients to justify their high cost even when the special considerations were applied, so NICE did not recommend them. (NICE, 2012) One problem with the social welfare criterion is that it goes well beyond issues that health professionals are comfortable with. Issues might include citizenship status, economic contribution, utility of one’s work, and emotional impact on others. Reaching some agreement on the importance of each of these is unlikely given current value conflicts in our society. That does not mean that we cannot reach a social consensus, but rather that it would be very difficult to justify once we have reached it. Maximize Utility and Medical Effectiveness “The providing or withholding of care is ideally determined by the probability that the treatment will maximize benefits and minimize harm, i.e. by the criterion of medical effectiveness” (Bodenheimer & Grumbach, 2005, p. 137). This concept was operationalized in the Oregon Basic Health Services Act of 1989, which tried to guarantee health care for all and still control health care costs through an open, publicly accountable rationing process. At that time, one had to be at or below 58% of the federal poverty level to receive Medicaid benefits in Oregon, and this bill was intended to open that up to those below the 100% level. The state created a Health Services Commission to recommend the prioritization of health services. The 11-member body was to report its priorities to the governor and the Joint Legislative Committee on Health Care. An actuarial contractor would then estimate the cost of each of the prioritized services for the committee. After the Medicaid budget for services was set, the package of services offered to the Medicaid population would be developed using the priority lists. Essentially, the process would be to go down the list taking the next highest priority coverage until the estimated budget package was exhausted. Other services then would be outside this basic coverage. If the demand exceeded the funding provided, Oregon was prepared to reduce the benefit package rather than ration through eligibility thresholds or Medicaid reimbursement levels, as so many other states were doing (Calkthan, 1991). The commission used three techniques to develop the prioritization of some 800 services. It held 11 open public hearings around the state. It also had Oregon Health Decisions, a respected advocacy group, conduct 47 community forums, including one in every county. Each forum featured a slide presentation, group discussions, and a questionnaire on the participants’ opinions about the relative importance of specific health situations and categories. About 70% of the more than 1,000 individuals attending these forums were health care workers. The commission also supported a statewide random-digit dialing survey asking 1,000 individuals to rate 31 health care situations on a modified Quality of Well-Being (QWB) scale that had been validated elsewhere. That information was used to build a costutility scale called a “net benefit value” scale. That study produced a listing of 1,600 medical condition–treatment pairs. The orderings produced by the telephone survey were highly debatable. Fox and Leichter (1991) reported that “crooked teeth received a higher ranking than early treatment for Hodgkin’s disease, and dealing with thumb sucking was ranked higher than hospitalization of a child for starvation” (p. 22). Because it was clear that the derived utilities were not workable in terms of overall values, commission members negotiated among themselves for an acceptable ordering. For example, the four consumer representatives on the panel argued for higher rankings for preventive services because that is what the public seemed to have been saying during this process. Rather than a continuous ranking, they came up with 709 pairs grouped according to three basic categories: essential, very important, and valuable to some individuals (Kaplan, 1995), and then under 17 subcategories of outcomes, using descriptors such as survival, degree of recovery, and degree of improvement on the QWB scale (Fox & Leichter, 1991). Implementing this process required a federal Medicaid waiver, which the federal government denied on the grounds that the assessments of quality of life by healthy individuals tended to stereotype and discount the value of quality for the disabled, and the process, therefore, violated the Americans with Disabilities Act. Kaplan (1995) argued that this finding was in error and offered counterevidence. Instead of debating these issues, Oregon chose to resubmit its application with the utility portion of the model excluded. Its revised waiver application considered probability of death and probability of moving up from a symptomatic to an asymptomatic state. By giving up the utility component of the model, Oregon ignored the fact that health states are valued (Kaplan, 1995). Priester (1992) argued that the plan had been flawed because it denied access to a reasonable level of care to some, but not to others. In 1993, the Clinton administration approved the revised Medicaid waiver. Combinations of One or More Table 12-3 contains a description of how the United Network for Organ Sharing (UNOS) allocates available organs (not including related donors). This contractor was set up after passage of the National Organ Transplantation Act of 1984. It emphasizes the likely medical outcome and then pays attention to one’s length of time on the waiting list; however, the issue of whether the transplant takes place is also contingent on the availability of private insurance or Medicare or Medicaid funds to pay for it. By now you should be aware that trying to maximize one thing while trying to minimize or maximize another is often a mathematical impossibility. It is legitimate, however, to have a system in which one objective is traded off against another. The problem is that most attempts to do so never specify what the trade-off ratios are because trying to arrive at a consensus ratio is likely to generate conflict over the weightings that cannot be resolved without considerable loss of momentum and goodwill. Allocation rules, therefore, tend to remain fuzzy. You can see this even in the UNOS description. It is clear that the concept of a social welfare criterion is not really operative there. Table 12-3 How the Transplant System Works: Matching Donors and Recipients Under the Organ Procurement and Transplantation Network (OPTN) contract with the U.S. Department of Health and Human Services’ Health Services & Resources Administration, UNOS maintains a centralized computer network linking all organ procurement organizations and transplant centers. This computer network is accessible 24 hours a day, 7 days a week, with organ placement specialists in the UNOS Organ Center always available to answer questions. A person who may benefit from a transplant is referred by his or her doctor to a transplant center, which evaluates the patient. The transplant center runs a number of tests and considers the patient’s mental and physical health, as well as his or her social support system. If the center decides to accept this person as a transplant candidate, it will add his or her medical profile to the national patient waiting list for organ transplant. The candidate is not placed on a ranked list at that time. Rather, his or her information is kept in a constantly updated, computerized database. When a deceased organ donor is identified, a transplant coordinator from an organ procurement organization accesses the UNOS computer. Each patient in the database in matched against the donor characteristics. The computer then generates a ranked list of candidates for each available organ in ranked order according to OPTN organ allocation policies. The match for each donor would be different and unique to the circumstances of the donor and the patients waiting. Factors affecting ranking may include tissue match, blood type, length of time on the waiting list, immune status, and the distance between the potential recipient and the donor. For heart, liver, lung, and intestines, the potential recipient’s degree of medical emergency is also considered. The organ is offered to the transplant team for the first person on the list. Often, the top patient will not get the organ for one of several reasons. When a patient is selected, he or she must be available, healthy enough to undergo major surgery, and willing to be transplanted immediately. Also, a laboratory test to measure compatibility between the donor and recipient may be necessary. For example, patients with high antibody levels often prove incompatible to the donor organ and cannot receive the organ because the patient’s immune system would reject it. Source: Reproduced from: United Network for Organ Sharing. (n.d.). How the Transplant System Works: Matching Donors and Recipients. Richmond, VA: UNOS. Retrieved on December 27, 2013, from 12.11 PROCESS EQUITY Not only must the outcome of the policy analysis and selection process—that is, the policy itself—be perceived as fair, but so should the process that produced it. For example, before settling on a policy, the policy analysts must ask themselves whether all interested parties participated. If not, have the underrepresented or disenfranchised had their issues addressed by the analysts? This was a relevant concern in the Oregon process, which, although highly rational, seemed dominated by health professionals and by more educated and civically involved individuals. It is not unusual for opponents of a policy to argue against the inclusiveness or integrity of the policy development process. Many governments have requirements for public hearings that are regionally representative in hopes that their process will be fairer to those concerned and to protect themselves against complaints about the process. 12.12 INFLUENCE ON SOCIETY: A BROADER QUESTION With the medical care sector headed toward constituting 20% of the economy, we have to wonder about the long-term effects of this much emphasis on health in our society. Areas of concern might include: •A focus on illness and the possible loss of a sense of well-being •Commercial pressure to overemphasize medical problems •The power of the medical–industrial–university complex Is it healthy to be so conscious of our health? Is it healthy to be so stressed about our medical bills? Just about every sector of our society adds a health concern to its primary and previous missions. Churches add health ministry committees and/or health-trained staff members. Schools take on more responsibility in terms of children’s medications and their special needs; some have even established school-based health clinics. Tax revenues previously devoted to education and infrastructure get diverted to health care. All of these individual decisions may be virtuous, but they also signal a changing societal focus from toughing it out to getting it fixed through health care, whether that works or not. Because health care represents an opportunity for growth, we see more and more commercial pressure to expand its markets—and its “top of mind” awareness for the public. In a way, this is good because it creates more innovation. However, it can create demand for which there is not a significant need and siphon resources away from areas of true need. Two issues that illustrate this are the explosive growth in direct-to-consumer advertising, especially on television, and the creation of new syndromes to justify new products, such as the hotly debated emergence of prehypertension. PREHYPERTENSION Many older doctors report that they were trained that the normal upper limit for systolic blood pressure was your age (at least up to 55 years) plus 100 millimeters of mercury over 90 (diastolic). Then, in 1977, the Joint National Committee on Prevention, Detection, Evaluation, and Treatment of High Blood Pressure issued its first report establishing the guideline of 120/80 mm Hg as optimal, 120–129/80–84 mm Hg as within the normal range, and 130–139/85–89 mm Hg as high normal. Then, in May 2003, it issued a new guideline stating that levels above 120/80 mm Hg constituted prehypertension and indicated increased risk for heart attack, stroke, or kidney disease. This new diagnostic entity was to be treated with the same methods as before—diet, exercise, and other lifestyle changes and, if these fail to do the trick, a diuretic. Critics argue that there is no randomized clinical trial evidence below 140 mm and suggest that the pharmaceutical industry, which might double its number of treatable patients, not only approved of the decision, but may have influenced it. They note that reducing salt intake will help some, but hinder others, and that treating blood pressure “by the numbers” is not good medicine, although it is tempting when a provider is pressed for time and faced with patients who expect a prescription. They point out that hypertension can have a number of causes and that it should be viewed as part of a “mosaic” of risk factors associated with cardiovascular care. In November 2013, the American Heart Association and the American College of Cardiology issued a new set of joint guidelines for cholesterol treatment, calling for treatment for anyone with a 10-year risk factor for a cardiac event of 7.5% or more. The two organizations also issued a new risk calculator, a spreadsheet that considers age, race, cholesterol levels, blood pressure, and other factors. The risk calculator combined with the new threshold will result in a dramatic increase in the number of individuals that should be treated. The risk calculator came under immediate criticism because reviewers said the model overpredicted risk by 75% or more. The main complaint was that it relied on outdated demographic data. Most of the public discussion focused on the use of statins to lower cholesterol, but treatment could also include prescribing drugs that lower blood pressure. Dr. H. Gilbert Welch, a Dartmouth medical professor, said the calculator treated the relationship between blood pressure and heart risk as if it was a straight line. “The model suggests that lowering systolic blood pressure from 130 to 100 is nearly as important as from 180 to 150,” he told the New York Times. “I doubt there is a cardiologist that believes that” (Kolata, 2013). A good classroom exercise would be to search out other newly emphasized conditions and track down their medical and commercial origins. You can start by turning on your television and noting all the ads for drugs that one must take regularly to suppress some distress such as acid reflux, erectile dysfunction, or insomnia. In the United States, much debate centers on pharmaceutical industry advertising aimed directly at consumers, the cost of which ranges between $3 billion and $5 billion annually. Health care advertising, especially for prescription drugs, seems to have replaced all of the airtime and billboard space that had been taken up by cigarette and tobacco ads before they were banned. Are we that much better off from stopping one set of ads and substituting another? Other countries, including New Zealand, have barred this type of commercial activity. Sterling offered a vision of a medically obsessed future in his novel Holy Fire (1996). In it, protagonist Mia Ziemann is 94 years old and still professionally active as a medical economist. In her world, wealth is all about how many medical procedures one can afford to extend one’s longevity. The medical–industrial–research complex clearly dominates the entire economy, and young people are disenfranchised because employment opportunities rarely open through retirement or death. It is a disturbing vision, and yet one that is strangely familiar and highly plausible because Sterling draws on existing trends to shape his view of the late 21st century. Indeed, his major failing as a futurist may have been underestimating the rate of change. 12.13 CONCLUSION Values are the fourth leg of the analyst’s desk, working alongside technology, politics, and economics to support identifying a policy recommendation. This chapter outlines a number of concerns that a policy analysis group must consider in addition to the other three as they factor in concern for the general welfare of our society and our democratic traditions. The issues of ethics and values are not just limited to professional decisions, but also play an important role in all analyses of policy alternatives. Case 12 The Folic Acid Fortification Decision: Before and After BEFORE At 5 p.m. on July 20, 1991, Dr. Godfrey P. Oakley, Jr., head of the Division of Birth Defects and Developmental Disabilities at the Centers for Disease Control and Prevention (CDC), took a phone call that, he says, “forever changed my life.” On the phone was a member of the British Medical Research Council (MRC) Vitamin Study Group, calling to share study results that would be published the following month in The Lancet (SerVaas & Perry, 1999). The MRC study focused on women who had previously had a pregnancy in which the fetus or child had a neural tube defect (NTD), a birth defect of the spinal cord or brain. In April 1991, the MRC halted its study after almost 8 years because the data indicated that daily folic acid supplementation before pregnancy and during early pregnancy resulted in a 71% reduction in the recurrence of NTDs (CDC, 1991). It was no longer ethical not to provide folic acid to all of the women. Dr. Oakley told the Saturday Evening Post Society in 1999, Until that time, I thought that prevention of neural tube defects by taking folic acid supplementation was certainly no better than 50–50. If you really pressed me on what I would have thought the likelihood that a vitamin would have prevented neural tube defects, I would have said no more than 10% or 20%. But this was the first randomized, controlled trial designed and executed in a way that it proved folic acid would prevent spina bifida—not all but most of it. You could bet the farm that folic acid prevents neural tube defects. (SerVaas & Perry, 1999, p. 3) The study ignited a policy debate lasting several years. In the United States, the question of how to increase folic acid consumption in woman of child-bearing years was contentious in itself, but the issue was complicated further by the controversy that surrounded implementation of the Nutrition Labeling and Education Act (NLEA) of 1990, which required the Food and Drug Administration (FDA) to regulate the health claims of food manufacturers. Among the tools policy makers had to help them sift through their options were three economic analyses: cost–benefit analyses produced in 1993 and 1995 and a cost-effectiveness analysis completed in 1996. All three predicted positive net economic benefits from fortifying foods with folic acid. BACKGROUND NTDs are a class of birth defects that involve the brain and spinal cord. The most extreme form is anencephaly, in which all or part of the brain is missing. Another form is spina bifida, in which the spinal cord is not fully encased in the spine. In the early 1990s, there were about 4,000 NTD-associated pregnancies per year in the United States. Folates are a form of B vitamin that occurs naturally in leafy vegetable, legumes, nuts, and other foods. Folic acid is its synthetic form. Folates help cells replicate quickly. Reports that increased folic acid intake could help prevent birth defects date back to 1965 (Hibbard & Smithells, 1965). Vitamin manufacturers learned how to add it to their supplements in the 1970s. The Saturday Evening Post Society launched its campaign to promote folic acid supplementation in October 1982 in the wake of a report that women who took a vitamin supplement with 400 mcg of folic acid experienced fewer NTD-affected pregnancies. In the late 1980s, the CDC held a workshop to discuss emerging research linking folic acids to reductions in the numbers of NTDs, which renewed interest among supplement manufacturers. Support for folic acid was limited, however. Post writers Cory SerVaas and Pat Perry (1999) reported that they were ridiculed for their efforts to promote folic acid. Scientific evidence was sparse, inconclusive, and based on observational epidemiological studies. Around the time of the CDC workshop, in fact, the National Research Council advised the FDA that it should lower the recommended daily allowance. A 1990 report by the Institute of Medicine’s Food and Nutrition Board called taking vitamin supplements to prevent NTDs “unjustified.” The National Academy of Sciences also discounted the link between NTDs and folic acid in its 1990 Report on Nutrition and Pregnancy. In the midst of this debate, the NLEA skated through Congress and was signed by President George H. W. Bush. The act directed the FDA to establish standards for nutrition labels and define how certain terms such as “low fat” and “low cholesterol” could be used on food packaging. Congress also directed the FDA to investigate 10 specific health claims and develop language food manufacturers could use to convey any valid claims on their packaging. One of those claims was that folic acid reduced the risk of neural tube defects. The FDA was hard at work on its proposed rules when The Lancet published the MRC study (MRC Vitamin Study Research Group, 1991). The study involved more than a thousand women in 33 centers across 17 countries. Researchers divided the subjects into four groups. Those in the first group received 400 mcg of folic acid. Those in the second group received the same amount of folic acid plus a multivitamin supplement. Those in the third group received neither the multivitamin supplement nor folic acid, and those in the final group received only the multivitamins. NTDs recurred 1% of the time when mothers received folic acid, with or without other vitamins, and 3.5% of the time when they received nothing or only the multivitamin supplement. The MRC study did not settle the debate. It investigated women who had already had a NTD-associated pregnancy and therefore might be predisposed to having another; the results were not necessarily applicable to the general population. An FDA-contracted study released in November 1991 said it was not possible to positively conclude that folic acid prevented NTDs, but it criticized the Institute of Medicine and National Academy of Sciences reports. FDA draft rules issued later that month rejected claims that high-folate foods prevented NTDs, but it called its conclusion “tentative” and left open the possibility of further review. The CDC, however, was less equivocal. At a 1991 conference on “Vitamins, Spina bifida, and Anencephaly,” participants generally accepted the notion that women who were pregnant or might become pregnant required more folic acid. They began to wrestle with what FDA Commissioner David Kessler would call “one of the most difficult issues” of his tenure—exactly how to go about providing that folic acid. ALTERNATIVES There were only a few ways to ingest more folic acid at the time: consume more foods naturally high in folates, take vitamin supplements, take folic acid pills, or eat fortified foods. Each option brought its own challenges. Working against the natural nutritionists was the fact that natural folates have lower bioavailability than folic acid and break down during cooking. A typical U.S. woman ingests only 25 mcg of naturally occurring folates daily, and thus it is hard to envision women ingesting 400 mcg through dietary changes. At the time, folic acid by itself was only available in a 100-microgram prescription formulation. The level of folic acid in most multivitamin supplements was so low that a woman trying to hit the 400-microgram target would have to ingest toxic levels of other vitamins. One option was to make folic acid more readily available in larger doses. Another was to reformulate multivitamins. Both options suffered from the same problem: Only periconceptional intake (ingestion before pregnancy and during the first few weeks after conception) is effective; yet roughly half of all pregnancies occur without early prenatal care. You would have to convince all women to take pills to supplement their folic acid intake throughout their childbearing years or risk missing more than half the pregnancies. That left the possibility of fortification (adding a nutrient to food that does not otherwise contain it). This approach would reach everyone, including all women who are or might soon become pregnant. Food fortification and enrichment (increasing the levels of a nutrient already in a food) has a long history in the United States, beginning in 1924 with the decision to add iodine to salt to prevent goiter and other iodine-deficiency disorders. Vitamin D was added to milk in the 1930s (much later, vitamin A was added to low-fat dairy products). Flours and bread have been enriched with various nutrients—1938 through 1942 saw the addition of thiamine, niacin, riboflavin, and iron. Four hundred micrograms of folic acid, however, struck many as a pharmacological dose. Best-selling longevity authors Durk Pearson and Sandy Shaw said fortification was equivalent to medicating competent adults without informed consent (Junod, 2006). Scientists worried about adverse reactions. One known issue was that folic acid at daily doses of a microgram or more could mask vitamin B12 deficiency, particularly among the older population, prompting some scientists to worry that fortification would simply shift risks from developing embryos to adults with pernicious anemia (Gaull et al., 1996). SUPPORT BUILDS Fortification gained adherents after the MRC study appeared and supporters’ ranks swelled as people became aware of two studies, as yet unpublished, conducted on women with no history of NTD-affected births. One, conducted in Hungary by Andrew Czeizel and his colleagues, showed benefits in the general population from consuming 800 mcg per day. Another, the “Werler study,” studied women in Boston, Philadelphia, and Toronto. Although Werler and her colleagues recommended 400 mcg daily, they found that even 250 mcg offered some protection. In May 1992, Dr. Walter C. Willet argued in an American Journal of Public Health editorial that “fortification should be the long term goal” (Junod, 2006). NEW PUBLIC RECOMMENDATION In September 1992, the U.S. Public Health Service announced that women of child-bearing age should get 400 mcg of folic acid every day, a decision touted by the CDC but soft-pedaled by the FDA and the National Institutes of Health (Palca, 1992). The announcement did nothing to satisfy the two policy questions in the FDA’s lap: whether to allow food products to promote their folic acid levels on their labels and whether to require that certain foods be fortified with folic acid. Amid safety concerns, the FDA’s folic acid advisory committee recommended against a folic acid health claim after a November 1992 meeting. In early 1993, the FDA, working under tight deadlines, adopted an NLEA rule that reflected this position and disallowed a health claim; however, the committee expressed an interest in fortification, and it reconvened in April 1993 to look at a variety of unresolved issues, including fortification. By October, the FDA had reversed its position, publishing a draft rule that would allow health claims for foods containing folic acid. There were many aspects of the rule, but its core was a provision that would allow health claims for foods that contained 40 mcg or more of folic acid per serving. On December 31, 1993, the rule became final. The October 1993 draft rule had contained provisions about fortification, but fortification was not mandated as part of the New Year’s Eve ruling. The FDA and its folic acid advisory committee continued to struggle with a variety of implementation questions. COST–BENEFIT ANALYSIS Federal agencies are required to conduct regulatory impact analyses as part of rulemaking and starting in 1993 were required to assess expected costs and benefits of significant rules. FDA staff conducted a CBA and estimated that fortification with 140 mcg of folic acid per 100 grams of cereal grain products would prevent 116 NTD-affected births per year. This analysis tallied direct savings, notably medical care avoided, and estimated a savings of $5 million for each case averted, resulting in economic benefits of $651–786 million annually. The annual cost of fortification would be $27 million, and thus the annual net economic benefit would be $624–750 million (FDA, 1993). In 1995, University of California researchers published a second CBA. They estimated that 304 NTD-associated births would be avoided through fortification. Using a different method that looked at lost productivity, they put the value of a case avoided at $342,500. The economic benefit came in at $121.5 million. From this, the researchers deducted not only the cost of fortification, which they put at $11 million, but the cost of adverse events—namely 500 cases of neurological damage annually at a cost of $16.4 million. Their calculations resulted in an estimated net benefit from fortification of $93.6 million (Romano, Waltzman, & Scheffler, 1995). These two studies were before the advisory committee as it debated folic acid implementation, and they played a role in shaping the draft folic acid fortification rule published on March 5, 1996. A third analysis, published by the CDC that same year, was not influential. The CDC estimated 89 averted NTDs at a total benefit of $16.1 million annually. That was largely offset by the $11 million cost of fortification and an estimated $350,000 in health costs related to 89 cases of neurological damage. That left a net benefit of $4.7 million. The FDA ultimately adopted a rule requiring fortification of cereal grain products with 140 mcg of folic acid for every 100 grams of grain. The rule went into effect on January 1, 1998. Between October 1998 and December 1999, the prevalence of reported cases of spina bifida declined 31%. Anencephaly declined 16%. Various studies over the years have put the total reduction of cases of spina bifida and anencephaly at 20–30%, much more than were reflected in the three ex ante economic analyses. (Not all of the improvement can be attributed to fortification, because women of childbearing age can expect to get only about a quarter of their recommended intake of 400 mcg through fortified grains, and public education campaigns continue to promote consumption of folic acid through vitamin pills.) Figure 12-1 shows the type of product labeling allowed with folate-fortified products. images Figure 12-1 Two labels (“nutrition facts” for foods and “supplement facts” for vitamin supplements) showing how regulations allow display of folate content. Source: Courtesy of the Office on Women’s Health at the U.S. Department of Health and Human Services THE RESULTS COME IN Studies in Chile and Canada also reported the effectiveness of folate fortification programs. Canada mandated 150 mcg per 100 grams in 1998; Chile required 220 mcg per 100 grams in 2000. Three Canadian population-based studies showed reductions in the incidence of NTD-related births of 50%, 54%, and 43%, respectively. A single study in Chile included measures of increased folate blood levels from fortification and reported a 43% reduction in the NTD rate within 6 months. Differences among these studies included differences in fortification levels and differences in measurement and reporting regarding the inclusion or exclusion of stillbirths and terminated pregnancies. The CDC published a before and after epidemiological study in 2004 that reported that surveillance-based population studies from 1995 and 1996 (prefortification) and 1999 and 2000 showed a reduction in the estimated number of NTD-affected pregnancies from 4,000 to 3,000. These results are summarized in Table 12-4. An editorial note in the Morbidity and Mortality Weekly Report (MMWR) noted that a 26% reduction was somewhat less than earlier studies had indicated and short of the national goal of a reduction of 50% (CDC, 2004). In 2005, Grosse and colleagues published an ex post economic study of fortification in the United States. It estimated 520 averted cases of spina bifida and 92 cases of averted anencephaly annually, which led to economic benefits per case of $636,000 and $1,020,000, respectively. That translated into $425 million in economic benefits ($146 million in direct costs, mostly medical) against an annual cost of fortification of $3 million. The authors did not identify any documented adverse health effects from fortification. This study used a 3% discount rate but noted that Office of Management and Budget guidelines called for comparisons using both 3% and 7% discount rates (at least one ex ante study had used a 5% rate). Of the $636,000 savings per spina bifida case avoided, the study reported, $279,000 was direct costs, mostly medical, with the rest apparently indirect costs for nonmedical caregiving. For the anencephaly cases, almost all of the $1,020,000 in costs were indirect. In addition to the required 3% and 7% discount rate comparisons, the authors performed sensitivity analyses with only 80% of the cases avoided attributed to folate fortification and with a doubling of the fortification costs. Then they developed a worst-case scenario that assumed only 80% of the observed benefits attributed to the intervention, a doubling of the cost of fortification, and a $25 million allowance for the potential effects of neurological damage from untreated anemia. This worst-case scenario still yielded annual net direct benefits of $88 million after expenditures of $6 million on fortification and an overall benefit of $312 million. The authors observed that the benefits were exceptionally large and noted that “few public health interventions beyond immunization and injury prevention are cost saving.” Table 12-4 Estimated Average Annual Numbers of Spina Bifida and Anencephaly Cases Based on Prevalence per 10,000 Live Births from Surveillance Systems—United States 1995–1996 and 1999–2000 images For systems with prenatal ascertainment, estimated total pregnancies included live births, stillbirths, prenatally diagnosed cases, and elective terminations. For systems without prenatal ascertainment*, estimates included live births, stillbirths, and fetal deaths through 20 weeks. Fetal deaths and elective terminations were calculated as difference between systems with and without prenatal ascertainment. The numbers of NTD-affected pregnancies and births were determined as prevalence multiplied by the average total number of U.S. births during the respective periods, as derived from the U.S National Vital Statistics System. *Programs with prenatal ascertainment use specific case-finding techniques to identify prenatally diagnosed and electively terminated cases. Source: Modified from: Centers for Disease Control and Prevention. (2004). Spina bifida and anencephaly before and after folic acid mandate: United States, 1995–1996 and 1999–2000. MMWR, 53, 362–365. Accessed December 11, 2013, at Hertkampf (2004) estimated that in Chile the fortification process cost approximately $280,000 annually. For spina bifida, she estimated the cost of surgery and rehabilitation for each of the 110 cases avoided annually at $100,000. She noted that bread is more of a staple of the Chilean diet. Commenting on the low priority given to folate fortification in most developing countries, she noted that prevalence data are lacking and that NTDs are not recognized as an important cause of morbidity and mortality. A meta-analysis of eight population-based studies found that folic acid food fortification reduced the incidence of NTDs by 46% (Blencowe et al., 2010). The authors estimated that in low-income countries, fortification could reduce the number of neonatal deaths stemming from congenital abnormalities by 13%. NEW CONCERNS ABOUT ADVERSE EFFECTS OF HIGH DOSAGES The earlier concerns about the masking of B12 deficiencies in the elderly have not been supported with reported cases. New concerns, however, surfaced by 2007 about the impact of high doses of folates on colorectal cancer (CRC). Animal studies suggested that high doses led to two conflicting effects. Doses higher than those normally introduced by fortification protected against the onset of CRCs, but also seemed to stimulate the growth rates of existing neoplasms. These observations, reported by Mason et al. in 2007, were not followed up by randomized controlled trials, which led the British Scientific Advisory Council on Nutrition (SACN) to report in January 2008, “The evidence for an association between folic acid and increased or reduced cancer risk is equivocal.” A 2009 report on two Norwegian clinical trials with high doses of folic acid and vitamin B12 in patients with ischemic heart disease showed significant increases in overall cancer rates (Ebbing et al., 2009). However, folic acid was considered to have a preventive effect toward heart disease and stroke (Wang et al., 2007). Vollset and colleagues (2013) conducted a meta-analysis that examined 13 randomized trials of people taking folic acid supplements. The studies were all conducted before 2011 and combined they enrolled almost 50,000 subjects. No significant effects were found with regard to folic acid supplementation on the incidence of cancer of the large intestine, prostate, lung, breast, or any significant site. The authors noted that folic acid dosages in the study were an order of magnitude greater than intake from fortified food. A CDC-sponsored study (Crider, Bailey, & Berry, 2011) that reviewed concerns about adverse effects found no evidence that fortification masked or exacerbated neuropathies related to anemia. It found no increase in cancer; no definitive studies showing adverse health effects from exposure to unmetabolized folic acid; and no evidence that folic acid was leading to epigenetic changes in human DNA. The researchers concluded, however, that future hypotheses addressing concerns about epigenetic changes would have to be explored. Crider and colleagues noted that careful monitoring of existing and proposed programs was needed to allow the scientific community to determine the blood folate concentrations required for NTD prevention as well as to evaluate and respond appropriately to concerns that may arise. FORTIFICATION IN OTHER COUNTIES To date, more than 50 countries have adopted mandatory fortification, but many of the programs have yet to be implemented (Crider et al., 2011). A number of English-speaking countries are considering a mandate at the recommendation of food safety agencies, but for a variety of reasons only Australia has completed its implementation. Australia and New Zealand Mandatory fortification of bread began in Australia in September 2009. Voluntary fortification had been allowed for more than 10 years. Food Standards Australia New Zealand (FSANZ) recommended mandatory fortification of bread in 2007 following an extensive review begun in 2004. The recommendation triggered a public comment period followed by approval of the Australia and New Zealand Food Regulation Ministerial Council, which is made up of the food and health ministers of the two countries. A 12-month phase-in period was to follow. FSANZ (2009) anticipated that a mandate would avoid about 14–48 of the 300–350 NTD-affected pregnancies that occur annually in Australia. New Zealand, however, put the plan on hold after a media campaign against fortification by bakers increased public concern about the proposed fortification. In August 2012, the New Zealand government announced that fortification would remain voluntary, with the goal of half of all bread products to be fortified eventually. Ireland’s Plans Derailed In 1990, Ireland had one of the highest rates of NTDs in Europe, with 10–15 NTDs per 10,000 live births. Voluntary fortification and nutritional education were only marginally successful, so in 2002 the Department of Health turned to the Food Safety Authority of Ireland (FSAI). In 2003, FSAI recommended fortification, and the health minister established a National Committee on Folic Acid Food, which consulted the parties involved and in July 2006 recommended mandatory fortification. An Implementation Group on Folic Acid Fortification was formed with the expectation of final implementation. In 2008, however, the implementation group reported that folic acid intake by woman of childbearing age had increased 30% as a result of voluntary fortification, and the incidence of NTDs had been reduced to 9.3 per 10,000 live births. Although Ireland’s daily folic acid intake of 90 mcg is well below international targets and other countries are achieving a much lower rate of NTD-associated births (5–6 per 10,000 live births), the group concluded that mandatory fortification would be of limited public health benefit at that time, although the decision is subject to future reconsideration. Meanwhile, Back in the U.K. The U.K. Food Standards Agency (FSA) first discussed the issue of fortification in 2002 amid concerns about possible risks to the health of older people. Then the Scientific Advisory Committee on Nutrition (SACN), an independent expert panel, reviewed the evidence and tracked the emerging science. SACN issued a November 2005 draft report (the final report was released in December 2006) that recommended mandatory fortification of flour, and in April 2006, the FSA agreed to consider four options for improving folate levels in young women: •Do nothing. •Increase efforts to encourage young women to change their diets and take supplements. •Further encourage voluntary fortification of foods. •Implement mandatory fortification of “the most appropriate food vehicle.” The FSA consulted with consumers, stakeholders, and industry in early 2007. A SACN briefing paper issued in January 2008 recommended fortification of flour but also called for the establishment of baselines for folic acid intake and folate concentrations in the blood so future surveillance programs could identify trends. It also called for standardized testing protocols (SACN, 2008). In 2009, SACN concluded that there was not sufficient data to support concerns about cancer, and it reconfirmed its recommendation in support of mandatory fortification. The four chief medical officers for the U.K. then recommended mandatory fortification to the four health ministers. CONCLUSION Mandatory fortification with folic acid is established practice in the United States and voluntary or mandatory fortification has been introduced in more than 50 countries worldwide as a strategy to help women of childbearing age increase their intake of folate. In countries where it has been implemented, it dramatically reduced NTD-associated births. So far, no European country has adopted mandatory folic acid fortification. Voluntary fortification is widely practiced in the European Union under regulation 1925/2006/EC, which allows the fortification of all foods except unprocessed foods and alcoholic beverages. Foods fortified with folic acid are widely available on the European market, except in Sweden, where fortification is not practiced, and in Denmark and Norway, which require approval. The range of product categories that are fortified on a voluntary basis includes dairy products, breakfast cereals, cereal bars, fruit juices, fat spreads, bread, and beverages. Maximum levels for the addition of folic acid to foods are not yet set in European regulations. The levels vary widely, with the highest levels added to spreads. Further use of fortification around the world, including in poorer nations, could dramatically reduce the global burden of NTDs. Discussion Questions 1.Describe the authorizing environment for folic acid fortification in the United States. 2.Why would a decision based on strong British studies influence the U.S. decision to fortify cereal products but yield a delayed response in the U.K.? 3.Contrast and compare the variables and their values used in the before and after CBA studies. What conclusions would you draw from them about that approach in this case? In general? Chapter 13 Implementation Strategy and Planning Health care delivery, like politics, is mostly local. No matter how good the policy analysis process, the policy selected as a result of that process will fail unless it elicits the support of its local implementers. Health-related activities exhibit deeply contrasting tendencies: health care processes are slow to change in some areas, yet the pace of change is rapid in other areas. Some argue that the adoption of new technologies is driving up costs, whereas others argue that failure to adopt new technology is partly responsible for escalating costs. Christensen, Bohmer, and Kenagy (2000) used the health care industry as an example of the need for disruptive technology to come in and overcome inertia. Their model applies very well in some areas, such as health information technology, but not in others, such as noninvasive surgery. Dopson and Fitzgerald (2005) edited a book about the “implementation gap” for evidence-based health care in Britain’s National Health Service, where centralization of management and financing would seem to create a more fertile environment for change. In a chapter contributed by Dopson and his colleagues (Dopson et al., 2005), the authors pointed out that failure to achieve goals that had been carefully planned has a long history in public policy analysis. Implementation failures could be explained as political bargaining as usual at a micro level; however, empirical studies suggest that implementation is a separate stage of the change process (Torenvlied & Thomson, 2003). The policy process must consider how to implement a policy decision and how to promote that implementation. The Australian government considers implementation so important that it established a Cabinet Implementation Unit in late 2003 within the Department of the Prime Minister and Cabinet. The White House might want to consider a similar unit after the Obama administration’s experience with the 2013–2014 rollout of the Web-based insurance exchanges. One can make a substantial list of the basic requirements of effective program implementation that were violated in that process. 13.1 LEVELS OF IMPLEMENTATION FAILURE There can be many reasons for a policy to be adopted but not implemented. Sometimes plans are unrealistic. Sometimes there is a failure to execute critical elements of a plan, whereas other plans are foiled by much more subtle (all too human) resistance. Still others are simply overtaken by events—wars, budget crises, changes of government, competing technologies, or differing ideologies. Many social programs started at the federal level with great effort and then failed in the field over time. McLaughlin (1984), noting how often legislators develop and adopt social programs that miss their intended objectives, observed: It is sometimes tragicomic to read the laws of entitlement, such as the one guaranteeing equality of education for the handicapped and exceptional children, and then see how they work out in group homes, classrooms and clinics. Some have blamed public parsimony. Others would cite professional narrowness, individual insensitivity, and bureaucratic myopia. But much of the blame falls on the haste with which public policy is adopted, implemented, and then displaced by new policy. (p. 83) The “deinstitutionalization” effort of the 1970s is a good example of failure to execute. After early antipsychotic drugs became available, the inpatient populations of psychiatric hospitals began to decline. Community mental health centers created to serve people released from mental institutions were up and running in many areas. Medicaid and Medicare provided some funding, but despite promises to transfer budgetary resources that had previously gone into psychiatric hospitals to these centers and other community organizations, the funding never arrived in sufficient amounts to provide both direct care and supportive services such as housing and employment training. An entire new population of homeless individuals appeared in our cities, and the terms revolving door and bag lady entered the public vocabulary. Hospitals and community centers did not provide coordinated care; they were often separate systems that competed for the same resources. Furthermore, many community mental health centers drifted away from the goal of supporting deinstitutionalization of the mentally ill and began serving a much broader spectrum of patients. As Torrey (1997) noted, “Once trained, however, the vast majority of these professionals decide to provide psychotherapy for people with mental health problems rather than treat people who were mentally ill” (p. 185). It is not easy to keep well-intentioned policies from going off the tracks. As the saying goes, “The devil is in the details.” 13.2 IMPLEMENTATION PLANNING Implementation planning arrives early and stays late. It is important to involve all stakeholders, including the implementers. An Australian Cabinet Implementation Unit process guide referred to two implementation processes: (1) implementation assessment, which contributes to the documentation that accompanies the submission of a proposal to the cabinet, and (2) implementation planning, which continues that process in much greater detail once the decision is final. Figure 13-1 outlines the stages of the Australian cabinet’s implementation planning process. Several topics discussed below—scope, funding, risk management, and schedule (which is discussed as part of the work breakdown)—may also be inputs, alongside program objectives, outcomes, and governance considerations connected to the strategic decision-making process. Scope Policy making is an art, and the “who, what, where, when, and how” may be changed either subtly or substantially. Implementers must be aware of what was actually approved. There is a saying that the camel was intended to be a horse, but it was designed by a committee. Note the result: the camel is highly adapted to its environment, but it is something quite different from a horse. Consequently, it needs a very different management approach to operate it and evaluate its ultimate performance. In the latter stages of implementation, it is important to establish lines of authority and accountability for implementation and to consider how the effort interacts with other initiatives and programs already under way. images Figure 13-1 Stages of implementation planning. It is also important to consider whether the new policy can be implemented effectively using existing organizational structures, management systems, and funding approaches or whether there is a need to establish a new structure designed to deliver the changed output. Work Breakdown This stage is a detailed analysis of the tasks generated by the implementation requirements of the policy. Political decision makers are likely to establish important dates (milestones) for implementation, dates that may or may not be achievable. Then the implementing organization must get to work: •Identifying the tasks to be performed, such as submitting a detailed budget, hiring personnel, finding office space, issuing rules and regulations, establishing advisory committees, and specifying reporting requirements •Identifying the units and individuals responsible for each task and gaining their commitment to complete the task within a specific time period •Establishing reporting responsibilities for the status of each task •Including coordination tasks as well as intradepartmental tasks •Developing a master schedule and an estimated time of completion for the project along with mechanisms for monitoring progress Depending on the complexity and urgency of the project, the project implementation staff may choose to use any one of a number of project management techniques and their associated software to show what the resulting project duration will be and whether the original target is likely to be met. If not, implementation planners may decide to undertake a number of efforts to “crash” the project in order to remain on schedule.1 This process works best when the estimate of how long an activity will take comes from the individual or team that will be responsible for that activity. This encourages participants to make realistic estimates and then commit to meeting their own estimates. For example, the Obama administration shortened the testing period for the insurance exchanges and failed to have top-level oversight of the process to determine whether this mission-critical system was up to its assigned tasks. Funding Few proposals get considered without a cost figure attached; however, additional steps related to funding may need to be taken once that figure is approved. Congress authorizes many more initiatives than it funds. For example, in 1998, Congress passed and President Clinton signed the Ricky Ray Hemophilia Relief Act, which authorized a compassionate payment of $100,000 to each hemophiliac infected between 1982 and 1987 from contaminated blood products, or to their families if they had died. This was to compensate for lax government control of the blood supply. The authorization bill did not include the funding required, estimated to be $750 million. Only after considerable effort by advocacy groups was $75 million appropriated in fiscal year 2000, $100 million in fiscal year 2002, and $475 million in other years. By the time the program was terminated in 2005, $559 million had been dispersed. Risk Management The Australian Guide to Preparing Implementation Plans states the following: By understanding the potential risks which may affect the implementation of a policy measure, agencies can reduce the likelihood or consequence of “unpleasant surprises” that may jeopardise the achievement of policy objectives.” (Cabinet Implementation Unit, 2006, p. 23) It suggests that likely risks include •Unclear objectives and deliverables •Unrealistic schedules •Shortages of key resources—funds, people, equipment •Lack of infrastructure and supports •Lack of agency internal capacity Whatever the risk, the planning process needs to assess the likelihood that it will occur, its severity and impact, how to mitigate it, and who is responsible for preventive measures. It also needs to address monitoring and how to initiate any needed actions. In situations of high uncertainty and high impact, such as national security intelligence, analysts are now required to report their estimates of their certainty regarding their findings. One way for implementers to ensure that they will be able to respond to changing conditions is to keep the planning flexible. How does a plan stay flexible? •By not getting too detailed too early •By not planning to use the available resources up to their limit •By checking in with all implementers from time to time to see if anything has changed •By having the periodic reviews to allow other parts of the plan to adjust to the “as built” changes that naturally occur •By making sure the staff knows from the start that there will probably be changes This does not mean that the planning is not complete. However, it does mean that there are contingencies built in and that the people on the job are prepared to respond to unexpected situations as they arise. Stakeholder Engagement Implementation must include a review of the stakeholders, including the following: •Who needs to be kept informed? •Who needs to participate in what detailed planning activities? •Who can be an opinion leader or champion of the program? •Who needs further training and motivation? •Who can be an enabler? •Who can be a blocker and needs to be co-opted? Then, as Table 13-1 illustrates, implementation planners must identify the type of commitment needed from the implementation stakeholder, how to secure it, key messages that need to be delivered, and who is responsible for the relationship. Decisions about how to deliver the message and maintain the relationship follow. Should it be delivered personally, by email, through the media, through a representative, and so on? After those coordination and communication tasks are identified, they can be scheduled and assigned to someone. It often is best to approach this work with stakeholders as meaningful consultation and collaboration. This can make initial implementation easier because stakeholders who feel that their ideas have been considered and their concerns addressed are less likely to try to subvert the process. Chances of success over time are greater if the people and organizations affected by the project recognize its value and are invested in its success. There will be times, though, when an implementing agency is given a mandate to implement a policy change on a specific timeline over the objections of important stakeholders, and this may force the implementation planners to develop a policy for “stakeholder management”—a term that is in disfavor but may be apt in such circumstances. You may recall from discussions of evaluating political feasibility that most techniques involve collecting information from stakeholders. That is why the most popular framework for determining political feasibility is called “stakeholder analysis.” Political feasibility inquiries can yield a lot of information that can be very important during the implementation process. If Delphi processes, key informant interviews, or other stakeholder outreach efforts were part of a feasibility evaluation prior to policy adoption, then implementers should review that material. Even if they feel they know the material, it could be helpful to turn to it with a fresh eye. A stake-holder concern that was not enough to prevent a policy’s adoption, for example, could frustrate or even derail that same policy’s implementation. Implementers might also consider employing such processes after the fact as part of their stakeholder engagement practices. Table 13-1 Communications Strategy Tool images Source: Reproduced from: Guide to Implementation Planning. Licensed from the Commonwealth of Australia under Creative Commons Attribution 3.0 Australia License. © Commonwealth of Australia 2005. Resources, Including Sourcing and Procurement Key resource needs should have been identified by this point in time because the funding requirements depend on the resources needed, especially personnel, equipment, and support systems. There may also be other less tangible resources that are mission critical, such as office space, computers and communication equipment, loaned personnel, and contractor personnel with special skills. For example, it is a frequent practice for contractors to assign their most competent personnel to preparing and marketing the proposal, but then substitute underutilized, less experienced, less skilled, or less costly personnel when the work gets under way. Implementation managers must stay alert to get the quality people and services that they expected originally. Quality Assurance The policy proposal usually specifies the quality and quantity of outcomes anticipated, and it may refer to the process and outcome measures to be used; however, implementation planners may still have to develop, validate, and install measures and measurement systems to monitor progress and suggest improvements as the implementation proceeds. When planning quality assurance measures, analysts should keep in mind the kinds of data, information, and documentation needed to conduct an evaluation after the policy has been implemented. When it comes to sequencing these implementation activities, there is no magic order. After the proposal stage, many activities may have to go forward on parallel tracks, with the implementation team making adjustments as problems and opportunities are encountered. New technology or results from ongoing studies may lead to program changes after the policy makers have completed their work. If so, the implementation team should inform the policy makers of the change so that there will be no big surprises when the effort is being reviewed (e.g., during a site visit). The list of implementation activities is often quite detailed, and it is up to the implementation team to decide how much planning time to invest in each activity. The systems necessary to plan and monitor some of these stages may be in place already. The budgeting and scheduling functions should be basic management activities everywhere. 13.3 SETTING UP TO SUCCEED Ample evidence suggests that implementation is enhanced by involving implementers early. This builds their commitment to the plan. Health care is going through a transition from a professional model that emphasizes individual responsibility, autonomy, and accountability toward an organizational one, hopefully one where organizational learning and transformation are norms. To succeed at implementation in this contentious environment, a number of things need to happen, including: 1.Shared responsibility is accepted. Team leaders and members at all professional levels must come to share overall responsibility while still accepting individual responsibility for assigned tasks. The industrialization of health care often means that treatment processes are carried out by multiple actors whose actions must be coordinated. 2.Leadership takes place at multiple levels. The team involved in developing a policy must have facts about how the system works at the operational level as well as the strategic level. Many developing countries still suffer from the system developed by the British Colonial Office for managing the Empire. This consisted of mostly locals organized into two cadres: one, the civil service, developed policy, whereas the other, the health service, for example, implemented it. A small group of British officials controlled the flow of information from one to the other. The policy makers produced brilliant analyses that circulated in files held together with red ribbon (called red tape by the English), but these analyses often proved unworkable for implementers in the field. It was an efficient way to use a small expatriate staff, but it did not necessarily produce effective delivery systems. All too many policies and plans have become “shelf art,” sitting there unused because implementers do not see them as practical or relevant. THE ORIGIN OF A POLICY The labor, delivery, recovery, and postpartum nursing team at a community hospital was reviewing its procedures and cost items in order to become more competitive in their city. One policy that puzzled team members was sending 100% of the placentas to the pathology laboratory after delivery. They kept asking around for the source of that rule and found that it stemmed from an incident many years earlier. At the time, the daughter of the chief of obstetrics was having a difficult delivery and encountered a problem that might have been handled more effectively if the placenta from her delivery had been saved and analyzed. The angry chief thoroughly chewed out the OB nursing staff for not saving it. To avoid such a confrontation in the future, the nursing supervisor instituted the rule that all placentas would go to pathology. Both the chief of obstetrics and the nursing supervisor had long since retired, but the rule lived on. The three obstetricians currently practicing at the hospital developed a set of criteria for sending placentas to the laboratory. This new rule decreased the number of pathology reviews of placentas by 95%, resulting in substantial cost savings to the patients and the hospital. 3.People understand the core business and technical processes, values, and mission of the organization. Participants must be knowledgeable and consistent in their decision making about policies and implementation. Policies and processes rarely bolt out of control. More typically, they silently drift away from the optimal as individuals and groups make incremental local adjustments in response to local events, stimuli, and experiences. The example in the box on pathology review of placentas illustrates how one process moved away from its appropriate levels. 4.Expectations are managed. Some participants will be optimistic and expect too much, whereas others will be pessimistic or cynical and expect too little. Wilson and McLaughlin (1984) suggested that one needs to work out a psychological contract with the planning participants, one that recognizes the scarcity of resources and directly addresses the WIIFM (what’s in it for me?) question. Table 13-2 outlines some of the factors such a psychological contract might consider. In essence, the contract would specify what each party gets from the exchange beyond monetary considerations. Table 13-2 The Psychological Contract The Employee Gets Performance standards that represent realistic trade-offs between funds, personnel, schedules, and service levels Personal courtesy and respect A supportive environment Meaningful and purposeful work Reasonable conflict and tension levels, mediated by clear standards for priority setting and evaluation of work Opportunities for personal development Profession and organizational recognition for good work Security, as long as funds are available Process for psychological contract change processes that reflect changing resource conditions Scarce resources The Organization Gets An honest day’s work, at least Loyalty to the organization Initiative, especially in resource use Job effectiveness and efficiency in meeting overall organizational goals Flexibility and willingness to wear multiple hats under tight staffing Acceptance of reasonable trade-offs among professional norms and organizational needs Participation in psychological contract change processes that reflect changing resource conditions Source: Reproduced from: Wilson, M., & C. P. McLaughlin. (1984). Leadership and Management in Academic Medicine, p. 310. Josey-Bass. 5.Planning is continuous. The health care environment is continuously changing. There are many more opportunities and challenges than most organizations can take on at any one time. Through functional and cross-functional teams, managers involve providers and others in setting priorities, developing and evaluating alternatives, and meeting the many new challenges. 6.Orientations are prospective rather than retrospective. Dopson and Fitzgerald (2005) and Senge and colleagues (1994) observed that behaviors and beliefs take time to change and require both abstract reasoning and experiential reinforcement. It is often easier to do things the way they have always been done. Looking to the past for precedent is usually a rational step in assessing a situation, but there is little assurance that what an organization has been doing is effective or will be so in the future. “Transformational leadership continually brings forward the vision of the future organization and indicates how the organization can get from where it is in the present to where it wants to be in the future” (Upshaw, Steffen, & McLaughlin, 2013, pp. 293–294). 7.Performance is assessed and rewarded. Effective policy change requires that the organization be prepared to commit real resources and provide support mechanisms for recognizing creativity and innovation. Personnel evaluation processes and procedures must be in place to encourage implementers, as well as policy makers, to seek new ways to get things done and to prepare for the changing future. 13.4 THAT ALL-IMPORTANT START Starting right is critical. If a team is involved, especially a multidisciplinary one (which would be the case for just about anything clinical), plan to offer leadership throughout the team formation cycle, which usually progresses through the following four stages: 1.Forming 2.Storming 3.Norming 4.Performing Forming The team needs to understand fully the factors behind the policy change and how it links to the institution’s strategies. The team’s initial efforts should be well supported and include tasks that are carefully chosen to build a shared experience of success. At this stage, the team must also consider whether it includes representation of all the important implementers. Storming Because health care settings are complex and have many built-in tensions, team members often start out blaming, finding fault, or expressing distrust of others. The team members have to be kept focused on their task until they begin to understand it and accept each other’s viewpoints. Norming The group can then set up norms of operation, detailing, for example, how decisions are made and how work is allocated. Do we vote? Do we have to have a consensus? What do we have to clear with higher authority? Do some professional groups have veto power? Performing After the barriers at each of the preceding stages are dealt with, the team can get on with its assigned tasks effectively or, having addressed them and failed to get over them, seek further guidance or facilitation. 13.5 PROVIDING FOR PERIODIC REVIEWS Major change projects often require that multiple teams go forward in parallel. Again, one or more of these may veer off on its own path, so it is important to stage periodic review sessions in which each team reports what it is doing, compares its progress against measures such as budget and schedule, and shares what implementation barriers it is experiencing. This process enables management to assess overall progress and make adjustments to the current plan where necessary. It also allows individual team leaders to see where they need to interface with other teams in order to meet their objectives and how to adjust their efforts to reflect what they learn at the review. The larger and more complex the project, the more important these periodic reviews become. 13.6 IMPLEMENTING POLICIES THAT AFFECT CLINICAL OPERATIONS One of the more problematic areas for implementing policy involves getting professionals to change the way they carry out professional tasks. This has been a topic of concern to those who study quality of care, provide continuing professional education, or sell pharmaceuticals and other supplies to the health industry. The move toward greater use of evidence-based medicine is a case in point. For example, Dopson and Fitzgerald (2005) provided a meta-analysis of a number of studies of implementing evidence-based practices in the U.K. Health Service, in which the concluding summary by Ferlie (2005) emphasized the role of leadership, organizational support, and the differences between knowledge (i.e., information) and practice: In the best case examples, there appeared to be a circular relationship between research evidence and experience—they reinforced each other and were woven together. At other times, there was a tension between craft knowledge and formal evidence. It should be remembered that clinical practice contains an element of judgment and tacit knowledge more reminiscent of craft skills than traditional conceptions of science. It may be unwise to force a stark choice between the two modes (experience or science), but there may be a need to balance both. (Ferlie, 2005, p. 188) Paul Batalden at Dartmouth has suggested that professional training include a microsystem approach to continuous improvement in health care, operating alongside issues- and organization-centered efforts. Mohr and Batalden (2006) identified eight dimensions of an effective, improvement-oriented microsystem (a teaching clinic or hospital service): 1.Constancy of purpose 2.Investment in improvement 3.Alignment of role and training for efficiency and staff satisfaction 4.Interdependence of the care team to meet patient needs 5.Integration of information and technology into work flows 6.Ongoing measurement of outcomes 7.Support from the larger organization 8.Connection to the community to enhance care delivery and extend influence. 13.7 THE POSTMORTEM Assuming that the group doing the analysis and planning will do this kind of thing again, it is critical to review the group’s own performance. This postproject analysis should be done by the planning group if the project is small or medium-sized, or by an independent evaluator if it is large or mission critical. Evaluation should study two aspects of the project: process and outcome. Process analysis should take place relatively quickly after the final report is delivered and should ask this question: “If we had to do this analysis again, what would we do differently?” Because this can be threatening interpersonally, a little humor would not hurt. The list of phases of a project in Table 13-3 can be used to lighten things up a little and may also point out opportunities for improvement. Clearly, one has to avoid using the postmortem merely to assign blame and to make sure that the accolades and rewards go to all those who really contributed to the process. Table 13-3 A Little Humor Might Help: Six Phases of a Project 1.Enthusiasm 2.Frustration 3.Panic 4.Assigning blame 5.Punishing the innocent 6.Rewarding the noncontributors Source: Reproduced from: W. A. Fischer, personal communication. Used with permission. Outcomes assessment has to wait until the outcomes are evident. It can only be justified for major policy proposals that were actually implemented; otherwise, a second analysis might be needed to focus on what might have been done differently to get that proposal implemented. The failure to implement might be primarily due to outside factors. Either way, one should be able to go back through the analysis and see how well the group defined the situation, assessed the technology, outlined the economics, adjusted to the political system, planned the implementation, and presented the product to the decision makers. Such a review is a key to improved organizational learning about policy analysis. 13.8 CONCLUSION There is no silver bullet to make implementation easy; however, the elements of successful implementation are well known. They involve top management consideration and support. They require an understanding of the social context in which change takes place. Would-be implementers must focus on the players, their roles, their barriers to action, and the roles of leadership and influencers in bringing about change. From an academic viewpoint, all of these should be worked out so that strategic policies are not derailed by the implementation details; however, decision makers are usually not comfortable with that level of detail as they deal broadly with a wide range of issues. They are very uncomfortable with surprises after the fact, but they also do not want to be bogged down reading the fine print. That is just a managerial reality. Perhaps the best answer is to turn to the experienced presenters on the team who know the behavior patterns of key decision makers and ask for their assessment of the appropriate level of detail to present at each stage. Case 13 340B Drug Pricing Program Oversight Section 602 of the Veterans Health Care Act of 1992 was titled “Limitations on Prices of Drugs Purchased by Certain Clinics and Hospitals.” It amended the Public Health Services Act by adding a new section, Section 340B, to that act. Section 602 of the Veterans Health Care Act read in part: Part D of title III of the Public Health Service Act is amended by adding the following subpart: “SUBPART VII – DRUG PRICING AGREEMENTS” LIMITATION ON PRICES OF DRUGS PURHASED BY COVERED ENTITIES “Sec. 340B (a) Requirements for Agreement with Secretary – “(1) In general. The Secretary shall enter into an agreement with each manufacturer of covered drugs under which the amount required to be paid … to the manufacturer for covered drugs … does not exceed an amount equal to the average manufacturer price for the drug under title XIX of the Social Security Act in the preceding quarter, reduced by the rebate percentage described in paragraph (2). “Rebate percentage defined. – (A) In general. For a covered outpatient drug … the ‘rebate percentage’ is the amount equal to – “(i) the average total rebate required under Section 1927(c) of the Social Security Act … for a unit of the dosage form and strength involved during the preceding quarter divided by “(ii) the average manufacturer price for such a unit of the drug during such quarter….” Section 340B applied Medicaid drug discounts to drugs purchased for clinics that served many outpatients who were not eligible for Medicaid at qualified safety-net institutions. For the most part, eligible clinics were associated with hospitals receiving disproportionate share payments under Medicare, pediatric hospitals, and community health centers. Also included were specialized clinics and projects for HIV/AIDS, hemophilia, black lung, tuberculosis, and family planning, as well as those serving Native Americans and Native Hawaiians. Hospitals were required to be governmental or nonprofit with a contractual commitment to provide services supported by governments, have a disproportionate share percentage greater than 11.75, and not obtain the covered drugs through a group purchasing agreement. The drugs had to be used for patients of the covered entity and could not be resold. A key provision of Section 340B read “(10) No prohibition on larger discount. Nothing in this subsection shall prohibit a manufacturer from charging a price for a drug that is lower than the maximum price that may be charged under paragraph (1).” The Patient Protection and Affordable Care Act (ACA or PPACA) increased the 340B discount to 13% on generic drugs and 23.1% on branded drugs. Specific discounts have been reported to range from 15–60% on prescription drugs. The law prohibits getting both a state Medicaid rebate and a 340B discount on a drug. BACKGROUND In the 1980s, Congress established a discount drug purchasing program for the Veterans Administration. In 1990, it extended this discount program to Medicaid purchases on behalf of low-income and uninsured enrollees under the Medicaid Drug Rebate Program. Soon it became clear that this law conflicted with another requirement that state Medicaid programs receive discounts matching the lowest prices offered in non-Medicaid markets. Congress moved to remedy this problem. Otherwise, the participating pharmaceutical and biotechnology companies would choose to stop offering discounts across the board. The 340B program is administered by the Office of Pharmacy Affairs within Health Resources and Services Administration (HRSA) of the Department of Health and Human Service. This office is tasked with auditing compliance with program requirements, especially the eligibility of covered entities, and program integrity concerning diversions and duplicate discounts and manufacturer pricing. However, this office has a very limited staff, and the number of institutions taking advantage of the program has been growing rapidly. HRSA also supports a number of other programs, such as the Ryan White HIV/AIDS program and community and rural health centers that are covered entities for 340B drug discounts. The HRSA website describes the intent of 340B in a listing of Frequently Asked Questions to be “to permit covered entities to stretch scarce Federal resources as far as possible, reaching more eligible patients and providing more comprehensive services” [HR Rep. No. 102-384 384(II) at 12 (1992)]. Although there are limitations on billings to Medicaid patients, there are no constraints on billings to non-Medicaid patients. The ACA freed up hospitals to choose among discount sources such as 340B and their group purchasing organizations. The ACA also made a number of provisions to strengthen program integrity. Section 1703 of the ACA called for a Government Accounting Office (GAO) study of the program: … that examines whether those individuals served by the covered entities under the program under section 340B of the Public Health Service Act (42 U.S.C. 256b) (referred to in this section as the “340B program”) are receiving optimal health care services. (b)RECOMMENDATIONS. – The report under subsection (a)shall include recommendations on the following: (1)Whether the 340B program should be expanded since it is anticipated that the 47,000,000 individuals who are uninsured as of the date of enactment of this Act will have health care coverage once this Act is implemented. (2)Whether mandatory sales of certain products by the 340B program could hinder patients access to those therapies through any provider. (3)Whether income from the 340B program is being used by the covered entities under the program to further the program objectives. THE 2011 GAO STUDY That study was issued by the GAO in September 2011. In the conclusions it noted: The 340B program allows certain providers within the U.S. health care safety net to stretch federal resources to reach more eligible patients and provide more comprehensive services, and we found that the covered entities we interviewed reported using it for these purposes. However, HRSA’s current approach to oversight does not ensure 340B program integrity, and raises concerns that may be exacerbated by changes within the program. According to HRSA, the agency largely relies on participants’ self-policing to ensure compliance with program requirements, and has never conducted an audit of covered entities or drug manufacturers. As a result, HRSA may not know when participants are engaging in practices that are not in compliance. Furthermore, we found that HRSA has not always provided covered entities and drug manufacturers with guidance that includes the necessary specificity on how to comply with program requirements. There also is evidence to suggest that participants may be interpreting guidance in ways that are inconsistent with the agency’s intent. Finally, participants have little incentive to comply with program requirements, because few have faced sanctions for noncompliance … PPACA [i.e., ACA] outlined a number of provisions that, if implemented, will help improve many of the 340B program integrity issues we identified. For example, PPACA requires HRSA to recertify eligibility for all covered entity types on an annual basis … Additionally, PPACA requires HRSA to develop a formal dispute resolution process, including procedures for covered entities to obtain information from manufacturers, and maintain a centralized list of 340B prices—provisions that would help ensure covered entities and manufacturers are better able to identify and resolve suspected violations. PPACA also requires HRSA to institute monetary penalties for covered entities and manufacturers, which gives program participants more incentive to comply with program requirements. Finally, PPACA requires HRSA to conduct more direct oversight of manufacturers, including conducting selective audits to ensure that they are charging covered entities the correct 340B price. However, we identified other program integrity issues that HRSA should also address. For example, the law does not require HRSA to audit covered entities or further specify the agency’s definition of a 340B patient. While HRSA has developed new proposed guidance on this definition, it is uncertain when, or if, the guidance will be finalized. Because the discounts on 340B drugs can be substantial, it is important for HRSA to ensure that covered entities only purchase them for eligible patients both by issuing more specific guidance and by conducting audits of covered entities to prevent diversion. Additionally, while PPACA included a provision prohibiting manufacturers from discriminating against covered entities in the sale of 340B drugs, HRSA does not plan to make any changes to or further specify its related nondiscrimination guidance. Absent additional oversight by the agency, including more specific guidance, access challenges covered entities have faced when manufacturers’ have restricted distribution of IVIG at 340B prices may continue and similar challenges could arise for other drugs in the future. (GAO, 2011, pp. 33–34) HOW IS THE PATIENT HELPED? The ACA and the GAO report said little about getting the resulting savings to the patient’s bill. As the law has been modified over the years, the direct link to the low-income, uninsured patient has weakened. The discounted drugs can even be used for commercially insured patients. The 2011 GAO report found that “some covered entities passed 340B savings on to patients by providing lower-cost drugs to uninsured patients. For example, many covered entities determined the amount that a patient is required to pay based on the lower cost of 340B-priced drugs” (p. 17). The report noted that some covered entities had indicated that without the discounts they would have to close their pharmacy or curtail other services. For a number of reasons, operating the 340B program in the hospital environment creates more opportunities for drug diversion compared to other covered entity types. First, hospitals operate 340B pharmacies in settings where both inpatient and outpatient drugs are dispensed and must ensure that inpatients do not get 340B drugs. Second, hospitals tend to have more complex contracting arrangements and organizational structures than other entity types—340B drugs can be dispensed in multiple locations, including emergency rooms, on-site clinics, and off-site clinics. In light of this and given HRSA’s nonspecific guidance on the definition of a 340B patient, broad interpretations of the guidance may be more likely in the hospital setting and diversion harder to detect. Third, hospitals dispense a comparatively larger volume of drugs than other entity types—while representing 27 percent of participating covered entities, according to HRSA, DSH hospitals alone represent about 75 percent of all 340B drug purchases. (GAO, 2011, p. 29) OTHER IMPACTS OF THE ACA The ACA added a number of classes of institutions, including affordable care organizations, freestanding cancer hospitals, clinical access hospitals, rural referral centers, and sole community hospitals. Many millions of uninsured individuals are to receive insurance. This would greatly increase the consumption of 340B drugs, even though one might argue that the original need for the 340B program was partially mitigated. MANUFACTURER PUSHBACK In early 2013, the Biotechnology Industry Organization (BIO) issued a white paper subtitled “A Review and Analysis of the 340B Program.” It was cosponsored by the Community Oncology Alliance (COA), the National Community Pharmacists Association (NCPA), National Patient Advocate Foundation (NPAF), the Pharmaceutical Care Management Association (PCMA), and the Pharmaceutical Research and Manufacturers of America (PhRMA). The report’s executive summary cited: Areas of most concern included the following: •Concerns that some uninsured, indigent patients may not be experiencing direct benefit from the program’s existence. •Anecdotal evidence that clinical decision-making may be skewed by efforts to take advantage of the 340B discount. •Growing evidence of displacement of non-340B providers who serve a key role in providing patient access to important health care services. (BIO, 2013, p. 1) The same executive summary cited the concerns expressed in the GAO report, as well as insufficient resources at HRSA to carry out its responsibilities under 340B and the ACA, the need for clearer guidance, and HRSA’s use of “subregulatory” procedures to clarify definitions and establish interpretive guidelines. The HRSA website contained the following observation: PROGRAM GUIDELINES HRSA chose to publish guidelines in the Federal Register rather than regulations to administer the Section 340B program. Guidelines are the quickest and most flexible way to convey to all concerned parties how HRSA interprets the Section 340B requirements. Guidelines are also used to disseminate procedures that are acceptable under the statute. To ensure that the guidelines were as appropriate and responsive as possible to the legitimate concerns of the covered entities and manufacturers, comments were solicited on all of the guidelines before HRSA published them in a final notice. The BIO white paper cited the changed guidance that allowed covered entities to use contract pharmacies as an example of HRSA expanding this program by administrative means. Subsequently, the number of 340B contract pharmacy arrangements climbed from about 3,000 in 2010 to more than 9,000 in 2012, with more than 12,000 projected for 2012. The white paper claimed these arrangements were forcing some community pharmacies out of business. SENATOR GRASSLEY’S INQUIRIES Senator Charles E. (Chuck) Grassley (R-Iowa) has often been critical of nonprofit hospitals, and his concern about their implementation of the 340B program is just one example. His office often follows up on public disclosures that provide an investigative opening and an opportunity to prod HRSA about its oversight of the program. The UAB Inquiry For example, as ranking member of the Senate Judiciary Committee, he sent a letter on May 19, 2012, to Dr. Carol Garrison, president of the University of Alabama (UAB) Hospital, stating that: The original intent of the program was to extend the Medicaid drug discount to the most vulnerable patients at PHS Clinics, those who are mostly, “medically uninsured, on marginal incomes, and have no other source to turn to for preventive and primary care services.” … On February 16, 2011, Donna Evans, R.Ph., Senior Pharmacist, with University of Alabama (UAB) Hospital gave a presentation at the 340B Annual Conference in San Diego, California. In this presentation, Ms. Evans stated that the purpose of the Purchasing Committee is, among other things, to “maximize savings opportunities.” Ms. Evan’s presentation goes on to state that UAB Hospital tracks the top drug expenses for “possible change in admission[s] process.” As an example of this change in admission process, Ms. Evans lists the drugs Melphalan and Busulfan and stated that the hospital “change[d] treatment protocol/location.” Furthermore, Ms. Evans’ presentation discussed the “discharge [of an IVIG patient] from [the] hospital to [a] Townhouse,” for the purpose of maximizing savings opportunities associated with the 340B drug discount provided in an outpatient setting. Ms. Evans’ presentation is deeply disconcerting (Grassley, 2012, pp.1-2). Senator Grassley asked the hospital to document the frequency and economics of such changes in admission status and 340B discounts in general, what the hospital did with the savings, and whether HRSA had ever audited it. The North Carolina Major Hospitals Inquiry In 2012, McClatchy newspapers in Charlotte and Raleigh, North Carolina, ran articles about major hospitals buying up oncology practices and substantially raising chemotherapy drug prices in these outpatient settings (Alexander & Garloch, 2012). In September 2012, Senator Grassley sent letters to three major hospitals cited in the articles, asking how much they earned by participating in the 340B Program, the breakdown of the 340B payer mix, and how they had reinvested those 340B dollars into serving the most vulnerable patients. Senator Grassley summarized their replies in a March 27, 2013, letter to Dr. Mary K. Wakefield, HRSA administrator: First, all three North Carolina hospitals provided a summary of revenue generated by participating in the 340B program from 2008. Below is a revenue summary … Carolinas Medical Center UNC Duke 2008: $12,970,012 2009: $33,087,329 2009: $88,953,570 2009: $16,697,500 2010: $38,451,076 2010: $109,700,400 2010: $16,910,620 2011: $52,580,763 2011: $131,759,091 2011: $21,065,620 2012: $65,391,050 2012: $135,539,459 These are not small amounts. … These numbers paint a very stark picture of how hospitals are reaping sizeable 340B discounts on drugs and then turning around and upselling them to fully insured patients covered by Medicare, Medicaid, or private health insurance in order to maximize their spread. (Grassley, 2013, pp. 1–2) All three hospitals were able to provide their 340B payer mix for the period 2008–2010. The data for 2010 taken from Senator Grassley’s letter is presented in the table below: images The Raleigh News & Observer of April 3, 2013, reported on Senator Grassley’s inquiry and stated that “Last year, Duke University Hospital purchased $65.8 million in drugs through the program and received $135.5 million in revenue. Duke says it saved $48.3 million buying the drugs through the 340B program. That means the hospital made a profit of $69.7 million, instead of $21.4 million if it had not participated in the program”(Alexander, Neff, & Garloch, 2013, p. A1). Sen. Grassley’s letter then goes on to ask a series of questions seemingly aimed at getting HRSA to collect this type of data routinely. Discussion Questions 1.What seems to be the true intent of the 340B drug discount program? How would you go about clarifying the legislative intent? 2.What conclusions do you draw from the data provided to Senator Grassley? 3.What data would you like to make the covered entities provide to HRSA on a routine basis? 4.Discuss the merits of using the “subregulatory” process versus the normal rule-making procedures. 5.As the ACA is implemented, what will be the impact of the 340B program on pharmaceutical and biotechnology firms? 6.What are the merits of using disproportionate share as a screen for whether acute care hospitals are covered entities? What about the average manufacturer’s selling price as a denominator in calculating the discount? What alternatives would you recommend? 7.What are the merits of Senator Grassley’s investigative methods, given that he holds formal hearings on health policy issues as well? 8.What events or policy shifts would support the contraction or expansion of the 340B program? 1Many systems for project planning and scheduling are available, including the Critical Path Method (CPM) and the Program Evaluation and Review Technique (PERT). These methods enable staff to build a feasible schedule and to track performance, updating that schedule as the effort moves along. Microsoft Project is one such program that is usually readily available. See discussions, stats, and author profiles for this publication at: United States National Healthcare Policies 2015: An Analysis with Implications for the Future of Medicine ArticleinCureus · January 2016 DOI: 10.7759/cureus.451 CITATIONS 2 READS 2,454 1 author: Harjus S Birk University of California, San Francisco 32 PUBLICATIONS940 CITATIONS SEE PROFILE All content following this page was uploaded by Harjus S Birk on 27 January 2016. The user has requested enhancement of the downloaded file. Received 10/31/2015 Review began11/04/2015 Review ended12/19/2015 Published 01/07/2016 © Copyright 2016 Birk. This is an open access article distributed under the terms of the Creative Commons Attribution License CC-BY 3.0., which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited. United States National Healthcare Policies 2015: An Analysis with Implications for the Future of Medicine Harjus S. Birk 1. Neurological Surgery, UCSF School of Medicine, Howard Hughes Medical Institute Research Fellow  Corresponding author: Harjus S. Birk, Disclosures can be found in Additional Information at the end of the article Abstract There is little doubt that the tenure of President Barack Obama and implementation of the Affordable Care Act has had a profound effect on the United States healthcare delivery system in terms of the organization, finances, and clinical aspects of medical practice. As we enter the 2016 presidential election, looming issues of health affairs include 1) Is affordability achievable and can it be achieved without sacrificing the physician-patient relationship? and 2) Does practice consolidation and control by insurance providers cast physicians in a role as technicians? In countries such as the United Kingdom, policies seeking to increase healthcare affordability without sacrificing the quality of care have been implemented, as manifested through not only socialized medicine but also a general goal of cost cutting without sacrificing patient care. In addition, although done more as a tactical move with little impact on the overall budget, the healthcare benefits of political leaders in the United Kingdom are being trimmed in order to increase citizen buy-in in the healthcare model. This article compares recent healthcare policy changes in the United States to those of some constitutional democracies. The attitudes of healthcare stakeholders, including patients, physicians, and political leaders, are also analyzed. It is argued that the evolution of health affairs internationally is driven largely by efficacious political and economic factors, and that it behooves United States healthcare policy makers to note the impact of these international changes and to integrate the necessary changes in order to enhance patient care. Categories: Public Health, Miscellaneous Keywords: healthcare policy, healthcare expenditures, Affordable Care Act , quality of care, affordability Introduction And Background Before comparing the healthcare policies of countries, such as the United Kingdom, to that of the United States, it is first necessary to analyze the current effects of the United States healthcare system on its medical professionals. Namely, physicians in solo practice as well as in groups have become employees of non-physician controlled healthcare delivery organizations, and this development has exerted impactful influence on all phases and sectors of medicine [1- 2]. One striking effect is evidenced by the selection of medical specialties by young physicians. Institutional and large group practices have become increasingly attractive to young physicians, especially those who have incurred significant debt in order to complete their medical education. As opposed to private practice, it eases many of the burdens of finance, regulations, and retirement benefits [3]. 1 Open Access Review ArticleDOI: 10.7759/cureus.451 How to cite this article Birk H S (January 07, 2016) United States National Healthcare Policies 2015: An Analysis with Implications for the Future of Medicine . Cureus 8(1): e451. DOI 10.7759/cureus.451 The control or outright ownership of hospitals and similar medical institutions is also a major development in the recent tenure of President Barack Obama. Previously, both not-for-profit and for-profit organizations operated hospitals in a cooperative manner in which the for-profit entities offered medical practices which were profitable and thus helped financially support the not-for-profit entities. Today, however, the number of not-for-profit institutions has rapidly diminished as corporate entities assume control to reap the clear financial benefits of for-profit organizations. In 2009, nearly 67% of all United States urban hospitals were nonprofit; interestingly, today this number has dwindled to less than 50% [4]. This shift has taken place as for-profit hospitals are believed to collect more revenue per each patient admission than do not-for-profit hospitals, although certain percentages have not been reported. A recently published study assessed the overall profitability of nonprofit and for-profit hospitals, taking into consideration different medical services that may be offered among each [5]. The results indicated that for-profit institutions were more likely to obtain higher profits from the same medical services as compared to nonprofit institutions. To ensure that hospital ownership status contributed to these results rather than geography, several sensitivity tests were performed that further confirmed the above findings. Ultimately, the absorption of medical practices and, on occasion, the practices of an entire community, has grown and has had a major impact on the lives of heretofore-independent physicians. Review In the setting of medical development, the power controlling the cost of healthcare is shared by insurance companies, hospitals, and pharmaceutical companies alike. The United States Department of Health and Human Services, as well as the Joint Commission on Accreditation of Hospital Organizations, are involved in overseeing these stakeholders. Many hospitals have answered in part to the rising financial burdens in the United States by hiring non-physician executives to serve as hospital administrators because they demand less salary than physicians [6-7]. A recent review article analyzed the role physician executives, as well as non-physician executives, play when operating as Chief Executive Officers of hospitals. It reported that hiring non-medical professionals to serve as executives is often preferred over hiring healthcare professionals with medical degrees because the former demand less salary [8]. It is unlikely that a shift in hospital power among non-physician executives will occur because the political power and sheer large numbers of these executives may create a barrier difficult for physicians to surpass. However, it is important to note that even though one might expect that takeover of management by non-physicians would result in lower costs because of greater efficiencies, this may not necessarily be the case because over time the executives may demand increased salaries [9-10]. On a national scale, there is a large absence of central standardized control of the fees charged by health care professionals in both United States hospitals and private practice settings. As a result, prices have steadily increased for diagnostic tests, medical appointments, and similar services among similarly geographic distributions [11-12]. It is important to note that some control mechanisms do exist to determine physician reimbursement as compared to what the physicians charge that patient. For instance, Medicare uses a system termed "relative value unit-based productivity" to decide how much it will reimburse physicians for services and procedures. For the purpose of this article, we focus on the prices charged by the healthcare provider because the actual cost to the provider and reimbursement obtained are challenging to procure. In 2012, the physician price for a private practice gynecologist to perform a laparoscopic hysterectomy in Sacramento was $47,500 as compared to $34,400 charged by a gynecologist in Orange County. Since these statistics were obtained from private practice, the difference in the laparoscopic hysterectomy may not seem out of the ordinary. However, this cost disparity becomes even more explicit when considering that, when comparing hospital prices, a patient 2016 Birk et al. Cureus 8(1): e451. DOI 10.7759/cureus.451 2 of 5 seeking a knee replacement operation at Sutter General Hospital was charged $86,002 in 2010 as compared to $126,292 for the same procedure at the UC Davis Medical Center only a few miles away [13]. Confounding variables that may in part explain price differences for medical services include geography and whether the hospital is a teaching or non-teaching institution because some areas with higher costs of living may be subject to similar medical cost adjustments. Nevertheless, when analyzing the prices charged for procedures by hospitals and private practices in similar cities in the same state, the difference in price becomes apparent. Although the actual service cost as well as reimbursement to the physician or hospital likely varies from the price charged for the service, it is evident that patient care has variable prices. There has been some effort by Congress to exert standardized controls aimed to ensure the cost of United States healthcare does not skyrocket and that the quality of medical care is not curtailed. The Affordable Care Act has a provision whereby hospitals are fined up to 3% of their Medicare payments if a certain quantity of patients return to the hospital within 30 days of being discharged, with the reasoning that these readmissions are indicative of poor care. In 2015 alone, 2,592 hospitals in the United States suffered from readmission penalties that totaled $420 million [14]. Although this provision may be reasonable in many cases, in others it may be unavoidable, such as in the case of a hypothetical homeless man with pneumonia who does not take his antibiotics upon discharge and therefore returns the emergency department within the 30 day period. Although provisions such as this are a step in the right direction, the ideal goal would be one that does not punish hospitals for unavoidable patient cases, such as the aforementioned. It has been argued that one step towards achieving this goal would be for members of Congress to refrain from obtaining very generous and unique healthcare plans [15]. For instance, members of Congress qualify for medical benefits that ordinary federal workers do not and are often able to receive medical services from the Office of the Attending Physician of the United States Capitol [16-17]. This makes it challenging for Congress to relate to and act upon the need for cost-control that most Americans seek when pursuing comprehensive and holistic medical care. In order to alleviate this issue, it may prove valuable to follow the precedent set by the United Kingdom of trimming the health benefits of its political leaders. Although this may have a relatively small effect on decreasing budget deficits, it may most importantly increase the faith of the people in the healthcare system and in the political leaders who are molding these systems. This may be a logical step towards bridging the gap between Congress and the American people as both groups will be operating under similar medical care plans. Given the needs of the American people, a greater effort must be made targeting a holistic and financially accessible national healthcare protection. It is necessary to note that the organizations comprising that industry cannot exist without an adequate source of funding. The cost of pharmaceutical products must in some fashion reflect the expenses incurred in research as well as promotion and sales. For instance, drug development in the United States in 2011 exceeded $1 billion and has been steadily rising each year since [18]. With increasing pressures to improve medical care through revolutionary advancements and therapeutic agents, the expenditures of the pharmaceutical companies are understandably high. The burden of cost becomes an issue when considering that local, state, and national regulations add to product cost for consumers. The medication component, essential as it is, exerts significant upward pressure on the cost of medical care for physicians and patients. In 2014, 52% of United States doctors proclaimed that their medical staff spends too much time communicating with insurance companies to approve lofty and complex medication requests [19]. In the future, it may prove invaluable to ascertain a similar statistic for the United Kingdom in order to compare efficiencies of the varying health care systems. In communities throughout the United States, whether urban or rural, hospitals are starting to buy physician practices. According to the American Hospital Association, between 2000 and 2010, there was a 32% increase in the number of previously private practice physicians who transitioned to become employees of local hospitals. Absorption of physician practices does 2016 Birk et al. Cureus 8(1): e451. DOI 10.7759/cureus.451 3 of 5 have advantages for physicians in minimizing financial responsibilities and the numerous bureaucratic measures that have become part of the practice of medicine, such as nuanced payment methodologies and administrative tensions [20-21]. An income guarantee within the hospital infrastructure, even though perhaps lower than the practicing physician has been accustomed to in private practice, together with diminished pressures of the ever increasing business aspects of medicine, make for a more appealing lifestyle as a hospitalist. Moreover, the growth of closed physician panels and groups makes it more challenging for the young physician to build a practice. In essence, the hospitals exert control over not only inpatient care but also over a significant portion of outpatient care. In that setting, the hospitals have also absorbed the physician-insurance link. The unfortunate result of this is that the interests of the physicians become secondary to the interchange and negotiations between insurance companies and the hospitals. It is likely that the country and its inhabitants will be better off economically when healthcare expenditures are controlled, whether through a socialized healthcare mechanism, as evidenced by the United Kingdom, or through simple cost-cutting. Although perhaps counterintuitive, neither studies nor associations reveal that by spending more on medical care, people will be healthier. In fact, data indicates that improved health results can be more readily observed in countries, such as France and Amsterdam, with a lower per capita outlay for healthcare than the United States [22]. Fifty-nine percent of physicians in the United States report that their patients struggle to pay for medical treatment and that this inability to adequately finance healthcare negatively impacts the patients. In stark comparison, only 4% of Norway physicians and 13% of United Kingdom physicians reported that affordability was a concern for their patient population [23]. It is important to note that controlling healthcare expenses in the United States will not automatically result in the benefits seen in the aforementioned European countries, but over time, a more holistic healthcare model that equalizes the power between political leaders, hospitals, and executives will inevitably lead to a more patient-focused healthcare system, which places patient safety at paramount importance. Conclusions With the upcoming 2016 Presidential Election, it is explicit that the next several years will foster significant changes in the health policy affairs of the United States The trend toward larger institutions controlled by business executives and geared towards generating financial gains will continue to grow. This may increase the control over the practice of medicine, which may not keep in alignment with the philosophy of physicians and other healthcare professionals. Fortunately, national legislation has made it possible to expand the availability of medical services across the country and across all layers of society. In due course, adjustments should be made in order to introduce financial adjustments that will shift funds from non-clinical to clinical areas of medicine, such that the quality of patient care is not sacrificed. Experience in other areas of the world, such as the United Kingdom, has revealed that medical care benefits are invaluable towards promoting and maintaining holistic and comprehensive healthcare. Additional Information Disclosures Conf licts of interest: The authors have declared that no conflicts of interest exist. References 1. Hall MA, Lord R: Obamacare: What the Affordable Care Act means for patients and physicians. 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DOI 10.7759/cureus.451 5 of 5 View publication statsView publication stats the primary care shortage on a shoestring: a successful track in an internal medicine residency United States National Healthcare Policies 2015: An Analysis with Implications for the Future of Medicine Abstract Introduction And Background Review Conclusions Additional Information Disclosures References

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