Leadership & Management, Health Care Leadership & Management in Health Care

President Clinton's Secretary of Health and Human Services, Donna Shalala, used to tell a story about her mother, who was 86 at the time but still a full-time attorney representing several clients who lived in nursing homes. She would tell Shalala, "Donna, I don't care whether they are good nursing homes or bad nursing homes, you have to watch them like a hawk" (Cited in White House, 1998, quoted by Hovey 2000, 43). Clinton's presidency was very aware of health care issues, even if it was unable to solve them. Shalala's remarks were delivered at a press conference regarding nursing home regulation; arguably, under the current administration, issues of health care for the aged have gotten more problematical rather than less.

Background

Despite relatively little action regarding health care for the aged by the federal government, there is little doubt that the news media has crated heightened awareness of the "graying" of American, and "has focused attention on the distinctive needs of individuals who are disabled, chronically ill, or functionally impaired. By no means are all of these people elderly" (Kahl & Clark 1986, 17+). Kahl and Clark noted that the aging of the population was expected to put pressure on the demands for hospital care, and that hospital use was significantly greater for the aged than for those under age 65 and that, in fact, the aged are hospitalized more often and stay in the hospital longer than those who are under 65. Indeed, the rapidly growing population that was age 85 and above used twice as many hospital days as those between 65 and 74. (Kahl & Clark 1986, 17+).

Kahl and Clark wrote almost two decades ago. Their predictions, which were made for only the ten years after their research, have held true even into this millennium. Without serious restructuring, legislators worry, the U.S. health care system -- particularly the need for long-term care, will "bust the bank." In 2000, it was noted that 35% of Medicaid's $160 billion budget went to long-term care. "That percentage is almost certain to increase as the roughly 77 million baby boomers age and medical science keeps people with chronic diseases and disabilities alive longer" (Fox-Grage & Shaw 2000, 30). Worse yet, predict Fox-Grage and Shaw, more than fifty percent of the U.S. population will need some sort of long-term care; that care costs about $51,000 a year in 2000 terms (2000, 30). Adding to the future woes caused by the aging baby boom, even current residents of long-term care facilities cannot be expected to vacate and save some funding for the future:

Just under half of the 13.5 million Americans who need long-term care are under the age of 65 and are expected to live longer than their counterparts did a generation ago. People 85 and older -- half of whom need help with basic daily living tasks like dressing and bathing -- now number about 4 million and represent the fastest growing segment of the population. By 2050, their numbers are expected to swell to perhaps 27 million. (Fox-Grage & Shaw 2000, 30).

It is possible that the number of those who need help with care is higher than Fox-Grage and Shaw note; in 1986, Kahl and Clark gave as 4.1 million the number of those who would need nursing home care by 1996. (1986, 17+)

Nor is aging the end of the problem. There is also the problem of multiple health problems in the very aged, along with the technological advances that make performing multiple and complicated surgeries on the aged less risky; however, that may also lead to need for long-term care. This trend, according to Kahl and Clark, was likely to wipe out any gains that were realized as hospital stays decreased in average length (1986, 17+).

In 1986, health sector output had outstripped economic growth in general, contributing a 5.6% annual gain in real output, compared to a 3.3% increase in real GNP (now called GDP) between 1960 and 1984 (Kahl & Clark 1986, 17+). Apparently, however, the growth in the aged population, along with the trend toward performing more procedures noted above, means that as of 2000, the cost of health care for the aged posed a larger dilemma than Social Security and Medicare. (Fox-Grage & Shaw 2000, 30)

Any discussion...

Here are the facts contributing to the need for leadership in that sector:
Nearly 13.5 million people needed long-term care in 1996. That number is expected to rise dramatically by 2020.

The Census Bureau estimates that the elderly population will more than double by 2050 to 80 million as the baby boomer generation grows older. But not just the elderly need long-term care services; roughly 6 million or 44% of people needing long-term care are under the age of 65.

Medicaid spends roughly $60 billion on long-term care, and the Congressional Budget Office expects it to rise to more than $75 billion by 2020.

Private long-term care insurance expenditures are expected to rise to little more than half of Medicaid expenditures -- $36.2 billion.

National spending for long-term care in 1997 was $115 billion; nursing home care accounted for 72% of the bill.

About 35% of total Medicaid spending paid for long-term care services.

Institutional care-nursing homes and intermediate care facilities for the mentally retarded -- accounted for 75% of total Medicaid long-term care spending.

Sources: The Census Bureau, the Congressional Budget Office, the Medstat Group, Health Care Financing Administration) (Fox-Grage & Shaw 2000 April 30

It is easy to see why Froeschle & Donahue concluded in 1998 that "Health care today is between paradigm. The stated of fluctuation places extraordinary challenges on leaders of...health care facilities. New leadership skills are needed to overcome this dilemma (1998, 60)

Study question

In light of these pressures on health care for the aged, it is reasonable to ask what skills a manager in the health care industry, particularly the sector serving the aged, needs to display.

What is the environment, and what is its effect on management?

Before determining what skills a manager in health care will need for the near-term and until 2020, it will help to have a snapshot of the evolving health care delivery setting.

In 1986, health care was still primarily delivered in doctor's office, hospitals and nursing homes, although even then, the structure of the industry was changing to include health maintenance organizations (HMOs), in addition to the burgeoning urgent care centers (the fabled "doc in a box"), birthing centers and hospices (Kahl & Clark 1986, 17+).

In addition, home health care was gaining in popularity by the end of the 1990s, if a simple visual survey of caregiver cars on the road and ads in the Yellow Pages was any indication.

Paying for those services was also undergoing changes. In the mid-1960s, the health care consumer paid for about half of all health care spending, with the other half paid for about equally by insurance and public programs. By 1984, the consumer paid only about 28%, with 40% of the tab picked up by government programs, and 31% by insurance. (It should be noted that insurance is not divorced from consumer spending; it is the result of consumer spending, either directly or via that portion of an employer's budget that pays for it as part of an employee's 'benefits,' that is, as part of his or her wages, although those 'wages' are never directly seen by the employee and are tax-deductible to the employer; this means it costs the employer a great deal less to cover the employee with health insurance than to give that money directly to the employee.)

All this has had an effect on health care delivery that becomes part of the consideration of a manger's role and responsibilities. The transfer of responsibility from the consumer to "third parties" such as insurance carriers is considered to have made patients and providers insensitive to the cost of treatment and care. (Kahl & Clark 1986, 17+). Although the relative amounts are probably different by now -- with greater percentages spent on nursing home care, as of 1986, health insurance and public programs paid 90% of hospital expenditures, 72% of physician services, and 50% of nursing home care (Kahl & Clark 1986, 17+). Arguably, as the percentages paid by third parties rose above the 1986 levels, even greater insensitivity to costs was evident on the part of consumers. In addition, "New programs, new technologies, and new types of personnel have been added because of perceived clinical benefits, with little concern for the cost implications" (Kahl & Clark 1986, 17+).

There is widespread confusion about who pays for all this care for the aged. Medicare covers acute care, such as physician and hospital services. However, private long-term insurance must cover logn0-term care; if an individual lacks this coverage, then Medicaid pays for nursing home placement. States, however, control Medicaid payments, not the federal government alone. Thus, several states have begun implementing alternative services such as home-health care, to contain Medicaid costs. This…