What's New with HCFO - March 16, 2006 (Print All Articles)

Challenges of the Public Health System

After decades of inadequate funding, there is broad consensus that today’s public health system is not equipped to meet modern-day challenges. In the aftermath of 9-11 and Katrina, and as we continue to watch the spread of avian flu and worry about the potential for bioterrorism, it is clear that this country’s public health system will take on increasing importance and increasing burden.  Yet the core public health functions such as tuberculosis control and childhood immunizations remain critical.

Research which provides a greater understanding of the organizational structures, the economic needs, and evaluation tools for the public health system is needed to inform policymakers and to assist them in creating an efficient structure with an optimal allocation of resources. The Robert Wood Johnson Foundation’s Health Care Financing and Organization (HCFO) Program has recently awarded several grants studying the challenges of the public health system.

Organization of Public Health Systems

While at is essential to coordinate federal, state and local efforts in the development of an effective public health system, the most immediate action happens on the ground - - at the front lines - - in the community.  Accordingly, much of the critical framework for the public health system will grow out of local and regional innovations.1 Secretary of Health and Human Services Michael Leavitt acknowledged this fact in a recent comment on the development of new information systems in New Orleans to monitor health threats and transmit information among providers.  Leavitt explained that it was important to compare “the principles for such a system we have devised up here with the principles that they have developed for themselves.  I have a pretty clear picture in my mind, but it has to evolve from them.”2

HCFO grantee Susan Zahner, Ph.D. from the University of Wisconsin is examining the factors that influence the performance of small local public health agencies in Wisconsin.  These agencies often support rural, sparsely populated areas and often do not have the infrastructure and resources to meet high quality performance standards. A better understanding of the workings of local public health agencies will be useful to state and local policymakers as they allocate resources and consider the types of technical assistance needed to build capacity in these agencies.

Public health crises, including natural disasters and disease outbreaks, often expand beyond geopolitical borders.  Accordingly, the development of regional public health structures which cross state lines may generate the greatest response capacity.  HCFO grantee Michael Stoto, Ph.D. from RAND is conducting a series of case studies examining the effect of regionalization of public health structures. 

Public Health Systems Funding

Funding for public health preparedness is insufficient.3  As new public health threats appear, the need for greater financial investment to stem these threats will increase.  Moreover, a strategic allocation of limited resources will be necessary to ensure that monies are put to the best use.

An important corollary to the shift in funds toward high priority public health needs is the potential to undermine other local programs.  Policymakers must keep in mind that without an influx of new dollars, shifting funds to support public health programs may have unintended consequences, including cuts in other essential programs.4

HCFO grantee Glenn Mays, Ph.D. from the University of Arkansas for Medical Sciences is exploring local public health spending, with a focus on identifying the factors that precipitate changes in spending and the consequences of such change.  Findings from the study will assist policymakers and public health administrators in a better understanding of the adequacy and equity of current investment in public health services.

As monies are directed toward disaster relief and legislation is passed to fund various public health programs, a sentiment often expressed is, “are these dollars making a difference?” Fair question, but not always easy to provide an answer.  In the public health environment, accountability is an important component to ensure that funding is making a difference and that the infrastructures being created are working.5  Measuring the value of public health services is necessary to determine where resources will have the most impact and whether adjustments are needed.  HCFO grantee Peter Jacobson, J.D. from the University of Michigan is exploring how best to incorporate value measures into the examination of public health systems, and how measuring value will affect important dimensions of public health systems, such as accountability.  His goal is to inform policymakers about the importance of demonstrating measurable contributions in the public health system and to allocate resources to those public health functions which are likely to achieve maximum value.

In sum, HCFO grantees are working to better inform the organizational, financial and strategic planning associated with the current public health system. While the findings from these projects will not resolve the universe of public health challenges, they are likely to assist policymakers in making important inroads to strengthen the system.

HCFO Funded Research:

Title:  Regionalization in Local Public Health Systems: Variation in Rationale, Implementation, and Impact of Public Health Preparedness
Institution: RAND
Time: February 2006 – January 2007
Principal Investigator: Michael Stoto, Ph.D.

What is the effect of regionalization of public health structures? The researchers will use four comparative case studies to 1) document the variation in the rationale for creating regional public health structures, 2) understand how these structures have been organized, implemented, and governed, and 3) assess the current and likely impact of regional structures on public health preparedness and public health systems more generally. The case studies will address coordination, standardization, and developing regional capacity. The objective of the study is to provide a better understanding of the regionalization of pubic health systems in order to inform the many state and local health departments currently developing regional structures.

http://www.hcfo.net/grantees/grant.asp?GrantNo=56470&searching=Yes

Title: Structural Capacities, Processes and Performance of Essential Public Health Services by Small Local Public Health Systems
Institution: University of Wisconsin
Time: February 2006 – January 2008
Principal Investigator: Susan Zahner, Ph.D.

What factors influence the performance of small local public health agencies (LPHA) in Wisconsin? The researchers will identify key factors by determining the contributions of specific structural capacities and processes in providing three public health services: 1) monitoring health status, 2) mobilizing community partnerships, and 3) developing policies and plans. The objective of the study is to gain insight into specific factors that can improve the quality of small local public health systems in order to assist policymakers and administrators with targeting resources and technical assistance.

http://www.hcfo.net/grantees/grant.asp?GrantNo=56471&searching=Yes

Title: Causes and Consequences of Change in Local Public Health Spending
Institution: University of Arkansas for Medical Sciences
Time: March 2006 – February 2007
Principal Investigator: Glenn Mays, Ph.D.

What are the causes and consequences of changes in local public health spending?  The researchers will study cross-sectional variation and longitudinal change in public health spending levels and funding sources, including an examination of disparities in spending levels for different types of communities. The researchers will also investigate the extent to which changes in spending levels are associated with changes in local population health status. The objective of the study is to provide insight into the effects of changes in local public health spending in order to assist policymakers craft desirable strategies to correct existing gaps and disparities in resources for local public health services.

http://www.hcfo.net/grantees/grant.asp?GrantNo=56469&searching=Yes

Title: Measuring the Value of Public Health Systems
Institution: The University of Michigan
Time: March 2006 – February 2007
Principal Investigator: Peter Jacobson, J. D.

How can the value of governmental public health systems (GPHSs) be defined and measured? The GPHS is a state and local governmental apparatus designed to assess and respond to threats to the public’s health through population-based and individual health services. The researchers will examine how other public or quasi-public entities define and measure value; the methodologies used to measure value; the criteria for determining and measuring value; and how measuring the value of these services will affect other important dimensions of public health systems, such as accountability. The objective of this study is to develop ways for policymakers to incorporate value measures for governmental public health system activities into resource allocation decisions. 

http://www.hcfo.net/grantees/grant.asp?GrantNo=56782&searching=Yes

1 See, Profiles in Public Health, The Robert Wood Johnson Foundation.  http://www.rwjf.org/newsroom/featureDetail.jsp?featureID=1028&type=3
2 Broder, David S., “Hope for Health Care? HHS’s Leavitt Sees an Opportunity in New Orleans,” The Washington Post, February 23, 2006.
3 Issue Report, “Ready or Not? Protecting the Public’s Health from Diseases, Disasters, and Bioterrorism,” Executive Summary, Trust for America’s Health (supported in part with a grant from The Robert Wood Johnson Foundation).
4 Lurie, N, Wasserman J, Stoto, M, et al., “Local Variation in Public Health Preparedness: Lessons from California,” Health Affairs Web Exclusive, June 2, 2004.
5 Issue Report, “Ready or Not? Protecting the Public’s Health from Diseases, Disasters, and Bioterrorism,” Executive Summary, Trust for America’s Health (supported in part with a grant from The Robert Wood Johnson Foundation).

This Month in the News

Mila Kofman, J.D., an associate research professor at Georgetown University, was quoted in an article in the San Diego Union Tribune on February 12, 2006 that examined the use of health savings accounts to contain medical costs. The article stated that “products like health savings accounts shift much of the costs and decision-making responsibility for health care onto consumers.  It’s a radical departure from the way most people use health insurance now.” Kofman added that “there’s a lot of incentive to leave the money and not use it for medical expenses.” 

Jack Hoadley, Ph.D., a health policy researcher at Georgetown University, was quoted in the Pittsburgh Post-Gazette on February 21, 2006 discussing problems that low-income seniors face under Medicare Part D. The article stated, “for years, thousands of patients with limited incomes have received free or reduced-cost drugs through assistance programs operated by drug companies.” Hoadley commented, “each [beneficiary] is a little different, but they all share this ‘I had this nice, stable situation’ aspect, where people knew what they had, even if it was somewhat spotty help through pharmaceutical assistance programs…. Now they have to disrupt that and at least make a decision, or in many cases a shift. That’s hard for people.”

Meredith Rosenthal, Ph.D., an assistant professor at the Harvard School of Public Health, was quoted in the Denver Post on February 26, 2006. The article explored the millions of dollars that go into high-tech medical equipment and facilities in the Denver area. The article noted that “amid a care crisis for the uninsured, hospital corporations sink millions into lucrative areas; high-tech testing, cardiac care and luxe new suburban facilities.” Rosenthal added, “sometimes these technologies can be lifesaving… but the fact of the medical arms race is that if you buy an MRI, it’s important to use it.”

Steven Parente, Ph.D., a professor at the University of Minnesota, was quoted in an editorial in the Star Tribune on March 5, 2006 that focused on President Bush’s health care agenda for the coming year. The article stated “The consumer-directed concept has several threads and a complicated history, but it got a huge boost in 2003, when Congress created a new form of tax-sheltered Health Savings Accounts.” Parente added that “the theory is popular with employers because it uses market forces to show employees the true cost of medical care.” 

Jack Hadley, Ph.D., a researcher with The Urban Institute, was quoted in an article in The Detroit News on March 7, 2006 that discussed the high price of emergency room use by low-income, uninsured patients. The article commented that “unpaid bills, or uncompensated care, reported by the region’s health systems increased by about $163 million between 2004 and 2005, with the problem reaching every hospital from Detroit to the Oakland County suburbs. Hospitals must cover the shortfalls by cutting costs, increasing fees and drawing more cash-paying patients.” Hadley noted, “it is common for hospitals to limit ER capacity or divert ambulances to other hospitals as a way to limit the care for patients who can’t pay, thus keeping down the cost of the uninsured.” 

Grantee Spotlight - Glenn Melnick, Ph.D.

Grantee Spotlight –Glenn Melnick, Ph.D.

Glenn Melnick, Ph.D., is the director of the Center for Health Policy and Management at the University of Southern California, School of Policy, Planning, and Development where he holds the Blue Cross of California Chair in Health Care Finance. A senior economist and resident consultant with RAND, Dr. Melnick has been an expert witness for the Federal Trade Commission and recently testified before the House Ways and Committee regarding hospitals' pricing to the uninsured.

His research specialties include healthcare competition and managed care. Melnick has extensive experience with foreign healthcare markets and provides technical assistance on issues of health financing and health system organization to other countries. Currently, he focuses on how markets work in health care and the role of competition in improving health system efficiency.

Melnick received his B.A. in Economics from the University of Massachusetts, and an M.H.S.A in Health Services Administration, an M.A.E in Applied Economics, and a Ph.D. in Urban and Regional Planning and Health Economics from the University of Michigan. Under the HCFO initiative, he has conducted work on a variety of projects.

Most recently, Melnick led a team that completed a study on the effects of Medicare managed care on access and quality for the general population of managed care beneficiaries and vulnerable populations. The study found that annual disenrollment rates from Medicare risk HMOs to Fee-For-Service (FFS) in California are higher among vulnerable beneficiaries than among other Medicare beneficiaries, with the highest rates among dual-eligibles. Dual-eligibles in Medicare risk HMOs had lower admission rates, shorter lengths of stay, and fewer inpatient hospital days than dual-eligibles in Medicare FFS. Additionally, researchers found that inpatient use by those who switch to FFS is higher on average than for continuously-enrolled HMO and FFS beneficiaries in California. A quarterly analysis of the year before and after disenrollment suggests that admissions began rising prior to disenrollment. Although Melnick’s most recent study of the effect of Medicare HMOs on hospitalization for ambulatory care sensitive conditions (ACSCs; also known as preventable hospitalizations) found that, controlling for selection, Medicare HMO enrollees have both lower ACSC hospitalization rates and fewer total inpatient days than Medicare FFS beneficiaries. This is in contrast to an analysis of non-ACSCs which found no impact of Medicare HMOs on the hospitalization rate, with fewer total inpatient days solely attributable to shorter lengths of stay in HMOs. 

Melnick believes that “this collection of studies has important implications for Medicare policy today.” The proposed lock-in policy that will restrict how often and when beneficiaries can enroll and disenroll from HMOs may have a negative impact on access and quality of care for a subset of Medicare beneficiaries. A better understanding of why beneficiaries leave HMOs as well as how HMOs manage the care and benefit coordination (which will include prescription drugs) of dual-eligibles is needed.  In contrast, when hospitalizations for ACSCs are analyzed, HMOs are able to lower admission rates for these conditions. This finding lends support for the theory that incentives in HMOs to promote effective care in the outpatient setting may benefit patients with ACSCs by reducing their hospitalizations. Finally, a major advantage to policy makers and managers is the fact that ACSC rates and total inpatient days can be computed base on readily available administrative data, making their use as indicators of access to care feasible.

Melnick is the recipient of two new HCFO grants. One will explore how health plan concentration affects hospital performance and the other will look at the relationship between hospital pricing and the uninsured. In the first, “The Effects of Health Plan Concentration on Hospital Pricing Costs, Capacity, Charity Care, and Outcomes” the objective is to discern whether health plan consolidation is welfare decreasing or welfare increasing. Specifically, this project will investigate whether increases in health plan concentration affect hospital price growth; reduce capacity, hospital staffing, and charity care; and affect patient outcomes. The researchers will investigate whether these effects differ depending on the level of managed care penetration and market structure stating, “We are very excited to begin this project since it has important antitrust policy implications and is in an area highlighted in a recent RWJ Synthesis Project Report (February 2006) where we currently know very little,”

The second new grant for research on hospital pricing and the uninsured will investigate whether hospital prices to the uninsured systematically differ from prices to the insured by examining the trends in charges (list prices) and net revenues (net prices). If price differences are found, the study will establish whether these differences are related to the type and financial status of the hospital and assess how important these higher prices are to its overall profitability.

For more information on Glenn Melnick, Ph.D., and his other HCFO funded work,  please visit the HCFO Grants Awarded page. For a list of selected publications, see the School of Policy, Planning and Development at the University of Southern California.

Four HCFO Grants Awarded

HCFO funded four new projects that began work on March 1, 2006. For more information on these grants, please visit the HCFO Grants Awarded page. 

Spotlight on Grantee Publications

Spotlight on Grantee Publications

Gloria J. Bazzoli, Ph.D., a professor in the Department of Health Administration at Virginia Commonwealth University, is a co-author of an article released in the Winter 2004/2005 issue of Inquiry, titled “The Balanced Budget Act of 1997 and U.S. Hospital Operations.” The article details HCFO sponsored research examining how changes to hospital payments made in the BBA affected hospital operations and comparing these effects to those that occurred with implementation of the Medicare prospective payment system in the early 1980s. 

Daniel Polsky, Ph.D., a research associate professor in the Division of Internal Medicine at the University of Pennsylvania, is a co-author of an article released in the October 2005 Part I issue of HSR titled “Employer Health Insurance Offerings and Employer Enrollment Decisions.” The article details HCFO sponsored research on how the characteristics of the health benefits offered by employers affect worker insurance coverage decisions.

Laurence Baker, Ph.D., a professor at the Department of Health Research and Policy, at Stanford University, is the co-author of an article featured in the October 2005 Part I issue of HSR titled “Medicaid Managed Care and Health Care for Children.” The article details HCFO sponsored research on the relationship between Medicaid managed care enrollment and health care for children. 

Kevin G.M. Volpp, M.D., Ph.D., a professor at University of Pennsylvania School of Medicine and The Wharton School, is a co-author of an article published in the August 2005 issue of HSR titled “The Effects of Price Competition and Reduced Subsidies for Uncompensated Care on Hospital Mortality.” The article details HCFO sponsored reserach into the impact on hospital mortality rates in New Jersey after the implementation of a law that changed hospital payment from a regulated system based on hospital cost to a price competition model that reduced subsidies for uncompensated care. The article also looks at whether changes in mortality rates were affected by hospital market conditions. 

Current HCFO grantee publications and recent grant findings will be regularly featured in the results section of the HCFO Web site. 

Research Brief - Regional Competition under the MMA - The Role of the PPO

Research Brief - Regional Competition under the MMA - The Role of the PPO

HCFO grantees Steven Pizer, Roger Feldman, and Austin Frakt are currently examining the market entry and exit behavior of health plans in the Medicare Modernization Act environment. Read a summary of research findings at the University of Minnesota, School of Public Health. 

The Robert Wood Johnson Foundation’s Synthesis Project

The Robert Wood Johnson Foundation's Synthesis Project

The Synthesis Project is an initiative of The Robert Wood Johnson Foundation to produce concise and thought-provoking briefs and reports that translate research findings on perennial health policy questions. Issues including how hospital consolidation has affected price, quality, and medical malpractice insurance will be featured. For reports and other information, visit http://www.rwjf.org/publications/synthesis/reports_and_briefs/index.html.