Incomplete vertical integration in the health care industry: pseudomarkets and pseudopolicies

Most economic relationships are either arm's-length exchange transactions, each party seeking his or her own interest, or command structures, such as a firm or public agency, integrating joint efforts toward a common goal. The health care industry, however, displays a pattern of incomplete vertical integration--relationships which are neither truly arm's-length nor completely hierarchical. The doctor-patient relationship is archetypical. Physicians appear to sell services in private markets; yet they reach through the exchange process to direct the consumer-patient's utilization decisions, implicity undertaking to act in the patient's interest, and thus integrate forward. But they also integrate backward to control the public regulatory process--self-government--and some forms of insurance. The health care systems of different countries--Canada, the United Kingdom, and the United States--can be interpreted as different patterns of incomplete integration among five basic classes of transactors: consumer-patients, first-line providers, second-line providers, insurers, and governments. Each system of linkage has characteristic strengths and weaknesses. Nowhere, however, do we find a predominance of arm's-length market relationships. Where they exist, markets in health care are usually pseudomarkets dominated by one side of the transaction. The rhetoric of market relationships serves principally to obscure political struggles over shifting patterns of integration.     

A growth industry. Graduate programs in health care are expanding rapidly

The debate of over health care reform is now front and center on the national stage. So this year, U.S. News has added four surveys of educational programs in health professions--health services administration, pharmacy, nursing and dentistry--to its study of America's Best Graduate Schools (tables, Page 79). Following, a brief report on enrollment trends in each area.     

Reform: health care

The Italian National Health Service was established in 1978 as three-tier system, involving State, Regions, USLs (Unità sanitarie locali, Local Health Care Units). The division between the responsibility of determining the general features of health care policy and financing it, on one side (the State), and that of managing services, on the order side (Regions and USLs), was bound to lead to increasing levels of expenditure and large financial deficits. An important reform has been carried out over the last five years, aiming toward a more decentralized system, which, although still public, were based on competition among suppliers and free choice for consumers. We argue that although the reform seems to have been successful in containing public expenditure, it has left some important issues still unresolved: the relationship between patients' freedom of choice and competition among providers, and the definition of a model of rationing the bundle of health services financed by the public sector.     

Action research in mental health: acute care teams

Action research applies knowledge and research findings to practical problems in order to strengthen the capability of the work unit, to contribute to the personal growth and satisfaction of organization members, and to improve theory. An action research project studying acute care teams at a state residential psychiatric facility found that foreign-born physicians chair high-performing teams. This unexpected result strengthens theories of diversity, status inconsistency, and project team effectiveness.     

Developments in health care finance

Costs, quality, and access are the central themes in health care policy in the United States. In the 1980s the predominate issue is becoming access, and the likelihood for universal health coverage, or a national health insurance program, is growing. This paper explores how the America health care system got to this point and examines the present conditions, the trends, and the consequences of those trends.     

Multilateral health care negotiations: the shadow at the bargaining table

Third-party payers and state regulatory agencies play a major role in health care negotiations. Third-party payer impact arises because of the significant amount of revenue provided to health institutions by these revenue sources. This article reviews the process by which third-party payers and state regulatory agencies affect health care negotiations and the outcomes experienced under these arrangements. The author describes the multilaterial bargaining structure of health care negotiations and illustrates this relationship through recent hospital bargaining in New York City.     

The health care state in the information age

The computerization of the medical record has important implications for the governance of health care, and the importance of health care means that changes wrought there are indicative of changes in government as a whole. This paper draws on work in public policy, medical sociology and studies of science and technology, as well as on cross–national empirical research in Britain and France. It describes the recent development of information policy in health care as an exercise in state–building, realized specifically in the governance of the health professions. The paper concludes with a discussion of what is both new and not so new in the form and extent of state power which emerges.     

Financing the health care of the aged.

The Medicare and Medicaid programs, which were enacted through the 1965 amendments to the Social Security Act, placed the federal government in the central role of assuring access of the aged and the poor to needed medical care. In this article the trends in the sources of financing medical care services for the aged are examined. The distinction in terms of insurance coverage between acute care services and long-term care services is highlighted. The effect of the programs in terms of reducing the aged's direct financial cost of medical care, increasing their access to medical services, and improving their health status is explored. The unanticipated increase in the cost of these programs has led to a change in emphasis in public policy, from assuring access to mainstream medical care to containing the cost of providing care. The direction of new federal policies is analyzed, and it is concluded that no longer will it follow the private sector's specifications of the conditions and arrangements under which health services are provided to program beneficiaries.     

Competition and health care policy: experience and expectations

Since 1970 federal policymakers have tried to strengthen competition and incentive-based market forces as alternatives to regulation in containing health costs. The effort to stimulate the growth of health maintenance organizations (HMOs) throughout the country has had limited results, and federal plans to promote competition by enacting changes in the health insurance market have so far come to little. Coalitions in some localities have shown growing interest in flexible HMO variants, however, and the intellectual force of the HMO critique of mainstream practices remains strong. Moreover, the federal government has shown new interest in prospective reimbursement of hospitals--a proposal that draws from both HMOs--competition--and hospital rate-setting programs--regulation--the element of prospectivity.     

Estimating the health impact of industry infant food marketing practices in the Philippines

The decline in the prevalence and duration of breast‐feeding in less developed countries and the accompanying increase in bottle feeding is a concern. Little research has been done tracing the links from infant food marketing to infant and child health outcomes. In this study, Philippine mothers’ feeding decisions and infantile diarrhoeal morbidity rates are modelled and jointly estimated using semiparametric estimation methods. The data clearly support the hypothesis that infant feeding practices are important determinants of diarrhoeal morbidity and that breast‐feeding reduces the incidence of diarrhoea. Our results also show that marketing activities have affected infant feeding choices.     

Patterns and issues in health care collective bargaining

Unionization of health care facilities has grown significantly over the last twenty years. More than 20 percent of American hospitals have one or more union contracts and an equal percentage of the industry's labor force is represented for collective bargaining purposes. Union membership is concentrated in the Northeast, Upper Midwest and Pacific Coast and is to be found particularly among large metropolitan hospitals. Although many different unions are actively organizing in the health care industry four labor organizations predominate: American Federation of State, County, Municipal Workers; Service Employees International Union; National Union of Hospital and Health Care Workers - District 1199; and the American Nurses Association.

One of the obstacles to union growth for many years was the absence of Federal legal regulation of labor relations. In 1974 Congress amended the so-called Taft Hartley Act to cover private nonprofit hospitals, the largest component of the industry. Since 1974 the application of Federal labor law has resolved old problems that arose from the lack of a basis to handle recognition disputes but at the same time created new issues. Among these issues are such legal questions as the legitimacy of the ANA to act as a labor organization, the proper bargaining classification for registered nurses, and the proper role in labor relations for hired consultants.

The growth of unions in health care raised concern that collective bargaining would impose onerous new burdens on an industry already hard pressed financially. Research indicates, however, that the impact on hospital costs have not been great -- perhaps on the order of an increase of 10 percent over what would be the case in the absence of unions. The greatest effects seem to be in the area of fringe benefits, working conditions, and the provision for grievance machinery.

Special problems have arisen in conjunction with the unionization of registered nurses. This particular category of health care workers occupies a strategic position in the hospital's work force. After a slow start nurse bargaining activity has come rapidly particularly as nonnursing unions such as 1199, SEIU, and the American Federation of Teachers have forced the ANA to respond to their efforts to make inroads among nurses.

Union growth in the industry seems to have stabilized for the time being without the prospect for much change in the remaining years of the decade. Incidence of conflict has been relatively low compared to other industries and this also shows little likelihood of change. While some visible signs of conflict over representation rights still remain collective bargaining is moving rapidly into an era of mutual accommodation.     

Voice and choice in health care in England: understanding citizen responses to dissatisfaction

Using data from a five-year online survey the paper examines the effects of relative satisfaction with health services on individuals' voice-and-choice activity in the English public health care system. Voice is considered in three parts – individual voice (complaints), collective voice voting and participation (collective action). Exercising choice is seen in terms of complete exit (not using health care), internal exit (choosing another public service provider) and private exit (using private health care). The interaction of satisfaction and forms of voice and choice are analysed over time. Both voice and choice are correlated with dissatisfaction with those who are unhappy with the NHS more likely to privately voice and to plan to take up private health care. Those unable to choose private provision are likely to use private voice. These factors are not affected by items associated with social capital – indeed, being more trusting leads to lower voice activity.