Compare And Contrast The Main Competitive Forces In The State Of North Dakota
Analyze the current health care delivery structure in your state. Compare and contrast the major determinants of healthcare market power.
Like all other States, the State of North Dakota health care delivery system is concerned about cost, accessibility and quality of health care services at a reasonable cost. North Dakota has a population of approximately 672 591 people, with most of the population is white (92%), with a small minority of Native Americans (5%) representing four tribal nations. In addition, North Dakota ranks in the top quartile of states on The Commonwealth Fund’s State Scorecard on Health System Performance, which ranks states according to their performance across 32 key indicators of access, quality, utilization, equity, …show more content…
and health outcomes. The latest Dartmouth Atlas of Health Care finds that North Dakota is one of the most efficient states in treating chronically ill Medicare patients in the last two years of life, with costs more than 25 percent below the national average. The Commonwealth Fund’s Commission on a High Performance Health System made a site visit to North Dakota in July 2007 to learn more about the state’s achievements, focusing on three key areas: 1) supports for primary care and the concept of a medical home (discussed below), 2) organization of care through networks of coordination and cooperation; and 3) the innovative use of technology to meet patient needs and hold down costs. This cooperative ethos is driven by resource scarcity and fostered by a rural community culture that enhances a sense of mutual accountability among health professionals and their patients. North Dakota faces challenges common to other rural areas of the country that are relatively disadvantaged in attracting health care professionals and in deploying resources to serve small, geographically dispersed communities. Despite these challenges, the state’s health care system appears to be performing better than many others in providing its citizens with accessible, relatively high-quality, and efficient health care services. Health care providers, payers, and policymakers in rural North Dakota have learned that only through cooperative, interdependent relationships and a willingness to innovate in both the organization and regulation of services can they achieve the reach, care coordination, and economies of scale that are necessary for delivery of quality and efficient care in rural settings. These innovations provide insights and lessons that may be transferable to other rural areas of the country and to urban areas as well.
To help overcome these challenges, health care providers in rural North Dakota have established various cooperative arrangements and networks to share resources and expertise. For example, six integrated delivery systems provide most of the health care in North Dakota through regional clinic networks and small rural hospitals linked to urban hospitals. Virtual networks built on telemedicine and telepharmacy also promote integration, extend the rural workforce, and enhance communication by allowing physically distant providers and facilities to transmit and receive critical patient data instantaneously.
Many small North Dakota communities rely primarily on small Critical Access Hospitals (CAH) to meet their health care needs. Of the 45 North Dakota hospitals, 31 are CAHs. These small hospitals act as a “health care central,” providing the gamut of care in their communities: pediatric, emergency, inpatient, skilled nursing, and home health services—all in a single physical location. By law, CAHs must be linked to tertiary care hospitals for referrals. Additionally, about 40 percent of the CAHs in North Dakota are part of formal networks. Some CAHs share administrators and equipment, such as information technology networks. These linkages strengthen CAHs through improved coordination, quality, and efficiency of health care.
The health care market power in North Dakota is manage by a non-for-profit MeritCare Health System, which is the state’s largest integrated delivery system, with two hospitals in the Fargo–Moorhead area, 430 employed physicians, and 180 midlevel practitioners who provide care in 46 clinic sites in North Dakota and Minnesota. Having the market power, the MeritCare Health System has the ability to influence the market positively or negatively, as to what services is being exchanged. Market power is important because if possessed by buyer or sellers it might allow them to wield influence over the use of resources to their benefit and to the detriment of the other bargaining parties (Hicks L. L., 2014)
MeritCare has been recognized as a leading integrated health network and as one of the top-performing hospitals in the United States.
Blue Cross Blue Shield of North Dakota (BCBS-ND) is the dominant health insurer in the state, holding 80 percent of the market with 275,000 insured members in North Dakota. (Retrieved from,http://www.commonwealthfund.org/usr_doc/1130_McCarthy_North_Dakota_experience.pdf?section=4039).
The main competitive forces in the healthcare delivery system
The main competitive forces in the state of North Dakota. The main competitive force is expanding access to healthcare to rural areas while maintaining cost and quality of the health delivery services provided. Competition in health care involves prices, supply and demand, quality of care, convenience, and products or services. Porter and Teisberg have noted that:
In a normal market, competition drives relent- less improvement in quality and cost. Rapid innovation leads to rapid diffusion of new technologies and better ways of doing things. Excellent competitors prosper and grow, while weaker rivals are restructured or go out of business. Quality-adjusted prices fall, value improves, and the market expands to meet the needs of more …show more content…
consumers.
However, competition can usually be based on price or the quantity of health care delivery utilized, and demand and supply. For instance, increase or decrease can be influenced be factors such as income, taste, quantity and quality, as well as technology and innovation. For example, increase in demand of a service can be as a result of increase in a patient income. How resources are allocated in the health care sector is important to supply and demand of services. This will determine what the market outcome would be in terms of prices and quantity.
The positive benefits and negative aspects, respectively, of HMO managed care
The main characteristics of the Health Management Organization (HMO) are responsible for health insurance and health care.
The HMO sells the health insurance coverage to customers on a per capita basis. The HMO assumes all responsibilities including financial risk for providing the care. The HMO is reliant on the providers to assess the HMO member’s condition and to provide appropriate levels of care. From the health care facility perspective, Health Maintenance Organization (HMOs) objective is to maximize profit, in efforts to increase and improve the quality of care to its members while the physician objective is to maximize net income. Healthcare providers will be forced to become more pre-conscious and cost-effective if HMOs gain market shares. HMOs reduce costs through fixed budget financing, reduced inpatient utilization by keeping customers out of hospitals, and using fewer resources once a customer is admitted. If HMOs control significant amounts of patient volume, the competitive impact will concentrate on health care system costs. As a result of low health care system costs, customers are likely to enjoy low services charges and become more satisfied, which is also an advantage to the employer and the insurer. A disadvantage to the Health Maintenance Organization is that members are restricted to only HMO physicians and the insurer must obtain a referral from their primary physician before seeing a specialist (Reddick, 2007). The biggest advantage of an HMO for the
insured is that the deductibles tend to be more affordable than other health insurance plans. There is generally a sufficient choice of providers, which gives the insured a great deal of flexibility in finding a provider that they are comfortable with, and that can adequately meet the health care needs of the insured and any family members also on the plan. An advantage to both the insured and the providers is that as long as the insured stays with an in-network provider, the patient is aware of all costs. From the health care facility perspective, Health Maintenance Organization (HMOs) objective is to maximize profit, in efforts to increase and improve the quality of care to its members.
The efficiency of the types of economic incentives available to providers in the delivery of healthcare services.
In the state of North Dakota, fees-for-service payment encourages quality of care, improve health outcomes and efficiency and the payment of services. It offers reimbursement for the delivery of services for time spent doing procedures is rewarded more highly than time with patients or coordinating care. Under fees-for-services, the physician has the incentive to generate more services, especially if the fees exceed the marginal cost of the service (Hicks L. L., 2014)
Fee-for-service, however, offers incentives to providers clinicians to efficiently organize the care their patients need. For example, is a physician can increase or reduce his incentives by the volume of the services they provide, however, the insurer must monitor for excessive services such as a complete physical exam, and a follow-up visit.
The financial risk of a capitation payment system
A capitation is a payment system in which the entity financially responsible for the patient healthcare services receives a fixed periodic sum for each patient (per capita) that covers the cost of the utilization of the patient (Hicks. L. L., 2014). Under the capitation payment system, the provider is placed at financial risk for all their patients. According to the source, if the cost of services provided to the members of the panel is less than the fixed amount, then the provider retains the difference as additional income, if the cost is greater, then the provider suffers a loss of income (Hicks. L. L., 2014).
For example, an insurer arranges to pay a doctor $750 per year per person in a group. For 500 people, the insurer would pay the doctor $375,000 and the doctor would be expected to supply all services necessary to those 500, different people. If a patient used $1,000 worth of health care services, then that doctor would end up losing $250 on that patient. On the other hand, if another patient used only $100 worth of health care services, then the doctor would make a profit of $650 on that patient. Of course, in such a system, the main goal for the doctor is to keep as much of that capitated amount as possible.
Capitation significantly influences healthcare. Physicians need to assure that payment models do not compromise the care they provide. Considering the interaction of financial incentives with physician and medical risk, primary care physicians need to work to assure that capitated systems incorporate checks and balances which protect both patients and providers.
Like all other States, the State of North Dakota health care delivery system is concerned about cost, accessibility and quality of health care services at a reasonable cost. North Dakota has a population of approximately 672 591 people, with most of the population is white (92%), with a small minority of Native Americans (5%) representing four tribal nations. In addition, North Dakota ranks in the top quartile of states on The Commonwealth Fund’s State Scorecard on Health System Performance, which ranks states according to their performance across 32 key indicators of access, quality, utilization, equity, …show more content…
and health outcomes. The latest Dartmouth Atlas of Health Care finds that North Dakota is one of the most efficient states in treating chronically ill Medicare patients in the last two years of life, with costs more than 25 percent below the national average. The Commonwealth Fund’s Commission on a High Performance Health System made a site visit to North Dakota in July 2007 to learn more about the state’s achievements, focusing on three key areas: 1) supports for primary care and the concept of a medical home (discussed below), 2) organization of care through networks of coordination and cooperation; and 3) the innovative use of technology to meet patient needs and hold down costs. This cooperative ethos is driven by resource scarcity and fostered by a rural community culture that enhances a sense of mutual accountability among health professionals and their patients. North Dakota faces challenges common to other rural areas of the country that are relatively disadvantaged in attracting health care professionals and in deploying resources to serve small, geographically dispersed communities. Despite these challenges, the state’s health care system appears to be performing better than many others in providing its citizens with accessible, relatively high-quality, and efficient health care services. Health care providers, payers, and policymakers in rural North Dakota have learned that only through cooperative, interdependent relationships and a willingness to innovate in both the organization and regulation of services can they achieve the reach, care coordination, and economies of scale that are necessary for delivery of quality and efficient care in rural settings. These innovations provide insights and lessons that may be transferable to other rural areas of the country and to urban areas as well.
To help overcome these challenges, health care providers in rural North Dakota have established various cooperative arrangements and networks to share resources and expertise. For example, six integrated delivery systems provide most of the health care in North Dakota through regional clinic networks and small rural hospitals linked to urban hospitals. Virtual networks built on telemedicine and telepharmacy also promote integration, extend the rural workforce, and enhance communication by allowing physically distant providers and facilities to transmit and receive critical patient data instantaneously.
Many small North Dakota communities rely primarily on small Critical Access Hospitals (CAH) to meet their health care needs. Of the 45 North Dakota hospitals, 31 are CAHs. These small hospitals act as a “health care central,” providing the gamut of care in their communities: pediatric, emergency, inpatient, skilled nursing, and home health services—all in a single physical location. By law, CAHs must be linked to tertiary care hospitals for referrals. Additionally, about 40 percent of the CAHs in North Dakota are part of formal networks. Some CAHs share administrators and equipment, such as information technology networks. These linkages strengthen CAHs through improved coordination, quality, and efficiency of health care.
The health care market power in North Dakota is manage by a non-for-profit MeritCare Health System, which is the state’s largest integrated delivery system, with two hospitals in the Fargo–Moorhead area, 430 employed physicians, and 180 midlevel practitioners who provide care in 46 clinic sites in North Dakota and Minnesota. Having the market power, the MeritCare Health System has the ability to influence the market positively or negatively, as to what services is being exchanged. Market power is important because if possessed by buyer or sellers it might allow them to wield influence over the use of resources to their benefit and to the detriment of the other bargaining parties (Hicks L. L., 2014)
MeritCare has been recognized as a leading integrated health network and as one of the top-performing hospitals in the United States.
Blue Cross Blue Shield of North Dakota (BCBS-ND) is the dominant health insurer in the state, holding 80 percent of the market with 275,000 insured members in North Dakota. (Retrieved from,http://www.commonwealthfund.org/usr_doc/1130_McCarthy_North_Dakota_experience.pdf?section=4039).
The main competitive forces in the healthcare delivery system
The main competitive forces in the state of North Dakota. The main competitive force is expanding access to healthcare to rural areas while maintaining cost and quality of the health delivery services provided. Competition in health care involves prices, supply and demand, quality of care, convenience, and products or services. Porter and Teisberg have noted that:
In a normal market, competition drives relent- less improvement in quality and cost. Rapid innovation leads to rapid diffusion of new technologies and better ways of doing things. Excellent competitors prosper and grow, while weaker rivals are restructured or go out of business. Quality-adjusted prices fall, value improves, and the market expands to meet the needs of more …show more content…
consumers.
However, competition can usually be based on price or the quantity of health care delivery utilized, and demand and supply. For instance, increase or decrease can be influenced be factors such as income, taste, quantity and quality, as well as technology and innovation. For example, increase in demand of a service can be as a result of increase in a patient income. How resources are allocated in the health care sector is important to supply and demand of services. This will determine what the market outcome would be in terms of prices and quantity.
The positive benefits and negative aspects, respectively, of HMO managed care
The main characteristics of the Health Management Organization (HMO) are responsible for health insurance and health care.
The HMO sells the health insurance coverage to customers on a per capita basis. The HMO assumes all responsibilities including financial risk for providing the care. The HMO is reliant on the providers to assess the HMO member’s condition and to provide appropriate levels of care. From the health care facility perspective, Health Maintenance Organization (HMOs) objective is to maximize profit, in efforts to increase and improve the quality of care to its members while the physician objective is to maximize net income. Healthcare providers will be forced to become more pre-conscious and cost-effective if HMOs gain market shares. HMOs reduce costs through fixed budget financing, reduced inpatient utilization by keeping customers out of hospitals, and using fewer resources once a customer is admitted. If HMOs control significant amounts of patient volume, the competitive impact will concentrate on health care system costs. As a result of low health care system costs, customers are likely to enjoy low services charges and become more satisfied, which is also an advantage to the employer and the insurer. A disadvantage to the Health Maintenance Organization is that members are restricted to only HMO physicians and the insurer must obtain a referral from their primary physician before seeing a specialist (Reddick, 2007). The biggest advantage of an HMO for the
insured is that the deductibles tend to be more affordable than other health insurance plans. There is generally a sufficient choice of providers, which gives the insured a great deal of flexibility in finding a provider that they are comfortable with, and that can adequately meet the health care needs of the insured and any family members also on the plan. An advantage to both the insured and the providers is that as long as the insured stays with an in-network provider, the patient is aware of all costs. From the health care facility perspective, Health Maintenance Organization (HMOs) objective is to maximize profit, in efforts to increase and improve the quality of care to its members.
The efficiency of the types of economic incentives available to providers in the delivery of healthcare services.
In the state of North Dakota, fees-for-service payment encourages quality of care, improve health outcomes and efficiency and the payment of services. It offers reimbursement for the delivery of services for time spent doing procedures is rewarded more highly than time with patients or coordinating care. Under fees-for-services, the physician has the incentive to generate more services, especially if the fees exceed the marginal cost of the service (Hicks L. L., 2014)
Fee-for-service, however, offers incentives to providers clinicians to efficiently organize the care their patients need. For example, is a physician can increase or reduce his incentives by the volume of the services they provide, however, the insurer must monitor for excessive services such as a complete physical exam, and a follow-up visit.
The financial risk of a capitation payment system
A capitation is a payment system in which the entity financially responsible for the patient healthcare services receives a fixed periodic sum for each patient (per capita) that covers the cost of the utilization of the patient (Hicks. L. L., 2014). Under the capitation payment system, the provider is placed at financial risk for all their patients. According to the source, if the cost of services provided to the members of the panel is less than the fixed amount, then the provider retains the difference as additional income, if the cost is greater, then the provider suffers a loss of income (Hicks. L. L., 2014).
For example, an insurer arranges to pay a doctor $750 per year per person in a group. For 500 people, the insurer would pay the doctor $375,000 and the doctor would be expected to supply all services necessary to those 500, different people. If a patient used $1,000 worth of health care services, then that doctor would end up losing $250 on that patient. On the other hand, if another patient used only $100 worth of health care services, then the doctor would make a profit of $650 on that patient. Of course, in such a system, the main goal for the doctor is to keep as much of that capitated amount as possible.
Capitation significantly influences healthcare. Physicians need to assure that payment models do not compromise the care they provide. Considering the interaction of financial incentives with physician and medical risk, primary care physicians need to work to assure that capitated systems incorporate checks and balances which protect both patients and providers.