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Rational planning for health care delivery : aspects of supply, demand, and evaluation 1972

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RATIONAL PLANNING FOR HEALTH CARE DELIVERY: ASPECTS OF SUPPLY, DEMAND, AND EVALUATION by RONALD MURRAY STROHMAIER B S c , U n i v e r s i t y o f B r i t i s h C o l u m b i a , 1968 MSc, U n i v e r s i t y o f B r i t i s h C o l u m b i a , 1970 A THESIS SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION i n t h e D i v i s i o n o f Management S c i e n c e We .accept t h i s t h e s i s as co n f o r m i n g t o t h e r e q u i r e d s t a n d a r d THE UNIVERSITY OF March, BRITISH 1972 COLUMBIA In presenting t h i s thesis i n p a r t i a l f u l f i l m e n t of th-i: requirements for an advanced degree at the University of B r i t i s h Columbia, I agree that the Library s h a l l make i t f r e e l y available for reference and study. I further agree that permission for extensive copying of t h i s thesis for scholarly purposes may he granted by the Head of my Department or by h i s representatives. It i s understood that copying or publication of t h i s thesis for f i n a n c i a l gain s h a l l not be allowed without my written permission. Department of ^[j^. The University of B r i t i s h Columbia Vancouver 8, Canada Rational planning for the delivery of health care services is the primary concern of this thesis. Various aspects of the demand for, and the supply and characteristics of these services are discussed, since an understanding of these topics is essential to rational planning. Chapter I examines the relative importance of the i n - fluences of health care services, socio-economic structures and l i f e styles on individual and societal health status. Various c r i t e r i a for the evaluation of health care services and for the allocation of societal resources between health care services and other social services influencing health and well-being are discussed. Chapter II deals with consumer behaviour and the demand for medical services. This discussion entails Individual per- ception of medical needs, factors influencing health knowledge, sources and effectiveness of health information dissemination, and various factors which inhibit u t i l i z a t i o n . Chapter III is concerned with the supply of health care services, their financing and interrelationships. In particular, the role, characteristics, and costs of physician and hospital services are examined. Chapter IV discusses the resolution of supply and demand with an emphasis on financial considerations and the organiza- tional arrangements between the various components of supply. Chapter V reviews and discusses some of the major pro- blems of various techniques which have been employed to forecast future health care service requirements. i i i Various aspects of future modes of health care delivery are discussed. Chapter VI presents a simulation model which may be used as an aid In regional, planning of health care services. Chapter VII i l l u s t r a t e s several r e s u l t s f o r various simu- lated conditions and s t r a t e g i e s . Chapter VIII suggests future improvements to the simulation model and describes several possible experiments which are being planned. TABLE OP CONTENTS CHAPTER PAGE I MEDICAL CARE AND HEALTH 1 A. Introduction 1 B. Medical Care 1 1. Entry . . . 3 2. In-Treatment 4 3. End-Result . . . 6 C. Socio-Economic Structures, Life Styles, 'and Health 8 1. Individual Life Styles 10 2. Pollution 11 3. Occupational Hazards to Health . . . . 11 Stress 12 D. Measurement of Health 13 E. Evaluation of Health Care Strategies . . . . 15 F. Conclusions 16 II CONSUMER BEHAVIOR AMD THE DEMAND FOR MEDICAL SERVICES 18 A. Introduction 18 B. Individual Perception of Need 19 C. Factors Influencing Health Knowledge . . . . 20 D. Sources and Effectiveness of Health Information Dissemination (in a developed country) 21 E. Health Service "Wants" 22 F. Factors Influencing Util i z a t i o n of Health Services 22 V CHAPTER PAGE 1. Distance 22 2. Economic Factors 23 3. Social Factors 24 G. Utilization Modes 24 H. Patients' Compliance With Doctors' Advice . . 25 I. Conclusions 26 III THE SUPPLY OP HEALTH SERVICES 27 A. Health Services, An Interrelated Network of Component Services 27 B. Community Care and Shelter F a c i l i t i e s and Services As Related to Health 27 C. Public Financing Of Health Services 34 D. Scope of Planning 35 E. Physician Services 35 1. The Role of the Physician 35 2. The Supply and Characteristics of Physician Services 36 3. Modes of Reimbursement and the Effect of Third Party Payment 4 l F. Hospital Services 43 1. The Development and Characteristics of Hospital Services . . . . 43 2. The Necessity and Urgency -of Hospitali- zation 54 3. Behavioral Aspects of Hospital Services 55 4. Internal Structure and Control 56 5. The Cost of Hospital Services 58 v i CHAPTER PAGE G. Conclusions 76 IV THE RESOLUTION OF SUPPLY AND DEMAND 77 A. Introduction 77 B. Distinguishing Features of the Health Services Market 77 1. Monopoly Aspects 77 2. Product Uncertainty and Competition . . . 77 3. Externalities 78 4. Profit Motive 78 C. Market Resolution 78 1. Financial Considerations . 78 D. A Surplus of Medical Treatment 79 E. Interaction Between Suppliers 8 l F. The Effect of Supply on Demand 86 G. Short Run Resolution 87 H. Long Run Resolution 87 I. Conclusion 88 V RATIONAL PLANNING FOR HEALTH CARE SERVICES 90 A. A Framework for Planning 90 B. Problems Encountered in Planning 91 C. Techniques Employed in Predicting Future Requirements for Health Care Delivery . . . 92 1. Utilization Models 92 2. Methods Based on Mortality 98 3. Approaches Based on Morbidity 99 D. The Need for Alternatives in Health Care Planning 100 v i i CHAPTER PAGE 1. Systems Analysis Approach . 101 E. Changing Patterns of Health Care Delivery . . . . 103 (a) Ambulatory Care 104 (b) Geographical and Institutional distribution of f a c i l i t i e s and personnel 105 (c) Greater use of paramedical personnel . . . 106 F. Conclusion 108 VI' REGIONAL HEALTH PLANNING MODEL 109 A. Objectives 109 B. Inter-Institutional Policy Simulation 110 1. Population and Demographic Submodel . . . . 110 2. Economic Submodel 110 3. Transportation Submodel I l l 4. Land Ut i l i z a t i o n Submodel I l l 5. Health Systems Submodel . . I l l 6. Pollution Submodel I l l 7. Human Ecology Group 112 8. Land Classification Group 112 9. Data Management Group 112 10. Resources and Public Services Group . . . . 112 C. System Priorities and Evaluation 112 D. Delegation Assumptions 114 E. Data Base 115 1. Incidence Data 115 2. Demands on Physician Resources 115 3. Bed Requirements 117 4. Graduate Nurses 117 5. Other Considerations 117 v i i i CHAPTER PAGE P. Model L o g i c 118 1. Overview of the Model . 118 2. D e s c r i p t i o n of Subroutines 120 VII EXPERIMENTS 135 Experiment 1 135 Experiment 2 139 Experiment 3 1 M 5 Experiment 4 146 V I I I FUTURE IMPROVEMENTS AND EXPERIMENTS 150 A. E x t e n s i o n and Refinements 150 B. Future Experiments 152 BIBLIOGRAPHY 155 APPENDIX A 161 APPENDIX B 16^ APPENDIX C 165 APPENDIX D 167 APPENDIX E 169 APPENDIX F • 170 APPENDIX G 171 APPENDIX H 172 LIST OP TABLES TABLE PAGE 1 Health and Health-Related Services and F a c i l i t i e s in the Greater Vancouver area 29 2 Patient Categories and Levels of Care in the Greater Vancouver Region 30 3 Non-Public Care F a c i l i t i e s and Organizations in the Greater Vancouver Region 33 4 Estimates of Output per Physician 1935-1951 . . . . 38 5 Classification of Hospitals 45 6 F a c i l i t i e s and Services Associated with C l a s s i f i - cations of Hospitals 47 7 Plant Fund - Source, 1968 (Public General Hospitals) 63 8 Operating Expenditures of Budget Review Hospitals . 64 9 Expenditures (Public General Hospitals) in B.C. . . 65 10 Selected Empirical Hospital Costs Studies 74 11 Evaluation of Three Approaches of Predicting Resource Requirements . . . . 97 12 Obstetrician/Gynecologist and Urologist Resource Surpluses for a 4$ Constant Resource Growth Policy 135 13 Percentage Increases in Population and Resource Requirements for Projected Population Growth . . 142 14 Percentage Increases in Population and Resource Requirements for Zero Population Growth 144 15 Bed Day Requirements/total population for projected regional population 145 LIST OP FIGURES PAGE Figure 1 Alternative Decisions f o r Perceived Needs . . . 22 2 LRAC and LRMC as a Function of Hospital Size . 61 3a Centralized Admission System 8 l 3b Central Referral System 82 3c System T y p i c a l of North America 84 4 The E f f e c t of Various Linear Growth Rates (for A l l Resources) on the S o c i a l Impact Index . . 137 5 The E f f e c t of Various Compound Growth Rates (for A l l Resources) on the S o c i a l Impact Index 140 6 S o c i a l Impact Index for 1 and 2% Compound Growth In A i r Po l l u t i o n Related Morbidity . . 147 ACKNOWLEDGEMENT The cooperation and assistance of the U.B.C. Health Systems Group is gratefully acknowledged. The contributions of the following persons are greatly appreciated: Dr. I. Vertlnsky, under whose supervision this thesis was written, for his guidance and many helpful suggestions. Dr. D. Uyeno for his many comments and suggestions in the preparation of this thesis. ; CHAPTER I: MEDICAL CARE AND HEALTH A. Introduction In examining the health care system, we must determine what i t i s that the consumer seeks and what benefits he derives from the health care system. This chapter examines the role of the health care and other systems and their relationships to health. Various measures of health status and the quality of medical care are discussed, for i t is only through such measures that the impact of the health care system on health and the quality of l i f e may be objectively evaluated. B. Medical Care It is commonly accepted that medical care services exist for the prevention and treatment of disease and di s a b i l i t y . However, a substantial proportion of patient v i s i t s to physicians are in search of reassurance and psychological support. The consumer of medical care services seeks expected benefits in terms of improved or Insured physical and mental well-being, rather than medical services per se. Medical care is not a single service, but a mix of component services which include drug prescription, epidemic control, reassurance, hospital care, physiotherapy, physician advice, and psychiatric aid. These services, unlike the goods or services of most other industries, are largely of an informational nature, either in the form of physician advice or skilled care. 2 The effectiveness of medical care services and the satisfaction or dissatisfaction derived from them, by the consumer, depend on a number of different attributes. The individual consumer is unable to adequately judge the quality of medical care services. Consequently the medical profession and various public agencies have been charged with the responsibility of insuring and improving the quality of medical care services. Efforts to do so involve an*1 evaluation of various aspects of medical care services which are f e l t to be essential to the provision of good or adequate medical care. Unfortunately, there i s no clearly defined and accepted standard of 'good health' nor is medical science advanced to the state of always being able to render a proper and exact diagnosis or to recommend with certainty a best course of treatment. These inherent d i f f i c u l t i e s have, to a large extent, precluded an objective measure of the efficacy of medical care services and evaluation has been primarily based on normative judgements and standards of the medical profession. In attempting to rationalize the evaluation processes, various approaches have been made at quantifying attributes of medical care services. Vfhile i t is desirable to be able to derive, from the quantified attribute values, an overall numerical evaluation score as a surrogate for the quality of a medical care system, such attempts are complicated by the conceptual d i f f i c u l t y of assigning appropriate weightings to the non-homogeneous attributes. There Is, as yet, no satisfactory quantifiable objective function for the macro evaluation of a medical care system. Since any weightings . 3 employed i n weighted measures w i l l incorporate subjective biases of the evaluators and may obscure important aspects, the methodology and assumptions should be e x p l i c i t l y stated and the spectrum of i n d i v i d u a l subcomponent evaluations presented. In evaluating the quality of a medical care system, consisting of physicians, h o s p i t a l inpatient and outpatient f a c i l i t i e s and other services, patient progress through the system may serve as a l o g i c a l means to segregate the system into three d i s t i n c t categories for analysis: entry, in-treatment, and end-result. Alternate c r i t e r i a may e x i s t for the evaluation of the system at any of these three stages of patient progress and evaluation may e n t a i l combinations of c r i t e r i a from the d i f f e r e n t stages. 1. Entry At the stage of entry to components of the medical care system, the two most frequently considered evaluative c r i t e r i a are the c a p a b i l i t y of the system to provide necessary and demanded services and the timeliness with which these services are provided. The timeliness of receiving medical services may be regarded as important not only i n terms of a patient's medical condition, but also i n terms of his s a t i s f a c t i o n with the system f o r other than medical reasons. Prolonged discomfort, anxiety, d i s a b i l i t y , and a loss of Income while waiting to receive medical services contribute to a patient's d i s s a t i s f a c t i o n with the medical care system. A proper evaluation of the importance of delays and unmet demands should focus on the seriousness of possible 4 consequences and'alternative treatment patterns as well as the number of patients involved and the time period of delay. A measure of the quality of medical services, i n the context of system c a p a b i l i t y , could be the percentage of the time which the system i s able to provide c e r t a i n services without delay or the percentage of the time f o r which various services are provided within a given waiting time. Many of the c r i t e r i a chosen f o r adequate or good care are norms of a subjective nature and are open to question, since the impact of the delays i s not f u l l y considered. 2. In-treatment The quality of care received while undergoing treatment i s often evaluated on the basis of the services a v a i l a b l e , the q u a l i f i c a t i o n s and competence of the personnel or the organi- z a t i o n a l processes involved. In terms of the physician's o f f i c e , the h o s p i t a l or other such f a c i l i t i e s certain standards may be recognized or deemed to be necessary for the provision of an adequate l e v e l of care. Such an evaluation of hospitals i s employed i n the United States by the Joint Commission f o r the Accreditation of Hospitals, which has set minimum acceptable standards f o r f a c i l i t i e s , equipment, administrative and professional organi- zation and professional q u a l i f i c a t i o n s . This evaluation process does not measure patient care d i r e c t l y , however i t does measure the existence and a v a i l a b i l i t y of various components of care which are f e l t to be necessary f o r proper patient care. One assessment of the quality of patient care may be made In terms of-the competence of medical and a n c i l l a r y per- sonnel, however, the emphasis has usually been placed on physicians and to a lesser extent nurses. Along these l i n e s , Palk et a l (23) have derived and quantified what " i n the opinion of a team of selected c l i n i c a l experts — should be done as good medical care for prevention, diagnosis, treatment, or r e h a b i l i t a t i o n i n the l i g h t of present day knowledge, s k i l l s and p o t e n t i a l resources in personnel and f a c i l i t i e s " i n terms of the mix and quantities of services for some 230 diagnostic categories In addition to the proper mix and quantities of services, various aspects of competence in the delivery of these services may serve as an i n d i c a t o r of the quality of patient care. Along these l i n e s , Price et a l (52) have devised a p r o f i l e for the measurement of physician performance, based on a number of factors. In h o s p i t a l s , medical audits serve as the major means for such an evaluation. T y p i c a l l y the audit w i l l examine h o s p i t a l records for indications of diagnostic errors and sub- j e c t i v e estimates of the quality of care provided, as well as various rates, by diagnostic category, such as preventable deaths the incidence of s p e c i f i c complications, c e r t a i n t e s t s , consul- tations and the removal of normal tissue i n operations. Various organizational processes, within the h o s p i t a l , may be regarded as indicators of q u a l i t y . These indicators may be concerned with the number and mix of personnel, administrative and professional organizational structures, the manner In which records are maintained, admission and discharge p o l i c i e s , and the existence and functioning of tissue committees, l i b r a r i e s , refresher courses, i n t e r n a l medical audits, etc. 6 T h e s e . e v a l u a t i o n s may be made i n terms of i n t e r - i n s t i t u t i o n a l or i n t e r - p h y s i c i a n a l comparisons or In comparison t o accepted s t a n d a r d s . The b a s i s f o r e v a l u a t i o n i s not to judge the a b i l i t y o f m e d i c a l s c i e n c e i n a c h i e v i n g r e s u l t s , but t o determine the degree t o which good treatment i s a d m i n i s t e r e d w i t h i n the c o n s t r a i n t of a v a i l a b l e r e s o u r c e s and whether or not these r e s o u r c e s are adequate. 3 . E n d - r e s u l t Seemingly, one of the most r e l e v a n t c r i t e r i a f o r j u d g i n g the q u a l i t y of a s e r v i c e i s the degree t o which i t i s e f f e c t i v e In f u l f i l l i n g i t s purpose, t h a t i s , whether or not d e s i r e d end r e s u l t s are a t t a i n e d . In the area of h e a l t h care d e l i v e r y , the end r e s u l t s of p r e v e n t i v e and r e m e d i a l programs, when they can be r e l i a b l y measured, serve as the most v a l i d i n d i c a t o r s of the q u a l i t y of a h e a l t h care system. In some a s p e c t s , end r e s u l t s can be w e l l d e f i n e d and r e a d i l y measured such as v a r i o u s s u r g i c a l f a t a l i t y r a t e s , p e r i n a t a l m o r t a l i t y r a t e s , p u e r p e r a l r a t e s , the i n c i d e n c e of p r e v e n t a b l e c o m p l i c a t i o n s , and the r e h a b i l i t a t i o n of persons with drug and a l c o h o l problems. However, v a r i o u s measures which have been employed were not always v a l i d . Sheps (64) p o i n t s t o the use of post o p e r a t i v e m o r t a l i t y r a t i o s as one such measure. T h i s r a t i o i s d e r i v e d by d i v i d i n g deaths w i t h i n 10 days of an o p e r a t i o n by the t o t a l number of o p e r a t i o n s performed. T h i s i g n o r e s deaths a f t e r 10 days and n a i v e l y g i v e s e q u a l weightings t o o p e r a t i o n s of v a r y i n g r i s k , such as d e n t a l e x t r a c t i o n s and neurosurgery. C l e a r l y , p o s t o p e r a t i v e m o r t a l i t y r a t i o s should be e v a l u a t e d on the b a s i s of o p e r a t i v e procedure category and should 7 account f o r deaths a f t e r 10 d a y s . i f they are r e l a t e d to treatment. While some outcomes of treatment may be r e a d i l y measured and w e l l d e f i n e d , others may be d i f f i c u l t to define or measure, such as s o c i a l r e s t o r a t i o n and p a t i e n t s a t i s f a c t i o n or may r e q u i r e long periods of time before follow-up studies can v a l i d l y determine the f i n a l outcome. Although various c r i t e r i a for e v a l u a t i o n may be w e l l defined and e a s i l y measured, the relevancy of these c r i t e r i a may sometimes be c o n t r o v e r s i a l , such as the 'Issue concerning the p r o l o n g a t i o n of l i f e under c e r t a i n circumstances. Factors other than medical care treatment may have an appreciable inf luence on outcomes and end r e s u l t s may vary as to the degree of success f o r a given treatment. Comparative studies under c o n t r o l l e d c o n d i t i o n s , t h e r e f o r e , serve as the only means of studying and drawing v a l i d conclusions concerning the effect of p a r t i c u l a r treatments. In studying outcomes, under a l t e r n a t i v e treatment p a t t e r n s , i n c l u d i n g non-treatment, care must be exercise'd to ensure the v a l i d i t y of c o n t r o l and that the treatment studied has been r i g o r o u s l y p r o v i d e d . These outcome measures may serve as I n d i c a t o r s of the degree to which medical science i s capable of t r e a t i n g various condit ions and as reference c r i t e r i a i n e v a l u a t i n g the performance of h e a l t h care d e l i v e r y . "Probably no more fundamental information would f a c i l i t a t e the conduct of e n d - r e s u l t s tudies than knowledge of the n a t u r a l h i s t o r y of d i s e a s e , the p h y s i c a l , s o c i a l and economic consequences of disease during w e l l defined i n t e r v a l s f o l l o w i n g onset, and the r o l e of preventive and t h e r a p e u t i c medical care i n a l t e r i n g x the course of d i s e a s e . This idea has been recognized for a long time, but the methodological problems and the personnel and time requirements have proven to be formidable barriers to undertaking studies that deal comprehensively with the issue." (63) Medical audits, accreditation of hospitals, and other evaluations of the quality of medical care provide a control mechanism and also a stimulus for improving the quality of health care delivery. As progress and changes in the delivery of health care occur, revision and validation of the c r i t e r i a used in evaluating quality are necessitated. There is a need for further research into developing valid and reliable c r i t e r i a as indicators of the quality of health care delivery. In addition, "there i s need for developing methods that review the quality of the entire episode of care — and that review the contributions of a l l the care-providing personnel . Since the methods now in use are almost entirely retrospective, i t also is important to develop methods that rapidly provide information about deviations from accepted practice so that interventive action can be taken while care is s t i l l in progress." (18) C. Socio-Economic Structures, Life Styles, and Health As has already been stated, the expected benefits of a medical care system are improved or insured physical and mental being or health. The traditional health care system has been primarily concerned with diagnosis and treatment in the pre- c l i n i c a l and c l i n i c a l stages of disease, and is but one of the factors influencing the health of a population. Individual and societal health status are influenced by 9 a number of other factors, of which some are considered natural such as bacterial and v i r a l infections, whereas others such as alcoholism and malnutrition stem from socio-economic structures and l i f e styles. The influence of these other factors on the health status of a population is such that i t has led Win^elstein and French (75) to conclude that the health status of a population i s largely unrelated to the quality and quantity of medical services at i t s disposal. Furthermore, "much of the total use of health services is accounted for by the relatively small portion of the total population with serious Illness episodes, — people with Illnesses requiring hospitalizations account for about one-half of a l l private expenditures for health (in the U.S.) but amount to only 8 percent of the population."(2) Thus, the health status of a relatively small percentage of the population is significantly affected by the medical care system. While medical services may not have an appreciable impact on the health status of a population they may be considered essential for the improvement or maintenance of the health of certain individuals. When considering the medical care system as one component factor contributing to the health status and quality of l i f e of individuals and of a population, i t is necessary to assume a broader perspective. A number of psychological and physical stresses, many of which have been shown to have a visible impact on morbidity, disability and mortality are a consequence of societal l i f e styles. "Symptoms such as alcoholism, mental disorder, crime, suicide, absenteeism, and chronic maladjustments are only the 10 more obvious consequences of l i f e s t y l e s which are vulnerable to c r i s i s . The cumulative d i r e c t e f f e c t of l i f e styles on phys i c a l health levels of the population, though i n v i s i b l e should be the major concern f o r the future." (73) While there are a number of relevant f a c t o r s , four of the most important have been chosen for discussion here, namely; i n d i v i d u a l l i f e s t y l e s , p o l l u t i o n , occupational hazards and stre s s . 1. Individual L i f e Styles Pratt ( 5 1 ) i n a study of personal health care practices reported "that the higher the qual i t y of personal health care practices the higher the l e v e l of health and the fewer the (past) health problems reported by the respondent". Individual l i f e s t y l e s characterized by such factors as hygiene, exercise, d r i v i n g habits, alcohol consumption, d i e t , sleeping habits, and smoking are to a large extent influenced by acceptance and standards of the s o c i a l groups with which an i n d i v i d u a l i d e n t i f i e s or associates. The effects of a number of these practices are well known and documented. Evidence i s continually coming to l i g h t on the ef f e c t s of a number of widely used drugs and t o x i c s , both l e g a l and i l l e g a l , and has recently caused concern over the use of hallucinatory drugs and the consumption of food additives. While various evidence points to possible hazards, the evidence i s often inconclusive and con t r o v e r s i a l . It w i l l probably be some time before the ef f e c t s of a number of these substances, by themselves and i n combination, w i l l be adequately known. 11 2. Pollution Societal l i f e styles are largely responsible for the ever increasing amounts of pollution. Industrialization and rapid population growth have led to demands for increased production and natural resource consumption. Accompanying the resultant industrial, agricultural and population growth have been an increase in pollutants from these sources, and the introduction of heretofore unknown chemicals and toxics. Many of these pollutants have been recognized as being harmful to human health, and in extreme cases have been known to cause deaths. The effects of various pollutants depend on their characteristic properties, concentration, duration and pattern of exposure and retention and accumulation by biological c e l l s . In examining the effects of pollutants, great care must be exercised in identifying synergistic effects of multiple pollutants and of other variables influencing health. Data on the adverse effects of pollutants is fragmentary and inconclusive. Often the only conclusive data is on exposures at high concentration levels. L i t t l e is known about the effects of prolonged exposure to low concentration levels of most pollutants. A brief discussion of the major pollutants and their effect on biological systems is given in Appendix A. 3. 'Occupational Hazards to Health Individuals are subject not only to the hazards of community environment and personal l i f e styles but also to the hazards of their occupation. The individual may be exposed to 1 2 such actual or potential hazards as thermal stress, various forms of radiation, noise, accidental hazards from various types of equipment, chemicals either through skin contact or as air contaminants, mechanical vibrations, and various particulate air contaminants. Repetitive tasks may induce physical and mental stress. Shift work may produce physiological, psychological and social adjustment problems. In addition to direct occupational hazards, changing patterns in employment often result in occupational obsolescence. The resultant displacement, relocation, retraining, unemployment, etc. may lead to financial and emotional hardships. In the past, various efforts and legislation have been concentrated on the prevention and treatment of physical hazards through the development of safety standards and the provision of various treatment programs. Attention is now being increasingly focused on the preclinical detection of occupational metabolic body disturbances and the reduction and prevention of deleterious psychological consequences of occupation. 4. Stress Prolonged or recurrent stress may induce gastrointestinal ulcers, kidney damage, hypertension, various other psychosomatic disorders and a number of psychoneuroses. As many of the stresses to which man is subjected are a product of societal structures and l i f e styles, to eliminate or significantly reduce such stresses calls for a radical social re-evaluation and a restructuring of man's societal environment. In designing the future state of health care services, factors other than the health care system should be taken into 1 3 account as much as possible, both in predicting their effect on the demand for health care services and of alternative benefits to be derived under different strategies for the allocation of resources in and between the health care system, environmental control, and other societal coping mechanisms. This broader perspective considers the health care system as one component factor contributing to health status and quality of l i f e . D. Measurement of Health In order to evaluate the benefits of medical care services and other programs designed to improve mental and physical being, i t Is desirable to have a quantifiable measure of Individual and societal health. Unfortunately, there is no clear and absolute measure of health nor is i t always easy to distinguish between states of individual health lying along a continuum varying from excellent health to normality, abnormality, pr e c l i n i c a l disease, c l i n i c a l morbidity, d i s a b i l i t y , and death. It is therefore necessary to employ proxies for the measurement of health status. At one time, l i f e expectancies and various death rates could adequately be employed as crude indicators of illness prevalence even though no account was made of morbidity conditions (not resulting in death) but which caused discomfort, impairment, etc. Changes in these values provided a useful proxy for evaluating the impact of medical treatment and health related programs. In most developed countries, l i f e expectancies have been prolonged such that half the female population can be expected to survive to over 75 and half the male population to over 70. While l i f e expectancies have been prolonged, and natal mortality rates reduced, such progress may have a negative impact on the health status of a population as measured by the prevalence of chronic and genetic illnesses and impairments. Deaths among the aged population, are usually not attributable to a single cause. A degeneracy of one physio- logical system may trigger malfunctions in other related systems which no longer possess the sta b i l i t y and resilience that they once may have had, cummulating in death bearing l i t t l e relation- ship to specific morbidity conditions. Under such conditions, l i f e expectancies and mortality rates, by themselves, can no longer serve as adequate measures of health or illness in a population. A more appropriate assessment of community health must, in addition to mortality rates and l i f e expectancies, involve other measures such as morbidity and impairment. Logan (4'4) suggests a number of physical, mental and biochemical tests and indices for which a range of variability may be used to partially define a state of normality for given age, sex and, possibly, other characteristics. These measures may then serve as crude indicators of community health by identifying the proportion of the population which f a l l within the range of accepted normal variation. Such an evaluation is merely a measure of the extent to which the surrogate measure of health status deviates from the often subjectively defined limits of variation of 'good' or 'normal health', rather than a measure of positive 'well-being'. "In trying to obtain anything more r e a l i s t i c than the crudest of guesses at the prevalence of health, we are forced back into a variety of indirect measurements, which probably 15 reflect to some extent an Impression of healthiness of the community without providing much of a measure of It." (44) One of the f i r s t positive approaches to measuring health is due to Sanders (60) who proposed that the years of "effective" l i f e expectancy be used. This concept was further extended by Sullivan (68) who proposed that general d i s a b i l i t y , relative to the social context, should serve as the basis for a health index. Various other research efforts concentrating on the a b i l i t y to perform daily ac t i v i t i e s and to function within society have been attempted. (See Sokolow and Taylor ( 6 5 ) , Hagner et al ( 3 4 ) , Katz et al (40) and Panshel and Bush ( 2 4 ) . An appropriate health status index should reflect the socio-economic consequences of mortality, morbidity, and dis- a b i l i t y . However constructed, such an index is a subjective evaluation on the basis of available information. Thus the use of such measures is not absolute, but rather an attempt to rationalize a subjective evaluation process. E. Evaluation of Health Care Strategies Different c r i t e r i a may be employed in the evaluation of strategies for the allocation of resources based on changes which can be made in a health status index. Some strategies may be more desirable because they provide an improved or comparable value of a health status index than other more expensive strategies. In other cases a more expensive strategy may hold more attraction when pain, discomfort and other social values are considered. One method which has been employed has been an economic cost-benefit analysis, which considers the cost of the provision 1 6 of various services and the economic losses i n production due to morbidity and premature death. The use of productivity losses is questionable, since i t gives no weighting.to persons not directly contributing to national productivity, and weights the value of other Individuals solely on their relative contributions to GNP. In an economy with less than f u l l employment, i t is probable that the calculated losses in productivity are highly overstated, since production is likely to be geared to a level which takes Into account absentee- ism and other such factors which the analysis naively considers as losses in production. The use of purely economic c r i t e r i a is highly inappro- priate to the evaluation of health care provision. Ideally the analysis should consider pain, loss of social function, psycho- logical stress, etc. which are not measureable in monetary terms, as well as the economic consequences of mortality, morbidity, and d i s a b i l i t y . P. Conclusions It is recognized that medical care services are an important factor which Influence certain individuals' health status, however their effect on population health status may not be appreciable. In modelling a health care system, the interactions and influences of the various factors contributing to health status must be examined to determine the relevant factors to be modelled, their interactions and their influence on health. There are numerous problems involved in the measurement of health status and of the influence of the factors contributing to mental and p h y s i c a l health. There i s , however, a need f o r quantifiable measures or surrogate measures of the above, i f a r a t i o n a l i z a t i o n of the evaluation processes i s to be sought. In developing c r i t e r i a for the a l l o c a t i o n of s o c i e t a l resources, i t i s necessary to consider the medical care system as one component of the m i l i e u which contribute to health status, both of an i n d i v i d u a l and of a population. CHAPTER II. CONSUMER BEHAVIOUR AND THE DEMAND FOR MEDICAL SERVICES A. Introduction In studying the delivery of health care services, the demand-supply interactions and characteristics of the various services should be investigated, as to the role they play in determining which services are performed, how they are delivered, in what quantities, and who consumes them. Underlying the demand for medical services, are the needs and desires which motivate individuals to seek medical services. The concept of need for medical services must differentiate between medically determined need and societal and individual perceptions of need. These needs may be defined in terms of the quantities of various medical services which would be required to f u l f i l l them. The services required to f u l f i l l medically determined needs depend on the state of existing medical knowledge and standards of the medical profession and are, thus, normative judgments of the profession. Individual perception of medical needs may di f f e r sub- stantially from medically determined needs, as the consumer Is not always aware of medical needs or of potential benefits which may be derived from u t i l i z i n g various medical services. Societal perceived needs may be defined as the quantities of various medical services which i t believes i t should consume on the basis of i t s perceived needs. It should be noted that these needs are not well defined in terms of either the quantity or the category of medical services, but are a general desire for 19 medical services and not for the mix and quantity of services which may be received or required, as w i l l be elaborated in Chapter III. The demand for medical services is the result of actions taken to satisfy wants. The transformation of wants Into demands is not homomorphic, in that many wants f a i l to materialize as demands because of various inhibiting factors. In order to analyze demand, one must investigate the possible impact of those variables which influence perception, needs, wants and the translation of wants into demands. B. Individual Perception of Need Medically determined needs may not be perceived by an individual, in some instances because of the asymptomatic nature of an Illness or in other cases through a lack of knowledge of symptoms or 'warning signals' which are present. The extent to which medical need exists and is not perceived has been docu- mented in a number of studies. Feldman ( 2 5 ) refers to a University of Michigan Medical School and Institute of Industrial Health report, in which 4 l percent of a group of 500 business executives taking a company paid check-up had abnormalities of health of which they were not aware and which required medical treatment. Population interviews compared with c l i n i c a l examinations of a sample population point out both the extent of unperceived illness and also the unreliability of population interviews as a means of determining the prevalence of medical needs. Elison and Trussell ( 2 0 ) reported that only "about one-fourth of the conditions found- on a thorough c l i n i c a l examination;: and judged by these clinicians to have been present at time of interview, were reported previously in the family interview . For example, one-third of the cases of diabetes, over one-half of the cases of heart disease, and nine out of ten cases of neoplasms (both benign and malignant) were not reported in the family interview." The extent to which individuals perceive various conditions as requiring professional medical attention without a knowledge of the particular diagnosis to which the symptoms pertain, is illustrated by Feldman (25). The percentage of the surveyed public which fe l t a physician v i s i t was required for various common symptoms appeared to correspond f a i r l y closely to the percentage of the surveyed physicians who also f e l t that a physician v i s i t was required. An individual's knowledge of symptomatic indicators of illness plays a significant role in his perception of need. To a lesser extent, the knowledge and awareness of those he associates with, sometimes, also, plays a role in perceiving his need. This is especially the case of small children whose need for medical care is perceived by their parents. C. Factors Influencing Health Knowledge Age, sex, urbanization, socio-economic status, and education have been shown to be correlated with health knowledge. The interdependencies among these variables often have created problems in determining the effects of the separate variables. Feldman (25) suggests that the amount of health knowledge possessed by an individual is largely a result of general medical 2 1 Interests and aptitudes and that "information materials generally reach and are assimilated by the better educated and most i n - terested groups in the population .... the better educated are able to (and do) keep themselves better informed about health and illness because of essentially the same factors which underlie their superiority in almost a l l other realms of knowledge a greater capacity and a greater desire for learning in general." D. Sources and Effectiveness of Health Information Dissemination (in a developed country) Mere exposure to health information Is hardly sufficient to ensure increased u t i l i z a t i o n since i t often does not reach the majority of the population or is not assimilated by them. The main source of health Information is the mass media. Organized campaigns and news coverage of new advancements or announcements such as Nixon's war on cancer appear to have the most effect on the public's awareness of health problems and of symptomatic indicators of i l l n e s s . Mendelsohn (45) states that "Research evidence has shown that rather than converting audiences, the mass media serve essentially to reinforce what they would like to believe or do. Furthermore, the mass media reinforce, more often than not, what audiences already like or dislike, and they serve to underpin what audiences have already learned in the past." Health knowledge is not necessarily accompanied by attitudes which are predisposed to action. While individuals may believe certain health services should be sought under given conditions, their behavior is often not consistent with their beliefs. 22 E. Health'Service "Wants" Having perceived the need for some form of health treat- ment, an individual Is faced with the decision as to the course of action to take. A subsequent translation into 'wants' or predisposition to action is determined by the individual's beliefs as to the seriousness of his condition and the possible conse- quences of the various courses of action. This task is reduced i f the individual has formed some opinion of the possible diagnosis. The possible alternative decisions are illustrated in Figure 1. Perceived Needs Beliefs Dec! sion do nothing self treatment desire treatment of some form outside the medical service system desire professional medical services Figure 1: Alternative Decisions for Perceived Needs This decision process may be iterative, in that the per- ception of needs and the beliefs may alter in such a manner that subsequent decisions are made. F. Factors Influencing Utilization of Health Services Although an individual may desire professional medical treatment, there are often other factors which contribute to a decision to actually seek such services. 1. Distance Distance appears to play an important role in health services u t i l i z a t i o n , u t i l i z a t i o n decreasing with an increase In distance from the sources' of provision of health services. 23 A study in a metropolitan area by Weiss and Greenlick (7*0 concludes that "distance affects the medical care process differentially by social class and interacts with social class as an explantory variable." This study is based on the distance between the sample population's place of residence and the nearest c l i n i c . This study and others which are based on the place of residence do not account for the effect of v i s i t s which may originate from other points such as the place of employment. Shannon et al (62) note that "The distance variable is only a crude surrogate for the human phenomena which are involved in travel. Human involvement in terms of effort, the distribution of effort over multiple purposes, choice between alternatives, and ease of transportation should be considered as these factors relate to medical care u t i l i z a t i o n . There is a pressing need to disentangle distance factors from locational factors, habitual paths, and social biases." 2. Economic Factors Financial considerations often represent a limitation on health service u t i l i z a t i o n . Family income, the cost of health services and other consumer expenditures often influence a decision to seek professional medical services or not. Unlike many other needs, such as food and shelter, individuals' f e l t needs for medical services often appear sporadically and may represent an unexpected! financial burden. Various health insurance plans provide against unexpected financial burdens and also make i t financially feasible for some to greater u t i l i z e available health services,. A number of 24 studies have shown that health insurance programs have Increased u t i l i z a t i o n of health services, especially hospital care. Reed, (53) in a study of Canadian health insurance programs, found that hospital admissions and lengths of stay continued to increase, but at an accelerated rate with the Inauguration of universal hospital insurance. It was found that increases In the length of stay were relatively greater than those in admissions. Another economic factor, which sometimes may effect u t i l i z a t i o n , is a loss of wages incurred while making a v i s i t to a physician or receiving some form of treatment. The possession of various sick leave and sick pay insurance schemes and job security clauses may be of considerable importance in this context. 3. Social Factors The decision to seek professional medical care, especially hospitalization, may depend on the availability and a b i l i t y of someone in the home to provide care. Marital status and family size may play an important role in this context. It has been found that the single or widowed aged, as compared to the married aged, require more services not only because of a need for care but also because of psychological needs. G. Utilization Modes In seeking medical services, an Individual usually seeks the services of a general practitioner who treated him in the past. In some cases, the individual may decide to seek the services of a specialist, although a patient is generally referred to a specialist by a general practitioner. An important consi- deration here, is that under some medical insurance plans, the patient may have to bear partial financial responsibility unless 25 he has been referred through a general practitioner. The i n i t i a l contact for a given incidence may take the form of a telephone conversation, an appointment, an unscheduled v i s i t , or a house c a l l . It should be noted that this last category has become an infrequently provided service. In seeking services for which the condition is perceived as requiring immediate medical attention, an individual may make an unscheduled v i s i t to the physician's office, u t i l i z e the emergency services of a hospital or request a physician house c a l l . In a study ( 7 4 ) of the Kaiser Foundation Health Plan, i t was found that the working class made more frequent use of hospital emergency services than the middle class which were more likely to make unscheduled v i s i t s to the physician's office. It was also found that the middle class u t i l i z e d the telephone much more than the working class. The study suggests that sociological consi- derations play an important role in determining the manner in which individuals u t i l i z e the health care system. H. Patients' Compliance With Doctors' Advice Various studies indicate that from 15 to 93 percent of patients are not compliant with doctors' orders (16). Such factors as the influence of others, s t a b i l i t y of conditions in the home, complexity of regimen, and restrictions on personal habits appear to influence a patient's compliance with a doctor's suggested medical regimen. In a study, Davis (16) found "no significant relationship between compliance and any of the demographic characteristics investigated — age, sex, marital status, religion, education or occupation," There was also found to be l i t t l e correlation be- tween any interactions in the primary v i s i t and later compliance. 26 The study suggests that compliance Is largely a result of patient- physician interactions on subsequent v i s i t s . 1. Conclusions The primary demand or the general demand of consumers for medical services is the end result of a process Involving per- ception of need, beliefs as to the seriousness of the perceived need, beliefs as to the possible consequences of the various courses of action, and the Influence of utilization-inhibiting factors such as the distance from the source of medical care provision, and socio-economic considerations. It should be noted that, some demands originate as prerequisites for employment, pass- ports, etc. rather than in the consumer seeking improved or insured health. Since many medically determined needs f a i l to materialize as demands, i t is necessary to understand these processes in order to predict or influence primary demand for medical care services. As has been noted, the general or primary demand of consumers for medical services is not well defined in terms of the quantity or mix of services. It is the suppliers of medical care services who determine the specific demands for the mix and quantity of services, based on the primary demands of the consumers. CHAPTER III. THE SUPPLY OP HEALTH SERVICES A. Health Services, An Interrelated Network of Component Services The community health care delivery system may be viewed in terms of the community's needs and demand^the services and f a c i l i t i e s required to provide specified fulfillment, the supply of services and f a c i l i t i e s and the manner in which services are provided. The component services of health care delivery must be considered in relation to one another since the degree of sub- s t i t u t a b i l i t y , relative cost, organizational arrangements, and availability and effectivness among other factors influence the mix and relative u t i l i z a t i o n of the component services. Coordinated planning and the efficient u t i l i z a t i o n of various care and treatment services are complicated by the involvement of numerous organizations which often act indepen- dently of one another in the provision of health and health related services. This situation leads to a less than optimal benefit from the resources employed. The complexity of interactions and interdependencies of various components of health services requires that policies and procedures within and between component parts must be viewed in the context of the total system in order to yield a meaningful appraisal of community health care services. B. Community Care and Shelter F a c i l i t i e s and Services As Related To Health Within most large communities, numerous services and 28 f a c i l i t i e s e x i s t to provide care and shelter to i t s d i t i z e n s . These services and f a c i l i t i e s range from preventive public health and home care services to such medical treatment centers as acute and chronic h o s p i t a l s . The manner i n which various components are delimited, regulated, coordinated and financed may vary between communities. Although d i f f e r e n t organizational structures and patient category d e f i n i t i o n s e x i s t , the following tables are f e l t to be represen- t a t i v e , They are chosen here since they have been employed i n the Greater Vancouver region. 2.9 Table 1: Health and Health-Related Services and Facilities in the Greater Vancouver Region Type of Ca r e S e r v i c e s F a c i l i t i e s P r e v e n t i v e Immunization P h y s i c a l checkup E n v i r o n m e n t a l public health Diagnostic and. Am b u l a t o r y patient " care P h y s i c i a n s e r v i c e s Dental s e r v i c e s R a d i o l o g i c a l and other diagnostic s e r v i c e s Outpatient h o s p i t a l departments .Home care • V o l u n t a r y organizations P u b l i c health n u r s i n g R e s i d e n t i a l care H o s t e l s / M i s s i o n s B o a r d i n g homes . P e r s o n a l care homes S k i l l e d n u r s i n g care P r i v a t e hospitals Extended care h o s p i t a l s Intensive care P u b l i c hospitals F e d e r a l hospitals Teaching and Re search U n i v e r s i t i e s H o s p i t a l s Table 2 : Patient Categories and Levels of Care In the 30 Greater Vancouver Region Types of Care Patient Groups Examples of Levels of Accom- ' Cases Included modation Required ACUTE - A C r i t i c a l l y i l l , high risk, re- quiring con- tinuous round- the-clock nursing and possibly special resuscitative and supportive equipment. Complex high risk medical and sur- gical cases; severe multiple injuries; shock, et c. Intensive Treat- ment areas, e.g. Post-anaesthetic Recovery Room (PAR), Post- operative Re- covery Room (POR), Inten- sive Care Unit (ICU), etc. B Acute medical and surgical conditions (in- cluding psychi- atric) . Routine acute medical and surgical cases. Regular wards and f a c i l i t i e s Acute General Hospital Ambulatory low risk patients. Day Care, Might Reception areas Care, Short Stay Activity areas Care and Out- patient . REHABILI- Patients re- Cases medically Special activities TATION AND quiring a capable of im- and Rehabili- ACTIVATION planned physi- provement within tation hospital. cal rehabili- a reasonable tation program period of time. Activation and Rehabilitation unit of acute hospital. CONVALESCENT Those patients requiring more than average length of time for recovery, do not require specially arranged re- habilitative programs or acute care level of accommodation. Uncomplicated recovery phase of medical and surgical cases. Areas of lesser care within or without the general hospital. Will require skilled nursing care. 31 T a b l e 2 ( C o n t i n u e d ) Types o f Care P a t i e n t Groups Examples o f Cases I n c l u d e d L e v e l s o f Accom- modation R e a u i r e d LONG TERM CARE or CHRONIC CARE or EXTENDED CARE Complete i n v a l i d , i n c l u d e s t h o s e c o n t i n u i n g c r i t i c a l l y i l l and t h o s e who have major i l l n e s s e s w i t h l i m i t e d m o b i l i t y . S e m i - I n v a l i d - may have con- s i d e r a b l e i l l n e s s but be q u i t e m o b i l e . E l d e r l y and f r a i l p e o p l e who r e - q u i r e s h e l t e r e d e n v i r o n m e n t . ( C u s t o d i a l ) . P a t i e n t s who a r e c o n t i n u i n g c r i t i c a l l y i l l and need I n t e n - s i v e s k i l l e d n u r s i n g c a r e 2 4 hours a day (some might be q u i t e m o b i l e ) . P a t i e n t s w i t h a t e r m i n a l i l l n e s s - a l l t h o s e w i t h major i l l n e s s and/or l o s s o f m o b i l i t y . P a t i e n t s who need s k i l l e d n u r s i n g c a r e , but p r e d o m i - n a t e l y p e r s o n a l c a r e . E xtended Care U n i t Acute H o s p i t a l Extended Care H o s p i t a l P r i v a t e H o s p i t a l ( N u r s i n g Home) These p a t i e n t s r e q u i r e s k i l l e d n u r s i n g c a r e . P e r s o n a l Care Home. P r i v a t e H o s p i t a l ( N u r s i n g Home-). P a t i e n t s who a r e up and l o o k a f t e r most of t h e i r own needs. L i m i t e d p e r s o n a l c a r e n e c e s s a r y . B o a r d i n g Homes (Rest Homes) ( S u b s t i t u t e f o r P a t i e n t ' s home) E x p l a n a t o r y N o t e s : 1. I t i s d i f f i c u l t t o d e f i n e t h e c a t e g o r i e s of c h r o n i c i l l n e s s because of the g r e a t v a r i a t i o n i n the needs of each c h r o n i c I n v a l i d . P a t i e n t s w i t h c h r o n i c i l l n e s s do not u s u a l l y remain s t a t i c - They are g e n e r a l l y im- p r o v i n g and d o i n g more f o r t h e m s e l v e s or d e t e r i o r a t i n g and becoming more dependent. A l t h o u g h B.C.H.I.S.* e s t a b l i s h e s a d m i n i s t r a t i v e c a t e g o r i e s of i l l n e s s and d i s a b i l i t y f o r purposes of h o s p i t a l i z a t i o n c o v e r a g e , i l l n e s s does not f a l l i n t o such w e l l d e f i n e d c a t e g o r i e s . I t must be a c c e p t e d t h a t t h e r e be ease o f t r a n s f e r between d i f f e r e n t l e v e l s of c a r e t o meet the changing needs of each p a t i e n t . 2. S k i l l e d N u r s i n g Care - r e f e r s t o n u r s i n g s e r v i c e s , c o n t i n u a l l y a v a i l a b l e by q u a l i f i e d p e r s o n n e l p r o v i d e d t o p a t i e n t s under r e g u l a r m e d i c a l s u p e r v i s i o n . 3 . P e r s o n a l Care - i n c l u d e s a l l c a r e o t h e r t h a n s k i l l e d n u r s i n g c a r e : s p e c i a l h e l p w i t h d r e s s i n g , w a s h i n g , 32 getting around, help with meals, etc. Personal care indicates 24-hour supervision. 4. Extended Hospital Care - as defined by'B.C.H.I.S. A hospital f a c i l i t y operated by a non-profit hospital society or by the provincial Government. By defini- tion, the patients in this f a c i l i t y must require 24- hour nursing care under the c r i t e r i a established by B.C.H.I.S. (In essence, the patient requires assis- tance to be mobile). 5. Private Hospital (Nursing Home) An institution providing 24-hour skilled nursing ser- vices under regular medical supervision. It is licensed by B.C.H.I.S. and subject to periodic i n - spection by B.C.H.I.S. * B.C.H.I.S. - British Columbia Hospital Insurance Service. Source: Patterns of Care, Greater Vancouver Regional Hospital District Advisory Committee - May, 1969. Faci l i ty or Organization Se rvices Type of Agency Bed Capacity 1968 * Regulation Source of Operating Funds Red Cross Canadian Arthrit is and Rheumatism Society (CARS) Other voluntary organizations Varied Non-profit --- --- Donations Hostels /M issions Food & Lodging Non -profit 425 Welfare Institutions Licensing Board Public or Social Assistance Payment Boarding Homes Food, Lodging and Limited Domestic Services Proprietary Voluntary 2, 089 994 Department of Social Welfare Payments by users of Personal Care Homes Food, Lodging and a range of services intermediate between residential and private hospital care Public Voluntary Proprieta ry 58 12 53 facility and payment of welfare rates for qualifying patients Private Hospitals Skilled nursing care under the supervision of a practicing physician Proprieta ry 1,932 Department of Health Services and Hospital Insurance Extended Care Hospitals Non-profit 695 Regional Hospital District Board BCHIS & $l/day from patients * A Total Concept of Care United Community Services of The Greater Vancouver Area , October 1968 T a b l e 3: N o n - P u b l i c C a r e F a c i l i t i e s and Organizations in the G r e a t e r V a n c o u v e r Region In comparison to the 6,263 beds in lower level care institutions there were 4,390 beds in rehabilitation, chronic care and acute general hospitals in the same region, In 1968. C. Public Financing Of Health Services Some health care services may be regarded as collective goods for which benefits may accrue equally to everyone. Such goods are sometimes financed and provided as public goods. This may be especially true of services requiring high capital invest- ment, such as hospitals. There are two major arguments for a policy of governmental intervention in the provision of various health services. 1. The access to medical services has come to be regarded, by many, as an individual right rather than a privilege of the wealthy. Without intervention, inequalities in Individual wealth would prevent many people from seeking medical services which they need and desire, but which they also regard as financially i n - feasible . 2. Externalities, in the absence of intervention, would often result in an underproduction of some services which are fe l t to be essential, as in the case where benefits of research and communicable disease control may accrue not only to the purchaser but everyone else in the society. Public intervention and the institution of regional planning of various services requiring high capital investment may avoid costly duplication and underutilization of services mort and allow f o r A d i v e r s i f i e d and specialized services through the coordination of resource allocation. 35 D. Scope Of Planning Of necessity, planning for the provision of health services must be limited to those areas over which a planning body has responsibility, while taking into consideration other f a c i l i t i e s and services outside i t s jurisdiction. In view of this, the approach here Is limited to the provision of hospital and related services under the jurisdiction of a Regional Planning Board and of physician services which are essential to the provision of health care services. It is f i r s t necessary to consider the supply of these services and their characteristics. E. Physician Services 1. The Role of the Physician An individual seeking medical care seeks the advice, knowledge, and ski l l e d care of a physician. The physician's role is to provide a service, ie. diagnosis, the prescription of drugs, tests, and therapy.,, the recommendation of hospital admission, etc. In fact, a patient must employ the services of a physician in order to gain non-emergency admission to a hospital or to legally obtain certain drugs. Once the individual has initiated a primary demand for health services by v i s i t i n g a physician, a secondary or 'prescribed' demand is generated when the physician determines the service requirements for the patient. The determination of a medical regimen depends on the physician's perception of the patients needs, the state of medical technology, and on the interaction between physician and patient in arriving at a treatment acceptable to the patient. In choosing among p o s s i b l e r e g i m e n s , the p h y s i c i a n may c o n s i d e r t h e economic c o s t t o the p a t i e n t and h i s p a s t knowledge o f the p a t i e n t ' s p r e f e r e n c e s . U n l e s s a p a t i e n t ' i n d i c a t e s an o b j e c t i o n o r p r e - f e r e n c e , the d e c i s i o n p r o c e s s u s u a l l y does not i n v o l v e t h e p a t i e n t ' s p a r t i c i p a t i o n and h i s v a r i o u s p r e f e r e n c e s a re not c o n s i d e r e d . O f t e n t h e l a c k o f knowledge on t h e p a r t o f t h e p a t i e n t as t o p o s s i b l e a l t e r n a t i v e s and t h e s o c i a l and p r o f e s - s i o n a l s t a t u s of t h e m e d i c a l p r o f e s s i o n work t o l e a v e the s e l e c - t i o n o f t h e regimen almost e n t i r e l y up t o t h e p h y s i c i a n . The p h y s i c i a n ' s c h o i c e o f t r e a t m e n t i n v o l v e s t h e a v a i l - a b i l i t y of v a r i o u s r e s o u r c e s and the a l t e r n a t i v e c o s t s t o h i m s e l f . P r e f e r e n c e s w i t h r e g a r d t o c o s t , r i s k a v o i d a n c e and time may d i f f e r s u b s t a n t i a l l y between t h e p h y s i c i a n and the p a t i e n t . The mix o f s e r v i c e s s p e c i f i e d by t h e p h y s i c i a n may be governed more by h i s own p r e f e r e n c e s t h a n t h o s e o f h i s p a t i e n t . I f a p a t i e n t f e e l s moderate d i s s a t i s f a c t i o n w i t h t h e c a r e he r e c e i v e s , he i s o f t e n r e l u c t a n t t o seek t h e s e r v i c e s o f a n o t h e r p h y s i c i a n because o f the committment he has made i n f o l l o w i n g a re g i m e n , t h e d e l a y and i n c o n v e n i e n c e of s e e k i n g the s e r v i c e s o f a n o t h e r p h y s i c i a n , and h i s u n c e r t a i n t y as t o any i n c r e a s e d bene- f i t s . 2. The Supply and C h a r a c t e r i s t i c s o f ' P h y s i c i a n S e r v i c e s The s u p p l y o f p h y s i c i a n s and the c o s t of t h e i r s e r v i c e s are not governed by c o m p e t i t i v e market f o r c e s . The s u p p l y i s l i m i t e d by r e s t r i c t i o n s on e n t r y t o t h e p r o f e s s i o n and on t h e r i g h t t o p r a c t i c e . These r e s t r i c t i o n s i n c l u d e l i m i t a t i o n s on e n r o l l m e n t i n m e d i c a l s c h o o l s , the h i g h c o s t of a m e d i c a l edu- c a t i o n , t h e s c r e e n i n g p r o c e s s d u r i n g m e d i c a l s c h o o l , l i c e n s i n g t o p r a c t i c e , and t h e g r a n t i n g o f h o s p i t a l p r i v i l e g e s . 37 The medical p r o f e s s i o n ' s r e g u l a t i o n of entry and the r i g h t to p r a c t i c e serves not only to l i m i t c o m p e t i t i o n , but a l s o to guarantee that c e r t a i n standards w i l l be maintained by medical p r a c t i t i o n e r s . Independent and organized groups of physicians cannot be regarded as competitive s u p p l i e r s of medical s e r v i c e s i n the normal economic context of competit ion. P r i c e as a competitive mechanism i s g e n e r a l l y considered to be u n e t h i c a l by the p r o - f e s s i o n and overt a d v e r t i s i n g of p r i c e s does not occur. In examining p r i c e behaviour of p h y s i c i a n f e e s , Garbarino (31) suggests that "the most important cause for the observed fee behaviour has been the pressure of a growing demand f o r more medical care on an i n e l a s t i c supply of s e r v i c e s " . The supply of p h y s i c i a n s e r v i c e s i s dependent both on the number of p r a c t i c i n g p h y s i c i a n s and on t h e i r p r o d u c t i v i t y . P r o d u c t i v i t y i s d i f f i c u l t to define i n the context of p h y s i c i a n s e r v i c e s , as i t cannot be measured s o l e l y on the b a s i s of the number of pat ient v i s i t s and operations performed, but must a l s o account for the q u a l i t y of services rendered and the mix and s e v e r i t y of p a t i e n t cases attended t o . Garbarino (31) has attempted to estimate output per p h y s i c i a n between 1935 and 1951 i n the United States (Table 4) . He notes, however, that the increase i n output may be overstated by 15 t o 20 per cent between 1935 and 19*14, since the percentage of b i l l i n g s c o l l e c t e d rose from approximately 74 percent i n 1935 to 87 per cent i n 1944. 38 T a b l e 4: E s t i m a t e s o f Output p e r P h y s i c i a n , 1935-1951 O u t p u t / P h y s i c i a n O u t p u t / P h y s i c i a n Year I I I Y e ar I I I 1935 100.0 1944 212.7 n.a. 1936 110.7 100.0 1945 234.4 213.9 1937 114.3 99.5 1946 212.9 190.0 1938 110.8 93.2 1947 214.6 195.9 1939 114.0 94.9 1948 220.5 204.0 1940 119.8 99.9 1949 225.4 214.2 1941 133.4 115.2 1950 233.4 , 225.8 1942 167.8 n.a. 1951 242.1 228.7 1943 210 .6 n.a. N o t e s : V a r i a n t I — C a l c u l a t e d by d e f l a t i n g t h e i n d e x o f mean g r o s s income p e r p h y s i c i a n by t h e i n d e x o f p h y s i c i a n s ' f e e s . Base — 1935 = 100 V a r i a n t I I — C a l c u l a t e d by s u b s t i t u t i n g median n et income f o r mean g r o s s income i n t h e above. Base — 1936 = 100 A l l income d a t a are f o r " n o n s a l a r i e d p h y s i c i a n s . " S o u r c e : G a r b a r i n o (3D I n a l a t e r s t u d y , he found a 10 p e r cent i n c r e a s e i n p r o d u c t i v i t y f o r t h e e n t i r e p e r i o d 1949-54 (32). -Time s e r i e s s t u d i e s such as t h i s are s u b j e c t t o e r r o r i n t r o d u c e d t h r o u g h changes and advancements i n t r e a t m e n t s and i n c r e a s e d use of a u x i l i a r y p e r s o n n e l and s e r v i c e s . I n the p a s t few decades the l o c a l e o f much t r e a t m e n t has been s h i f t e d from p a t i e n t s ' homes t o p h y s i c i a n s ' o f f i c e s and t h e h o s p i t a l , t h u s r e d u c i n g p h y s i c i a n t r a v e l l i n g t i m e . T h i s f a c t o r i n i t s e l f s h o u l d account f o r a s u b s t a n t i a l p e r c e n t a g e o f the 39 increase i n productivity. It Is no doubt true that the q u a l i t y of medical services has improved during t h i s time and that many other a c t i v i t i e s such as research, teaching and continuing education have increased i n importance and t h e i r demand on physician time. Although throughput may be increased, the supply of physician services may be regarded as very i n e l a s t i c , i n the short-run, while the supply curve f o r physician services i s l i k e l y to be p o s i t i v e l y sloped, i n the long-run ( 4 l ) . In the short-run, the supply of physician services i s limited by the number of physicians and the time they are w i l l i n g to devote to t h e i r p r a c t i c e s . In the long-run, the number of physicians, i n a p a r t i c u l a r region, i s l i k e l y to be influenced by the r e l a t i v e attractiveness of p r a c t i c i n g i n that region. Expected income i s , of course, a major consideration. An important development i n physician services i n the la s t 20 to 30 years has been the trend towards s p e c i a l i z a t i o n and associated r i s e i n the cost of medical services. Among other things the trend towards s p e c i a l i z a t i o n has stemmed from a vast increase i n knowledge and technology. S p e c i a l i z a t i o n has led to a decline i n the number of general p r a c t i t i o n e r s and a concentration of physicians in urban areas. The concentration of s p e c i a l i s t s i n urban areas i s p a r t i a l l y a r e s u l t of the need f o r a large enough population and r e f e r r a l system to u t i l i z e s p e c i a l i s t s services. The 1968 p r o v i n c i a l d i s t r i b u t i o n of s p e c i a l i s t s i s shown below, where metro refers to Metropolitan Vancouver and V i c t o r i a and non-metro are a l l remaining regions. ( 6 l ) As may be seen, there are more s p e c i a l i s t s than general p r a c t i t i o n e r s i n the metropolitan regions, whereas the opposite is true of non- metropolitan regions. G.P. Specialists Metro 884 1060 Non-Metro 544 238 The two major c r i t e r i a which appear to have governed physician location are available opportunity and size of community, with the smaller community being preferred (.61). The number of specialists in provincial non-metropolitan regions appears to be correlated with the population size of the region. The only provincial region which shows a major deviation from this is the Lower Mainland, excluding the Greater Vancouver region. This is explainable by i t s close proximity to Metropoli- tan Vancouver, which serves as a. major referral centre not only for the Lower Mainland but also for the province as a whole ( 6 l ) . It is interesting to note that half of the general practitioners have a special f i e l d of interest which accounts for as much as 30 percent of their practice time. In addition, specialists deal with cases outside their speciality with over .15 percent also engaged in general practice ( 6 l ) . In addition, various specialists such as pathologists, anaesthesiologists, and radiologists, as hospital or private laboratory staff, provide services for other physicians. Today, many physicians are engaged in partnerships and group practices. In a British Columbia survey of medical man- power ( 6 l ), responses Indicated that 15 percent of ^private practice physicians were in partnership and 49 percent were in 41 group p r a c t i c e . Of t h e s u r v e y e d p h y s i c i a n p o p u l a t i o n 70 p e r c e n t f e l t t h a t group p r a c t i c e was b e t t e r t h a n s o l o p r a c t i c e . The maj o r advantages o f group p r a c t i c e were g i v e n a s ; more f r e e t i m e , b e t t e r o r g a n i z a t i o n o f manpower, i n f o r m a l c o n s u l t a t i o n , b e t t e r p a t i e n t c a r e , c o n t i n u i t y o f c a r e , b e t t e r w o r k i n g f a c i l i t i e s and f u l l e r use o f p a r a m e d i c a l p e r s o n n e l . (6l) 3. Modes o f Reimbursement and t h e E f f e c t o f T h i r d P a r t y Payment Governmental and o t h e r a g e n c i e s have o f t e n made p r o v i s i o n s f o r m e d i c a l i n d i g e n t s , w h i l e t h e m e d i c a l p r o f e s s i o n has employed s l i d i n g s c a l e f e e s t o make a l l o w a n c e s f o r p a t i e n t s o f l i m i t e d f i n a n c i a l means. A l t h o u g h the use o f s l i d i n g s c a l e f e e s may be r e g a r d e d as a form o f p r i c e d i s c r i m i n a t i o n , Arrow (5) argues t h a t t h i s p r a c t i c e i s not one whi c h maximizes p r o f i t . The b a s i s o f h i s argument i s t h a t the p r i c e e l a s t i c i t y o f demand i s l e s s t h a n one f o r a l l income l e v e l s , but c o n s i s t e n c y w i t h p r o f i t m a x i m i z a t i o n r e q u i r e s t h a t the e l a s t i c i t y o f demand be g r e a t e r t h a n one i n each segmented market. I n t h e p a s t , a l t h o u g h v a r i o u s a l l o w a n c e s and p r o v i s i o n s were made f o r i n d i v i d u a l s o f l i m i t e d f i n a n c i a l r e s o u r c e s , i n d i v i d u a l consumers o f p h y s i c i a n s e r v i c e s were l a r g e l y f i n a n c i a l l y r e s p o n s i b l e f o r t h e s e r v i c e s they consumed. T h i s c o n s t i t u t e d t h e p r i m a r y s o u r c e o f p h y s i c i a n revenue. I n s u r a n c e payments now account f o r a s i g n i f i c a n t p r o p o r t i o n of the revenue r e c e i v e d by p h y s i c i a n s . Under i n s u r a n c e payment " t h r e e d i f f e r e n t methods of coverage o f the c o s t s c f m e d i c a l care have a r i s e n : prepayment, 42 indemnities according to a fixed schedule, and insurance against costs, whatever they may be. In prepayment plans, insurance i n e f f e c t i s paid i n kind that i s , d i r e c t l y i n medical services. The other two forms both involve cash payments to the ben e f i c i a r y , but i n one case the amounts to be paid involving a medical con- tingency are fi x e d i n advance, while i n the other the insurance c a r r i e r pays a l l the costs, whatever they may be, subject, of course, to provisions, l i k e deductibles and coinsurance." ( 5 ) . In many cases the rates of remuneration are negotiated between the physicians involved and the insuring party. In B r i t i s h Columbia, governmental and governmentally regulated t h i r d party payment plans provide universal insurance coverage for physician services, various physician-prescribed services such as x-rays, physiotherapy, and laboratory t e s t s , and other services such as those of chiropractors. The services covered are extensive. However, there are certain l i m i t a t i o n s on the usage of some services and a few services such as physical examinations required for employment or insurance purposes are not covered. Insurance plans are of p a r t i c u l a r importance i n t h e i r e f f e c t on the cost and quality of medical care. While medical insurance coverage provides a means whereby certai n needed services, which may have been foregone by various indivi d u a l s because of f i n a n c i a l constraints, are obtained, i t also induces elements cf abuse. When patients are covered by insurance they may seek additional services which are not r e a l l y medically required. Some physicians may overprescribe services or select a more expensive form of treatment than i s required e i t h e r at the p a t i e n t ' s request or to i n c r e a s e p r o f i t , reduce r i s k or reduce the time and e f f o r t r e q u i r e d . On the other hand, the involvement o f governmental and other t h i r d p a r t y payment plans may p r o v i d e an impetus to reduce or c o n t r o l the costs of m e d i c a l s e r v i c e s and t o improve the q u a l i t y of these s e r v i c e s . These c o l l e c t i v e o r g a n i z a t i o n s have g r e a t e r b a r g a i n i n g power than i n d i v i d u a l consumers and a l s o have the inecessary resources t o study v a r i o u s aspects of c o s t s and q u a l i t y of m e d i c a l c a r e . Other o r g a n i z a t i o n a l arrangements such as prepayment plans where p h y s i c i a n s form the insurance group and arrangements o f a p r o f i t - s h a r i n g nature such as the K a i s e r Foundation M e d i c a l Care Program may p r o v i d e s t r o n g m o t i v a t i o n f o r the development of e f f e c t i v e means of p r o v i d i n g m e d i c a l care s e r v i c e s , however f u r t h e r r e s e a r c h i n t h i s area i s r e q u i r e d . The impact of these arrangements i s g r e a t e s t i n the area of h o s p i t a l care and w i l l be f u r t h e r d i s c u s s e d i n the next s e c t i o n . F. H o s p i t a l S e r v i c e s 1. The Development And C h a r a c t e r i s t i c s of H o s p i t a l S e r v i c e s The r o l e and e f f e c t i v e n e s s of the h o s p i t a l have g r e a t l y i n c r e a s e d d u r i n g the l a s t century. The d i s c o v e r y of a n e s t h e s i a and a n t i s e p s i s i n the l a s t q u a r t e r of the n i n e t e e n t h century began the growth i n h o s p i t a l s t a t u s from one which was not f a r d i f f e r e n t from the almshouse and- s h e l t e r f a c i l i t i e s f o r the poor t o one of prominence. E a r l i e r h o s p i t a l s were regarded as care f a c i l i t i e s f o r the l e s s wealthy who could not a f f o r d p r i v a t e nurses and other home care s e r v i c e s . W i t h the improvement i n m e d i c a l s c i e n c e and r e c e n t p r o l i f e r a t i o n of complex and e x p e n s i v e equipment, the h o s p i t a l grew i n s t a t u r e and p r o v i d e d s e r v i c e s w h i c h c o u l d not be p r o v i d e d i n p a t i e n t homes. Because o f the i n c r e a s e d s t a t u r e , a number of s e r v i c e s w h i c h were p r e v i o u s l y and s t i l l can be p r o v i d e d i n t h e p a t i e n t ' s home o r p h y s i c i a n ' s o f f i c e are now l a r g e l y p erformed i n the h o s p i t a l . H o s p i t a l s o f f e r a wide v a r i e t y o f p a t i e n t care and d i a g n o s t i c s e r v i c e s . The f o l l o w i n g t a b l e s o u t l i n e t h e c l a s s i - f i c a t i o n and a s s o c i a t e d f a c i l i t i e s and s e r v i c e s o f h o s p i t a l s w i t h i n t h e G r e a t e r Vancouver r e g i o n . As can be seen from t h e t a b l e s , some h o s p i t a l s p r o v i d e e d u c a t i o n a l and r e s e a r c h programs i n a d d i t i o n t o p a t i e n t c a r e and d i a g n o s t i c s e r v i c e s . I n a d d i t i o n , h o s p i t a l s s e r v e as l o c a l c e n t r e s o f knowledge and p r o v i d e o p p o r t u n i t i e s f o r i n t e r - p h y s i c i a n a l c o n t a c t . 45 Table 5 : Classification of Hospitals TERTIARY ; Major Referral, Teaching and Research Centre Hospital f a c i l i t i e s of a complex, highly specialized nature acting as a major referral centre for a large population group throughout a widespread geographical area (the Province). These centres w i l l have a varying degree of teaching and research responsibility. SECONDARY Regional Referral Centres Regionalized hospital f a c i l i t i e s of a less highly specialized nature than the major teaching, research and referral centres, but s t i l l pro- viding more complex services and f a c i l i t i e s than w i l l be found in the majority of the community type hospitals throughout the area. Regional referral centres w i l l provide specialized f a c i l i t i e s in order to serve some of the special needs of a number of local communities. Some of the regionalized hospital centres w i l l continue to provide general treatment for the populace in the area Immediately adjacent to the centre, but i t s role in this respect should diminish in . the future. 46 T a b l e 5 (Continued) PRIMARY Community H o s p i t a l s H o s p i t a l s of a community or g e n e r a l p r a c t i c e t y p e , designed t o serve the m a j o r i t y of h o s p i t a l i z a t i o n requirements of the populace of the l o c a l sub-communities of the metrow p o l i t a n area. S p e c i a l i z e d Disease E n t i t y H o s p i t a l s H o s p i t a l s i n which one or a very l i m i t e d number of c l i n i c a l s p e c i a l s e r v i c e s are p r o v i d e d ; e.g., O b s t e t r i c s and Gynaecology, Cancer, e t c . J u r i s d i c t i o n a l H o s p i t a l s H o s p i t a l s owned and operated by a government a u t h o r i t y , t o meet a s p e c i f i c provincer-wlde need. The l o c a t i o n of these h o s p i t a l s w i t h i n any p a r t i c u l a r r e g i o n i s of no s p e c i a l b e n e f i t t o t h a t r e g i o n , i n terms of a v a i l a b i l i t y of f a c i l i t i e s , s i n c e these h o s p i t a l s operate on a province-wide b a s i s . They may p r o v i d e a l i m i t e d or broad scope of s e r v i c e s ; e.g., T u b e r c u l o s i s or Mental H o s p i t a l s . Treatment F a c i l i t i e s Operated by V o l u n t a r y Agencies F a c i l i t i e s such as the C.A .R.S. Treatment Centre, the N a r c o t i c s and A l c o h o l i s m Foundations of B.C., e t c . These f a c i l i t i e s should have an e f f e c t i v e v/orking arrangement with a h o s p i t a l . Source: P a t t e r n s of Care, G r e a t e r Vancouver R e g i o n a l H o s p i t a l D i s t r i c t , A d visory Committee, May, 1 9 6 9 . 2,7 Table 6: F a c i l i t i e s and Services Associated with Classifications of Hospitals Major Referral and Teaching and Research Centres The work done should reflect the investigation and treatment of less commonly encountered illnesses and also those requiring complex equipment and f a c i l i t i e s and multiple c l i n i c a l specialty personnel. . In-Patlent F a c i l i t i e s - general and specialized services Surgical Services Very specialized surgical procedures such as organ transplants, open heart surgery, neurological, major abdominal, cardio- vascular, cancer procedures, etc. Medical Services Diagnosis and treatment of complicated blood diseases Metabolic procedures Rehabilitation and activation treatments Etc. Obstetrics and Gynaecology Complication of maternity High risk obstetrical and gynaecological cases Paediatrics Neo-natal problem cases The high risk infant - transfusions - Rh factor Restorative surgery, cardiovascular case Multiple problem child, handicapped, speech problems, cerebral palsy, neurological, tumors, cancer, retarded children Major endocrine disorders, etc. 48 T a b l e 6 ( C o n t i n u e d ) P s y c h i a t r i c S e r v i c e s Advanced p s y c h i a t r i c r e s e a r c h and t r e a t m e n t Group t h e r a p y Drug t h e r a p y R e h a b i l i t a t i o n t h e r a p y E t c . P h y s i c a l M e d i c i n e P h y s i o - , o c c u p a t i o n a l and i n h a l a t i o n t h e r a p y f a c i l i t i e s D iathermy Gymnasium, p o o l Treatment of c a t a s t r o p h i c c a s e s , s p i n a l c o r d i n j u r i e s E t c . Lab o r a t o r y Complete f a c i l i t i e s f o r the c a r r y i n g out o f e x p e n s i v e and c o m p l i c a t e d t e s t s r e q u i r i n g e x t e n s i v e equipment which are not performed v e r y o f t e n — t h e core o f a r e g i o n a l r e f e r r a l program C y t o l o g y l a b o r a t o r y A c q u i r e and t e s t hew p i e c e s o f equipment ' R a d i o l o g y C o m p l i c a t e d and e x p e n s i v e r e s e a r c h and t r e a t m e n t i n v e s t i g a t i v e f a c i l i t i e s P r e p a r a t i o n of v i d e o tape Equipment f o r use i n c a r d i o l o g y p r o c e d u r e s E x p e r i m e n t i n g and t e s t i n g o f new equipment N u c l e a r M e d i c i n e R a d i o - i s o t o p e l a b o r a t o r y and f a c i l i t i e s a p p r o p r i a t e t o m ajor r e f e r r a l f u n c t i o n T a b l e 6 (Continued) D i r e c t P a t i e n t S e r v i c e s I n t e n s i v e Care U n i t s Post o p e r a t i v e r e c o v e r y rooms Hyperbaric Chamber Burn Unit E t c . ; . Supportive S e r v i c e s Teaching Areas Research L a b o r a t o r i e s Brace Shops Bi o m e d i c a l E n g i n e e r i n g Department L i b r a r y F a c i l i t i e s V o l u n t e e r s E t c . ; ; ' " ' ' Emergency 24-hour emergency s e r v i c e s i n a l l s p e c i a l t i e s O u t-Patient Ambulatory Complete range of d i a g n o s t i c and treatment s e r v i c e s on an out- p a t i e n t , ambulatory b a s i s , e.g. day/night c a r e , day care medicine and surgery and short s t a y . R e g i o n a l R e f e r r a l Centres The work done should r e f l e c t the i n v e s t i g a t i o n and treatment of the commonly and l e s s commonly encountered i l l n e s s e s of the r e g i o n . I n - P a t i e n t F a c i l i t i e s S u r g i c a l S e r v i c e s L i m i t e d t e a c h i n g and r e s e a r c h f a c i l i t i e s Table 6 (Continued) Good s u r g i c a l f a c i l i t e s , i n c l u d i n g some s p e c i a l i z e d s u r g i c a l procedures f o r n e u r o l o g i c a l and abdominal work. M e d i c a l S e r v i c e s S i m i l a r t o those Of the Tea c h i n g , Research and Major R e f e r r a l Centre w i t h the e x c e p t i o n of treatment of complicated b l o o d d i s e a s e s O b s t e t r i c s and Gynaecology Almost complete range of s e r v i c e s . P e d i a t r i c s G e n e r a l range of s e r v i c e s but no c a r d i o v a s c u l a r work, neuro- l o g i c a l , tumor. Few cases of the m u l t i p l e problem c h i l d E t c . P s y c h i a t r i c S e r v i c e s These are an e s s e n t i a l p a r t o f the r e g i o n a l h o s p i t a l f a c i l i t i e s and s h o u l d be i n a separate area. G e n e r a l range of s e r v i c e s . P h y s i c a l Medicine G e n e r a l s e r v i c e s but no c a t a s t r o p h i c cases; these would be r e f e r r e d . Laboratory S e r v i c e s Good range of t e s t s ; l a b o r a t o r y l i k e l y automated - not c a r r y out the few very expensive t e s t s . Radiology Good range of d i a g n o s t i c s e r v i c e s - l i m i t e d therapy. Nuclear Medicine R a d i o - i s o t o p e f a c i l i t i e s e s s e n t i a l when r e g i o n a l r e f e r r a l f u n c t i o n s developed. 5 1 Table 6 (Continued) Direct Patient Services Intensive Care Unit, post-operative recovery room but no Hyperbaric Chamber or Burn Unit. Supportive Services Good physi- and occupational therapy, Volunteers, Bio-Engi- neering to a limited degree. Emergency 24-hour emergency services available in a l l specialties provided by that hospital. Out-Patlent Ambulatory Varying degrees of diagnostic and therapeutic services available, e.g., Day/Might Care, Day Care Medicine and Surgery, Short Stay. Community Hospitals The work done should reflect the investigation and treatment of the commonly and some less commonly encountered illnesses of the region. In-Patient F a c i l i t i e s Surgical Services General procedures. Referral of known high risk patients requiring specialty f a c i l i t i e s and/or personnel. Medical Services General procedures. Referral of known high risk patients requiring specialty f a c i l i t i e s and/or personnel. Obstetrics and Gynaecology General procedures. Referral of known high risk patients requiring specialty f a c i l i t i e s and/or personnel. T a b l e 6 ( C o n t i n u e d ) P a e d i a t r i c s G e n e r a l p r o c e d u r e s . R e f e r r a l o f known h i g h r i s k p a t i e n t s r e q u i r i n g s p e c i a l t y f a c i l i t i e s and/or p e r s o n n e l . S p e c i a l p r o v i s i o n s h o u l d be made f o r t h e a d o l e s c e n t . P s y c h i a t r i c S e r v i c e s These are an e s s e n t i a l p a r t o f t h e Community H o s p i t a l f a c i l i t i e s and t h e y may o r may not be i n a s e p a r a t e a r e a . P h y s i c a l M e d i c i n e May not be e s t a b l i s h e d as a s e p a r a t e m e d i c a l department. L a b o r a t o r y S e r v i c e s G e n e r a l l a b o r a t o r y s e r v i c e s i n t e g r a t e d w i t h a r e g i o n a l l a b o r a t o r y program so t h a t new p r o c e d u r e s v r i l l be a v a i l a b l e . N u c l e a r M e d i c i n e C e r t a i n b a s i c p r o c e d u r e s a v a i l a b l e as p a r t o f g e n e r a l l a b o r a t o r y s e r v i c e . R a d i o l o g y G e n e r a l X-ray p r o c e d u r e s t o meet t h e r e q u i r e m e n t s o f the c l i n i c a l s e r v i c e s . D i r e c t P a t i e n t S e r v i c e s P o s t - o p e r a t i v e r e c o v e r y room w i t h l i m i t e d s p e c i a l i z e d s e r v i c e s t o s e r v e s u r g i c a l and o b s t e t r i c a l c a s e s ; I n t e n s i v e Care U n i t a p p r o p r i a t e t o the f u n c t i o n o f t h e h o s p i t a l ; a c t i v a t i o n and . r e h a b i l i t a t i o n a r e a ; adequate i s o l a t i o n f a c i l i t i e s . S u p p o r t i v e S e r v i c e s P h y s i o - , o c c u p a t i o n a l and i n h a l a t i o n t h e r a p y and e d u c a t i o n t o meet l o c a l r e q u i r e m e n t s ; V o l u n t e e r s . Emergency An e s s e n t i a l i n t e g r a l department o f the Community H o s p i t a l ; the Table 6 (Continued) degree of development and operation are dependent on local conditions. Out-Patlent Ambulatory Provision for diagnostic and treatment f a c i l i t i e s to accordance with health services programs, Day care, Surgery, Medicine, Psychiatry . ' A breakdown of f a c i l i t i e s and services associated with other classifications of primary hospitals had not been performed at the time at which the report ( 4 9 ) was prepared. Source: Patterns of Care, Greater Vancouver Regional Hospital D i s t r i c t , Advisory Committee, May, 1 9 6 9 . 2. The Necessity and Urgency of Hospitalization Surgery, medical treatment, and diagnostic investigation comprise the reasons for the majority of patient hospitalizations. The degree of necessity and urgency differs among these categories. Although hospitalization is often necessary, a l l recom- mended admissions are not essential. In a Massachussett's study (50) of hospital admissions, i t was found that physicians f e l t that 70 percent of the patient admissions which they recommended were "absolutely necessary" and that for another 20 percent of the cases the patient would be much better off in the hospital. Of the cases not judged as absolutely requiring hospitalization, the physicians f e l t that nearly 55 percent could have been treated at home, in the physician's office or on an out-patient basis. The physicians indicated that approximately another 40 percent of these patients could not be treated unless they were in the hospital. The study inferred that this last group probably was not in need of urgent medical care. The physician's attitude toward the urgency of hospital admission was also studied. The surveyed physicians had advised immediate admission for 70 percent of the patients, within a few weeks or months for 21 percent and eventually for another 6 percent. If the above figures are representative i t may be inferred that a significant misutilization of hospital services occurs which warrants concern. Various studies both in Canada and the United States support the contention that such misutilization does occur. (See the Task Force Reports (69)) In order to understand the causes of misutilization we 55 must c o n s i d e r t h e b e h a v i o r a l a s p e c t s o f h o s p i t a l s e r v i c e s . 3. B e h a v i o r a l A s p e c t s of H o s p i t a l S e r v i c e s I n most n o n - p r i v a t e h o s p i t a l s t h e r e i s l i t t l e i n c e n t i v e f o r a d m i n i s t r a t o r s t o m i n i m i z e c o s t s , so l o n g as b u d g e t a r y con- s t r a i n t s can be met. I n f a c t , t h e r e a re o f t e n a number o f i n c e n t i v e s f o r i n e f f i c i e n c y b o t h f o r p h y s i c i a n s and f o r a d m i n i - s t r a t o r s . A d m i n i s t r a t i v e i n n o v a t i o n t o m i n i m i z e c o s t s can r e s u l t i n o p p o s i t i o n and c o n f l i c t from m e d i c a l s t a f f and v a r i o u s h o s p i t a l employees. I n t h e case o f p u b l i c h o s p i t a l s , the a d m i n i s t r a t i o n g a i n s l i t t l e b e n e f i t from c o s t s a v i n g s w h i l e u n d e r t a k i n g an i n c r e a s e d m a n a g e r i a l burden. Both p h y s i c i a n s and a d m i n i s t r a t o r s are prone t o view h o s p i t a l e x p a n s i o n and t h e acquirement o f e x p e n s i v e and complex f a c i l i t i e s f o r t h e i r p r e s t i g e v a l u e and s o p h i s t i c a t i o n r a t h e r t h a n f o r t h e i r m a r g i n a l s o c i e t a l b e n e f i t weighed a g a i n s t t h e i r c o s t . (22) The a v a i l a b i l i t y o f f r e e d i a g n o s t i c and h o s p i t a l p e r - s o n n e l s e r v i c e s o f t e n a f f o r d a p e r s o n a l time s a v i n g t o t h e p h y s i c i a n . However, when i n d i v i d u a l p h y s i c i a n s concerned w i t h i n c r e a s i n g t h e i r own t h r o u g h p u t u n n e c e s s a r i l y o v e r s u b s c r i b e t o t h e s e s e r v i c e s the e f f i c i e n c y of the h o s p i t a l and t h e h e a l t h c a r e system may be re d u c e d . At t i m e s , a p h y s i c i a n may r e q u e s t p a t i e n t h o s p i t a l i z a t i o n when a lower l e v e l o f care I s more a p p r o p r i a t e . T h i s s i t u a t i o n may o c c u r when a p a t i e n t i s cove r e d by h o s p i t a l i n s u r a n c e but has no coverage f o r l o w e r - l e v e l f a c i l i t e s . 56 I n e f f i c i e n c y due t o t h e s e causes and o t h e r s may be re d u c e d t h r o u g h v a r i o u s o r g a n i z a t i o n a l c o n t r o l s such as r e g i o n a l p l a n n i n g and c o - o r d i n a t i n g a g e n c i e s which have c o n t r o l over c e r t a i n a c t i v i t i e s such as e x p a n s i o n and w h i c h i n c o r p o r a t e i n - c e n t i v e s f o r c o s t r e d u c t i o n . The i n s t i t u t i o n o f s u c c e s s f u l o r g a n i z a t i o n a l c o n t r o l s has been i l l u s t r a t e d by t h e K a i s e r F o u n d a t i o n M e d i c a l Care Program. I t was found t h a t t h e e x p e n d i t u r e p e r member vras 35-45 p e r c e n t l e s s t h a n t h e e x p e n d i t u r e of the average C a l i f o r n i a n w i t h no s i g n i f i c a n t d e c r e a s e i n t h e q u a l i t y of c a r e . (56) A l t h o u g h t h e r e were a number o f f a c t o r s c o n t r i b u t i n g t o the l o w e r c o s t , the main economy appeared t o be t h e " c o n t r o l o v e r what m e d i c a l care i s p r o v i d e d and where i t i s p r o v i d e d . T h i s s o u r c e o f economy i s most apparent i n h o s p i t a l c a r e , w i t h the a g e - a d j u s t e d days o f h o s p i t a l c a r e p e r y e a r f o r K a i s e r members b e i n g o n l y 70 p e r c e n t o f t h e S t a t e ' s p e r c a p i t a a v e r a g e . " (56) I t was s u g g e s t e d t h a t i t i s t h e p r o f i t s h a r i n g and the c o s t c o n s c i o u s n e s s o f t h e i n d i v i d u a l p h y s i c i a n w h i c h c o n t r i b u t e s most t o the reduced c o s t . (56) A l t h o u g h t h i s t y pe o f p l a n i s l i k e l y t o form o n l y a s m a l l p e r c e n t a g e o f t h e h e a l t h c a r e systems i n N o r t h A m e r i c a , t h e r e are o t h e r s t r u c t u r a l and o r g a n i z a t i o n a l c o n t r o l s w h i c h may be implemented t o i n c r e a s e t h e e f f i c i e n c y o f t h e h e a l t h system. 4. I n t e r n a l S t r u c t u r e and C o n t r o l A w e l l managed a d m i s s i o n and d i s c h a r g e system may reduce u n n e c e s s a r y h o s p i t a l a d m i s s i o n s and i n c r e a s e the e f f i c i e n c y o f r e s o u r c e u t i l i z a t i o n . The a d m i s s i o n p o l i c i e s and o r g a n i z a t i o n a l arrangements of h o s p i t a l s may s e r v e as the most e f f e c t i v e means 57 of controlling costly misutilization of hospital f a c i l i t e s . Patient mix as well as occupancy rate are determinants of the u t i l i z a t i o n of various f a c i l i t i e s and services within the hospital. An imbalance in patient mix may result In. a less than optimal use of resources, since some resources may be underutilized while other resources are overtaxed. As a consequence the length of some patient stays may be longer than necessary, since the patient may have to await the availability of overtaxed resources. Any resultant Increases in patient stay also increase the waiting time of patients scheduled for elective admission. While patient mix may be controllable to an extent, the major variable which may be used to regulate f a c i l i t y u t i l i z a t i o n is the occupancy level of the hospital. The occupancy level of a hospital is a balancing of the need for slack and of the need for the f u l l u t i l i z a t i o n of the f a c i l i t i e s . Between 1961 and 1968 the average occupancy level of Canadian hospitals has been slightly in excess of 80%. (70) There are three major reasons for a less than 100 percent occu- pancy rate. (a) F a c i l i t i e s have been built to meet projected demands for future years. (b) Randomness in the discharge and admission processes. (c) Intentional slack to allow for emergency admissions. Most researchers believe that the extent of emergency slack and randomness of admission and discharge is a function of hospital size. From s t a t i s t i c a l considerations i t can be shown that for an excess demand, hospitals with a greater number of beds 58 s h o u l d have a h i g h e r occupancy r a t e than a g r e a t e r number of s m a l l e r f a c i l i t i e s s e r v i n g an i d e n t i c a l p o p u l a t i o n with the same number of beds, s i n c e the d e v i a t i o n about the mean occupancy l e v e l w i l l be l e s s (see Berry ( 8 ) ) . However, the p r o v i s i o n of a wider range of s e r v i c e s by l a r g e r h o s p i t a l s may reduce the occu- pancy r a t e o f l a r g e r h o s p i t a l s , s i n c e the t o t a l v a r i a b i l i t y w i l l depend on v a r i a t i o n s i n a g r e a t e r number of d i s t i n c t i v e c a p a b i l i t y s e r v i c e s . In a d d i t i o n , h o s p i t a l s i n the same r e g i o n cannot be c o n s i d e r e d as independent u n i t s . The occupancy l e v e l of one h o s p i t a l may depend on the a v a i l a b i l i t y of space i n other h o s p i t a l s . E m p i r i c a l evidence i n d i c a t e s t h a t the d a i l y census f o r c e r t a i n d i s t i n c t i v e p a t i e n t f a c i l i t i e s i s Poisson d i s t r i b u t e d . To the extent t h a t Poisson or other e a s i l y d e a l t w i t h f u n c t i o n s are a p p l i c a b l e , s t a t i s t i c a l methods may be used t o study the e f f e c t s of a l t e r n a t i v e admission p o l i c i e s . The a p p l i c a b i l i t y of the P o i s s o n d i s t r i b u t i o n r e s t s on a number of c o n d i t i o n s which may or may not h o l d . Of p a r t i c u l a r note are admissions such as e l e c t i v e surgery which are scheduled p a r t i a l l y on the b a s i s of p a t i e n t convenience, and, thus, may not be d e s c r i b a b l e by a Poisson d i s t r i b u t i o n . In s t u d y i n g cases f o r which a Po i s s o n or other e a s i l y handled d i s t r i b u t i o n s are not a p p r o p r i a t e , other a n a l y t i c a l techniques such as s i m u l a t i o n , based on sampled e m p i r i c a l d i s t r i b u t i o n s , may be u s e f u l . 5. The Cost of H o s p i t a l S e r v i c e s (a) The Theory of Cost. The co s t s of producing goods and s e r v i c e s may be d i v i d e d i n t o two c a t e g o r i e s . 59 (i). fixed costs which do not vary with output, and ( i i ) variable costs which depend on the amount of various services performed. Economic theory makes use of three cost functions. 1. Total cost; the sum of variable and fixed costs T = F + VC where F = fixed cost VC = variable cost 2. Average cost; the cost per unit of output AC =_T =_F + VC q q q where q is the total units of homogeneous output. 3. Marginal cost; the cost of producing one extra unit of output, MC =__ = 'B(VC) ^ q 5 q Variable cost may be written as VC =2v±(q,) q where v^ (q^) Is the unit cost of service i at the output level q^ In considering hospital costs the often followed procedure is to assume a relatively stable patient mix and, thus, to use a single appropriately weighted variable cost. Thus: T = F + V(q) q AC =_F + V(q) q MC = V(q) + q"3v(q) 3 q where q is a. proxy measure of total output 60 The d i v i s i o n of c o s t s I n t o f i x e d and v a r i a b l e costs depends on dynamic processes and hence on the time p e r i o d . In the s h o r t run v a r i o u s c o s t s such as p h y s i c a l d e p r e c i a t i o n of p l a n t and equipment may be regarded as f i x e d . In the long run these c o s t s are v a r i a b l e s i n c e equipment and p h y s i c a l p l a n t f a c i l i t i e s may be expanded or reduced. Short run cost f u n c t i o n s d e s c r i b e the costs of i n d i v i d u a l p r o d u c t i o n u n i t s f o r d i f f e r e n t l e v e l s of p r o d u c t i o n at g i v e n f i x e d c a p i t a l investment, whereas long run average and m a r g i n a l cost f u n c t i o n s d e s c r i b e the cost of p r o d u c t i o n f o r v a r y i n g c a p i t a l investment. Prom experience i n most p r o d u c t i o n s e r v i c e s there are reasons t o b e l i e v e t h a t i n c r e a s e d p r o d u c t i o n l e a d i n g t o s p e c i a l i - z a t i o n of equipment and r e l a t e d l a b o r s k i l l s i n c r e a s e s produc- t i v i t y . A d e c r e a s i n g u n i t cost as p r o d u c t i o n f a c i l i t i e s are i n c r e a s e d or i n c r e a s i n g r e t u r n s t o s c a l e i s r e f e r r e d t o as an economy of s c a l e . Beyond a c e r t a i n l e v e l of p r o d u c t i o n , i n - c r e a s i n g complexity of managment may lead t o a d i s p r o p o r t i o n a t e l y l a r g e decrease i n e f f i c i e n c y . VJith u n i t cost of output i n c r e a s i n g as p r o d u c t i o n f a c i l i t i e s are i n c r e a s e d , i . e . a diseconomy of s c a l e . I t i s b e l i e v e d t h a t most p r o d u c t i o n s e r v i c e s , t h e r e f o r e , have a U shaped long run average cost curve, as shown i n the f i g u r e below. 61 COST LRMC LRAC SIZE (Q) Figure 2: LRAC arid' LRMC as a Function of Hospital Size The minimum long run average cost (LRAC) is given by 0 = 3(LRAC) = 2(F(Q) + V(Q)Q) c) Q 3 Q Q = -F(Q) + 1 0>F(Q) + 9 v(Q) ' Q 2 Q O'Q The minimum LRAC occurs where LRAC=LRMC. This can be shown as follows: LRMC = V(Q)+Q3v(Q) +3 F(Q) v at the minimum of the LRAC curve, 9 Q LRMC = V(Q)+QF(Q) = F(Q) + V(Q) = LRAC Q 2 Q If the LRMC Is less than the LRAC then economics of scale exist, since by increasing the scale* of plant and capital equip- ment we can reduce the average cost of a unit of output. 62 (b) Trends In Hospital Costs and Financing The rapid rise in the cost of hospital services has been of concern and the subject of numerous studies. Ingbar and Taylor (38) note that the average per diem charge for non-federal short-term hospitals in the U.S. had increased 185 percent between 1950 and 1965, an average of approximately 4.2 percent yearly. This increase was noted to be accelerating, as the yearly average increase between I960 and 1965 was 6.5 percent and in 1966 the increase was 8.3%. In Canada, expenditures on personal health care rose from approximately 2.8 percent of a l l national expendi- tures in 1953 to 4.6 percent in 1967. At the same time the proportion of expenditures for hospital care rose from almost 59$ to over 63 percent. ( 7 0 ) Increases in hospital expenditures have been influenced both by increased u t i l i z a t i o n and increases in the cost of providing services due to general inflation in the economy and increased use of sophisticated equipment. Increased u t i l i z a t i o n (28 percent in Canada and 27 percent in the U.S., between 1950 and 1967) has occurred through an increase in both the admissions/1000 population (27 percent in Canada and 24 percent in the U.S. between 1950 and 1967) and the average length of stay (A 6 percent decline between 1950 and 1958 in both countries followed by a 4 percent increase in Canada and 9 percent in the U.S. between 1958 and 1967). (3) In Canada, the inauguration of universal hospital i n - surance arrangements has shifted financial responsibility for hospital payment from the Individual to governmental agencies. In B.C. hospital patients pay $1 per day, plus additional payments for special services, such as private or semi-private rooms, while the British Columbia Hospital Insurance Service (BCHIS) reimbruses individual hospitals at set per diem rates. These rates are set on an individual hospital basis, taking into account the different services offered, research, teaching, past financial records, etc. The extent to which governments have assumed responsibility may be illustrated by the fact that the percentage of payments of active treatment hospital care made by governmental agencies in Canada rose from 36 .2$ in 1953 to 9 0 . 5 $ In 1967 . (70) Hospital services are characterized by high capital investment. In 1 9 6 8 , British Columbia with a population of slightly less than 2 million the total capital investment in hospitals was over $170 million. (55) Funds for capital invest- ment in physical plant and major equipment are also largely derived from public treasuries as may be seen in the following t ab le. Table 7 : Plant Fund - Source, 1968 (Public General Hospitals 1) Source Provincial Grants B.C.H.I.S. Equipment Allowance Federal Grants 2 Municipal Grants Donations Interest Total Total Public General Hospitals $2,423 , 165 9 4 2 , 8 1 3 1,540 ,206 1 8 , 4 7 7 , 8 2 8 1,314 ,189 364 ,371 $25 ,062 ,572 I Rehabilitation and extended care hospitals not included 2 Including regional hospital d i s t r i c t grants Table 7 (Continued) Source: Report on Hospital Statistics and Adminstration of the Hospital Act, 1968 (55) (c) An Empirical Look at Hospital Costs. Tables 8 and 9 i l l u s t r a t e Canadian and British Columbian data on the major hospital expenditure categories and their relative importance. From these tables i t may be seen that wages and salaries are the largest component of expenditures, accounting for approximately 2/3 - 3/4 of the total. Wages and salaries also represent one of the fastest growing expenditures In Canadian hospitals. This increase is a result of increased paid hours of work per patient day (a 17$ Increase in non-medical staff hours - from 11.9 in 1961 to 13.9 in 1967 and a 22$ increase in nursing hours per patient day - from 6. 3 to 7.7 in the same period (70)), increased average level of s k i l l and increased wage levels (a 57% increase between 1961 and 1967 with preliminary indications of an increase of 12% from 1967 to 1968 (70)). Table 8: Operating Expenditures of Budget Review Hospitals $ Per Patient Day (Excluding Newborn) Percent increase 1961 % 1967 % 1961-1967 Salaries & Wages $14.84 64.5 $27.10 66.8 83$ Medical and Surgical Supplies 0.73 3.2 1.24 3.1 70 Drugs 0.99 4.3 1.42 3.5 43 Raw Food 1.46 6.3 1.75 4.3 20 Other Departmental 3.17 13.8 6.96 17.2 120 Other non-Departmental 1.82 7.9 2.06 5.1 13 $23.01 100.0$ $40.54 100.0% 76% Source: Canadian Hospital Association Trends in Health and Hospit Care Chart Book 1969, Vol. 1. Table 9: Expenditures (Public General Hospitals ) in B. C. 1964 1965 1966 1967 1968 G r o s s s a l a r i e s a n d w a g e s M i v ! i r n l nn<\ QiirgirM supplies niri'.ry—fnnri O t h e r $53,316,952 (72.8%) 2,529,254 (3.5%) 2,886,176 (3.9%) 3,844,900 (5.3%) 10,605,591 (14.5%) $58,960,066 ('.3.1%) 2.786.0S4 i34%) 3,139,972 (3.9%) 4,060,728 (5.0%) 11,745,180 (14.6%) $67,284,459 (72.8%) 3,241,747 (3.5%) 3,594,893 (3.9%) 4,423,947 (4.8%) 13,859,558 (15.0%) $79,699,927 (73.7%) 3,803,662 (3.5%) 4,061,024 (3.7%) 4,736,217 (4.4%) 15,868,643 (14.7%) $100,044,467 (75.2%) 4,629,812 (3.5%) 4,550,057 (3.4%) 5,274,827 (4.0%) 18,550,279 (13.9%) S u b - t o t a l s . $73,182,873 (100.0%) $80,692,030 (1(0.0%) $92,404,604 (100.0%) $108,169,473 (100.0%) $133,049,442 (100.0%) D e p r e c i a t i o n — B u i l d i n g s a n d b u i l d i n g - s e r v i c e equipment M a j o r e q u i p m e n t . . , $2,358,641 1,633,112 $2,988,832 1,562,555 $3,293,613 1,793,940 $3,459,556 2,008,751 $3,902,726 2,309,864 S u b - t o t a l s $3,991,753 $4,551,487 $5,087,553 $5,468,307 $6,212,590 T o t a l g r o s s e x p e n d i t u r e $77,174,626 $85,243,517 $97,492,157 $113,637,780 $139,262,032 A v e r a g e g r o s s e x p e n d i t u r e p e r p a t i e n t -d a y ( n e w b o r n d a y s I n c l u d e d a t 100 p e r c e n t ) A v e r a g e g r o s s e x p e n d i t u r e p e r p a t i e n t -d a y ( n e w b o r n d a y s i n c l u d e d a t 25 p e r c e n t ) . , $25.S6 27.68 $28.03 29.84 $31.14 33.01 $35.32 37,41 $41.38 43.78 1 Rehabilitation and extended-care hospitals not included. Source: Hospital Statisitcs and Administration of the Hospital Act - 1968 (55) 66 Numerous factors complicate empirical studies of hospital costs, especially those studies done on an inter-hospital com- parative basis. Comparability of hospitals is hampered by differences in staff structures, wage and material costs, operating procedures, the range and quality of services, occupancy level and the scope of teaching and research programs. Hospitals differ in the quality, number and mix of inpatient services and f a c i l i t i e s offered. In addition, there is considerable variation in the extent of outpatient treatment and education and research programs. These differences may have an appreciable effect of the costs incurred by the different hos- pitals . As noted earlier, wages and salaries account for approxi- mately 2/3 - 3/4 of operating expenditures. In cross-sectional studies, i t is therefore essential that wage differences be consi- dered, especially i f appreciable wage differences exist among hospitals. If aggregate wage costs are employed, in analyzing hospitals with different staff structures, biases may be intro- duced i f an adjustment of wage rates does not take account of the differences in the average level of s k i l l . Additional problems arise from the use of hospital accounting data, which may be inappropriate and may necessitate the use of proxy measures, and from the use of time series analysis, which may be complicated by changes over time in any of the factors influencing costs and may offer only a limited range of output for study. Many studies have attempted to examine the relationship between cost and size, in order to determine an optimal manner 67 o f p r o v i d i n g c a r e f o r a s p e c i f i e d average number of p a t i e n t s . One o f the major d i f f i c u l t i e s o f s t u d y i n g h o s p i t a l c o s t s has been t o s e l e c t a p p r o p r i a t e measures of two c l o s e l y r e l a t e d v a r i a b l e s ; s i z e a nd.output. The most o b v i o u s approach t o m e a s u r i n g s i z e would be t o use bed c a p a c i t y . T h i s , however, would I g n o r e t h e e f f e c t o f occupancy l e v e l w h i c h , as d i s c u s s e d e a r l i e r , may be s i z e - d e p e n d e n t . The u s u a l manner i n which t h i s d i f f i c u l t y i s a v o i d e d i s t o use measures r e l a t e d t o o u t p u t such as a d j u s t e d bed s i z e and average d a i l y census or e q u i v a l e n t l y t h e y e a r l y o r even monthly number of p a t i e n t days. A d j u s t e d bed s i z e a l l o w s f o r o c c u p a t i o n l e v e l by sub- t r a c t i n g the average number o f u n o c c u p i e d beds from r e p o r t e d bed c a p a c i t y . T h i s method i s s u b j e c t t o e r r o r i n t r o d u c e d by d i f - f e r e n c e s i n the methods employed by h o s p i t a l s i n r e p o r t i n g bed c a p a c i t y . The use o f average d a i l y census may c r e a t e e r r o r s i n the measurement of c o s t s due t o t h e use of o u t p u t measures r e f l e c t i n g s h o r t - r u n changes w i t h d e l a y e d a d j u s t m e n t o f the f a c t o r s of p r o d u c t i o n , o r t o t h e use o f l o n g - r u n measures of o u t p u t w h i c h do not account f o r changes i n p r o d u c t i o n d u r i n g the time p e r i o d from w h i c h average v a l u e s have been computed. I n s t u d y i n g the r e l a t i o n s h i p between c o s t s and s i z e , i t i s o f t e n assumed t h a t h o s p i t a l s combine f a c t o r s o f p r o d u c t i o n i n a manner a p p r o p r i a t e t o t h e average measure o f o u t p u t . The r e s u l t s o f some of the major e m p i r i c a l s t u d i e s of h o s p i t a l c o s t s are summarized i n T a b l e 10. F e l d s t e i n (26) examined t h e r e l a t i o n s h i p between the c o s t 68 of v a r i o u s f a c t o r s of p r o d u c t i o n and the monthly number of p a t i e n t days i n a g e n e r a l , s h o r t - t e r m , non-research o r i e n t a t e d h o s p i t a l . A month was chosen as the time u n i t f o r a n a l y s i s , s i n c e i t i s s u f f i c i e n t l y s h o r t t o a v o i d c o m p l i c a t i o n s due to changes i n c a p i t a l p l a n t and equipment, w h i l e b e i n g long enough f o r v a r i a b l e f a c t o r s of p r o d u c t i o n t o be a d j u s t e d t o output l e v e l s . The c o s t s of p l a n t , equipment, a d m i n i s t r a t i v e s e r v i c e s and s k i l l e d p e r s o n n e l showed no v a r i a t i o n i n response t o changes i n the monthly number of p a t i e n t days, w h i l e the costs of un- s k i l l e d l a b o r , s u p p l i e s , f o o d , and drugs v a r i e d w i t h the number of p a t i e n t days. Departmental costs were analyzed t o d e r i v e a t o t a l cost f u n c t i o n f o r the h o s p i t a l . I t was f e l t t h a t the use of depart- mental c o s t s would p r o v i d e a more homogeneous measure of product In a d d i t i o n , the i n f l u e n c e of departmental costs on t o t a l cost and a l s o the r e l a t i o n s h i p between output and cost w i t h i n each department c o u l d be d e r i v e d . The independent v a r i a b l e s used were: number of med- s u r g i c a l p a t i e n t days ( p . d . ) , number of o b s t e t r i c a l p.d., number of OB d e l i v e r i e s , number of l a b o r a t o r y p a t i e n t s , number of r a d i o l o g y p a t i e n t s , number of EKG p a t i e n t s , number of p h y s i c a l therapy p a t i e n t s , number of o p e r a t i o n s , supply expenses i n the Operating room i n the p r e c e d i n g month, food costs i n the p r e c e d i month, and a continuous time v a r i a b l e . The l i n e a r model was t e s t e d f o r c u r v a t u r e , and i t was concluded that the l i n e a r model was the most a p p l i c a b l e . F e l d s t e i n s t a t e s that "a d e c r e a s i n g s h o r t - r u n average 69 t o t a l cost curve, may be i n t e r p r e t e d i n two ways: f i r s t , t h a t excess c a p a c i t y e x i s t s , i n which.case a s m a l l e r p l a n t would be l e s s c o s t l y , and second, t h a t long-run i n c r e a s i n g r e t u r n s e x i s t , and t h e r e f o r e i n c r e a s e s i n output should be met by i n c r e a s i n g the s i z e of e x i s t i n g h o s p i t a l s . " (26) The h o s p i t a l In the study had an occupancy l e v e l of approximately 90 percent i n d i c a t i n g that excess c a p a c i t y was not an e x p l a n a t i o n f o r the d e c r e a s i n g s h o r t - r u n average c o s t . I t i s p o s s i b l e t h a t d e c r e a s i n g s h o r t run average c o s t s might e x i s t f o r any s i z e of h o s p i t a l . I t was, t h e r e f o r e , necessary t o perform a c r o s s - s e c t i o n a l a n a l y s i s of h o s p i t a l s of v a r y i n g s i z e s i n order t o determine i f long-run i n c r e a s i n g r e t u r n s e x i s t e d . The r e s u l t s o f the study i n d i c a t e d a constant LRMC which was below the LRAC, i . e . there are economies of s c a l e . Account- i n g f o r the broader scope of s e r v i c e s i n l a r g e r h o s p i t a l s , i t was i n f e r r e d t h a t the LRMC curve has a downward s l o p e . The c r o s s - s e c t i o n a l study was l a t e r expanded and r e f i n e d by C a r r and F e l d s t e i n (10), the r e s u l t s of which are shown i n the t a b l e . Average d a i l y census was i n c l u d e d as a l i n e a r and square term i n the r e g r e s s i o n a n a l y s i s . The measures of s e r v i c e c a p a b i l i t y and e d u c a t i o n programs used were: number of f a c i l i t i e s and s e r v i c e s , number of f a c i l i t i e s and s e r v i c e s times average d a i l y census, number of o u t p a t i e n t v i s i t s , number of student n u r s e s , number of i n t e r n s h i p and r e s i d e n c y programs, med i c a l s c h o o l a f f i l i a t i o n , e x i s t e n c e of a p r o f e s s i o n a l n u r s i n g s c h o o l , and the number of i n t e r n s and r e s i d e n t s . The use of average d a i l y census as a measure of s c a l e 70 and average d a l l y census t i m e s the number o f s e r v i c e s and f a c i l i t i e s as a measure o f s e r v i c e c a p a b i l i t y y i e l d s q u e s t i o n - a b l e r e s u l t s because of the c o l l i n e a r i t y between t h e s e two measures. The a u t h o r s d i d not c o n s i d e r the r e s u l t s o f the f i r s t a n a l y s i s t o be c o n c l u s i v e because o f t h e manner i n which v a r i a t i o n s i n s e r v i c e c a p a b i l i t y were h a n d l e d . T h e r e f o r e , the a n a l y s i s was r e p e a t e d , g r o u p i n g t h e h o s p i t a l s i n t o 5 s e r v i c e c a p a b i l i t y groups by t h e number of f a c i l i t i e s and s e r v i c e s and e x c l u d i n g as an independent v a r i a b l e t h e number of s e r v i c e s and f a c i l i t i e s o f f e r e d . The a n a l y s i s i n d i c a t e d economies o f s c a l e o v e r a wide range of o u t p u t , the o p t i m a l s i z e i n c r e a s i n g as the number o f s e r v i c e s i n c r e a s e d . The s t u d y s u g g e s t e d p o s s i b l e d i s e c o n o m i e s of s c a l e o n l y f o r t h e l a r g e s t h o s p i t a l s I n t h e h i g h e s t s e r v i c e c a p a b i l i t y group. I n a s t u d y of 72 M a s s a c h u s s e t s community h o s p i t a l s , I n g b a r and T a y l o r (38) employed f a c t o r a n a l y s i s and m u l t i p l e r e g r e s s i o n t o d e r i v e a n o n - l i n e a r l o n g - r u n average c o s t c u r v e . The r e s u l t a n t i n v e r t e d U-shaped curve s u g g e s t s t h a t d i s e c o n o m i e s o f s c a l e e x i s t up t o a c e r t a i n s i z e o f h o s p i t a l and t h a t economies of s c a l e e x i s t beyond t h i s . T h i s may be c o n s i s t e n t w i t h c o s t s i n c r e a s i n g n o n - l i n e a r l y as t h e scope of s e r v i c e s i n c r e a s e s and economies of s c a l e p r e d o m i n a t i n g beyond a c e r t a i n p o i n t . B e r r y (8) a t t e m p t e d t o overcome t h e p r o b l e m of p r o d u c t d i f f e r e n t i a t i o n by g r o u p i n g h o s p i t a l s by t h e a v a i l a b i l i t y of 28 s e r v i c e s and f a c i l i t i e s . On t h i s b a s i s I t was assumed t h a t t h e p r o d u c t w i t h i n each group would be r e a s o n a b l y homogeneous. 71 A n a l y s i s ' o f groups c o n t a i n i n g 10 o r more h o s p i t a l s showed t h a t 36 o f the 40 groups had d e c r e a s i n g average c o s t c u r v e s and t h a t the n e g a t i v e c o e f f i c i e n t o f c o r r e l a t i o n between the average c o s t c u r v e s and p a t i e n t s days f o r 2 6 1 o f the 36 e q u a t i o n s were s t a t i s t i c a l l y s i g n i f i c a n t but at a l e v e l o f c o n f i d e n c e o f l e s s t h a n . 8 4 . F o l l o w i n g B e r r y ' s t e c h n i q u e , F r a n c i s c o ( 3 0 ) examined d a t a on 4 , 7 1 0 s h o r t - t e r m g e n e r a l h o s p i t a l s , s e l e c t i n g 25 groups c o n t a i n i n g 30 o r more h o s p i t a l s . F o r a l i n e a r r e g r e s s i o n r e l a t i n g t o t a l c o s t t o p a t i e n t d a y s , 21 of t h e 25 groups had p o s i t i v e i n t e r c e p t s , i n d i c a t i n g a d e c r e a s i n g average c o s t . However, o n l y 4 o f t h e p o s i t i v e i n t e r c e p t s , were s i g n i f i c a n t l y d i f f e r e n t from z e r o at a 5 p e r c e n t c o n f i d e n c e l e v e l . I n s t u d y i n g t h e r e l a t i o n s h i p between average c o s t p e r p a t i e n t day and output ( p a t i e n t d a y s ) , 22 o f the 25 groups showed the average c o s t t o be l e s s f o r the l a r g e h o s p i t a l s i n each g r o u p , but o n l y 7 o f t h e s e r e l a t i o n s h i p s were s i g n i f i c a n t and 1 o f t h e o t h e r 3 groups showed a s i g n i f i c a n t r e l a t i o n s h i p w i t h a p o s i t i v e r e g r e s s i o n c o e f f i c i e n t . A l l seven n e g a t i v e r e g r e s s i o n c o e f f i - c i e n t s w hich were s i g n i f i c a n t were f o r groups o f h o s p i t a l s w i t h 56 beds o r l e s s . I n a f u r t h e r a n a l y s i s , g r o u p i n g t h e h o s p i t a l s by t h e number o f s e r v i c e s and f a c i l i t i e s , w i t h no account made of the c o m b i n a t i o n o f f a c i l i t i e s and s e r v i c e s , 15 o f t h e 17. groups e x h i b i t e d a d e c r e a s i n g LRAC, but o n l y 8 r e l a t i o n s h i p s were s i g n i f i c a n t and o f t h e s e 7 were f o r groups w i t h 135 beds or l e s s . 72 By grouping hospitals as small and large on the basis of the number of f a c i l i t i e s and services, i t was Inferred from the results that smaller hospitals (less than approximately 100 beds with limited f a c i l i t i e s and services) had Increasing returns to scale and large hospitals have either constant returns to scale or decreasing returns to scale, though not appreciable. Cohen (12 and 13), in two related studies, employed a sample composed of short-term general hospitals which were members of the United Hospital Fund of New York. A l l hospitals used an identical accounting system, thus avoiding d i f f i c u l t i e s in variations due to different accounting systems. Service output as defined by the individual outputs weighted by their relative costs was used as an explanatory variable. The f i r s t study (12) used physical therapy treatments, electrocardiograms, x-ray treatments, blood transfusions, electroencephalograms, weighted operations, deliveries, diagnostic x-rays, laboratory examinations, newborn days, outpatient v i s i t s , emergency room treatments and adult and pediatric patient days as the component measures of output. The second study also added isotope treatments and ambulance trips. The AC curve of the f i r s t study was U-shaped, with the minimum occurring.at 85,000-90,000 patient days or about 290-295 beds. However, the manner in which output was converted to patient days is not clear. The second study attempted to pa r t i a l l y account for differences in quality by employing a dummy variable for a f f i l i - ation with a medical school. Service output and patient days were employed separately as explanatory variables. The minimum AC occurred for about 270,000 units of service and for 180,000 patient days, or approximately for a hospital size of 540-555 beds (at slightly more than 90 percent occupancy). Allowing alternative weights for a f f i l i a t e d hospitals by assuming that a teaching hospital provides 10, 20, or 30 percent more service yielded a minimum average cost at approximately 640,700, 790 beds respectively. The apparent inconsistencies in these and other studies are largely a result of the differences in the services offered, the groupings and measures of output employed, and the quality of services. It would appear however that economies of scale exist for small hospitals offering a limited range of f a c i l i t i e s and services and that within relatively homogeneous groups of hospitals economies of scale also exist. D e p e n d e n t V a r i a b l e I n d e p e n d e n t V a r i a b l e s M e t h o d o l o g y S a m p l e R e s u l t . R e f e r e n c e A d m i n i s t r a t i o n c o s t s E q u i p m e n t c o s t s S k i l l e d p e r s o n n e l c o s t s M o n t h l y n u m b e r o f a d u l t p a t i e n t d a y s S c a t t e r d i a g r a m s N o v a r i a t i o n i n r e s p o n s e t o c h a n g e s i n p a t i e n t d a y s F e l d s t e i n U n s k i l l e d l a b o u r c o s t s S u p p l y c o s t s F o o d c o s t s D r u g c o s t s V a r i o u s m o n t h l y d e p a r t m e n t a l p a t i e n t d a y s a n d e x p e n s e s M u l t i p l e r e g r e s s i o n , w i t h a c c o u n t m a d e o f c o s t i n f l a t i o n , e m p l o y e e d a y s o f f w i t h p a y , a n d c h a n g e s i n p r o d u c t i o n A g e n e r a l , s h o r t - t e r m , n o n - r e s e a r c h o r i e n t e d h o s p i t a l i n I n d i a n a C o s t o f d e p e n d e n t v a r i a b l e i n c r e a s e d w i t h i n c r e a s e s i n . p a t i e n t d a y s T o t a l o p e r a t i n g e x p e n s e L i n e a r r e l a t i o n s h i p s b e t w e e n t o t a l e x p e n d i t u r e s a n d m e a s u r e s o f o u t p u t ( p a t i e n t d a y s ) ( 2 6 ) T o t a l o p e r a t i n g e x p e n s e e x c l u d i n g d e p r e c i a t i o n Y e a r l y n u m b e r o f a d u l t p a t i e n t d a y s L i n e a r r e g r e s s i o n a n a l y s i s 6 0 h o s p i t a l s r a n g i n g i n s i z e f r o m 4 8 - 4 5 3 b e d s C o n s t a n t L R M C w i t h L R M C b e i n g l e s s t h a n L R A C T o t a l o p e r a t i n g c o s t A v e r a g e d a i l y c e n s u s a n d 8 m e a s u r e s o f h o s p i t a l s e r v i c e c a p -a b i l i t y a n d e d u c a t i o n a l p r o g r a m s M u l t i p l e r e g r e s s i o n a n a l y s i s 3 , 1 4 7 n o n - p r o f i t , g e n e r a l h o s p i t a l s M i n i m u m L R A C ( U - s h a p e d c o s t c u r v e ) o c c u r r e d f o r a n a v e r a g e d a i l y c e n s u s o f 1 9 0 , a s s u m i n g a m e a n n u m b e r o f f a c i l i t i e s a n d s e r v i c e s C a r r & F e l d s t e i n ( 1 0 ) A v e r a g e c o s t p e r p a t i e n t d a y P a t i e n t d a y s L i n e a r r e g r e s s i o n a n a l y s i s o f h o s p i t a l s g r o u p e d b y t h e a v a i l a b i l i t y o f 2 8 s e r v i c e s a n d f a c i l i t i e s 5 , 2 9 3 n o n - f e d e r a l , s h o r t -t e r m , g e n e r a l a n d o t h e r s p e c i a l h o s p i t a l s D o w n w a r d s l o p i n g A C c u r v e , i m p l y i n g e c o n o m i e s o f s c a l e B e r r y ( 8 ) Table 10: Selected Empirical Hospital Costs Studies D e p e n d e n t V a r i a b l e I n d e p e n d e n t V a r i a b l e s M e t h o d o l o g y S a m p l e i R e s u l t R e f e r e n c e L R A C M e d i c a l a n d s u r g i c a l e x p e n s e / p . d . , w e i g h t e d o p e r a t i o n s / p . d . , w e i g h t e d o u t p a t i e n t r a d i o l o g i c a l f i l m s / p . d . , p r i v a t e p . d . / p . d . , o c c u p a n c y r a t e , a n d n u m b e r o f b e d s F a c t o r a n a l y s i s a n d m u l t i p l e r e g r e s s i o n a n a l y s i s , 7 2 M a s s a c h u s e t t s c o m m u n i t y h o s p i t a l s , r a n g i n g i n s i z e f r o m 30 t o 300 b e d s (1958-59) , I n v e r t e d U - s h a p e d A C c u r v e , w i t h a m a x i m u m a t 1 5 0 b e d s I n g b a r S t T a y l o r (38* 6 7 o f t h e a b o v e h o s p i t a l s (1962-63) S i m i l a r s h a p e c u r v e , t h e m a x i m u m o c c u r r i n g a t 1 9 0 b e d s T o t a l a n d a v e r a g e c o s t P a t i e n t d a y s S i m i l a r t o B e r r y A m e r i c a n H o s p i t a l A s s o c i a t i o n a n n u a l s u r v e y f o r 1966 W e a k i n d i c a t i o n s o f e c o n o m i e s o.f_ scale. F r a n c i s c o (30) L R A C P a t i e n t d a y s a n d n u m b e r o f f a c i l i t i e s G r o u p i n g b y n u m b e r o f s e r v i c e s a n d f a c i l i t i e s ( l e s s t h a n 6 f a c i l i t i e s a n d 6 f a c i l i t i e s o r g r e a t e r ) D e c r e a s i n g a v e r a g e c o s t f o r s m a l l h o s p i t a l s a n d c o n s t a n t r e t u r n s t o s c a l e f o r l a r g e h o s p i t a l s T o t a l C o s t P a t i e n t d a y s a n d v a r i o u s s e r v i c e s w e i g h t e d b y t h e i r r e l a t i v e a v e r a g e c o s t M u l t i p l e r e g r e s s i o n a n a l y s i s 2 3 m e m b e r h o s p i t a l s o f t h e U n i t e d H o s p i t a l F u n d o f N e w Y o r k C i t y U - s h a p e d L R A C c u r v e w i t h t h e m i n i m u m o c c u r r i n g i n t h e r a n g e 85, 000-90,000 p . d . . ( a p p r o x i m a t e l y 290-295 b e d s ) C o h e n (tz) ti A s a b o v e , b u t i n c l u d i n g a d u m m y v a r i a b l e t o a c c o u n t f o r a f f i l i a t i o n w i t h a m e d i c a l s c h o o l 11 4 6 m e m b e r h o s p i t a l s o f t h e a b o v e F u n d ( o p e r a t i n g a t s l i g h t l y m o r e t h a n 9 0 % o c c u p a n c y ) U - s h a p e d L R A C c u r v e , w i t h t h e m i n i m u m o c c u r r i n g a t 540-555 b e d s C o h e n (13) Table 10: -- Continued G. Conclusions' W i t h i n most l a r g e communities, numerous i n d i v i d u a l s and o r g a n i z a t i o n s are i n v o l v e d i n the p r o v i s i o n and ins u r a n c e f o r the p r o v i s i o n of h e a l t h and h e a l t h r e l a t e d s e r v i c e s . V a r i o u s of these agencies act l a r g e l y independently of one another w h i l e there are s i g n i f i c a n t , though not always d i r e c t , i n t e r a c t i o n s and i n t e r d e p e n d e n c i e s between them. T h i s may be e x e m p l i f i e d by i n s t a n c e s i n which a p h y s i c i a n may have t o choose between p l a c i n g a p a t i e n t i n a h o s p i t a l or i n a p r i v a t e n u r s i n g home. The f i n a l d e c i s i o n may be i n f l u e n c e d by whether or not the p a t i e n t can g a i n admission t o a h o s p i t a l or whether the p a t i e n t i s i n s u r e d f o r h o s p i t a l i z a t i o n but not f o r n u r s i n g home ca r e . In a d d i t i o n t o in t e r d e p e n d e n c i e s and a la c k of o v e r a l l c o o r d i n a t i o n , the com- p l e x i t y of h e a l t h care d e l i v e r y systems i s o f t e n i n c r e a s e d by c o n f l i c t s of i n t e r e s t which sometimes a r i s e between v a r i o u s groups, as i n the case of t h i r d p a r t y i n s u r e r s and the s u p p l i e r s of s e r v i c e s or as i n the case of p h y s i c i a n s and h o s p i t a l admini- s t r a t o r s . E f f e c t i v e p l a n n i n g r e q u i r e s that the component s e r v i c e s of h e a l t h care d e l i v e r y should be s t u d i e d i n r e l a t i o n t o one another, as the degree of s u b s t i t u t a b i l i t y , r e l a t i v e c o s t s , o r g a n i z a t i o n a l arrangements, a v a i l a b i l i t y and e f f e c t i v e n e s s are determinants of the mix and r e l a t i v e u t i l i z a t i o n of the component s e r v i c e s , and t h e r e f o r e of the cost and e f f e c t i v e n e s s of h e a l t h care p r o v i s i o n . Although p l a n n i n g i s c o n f i n e d t o those areas over which v a r i o u s p l a n n i n g bodies have r e s p o n s i b i l i t y , account should be made of the i n t e r a c t i o n s and e f f e c t s of other a c t i v i t i e s o u t s i d e t h e i r j u r i s d i c t i o n . CHAPTER IV. THE RESOLUTION OF SUPPLY AND DEMAND A. Introduction The manner in which supply and demand are resolved and the extent to which the delivery of health care services is effective depend on the features particular to any given medical services market. V/hile a varied number of health care service market structures exist, this discussion w i l l be primarily con- fined to financial and organizational characteristics particular to markets in Canada. B. Distinguishing Features of the Health Services Market In traditional economic theory, profit maximization is assumed on the part of the suppliers and the resolution of supply and demand occurs through the pricing mechanism of the market. The health services market differs substantially in these aspects from the markets normally dealt with in traditional economic analysis. The major characteristics of the health services market are briefly summarized below. 1. Monopoly Aspects: There is restricted entry to the medical profession and overt price competition is not practiced. The physician often performs services demanding l i t t l e of his medical knowledge and s k i l l , many of which could easily be pro- vided by lesser trained personnel. However, substitutes, except those permitted to assist and aid physicians, are excluded, by law, from engaging in the provision of medical practice services. 2. Product Uncertainty and Competition: Knowledge, 78 e i t h e r as p h y s i c i a n advice or s k i l l e d care i s a major component of p e d i c a l s e r v i c e s . U n l i k e most other products and s e r v i c e s , t h e r e i s u s u a l l y i n s u f f i c i e n t knowledge on the p a r t of the con- sumer t o be able t o adequately judge the q u a l i t y or b e n e f i t of the p r o d u c t . The m e d i c a l p r o f e s s i o n does not o v e r t l y compete In the form of a d v e r t i s i n g o f p r i c e s or q u a l i t y , nor are the fees charged f o r s i m i l a r s e r v i c e s s u b s t a n t i a l l y d i f f e r e n t w i t h i n a g i v e n s p e c i a l t y , from one p h y s i c i a n t o the next, except f o r s p e c i a l t i e s such as p l a s t i c s u r gery. T h i s c o n t r i b u t e s . t o the p u b l i c ' s image of l i m i t e d d i f f e r e n t i a t i o n i n p r o d u c t , as between g e n e r a l p r a c t i t i o n e r and s p e c i a l i s t . 3. E x t e r n a l i t i e s : E x t e r n a l i t i e s , e s p e c i a l l y In such cases as communicable d i s e a s e c o n t r o l and r e s e a r c h , have l e d t o governmental and o t h e r i n t e r v e n t i o n s . 4. P r o f i t Motive: The p r o f i t motive i s subdued i n the area of h e a l t h s e r v i c e s . The p h y s i c i a n i s supposedly governed by h i s concern f o r the w e l f a r e of h i s p a t i e n t s r a t h e r than maximizing h i s p e r s o n a l wealth. H o s p i t a l s are l a r g e l y n o n - p r o f i t i n s t i t u t i o n s , a l though, i n the U.S., p r o p r i e t a r y h o s p i t a l s e x i s t . These account f o r only a s m a l l p r o p o r t i o n of h o s p i t a l s . (In 1962, p r o p r i e t a r y h o s p i t a l s accounted f o r only 5% of h o s p i t a l beds i n the U.S. (36)) C. Market R e s o l u t i o n 1• F i n a n c i a l C o n s i d e r a t i o n s As p r e v i o u s l y d i s c u s s e d , f i n a n c i a l c o n s i d e r a t i o n s play an important r o l e i n d e t e r m i n i n g m a n i f e s t demand, the s e r v i c e s s u p p l i e d , and t h e - e f f i c i e n c y with which h e a l t h care s e r v i c e s are p r o v i d e d . One of the most important aspects of the h e a l t h s e r v i c e s 79 market is the increasing role of governments and third party payment arrangements which often void price as a market rationing mechanism. In the United States, proprietary hospitals, sliding scale fees, and a coverage of only a part of the population by various • medical care insurance programs complicates an- economic discussion of the medical services market. Since we are primarily concerned with the Canadian market, in which universal coverage exists, and since the trend in many other countries, including the U.S., is towards increased governmental intervention and other third party payments, the current discussion of market resolution w i l l be confined to a market in which price does not serve as a market rationing mechanism. In a social context, and in the absence of price rationing, the concept of shortages may be introduced. These shortages may consist not only of services which are sought and not obtained, but also of delays In obtaining the sought after services. D. A Surplus of Medical Services? In a number of health service markets, including those in Canada and the United States, there are two unajor arguments which may be presented against the occurrence of a manifest surplus of medical services. The f i r s t argument is that the medical pro- fession exercises influence over the number of physicians trained and the granting of practice licenses and hospital privileges. The second argument is that physicians, either for economic reasons or high risk avoidance preferences, may increase the demand for available medical services by prescribing additional services for their patients. 80 While the second argument may be applicable when physicians are paid on a fee for service basis, other payment arrangements offer inducement to maintain the amount of physician services at a level at which they are required. Time, effort, and income are the three basic physician resource variables which may influence the manner in which the physician combines his own and other resources. The combina- tional processes which determine the ease with which the resources may be varied and the resultant marginal u t i l i t y to the physician. Each physician w i l l , of course, have varying preferences in the trade off between income, and time and effort. "So long as physicians are independent entrepreneurs paid on a fee for service basis, the incentives to expand the demands for medical services, expand the supply of (free) complementary factors of production, and to restrain the entry of substitute health care suppliers w i l l persist. The industry cannot be made more efficient unless control over the supply of new entrants to medical care supply is taken away from professional groups and returned to the public and at the same time competitive forms of service supply are permitted and encouraged." (22) While other forms of reimbursement such as on a capi- tation, or salaried basis may eliminate abuse by unscrupulous physicians who overprescribe their services, the incentives to over u t i l i z e complementary factors of production s t i l l remain. "The choice of factor combinations in health service supply is too important to be left to one group of suppliers who have no training in management and worse, every incentive to choose inefficient forms of supply." (22) It is only under such overall 81 profit sharing arrangements as the Kaiser Plan that physicians are motivated to balance complementary service costs. However, such arrangements presently account for a very small proportion of the total health care arrangements in North America. E. Interaction Between Suppliers The organizational arrangements between the various components of medical services, notably the system of referrals and hospital admissions, may vary between countries and even be- tween regions within a given country. Figures 3a, 3b, and 3c schematically represent three idealized systems from the spectrum of systems which have emerged. Hospital Patients etc. etc. F i l t e r I * Physician refers to any hospital (no hospital privileges) F i l t e r II * Hospital admini- strative control according to (i) resources available and ( i i ) hospital policies and con- straints . * These two f i l t e r s are strongly coupled. System Characteristics Extended matching capability but with corresponding high search cost. F i l t e r III Individual admission screening by f u l l - time hospital specialists. Also policy screening. Accentuated random fluctuations in re- ferred patient flow to each hospital. Source F i g u r e 3a. C e n t r a l i z e d Admission System Milsum et a l . (46) 82 F i g u r e 3a i s r e p r e s e n t a t i v e of a c e n t r a l i z e d system such as i n s t i t u t e d by the government i n Sweden and the S i c k Funds i n I s r a e l . In t h i s system the p a t i e n t i s normally t r e a t e d by a g e n e r a l p r a c t i t i o n e r . In the event t h a t the g e n e r a l p r a c t i t i o n e r f e e l s t h a t h o s p i t a l i z a t i o n i s r e q u i r e d , the p a t i e n t i s r e f e r r e d t o any h o s p i t a l where the p a t i e n t i s screened f o r admission by h o s p i t a l s t a f f s p e c i a l i s t s and subsequently t r e a t e d by the' h o s p i - t a l s p e c i a l i s t s and r e s i d e n t p h y s i c i a n s i f admitted. P a t i e n t s F i l t e r I R e f e r r i n g p h y s i c i a n P h y s i c i a n H o s p i t a l e t c . e t c . F i l t e r I I (I) C e n t r a l admission F i l t e r I I I I n d i v i d u a l ad- bureau matches p a t i e n t s ' m i s s i o n s c r e e n i n g needs with h o s p i t a l r e - sources a v a i l a b l e , ( i i ) Some f u r t h e r f i l t e r i n g by assigned h o s p i t a l as i n System A. by f u l l - t i m e h o s p i t a l s p e c i a l - i s t s . A l s o p o l i c y s c r e e n i n g * System C h a r a c t e r i s t i c s Optimal matching c a p a b i l i t y with minimal search cost to r e f e r r i n g p h y s i c i a n . Economy of sfcale a c c r u i n g i n c e n t r a l i z e d search and c o n t r o l system. Flow f l u c t u a t i o n s smoothed by c e n t r a l l i m i t theorem. Flow r e s p o n s i v e t o each h o s p i t a l ' s s t a t e . F i g u r e 3b. C e n t r a l R e f e r r a l System Source: Milsum et a l . (46). 83 The city-wide central referral system (Figure 3b) is representative of an experimental program i n Rotterdam, Holland. In this system, physicians with patients requiring hospitalization refer to a central agency which then screens patient needs and attempts to match patient needs to available hospital resources. Once a patient is referred by the physician to a hospital there is a further screening by hospital staff specialists. Figure 3c is representative of the majority of situations in Canada and the United States. In this system a specialist or general practitioner with hospital privileges may recommend the admission of a patient to a hospital where he has been granted privileges. Although the private practitioner is not an employee of the hospital, he may make extensive use of hospital f a c i l i t i e s and personnel in the treatment of his patients. The number of hospitals at which a physician has privileges, the number of beds which he can u t i l i z e in a hospital, and the priority given his patients by the hospital may di f f e r considerably between physi- cians. The physician's recommendation for hospitalization is not sufficient to gain admission for his patient. The admission policy of the hospital, i t s census state, the physicians status for having patients admitted, and the waiting l i s t also determine when and i f a patient gains admission. 84 F i l t e r III Hospital medical u t i l i z a t i o n committee screen- ing (policy rather than individual screening). Relatively uni- form flow pattern over time of referral to each hospital by each physician. Figure 3c. System typical of North America Source: Milsum et al (46) As indicated in the above discussion, the relationships between specialists, general practitioners, and hospitals may vary considerably. General practitioners may refer their patients to specialists or the patient may seek the services of a special- ist directly. However, under various insurance plans, there may be a financial penalty to the patient, i f he seeks specialist services without being referred by a general practitioner. This penalty often constitutes payment of the difference between the general practitioner's fee and the specialist's fee, as is the case under the British Columbia Medical Services Plan. In some systems, patients admitted to a hospital are treated by hospital staff specialists and resident physicians. Physician Hospital Patients etc, etc. F i l t e r I Physician with hos- p i t a l privileges selects hospital in predictable ways F i l t e r II Hospital administra- tion control accord- ing to (i) resources available and ( i i ) hospital policies and constraints. System Characteristics Limited search range by each physician but correspondingly low matching capa- b i l i t y . 85 In other systems., such as that typical of Canada and the United States, continuity of patient care is maintained by the patient's regular physician or specialist to which he has been referred . It should be noted that surgical procedures are often performed only by surgeons, that i s , patients are referred to a surgeon (a physician specialty) for surgical treatment. In the event that a patient is placed on a waiting l i s t or is not granted admission to a hospital, the physician may prescribe an alternative pattern of treatment, or attempt to have the patient admitted to another hospital. Within any hospital, services are generally segmented along service capability lines, such that the individual segments are restricted to supplying limited patient services. An im- balance in patient mix may thus result in a shortage of some services and a surplus of others, at any given time. Short run fluctuations in various demand categories may result In patients of low medical need receiving treatment before cases of greater medical need, because of variations in the availability of re- quired services. The central referral system offers the greatest potential for controlling and regulating patient mix, occupancy levels and the stability of patient demands on individual hospitals. This system also provides the greatest f l e x i b i l i t y in matching patient needs to available resources. Of the three systems, the centralized admission system presents the greatest uncertainty in predicting demands on individual hospitals' services. While eliminating the constraint of hospital privileges, i t may require the greatest amount of 86 search effort on the part of the physician and the patient in obtaining hospital admission for the patient. In the system typical of Canada and the U.S., the search effort to find available hospital services i s limited to hospi- tals at which the physician has privileges and of which he is more aware of the possibility of having the patient admitted. This system also affords less possibility of duplicating diagnos- t i c services than the other two systems. It should be emphasized that these are only three idealized systems from the spectrum of existing systems and that there may be several different systems operative in any given region. P. The Effect of Supply on Demand Of particular note, in the discussion of the resolution of the demand and supply of medical services, is the effect of supply on demand. It is commonly believed that the supply of hospital beds influences the demand for them. In a study of an upstate New York county, Roemer (57) found that following a sudden increase in bed supply, a statis - t i c a l l y significant increase in u t i l i z a t i o n occurred. This increase was evident both in the number of admissions and the average length of stay. Durban and Antelman (19) used multiple regression analysis to study u t i l i z a t i o n in 48 continental states. It was concluded that admission rates and average length of stay increase with bed supply. In the same study, the number of physicians per 100,000 population was also found, to affect hospital u t i l i z a t i o n , admission rates decreasing and average length of stay Increasing as the 87 physician/population ratio increased. It was postulated that as the ratio of physicians/population Increases, a greater percentage of patients are treated without hospitalization, thus making greater use of available physician time. The average length of stay increases since the patients treated without hospitalization are li k e l y to be primarily "short stay" patients. 5. Short Run Resolution In the absence of price rationing, i t is relative attractiveness in terms of ava i l a b i l i t y , waitng time, costs both to the physician and patient, and certain p r i o r i t i e s within the system that, in the short run, determine which demands are met, which demands are satisfied by alternative services, which demands are met with delay, and which demands go unmet.' Relative attrac- tiveness of physician alternatives is dependent both on the method of payment and the time and effort required of the physician under different system structures. H. Long Run Resolution In the long run, the resolution of supply and demand is influenced by past resolution. A manifest shortage of physician oi* hospital services may serve as an impetus for a future increase in supply. It. should be noted that financial and p o l i t i c a l constraints may play a large role In determining long run resolution. Since a significant lag is likely to occur between the time an impending or overt shortage of physician or hospital services is recognized and the time additional physicians are trained c r attracted to the region and hospital f a c i l i t i e s b u i l t , i t is necessary to project demands and to plan for the provision of adequate health services on a long range basis. I. Conclusion A rational approach to the provision of health care services necessitates many changes in the present system, both in financial arrangements and in the organizational arrangements between the various components of health care services. The present system in North America, which is largely based on a fee for service payment to physicians, not only f a i l s to provide motivation to balance complementary health care service costs, but often motivates physicians to misutilize complementary services in order to increase their own throughput. The efficient u t i l i z a t i o n of health care resources requires that incentives be instituted which motivate suppliers of health care services to balance complementary service costs and to provide only those services which are required. The present Canadian system of admissions and referrals could be considerably improved in areas with several hospitals. The institution of some form of centralized coordination such as a centralized admission or referral bureau could better match patient needs with available resources and provide better control of the occupancy levels, and the mix and s t a b i l i t y of patient flows in individual hospitals. CHAPTER V. RATIONAL PLANNING FOR HEALTH CARE SERVICES A. A Framework for Planning Public Law 8 9 - 7 4 9 , In the United States, views com- prehensive health planning as " a process that w i l l enable rational decision making about the use of private and public resources to meet health needs. Its concern encompasses physical, mental, and environmental health: the f a c i l i t i e s , service and manpower required to meet a l l health needs: and the development and coordination of public, voluntary and private resources to meet these needs." ( 3 7 ) Health planning is based on cultural values which vary among cultures and which vary over time within a given culture. The problem of defining and assigning relative weightings to various aspects of cultural values relating to health and the quality of l i f e Is a d i f f i c u l t one. The methodologies and resultant quantified values are not absolute; however, they do provide a rational approach .to a subjective evaluation process (see Chapter I ) . A;.-set of relative value weightings may be applied to the projected shortcomings of the future health care system. The value weighted shortcomings may then serve to provide an ordering based on relative importance. An analysis of these problem areas in terms of their relative importance, the extent to which medical science and technology may be effective in reducing the problems and prelimi- nary estimates of the costs involved may then serve to establish pr i o r i t i e s for planning. This preliminary cost-benefit or cost- effectiveness analysis should recognize Individual and societal 90 costs. The societal costs involved are not only the direct capital and operating costs for maintaining the health care system, but also the opportunity costs of alternative public goods which may have been foregone and of losses in productivity and well-being because of illness and d i s a b i l i t y . Financial and other resource constraints set limits on the -number of pr i o r i t i e s which may be resolved. Given the con- straints, i t is necessary to choose subsets of p r i o r i t i e s which may be dealt with in different, although often overlapping, time periods. The chosen priority subsets may then serve as a basis to define planning objectives. Care must be exercised in the choice and definition of objectives. Operational objectives cannot be vaguely defined such as improving the level of population health. A measure of health must be defined and the objective stated in terms of this measure. We may define such objectives as reducing infant mortality or of providing the same level of service, but at a lower cost. To be valid and operational, the objective must be well defined and possess a basis for reliable measurement and evaluation. Having defined a set of objectives, alternative strate- gies which may achieve the objectives should be enumerated. These strategies must then be evaluated by cost-benefit or cost effectiveness and a course of action defined. Once a decision has been made on an appropriate course of action, resources must be allocated and the chosen strategies implemented. The f i n a l step of a particular planning activity is to evaluate the extent to which the implemented strategies have 91 been effective in attaining the desire objectives. It should be emphasized that planning Is a continuous evaluation and decision making process, necessitated by the extent of success of implemented strategies and by changing value systems, needs, demands, medical technology, resource a v a i l a b i l i t i e s , etc. This chapter w i l l attempt to discuss some of the major problems encountered in planning, various techniques employed to forecast needs and demands, and f r u i t f u l areas in which to search for possible alternatives in the delivery of health care services. B. Problems Encountered in Planning Rational planning presupposes some knowledge of causal relationships. Planning for health care provision is hampered by a fragmentary and imprecise knowledge of the Influences of social, cultural, and environmental factors on societal and individual health status. Furthermore, numerous causal and causal indicator variables are often d i f f i c u l t to quantify and may be interdependent. Causal variables such as pollutant levels and indcator variables such as age and sex classified disease incidence rates may be quantifiable; however, the exact nature of the causal relationships are not always known. Other variables such as measures of health status may have meaning only in normative terms. Various variables such as income and educational level are interdependent. The above-mentioned problems, as well as the complexity of system interactions, the involvement of various groups and agencies that often act independently of one another, and the 92 sampling requirements for meaningful stati s t i c s have been major d i f f i c u l t i e s in studying health care systems and have resulted in a lack of much needed data for rational planning. C. Techniques Employed in Predicting Future Requirements for Health Care Delivery Knowledge gained from studies of the effects of selected variables on u t i l i z a t i o n of health care delivery services to- gether with a knowledge of the functioning of the health care delivery system and an adeauate data base can serve in planning for future health care delivery. This section w i l l attempt to review and discuss some of the shortcomings of the major approaches to forecasting health care needs and demands and their applications to planning. 1. U t i l i z a t i o n Models Methods based on ut i l i z a t i o n vary in sophistication from simple bed/population and physician/population ratios to models which project u t i l i z a t i o n through an analysis of demand, (a) Planning by comparison If the 'status quo' performance of health care delivery is deemed, by those responsible for planning, to be ade- quate, then current u t i l i z a t i o n appears to be an appropriate basis on which to plan for future service. If an improvement of regional health care delivery is desired, another region may be found which w i l l serve as a standard. This approach is subject to the precarious assumption that the needs and demands of the two regions are comparable. It i s , however, possible to subjectively adjust current u t i l i z a t i o n rates for the region concerned and to employ these estimates In planning. The simplest form of planning on the basis of ut i l i z a t i o n rates is to compute such figures as bed/ population and physician/population ratios. This has the underlying assumption that constant u t i l i z a t i o n for a given size population w i l l hold in the future. A more sophisticated variation 3 which has been employed, is to compute ratios of the u t i l i z a t i o n of selected health resources/demographleally categorized population. Projections of population growth by demographic classification may then be used to predict future resource requirements. In these and other methods, the validity of pre- dicted requirements depends to a great extent on the r e l i a b i l i t y of population projections. (h) Planning on the Basis of Existing Demand Planning based on demand considers not only actual u t i l i z a t i o n , but also u t i l i z a t i o n which would occur i f known unmet demands were satisfied. A method which has been employed in England is based on Bailey's (6) concept of a " c r i t i c a l number of beds'. This number represents the number of hospital beds which would satisfy current levels of known demand, and is determined as follows: "In any year the number of patients recommended for admission multiplied by the average duration of stay of the patients died and dis- charged gives the number of bed-days which would have been spent in hospital had a l l patients recommended been admitted." (6) The number of patients recommended for admission is calculated as in-patient deaths and dis- charges plus or minus the change in waiting-lists. Prediction of bed requirements on the basis of this model f a i l s to take account of changes in population age and sex composition, which affect both the demand for admissions and the average length of stay. The effect of other variables is also ignored. Of special note is the effect of supply on demand. Should the c r i t i c a l number of beds be supplied and other factors having no influence, one might find unmet demand̂  as reflected by waiting lists^would s t i l l exist. (c) Planning Based on Analysis of Demand Predicting demand on the basis of an analysis of contributing factors offers a more attractive and sophis- ticated approach than the above methods. Barr (7) in a study of the Reading County Borough derived sex-age-specific discharge, rates of new admissions, staying for one night or more, for different hospital departments in different d i s t r i c t s (classified as county borough, municipal boroughs, urban di s t r i c t s and rural d i s t r i c t s ) . This method may be u t i l i z e d as a basis not only to plan for the number of beds required, but also for their distribution. Using multiple regression analysis, Brooks, et a_l (9) have described a model to predict future demand in each of the cate- gories listed below. 95 1. Ob.stetrJ.es (O.B.) 10. Ear-Nose-Throat (ENT) 2. Newborn 11. Gynaecology 3. Medicine 12. Neuro-surgery 4. Cardiology 13. Ophthalmology 5. Communicable 14. Orthopaedics 6. Dermatology 15. Proctology 7. Neurology 16. Urology 8. Psychiatry 17. Paediatrics (children under 9. Surgery 14 years) A number of factors, 117 in a l l , were selected for the analysis. "From two to five factors were f i n a l l y established as being predictors for the cases considered." (9) Rosenthal (58) has presented a u t i l i z a t i o n model with socio-demographic and economic variables. The model is a least squares linear multiple regression employing the following variables selected on the basis of their popularity in the l i t e r a - ture . 1. % over age 64 8. population per dwelling unit 2. % under age 15 9. charges for 2 - bedroom 3, % of females married 10. % over $5995 income 4. % male 11. % under $2000 income 5. % urban 12. % hospital coverage 6. % over 12 years educa^ tion 7. % non white The alternate variables used to measure u t i l i z a t i o n in short-term general and special nonfederal hospitals in the United States were 1. patient days/1000 population 2. admissions/1000 population 3. average length of stay per admission The analysis was performed for two years, 1950 and I960. In both years the coefficient of multiple correlation was greater for length of stay than for admissions. To take account of trends, the total observations for both years were pooled and a dummy time variable added. The results indicated that the relationships for patient days and admissions 96 displayed a significant time dependence. "The most interesting aspect of these relationships is the negative coefficient for the time period. This means that, for any given set of charac- t e r i s t i c s , there would have been lesser u t i l i z a t i o n in i960 than 1950. It follows, therefore, that the increases in ut i l i z a t i o n noted over the 10-year period resulted from changes In overall social, demographic, and economic characteristics in the United States, rather than from an increasing propensity to consume hos- p i t a l services at a given level of these variables." To test the applicability of a linear model, a curvi- linear model was employed, but l i t t l e significant difference was found. Peldstein and German (27) have presented an evaluation of three approaches to predicting hospital u t i l i z a t i o n . State data on short-term general and special nonfederal hospitals was employed to evaluate the predictive value of the following three approaches: 1. Trend line extrapolation 2. Bed supply extrapolation 3. Demand analysis The results of the study are summarized in Table 11. V A R I A B L E O P E R A T I O N A L DEFINITION M E T H O D O L O G Y OF A S S E S S M E N T SHORTCOMINGS A N D / O R A D V A N T A G E S Patient days (P. d.) patient days/1000 pop. in non-federal, short- term, general hospitals Trendline-Multiple regression (going back 1 year in time for each year projecting into the future) a) 5 year trend of absolute p. d. /population b) 5 year average of p .d . /population c) 5 year trend in changes in p .d . /population d) 5 year average in annual change in p. d. /pop. a) multicollinearity between independent variables may cause problems b) avoids multicollinearity, however assumes equal weights for all /ears Beds number of non-federal, short-term, general and other special hospital beds/1000 population in each state As above, except using bed/population ratios c) avoids multicollinearit / and the use of equal weights d) implies equal weights for al l /ears Income median family income Demand analysis - Multiple regression Makes explicit account of variables influencing utilization Hospital Insurance proportion of population covered Determination of the dependence of patient days/1000 population on socio-economic variables and changes in these variables 7. Cost of Hospital Care 2-bed room rate Age proportion of population over 55 years of age Urbanization proportion of population living in rural areas Race proportion on non-whites living in the state V A L I D A T I O N : Historical data is used to test ; coefficients, standard error of estimation, coeficient of multiple correlation and standard error of the net regression coefficient Table 11: Evaluation of Three Approaches of Predicting Resource Requirements 98 It was found that trends in patient days/1000 and beds/ 1000 population were similar and much more reliable than the use of the selected socio-economic variables in predicting patient- day /population ratios. The authors also incorporated a trend variable into the demand model which resulted in a lower standard error than any of the trend models. However, the authors cautiously state that "further research is s t i l l required to determine more accurate measures for the demand variables so as not to misinterpret their effects, and also to develop an appropriate trend variable." (27) Multiple regression analysis may f a i l to satisfactorily account for interactions. Analysis of variance may be used to handle interactions, however, uneven distributions of observations among cells lead to orthogonality problems. It is for these reasons that Reinke and Baker (5*0 have employed the multi-sort technique, which is an approximation procedure following analysis of variance principles but simplifying computations. Multiple regression analysis was performed after the key variables had been identified. The authors, by a comparison of results using the multi-sort technique and of those from certain multiple re- regression and analysis of variance procedures conclude that "the multi-sort technique offers more promise in the evaluation of demographic data than previous applications of analysis of variance would indicate". (54) 2. Methods Based on Mortality The availability and r e l i a b i l i t y of mortality data has previously attracted some effort to u t i l i z e this information for estimating required health resources. Some measures based on m o r t a l i t y which have been employed a r e : 1. L i f e expectancy by age and sex grouping 2. S u r v i v a l rate at various ages 3 . Selected death rates such as (a) i n f a n t m o r t a l i t y (b) maternal m o r t a l i t y (c) s t i l l - b i r t h s (d) m o r t a l i t y among c h i l d r e n ages 1 - 4 (e) p o s t - n e o n a t a l m o r t a l i t y (f) major i n f e c t i o u s disease m o r t a l i t y The Commission on H o s p i t a l Care (35) derived a technique known as the bed-death r a t i o which considers the r e l a t i o n s h i p between p r e d i c t a b l e deaths and an estimate of the p r o p o r t i o n of deaths that w i l l occur i n the h o s p i t a l . This technique has been employed i n a number of s t a t e s , Including New York and M i c h i g a n . Planning on the basis of m o r t a l i t y data assumes a s t a t i c r a t i o of u t i l i z a t i o n to m o r t a l i t y . As p r o v i o u s l y d i s c u s s e d , the use of constant r a t i o s ignores the e f f e c t s of changing demographi socio-economic and other f a c t o r s which inf luence u t i l i z a t i o n and i n c i d e n c e . As pointed out i n Chapter I , m o r t a l i t y i s not an appropriate basis for health care d e l i v e r y p l a n n i n g . 3 . Approaches Based on Morbidity M o r b i d i t y i s the u n d e r l y i n g f a c t o r which i n i t i a t e s many of the processes leading to demand. U n l i k e death, which i s c h a r a c t e r i z e d by a s i n g l e s t a t e , morbidity i s a continuum varying i n d u r a t i o n and s e v e r i t y and having a number of p o s s i b l e outcomes The problems of obtaining r e l i a b l e m o r b i d i t y data and of t r a n s - 100 lating morbidity incidence into u t i l i z a t i o n have limited appli- cation of approaches based on morbidity. In addition,this approach is based on subjective 'expert' opinion of the .needed health care resources and there is nothing to ensure that the needs w i l l become translated Into demands. Surveys of morbidity such as those of Lee and Jones (43) and Kalimo and Slevers (39) have attempted to calculate needed health care resources to cope with existent levels of determined morbidity. However, surveys of this nature are few in number and are often dated. D. The Need for Alternatives in Health Care Planning Most of the techniques discussed above are employed to forecast requirements on the basis of past characteristics of the population at risk and the existing patterns of health care delivery. Advances in technology and new drugs and approaches to treatment have been evidenced which have had appreciable impacts on disease incidence and medical practice, sometimes resulting in the obsolescence of service f a c i l i t i e s , as in the case of active tuberculosis treatment. A rational approach to planning requires that such pos s i b i l i t i e s be considered and that the design of various f a c i l i - ties be such as to be functionally flexible within the constraint of economic considerations. VJhile various advances in medical science may offer improvements in the quality and effectiveness of health care delivery, great potential lies in research efforts directed to- 101 wards s t u d y i n g a l t e r n a t e modes o f p r o v i d i n g h e a l t h c a r e s e r v i c e s . L i t t l e e f f o r t has been devoted t o s e e k i n g a l t e r n a t i v e s t r a t e g i e s f o r d e l i v e r i n g h e a l t h c a r e s e r v i c e s . "To date most at t e m p t s a t h e a l t h s e r v i c e s p l a n n i n g have gone l i t t l e f u r t h e r t h a n e f f o r t s t o c o l l e c t census d a t a , v i t a l s t a t i s t i c s , and aggregatae d a t a on u t i l i z a t i o n o f v a r i o u s h e a l t h s e r v i c e s w h i c h are t h e n used i n summary form t o d e s c r i b e a g g r e g a t e c h a r a c t e r i s - t i c s o f the t a r g e t p o p u l a t i o n " ( 4 ) . W i t h the p r e v a i l i n g h i g h l e v e l s and s p i r a l i n g o f h e a l t h c a r e e x p e n d i t u r e s , we can no l o n g e r a f f o r d t o a c c e p t e x i s t i n g p a t t e r n s o f h e a l t h c a r e d e l i v e r y w h i c h have h i s t o r i c a l l y d e v e l o p e d , o f t e n i n a p i e c e m e a l f a s h i o n and w i t h o u t a v a l i d assessment. I n t e r e s t and r e s e a r c h a r e i n c r e a s i n g l y b e i n g f o c u s s e d on a l t e r n a t e p a t t e r n s o f h e a l t h c a r e d e l i v e r y i n s e a r c h o f more e f f e c t i v e means of p r o v i d i n g h e a l t h c a r e s e r v i c e s . Such approaches t o h e a l t h care d e l i v e r y are almost c e r t a i n t o be system o r i e n t e d . 1. Systems A n a l y s i s Approach The systems a n a l y s i s approach a t t e m p t s t o e v a l u a t e some measure o f performance of the h e a l t h care d e l i v e r y system o r some subsystem t h e r e o f . T h i s approach n e c e s s i t a t e s i d e n t i f y i n g i n p u t s t o the syst e m , i n t e r a c t i o n s w i t h i n t h e s y s t e m , and t h e ou t p u t o f the system. E v a l u a t i o n i s d e f i n e d i n terms o f a r e l a t i o n s h i p between i n p u t and ou t p u t of the syste m , o f t e n w i t h a r e s t r i c t i o n on some o f the i n t e r a c t i o n s w i t h i n t h e system. Most o f t e n , t h e s e approaches have d e a l t w i t h subsystems, such as a ward ( F e t t e r and Thompson ( 2 8 ) , G u r f i e l d and C l a y t o n (33)), and the e v a l u a t i o n has been a measure o f p r o d u c t i v i t y . The s h i f t from acute t o c h r o n i c c a r e , s h o r t e r l e n g t h s 102 of stay f o r a given diagnosis, and ambulatory care have made i t necessary to view the t o t a l care system rather than just h o s p i t a l beds, since the largest percentage of health care i s provided outside the domain of the h o s p i t a l . A recent approach along these l i n e s has been described by Navarro. (47) The model employs a Markov chain to describe the stochastic interactions of the component parts of the health service system. The subsystems are grouped by type of care i . e . popu- l a t i o n not under care, primary medical care, consultant medical care, nursing home care, h o s p i t a l care and domicilary care. The input to each subsystem i s the number of e n t r i e s , as derived from demand data, during a selected unit of time. The output of each subsystem i s the number of discharges per unit of time. The model allows f o r transfers and r e f e r r a l s within the system, with the throughput being defined as "the t o t a l i t y of u t i l i z a t i o n ex- periences f o r a l l patient^'. (47) Underlying the model are two assumptions which weaken i t s a p p l i c a b i l i t y i n i t s present form. These are: (a) . The t r a n s i t i o n a l p r o b a b i l i t i e s between states or subsystems are independent of the previous states, i . e . the past history of the patients i n the system. (b) The t r a n s i t i o n a l p r o b a b i l i t i e s are time invariant - i . e . the model does not account f o r changes i n u t i l i z a t i o n patterns due to s h i f t s i n population age and sex structure etc. Navarro has discussed three applications f o r which the 103 model may be used. (a) Prediction: to predict required resources in future time periods on the basis of the productivity of various health care resources and current ut i l i z a t i o n patterns. (b) Parametric study: to predict required resources i f various changes occur in u t i l i z a t i o n , productivity or referral patterns. (c) Goal seeking: to calculate the referral pattern which " w i l l minimize an objective function such as cost or change in current resources In such a manner as to reach, in a given time period, specified u t i l i z a t i o n patterns or to require a specified amount of resources." (47) An extension of this model to include changes in popu- lation size and age structure, and different u t i l i z a t i o n by different age groups has been described by Navarro, Parker, and White. (48) E• Changing Patterns of Health Care Delivery The systems approach provides a framework with which to analyze various aspects of alternative patterns of health care delivery. In some cases the parametric values of personnel requirements, etc. to be employed in the system simulation must be derived through subsystem models. While there are many possible areas for research in health care subsystems, this section w i l l discuss three aspects of health care delivery which are likely to have important implications 104 throughout the whole system of f u t u r e h e a l t h care d e l i v e r y , namely; (a) Ambulatory care (b) G e o g r a p h i c a l and i n s t i t u t i o n a l d i s t r i b u t i o n of f a c i l i t i e s and p e r s o n n e l (c) G r e a t e r use of a u x i l a r y m e d i c a l p e r s o n n e l (a) Ambulatory Care Ambulatory care s e r v i c e s have a l r e a d y gained acceptance i n v a r i o u s areas of m e d i c a l , s u r g i c a l and p s y c h i a t r i c h e a l t h care and are l i k e l y t o f i n d g r e a t e r implementation i n the f u t u r e . The b e n e f i t s of ambulatory care are both economic and t h e r a p e u t i c . In cases where p a t i e n t s can be cared f o r on an ambula- t o r y b a s i s , treatment can be p r o v i d e d at a s i g n i f i c a n t l y lower cost than c o n v e n t i o n a l h o s p i t a l i n - p a t i e n t treatment. In a r e p o r t recommending the i n s t i t u t i o n of day care p s y c h i a t r y f o r Vancouver General H o s p i t a l (71), J . S. T y h u r s t s t a t e s t h a t " I t has been e s t i m a t e d that the o p e r a t i n g c o s t s of day h o s p i t a l care are from 1/3 t o 1/2 of t h a t of f u l l h o s p i t a l i z a t i o n " . In a d d i t i o n t o o p e r a t i n g cost s a v i n g s , long run economic b e n e f i t s may accrue s i n c e the c a p i t a l c o s t s of p r o v i d i n g ambulatory beds are s i g n i f i c a n t l y l e s s than f o r acute care beds. The f o l l o w i n g example of one p a r t i c u l a r area of ambula- t o r y c a r e , day surgery f o r c h i l d r e n , i l l u s t r a t e s the p o s s i b l e impact of day care. "In Vancouver i t has been shown t h a t a p p r o x i - mately one-quarter of a l l admissions t o c h i l d r e n ' s u n i t s i n the r e g i o n a l h o s p i t a l d i s t r i c t can be cared f o r i n ambulatory s u r g i c a l u n i t s . Subsequently, c o n t r o l l e d s t u d i e s of m e d i c a l c o m p l i c a t i o n s 105 and parental attitudes towards s u r g i c a l day care were undertaken, which demonstrated that day surgery was a safe and economical alternative to conventional h o s p i t a l i z a t i o n and was acceptable to parents and professionals a l i k e " (/5). Patients receiving ambulatory care maintain s o c i a l contact i n the family and the community. In addition, ambulatory care may f a c i l i t a t e e a r l i e r treatment i n some cases where patients possess anxieties concerning h o s p i t a l i z a t i o n and who might normally delay treatment. Intermediate or s e l f help wards for patients, not r e - quiring f u l l nursing and housekeeping services, also hold promise of providing health care services at lower costs than conventional, f u l l h o s p i t a l i z a t i o n . Like ambulatory care, patients may be motivated to be more s e l f dependent, rather than becoming con- ditioned to i n v a l i d roles as sometimes occurs when treatment i s provided i n the conventional manner. Such wards have recently been i n s t i t u t e d i n Veterans' Administration hospitals i n the United States, with some private hospitals now beginning to adopt t h i s method of care as w e l l . What i s believed to be the f i r s t s a t e l l i t e health centre i n North America which i s p h y s i c a l l y separated from a h o s p i t a l i s scheduled to open in Toronto i n 1972. The centre i s to o f f e r a wide range of diagnostic services and emergency care. The i n s t i t u t i o n of such centres holds promise of bringing health services to within shorter distances of more members of the community and of r e l i e v i n g unnecessary pressure on costly h o s p i t a l f a c i l i t i e s . (b) Geographical and I n s t i t u t i o n a l d i s t r i b u t i o n of f a c i l i t i e s and personnel 106 The g e o g r a p h i c a l d i s t r i b u t i o n of h o s p i t a l s and other s e r v i c e f a c i l i t i e s p l a y s an important r o l e i n i n f l u e n c i n g demand and a l s o i n determining t r a v e l l i n g time and co s t s f o r p a t i e n t s , v i s i t o r s , ambulances and p h y s i c i a n s . More a t t e n t i o n i s l i k e l y t o be p l a c e d on the d i s t r i b u t i o n a l a spects of h e a l t h care d e l i v e r y s e r v i c e s , and i n t h i s context the success or f a i l u r e of community h e a l t h c e n t r e s may s i g n i f i c a n t l y i n f l u e n c e f u t u r e p a t t e r n s of h e a l t h care d e l i v e r y . In a d d i t i o n t o the g e o g r a p h i c a l d i s t r i b u t i o n of i n s t i t u - t i o n s , the manner i n which f a c i l i t i e s and p e r s o n n e l should be d i s t r i b u t e d among the i n d i v i d u a l i n s t i t u t i o n s i s of c o n s i d e r a b l e importance. To a l a r g e e x t e n t , the mix and d i s t r i b u t i o n of pe r s o n n e l w i l l be dependent on the d i s t r i b u t i o n of f a c i l i t i e s . However, w i t h i n a p a r t i c u l a r s e r v i c e u n i t there are a l l o w a b l e v a r i a t i o n s i n the mix and number of p e r s o n n e l . Such s t u d i e s as those o f the S t a n f o r d U n i v e r s i t y ' s S c h o o l of Medicine (11) d e a l i n g w i t h v a r i o u s mixes and systems f o r p r o v i d i n g n u r s i n g s e r v i c e s , and G u r f i e l d and Clayton's (33) study of cost savings r e s u l t i n g from more e f f i c i e n t a l l o c a t i o n s of c a p i t a l and s t a f f i n a c a r d i a c u n i t are l i k e l y t o f i n d more a p p l i c a t i o n i n the f u t u r e . An a n a l y s i s of the d i s t r i b u t i o n o f p e r s o n n e l and f a c i l i - t i e s should c o n s i d e r and attempt t o balance the f a c t o r s c o n t r i - b u t i n g t o a c c e s s i b i l i t y , development of s p e c i a l i z e d s k i l l s , p o s s i b l e economies of s c a l e , i n c r e a s e d problems of d e c e n t r a l i z e d i n f o r m a t i o n exchange and c o o r d i n a t i o n , and unnecessary r d u p l i - c a t i o n and u n d e r u t i l i z a t l o n of v a r i o u s s e r v i c e s . (c) G r e a t e r use of paramedical p e r s o n n e l Many r o u t i n e c l i n i c a l c r minor p r o c e d u r a l d u t i e s are 107 performed by doctors and nurses which do not require much of their medical s k i l l or knowledge and could easily be performed by lesser trained personnel. In some areas of health care, such as pediatrics in the U.S., auxilary medical personnel have been successful in relieving the physician of many routine duties (72). A willingness of B. C. physicians to accept auxilary personnel is indicated by the Medical Manpower Survey ( 6 l ) . The following results show the reaction of the surveyed physicians to the question "Do you think that a medical auxilary of some kind could be trained to relieve you of part of the medical professional work load in your practice?" No Answered or Yes No Undecided not applicable Specialist H5% 31% 9% 9% GP 53% 27% 18% 2% The survey also reported that Hospital Directors of Nursing f e l t that nurses could be given special training to perform additional in-hospital tasks such as Intravenous therapy, blood transfusion, vaginal examination during labor, care of incisions, and changing or removing complicated dressings. The success of greater use of auxilary personnel rests largely on acceptance by the medical profession and their patients. It should be noted that in the above situations the physician's position is not threatened, and, in fact, his earnings may be Increased. Under such circumstances, i t is not surprising that physicians are willing to accept the performance of various tasks by auxilary medical personnel. 108 P. Conclusion Greater emphasis i s needed on r a t i o n a l planning of health care systems, e s p e c i a l l y with regard to seeking alternative modes of providing health care services. Such planning should be based on expected demands under alternative patterns of health care delivery and should be viewed i n terms of a system, rather than a subsystem, such as one or two h o s p i t a l s . In addition, health care should be viewed not only within the context of what i s t r a d i t i o n a l l y regarded as the health care system, but within the broader perspective of those systems which have an appreciable impact on health and the qu a l i t y of l i f e . To t h i s end, one such system model has been developed i n the UBC Health Systems Group and i s presented i n the next chapter. CHAPTER VI. REGIONAL HEALTH PLANNING MODEL A. Objectives The regional health planning model i s a prescriptive model and is intended to serve as an aid in policy formulation and resource allocation in the Greater Vancouver region. The model is intended to provide estimates for future time periods of resource requirements and the effectiveness and efficiency of organizational structures and policies which determine the opera- tional mechanism of the health care delivery system. Although the model has been designed for the Greater Vancouver region, i t is general enough In design that i t may be readily modified and adapted for other regions, providing an adequate data base is available. The health planning model is designed in such a manner that i t can be interfaced with various other submodels to take into account the modifying and contributing effects of environ- mental and l i f e style factors. This leads to the possibility of evaluating different alternative strategies and resource a l l o - cations, not just within what is traditionally regarded as the health care system but also including those systems having an appreciable impact on health and the quality of l i f e . Although this does not permit a complete evaluation of the various oppor- tunity costs, i t does open the way to a more meaningful social evaluation analysis. In i t s present state of developmenta the model u t i l i z e s , 110 U . S . data where Canadian data were not available and various aggregations of data which sometimes have had to be subjectively adjusted. It, is intended, at present, to show the operational f e a s i b i l i t y and applicability of the model, and to pursue refine- ments at a later time when the conceptual framework has been more ful l y developed and the appropriate data obtained. B. Inter-Instltutlonal Policy Simulation The regional health planning model Is one submodel of a larger simulation project. The overall project, the Inter- Institutional Policy Simulator (HPS) is a large scale simulation of the Greater Vancouver region which is intended to simulate various aspects of activity and development in the region. V/ithin the HPS project are ten subgroups which are described below, together with their existing and proposed links to the health planning model. 1. Population arid Demographic Submodel. This model Incorporates both natural population growth and migration. The migration model is to be interfaced with the economic and the environmental quality submodels to account for relative regional attractiveness compared to other regions. This model now serves as a basic input to the health planning model. 2. Economic Submodel The economic submodel u t i l i z e s an input-output framework with shift-share analysis to predict f i n a l demands in the region. The role of local governments in economic conditions and regional development is currently being studied. It is proposed that this model be u t i l i z e d in capital I l l budgeting decisions for the health care system and other sub- models influencing the quality of l i f e In the region. 3. Transportation Submode1 The transportation model Is based on the behavioral assumption underlying the well-known gravity or potential model, i.e. persons are most drawn to locations of closest proximity, possessing the highest levels of activity. Distance is measured in terms of travel time along the most convenient a r t e r i a l route. The model should be able to provide data on t r a f f i c accidents and medical distance as input to the health planning model. 4. Land U t i l i z a t i o n Submodel The purpose of this model is to allocate subareas by activities such as agriculture, forestry, mining, recreation, employment and housing. This model may provide useful demographic data for the health planning model. 5. Health Systems Submodel This model w i l l be discussed in detail In a subsequent section. 6. Pollution Submodel The pollution submodel considers a i r , water, solid waste, and noise pollution and their ecological impact. The levels of the various pollution types can be used as input to the health planning model as factors modifying various incidence rates. Together with the economic submodel a wider perspective of quality of l i f e and alternative costs may be con- sidered. 112 7. Human Ecology •Group This subgroup is concerned with human behavior and the effects of changes in the variables of the various submodels on human behavior. The aspects of human behavior may form an important input to the evaluation of the consequences of alternative policies within the region. 8. Land Classification Group The land classification subgroup provides data input for the land u t i l i z a t i o n model, classified by land use, s o i l type and other physical attributes of the land. 9 . Data Management Group The data management subgroup is responsible for the management and retrieval of data and for the development of com- puter graphic techniques. 10. Resources arid Public Services Group This subgroup Is responsible for providing projections of the cost of site services such as streets, sidewalks, sewer and water, gas and e l e c t r i c i t y , and telephone. In addition, i t w i l l aid In forecasting energy requirements for the region. C. System Priorities and Evaluation As previously discussed, there i s , as yet, no satisfactory quantifiable objective function for the macro evaluation of a health care system. In an attempt to give one measure of psychological and physical well being, as influenced by the health care system, system shortages have been employed as a measure of performance. This would appear to be the only appropriate macro evaluative 113 measure which can presently be employed. Recent work along the lines followed by Holmes and his colleagues (76) offers a quantifiable measurement of the above and appears to possess a valid basis. Holmes et. a l . have derived ordinal and cardinal rankings of the seriousness of 126 of the most common and representative illnesses. The Seriousness of Illness Rating Scale (SIRS) is based on individual perceptions of the seriousness of various illnesses in relation to a normalizing value of 500 for peptic ulcer. This scale has been shown to have a high degree of con- cordance between the ranking by medical and non-medical people (76) and to be satisfactorily reproducible. (77) A system priority matrix having 6 priority classes (highest priority=l) was derived for each morbidity category from the medical rating scale. As the morbidity categories used in the model were aggregations, a weighted index was computed on the basis of the component conditions. Because of the aggregations and varying severity within morbidity categories, these p r i o r i t i e s were adjusted by professional judgement to reflect varying pri o r i t i e s within each category. The resulting priority matrix represents the proportion of cases of each category belonging to a particular priority class. Thus, for example, heart disease and hypertension is represented by a discrete probability distribution, with 50 percent of the cases belonging to priority class 1, 20 percent to each of priority classes 2 and 3 , and 10 percent to priority class 4. In a few cases a rating was not given for a particular illness and not at a l l for services such as prophylactic innoculation. In these instances i t was necessary to subjectively 114 extrapolate values. The performance evaluation is based on an index employing the non-medical seriousness scale values as weightings for unmet demands. The evaluation is thus a measure of the social impact of the performance of the health care system, with larger values of the index of untreated cases signifying a poorer performance of the system. D. Delegation Assumptions At present there are 11 resource categories employed in the model; 9 physician specialties, beds, and nurses. The model is prescriptive in nature and therefore allows substitutions of various resources which might not fu l l y conform to a descriptive model of the health care system. The prescriptive orientation of the model is an attempt to evaluate the system at it s greatest capability for given work loads, hospital occupancy levels, and standards of care, when there i s greatest f l e x i b i l i t y in substituting physician resources. A number of physician categories often treat cases in the same demand category, for example upper respiratory conditions may normally be treated by a general practitioner, a pediatrician or a specialist in internal medicine. If the available amount of any one of the physician resources which normally are employed to meet the demand in a given category is insufficient to treat the normal proportion of these cases, delegation is allowed. The model prescribes that, i f at a l l possible, other physicians normally treating these cases are u t i l i z e d in the order of the specialty normally treating the greatest proportion of these cases. The underlying assumption is that this physician specialty w i l l be 115 the most proficient resource to u t i l i z e . If a l l appropriate physician resources have been depleted, other physicians are allowed to substitute, in the order of the greatest percentage of resources remaining available. In allowing substitutions between physicians, exchange rates based on specialty work loads have been employed to reflect differing amounts of time required to treat a given case. This makes the simplified assumption that there i s a constant trade-off ratio between physician specialties. Additional physician v i s i t s are allowed to compensate in the event of a bed shortage. In the present model, a bed case shortage is compensatable by an additional number of physician cases (at present this number is 1) and this number has been assumed to be equal for a l l categories. E. Data Base The data base used in the i n i t i a l runs of the model was derived from several different sources. It was necessary to process the data as described below. 1. Incidence Data Categorized yearly incidence and prevalence rates/100 population in the U.S. classified by age, sex, and diagnosis ( 1 , 1%) were adjusted when appropriate to reflect local conditions. In order that the various data be compatible, i t was necessary to aggregate into broad diagnostic categories. 2. Demands on Physician Resources Of the data pertaining to 16 specialties categorized in Specialty Profile (r6'6) (accounting for approximately 90% of physicians with a private practice;), a l l but that relative to the - 116 Psychiatrist/Neurologist was used. It was fe l t that, at this time, the project would not concern i t s e l f with psychiatric and neurological conditions. In order to be compatible with available data on medical manpower in the lower mainland and greater Vancouver regions of British Columbia, i t was necessary to aggregate various special- ties as shown below: (a) General practitioner includes dermatologist, a l l e r g i s t , and osteopathic physician. (b) Internal medicine includes gastroenterologist, proctologist and cardiologist. The relevant data given for each specialty was the number of specialists, reason for v i s i t , and number of v i s i t s for a specified reason. Multiplying the number of v i s i t s by the number of physicians active in a specialty gave the number of v i s i t s by specialty for a specified reason. This figure was then converted to v i s i t s / 1 0 0 population. From the data on incidence and v i s i t s , i t was then possible to compute the number of visits/incidence by diagnosis and specialty. (Appendix D) The number of v i s i t s available per year for each specialty at the work load level of the survey summarized in Specialty Profile was calculated as follows: daily patient load* x number of specialists** x 220 * Based on a five-day week. ** In the lower mainland and greater Vancouver regions ( 6 1 ) 1 1 7 This was then adjusted for the physician work loads in the relevant regional areas on the basis of figures of sampled physician work loads published by the B. C. Health Resources Council ( 6 l ) . It was assumed that these values would then be representative of the region. 3. Bed Requirements From the rate of h o s p i t a l i z a t i o n / 1 0 0 , 0 0 0 population ( 6 7 ) , average length of stay C6y), and the incidence rate / 1 0 0 population (U.S. data), the number of bed days/incident for the various aggregated categories of diagnosis were derived. (Appendix C). The number of bed days available/year was calculated by multiplying the rated bed capacity of hospitals in the lower mainland and greater Vancouver region (^5) by the number of days/ year. For the purposes of the model an 85 percent occupancy rate was assumed on the basis of data indicating an 8l-85# occupancy rate in B. C. 4. Graduate Nurses From the Report on Hospital Statistics (55), the number of full-time equivalent graduate nurses working in the hospitals in the above region was derived. Using this figure, the number of graduate nurses/bed days as well as the yearly available graduate nurses/bed day was calculated. (Appendix B). 5. Other Considerations Various service v i s i t s to physicians, i.e. checkups, innoculations, etc. and several diagnoses for which incidence data was not available were handled In a slightly different manner. In order to u t i l i z e the simulation program and data relevant to the above cases the incidence/ 1 0 0 population was replaced by v i s i t s / 1 0 0 populations and visits/incidence was set 118 equal to the fraction of v i s i t s seen by a specialty. P. . Model Logic 1. Overview of the Model The model generates demands, allocates selected health care resources, on a priority basis, feeds back and evaluates system shortages. Various interventions and policy alternatives are allowable for any year of the simulation. U t i l i z a t i o n , resource requirements for demand categories, exogeneous variable impact (dominating factors), and available annual resources may Indivi- dually be allowed to Increase or decrease linearly or compoundly and these rates may be changed for any simulated year. The yearly output is a l i s t i n g of the total population, number of incidences In each demand category, available resources, resource surpluses or deficits i f demands and resources are matched without delegation, the number of treated and untreated cases, the actual resource surpluses or d e f i c i t s , and the value of the Social Impact Index. While the output is currently available only In tabular form, a command language Is being developed to provide on-line graphical displays of a l l HPS submodel outputs as well as for the total regional simulation. H E A L T H P L A N N I N G M O D E L 119 ^ S T A R T >J; \ R E A D A L L D A T A ( I N C L U D I N G I N P U T / \ F R O M P O P U L A T I O N M O D E L ) / ^ : b C A L C U L A T E R E S O U R C E S A T B E G I N N I N G O F P E R I O D \fc I N C I D E N C E S U B R O U T I N E R E S O U R C E A L L O C A T I O N S U B R O U T I N E ( C A L L S D E L E G A T I O N S U B R O U T I N E I F N E C E S S A R Y ) I * 1 | F A T E S U B R O U T I N E | r C A L C U L A T E I N D E X r C A L C U L A T E V A R I O U S G R O W T H F A C T O R S — JK P R I N T R E S U L T S | \ i I N C R E M E N T T I M E P E R I O D N O -3> U P D A T E P O P U L A T I O N M O D E L 1 2 0 2 . Description of Subroutines (a) Incidence Subroutine (i) • Variable Definitions AGEP(K) AGEM(K) = number of females in age class K = number of males in age class K PDISM(K,I) = probability of category I incidence in males of age class K PDISF(K,I) = probability of category I incidence in females of age class K DOM(J) = value of Jth dominating factor UTIL(I) = u t i l i z a t i o n factor for category I CAT(I) = number of new cases in category I = number of non birth related categories = the maximum number of domi- nating factors per category (presently this is 2 ) JD0M(L,I) = the number of the Lth dominating factor relevant to disease I. If there are fewer than L factors relating to category I, NNBRC LDOM 121 JDOM(L,I) = 0. (II) Program Logic The population submodel provides input to the incidence subroutine in the form of age and sex classified yearly population projections. The number of incidences or cases re- quiring services in each category are calculated from population data and age and sex classified morbidity incidence and service rates. Exogenous data from other submodels or parametric estimates are used to alter "natural" prevalence rates of various morbidity categories. The exogenous variables influencing incidence rates have been termed dominating factors and are expressed as coefficients, which when multiplied by the natural prevalence rates yield modified rates reflecting the effect of the exogenous variables. The extent to which demand is manifest depends on a number of factors previously discussed and Is subject to change as these factors change. It was, therefore, decided to Incorporate u t i l i z a t i o n factors for each category. Although In the program these factors modify incidence and service rates, a given percentage change in these rates w i l l result in the same percentage change in demand. Various services such as prenatal care etc., are related to the number of child deliveries. Required services related to births, are calculated from population model data by multiplying the number of d e l i v e r i e s , account being made fo r multiple b i r t h s , by the s p e c i f i c requirements per dellve (Appendlcies C and D) I N C I D E N C E S U B R O U T I N E 123 ^ S T A R T ^ I = 1,NBRC CALCULATE THE NUMBER OF CASES IN CATEGORY I WORK = E{AGEM(K)*PDISM(K,I) + K AGEF(K)*PDISF(K,I)} ;L = l,LDOM J = JDOM(L,I) NO WORK = WORK*DOM(J) CALCULATE MODIFIED DEMAND DUE TO ALTERED UTILIZATION CAT(I) = WORK*UTIL(I) CALCULATE REQUIRED SERVICES '•. RELATED TO BIRTHS ; t ^ END ^ 124 (b) Priority Streaming Subroutine (i) Variable Definitions LPRI(I) = the highest priority to which cases in category I may rise . STPRI(I,J) = the proportion of new cases in category I waiting for treatment at priority level J, including new cases plus cases carried forward from the previous year. The value in the f i r s t time period is read i n , so that h i s t o r i c a l back logs may be accounted for. NCAT = number of morbidity and service categories ( i i ) Program logic This subroutine allows for pr i o r i t i e s in providing service to the various demands. Each category is described by the proportion of cases in various priority classes, with 1 being the highest priority. Patients who fa i l * to receive treatment in one time period may move up one pr i o r i t y class in the succeeding time period, with the limitation that the highest priority to which a patient in category I may rise is LPRI(I). The subroutine calculates CAPRI(I,J) from the number of ne\i cases plus those returning from the previous year which have moved up one priority class where permitted. P R I O R I T Y S T R E A M I N G S U B R O U T I N E 125 CAPRI (I, J) = CAPRI (I, J) + CAT(I)*STPRI (I,J) CALCULATE THE NUMBER OF CASES IN CATEGORY I AND PRIORITY CLASS J CAPRI (I,J) = CAPRI (I, J)+CAPRI (I,JH) +CAT(I) *STPRI (I, J) j = j + l YES •> CAPRI (I, J) = CAT (I) *STPRI (I, J) NO CAPRI (I, J) = CAPRI(I,J+1) +CAT.(I) *STPRI (I, J) ^ C O N T I N U S ^ - ^ END 1 2 6 (c) Resource Allocation Subroutine ( 1 ) Variable Definitions UNTRE(I) = the number of untreated cases of category I. TRE(I) = the number of treated cases of category I. NPRI = the number of priority classes RES(K) = amount of resource K currently avail- able. At present resources 1 - 9 are physician speciality resources, 1 0 is beds and resources, 1 1 is nurses. REQU(K, I) = the amount of resource K required per case in category I. CAP - the number of untreated cases, ( i i ) Program Logic This subroutine allocates resources in order of priority class. Note that since the cases of equal priority are treated sequentially by category number, there is an implicit secondary priority. This is not intended to have any significant inter- pretation and is merely a result of programming constraints. Appropriate resources are decremented on a priority basis to meet the requirements for each priority and category block, (I, J). If at any time, i t is detected that the allocation of resources to a priority and category block (I, J) drives one or more resources negative, the delegation subroutine is called. Delegation is then attempted before the R E S O U R C E A L L O C A T I O N S U B R O U T I N E 127 (" START ~) SET NUMBER OF TREATED (TRE) AND UNTREATED (UNTRE) CASES IN ALL CATEGORIES EQUAL TO 0 J = 1,NPRI I = l fNCAT YES IDEL = 2 K = 1.11 H O YES DECREMENT RESOURCE K BY REQUIREMENTS RES (K) = RES (K) -REQU(K,I) * CAPRI (I, Jl NO YES IDEL = 1 CALL DELEGATION SUBROUTINE £ < ^ I ^ L ^ > - END ^ CALCULATE NUMBER OF TREATED OASES IN CATEGORY I TRECI) = TRE(I)+CAPRI) I, J) CALCULATE NUMBER OF TREATED CASES IN CATEGORY I TRE (I) = TRE (D+CAPRI (I ,J) -CAP CALCULATE NUMBER OF UNTREATED CASES IN CATEGORY I UNTR(I) - UNTR(I) -hCAP next sequence (I, J) Is processed. The number of cases which are not treated each time the delegation 'subroutine is called is calculated by the delegation subroutine and returned in storage area CAP. The number of treated and untreated cases for each time period is calculated for a l l categories and stored in TRE(I) and UNTRE(I). (d) Delegation Subroutine (i) Variable Definitions CAP = the equivalent number of untreated cases ALPA = the additional number of GP equivalent cases required to compensate for a failure to provide a hospital bed for a case. RES(l) = G.P. resources (v i s i t s ) EXCHA(K,1) = the exchange rate when using G.P. resources to substitute for physician resource K. RESI(K) = amount of resource K at the beginning of the time period, ( i l ) Program Logic The flow chart Is self-explanatory for the most part, except for the calculation of the equiva- lent number of untreated cases when a bed shortage exists for which physician resources cannot f u l l y compensate, (see Section D) Each case requirement is assumed to be represented by one GP equivalent case requirement plus the GP equivalent of the case bed requirement., or D E L E G A T I O N S U B R O U T I N E 129 [ C A P = 0 P H Y S * = 0 R E Q = 0 j )L C O N V E R T A L L P H Y S I C I A N R E S O U R C E S T O G P R E S O U R C E E Q U I V A L E N T S A N D A L L P H Y S I C I A N R E Q U I R E M E N T S TO G P R E S O U R C E E Q U I V A L E N T R E Q U I R E M E N T S 9 P H Y S =KZ R E S ( K ) * E X C H A ( K , 1 ) 9 R E Q = ^ E i R E Q U ( K , I ) * E X C H A ( K , 1) )k C A L C U L A T E G P E Q U I V A L E N T C A S E S U R P L U S ( D E F I C I T ) P H Y S = P H Y S / R E Q NO C A P = - P H Y S ... V P H Y S = 0 : & R E S T O R E B E D A N D N U R S I N G S E R V I C E S W H I C H W E R E A L L O C A T E D B U T F O R W H I C H T R E A T M E N T I S N O T G I V E N B E C A U S E O F P H Y S I C I A N S H O R T A G E R E S ( 1 0 ) = R E S ( 1 0 ) + R E Q U ( 1 0 , I ) * C A P ; R E S (11) = R E S ( 1 1 ) + R E Q U ( 1 1 , I ) * C A P N O \ Y E S C A L C U L A T E B E D C A S E S H O R T A G E ( S U R P L U S ) B E D S = R E S ( 1 0 ) / R E Q U ( 1 0 , I ) NO Y E S •M l R E S(10) = 0 : ± : RESTORE NURSING SERVICES WHICH WE'RE ALLOCATED BUT NOT UTILIZED BECAUSE OF BED SHORTAGE RES(ll) = RES(11)-REQU(11,I) *BEDS CALCULATE EQUIVALENT GP CASES WHICH COULD COMPENSATE FOR BED SHORTAGE BEDS = BEDS*ALPHA _ W O R K = PHYS+BEDS W O R K > 0 . . e . , CAN PHYSICIANS COMPLETELY COMPENSATE . F O R 'BED SHORTAGE. ? YES DECREMENT ALL APPROPRIATE PHYSICIAN RESOURCES E5ES(K) = RES ( K ) + REQU(K,I)*BEDS : * CALCULATE EQUIVALENT NUMBER OF UNTREATED CASES • CAP = CAP-WORK/ (1+ALPHA) 5 \k S E T ALL PHYSICIAN RESOURCES TO 0 ^ E N D N O 131 . C A N N O T S U B S T I T U T E W I T H T H I S P H Y S I C I A N R E S O U R C E S U B ( K ) = 0 | B I G = 00001 C H O O S E i n E AVAILAcLci S f ^ C X A L T ' I W h i c t i N O R M A L L Y T R E A T S T H E G R E A T E S T N U M B E R O F C A S E S I N C A T E G O R Y I O R W I T H T H E G R E A T E S T P E R C E N T A G E O F R E S O U R C E S R E M A I N I N G W H E N A L L P H Y S I C I A N R E S O U R C E S N O R M A L L Y A L L O C A T E D T O C A T E G O R Y I A R E D E P L E T E D B I G = S U B ( K ) K S U B = K N O XL C A L C U L A T E T H E R A T I O O F R E M A I N I N G R E S O U R C E S T O I N I T I A L R E S O U R C E S F O R E A C H C A T E G O R Y S U B ( K ) = R E S ( K ) / R E S I ( K ) 132 © K = 1.9 YES S U B S T I T U T E F O R T H I S R E S O U R C E A N D D E C R E M E N T S U B S T I T U T E D R E S O U R C E R E S(K) .- R E S ( K S U B ) + R E S ( K ) * E X C H A ( K , K S U B ) (1 + ALPHA)GP equivalent cases. The number of deficit equivalent cases is given by WORK = PHYS + BEDS. Therefore the number of untreated cases is given by CAP - WORK 1 + ALPHA ) Subroutine Fate (i) Variable Definitions HAPT(I,K) = the number of treated cases of category I resulting in outcome K. HAPU(I,K) = the number of untreated cases in category I resulting in outcome K. PHAPT(I,K) = the probability of outcome K for treated cases in category I PHAPU(I,K) = the probability of outcome K for untreated cases in category I. NHAP = the number of different possible outcomes. ( i i ) Program Logic The subroutine calculates the various outcomes for a l l categories and the number of cases by category and priority to be carried over to the succeeding year. At present only one possible outcome is consi- dered (K = 2) for which treated and untreated cases return in the subsequent year for treatment. PHAPT(I, 2) has been set equal to 0 and PHAPU(I, 2) has been set equal to 1. F A T E S U B R O U T I N E 134 ( S T A R T } I = l . N C A T K = 1 , N H A P H A P T ( I , K ) = T R ( T ) * P H A P T ( I , K ) \̂ H A P U ( I , K ) = U N T ( I ) * P H A P T ( I , K ) N O T R ( I ) = T R ( I ) - W O R K Y E S ± C A P R I ( I , J ) = W O R K * P U C E N D 3 C A P R I ( I , J ) = ( W O R K + T R ( I ) ) * P T - T R ( I ) * P U CHAPTER VII. EXPERIMENTS" This chapter w i l l present the results 1of several pilot experiments which have been chosen to demonstrate some of the capabilities of the regional planning model. The experiments are designed to show the possible impacts of various resource growth rates.and environmental factors. The impact is measured in terms of the social impact index and shortages or surpluses of resources. Experiment 1 The model was run for a 25 year simulated time period, with projected regional population growth and constant resource growth rates of 1, 2, 3, 4, and 5%. Various resources, even in the i n i t i a l year of the simu- lation, were in excess of forecasted regional requirements, whereas others were in shortage. For i l l u s t r a t i v e purposes, obstetrician/ gynecologist (OG) and urologist (UROL) resource surpluses (deficits) for a 4$ constant resource growth rate are presented in Table 12. .Year OBG UROL vi s i t s v i s i t s 0 -22,230 15 , 0 2 6 5 -16,773 14,202 10 -54,340 8,657 15 -116,947 -3,150 20 -190,184 -22,434 25 -265,135 -49,464 Table 12. Obstetrician/Gynecologist and Urologist Resource Surpluses for a 4% Constant" Resource Growth Policy 136 Since the model allows f o r s u b s t i t u t i o n of various resources, the surplus resources compensating for d e f i c i t r e - sources, an o v e r a l l resource shortage, as r e f l e c t e d by a non- zero value of the s o c i a l Impact index, i s not evidenced u n t i l years 4 , 6 , 8 , 1 2 , and 17 for the respective growth rates (Figure U). The sub s t i t u t i o n process allowed In the model i s p a r a l l e l e d i n r e a l i t y , since many s p e c i a l i s t s provide treatment for conditions which are not s t r i c t l y i n t h e i r f i e l d of s p e c i a l i - zation. This s i t u a t i o n occurs frequently, as a number of s p e c i a l i s t s are also engaged, part-time, i n general p r a c t i c e . 1 3 7 Y E A R S Figure 4: The Effect of Various Linear Growth Rates(for A l l Resources) on the Social Impact Index 138 For a l l five growth rates, the social impact index grows in an exponential or compound manner. This behaviour of the index i s to be expected, since; (a) the population and also the individual resource requirements increase at compound rates of approximately 4 - 5% (Table 13). As demand increases at a faster rate than supply, the shortages grow at an increasing rate. (b) as the resource shortages increase, the untreated cases are of progressively higher priority classes. While a l l SIRS values within a given priority class are not greater than a l l SIRS values in lower priority classes, the average SIRS value Increases as the priority class increases. The untreated cases are, therefore, generally weighted with increasing SIRS values, as the resource shortages increase. (c) the present version of the model allows only one possible outcome, each, for treated and untreated cases. A l l untreated cases are returned for treatment with a probability of 1 and a l l treated cases are regarded as being completely re- covered and are returned for treatment with a probability of 0. As resource shortages continue to increase, the cummulative effects of the demand carry-over increases the index at an accelerated rate. While the untreated demands may properly be regarded as contributing to the social Impact Index in the year in which they are i n i t i a l l y not met, i t is not valid to assume that a l l such cases w i l l be manifest as demands carried over into the subsequent year. Other outcomes such as death, p a r t i a l recovery of treated and untreated cases, and the relapse of treated cases w i l l , therefore, be added to l a t e r versions of the model. Experiment 2 The above experiment was repeated f o r compound resource growth rates. The f i r s t year In which o v e r a l l system shortages were evidenced f o r growth rates of 1, 2, 3, and *\% were 4, 6, 9 and 22 (Figure 5) . No o v e r a l l shortage;was evidenced f o r a 5% compound resource growth rate.,. 120-1 Y E A R S Figure 5: The Effect of Various Compound Growth Rates (for A l l Resources)on the Social Impact Index 141 In experiments 1 and 2, the social impact index has a value of 0 in the earlier years of the simulation, indicating that, overall, resources are i n i t i a l l y in excess of regional requirements. This apparent surplus is largely due to the export of services to other regions, i.e. services u t i l i z e d by patients referred to the Greater Vancouver region for treatment. Since the export of services has not been accounted for in the present version of the model, the results must be Interpreted as the ab i l i t y of regional resources to cope only with regional demands. To bbtain an impression of the manner in which regional resource requirements behave over time, the annual increases in resource requirements, for the projected population growth, are presented in Table 13. The more or less constant yearly increase in resource requirements is a result of a population growth rate which is approximately compounded at 4 - 5%, with very l i t t l e change occurring in the age and sex structure. In comparison, Table 14 illustrates the percentage change in resource requirements (for five year intervals) under conditions approximating zero population growth (no migration and births limited to 2 per susceptable women). The following are some of the more important aspects ob- served in Table 14. (a) As a result of a decrease in the birth rate, obstetrician/gynecologist resource requirements significantly decrease by 16.78$ during the f i r s t five year period of the simulation. A decrease is again evidenced i n the last five year period of the simulation, years 20-25. This decrease of 5.66$ in the last five year period reflects the maturing of women who were born subsequent to the zero population growth intervention. Table 13: Percentage Increases in Population and Resource Requirements* for Projected Population Growth V e a r s P o p u l a t i o n G P v i s i t s I M v i s i t s S U R G v i s i t s O R S v i s i t s P E D v i s i t s O T O v i s i t s O P H ' v i s i t s O B G v i s i t s U R O L v i s i t s B e d -d a y s 1 - 2 4 . 5 8 4 . 5 5 4 . 5 6 4 . 3 8 4 . 4 8 4 . 4 5 4 . 5 7 4 . 6 4 4 . 9 6 4 . 6 6 4 . 3 8 2 - 3 4 . 5 8 4 . 5 5 4 . 5 6 4 . 3 8 4 . 4 8 4 . 4 7 4 . 5 8 4 . 6 4 4 . 9 7 4 . 6 7 4 3 6 3 - 4 4 . 5 9 4 . 5 6 4 . 5 6 4 . 4 0 4 . 5 0 4 . 4 5 4 . 5 9 4 . 6 3 4 . 9 5 4 . 6 7 4 . 3 8 4 - 5 4 . 6 0 4 . 6 0 4 . 5 9 4 . 4 3 4 . 5 1 4 . 5 5 4 . 6 0 4 . 6 8 5 . 1 2 4 . 6 8 4 . 4 9 5 - 6 4 . 6 2 4 . 6 3 4 . 5 9 4 . 4 8 4 . 5 5 4 . 6 2 4 . 6 2 4 . 4 0 5 . 1 2 4 6 9 4 . 5 3 6 - 7 4 . 6 3 4 . 6 8 4 . 6 2 4 . 5 6 4 . 6 0 4 . 7 3 4 . 6 3 4 . 7 0 5 . 1 9 4 . 7 0 4 . 6 8 7 - 8 4 . 6 5 4 . 7 0 4 . 6 4 4 . 5 7 4 . 6 1 4 . 7 4 4 . 6 5 4 . 7 1 5 . 2 4 4 . 7 1 4 . 6 9 8 - 9 4 . 6 6 4 . 7 2 4 . 6 5 4 . 5 5 4 . 5 8 4 . 7 5 4 . 6 6 4 . 7 2 5 . 3 1 4 . 7 3 4 . 6 7 9 - 1 0 4 . 6 8 4 . 7 4 4 . 6 8 4 . 5 7 4 . 5 9 4 . 8 0 4 . 6 8 4 . 7 6 5 . 3 8 4 . 7 5 4 . 7 2 1 0 - 1 1 4 . 7 1 4 . 7 9 4 . 7 0 4 . 6 3 4 . 6 5 4 . 8 6 4 . 7 1 4 . 7 8 5 . 4 1 4 . 7 7 4 . 8 0 1 1 - 1 2 4 . 7 2 4 . 8 2 4 . 7 3 4 . 6 5 4 . 6 6 4 . 9 1 4. 7 2 4 . 8 1 5 . 3 5 4 . 7 8 4 8 3 1 2 - 1 3 4 . 7 4 4 . 8 3 4 . 7 5 4 . 6 5 4 . 6 6 4 . 9 3 4 . 7 4 4 . 8 3 5 3 3 4 8 0 4 8 2 * The key to physician abbreviations is given in appendix B Table 13; -- Continued Y e a r s P o p u l a t i o n G P v i s i t s I M v i s i t s S U R G v i s i t s O R S v i s i t s P E D v i s i t s O T O v i s i t s > O P H v i s i t s O B H v i s i t s U R O L v i s i t s F e d -d a y s 1 3 - 1 4 4 . 7 6 4 . 8 6 4 . 7 7 4 . 7 1 4 . 7 1 4 . 9 7 4 . 9 0 4 . 8 5 5 . 2 8 4 . 8 1 4 8 8 >'14 - 1 5 4 . 7 7 4 . 8 6 4 . 7 9 4 . 6 8 4 . 6 8 4 . 9 6 4 . 7 7 4 . 8 9 5 . 1 8 4 . 8 2 4 . 8 2 1 5 - 1 6 4 . 7 7 4 . 8 6 4 . 7 8 4 . 6 9 4 . 6 9 4 . 9 7 4 . 7 7 4 . 8 7 5 . 0 1 4 . 8 2 4 . 7 8 1 6 - 1 7 4 . 7 7 4 . 8 4 4 . 7 9 4 . 6 9 4 . 6 9 4 . 9 6 4 . 7 7 4 . 8 9 4 . 7 9 4 . 8 1 4 . 7 4 1 7 - 1 8 4 . 7 5 4 . 8 2 4 . 7 7 4 . 6 5 4 . 6 5 4 . 9 3 4 . 7 5 4 . 8 7 4 . 5 8 4 8 0 4 6 5 1 8 - 1 9 4 . 7 3 4 . 7 9 4 . 7 5 4 . 6 5 4 . 6 5 4 . 9 1 4 . 7 3 4 8 5 4 . 3 5 4 . 7 8 4 . 5 9 1 9 - 2 0 4 . 7 0 4 . 7 5 4 . 7 2 4 . 6 0 4 . 6 0 4 . 8 6 4 . 7 0 4 . 8 2 4 . 1 5 4 . 7 5 4 4 9 2 0 - 2 1 4 . 6 7 4 . 7 1 4 . 6 8 4 . 5 8 4 . 5 8 4 . 8 3 4 . 6 7 4 . 7 8 4 . 0 0 4 . 7 1 4 4 3 2 1 - 2 2 4 . 6 3 4 . 6 6 4 . 6 4 4 . 5 3 4 . 5 3 4 . 7 8 4 . 6 3 4 . 7 4 3 . 8 5 4 . 6 7 4 3 6 2 2 - 2 3 4 . 5 8 4 . 6 1 4 . 5 9 4 . 4 9 4 . 4 9 4 . 7 3 4 . 5 8 4 . 6 9 3 . 7 1 4 6 3 4 2 8 2 3 - 2 4 4 . 5 4 4 . 5 7 4 . 5 5 4 . 4 6 4 . 4 7 4 . 6 9 4 . 5 4 4 . 6 4 3 . 6 4 4 5 8 4 2 5 2 4 - - 2 5 4 . 5 0 4 . 5 2 4 . 5 0 4 . 3 9 4 . 4 0 4 . 6 2 4 . 5 0 4 . 6 0 3 . 5 6 4 5 4 4 1 8 - C r Table 14: Percentage Increases in Population and Resource Requirements for Zero Population Growth Years Population GP visits IM visits SURG visits ORS visits PED visits OTO visits OPH visits OBG visits UROL visits Bed- da /B 0 - 5 • 5 5 -r81 . 2 9 - . 7 7 - . 20 -1 .35 . 55 .14 -16 .78 . 9 5 - 5 . 9 3 5 - 1 0 1.24 1.13 1.06 , . 53 .72 . 56 1.41 . 37 7.11- I. 53 1. 23 10 - 15 1.96 2 .07 1.89 1. 46 1. 46 1.95 1.92 1.73 6. 66 2. 25 2. 42 1 5 - 2 0 1.99 1.86 1.96 1.38 1. 34 1. 85 2. 04 I. 84 . 53 2. 24 .94 20 - 25 . 7 7 - . 3 4 . 66 .02 . 04 .27 .77 . 53 - 5 . 66 1.00 -1. 34 The cohort of women with the highest f e r t i l i t y rates comprise a smaller proportion of the total population in this time period than in previous periods of the simulation. (b) a similar result is evidenced in the requirement for pediatricians. The requirements decrease by 1.35% in the f i r s t 5 year period and the rate of increase has significantly declined from l.&5% in years 15-20 to 0.27? in years 20-25. Experiment 3 As discussed in Chapter V, the use of constant ratios may not be an appropriate basis to plan for future health care delivery services. In order to determine to what extent this applies in the present case, bed day requirements/total regional population ratios were calculated. Table 15 shows these ratios for projected regional population growth over a 25 year period. Year Ratio Year Ratio Year Ratio 1 1.011 10 1.001 18 1.001 2 1.008 11 1.002 19 1.000 3 1.006 12 1.002 20 .997 4 1.004 13 1.003 21 .995 5 1.002 14 1.004 22 .992 6 1.001 15 1.004 23 .988 7 1.001 16 1.003 2̂ 4 .985 8 1.001 17 1.003 25 .982 Table 15. Bed day requirements/total- population for projected regional population. As can be seen, the use of a constant value of approxi- mately 1 bed day per person per year could adequately serve to determine regional bed requirements. However, in instances in which the underlying demographic variables undergo more radical changes, this may not be a very appropriate method. The actual distribution of beds along functional lines such as maternity, surgical and chronic care is not indicated at this level of granularity. Changes in population age and sex structure are likely to produce shifts in the demands for specific bed categories. Later more refined versions of the model w i l l , therefore, classify beds and demands for beds by functional use. Experiment 4 L i t t l e is known about the relationship between a i r pollution and morbidity. We may, however, parametrically examine the possible impact of air pollution on the performance of the health care system. Lave and Seskin (42) suggest that a 50 percent reduction in a i r pollution in the major urban areas of the United States could result in a 25 percent reduction in morbidity and mortality due to a l l respiratory diseases. It was, therefore, f e l t that compound growth rates of up to 2% in the incidence of morbidity suspected of being related to air pollution would not be unreason- able to assume for the Greater Vancouver region, which currently experiences relatively low air pollution levels. Dominating factors 2 (gaseous air pollution) and 7 (particulate air pollution) were, therefore, allowed to Increase in two separate runs of the model, at compound rates of 1 and 2%. (Figure 6). While the effects of these exogeneous variables on the social impact index do not appear to be significant, i t should be noted that some degree of caution must be exercised in interpreting the results. Changes in the social impact index provide a measure only of the ab i l i t y of the health care system, with i t s predeter- : mined p r i o r i t i e s , to cope with any increases in demands as a re- sult of the influences of the exogeneous variables. In many cases. gure 6: Social Impact Index for 1 and 2% Compound Growth in A i r Pollution Related Morbidity- demands of lower priority may be displaced in order that resources may be allocated, in the model, to provide treatment for i n - creased incidences of higher priority. In such cases, the index reflects the impact of the variables only in terms of an increase in untreated demands of lower priority. If the increased i n - cidences receive treatment, no account is made of the discomfort, loss of social function, etc. experienced by these individuals. Ohly in the event that resources are insufficient to meet these increased demands, does the social impact index reflect more full y the seriousness of the increases in incidence. The SIRS values which have been employed to derive the social impact index are measures of the public's perception of the seriousness of having specific conditions. These values do not differentiate between having a condition for which treatment Is received and having a condition for which treatment is not received. In many cases, i t is likely that the perceived seriousness of having specific conditions Is influenced by per- ceptions of the effectiveness with which these conditions may be treated and the consequences of not receiving treatment. For these two circumstances the perceptions may be almost identical, in cases for which treatment is not perceived as being.effective or may dif f e r substantially, in cases for which the outcome may be dependent on whether or not treatment is received. The above shortcomings of the social impact index neces- sitates a more refined approach. A methodology similar to that used in deriving the SIRS values should be employed to obtain values for (a) the seriousness of having conditions for which treatment is received. - 149 (b) the seriousness of having conditions for which treatment is not received. Such measures would provide an improved weighting system for evaluating the social impact in terms of the abi l i t y of health care resources to meet demands. In addition, such measures would provide a means to measure the Impact of exogeneous variables not only in terms of those who seek treatment, but also in terms of that segment of the population which are affected but which do not seek professional medical services. 1 Some of the results are also discussed in Ecological Planning of Health Care, I. Ventinsky and G. Povey, Unpublished Working paper of U.B.C. Health System Group. CHAPTER VIII. FUTURE IMPROVEMENTS AND EXPERIMENTS A. Extensions and Refinements While, in i t s present stage of development, the described planning model can be uti l i z e d for demonstration purposes, further extensions and refinements are necessary before i t can be operationally employed for real planning purposes in British Columbia. In addition to the extensions and refinements proposed in Chapter VII, this section w i l l discuss other major improvements to the model. (1) The present version of the model employs 27 aggregate demand categories. The weighting values used in deriving the social impact index are a composite of SIRS values. These com- posite values were arrived at on the basis of the relative com- position of the aggregate demand categories in 1968, the base year of the simulation. The social Impact index i s , thus, i n - sensitive to changes which may occur in the relative composition within the demand categories. In addition, resources are allocated on the basis of requirements for the aggregate demand categories. A change in the relative composition of a demand category may, in reality, require that the mix of required resources also change. It i s , therefore, anticipated that a finer c l a s s i f i - cation of the demand categories w i l l be provided when compatible data become available. ( 2 ) The simulation model employs v i s i t s as a measure of physician time u t i l i z a t i o n . The total number of available v i s i t s / year within each physician specialty is specified as the product of the average number of v i s i t s / y e a r / f u l l time equivalent specialist and the number of f u l l time equivalent physicians practicing in the specialty. Since the average time required per v i s i t is not the same for a l l demand categories, v i s i t s may be an inappropriate measure of physician resource availability and u t i l i z a t i o n , especially i f the composition of demand changes. Later versions of the model may, therefore, employ measures which better reflect physician time u t i l i z a t i o n . (3) The logic of the current version of the model assumes that physicians may substitute for bed shortages. The ratio of substitution, ALPHA, is the same for a l l demand categories re- quiring hospital beds. For conditions requiring a major surgical procedure, physician time cannot substitute for the required hospital f a c i l i t i e s . In other cases, the substitution which can be made differs between demand categories. The ratio of substi- tuting physician resources for hospital beds should be reflective of the actual substitution which can be made in each demand category and in cases where substitution cannot be made, the demand should be regarded as being unmet. Future versions of the model w i l l , therefore, attempt to correct this shortcoming. (4) It is planned to expand the resource categories to include essential support services such as radiology, anaesthesi- ology, operating f a c i l i t i e s , etc. This extension may also include alternative f a c i l i t i e s and services such as private hospitals and chiropractor services. (5) To provide a basis for cost-benefit or cost-effec- tiveness analysis, cost functions, both operating and capital, w i l l be added to later versions of the model. (6) If the social impact index is to reflect a social evaluation of the abil i t y of the health care system to meet de- mands, the shortcomings of the system should be examined in relation to the total demands placed on i t . A normalized social impact index (SII) having the following form is proposed. SII = SSIR(i)unt(i) ^SIRU)dem(i) where: SIR(i) = the perceived seriousness of not receiving treatment for a condition in demand category i unt(i) = the number of untreated cases in demand category i for which treat- ment i s sought dem(i) = the number of cases in demand cate- gory 1 for which treatment i s sought. By redefining the social impact index in this manner, a relative measure of system performance is obtained. The develop- ment of this index w i l l necessitate obtaining data relating the number of visits/treated case or the number of incident cases for which treatment is sought/the total number of incident cases in each demand category. Further research w i l l be required to define levels of system performance and to establish a correspondence between these levels and values of the social impact index. B. Future Experiments Some of the model's capabilities were demonstrated by the experiments presented in Chapter VII. These are but a few of the possible experiments which can be performed employing the model. This section w i l l discuss two experiments which are now being planned. 153 (1) To date, only one priority system and one delegation routine have been employed In the model. There are numerous alternatives which may be studied. The sensitivity of the social Impact index and resource shortages to p r i o r i t i e s and delegation should be examined. One aspect of medical care which is likely to be impor- tant In the future is the increased use of auxilary medical personnel. It Is essential that the implications of an increased role for auxilary medical personnel be investigated. The model offers one possible means of examining the economic implications as well as the maximum abi l i t y of given levels of physician resources to cope with demands when various delegations are allowed. The parameters to be used in the model may be a combination of data from empirical studies such as that of Uyeno (72) and subjectively extrapolated estimates. (2) The present logic of the model assumes that current treatment patterns w i l l persist in the future. Alternative patterns of treatment such as day care and s a t e l l i t e health centre services may have appreciable implications for future modes: of health care delivery. The model, with appropriate cost functions and estimates of the human and physical resource requirements/case, under alternative health care delivery patterns, may serve as a frame- work to study alternative capital and operating costs. The institution of alternative patterns of treatment may relieve much of the commonly occurring demands of low medical priority which are placed on hospitals and other f a c i l i t i e s . A complementary simulation should be developed to investigate the impact such changes w i l l have on admission scheduling procedures and the s t a b i l i t y and mix of patient flows i n h o s p i t a l f a c i l i t i e s . BIBLIOGRAPHY 1 . Age P a t t e r n s In M e d i c a l Care, I l l n e s s and D i s a b i l i t y . U n i t e d S t a t e s , J u l y 1963-June 196~5"l N a t i o n a l Center f o r H e a l t h S t a t i s t i c s , Washington S e r i e s 10, No. 32. 2. Andersen, R. and 0. W. Anderson. A Decade of H e a l t h S e r v i c e s . The U n i v e r s i t y of Chicago P r e s s , Chicago (1967). 3. Andersen, R. and J . T. H a l l . " H o s p i t a l U t i l i z a t i o n and Cost Trends i n Canada and the U n i t e d S t a t e s " . H e a l t h S e r v i c e s Research ( F a l l 1969). 4. Anderson, James G. 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Unpublished PhD. dissertation, North Western University, ,Evenston, I l l i n o i s , June 1971. 160 7 3 . V e r t i n s k y , I . " L i f e S t y l e s , Environment, And Hea l t h Problems: A n . E c o l o g i c a l P e r s p e c t i v e Of H e a l t h Care" In Human B i o l o g y and Human Ecology. H. E. Kasinsky and S. Kort (ed.) ( i n press ), ; 74. Weiss, J.E. and M.R. G r e e n l i c k . "Determinants of M e d i c a l Care U t i l i z a t i o n : The E f f e c t o f S o c i a l C l a s s and. Dis t a n c e on Contacts with the M e d i c a l Care System" M e d i c a l Care. V o l . V I I I , No. 6 (Nov.-Dec. 1 9 7 0 ) . 75. W i n k e l s t e i n , W. J r . and F.E. French. "The Role of Ecology i n the Design of a Hea l t h Care System" C a l i f o r n i a M e d i c i n e . V o l . 1 1 3 , No. 5 (Nov. 1 9 7 0 ) . 76. Wyler, A.P.., M. Masuda, and T.H. Holmes. "Seriousness of I l l n e s s R a t i n g S c a l e " J o u r n a l o f Psychosomatic Research. V o l . 1 1 (196871 77. Wyler, A.R., M. Masuda, and T.H. Holmes, "Seriousness o f I l l n e s s R a t i n g S c a l e P e p r o c u c i b i l i t y " . J o u r n a l o f Psychosomatic Research. V o l . 14 ( 1 9 7 0 7 7 " ^ APPENDIX A - Major P o l l u t a n t s (a) P a r t i c u l a t e A i r P o l l u t i o n L i t t l e study has been made on the e f f e c t on health of s p e c i f i c p a r t i c u l a t e a i r p o l l u t i o n . Some studies have i n d i c a t e d that carbonaceous soot i s s t r o n g l y associated with the incidence of g a s t r i c cancer and that -asbestos p a r t i c l e s are c o r r e l a t e d with asbestosis and asbestos lung cancer. (b) Carbon Monoxide Carbon monoxide (CO), produced l a r g e l y from the lncomplet combustion of motor v e h i c l e fuel, has the highest concentrat ion of any of the major gaseous p o l l u t a n t s . In low concentrations s p e c i f i c symptoms are not e v i d e n t . In high concentrations i t can produce headache, v e r t i g o , mental c o n f u s i o n , unconsciousness and death. It i s b e l i e v e d the CO may have an e f f e c t on some people with p r e - e x i s t i n g medical condit ions such as emphysema and coronary vascular d i s e a s e . The evidence, however, i s not con- c l u s i v e . (c) S u l f u r Dioxide A i r P o l l u t i o n S u l f u r dioxide (SO2) , an i n d u s t r i a l p o l l u t a n t , i s the major component of smog t y p i c a l of Londoi^New York and Tokyo. S u l f u r dioxide causes increased airway r e s i s t a n c e and can adversely affect persons s u f f e r i n g from such r e s p i r a t o r y diseases as chronic b r o n c h i t i s , asthma, and emphysema. It has been c o r r e l a t e d to chronic b r o n c h i t i s deaths when p a r t i c u l a t e , a i r p o l l u t a n t s are p r e s e n t . (d) Photochemical A i r P o l l u t i o n Energy from s u n l i g h t t r i g g e r s chemical r e a c t i o n s of 7 162 h y d r o c a r b o n v a p o r s and n i t r i c o x i d e i n the atmosphere t o produce ozone, n i t r o g e n d i o x i d e and o t h e r p h o t o c h e m l c a l s . T h i s form o f p o l l u t i o n i s c h a r a c t e r i s t i c of S o u t h e r n C a l i f o r n i a smog. Ozone i s h i g h l y t o x i c even i n s m a l l c o n c e n t r a t i o n s and has been found t o a c c e l e r a t e b a c t e r i a l i n f e c t i o n s at low tempera- t u r e s . Other p h o t o c h e m l c a l s can produce eye and r e s p i r a t o r y i r r i t a t i o n and o t h e r e f f e c t s on the r e s p i r a t o r y system, such as a g g r a v a t i n g asthma and c h r o n i c b r o n c h i t i s . I t i s a l s o b e l i e v e d t h a t t h e y may have an e f f e c t on t h e c a r d i o v a s c u l a r system. (e) Sewage Sewage t r e a t m e n t has l a r g e l y been c o n c e r n e d w i t h r e d u c i n g the t r a n s m i s s i o n of communicable d i s e a s e s s u c h as t y p h o i d f e v e r , c h o l e r a and d y s e n t r y . P r i m a r y and sec o n d a r y sewage t r e a t m e n t i s not e f f e c t i v e i n removing t o x i c heavy m e t a l s , d e t e r g e n t s and n u t r i e n t s . N u t r i e n t s , d i s c h a r g e d i n t o the waterways cause i n c r e a s e d a l g a e and o t h e r oxygen d e p l e t i n g p l a n t g r o w t h . I n a number of i n s t a n c e s t h i s e x c e s s i v e p l a n t grox^th and o r g a n i c p o l l u t i o n have r e s u l t e d i n t h e death o f numerous f i s h . ( f ) Mercury Many o r g a n i c mercury compounds from i n d u s t r i a l and a g r i c u l t u r a l s o u r c e s and i n o r g a n i c mercury from i n d u s t r i a l s o u r c e s may be c o n v e r t e d t o m e t h y l mercury by n a t u r a l p r o c e s s e s a f t e r t h e y have been d i s c h a r g e d i n t o the waterways. M e t h y l mercury i s b o t h h i g h l y t o x i c and s t a b l e and can be c o n c e n t r a t e d I n b i o l o g i c a l t i s s u e s . O r g a n i c mercury has been w i d e l y r e p o r t e d i n f i s h and b i r d s and in isolated cases has resulted in human deaths from the con- sumption of food containing i t in excess levels, (g) DDT DDT and other insecticides are carried great distances from their original sources by air and water with the result that organochlorine residues are widely distributed over the earth. These residues are concentrated through the food chain, DDT occurring with an average of 12 ppm in human fat in the United States. DDT is suspected to be correlated with l i v e r cancer and deaths due to hypertension and leukemia. APPENDIX B - Available Resources in the F i r s t Year Resource Visits/year 1. General Practitioner (GP) 3,922,424 2. Internal Medicine (IM) 438, 504 3. Surgeon (SURG) 411,136 4. Orthopedic Surgeon (ORS) 142,956 5. Pediatrician (PED) 318,384 6. Otolaryngologist (OTO) 286, 286 7. Ophthamologist (OPH) 202,048 8. Obstetrician/Gynecologist (OBG) 218,240 9. Urologist (UROL) 83,160 Total graduate nurse bed days Available bed days (at 100% occupancy) 399,483 2, 000, 930 Demand Category Hospital Bed Days /Incidence TMale 1 Incidence/100 Population „ * FemaleJ Under 6 6-16 17 - 44 45 & Over infective and Parasitic Diseases .203 50,9 46.9 37.9 33.8 14.6 20.1 7. 3 9.9 Common Cold 0 51.0 55.9 Influenza .024 34.8 37. 7 40. 7 39.6 29. 2 41.9 24. 2 24. 6 Bronchitis .325 13. 5 9.0 3.8 3.3 2.4 3.2 2.5 2.5 Other Respiratory Conditions .041 151.4 198. 2 81.2 132.2 47. 7 106. 2 35.6 67. 7 Digestive System Disorders (Acute) 2.785 14.8 13.1 8.7 9.6 7.0 9.1 7.0 6.0 Injuries and Adverse Effects 1. 272 43. 7 32.3 38.2 21.9 37.4 24.5 22.0 21.0 Diseases of the Ear .60 7 4.9 4.6 Genitourinary Disorders 7.883 0.8 5.4 Diseases of the Skin 1.780 2.2 3.0 Diseases of the Musculo-skeletal System 5. 725 .1.6 2. 7 Heart Conditions and Hypertension 8.682 Under 45 45 - 64 65 and Over 1.6 2. 2 12.5 17.4 39.5 Arthritus and Rheumatism 1.030 1.0 2.1 1.4 20.8 25. 3 39. 3 APPENDIX C - Incidence Rates and Hospital Bed Requirements Demand Category- Hospital Bed Days/Incidence . , . , „ „ _ . . . Male Incidence / 100 Population „ r |FemaleJ Under 45 45 - 64 65 and Over Digestive Conditions (Chronic) 2.467 3.9 3.0 13. 7 11.6 22.4 20.0 Visual Impairments 1.395 1.1 1.4 3.9 4.1 12.8 16.2 Visits/100 Population Medical and Surgical After Care 46.1 Medical or Special Examination 200.0 Prophylactic Innoculation 35.0 Non-Endocrine Obesity 8.4 Diabetic Mellitus .460 11.6 Neoplasms . 260 11. 7 Well Baby and Child Care 35.0 Other Visits to Opthamologist 11.0 Other Visits to Otolaryngologist 5.4 Visits /Delivery Post -partum Observation 1.27 Prenatal Care 3.90 Deliveries and Disorders of the Puerperium 5.9 A P P E N D I X C - Continued Demand Category Visits/Incidence or Proportion of Visits Seen by Specialty GP IM SURG ORS P E D OTO OPH OBG UROL Infective and Parasitic Diseases . 018 . 072 Bronchitis -901 .430 Common Cold . 010 Influenza . 085 Other Respiratory Conditions .247 .017 .110 Digestive System Disorders (Acute ) . 260 . 028 . 476 . 115 Injuries and Adverse Effects . 175 . 260 . 261 . 071 . 015 Diseases of the E a r . 209 . 117 Genitourinary Disorders 1. 901 . 847 1. 333 1. 236 Deliveries and Disorders of the Puerperium . 193 1. 426 Diseases of the Skin 2. 697 Diseases of the Musculo- skelatal System 2.813 Heart Conditions and Hypertension 4. 763 6. 668 APPENDIX D - Physician Resource Requirements Demand Category- Visits/Incidence or Proportion of Visits Seen by Specialty GP IM SURC ORS PE E OTO OPH OBG UROL Arthritis and Rheumatism . 252 . 343 . 083 Digestive Conditions (Chronic) . 145 . 276 Medical and Surgical (Aftercare) . 18 . 12 . 36 . 08 . 02 . 05 . 06 . 09 . 05 Medical or Special Examination . 75 . 20 . 01 . 03 . 01 Prophylactic Innoculation . 50 . 50 Prenatal Care . 32 . 68 Well Baby and Child Care . 31 . 69 Visual Impairments 6. 223 Non-endocrine Obesity . 70 . 22 . 08 Diabetic Mellitus . 50 .49 . 01 Neoplasms . 35 . 36 . 12 . 03 . 02 . 12 Post partum Observation . 30 . 70 Other Visits to Otolaryngologist 3 Other Visits to Ophthamologist 1 APPENDIX D - Continued CO 169 APPENDIX E - P r i o r i t y Matrix D e m a n d C a t e g o r y P r i o r i t y 1 2 3 4 5 6 I n f e c t i v e a n d P a r a s i t i c D i s e a s e s . 2 . 6 . 2 B r o n c h i t i s . 1 . 1 . 2 . 6 C o m m o n C o l d . 1 . 2 . 7 I n f l u e n z a . 1 . 2 . 7 O t h e r R e s p i r a t o r y C o n d i t i o n s . 2 . 6 . 2 D i g e s t i v e S y s t e m D i s o r d e r s ( A c u t e ) . 1 . 2 . 5 . 2 I n j u r i e s a n d A d v e r s e E f f e c t s . 4 . 3 . 2 . 1 D i s e a s e s o f t h e E a r . 2 . 3 . 3 . 2 G e n i t o u r i n a r y D i s o r d e r s . 2 . 3 . 3 . 2 D e l i v e r i e s a n d D i s o r d e r s o f t h e P u e r p e r i u m . 8 . 2 D i s e a s e s o f t h e S k i n . 1 . 2 . 7 D i s e a s e s o f t h e M u s c u l o s k e l e t a l S y s t e m . 2 . 3 . 3 . 2 1 H e a r t C o n d i t i o n s a n d H y p e r t e n s i o n . 5 . 2 . 2 . 1 A r t h r i t u s a n d R h e u m a t i s m . 1 . 3 . 3 . 2 . 1 D i g e s t i v e C o n d i t i o n s ( C h r o n i c ) . 1 . 1 . 3 . 3 . 2 M e d i c a l a n d S u r g i c a l A f t e r c a r e . 1 . 2 . 3 . 3 . 1 M e d i c a l o r S p e c i a l E x a m i n a t i o n . 1 . 1 . 8 P r o p h y l a c t i c I n n o c u l a t i o n . 1 . 1 . 8 P r e n a t a l C a r e . 1 . 2 . 6 . 1 W e l l B a b y a n d C h i l d C a r e . 1 . 1 . 8 V i s u a l I m p a i r m e n t s . 2 . 2 . 2 . 4 N o n - e n d o c r i n e O b e s i t v . 2 . 8 D i a b e t i c M e l l i t u s . 3 . 4 . 3 N e o p l a s m s . 8 . 2 P o s t p a r t u m O b s e r v a t i o n . 3 . 4 . 3 O t h e r V i s i t s t o O t o l a r y n p o l o c i s t . 1 . 1 . 2 . 2 . 4 O t h e r V i s i t s t o O p h t h a m o l o p s t . 1 . 9 170 APPENDIX F - Substitution Exchange Ratios The rate of exchange between physician visits i to j (the amount of physician visits i needed to substitute for 1 visit of physician j) is calculated on the bases of work load ie E X C H A ( i , j) = work load(daily visits) of physician i work load(daily visits) of physician j The exchange ratios are given in the table below. EXCHA(I, J) 1 2 3 4 5 6 7 8 9 1 1 1. 40 1. 66 1. 24 1. 06 1. 25 1. 29 1. 37 1. 51 2 . 71 1 1. 18 . 88 . 75 . 89 . 92 . 97 1. 08 3 . 60 . 85 1 . 75 . 64 .76 . 78 . 83 . 91 4 . 81 1. 73 1. 34 1 . 85 1. 01 1. 04 1. 10 1. 22 5 . 95 1. 33 1. 57 1. 18 1 1. 19 1. 23 1. 30 1. 44 6 . 80 1. 12 1. 32 .99 . 84 1 1. 03 1. 09 1. 21 7 . 77 1. 09 1. 28 .96 . 82 .97 1 1. 06 1. 17 8 . 73 1. 03 1. 21 .91 . 77 .92 . 95 1. 1. 11 9 . 66 . 93 1. 09 . 82 . 70 . 83 . 85 . 90 1 N. B. Physician specialty numbers are the same as given in Appendix B APPENDIX G - Seriousness of Illness Rating Demand Category- Index Rating Infective and Parasitic Diseases 190 Bronchitis 270 Common Cold 67 Influenza 230 Other Respiratory Conditions 250 Digestive System Disorders (Acute) 160 Injuries and Adverse Effects 450 Diseases of the E a r 204 Genitourinary Disorders 506 Deliveries and Disorders of the Puerperium 550 Diseases of the Skin 55 Diseases of the Musculoskeletal System 400 Heart Condition and Hypertension 650 Arthritus and Rheumatism 444 Digestive Conditions (Chronic) 550 Medical and Surgical Aftercare 350 Medical or Special Examination 59 Prophylactic Innoculation 59 Prenatal Care 150 Well Baby and Child Care 150 Visual Impairments 350 Non-endocrine Obesity 267 Diabetic Mellitus 570 Neoplasms 650 Postpartum Observation 550 Other Visits to Otolaryngologist 230 Other Visits to Ophthamologist 230 APPENDIX H - Dominating Factors Demand Category Infective and Parasitic Diseases Bronchitis Influenza Other Respiratory Conditions Digestive System Conditions (Acute) Injuries and Adverse Effects Diseases of the E a r Heart Conditions and Hypertension Visual Impairments Non-endocrine Obesity Key 1 2 3 4 5 6 7 Dominating Factor 1 2 1 2, 7 3 4 5 6 7 6 Crowding A i r Pollution (gaseous) Water Quality Tr a f f i c Accidents Noise Nutrition A i r Pollution (particulate)

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