Health Care Institutions

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Health Care Institutions

A hospital is no place to be sick.
Samuel Goldwyn


The first hospitals in the United States were established more than two hundred years ago. No records of hospitals in the early colonies exist, but almshouses, which sheltered the poor, also cared for those who were ill. The first almshouse opened in 1662 in the Massachusetts Bay Colony. In 1756 the Pennsylvania Hospital in Philadelphia became the first U.S. institution devoted entirely to care of the sick.

Until the late 1800s, U.S. hospitals had a bad reputation. The upper classes viewed hospitals as places for the poor who could not afford home care, and the poor saw hospitalization as a humiliating consequence of personal economic failure. People from all walks of life thought hospitals were places to go to die.


The American Hospital Association notes in Fast Facts on US Hospitals (October 23, 2007, that in 2007 there were 5,747 hospitals in the United States that were described as short stay or long term, depending on the length of time a patient spends before discharge. Short-stay facilities include community, teaching, and public hospitals. Sometimes short-stay hospitals are referred to as acute care facilities because the services provided within them aim to help resolve pressing problems or medical conditions, such as a heart attack, rather than long-term chronic conditions, such as the need for rehabilitation following a head injury. Long-term hospitals are usually rehabilitation and psychiatric hospitals or facilities for the treatment of tuberculosis or other pulmonary (respiratory) diseases.

Hospitals are also distinguished by their ownership, scope of services, and whether they are teaching hospitals with academic affiliations. Hospitals may be operated as proprietary (for-profit) businesses, owned either by corporations or individuals such as the physicians on staff, or they may be voluntaryowned by not-for-profit corporations or religious organizations or operated by federal, state, or city governments. Voluntary, not-for-profit hospitals are usually governed by a board of trustees, who are selected from among community business and civic leaders and who serve without pay to oversee hospital operations.

Most community hospitals offer emergency services as well as a range of inpatient and outpatient medical and surgical services. There are more than a thousand tertiary hospitals in the United States, which provide highly specialized services such as neonatal intensive care units (for care of sick newborns), trauma services, or cardiovascular surgery programs. Most tertiary hospitals serve as teaching hospitals.

Teaching hospitals are those community and tertiary hospitals affiliated with medical schools, nursing schools, or allied-health professions training programs. Teaching hospitals are the primary sites for training new physicians, where interns and residents work under the supervision of experienced physicians. Nonteaching hospitals may also maintain affiliations with medical schools and some serve as sites for nursing and allied health professions students as well as physicians-in-training.

Community Hospitals

The most common type of hospital in the United States is the community, or general, hospital. Community hospitals, where most people receive care, are typically small, with fifty to five hundred beds. These hospitals normally provide quality care for routine medical and surgical problems. Since the 1980s many smaller hospitals have closed down because they are no longer profitable. The larger ones, usually located in cities and adjacent suburbs, are often equipped with a full complement of medical and surgical personnel and state-of-the-art equipment.

Some community hospitals are not-for-profit corporations that are supported by local funding. These include hospitals supported by religious, cooperative, or osteopathic organizations. During the 1990s increasing numbers of notfor-profit community hospitals converted their ownership status, becoming proprietary hospitals that are owned and operated on a for-profit basis by corporations. These hospitals joined investor-owned corporations because they needed additional financial resources to maintain their existence in an increasingly competitive industry. Investor-owned corporations acquire not-for-profit hospitals to build market share, expand their provider networks, and penetrate new health care markets.

Teaching Hospitals

Most teaching hospitals, which provide clinical training for medical students and other health care professionals, are affiliated with a medical school and have several hundred beds. Many of the physicians on staff at the hospital also hold teaching positions at the university affiliated with the hospital, besides teaching physicians-in-training at the bedsides of the patients. Patients in teaching hospitals understand that they may be examined by medical students and residents as well as by their primary attending physician.

One advantage of obtaining care at a university-affiliated teaching hospital is the opportunity to receive treatment from highly qualified physicians with access to the most advanced technology and equipment. A disadvantage is the inconvenience and invasion of privacy that may result from multiple examinations performed by residents and students. When compared to smaller community hospitals, some teaching hospitals have reputations for being impersonal; however, patients with complex, unusual, or difficult diagnoses usually benefit from the presence of acknowledged medical experts and more comprehensive resources available at these facilities.

Public Hospitals

Public hospitals are owned and operated by federal, state, or city governments. Many have a continuing tradition of caring for the poor. They are usually located in the inner cities and are often in precarious financial situations because many of their patients are unable to pay for services. These hospitals depend heavily on Medicaid payments supplied by local, state, and federal agencies or on grants from local governments. Medicaid is a program run by both the state and federal government for the provision of health care insurance to people younger than sixty-five years of age who cannot afford to pay for private health insurance. The federal government matches the states' contribution to provide a certain minimal level of available coverage, and the states may offer additional services at their own expense.

TREATING SOCIETY'S MOST VULNERABLE MEMBERS . Increasingly, public hospitals must bear the burden of the weaknesses in the nation's health care system. The major problems in U.S. society are readily apparent in the emergency rooms and corridors of public hospitals: poverty, drug and alcohol abuse, crime-related and domestic violence, untreated or inadequately treated chronic conditions such as high blood pressure and diabetes, and infectious diseases such as acquired immunodeficiency syndrome (AIDS) and tuberculosis.

LOSING MONEY . The typical public hospital provides millions of dollars in health care and fails to recoup these costs from reimbursement by private insurance, Medicaid, or Medicare (a program run by the federal government through which people aged sixty-five and older receive health care insurance). Joel S. Weissman notes in The Trouble with Uncompensated Hospital Care (New England Journal of Medicine, vol. 352, no. 12, March 24, 2005) that the National Association of Public Hospitals and Health Systems (NAPH) estimates that nearly half of all public hospital charges are not ultimately paid. According to Weissman, this figure has grown sharply as the number of uninsured Americans has also increased. State and local governments provide subsidies to help offset these expenses. However, even with the subsidies, the unpaid costs incurred by the nation's public hospitals add up to billions of dollars' worth of care each year.

In Charity Care at U.S. Hospitals on the Rise as Americans with No Health Insurance Grows (April 1, 2006,, the PricewaterhouseCoopers Health Research Institute reports that the dollar amount of uncompensated service, of which charity care is a component, provided by U.S. hospitals rose 30% since 1999from $20.7 billion to $27 billion in 2005. Even though approximately 70% of hospitals surveyed said they provide discounted care to the uninsured as well as charity care, many fail to communicate adequately their charity policies to patients, which results in fewer needy patients requesting financial assistance. The institute exhorts hospital leaders to proactively report to the community and local leaders through an annual community benefit report to defend against accusations that they are not fulfilling their charitable missions.

PROVIDING NEEDED SERVICES. The NAPH (2008, believes the mission of public hospitals is to respond to the needs of their communities. As a result, most provide a broad spectrum of services. Even though the need for trauma care exists throughout the nation and across all socioeconomic levels, in thirty cities including Albuquerque, New Mexico; Las Vegas, Nevada; Memphis, Tennessee; New Orleans, Louisiana; Richmond, Virginia; and San Francisco, California, NAPH-member hospitals are either the only providers of trauma center services or provide the highest level of trauma care.

According to Ron J. Anderson, Paul J. Boumbulian, and S. Sue Pickens, in The Role of U.S. Public Hospitals in Urban Health (Academic Medicine, vol. 79, no. 12, December 2004), almost half of NAPH-member hospitals provide prison services, and some hospitals have dedicated beds for prisoners. County and city revenues provide most, if not all, of the funds available for prison services. Many of the NAPH-member hospitals are also major academic centers, where they train medical and dental residents as well as nursing and allied health professionals. Anderson, Boumbulian, and Pickens explain that NAPH-member hospitals are just 2% of the nation's hospitals, but they provide 25% of uncompensated care.

SOME PUBLIC HOSPITALS IN PERIL OF CLOSING . New York City's cash-strapped public hospital system, the facilities that provide trauma and emergency care and are considered lifelines for the working poor, are imperiled because the bulk of their reimbursement comes from Medicaid and Medicare, which have failed to keep pace with rising inflation. In Cabrini Medical Center Closes Its Doors (The Sun [New York City, New York], March 18, 2008), E. B. Solomont reports that in 2006 a state health care commission recommended that five of the eleven public hospitals in New York City would close in the coming years. In late 2007 St. Vincent's Midtown Hospital closed and in March 2008 Cabrini Medical Center became the second hospital to close. The city's public hospital system projects an average annual deficit of $314 million between 2008 and 2012. The city has subsidized the Health and Hospitals Corporation for more than a decade. Between 2005 and 2008 the average annual subsidy was $1.2 billion, up from $290 million between 1999 and 2004.

The problems New York City faces are only compounded at the national level. In the press release President's Budget Would Further Weaken Health Care Safety Net (February 4, 2008,, the NAPH decries President George W. Bush's (1946) fiscal year 2009 budget request, explaining that cutting Medicaid expenditures by $200 billion over five years will have a disproportionate impact on public hospitals and would threaten to close more public hospitals, further compromising the nation's safety netits essential role in the provision of care for uninsured Americans. Citing economic uncertainty and heightened awareness about matters of national security, the NAPH asks Congress to reject this budget, and if needed, to enact legislation to prevent President Bush from implementing a budget that will severely damage public hospitals nationally.

Hospital Emergency Rooms: More Than They Can Handle

For many Americans, the hospital emergency room has replaced the physician's office as the place to seek health care services. With no insurance and little money, many people go to the only place that will take them without question. Insurance companies and health care planners estimate that more than half of all emergency room visits are for nonemergency treatment.

Poor or near poor children up to eighteen years of age of all races were more likely to visit emergency rooms (27.3% and 21.8%, respectively) in 2005 than those who were not poor (17.9%). (See Table 3.1.) In 2005, 28.5% of children on Medicaid visited emergency rooms at least once, as opposed to 17.4% of children who were privately insured and 18.4% of uninsured children. In the eighteen and older age group, 29.8% of poor people made one or more emergency department visits and 23.2% of the near poor made one or more visits in 2005. (See Table 3.2.) Of adults aged eighteen to sixty-four, 17.3% of people who were privately insured made one or more emergency room visits during 2005, as opposed to 40.1% of those who had Medicaid and 19.5% of those who were uninsured.

Even though any type of hospital can experience slow emergency room service, public hospitals are frequently underfunded and understaffed, and service can be exceedingly slow. All-day waits in the emergency room for initial treatment are not uncommon. Andrew P. Wilper et al. of the Harvard Medical School indicate in Waits to See an Emergency Department Physician: U.S. Trends and Predictors, 19972004 (Health Affairs, vol. 27, no. 2, January 15, 2008) that the median waiting time to see a physician in a hospital emergency department rose from twenty-two minutes in 1997 to thirty minutes in 2004. The researchers attribute the longer waits to an increase in the number of emergency room visits and the closure of many emergency rooms. Uninsured patients and those who do not have a primary care physician account for much of the increase. When they use emergency rooms for routine care, the system becomes over-burdened. At the same time, hospitals provide so much uncompensated care through emergency rooms that they end up closing or stop offering emergency care.

MAJORITY OF EMERGENCY ROOM PATIENTS HAVE HEALTH INSURANCE . Because people without health insurance or a usual source of care often resort to using hospital emergency departments, many industry observers assume that the crowding and long waits in the emergency department are at least in part caused by uninsured patients seeking care for routine illnesses such as colds, flu, or back pain. In Characteristics of Frequent Users of Emergency Departments (Annals of Emergency Medicine, vol.48, no. 1, July 2006), Kelly A. Hunt et al. refute this hypothesis and characterize frequent users of emergency medical care (adults who made four or more emergency department visits in one year) as people with both insurance (84%) and a usual source for health care (81%). Between 2000 and 2001 frequent users accounted for just 8% of emergency department users and 28% of all adult visits. Contesting the notion that frequent users were generally inappropriate users, Hunt et al. find that frequent users were sicker than less frequent users and made more health care visits to other parts of the health care system for care. They conclude that most emergency department utilization by frequent users appears to be appropriate.

Under 18 yearsUnder 6 years617 years
Percent of children with one or more emergency department visits
All childrena19.920.920.524.326.226.817.718.417.4
White only19.420.619.822.625.325.317.818.317.1
Black or African American only24.023.123.833.131.131.619.419.420.0
American Indian or Alaska Native only*24.1*17.7*32.1*24.3***24.0*16.7*
Asian only12.615.814.620.8*19.420.28.614.312.3
Native Hawaiian or other Pacific Islander only******
2 or more races27.024.835.738.321.317.1
Hispanic origin and raceb
Hispanic or Latino21.120.619.525.726.928.018.116.914.5
Not Hispanic or Latino19.721.020.724.026.026.517.618.718.0
      White only19.220.719.922.224.824.517.718.817.9
      Black or African American only23.622.823.832.730.731.819.219.120.0
Percent of poverty levelc
Below 100%25.127.627.329.534.333.522.223.623.5
100%less than 200%22.022.321.828.029.530.819.018.617.4
200% or more17.318.517.920.521.922.715.816.915.7
Hispanic origin and race and percent of poverty levelb, c
Hispanic or Latino:
Percent of poverty level:
        Below 100%21.923.121.825.029.228.419.619.217.4
        100%les s than 200%20.820.917.828.826.426.115.617.613.1
        200% or more20.417.918.823.424.829.318.714.413.5
Not Hispanic or Latino:
White only:
Percent of poverty level:
        Below 100%25.532.334.127.236.637.324.429.932.2
        100%les s than 200%22.323.822.825.831.330.720.719.619.1
        200% or more17.218.317.420.120.920.815.917.215.9
Black or African American only:
Percent of poverty level:
        Below 100%29.329.227.139.537.534.823.024.122.6
        100%les s than 200%22.521.224.131.727.833.318.518.920.3
        200% or more17.718.920.622.625.827.415.915.917.6
Health insurance status at the time of interviewd
Health insurance status prior to interviewd
Insured continuously all 12 months19.620.720.524.125.526.717.318.417.3
Uninsured for any period up to 12 months24.027.326.027.137.434.421.922.222.4
Uninsured more than 12 months18.416.614.419.321.915.7*

HOSPITALS TRY TO EASE THE PAIN OF WAITING . In an effort to distinguish themselves from competitors and increase patient satisfaction with care, some hospitals are promising patients in the emergency department that they will not have to wait more than thirty minutes to be seen. Even though this guarantee does not apply when the emergency department has multiple critical patients or is so full that ambulances are being diverted to other hospitals, Tammie Smith notes in Hospital Offering a Time Guarantee (Richmond Times-Dispatch, March 20, 2006) that under typical circumstances participating hospitals are attempting to reduce the average waiting time to see a physician46.5 minutesto under half an hour. When the guarantees are not met and patients have to wait longer, they may be compensated with an apology and movie tickets, prepaid gas cards, restaurant gift certificates, or even free medical care.

Under 18 yearsUnder 6 yearsUnder 6-17years
*Estimates are considered unreliable. Data preceded by an asterisk have a relative standard error (RSE) of 20%30%. Data not shown have an RSE of greater than 30%.
Data not available.
aIncludes all other races not shown separately and unknown health insurance status.
bThe race groups, white, black, American Indian or Alaska Native, Asian, Native Hawaiian or other Pacific Islander, and 2 or more races, include persons of Hispanic and non-Hispanic origin. Persons of Hispanic origin may be of any race. Starting with 1999 data, race-specific estimates are tabulated according to the 1997 Revisions to the Standards for the Classification of Federal Data on Race and Ethnicity and are not strictly comparable with estimates for earlier years. The five single-race categories plus multiple-race categories shown in the table conform to the 1997 standards. Starting with 1999 data, race-specific estimates are for persons who reported only one racial group; the category 2 or more races includes persons who reported more than one racial group. Prior to 1999, data were tabulated according to the 1977 standards with four racial groups and the Asian only category included Native Hawaiian or other Pacific Islander. Estimates for single-race categories prior to 1999 included persons who reported one race or, if they reported more than one race, identified one race as best representing their race. Starting with 2003 data, race responses of other race and unspecified multiple race were treated as missing, and then race was imputed if these were the only race responses. Almost all persons with a race response of other race were of Hispanic origin.
cPercent of poverty level is based on family income and family size and composition using U.S. Census Bureau poverty thresholds. Missing family income data were imputed for 21%25% of children in 19971998 and 28%31% in 19992005.
dHealth insurance categories are mutually exclusive. Persons who reported both Medicaid and private coverage are classified as having private coverage. Starting in 1997 Medicaid includes state-sponsored health plans and State Children's Health Insurance Program (SCHIP). In addition to private and Medicaid, the insured category also includes military, other government, and Medicare coverage. Persons not covered by private insurance, Medicaid, SCHIP, public assistance (through 1996), state-sponsored or other government-sponsored health plans (starting in 1997), Medicare, or military plans are considered to have no health insurance coverage. Persons with only Indian Health Service coverage are considered to have no health insurance coverage.
Percent of poverty level and health insurance status prior to interviewc,d
Below 100%:
      Insured continuously all 12 months26.327.428.130.933.234.322.823.723.8
      Uninsured for any period up to 12 months26.535.431.229.747.539.124.429.5*28.2
      Uninsured more than 12 months17.5*18.915.7*16.0**18.0**15.6
100%-less than 200%:
      Insured continuously all 12 months21.822.322.128.028.731.018.618.817.4
      Uninsured for any period up to 12 months24.527.227.429.739.539.541.221.021.4
      Uninsured more than 12 months19.516.814.7*22.5*27.3*18.613.6*14.5
200% or more:
      Insured continuously all 12 months17.18.517.920.321.722.615.617.115.7
      Uninsured for any period up to 12 months20.722.221.421.330.026.820.418.118.7
      Uninsured more than 12 months17.9*13.6*12.6*19.2**17.3*12.6*
Note: Data are based on household interviews of a sample of the civilian noninstitutionalized population.

In Hospitals Try Pagers to Ease the Pain of Waiting (Pittsburgh Post-Gazette, January 1, 2006), Christopher Snowbeck states that other hospitals issue pagers to waiting patients, which allow them to roam the hospital campus or eat in the cafeteria rather than sitting in waiting rooms anxiously awaiting diagnostic testing or appointments. Friends and family are also offered pagers so they can be summoned quickly when physicians have updated information or a patient is ready for discharge.


Table 3.3 shows that the discharge rate increased among people aged sixty-five and older from 1990 to 2003. From 2003 to 2004 the rate declined and stabilized through 2005. Discharge rates for all other age groups steadily declined during this period.

In 2005 the hospital discharge rate was 116.2 per 1,000 population. The rate for females was 132 per 1,000, and for males it was 101.3 per 1,000. (See Table 3.3.) Male patients had longer average lengths of stay (ALOS) than female patients5.2 days compared to 4.4 days. ALOS and discharge rates varied by geographyALOS ranged from 4.2 days in the Midwest to 5.3 days in the Northeast. Furthermore, the discharge rate per 1,000 population ranged from 100.6 in the West to 124.6 in the Northeast.

Organ Transplants

Organ transplants are a viable means of saving lives, and according to the United Network for Organ Sharing's (UNOS) Organ Procurement and Transplantation Network (OPTN; August 1, 2008,, in 2007, 28,354 transplants were performed. UNOS compiles data on organ transplants, distributes organ donor cards, and maintains a registry of patients awaiting organ transplants. It reports that as of August 2008, 107,280 Americans were waiting for transplants. UNOS (May 1, 2006, also states that in 2004 there were 153,245 people living with functioning

One or more emergency department visitsTwo or more emergency department visits
Percent of adults with emergency department visits
18 years and over, age-adjusteda, b19.620.220.720.
18 years and over, crudea19.620.120.620.
1844 years20.720.520.920.
      1824 years26.325.724.425.
      2544 years19.018.819.719.
4564 years16.217.618.
      4554 years15.717.917.917.
      5564 years16.917.018.419.
65 years and over22.023.724.523.
      6574 years20.321.620.820.
      75 years and over24.326.228.727.19.310.011.89.1
Raceb, c
White only19.019.420.
Black or African American only25.926.527.026.311.110.811.211.9
American Indian or Alaska Native only24.830.327.831.013.112.6*12.6*11.1*
Asian only11.613.612.215.42.9*3.8*4.13.8*
Native Hawaiian or other Pacific Islander only******
2 or more races32.531.525.711.314.412.8
      American Indian or Alaska Native; White33.932.129.39.4*15.8*15.3*
Hispanic origin and raceb, c
Hispanic or Latino19.218.319.
Not Hispanic or Latino19.720.621.
        White only19.119.820.420.
        Black or African American only25.926.527.
Percent of poverty levelb, d
Below 100%
100%less than 200%23.823.923.623.
200% or more17.018.018.718.
Hispanic origin and race and percent of poverty levelb, c, d
Hispanic or Latino:
Below 100%22.122.422.624.09.89.710.09.2
100%less than 200%
200% or more17.616.816.919.
Not Hispanic or Latino:
  White only:
Below 100%29.530.130.230.813.013.914.113.7
100%less than 200%24.325.525.
200% or more16.817.718.618.
Black or African American only:
Below 100%34.635.438.235.417.517.419.218.3
100%less than 200%29.228.528.528.912.812.212.114.2
200% or more19.722.622.521.

organ transplants. Nonetheless, many patients died waiting for an organ transplant because demand for organs continued to outpace supply.

In February 2004 UNOS/OPTN revised and strengthened its policies to guard against potential medical errors in transplant candidate and donor matching. The policy revisions were developed in response to a systematic review begun after a medical error in February 2003, when a teenager named Jesica Santillan died after receiving a heart-lung transplant from a blood-type incompatible donor at Duke University Medical Center. News of this tragic error immediately prompted transplant centers throughout the United States to perform internal audits of their protocols and procedures to ensure appropriate donor-recipient matching.

The key policy revisions included stipulations that:

  • The blood type of each transplant candidate and donor must be independently verified by two staff members
    One or more emergency department visitsTwo or more emergency department visits
    *Estimates are considered unreliable. Data followed by an asterisk have a relative standard error (RSE) of 20%30%. Data not shown have an RSE of greater than 30%.
    Data not available.
    aIncludes all other races not shown separately and unknown health insurance status.
    bEstimates are for persons 18 years of age and over and are age-adjusted to the year 2000 standard population using five age groups: 1844 years, 4554 years, 5564 years, 6574 years, and 75 years and over.
    cThe race groups, white, black, American Indian or Alaska Native, Asian, Native Hawaiian or other Pacific Islander, and 2 or more races, include persons of Hispanic and non-Hispanic origin. Persons of Hispanic origin may be of any race. Starting with 1999 data, race-specific estimates are tabulated according to the 1997 Revision to the Standards for the Classification of Federal Data on Race and Ethnicity and are not strictly comparable with estimates for earlier years. The five single-race categories plus multiple-race categories shown in the table conform to the 1997 standards. Starting with 1999 data, race-specific estimates are for persons who reported only one racial group; the category 2 or more races includes persons who reported more than one racial group. Prior to 1999, data were tabulated according to the 1977 standards with four racial groups, and the Asian only category included Native Hawaiian or other Pacific Islander. Estimates for single-race categories pri to 1999 included persons who reported one race or, if they reported more than one race, identified one race as best representing their race. Starting with 2003 data, race responses of other race and unspecified multiple race were treated as missing, and then race was imputed if these were the only race responses. Almost all persons with a race response of other race were of Hispanic origin.
    dPercent of poverty level is based on family income and family size and composition using U.S. Census Bureau poverty thresholds. Missing family income data were imputed for 27%-31% of persons 18 years of age and over in 19971998 and 33%36% in 19992005.
    eEstimates for persons 1864 years of age are age-adjusted to the year 2000 standard population using three age groups: 1844 years, 4554 years, and 5564 years of age.
    fHealth insurance categories are mutually exclusive. Persons who reported both Medicaid and private coverage are classified as having private coverage. Starting wit 1997 data, Medicaid includes state-sponsored health plans and State Children's Health Insurance Program (SCHIP). In addition to private and Medicaid, the insured category also includes military plans, other government-sponsored health plans, and Medicare, not shown separately. Persons not covered by private insurance, Medicaid, SCHIP, public assistance (through 1996), state-sponsored or other government-sponsored health plans (starting in 1997), Medicare, or military plans are considered to have no health insurance coverage. Persons with only Indian Health Service coverage are considered to have no health insurance coverage.
    Health insurance status at the time of interviewe, f
    1864 years:
    Note: Data are based on household interviews of a sample of the civilian noninstitutionalized population.
    at the institution involved at the time blood type is entered into the national database.
  • Each transplant program and organ procurement organization (OPO) must establish a protocol to ensure blood-type data for transplant candidates, and donors are accurately entered into the national database and communicated to transplant teams. UNOS will verify the existence and effective use of these protocols during routine audits of OPOs and transplant programs.
  • Organs must only be offered to candidates specifically identified on the computer-generated list of medically suitable transplant candidates for a given organ offer. If the organ offer is not accepted for any candidate on a given match run, an OPO may give transplant programs the opportunity to update transplant candidate data and rerun a match to see if any additional candidates are identified.

UNOS resolved to continuously review national policies and procedures for organ placement and to recommend policy and procedure enhancements to maximize the efficiency of organ placement and the safety of transplant candidates and recipients, as well as to ensure public confidence in the transplant system. As of August 2008, there had been no further reported occurrences of unintentional blood-type incompatible transplants.

The risks associated with organ transplant were, however, publicized once again in 2005 and 2006, when two transplant recipients from the same organ donor contracted West Nile virus, a potentially serious illness transmitted by mosquitoes. Even though 28,113 transplants were performed in the United States in 2005, according to the OPTN (August 1, 2008,, and these two recipients were the only ones reported to have become ill from West Nile virus, they suffered the worst possible outcome. Both developed encephalitis (a brain infection), fell into coma, and died. These cases catalyzed transplant physicians and public health officials to intensify organ safety protocols and procedures. Denise Grady reports in For Two Transplant Patients, a Dire Complication: West Nile (New York Times, May 16, 2006) that Matthew Kuehnert, an authority in transfusion and transplant safety at the Centers for Disease Control and Prevention (CDC), asserts, I think organ safety as concerns infectious disease transmission is really underappreciated. It's something that really needs to be looked at more closely.

Discharges per 1,000 population
      Total, age-adjusted b 173.4151.4125.2118.0113.3117.3119.5118.4116.2
      Total, crude167 7148.4122.3115.7112.8117.5120.0119.2117.4
Under 18 years75.661.446.442.440.343.443.643.041.1
1844 years155.3128.0102.791.484.990.391.391.189.8
4554 years174.8146.8112.498.592.195.699.599.796.4
5564 years215.4194.8163.3148.3141.5146.5145.7143.6140.2
65 years and over383.7369.8334.1347.7353.4357.5367.9362.9359.6
      6574 years315.8297.2261.6260.0254.6254.0265.1259.2262.9
      75 years and over489.3475.6434.0459.1462.0466.6475.2470.2458.8
Geographic regionb
Days of care per 1,000 population
      Total, age-adjustedb1,297.0997.5818.9638.6557.7570.9574.6568.7554.2
      Total, crude1,216.7957.7784.0620.2554.6571.7577.8574.1562.1
Under 18 years341.4281.2226.3184.7179.0195.2195.5193.2191.8
1844 years818.6619.2467.7351.7309.4333.9339.7334.9330.5
4554 years1,314.9967.8699.7516.2437.4456.7477.2491.1471.1
5564 years1,889.41,436.91,172.3867.2729.1752.2735.9735.2712.4
65 years and over4,098.33,228.02,895.62,373.72,111.92,085.12,088.32,048.61,988.3
      6574 years3,147.02,437.32,087.81,684.71,439.01,411.91,428.91,405.21,398.5
      75 years and over5,578.84,381.34,009.13,247.82,851.92,795.02,776.12,714.92,593.9
Geographic regionb
Average length of stay in days
      Total, age-adjusted b
      Total, crude7.
Under 18 years4.
1844 years5.
4554 years7.
5564 years8.
65 years and over10.
      6574 years10.
      75 years and over11.


Ambulatory surgery centers (also called surgicenters) are equipped to perform routine surgical procedures that do not require an overnight hospital stay. A surgical center requires less sophisticated and expensive equipment than a hospital operating room. Minor surgery, such as biopsies, abortions, hernia repair, and many cosmetic surgery procedures, are performed at outpatient surgical centers. Most procedures are done under local anesthesia, and patients go home the same day.

Most ambulatory surgery centers are freestanding, but some are located on hospital campuses or are next to physicians' offices or clinics. Facilities are licensed by their state and must be equipped with at least one operating room, an area for preparing patients for procedures, a patient recovery area, and x-ray and clinical laboratory services. Surgical centers must have a registered nurse on the premises when patients are in the facility.

aComparisons of data from 19801985 with data from later years should be made with caution as estimates of change may reflect improvements in the survey design rather than true changes in hospital use.
bEstimates are age-adjusted to the year 2000 standard population using six age groups: under 18 years, 1844 years, 4554 years, 5564 years, 6574 years, and 75 years and over.
Geographic regionbAverage length of stay in days
Note: Excludes newborn infants. Rates are based on the civilian population as of July 1. Starting with Health, United States, 2003, rates for 2000 and beyond are based on the 2000 census. Rates for 19901999 use population estimates based on the 1990 census adjusted for net underenumeration using the 1990 National Population Adjustment Matrix from the U.S. Census Bureau. Rates for 19901999 are not strictly comparable with rates for 2000 and beyond because population estimates for 19901999 have not been revised to reflect the 2000 census. Data are based on a sample of hospital records.

Urgent care centers (also called urgicenters) are usually operated by private, for-profit organizations and provide up to twenty-four-hour care on a walk-in basis. These centers fill several special needs in a community. They provide convenient, timely, and easily accessible care in an emergency when the nearest hospital is miles away. The centers are normally open during the hours when most physicians' offices are closed, and they are economical to operate because they do not provide hospital beds. They usually treat problems such as cuts that require sutures, sprains and bruises from accidents, and various infections. Many provide inexpensive immunization, and some offer routine health care for people who do not have a regular source of medical care. Urgent care may be more expensive than a visit to the family physician, but an urgent care center visit is usually less expensive than treatment from a traditional hospital emergency department.

Clinics and Urgent Care Centers in Malls and Storefronts

In No Appointment Needed: The Resurgence of Urgent Care Centers in the United States (September 2007, UrgentCareCenters.pdf), Robin M. Weinck and RenéeM. Betancourt indicate that since 2005 there has been a resurgence in the popularity of urgent care centers and clinics in retail settings. The updated versions of such centers offer more than simply convenient locations. Many offer extended hours, flat fees for physician visits, immunizations, comfortable surroundings, and welcome walk-in patients. They emphasize unscheduled care much more than most do most primary care practices. Most do not bill insurance companies; patients pay in cash or by credit card. Health care industry observers characterize these clinics as affordable alternatives as health care consumers assume a greater share of costs and the number of uninsured Americans continues to rise. Victoria Colliver notes in The Instant Doctor: Health Clinics Popping up in Malls, Storefronts (San Francisco Chronicle, February 21, 2006) that detractors believe the clinics undermine continuity and quality of care when the same practitioner rarely sees patients more than once and patients do not return for follow-up visits.


Families are still the major caretakers of older, dependent, and disabled members of American society. However, the number of people aged sixty-five and older living in long-term care facilities such as nursing homes is rising because the population in this age group is increasing rapidly. Even though many older people now live longer, healthier lives, the increase in overall length of life has increased the need for long-term care facilities.

Growth of the home health care industry in the early 1990s only slightly slowed the increase in the numbers of Americans entering nursing homes. Assisted living and continuing-care retirement communities offer other alternatives to nursing home care. When it is possible, many older adults prefer to remain in the community and receive health care in their home.

Types of Nursing Homes

Nursing homes fall into three broad categories: residential care facilities, intermediate care facilities, and skilled nursing facilities. Each provides a different range and intensity of services:

  • A residential care facility (RCF) normally provides meals and housekeeping for its residents, plus some basic medical monitoring, such as administering medications. This type of home is for people who are fairly independent and do not need constant medical attention but need help with tasks such as laundry and cleaning. Many RCFs also provide social activities and recreational programs for their residents.
  • An intermediate care facility (ICF) offers room and board and nursing care as necessary for people who can no longer live independently. As in the RCF, exercise and social programs are provided, and some ICFs also offer physical therapy and rehabilitation programs.
  • A skilled nursing facility (SNF) provides around-the-clock nursing care, plus on-call physician coverage. The SNF is for patients who need intensive nursing care, as well as services such as occupational therapy, physical therapy, respiratory therapy, and rehabilitation.

Number of Nursing Home Residents Rising

The National Nursing Home Survey (NNHS) is a continuing series of national sample surveys of nursing homes, their residents, and their staff. The surveys were conducted in 197374, 1977, 1985, 1995, 1997, 1999, and 2004. Even though each survey focused on different aspects of care, they all provide some common basic information about nursing homes, their residents, and their staff from two perspectives: that of the provider of services and that of the recipient. Data about the facilities include characteristics such as size, ownership, Medicare/Medicaid certification, occupancy rate, number of days of care provided, and expenses. The surveys gathered demographic data, health status, and services received by nursing home residents. The most recent NNHS for which data are available was conducted in 2004. The nursing homes included in this survey had at least three beds and were either certified (by Medicare or Medicaid) or had a state license to operate as a nursing home.

In 2004 the nation's 16,100 certified nursing homes housed more than 1.7 million beds and had occupancy rates of 86.3%. (See Table 3.4.) Nursing homes averaged 107.6 beds per facility.

In 2004, 61.5% of all nursing homes were proprietary (privately owned). (See Table 3.4.) More than half (54.2%) were affiliated with a chain, 30.8% were operated by nonprofit, volunteer organizations, and only 7.7% were operated by governmental agencies.

Most residents of nursing homes are the oldest old (people aged eighty-five and older). Out of the total 1.3 million nursing home residents aged sixty-five years old and older, the so-called oldest old accounted for 674,200 (51%) of all nursing home residents in 2004. (See Table 3.5.)

Diversification of Nursing Homes

To remain competitive with home health care and the increasing array of alternative living arrangements for the elderly, many nursing homes began to offer alternative services and programs. New services include adult day care and visiting nurse services for people who still live at home. Other programs include respite plans that allow caregivers who need to travel for business or vacation to leave an elderly relative in the nursing home temporarily.

One of the most popular nontraditional services is subacute care, which is comprehensive inpatient treatment for people recovering from acute illnesses such as pneumonia, injuries such as a broken hip, and chronic diseases such as arthritis that do not require intensive, hospital-level treatment. This level of care also enables nursing homes to expand their markets by offering services to younger patients.

Innovation Improves Quality of Nursing Home Care

Even though industry observers and the media frequently raise concerns about the care provided in nursing homes and publicize instances of elder abuse and other quality of care issues, several organizations have actively sought to develop models of health service delivery that improve the clinical care and quality of life for nursing home residents. In Evaluation of the Wellspring Model for Improving Nursing Home Quality (August 2002,, a report that examines one such model in eastern Wisconsin, Robyn I. Stone et al. of the Institute for the Future of Aging Services and the American Association of Homes and Services for the Aging evaluate the Wellspring model of nursing home quality improvement.

Wellspring is a group of eleven not-for-profit nursing homes governed by a group called the Wellspring Alliance. Founded in 1994, the alliance aims to improve simultaneously clinical care delivered to its nursing home residents and the work environment for its employees. Education and collaboration are hallmarks of the Well-spring philosophy, and this program began by equipping nursing home personnel with the skills needed to perform their jobs and by organizing employees in teams working toward shared goals. The Wellspring model of service delivery uses a multidisciplinary clinical team approach (nurse practitioners, social service, food service personnel, nursing assistants, and facility and housekeeping personnel) to solve problems and develop approaches to better meet residents' needs. Each of these teams represents an important innovation because it allows health professionals and other workers to interact as peers and share resources, information, and decision-making in a cooperative, supportive environment.

Shared resources, training, ideas, and goals have had a powerful impact on care at the Wellspring facilities.

Nursing homesBedsCurrent residents
Facility characteristicNumberPercent distributionNumberBeds per nursing homeNumberOccupancy ratea
*Estimate does not meet standard of reliability or precision because the sample size is less than 30. Estimates accompanied by an asterisk (*) indicate that the sample size is between 30 and 59, or the sample size is greater than 59 but has a relative standard error of 30 percent or more.
aOccupancy rate is calculated by dividing residents by available beds.
bEstimates for nursing homes that are not certified are not shown because the sample size was less than 30 and figures are unreliable.
Voluntary nonprofit5,00030.8503,600101.6440,30087.4
Government and other1,2007.7152,200123.6133,90088.0
Medicare and Medicaid14,10087.61,599,600113.51,379,70086.3
Medicare only*700*4.1*33,100*50.628,10085.0
Medicaid only1,1006.976,20069.067,90089.1
Fewer than 50 beds2,20013.975,80033.862,20082.1
5099 beds6,00037.3454,70075.7422,60092.9
100199 beds6,80042.5903,100132.0788,50087.3
200 beds or more1,0006.2296,400298.2218,90073.9
Geographic region
Metropolitan statistical area10,90067.71,290,900118.51,127,80087.4
Micropolitan statistical area2,60016.2242,20092.9202,00083.4
Other location2,60016.0196,90076.3162,40082.5
Note: Numbers may not add to totals because of rounding. Percentages and rates are based on the unrounded numbers.

Stone et al. observe more cooperation, responsibility, and accountability within the teams and the institutions than what was noted at other comparable facilities. Besides finding a strong organizational culture that seemed committed to quality patient care, the researchers also document measurable improvements in specific areas including:

  • Wellspring facilities had lower rates of staff turnover than comparable Wisconsin facilities during the same time period, probably because Wellspring workers felt valued by management and experienced greater job satisfaction than other nursing home personnel.
  • The Wellspring model did not require additional resources to institute, and Wellspring facilities operated at lower costs than comparable facilities.
  • Wellspring facilities' performance, as measured by a federal survey, improved.
  • Generally, Wellspring personnel appeared more attentive to residents' needs and problems and sought to anticipate and promptly resolve problems.

Stone et al. conclude that the organizational commitment to training and shared decision making, along with improved quality of interactions and relationships among staff and between staff and residents, significantly contributed to enhanced quality of life for residents.

The ambitious social outreach programs of one of the charter Wellspring organizations, St. Paul Elder Services, which serves a community of thirteen thousand in Kaukauna, Wisconsin, are described by James Fett in Social Accountability: Building Bonds in Our Communities (JulyAugust 2004, St. Paul Elder Services provides much uncompensated care as well as programs

Number of residents in hundredsResidents per 1,000 populationa
Age, sex, and race197319741985199519992004197319741985199519992004
aRates are calculated using estimates of the civilian population of the United States including institutionalized persons. Population 60 from unpublished tabulations provided by the U.S. Census Bureau. The 2004 population estimates are postcensal estimates as of July 1, 2004, based on the 2000 census.
bAge-adjusted to the year 2000 population standard using the following three age groups: 6574 years, 7584 years, and 85 years and over.
cStarting with 1999 data, the instruction for the race item on the current resident questionnaire was changed so that more than one race could be recorded. In previous years, only one racial category could be checked. Estimates for racial groups presented in this table are for residents for whom only one race was recorded. Estimates for residents where multiple races were checked are unreliable due to small sample sizes and are not shown.
65 years and over, age-adjustedb58.554.046.443.334.8
65 years and over, crude9,61513,18314,22914,69513,17244.746.242.842.936.3
6574 years1,6312,1211,8971,9481,74112.312.510.210.89.4
7584 years3,8495095,0965,1764,68957.757.746.143.036.1
85 years and over4,1365,9737,2357,5716,742257.3220.3200.9182.5138.7
65 years and over, age-adjustedb42.538.833.030.624.1
65 years and over, crude2,6573,3443,5713,7783,36830.
6574 years65180679584175411.310.89.610.38.9
7584 years1,0231,4131,4431,4951,40839.943.033.530.827.0
85 years and over9831,1261,3331,4421,206182.7145.7131.5116.580.0
65 years and over, age-adjustedb67.561.552.849.840.4
65 years and over, crude6,9589,83910,65810,9179,80454.957.954.354.646.4
6574 years9801,3151,1031,10798813.113.810.711.29.8
7584 years2,8263,6773,6543,6813,28068.966.454.351.242.3
85 years and over3,1534,8475,9026,1295,536294.9250.1228.1210.5165.2
65 years and over, age-adjustedb61.255.545.841.934.0
65 years and over, crude9,20612,27412,71512,79611,48846.947.742.742.136.2
6574 years1,5011,8781,5411,5731,34212.512.39.310.08.5
7584 years3,6974,7364,5134,4064,06060.359.145.040.535.2
85 years and over4,0085,6606,6626,8176,086270.8228.7203.2181.8139.4
Black or African Americanc
65 years and over, age-adjustedb28.241.550.855.549.9
65 years and over, crude3778201,2291,4591,45422.035.045.551.047.7
6574 years12222529630334511.115.418.518.220.2
7584 years13430647558754626.745.357.866.555.5
85 years and over121290458569563105.7141.5168.2182.8160.7
Category not applicable.
Note: Residents are persons on the roster of the nursing home as of the night before the survey. Residents for whom beds are maintained even though they may be away on overnight leave or in a hospital are included. People residing in personal care or domiciliary care homes are excluded.
Data are based on a sample of nursing home residents.

and services to meet unmet needs of older adults in the community. Examples of these services include free blood pressure screenings at senior housing complexes, foot, nail, and ear cleaning services, adult day care for people suffering from dementia, warm-water exercise classes, diabetic menu planning classes, and continence management programs. The president of St. Paul Elder Services explains that our community is the source of our residents, volunteers, associates and philanthropy Social accountability communicates our message of commitment, performance and excellence. Through this process, we have created and strengthened a level of trust and cooperation, improving the quality of life for everyone involved.


In earlier centuries mental illness was often considered a sign of possession by the devil or, at best, a moral weakness. A change in these attitudes began in the late eighteenth century, when mental illness was perceived to be a treatable condition. It was then that the concept of asylums was developed, not only to lock the mentally ill away but also to provide them with relief from the conditions they found troubling.

In the twenty-first century mental health care is provided in a variety of treatment settings by different types of organizations. The National Center for Health Statistics (NCHS) describes in Mental Health Organization (January 11, 2007, defs/mho.htm) the following mental health organizations:

  • A psychiatric hospital (public or private) provides twenty-four-hour inpatient care to people with mental illnesses in a hospital setting. It may also offer twenty-four-hour residential care and less than twenty-four-hour care, but these are not requirements. Psychiatric hospitals are operated under state, county, private for-profit, and private not-for-profit auspices.
  • General hospitals with separate psychiatric services, units, or designated beds are under government or nongovernmental auspices and maintain assigned staff for twenty-four-hour inpatient care, twenty-four-hour residential care, and less than twenty-four-hour care (out-patient care or partial hospitalization) to provide mental health diagnosis, evaluation, and treatment.
  • Veterans Administration (VA) hospitals are operated by the U.S. Department of Veterans Affairs and include VA general hospital psychiatric services and VA psychiatric outpatient clinics that exclusively serve people entitled to VA benefits.
  • Outpatient mental health clinics that provide only ambulatory mental health services. Generally, a psychiatrist has overall medical responsibility for clients and the philosophy and orientation of the mental health program.
  • Community mental health centers were funded under the Federal Community Mental Health Centers Act of 1963 and subsequent amendments to the act. During the early 1980s, when the federal government reverted to funding mental health services through block grants to the states rather than by funding them directly, the federal government stopped tracking these mental health organizations individually, and statistical reports include them in the category all other mental health organizations. This category also includes freestanding psychiatric outpatient clinics, freestanding partial care organizations, and multiservice mental health organizations such as residential treatment centers. These so-called community mental health centers have sliding scale fees and accept Medicaid, Medicare, private health insurance, and private fee-for-service payment. Mental health care is also available from not-for-profit mental health or counseling services offered by health and social service agencies, such as Catholic Social Services, family and children's service agencies, Jewish Family Services, and Lutheran Social Services, that are staffed by qualified mental health professionals to provide counseling services.
  • Residential treatment centers for emotionally disturbed children serve children and youth primarily under the age of eighteen, provide twenty-four-hour residential services, and offer a clinical program that is directed by a psychiatrist, psychologist, social worker, or psychiatric nurse who holds a master's or doctorate degree.

Where Are the Mentally Ill?

The chronically mentally ill reside either in mental hospitals or in community settings, such as with families, in boarding homes and shelters, in single-room-occupancy hotels (usually cheap hotels or boardinghouses), in prison, or even on the streets as part of the homeless population. The institutionalized mentally ill are those people with psychiatric diagnoses who have lived in mental hospitals for more than one year or those with diagnosed mental illness who are living in nursing homes.

Declining mental health expenditures have resulted in fewer available services for specific populations of the mentally ill, particularly those who could benefit from inpatient or residential care. Even for people without conditions requiring institutional care there are barriers to access. The U.S. surgeon general's landmark report Mental Health: A Report of the Surgeon General, 1999 (1999, describes the U.S. mental health service system as largely uncoordinated and fragmented, in part because it involves so many different sectorshealth and social welfare agencies, public and private hospitals, housing, criminal justice, and educationand because it is funded through many different sources. Finally, inequalities in insurance coverage for mental health, coupled with the stigma associated with mental illness and treatment, have also limited access to services.

The U.S. Department of Health and Human Services observes in Trends in Mental Health System Transformation, 2005: The States Respond (2006, that state-level initiatives share the common challenge of providing the most effective treatment and services in the face of diminishing resources and increasing needs.

The NCHS reveals in Health, United States, 2007 (2007, that the number of mental health organizations for twenty-four-hour inpatient treatment steadily declined from 3,942 in 1990 to 2,891 in 2004. (See Table 3.6.) Except for Department of Veterans Affairs medical centers, all other service sites and types of organizations diminished in capacity. The number of beds per 100,000 civilian population fell from 128.5 in 1990 to just 71.2 in 2004. This decline was not necessarily a result of better treatment for the mentally ill but a consequence of reduced funding for inpatient facilities. Many of the patients who were once housed in mental institutions (including some who had been lifelong residents in these facilities) were forced to fend for themselves, on the streets or in prisons.

Type of organization1986199019941998200020022004
aDepartment of Veterans Affairs medical centers (VA general hospital psychiatric services and VA psychiatric outpatient clinics) were dropped from the survey as of 2004.
bIncludes freestanding psychiatric outpatient clinics, partial care organizations, and multiservice mental health organizations.
cCivilian population estimates for 2000 and beyond are based on the 2000 census as of July 1; population estimates for 19921998 are 1990 postcensal estimates.
Number of mental health organizations
All organizations3,5123,9423,8533,7413,2113,0442,891
State and county mental hospitals285278270237229227237
Private psychiatric hospitals314464432347271255264
Nonfederal general hospital psychiatric services1,3511,5771,5391,5951,3251,2311,230
Department of Veterans Affairs medical centersa139131136124134132
Residential treatment centers for emotionally disturbed children437501472462476510458
All other organizationsb9869911,004976776689702
Number of beds
All organizations267,613325,529293,139269,148214,186211,040212,231
State and county mental hospitals119,033102,30784,06371,26661,83357,31457,034
Private psychiatric hospitals30,20145,95242,74231,73126,40224,99628,422
Nonfederal general hospital psychiatric services45,80853,57653,45554,77540,41040,52041,403
Department of Veterans Affairs medical centersa26,87424,77921,34617,1738,9899,581
Residential treatment centers for emotionally disturbed children24,54735,17032,69132,04033,50839,40733,835
All other organizationsb21,15063,74558,84262,16343,04439,22251,536
Beds per 100,000 civilian populationc
All organizations111.7128.5110.994.074.872.271.2
State and county mental hospitals49.740.431.824.921.619.619.1
Private psychiatric hospitals12.618.
Nonfederal general hospital psychiatric services19.
Department of Veterans Affairs medical centersa11.
Residential treatment centers for emotionally disturbed children10.313.912.411.211.713.511.4
All other organizationsb8.825.222.221.715.013.417.3
Data not available.
Note: Data for 1990, 1992, 1994, 1998, 2000, and 2002 are revised final estimates and differ from previous editions of Health, United States. Data are based on inventories of mental health organizations.

Besides mental health units or beds in acute care medical/surgical hospitals and physicians' offices, mental health care and treatment is offered in offices of other mental health clinicians such as psychologists, clinical social workers, and marriage and family therapists, as well as in other settings. Private psychiatric hospitals provide outpatient mental health evaluation and therapy in day programs as well as inpatient care. Like acute care hospitals, these facilities are accredited by the Joint Commission on Accreditation of Health Care Organizations and may offer outpatient services by way of referral to a local network of qualified mental health providers. Figure 3.1 shows that depression, a common mental disorder, accounted for 13% of all outpatient department visits in 2005, up from 8.8% in 1995.

National Goals for Mental Health Service Delivery

Healthy People 2010 (2000, is a set of health objectives for the United States to achieve during the first decade of the new century. Fourteen of the 467 health objectives enumerated in Healthy People 2010 relate to mental health and mental disorders. Even though nearly all the objectives intend to reduce the incidence and prevalence of mental illness in the United States and improve access to care and treatment, several specifically address service delivery issues related to mental health professionals and treatment facilities.

Healthy People 2010 (November 2000, objectives call for system-wide improvements in mental health service delivery. For example, number 18-12 calls on the nation to increase the number of States and the District of Columbia that track consumers' satisfaction with the mental health services they receive. Number 18-14 asks to increase the number of States, Territories, and the District of Columbia with an operational mental health plan that addresses mental health crisis interventions, ongoing screening, and treatment services for elderly persons.


The concept of home health care began as postacute care after hospitalization, an alternative to longer, costlier lengths of stay in regular hospitals. Home health care services have grown tremendously since the 1980s, when prospective payment (payments made before, rather than after, care is received) for Medicare patients sharply reduced hospital lengths of stay. During the mid-1980s Medicare began to reimburse hospitals using a rate scale based on diagnosis-related groupshospitals received a fixed amount for providing services to Medicare patients based on their diagnoses. This form of payment gave hospitals powerful financial incentives to use fewer resources because they could keep the difference between the prepayment and the amount they actually spent to provide care. Hospitals suffered losses when patients had longer lengths of stay and used more services than were covered by the standardized diagnosis-related group prospective payment.

According to the article Home Health Care (Family Economics and Nutrition Review, spring 1996), home health care grew faster in the early 1990s than any other segment of health services. Its growth may be attributable to the observation that in many cases caring for patients at home is preferable to and more cost effective than care provided in a hospital, nursing home, or some other residential facility. Oftentimes, older adults are more comfortable and much happier living in their own home or with family members. Disabled people may also be able to function better at home with limited assistance than in a residential setting with full-time monitoring.

Home health care agencies provide a wide variety of services. Services range from helping with activities of daily living, such as bathing, doing light housekeeping, and making meals, to skilled nursing care, such as the nursing care needed by AIDS or cancer patients. The number of Medicare-certified home health agencies has varied in response to reimbursement, growing from 2,924 in 1980 to 10,807 in 1996, then declining to 7,519 in 2004. (See Table 3.7.) In 2005 the number rose to 8,090, the highest it has been in the twenty-first century.

In 1972 Medicare extended home care coverage to people under sixty-five years of age only if they were disabled or suffered from end-stage renal disease. Before 2000 Medicare coverage for home health care was limited to patients immediately following discharge from the hospital. By 2000 Medicare covered beneficiaries' home health care services with no requirement for previous hospitalization. There were also no limits to the number of professional visits or to the length of coverage. As long as the patient's condition warranted it, the following services were provided:

  • Part-time or intermittent skilled nursing and home health aide services
  • Speech-language pathology services
  • Physical and occupational therapy
  • Medical social services
  • Medical supplies
  • Durable medical equipment (with a 20% co-payment)

Over time, the population receiving home care services has changed. Since 2000 much of home health care is associated with rehabilitation from critical illnesses, and fewer users are long-term patients with chronic conditions. This changing pattern of utilization reflects a shift from longer-term care for chronic conditions to short-term, post-acute care. Compared to postacute care users, the long-term patients are older, more functionally disabled, more likely to be incontinent, and more expensive to serve.

Medicare Limits Home Care Services

The Balanced Budget Act of 1997 aimed to cut approximately $16.2 billion from the federal government's home care expenditures over a period of five years. The act sought to return home health care to its original concept of short-term care plus skilled nursing and therapy services. As a result of this shift away from personal care and custodial care services and toward short-term, skilled nursing services, some Medicare beneficiaries who received home health care lost coverage for certain personal care services, such as assistance with bathing, dressing, and eating.

The Balanced Budget Act sharply curtailed the growth in home care spending, greatly affecting health care providers. Nonetheless, the aging population and the financial imperative to prevent or minimize institutionalizationhospitalization or placement in a long-term care facilitycombined to generate increasing expenditures for home health care services. Medicare expenditures for home health care rose from $5.1 billion in 2003 to $7.2 billion in 2006, which represented 3.1% of Medicare expenditures. (See Table 3.8.) In contrast, payments to skilled nursing facilities accounted for 10.4% of expenditures in 2006, whereas inpatient hospital expenditures were 63.1% of the total.

Providers or suppliers19801985199019962000200220042005
Number of providers or suppliers
Home health agencies2,9245,6795,73010,8077,8576,8137,5198,090
Clinical Lab Improvement Act facilities164,054171,018173,807189,340196,296
End stage renal disease facilities9991,3931,9373,3673,7874,1134,6184,755
Outpatient physical therapy4198541,1952,7582,8672,8362,9712,962
Portable x-ray216308443656666644608553
Rural health clinics3914285513,6733,4533,2833,5363,661
Comprehensive outpatient rehabilitation facilities72186531522524635634
Ambulatory surgical centers3361,1972,4802,8943,3714,1364,445
Data not available.
Note: Provider and supplier data for 19801990 are as of July 1. Provider and supplier data for 19962005 are as of December. Providers and suppliers certified for Medicare are deemed to meet Medicaid standards.


In medieval times hospices were refuges for the sick, the needy, and travelers. The modern hospice movement developed in response to the need to provide humane care to terminally ill patients, while at the same time offering support to their families. The English physician Cicely Saunders (19182005) pioneered the hospice concept in Britain in the late 1960s and helped introduce it in the United States over the next decade. The care provided by hospice workers is called palliative care, and it aims to relieve patients' pain and the accompanying symptoms of terminal illness without seeking to cure the illness.

Hospice is a philosophy, an approach to care for the dying, and it is not necessarily a physical facility. Hospice may refer to a placea freestanding facility or a designated floor in a hospital or nursing homeor to a program such as hospice home care, where a team of health professionals helps the dying patient and family at home. Hospice teams may involve physicians, nurses, social workers, pastoral counselors, and trained volunteers. The goal of hospice care is to provide support and care for people at the end of life, enabling them to remain as comfortable as possible.

Hospice workers consider the patient and family as the unit of care and focus their efforts on attending to emotional, psychological, and spiritual needs as well as to physical comfort and well-being. The programs provide respite care, which offers relief at any time for families who may be overwhelmed and exhausted by the demands of caregiving and may be neglecting their own needs for rest and relaxation. Finally, hospice programs work to prepare relatives and friends for the loss of their loved ones. Hospice offers bereavement support groups and counseling to help deal with grief and may even help with funeral arrangements.

The hospice concept is different from most other health care services because it focuses on care rather than on cure. Hospice workers try to minimize the two greatest fears associated with dying: fear of isolation and fear of pain. Potent, effective medications are offered to patients in pain, with the goal of controlling pain without impairing alertness so that patients may be as comfortable as possible.

Hospice care also emphasizes living life to its fullest. Patients are encouraged to stay active for as long as possible, to do things they enjoy, and to learn something new each day. Quality of life, rather than length of life, is the focus. In addition, whenever it is possible, family and friends are urged to be the primary caregivers in the home. Care at home helps both patients and family members enrich their lives and face death together.

Ira Byock, the former president of the American Academy of Hospice and Palliative Medicine, explains the concept of hospice care in Dying Well: The Prospect for Growth at the End of Life (1997): Hospice care differs noticeably from the modern medical approach to dying. Typically, as a hospice patient nears death, the medical details become almost automatic and attention focuses on the personal nature of this final transitionwhat the patient and family are going through emotionally and spiritually. In the more established system, even as people die, medical procedures remain the first priority. With hospice, they move to the background as the personal comes to the fore.

Medicare program and type of service19701980199019952000200120022003200420052006a
aPreliminary figures.
bAverage number enrolled in the hospital insurance (HI) and/or supplementary medical insurance (SMI) programs for the period.
cStarting with 2004 data, the SMI trust fund consists of two separate accounts: Part B (which pays for a portion of the costs of physicians' services, outpatient hospital services, and other related medical and health services for voluntarily enrolled aged and disabled individuals) and Part D (Medicare Prescription Drug Account which pays private plans to provide prescription drug coverage).
dThe Medicare Modernization Act, enacted on December 8, 2003, established within SMI two Part D accounts related to prescription drug benefits: the Medicare Prescription Drug Account and the Transitional Assistance Account. The Medicare Prescription Drug Account is used in conjunction with the broad, voluntary prescription drug benefits that began in 2006. The Transitional Assistance Account was used to provide transitional assistance benefits, beginning in 2004 and extending through 2005, for certain low-income beneficiaries prior to the start of the new prescription drug benefit.
eMedicare-approved managed care organizations.
fStarting with 1999 data, reflects annual home health HI to SMI transfer amounts.
gIncludes research, costs of experiments and demonstration projects, fraud and abuse promotion, and peer review activity (changed to Quality Improvement Organization in 2002).
hType-of-service reporting categories for fee-for-service reimbursement differ before and after 1991.
iIncludes payment for physicians, practitioners, durable medical equipment, and all suppliers other than independent laboratory through 1990. Starting with 1991 data, physician services subject to the physician fee schedule are shown. Payments for laboratory services paid under the laboratory fee schedule and performed in a physician office are included under laboratory beginning in 1991. Payments for durable medical equipment are shown separately beginning in 1991. The remaining services from the physician category are included in other.
jIncludes payments for hospital outpatient department services, skilled nursing facility outpatient services, Part B services received as an inpatient in a hospital or skilled nursing facility setting, and other types of outpatient facilities. Starting with 1991 data, payments for hospital outpatient department services, except for laboratory services, are listed under Hospital. Hospital outpatient laboratory services are included in the laboratory line.
kStarting with 1991 data, those independent laboratory services that were paid under the laboratory fee schedule (most of the independent lab category) are included in the laboratory line; the remaining services are included in the physician fee schedule and other lines.
lPayments for laboratory services paid under the laboratory fee schedule performed in a physician office, independent lab, or in a hospital outpatient department.
mIncludes payments for physician-administered drugs; freestanding ambulatory surgical center facility services; ambulance services; supplies; freestanding end-stage renal disease (ESRD) dialysis facility services; rural health clinics; outpatient rehabilitation facilities; psychiatric hospitals; and federally qualified health centers.
nIncludes the hospital facility costs for Medicare Part B services that are predominantly in the outpatient department, with the exception of hospital outpatient laboratory services, which are included on the laboratory line. Physician reimbursement is included on the physician fee schedule line.
oPart D Administrative and Transitional Start-Up Costs were funded through the SMI Part B account.
EnrolleesNumber in millions
Total Medicareb20.428.434.337.639.740.140.541.241.942.643.2
        Hospital insurance20.128.033.737.239.339.740.140.741.442.242.9
        Supplementary medical insurancec19.527.332.635.637.337.738.038.6
              Part B19.527.332.635.637.337.738.038.639.139.740.3
              Part Dd1.21.827.9
ExpendituresAmount in billions
Total Medicare$7.5$36.8$111.0$184.2$221.7$244.8$265.8280.8308.9336.4408.3
        Total hospital insurance (HI)5.325.667.0117.6131.0143.4152.7154.6170.6182.9191.9
              HI payments to managed care organizationse0.02.76.721.420.819.219.520.824.932.9
              HI payments for fee-for-service
                      Inpatient hospital4.824.156.982.387.196.0104.2108.7116.4121.7121.0
                      Skilled nursing facility0.
                      Home health agency0.10.53.716.
              Home health agency transferf1.73.11.2-
              Administrative expensesg0.
        Total supplementary medical
insurance (SMI)c
Total Part B2.
        Part B payments to managed care
        Part B payments for fee-for-service
        Part B payments for fee-for-service
            Outpatient hospitalJ0.11.98.5
            Independent laboratoryk0.00.11.5
            Physician fee schedule31.737.042.044.848.354.157.758.4
            Durable medical equipment3.
            Home health agency0.
        Home health agency transferf1.
        Administrative expensesg0.
        Part D Transitional Assistance and
Start-up costso
Total Part Dd0.41.047.4
Percent distribution of expenditures
Total hospital insurance (HI)100.0100.0100.0100.0100.0100.0100.0100.0100.0100.0100.0
        HI payments to managed care organizationse0.04.05.716.314.512.612.612.213.617.1
        HI payments for fee-for-service
              Inpatient hospital91.494.385.070.066.567.068.370.368.266.663.1
              Skilled nursing facility4.
              Home health agency1.02.15.513.
        Home health agency transferf1.32.20.8#x2212;
        Administrative expensesg3.
Note: Percents are calculated using unrounded data. Totals do not necessarily equal the sum of rounded components. Estimates include service disbursements as of February 2006 for Medicare enrollees residing in the United States, Puerto Rico, Virgin Islands, Guam, other outlying areas, foreign countries, and unknown residence. Some numbers in this table have been revised and differ from previous editions of Health, United States.

According to the National Hospice and Palliative Care Organization (NHPCO), in NHPCO Facts and Figures: Hospice Care in America (November 2007,, the use of hospice care is increasing in the United States. The NHPCO estimates that 1.3 million patients received hospice care in 2006, a 162% increase in the preceding decade. NHPCO reports that 36% of deaths in 2006 were of patients cared for in hospice programs. In 2006 Medicare and Medicaid expenditures for hospice care totaled $8.9 billion and accounted for 4.6% of Medicare expenditures. (See Table 3.8.)


Managed health care is the sector of the health insurance industry in which health care providers are not independent businesses run by, for example, private medical practitioners but by administrative firms that manage the allocation of health care benefits. In contrast to conventional indemnity insurers that do not govern the provision of medical care services and simply pay for them, managed care firms have a significant voice in how services are administered to enable them to exert better control over health care costs. (Indemnity insurance is traditional fee-for-service coverage in which providers are paid according to the service performed.)

Managed care, which has a primary purpose of controlling service utilization and costs, represents a rapidly growing segment of the health care industry. The beneficiaries of employer-funded health plans (people who receive health benefits from their employers), as well as Medicare and Medicaid recipients, often find themselves in this type of health care program. The term managed care organization covers several types of health care delivery systems, such as health maintenance organizations (HMOs), preferred provider organizations (PPOs), and utilization review groups that oversee diagnoses, recommend treatments, and manage costs for their beneficiaries.

Health Maintenance Organizations

HMOs began to grow in the 1970s as alternatives to traditional health insurance, which was becoming increasingly expensive. The HMO Act of 1973 was a federal law requiring employers with more than twenty-four employees to offer an alternative to conventional indemnity insurance in the form of a federally qualified HMO. The intent of the act was to stimulate HMO development, and the federal government has been promoting HMOs since the administration of President Richard M. Nixon (19131994), maintaining that groups of physicians following certain rules of practice can slow rising medical costs and improve health care quality.

HMOs are health insurance programs organized to provide complete coverage for subscribers' (also known as enrollees or members) health needs for negotiated, prepaid prices. The subscribers (and/or their employers) pay a fixed amount each month; in turn, the HMO group provides, at no extra charge or at a minimal charge, preventive care, such as routine checkups, screening, and immunizations, and care for any illness or accident. The monthly fee also covers inpatient hospitalization and referral services. HMO members benefit from reduced out-of-pocket costs (they do not pay deductibles), they do not have to file claims or fill out insurance forms, and they generally pay only nominal co-payments for each office visit. Members are usually locked into the plan for a specified periodusually one year. If the necessary service is available within the HMO, patients must normally use an HMO doctor. There are several types of HMOs:

  • Staff model HMOthe purest form of managed care. All primary care physicians are employees of the HMO and practice in a centralized location such as an outpatient clinic that may also house a laboratory, pharmacy, and facilities for other diagnostic testing. The staff model offers the HMO the greatest opportunities to manage both cost and quality of health care services.
  • Group modelin which the HMO contracts with a group of primary care and multispecialty health providers. The group is paid a fixed amount per patient to provide specific services. The administration of the medical group determines how the HMO payments will be distributed among the physicians and other health care providers. Group model HMOs are usually located in hospitals or in clinic settings and have on-site pharmacies. Participating physicians usually do not have any fee-for-service patients.
  • Network modelin which the HMO contracts with two or more groups of health providers that agree to provide health care at negotiated prices to all members enrolled in the HMO.
  • Independent practice association model (IPA)in which the HMO contracts with individual physicians or medical groups that then provide medical care to HMO members at their own offices. The individual physicians agree to follow the practices and procedures of the HMO when caring for the HMO members; however, they generally also maintain their own private practices and see fee-for-service patients as well as HMO members. IPA physicians are paid by capitation (literally, per head) for the HMO patients and by conventional methods for their fee-for-service patients. Physician members of the IPA guarantee that the care for each HMO member for which they are responsible will be delivered within a fixed budget. They guarantee this by allowing the HMO to withhold an amount of their payments (usually about 20% per year). If at year's end the physician's cost for providing care falls within the preset amount, then the physician receives all the monies withheld. If the physician's costs of care exceed the agreed-on amount, the HMO may retain any portion of the monies it has withheld. This arrangement places physicians and other providers such as hospitals, laboratories, and imaging centers at risk for keeping down treatment costs, and this at-risk formula is the key to HMO cost-containment efforts.

Some HMOs offer an open-ended or point-of-service (POS) option that allows members to choose their own physicians and hospitals, either within or outside the HMO. However, a member who chooses an outside provider will generally have to pay a larger portion of the expenses. Physicians not contracting with the HMO but who see HMO patients are paid according to the services performed. POS members are given an incentive to seek care from contracted network physicians and other health care providers through comprehensive coverage offerings.

The number of people enrolled in HMOs more than tripled between 1980 and 1990. In 1980 HMOs covered just 4% of the U.S. population. (See Table 3.9.) By 1990, 13.4% of Americans were enrolled in HMOs. Enrollment continued to explode through the 1990s, and by 2000, 30% of the U.S. population belonged to HMOs. However, by 2006 HMO enrollment had declined to just 24.5% of the U.S population.

HMO enrollment varies by geographic region, with the highest levels of enrollment in the New England states and the far West. (See Table 3.9.) In 2006, 41.7% of the populations in Massachusetts, 49.6% in California, and 45.7% in Hawaii were enrolled in HMOs. In contrast, 0.3% of the populations of North Dakota and 0.4% in Mississippi were covered by HMOs.

HMOs Have Fans and Critics

HMOs have been the subject of considerable debate among physicians, payers, policy makers, and health care consumers. Many physicians feel HMOs interfere in the physician-patient relationship and effectively prevent them from practicing medicine the way they have traditionally practiced. These physicians claim they know their patients' conditions and are, therefore, in the best position to recommend treatment. The physicians resent being advised and overruled by insurance administrators. (Physicians can recommend the treatment they believe is best, but if the insurance company will not cover the costs, patients may be unwilling to undergo the recommended treatment.)

The HMO industry counters that its evidence-based determinations (judgments about the appropriateness of care that reflect scientific research) are based on the experiences of many thousands of physicians and, therefore, it knows which treatment is most likely to be successful. The industry maintains that, in the past, physician-chosen treatments were not scrutinized or even assessed for effectiveness, and as a result most physicians did not really know whether the treatment they prescribed was optimal for the specific medical condition.

Furthermore, the HMO industry cites the slower increase in health care expenses as another indicator of its management success. Industry spokespeople note that any major change in how the industry is run would lead to increasing costs. They claim that HMOs and other managed care programs are bringing a more rational approach to the health care industry while maintaining health care quality and controlling costs.

Geographic region and statea2006b19801985199019951998200020052006b
Number in thousandsPercent of population
United Statesc72,7074.07.913.419.428.630.023.424.5
New England:
New Hampshire1261.25.69.618.533.833.721.99.6
Rhode Island2833.79.120.619.629.838.125.926.3
Mideast :
District of Columbiad33.035.242.2
New Jersey2,1902.05.612.314.731.330.925.025.1
New York6,2685.
Great Lakes:
North Dakota20.
South Dakota653.
North Carolina7420.
South Carolina3210.
West Virginiae2640.
New Mexico5161.42.012.715.132.337.724.326.8
Rocky Mountains:

Still, many physicians resent that, with a few exceptions, HMOs are not financially liable for their decisions. When a physician chooses to forgo a certain procedure and negative consequences result, the physician may be held legally accountable. When an HMO informs a physician that it will not cover a recommended procedure and the HMO's decision is found to be wrong, it cannot be held directly liable. Many physicians assert that because HMOs make such choices, they are practicing medicine and should, therefore, be held accountable. The HMOs counter that these are administrative decisions and deny that they are practicing medicine.

The legal climate, however, began to change for HMOs during the mid-1990s. Both the Third Circuit Federal Court of Appeals in Dukes v. U.S. Healthcare (64 LW 2007, 1995) and the Tenth Circuit Federal Court of Appeals in PacifiCare of Oklahoma, Inc. v. Burrage (59 F.3rd 151, 1995) agreed that HMOs were liable for malpractice and negligence claims against the HMO and HMO physicians. In Frappier Estate v. Wishnov (No. 95-0669, May 8, 1996), the Florida District Court of Appeals, Fourth District, agreed with the earlier findings. It seemed these decisions would be backed by new laws when both houses of Congress passed legislation (the Patients' Bill of Rights) giving patients more recourse to contest the decisions of HMOs, even though the U.S. House of Representatives and the U.S. Senate disagreed about the specific rights and the actions patients could take to enforce their rights. By August 2002 the prospects for a patients' rights law passing by the end of that year dimmed as the House and Senate failed to resolve their differences about the legislation. The central issue that stalled the negotiations about the bill was the question of how much recourse patients should have in court when they believe their HMO has not provided adequate care.

Geographic region and statea2006b19801985199019951998200020052006b
Number in thousandsPercent of population
aData are shown for Bureau of Economic Analysis (BEA) regions that are constructed to show economically interdependent states. These BEA geographic regions differ from the U.S. Census Bureau geographic regions and divisions shown in some Health, United States tables.
bStarting with 2006 data, all managed health plans offering Medicaid products, whether licensed as HMOs or not, are included in these data. Starting with 2006 data, enrollment data for Medicare HMOs are limited to Medicare Advantage HMO plans. Previously, some other types of Medicare plans were included in the enrollment data for certain plans.
cHMOs in Guam are included starting in 1994; HMOs in Puerto Rico are included starting in 1998.
dData for the District of Columbia (DC) not included for 19801996 because data not adjusted for high proportion of enrollees of DC-based HMOs living in Maryland and Virginia.
eIncludes partial enrollment for five plans serving the District of Columbia.
Far West:
Quantity less than 1,000 for number of persons and 0.02 for percent.
Data not available.
Note: Data are for midyear prior to 1990 and in 2006 and as of January 1 in all other years. Data for 19801990 are for pure HMO enrollment. Starting with 1994 data, pure and open-ended enrollment are included. In 1990, open-ended enrollment accounted for 3% of HMO enrollment compared with 12.5% in 2006. In 2005, 3,366 thousand enrollees in Cigna's Flexcare product were added to open-ended enrollment. Without this addition, total HMO enrollment would have continued slowly decreasing. Data are based on a census of health maintenance organizations.

On June 21, 2004, the U.S. Supreme Court struck down a law in California and in several other states that allowed patients to sue their health plans for denying them health care services. Even though patients can still sue in federal court for reimbursement of denied benefits, they are no longer be able to sue for damages in federal or state courts.


During the 1990s, in response to HMOs and other efforts by insurance groups to cut costs, physicians began forming or joining PPOs. PPOs are managed care organizations that offer integrated delivery systemsnetworks of providersavailable through a wide array of health plans and are readily accountable to purchasers for access, cost, quality, and services of their networks. They use provider selection standards, utilization management, and quality assessment programs to complement negotiated fee reductions (discounted rates from participating physicians, hospitals, and other health care providers) as effective strategies for long-term cost control. Under a PPO benefit plan, covered people retain the freedom of choice of providers but are offered financial incentives such as lower out-of-pocket costs to use the preferred provider network. PPO members may use other physicians and hospitals, but they usually have to pay a higher proportion of the costs. PPOs are marketed directly to employers and to third-party administrators who then market PPOs to their employer clients.

Exclusive provider organizations (EPOs) are a more restrictive variation of PPOs in which members must seek care from providers on the EPO panel. If a member visits an outside provider who is not on the EPO panel, then the EPO will offer either limited or no coverage for the office or hospital visit.

According to HealthLeaders-InterStudy, in the press release Boosts in Managed Care Enrollment Seen across the Board (December 19, 2007, p=press-archive-detailed=prpr_121907MMSRelease), enrollment in all types of managed care plans increased by 4.9% to 126.5 million from January 2007 to July 2007. PPO enrollment increased in California, Connecticut, Ohio, Hawaii, Iowa, Delaware, and Minnesota.

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