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CHAPTER I I SELECTED ISSUES IN HEALTH PLANNING This chapter first summarizes some of the committee's principal concerns about limitations of the nation's health planning program. It then presents selected background information on the program and an overview of some pressing policy questions. Particular attention is paid to issues of national, state, and local relations and of consumer participation. The chapter concludes with a discussion of the purposes of the health planning program and what the committee believes to be reasonable expectations for it. In general, the health planning program in the United States may be characterized as a citizen-dominated trusteeship in the field of health. At its best and at its most inspiring theoretical level, it may be seen as a new institution charged with helping to ensure that in- dividual institutions or actors will promote, or at least not adversely affect, the development of a health care system that provides for all the citizenry "access to quality health care at reasonable cost."* In many places, there are literally hundreds of interested and committed volunteers trying to make it work. Like all of our social institutions, when operating and viewed up close, the picture is sometimes less in- spiring, and suffers from human failures. As always, there are problems in devising arrangements and methods for structuring the unusual Ameri- can institution that is health planning, but the committee believes that the effort is worthwhile, as stated in its first year's report. In par- ticular, the committee wishes to encourage much more flexibility in administration and, where local communities desire it, experimentation. The intentionally decentralized process for planning and resources de- velopment should be viewed as an opportunity for learning how to help deploy health resources in this country. The National Health Planning and Resources Development Act of 1974 (Public Law 93-641) was intended to establish the structure and support for health planning. The agencies established under the law were to *It is both a goal and an explicit assumption of this Act that citizens should have access to needed health services without regard to socio- econo~ic status. 5

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6 ensure a systematic development of resources, especially new technology. Local level planning was to be conducted by Health Systems Agencies (HSAs), governed by local citizens on a board having a "consumer" major- ity.* The Act was to link health planning more closely to decisions about the allocation of health care resources, by having local HSAs ad- vise public and private decisionmakers about the needs and priorities of an area for health programs and services. The law also was designed to encourage institutions and programs to bring their own planning in line with the area's perceived priorities for services, recognizing that most "health planning" is done by those who deliver services. The local-state-national planning network initiated by P.L. 93-641 was viewed by some of its supporters as only one piece of a larger, more comprehensive strategy of controls and new financing mechanisms in the health system. But a principal legislative component of that strategy-- national health insurance--was not passed by the Congress. Some other ., pieces of the health system's intended refurbishment, such as Profes- sional Standards Review Organizations and Health Maintenance Organiza- tion legislation, were enacted, but the planning structure never became as fully buttressed as many of its architects had hoped. The health planning agencies were intended to encourage a more ef- fective health system overall, which would reduce inefficiencies and, therefore, indirectly control costs e Institutions would be urged to mesh their plans with needs in the area; technical assistance would be provided to community agencies and organizations in shaping their pro- grams; plans and projects would be developed to improve the community's health care system; and federal projects would be made consistent with local needs and preferences. The planning program was not intended to be a major cost contain- ment device and it lacks the authority needed to control expenditures. But with the likelihood of a national health insurance program fading and little promise of a cost containment bill making it through the Congress in the late 1970s, the cost containment potential of the health planning structure received increasing emphasis by its federal administrators. The HSAs' authority as exercised indirectly through state certifi- cate of need programs or appropriateness review was seen as a strategy for cost control. But the authority that really could have strength- ened the cost containment capability of the agencies--such as direct linkages to existing reimbursement mechanisms, limits on total allow- able capital investment, or mandatory rate control programs--was not granted. There is little question that in 1974, Congress did not .- *Under the law a distinction is made between consumers and providers of health care services. For the most part, consumers are lay citizens who do not have a policy making or fiduciary role in health institu- tions. For a more detailed definition of a consumer, see Chapter IV.

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intend that health planning agencies would set strict limits on resources. Further, it has not yet enacted a more direct approach to control through a capital expenditures limit. In the structure of the health planning system, the only inter- section of planning responsibilities with financial liability is in state governors' offices. State Medicaid expenditures are among the fastest growing and most politically sensitive of all state budgetary items, yet the health planning program, at both state and federal levels, has never fully recognized this possible convergence of in- terests. In part, that lack of recognition comes from the fact that Medicaid is built administratively on welfare programs, not health, and the health planning structure incorporated earlier activities that had largely been the responsibility of state health departments. Also, federal officials in the public health service have never had a very clear understanding of the political dynamics of Medicaid in the states. However, the relatively brief experience with the plan- ning law suggests that concern about Medicaid expenditures can make a state desire to operate an aggressive planning program and, as Cohodes In Volume II suggests such political "will" is vital to its success. In addition, the role of the states was relatively weak because the con- gressional authors of P.L. 93-641 feared that governors would be nar- rowly interested in minimizing Medicaid costs, to the possible detri- ment of the health system as a whole. Built-in limitations on effectiveness of the planning program are sometimes overlooked by critics who emphasize the wide-ranging mandate written in the law. Even now, naive expectations persist about what is possible for the health planning network. It was assigned lofty, laudable, but difficult goals--to assist in "the achievement of equal access to quality health care at a reasonable cost." It was intention- ally deprived of any real budgetary or regulatory powers by which to accomplish these goals. It was asked to focus on objectives that are sometimes seen as contradictory such as improving health status and controlling costs. There is a need to find feasible measures of effec- tiveness against which the planning program can be judged, and this committee discusses its approach at the end of this chapter. Previous studies evaluated only the extent to which certificate of need activ- ities decreased capital expenditures--ignoring the role of CON as an allocator of resources--and treated them as a uniform national pro- gram. However, CON is a state program and varies greatly across the nation (see Cohodes' paper). Further, other aspects of planning are worthy of evaluation. As is often the case in U.S. politics, a crisis atmosphere and inflated promises accompanied the passage of the planning Act. Un- realistic adherence to such elevated expectations virtually ensures that a program will be viewed as unsuccessful no matter what it ac- complishes. The committee believes that there is a need to scale- down the unrealistic expectations for the health planning program.

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8 The political process seems to require rhetoric and overselling in order to maintain a coalition, but the committee feels that the ef- fect of the overselling is not neutral; it fosters skepticism about our nation's ability to solve problems and discourages faith in any government action. The Health Systems Agencies are the basic units of a complex, locally directed system for detaining a community's health resource needs and for advising governmental and other decis~onmakers about those determinations. The planning system should be viewed as an important, somewhat experimental, effort toward forming relationships among agen- cies of government, between the public and private sectors, and between the processes of politics and technology. The HSAs should be evaluated as to whether they fulfill criteria of a democratic process, including fairness, openness, potential for participation, and extent to which they employ data and information appropriately. The committee is not suggesting that process considerations form the sole basis for program evaluation. The priorities for the planning program set forth in the enabling legislation suggest that Congress had definite ideas about the outcomes of the process. A variety of "ends" were defined in the Congressional priorities. Those "ends" may not be the sole justifi- cation for the "means" or the process, but neither do the "means'' stand alone. Congress clearly hoped that promoting and facilitating a com- munity-based planning process would contribute to improvements in health status and the health system, including cost-containing improvements. These desired improvements affect our judgement of the process, and provide further evaluation criteria for assessment of the Act and the programs created under its provisions.* In the final analysis, expecta- tions of the planning agency network, and of the degree to which generalizations can be made concerning its "success" must remain modest and sensible, geared to the scale, nature, and actual power of the program. Evaluators should remember that inefficiencies and frustra- tions are inherent in the planning program as in Congress or other legislative bodies. To judge the program by theoretical standards of rational decision making would be inappropriate. Background The National Health Planning and Resources Development Act of 1974 (Public Law 93-641) was an evolutionary step in the development of health planning in the United States, not a revolutionary break with previous practice. The Congress built on existing voluntary and government-spon- sored activities in designing the local, state, federal, private and *Health Systems Plans, developed by HSAs, indicate community concerns. Cost containment is only one issue addressed by plan documents. A 1978 survey of 146 HSA first-year plans found that 92 percent recommend- ed a health promotion component, and over half of these agencies were working with outside groups to encourage health promotion activities.

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public arrangement that makes up the bulk of the current health plan- ning system. Before passing the 1974 Act Congress reviewed several earlier health planning and resource development initiatives and found them wanting. Existing areawide and state comprehensive health planning agencies were judged lacking in ability to implement their plans. Resource development programs, such as the Regional Medical Programs, the Experimental Health Services Delivery Systems, and the Hill-Burton facilities construction activities, were seen as excessively fragmented and isolated from community planning efforts. In merging these exis`-- ing federal interests in planning and resources development into a single program, Congress anticipated a system in which the flow of resources would follow plans developed at the local level and be in- corporated into state planning efforts. A regulatory activity-~certificate of need--was added to implement decisions and moderate the flow of capital into the health industry. In addition to provisions affecting the local and state levels, Congress called for the development of a national health planning policy to guide the development of health resources throughout the nation (particularly medical facilities and new technology), and assist in setting priorities for federal health program investments. Congress concluded that the massive infusion of federal funds into the health care system following enactment of Medicare and Medicaid had been inflationary. Yet, the increased health expenditures failed to produce an adequate supply or distribution of resources. There still were problems of access to needed health care, quality of care, and availability of services. Instances were identified in which substan- tial numbers of citizens had not fully shared in the benefits of social and medical progress. In the planning legislation, Congress reaffirmed the national commitment to provide quality, affordable, health care to meet the needs of all citizens, and also put a high priority on dampen- ing health care costs. The major structural and procedural characteristics of the program are firmly rooted in important political and social realities. These in- clude the incremental nature of policy-making, the careful preservation of private and public roles, and belief in the importance (both as a val- ue and a technical necessity) of having local level, extra-governmental organizations advising those with decision-making responsibilities. In turn, those with the power of decision, for example the states, have elaborate due process and administrative procedural requirements. Health Systems Agencies (HSAs) The Act authorized and required the development of a nationwide network of local planning agencies, HSAs. Once health service areas were established, applications were sought from public or private, non- profit entities which desired designation as the HSA for the area.

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-la- Of the 203 agencies ultimately designated as HSAs by the Secretary of DONS, 180 are private non-profit agencies, while the remaining 23 are based either in public regional planning bodies or units of local government. Two hundred and eleven health service areas have been estab- lished covering the entire area of the United States and its territo- ries.* Each HSA must have a governing body with a majority of its members defined as health care consumers rather than providers. The problems and opportunities related to consumer participation, including com- positional issues, are detailed in Chapter IV. The remainder of the members of the governing body are to represent health professions, health care institutions, insurers, educational pro- grams for the health professions, allied health professions, and hospi- tal administration. The membership of the governing body must also in- clude, through its provider or consumer components, representation of general purpose local government, elected officials, non-metropolitan areas, and mental health interests. If there is a Veterans Administra- tion facility or a health maintenance organization in the area it also must be represented. The 1974 Act did not specify a process for governing body selec- tion. The 1979 amendments required that the process used to select governing body members meet minimum statutory requirements concerning community participation in, and understanding of, the selection pro- cess. A majority of the members must be selected in a manner that is not "self perpetuating." In a private nonprofit agency, the governing body is responsible for managing the affairs of the agency and for directing its various functions. In a governmentally-based HSA, the governing body's responsibilities are more circumscribed, with the parent governmental board or council retaining key functions regarding budgetary and personnel matters, as well as a key role In the planning process. The Act, as amended in 1979, states five purposes for the HSAs: 1. improving the health of residents of a health service area 2. increasing the accessibility, acceptability, continuity and quality of health services provided residents of the area *In 11 cases, because of geographic and demographic factors, the boundaries of a health service area are coterminous with those of a state. In 16 areas, the stipulation against subdivision of SMSAs, or other factors, led to the creation of interstate health service areas. The Act exempted some jurisdictions from the require- ment to designate HSAs. These areas are served by a state agency which also carries out HSA functions. These are called 1536 agencies.

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11 3. restraining increases in the cost of providing residents with health services 4. preventing unnecessary duplication of health resources preserving and improving competition in the health service area. Planning in the HSA The process of developing area health services plans is central to all other activities carried out by HSAs. The agencies collect and an- alyze data concerning the health status of the area's residents and the health resources available to them. With this description of existing conditions, the HSA develops goals for the following five years, describ- ing a desired state of community health and health services. These goals, along with supporting objectives, recommended actions, and estimates of the resources required to achieve its goals, are incorporated into a Health Systems Plan (HSP). An annual plan of action is prepared which outlines specific steps to be taken that year toward achieving the HSP goals. This Annual Implementation Plan (AIP) is intended to guide the activities of those involved in the provision of health services in a community. Representatives of a variety of community interests partici- pate in the process of developing plans. The five year plan (HSP) must be reviewed and updated at least once every three years, although plan development and update is a continuous process in most HSAs. These plans are important as consensus documents stating a community's health goals and describing the means to achieve them. They form the basis for the HSA's recommendations and decisions concerning allocation of resources--the implementation function. Each HSA is required to pursue organized efforts to secure changes in its health service area which support the goals of its plan. These implementation responsibilities include both planning and quasi-regula- tory efforts. The former consist of information gathering and analysis, technical assistance and consultation with community organizations and agencies, development of plans and projects for achieving plan goals, and review and approval of proposed uses of federal health funds in the area. Quasi-regulatory activities include recommendations to the state under the certificate of need program and the review of the appropriate- ness of services offered in an area. Appropriateness Review One of the more controversial agency activities is the periodic review of health services to determine the appropriateness of services offered to the needs of residents. Reducing a mismatch between current requirements and services designed for an earlier time was seen as an

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-12- opportunity to reduce waste and inefficiency in the system. Congress therefore required that planners look at existing services to determine whether or not they continue to meet current needs. The HSA reports its findings concerning appropriateness to the SHPDA, which in turn makes the findings public. There is no sanction attached to a finding of inappropriateness, but such findings must be accompanied by an HSA plan of remedial actions which would correct the inappropriate situation. Appropriateness review was proposed late in the legislative process and there is very little information available concerning congressional expectations of it. Appropriateness review emerged as a last-minute sub- stitute for a section that would have required that all services be periodically recertified. This was politically unacceptable at the time, but as a background it has led to appropriateness review's being regard- ed as threatening to many health care institutions. The lack of speci- ficity about what it is, how it will be used, and how it might be linked to future reimbursement or financing have raised anxieties and efforts to secure its repeal. But there was little interest in its removal in 1979 and appropriateness reviews of selected services are now underway. Proposed Use of Federal Funds Another congressional concern during the development of the basic health planning legislation was the consistency of federal health pro- ects and contracts with local goals and desires, as well as existing services. To assure that targeted federal financial investments were in line with local priorities, HSAs were given the authority to review and approve or disapprove proposed uses of federal funds (PUFF) in their areas. Each application for most federal funds from the Public Health Services must be submitted to the HSA. Upon receipt of the application, the HSA has 60 days in which to make a decision. The HSAts comments on the proposal are sent to the applicant, the relevant federal funding agency, the state agency, and the state program. But federal programs subject to this requirement represent a relatively small portion of the federal dollars flowing into a community. For example, Medicare and Medi- caid expenditures are excluded from review. Nevertheless, the funds sub- ject to review represent a significant amount of the federal discre- tionary money in health. The federal grant review function has evoked controversy within the federal government. Many programs that once distributed funds with re- lative freedom resent the HSAs' authority to document and possibly over- ride federal judgement. This friction delayed the development of regulations and policies governing PUFF review and continues to create problems. Although the HSA has decision retaking authority in this matter, the Secretary can override a decision upon request of an applicant. Whether or not this authority is used frequently wil1 depend in large

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-13- part on the competence with which HSAs approach this responsibility.* In addition to the federal tensions, there are sometimes conflicts at the local level. Many of the funds that come under review are cate- gorical grant programs that serve special groups, most often the tradi- tionally underserved and politically weak. Further, medical researchers feel it is inappropriate for local health planning bodies to review their funding applications. Certificate of Need and 1122 Review--HSA One of the major implementation tools given planning agencies is the review of proposed institutional capital spending. The HSA recom- mends to the state agency approval or disapproval of applications for capital expenditures. The MBA's determination of need should be based on analysis of data and community desires as expressed in planning doc- uments. Review under 1122 is a voluntary federal program; CON review was mandated by P.L. 93-641, but is a state program requiring passage of state legislation. Today all states except Idaho have 1122 or CON programs, or both, although most do not meet federal requirements. The State Health Planning and Development Agency Another structural element established under Title XV of the law is the State Health Planning and Development Agency (SHPDA). Each state participating in the program is required to designate a single state agency to carry out health planning, coordination, and regulatory func- tions in the state. Just as the HSA must submit an annual work program detailing its investment of resources for a year, the state agency must submit an administrative program for review and approval by the Depart- ment of Health and Human Services (DHHS). The SHPDA is responsible for conducting the state's health planning activities "~d for implementing those portions of both the state health plan and the HSAs' plans that relate to the government of the state. The state agency also is required to conduct certain regulatory activi- ties. If the state participates in capital expenditure reviews for the Secretary of DHHS under Section 1122 of the Social Security Act, the state agency must be responsible for the reviews. In addition, the state agency is required to administer a certification of need program that complies with federal statutory and regulatory requirements. As indicat- ed above, the SHPDA also has a role in the appropriateness review pro- gram, preparing and making public findings based on its own review as well as that of the HSA. *As of the beginning of November 1980 (one year after the program became fully active), 27 HSA decisions had been overridden, 18 sus- tained, and 28 cases were still pending, according to the Bureau of Health Planning, Department of Health and Human Services.

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-14- Statewide Health Coordinating Council The third structural element to be created under the health plan- ning act is a Statewide Health Coordinating Council (SHCC). The SHCC is intended to provide a forum where the HSA plan documents are coordi- nated. Sixty percent of the SHCC's members are appointed by the state's governor from among nominees provided by health systems agencies in a state. The SHCC's chair may be appointed by the governor unless she or he declines the opportunity, in which case the chair is elected by the members of the SHCC. The SHCC is responsible for final preparation of the State Health Plan (SHP) based on a preliminary document prepared by the SHPDA, and is charged with the responsibility for ensuring that needs identified by the state program agencies (such as the state public health authority or the state mental health authority) are addressed in the state health plan. As a result of the 1979 amendments, the SHCC no longer has final approval authority concerning the state health plan. That authority is vested in the governor, who must approve the document. The SHCC is also responsible for reviewing the budgets and applications of HSAs and for advising the SHPDA in its responsibilities. The SHCC, un- like the SHPDA, is involved in the proposed uses of federal funds, re- viewing entitlement programs and federal grants and contracts that in- volve health resources in more than one health service area. In addi- tion, the Act established a National Council for advising the Secretary of DHHS. The committee's first report recommended an expanded and strengthened role for the Council. Certificate of Need and 1122 Review--State Level Title XV of the planning law requires that all states participating in the health planning program develop a certificate of need program intended to ensure that only those services, facilities, and equipment that are determined to be needed are developed and made available with- in the state. The certificate of need concept, borrowed from the public utility regulation field, has been applied to the health industry by several states since the late 1960s. For health planning, Congress man- dated states to develop such programs, and authorized substantial finan- cial penalties for those states which did not comply. Congress assumed that prior review and authorization of capital ex- penditures would help prevent duplication of services and facilities, which, in turn, is supposed to hold down inflation in the health indus- try. In addition, certificate of need was seen as an instrument for regionalizing the health system and giving power over resource distri- bution to community and state health planning activities. The certificate of need program was not the first federal effort to control capital expenditures through prior review and approval. In 1972, the Social Security Act was amended to authorize and provide reimburse- ment for review of capital investments of facilities receiving funds

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under the Medicare and Medicaid programs.* This review program, (Sec- tion 1122 of the Social Security Act,) is voluntary, and is dependent on a state's signing a contract with the Secretary. Under an 1122 pro- gram, an agency of state government (usually the state planning agency) is designated to review capital expenditure proposals which meet certain criteria. If a proposal is not approved, the sanction is to withhold a portion of the federal reimbursement for facilities and services estab- lished despite state disapproval. Under CON the sanctions are denial or revocation of operating license, court injunction and fines. One of the differences between 1122 and CON is the appeal process. If an appli- cant is dissatisfied, the applicant may appeal to federal officials at DHHS, whereas under CON the appeal process remains at the state level. Although it was assumed that Section 1122 review would be redundant once a state had developed a certificate of need program, delays in the establishment of CON programs and differences in coverage have led the federal government to continue to encourage states to participate in the 1122 program even after a complying certificate of need program is in place. Certificate of need has been a source of tension between the federal and state governments because it forces a state to perform a function that it might not otherwise undertake. Some states initiated lawsuits to overturn the requirements (see Chapter III), but none has yet been successful. Facilities Construction Assistance The 1974 Planning Act also revised federal financial assistance for health facilities construction. In a new Title XVI, the Hill-Burton program was replaced by a more modest effort focused on modernization of medical facilities, construction of new outpatient or ambulatory facilities, and conversion of existing medical facilities to permit the provision of new types of health services. The 1979 Amendments added authority for federal grants to assist institutions in discontinuing unneeded services and converting unneeded facilities to other uses but no money has yet been appropriated. Money for construction of new in- patient medical facilities was authorized only in areas that experienced recent rapid population growth. Implementation of Title XVI has been slow. The only component for which significant appropriations have been made available is a project grant program for modernization of public medical facilities. Reflecting strong pressure from urban law makers, $11 million was appropriated in 1976, and another $39.8 million was "reprogrammed" for grants to public medical facilities. No additional money has been appropriated since then. *This was also the statute that created the PSROs and required medical review of Medicaid patients in nursing homes.

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-20- for ensuring public accountability of the health systems agencies are adequate (but these are discussed in Chapters III and IV). It is not obvious what the long run relationship should be between the quasi- public HSA's and other public bodies and how the relationships might be affected by new developments. Further, the composition of the governing body reflects a particu- lar model of advisory bodies--the people being regulated and planned for as an integral part of the process. The committee does not feel that the current structure, including the types of agencies and who participates, should be changed at this time. There are solid reasons for learning from what has been done. Purpose and Expectations At the end of its first year's report, the committee concluded: . . . that the current health planning program has sub- stantial potential for helping to achieve certain im- portant social goals, through local planning for improved local health care systems. The committee continues to hold that view. In the course of its deliberations, the committee was presented with both anecdotal and empirical evidence of the planning program's successes, as well as its problems. The fact that these successes are often dimmed by perceived problems with the program is not surprising. The committee noted earlier that if the program is not living up to all the expectations of the various interests involved in its design and operation, a problem may be with the expectations, rather than the program itself. It would be logical to assume that a program with the structural complexity and breadth of responsibility of the health planning program would create divergent expectations at the various levels involved. The committee found this to be the case, as reflected both in the studies performed and the testimony received. The major discontinuity in expec- tations is between the federal and local levels. In framing the basic legislation, Congress stated It national priorities for health planning, and expanded the list to 17 in the 1979 amendments. Despite the wide range of topics encompassed in the priority list, such as medical care organization, professional training, improved management of health enterprises, community health education, and health promotion, the subsequent action of the Congress and the Administration have made it clear that the expectation is for cost containment in the institutional sector. Cost containment has become the goal against which some members of Congress and the executive branch judge the effectiveness of the program, despite the limited abilities provided to planning agencies for controlling expenditures of health providers.

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-21- At the local level, cost containment is viewed as a worthwhile goal, but not the only one. Local agencies have, as reflected in their plans and actions, a broader agenda of concerns--particularly improved access to services, health promotion and disease prevention. Conflic- ting goals between levels have contributed to perceptions at both levels that the program is not functioning effectively. The federal level sees the program as ineffective in cost containment. The local level perceives that the program is ineffective in responding to local, rather than federal, needs. The committee concluded that the demonstrated differences between . the goals professed in the Act and those applied by federal administra- tors and the Congress in evaluation may lead to invalid conclusions concerning the program's continuation. The committee recommends that a . clearer statement of purposes and expectations of the health planning program be developed as a basis for evaluation of its effectiveness. This statement should recognize the limitations imposed by the level of program funding and authority, and provide better direction to both levels concerning the program's activities. Coals should be internally consistent, or inconsistencies should be explicitly recog-.~ized. Until such goals are developed, health planning will be vulnerable to buffet- ing by conflicting values and changing priorities. This does not mean that the program would not have several goals that may sometimes be contradictory. Public policy must often pursue seemingly incompatible goals simultaneously (Vladeck, 1979~. Each goal has value and it is the very fact that the choices are hard, touching highly personal elements in our lives and involving deeply held values that make a process like planning so important. Clarity about those conflicts and acceptance of the process must be recognized Connected to the need for well-defined goals is the need for a rea- sonable set of expectations for the health planning program. ''Reason- able" can be defined in several ways: reasonable in the sense of tech- nical and political feasibility; reasonable in relation to the limited authority of the agencies; reasonable in terms of the dollars and staff of the agencies; or reasonable in terms of the length of time that the agencies have been functioning. Fixing more clearly the objectives of the program would permit more rigorous evaluation and identification of a range of planning methods. It is difficult, if not impossible, to try to understand national, state, and local roles and relationships in health planning or consumer participation without some overall notion of what the planning agencies are trying to achieve. It is hard to talk about effective intergovern- mental relations or an effective consumer if there is not at least some broad idea of what the program is supposed to accomplish. The absence of agreement on the program's purposes, and of associated, well-publi- cized, and sensible performance measures creates confusion.

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-22- Another important reason for trying to identify realistic goals for the planning program is a tendency to confuse the aims of health plan- ning with other programs. There is a nationwide PSRO program, a number of state rate setting commissions, thousands of health departments, and many other national, state and local health programs all relating to one or more of the goals subsumed under broad health planning goals. The role and function of the planning program should be more clearly outlined in relation to the other initiatives. Planning must embrace all of these functions to some extent and reconcile the opposing values in their planning and review functions. Role clarification is important for evaluative purposes but it has other values as well. The current planning program includes an experi- ment with an unusual structure for advising on investments in health services. Many aspects of the program are untested, their effects and their value unknown.* Studies for evaluative purposes will help our un- derstanding of social/political experiments in the United States. Les- sons learned about shifting the balance of power in medical care, estab- lishing more effective means for allocating resources in the health sec- tor, and making the health system more accountable to the public will find increasing application as federal investment increases in financing of health services. It is important to note that clarifying the objectives of the plan- ning program may have some negative as well as positive effects. For ex- ample, some interests in the coalition that today supports health plan- ning may be alienated by some specific program goals. Thus, political support will be weakened. Reconciling internal contradictions in the planning program will be of sufficient benefit to justify the opposition that will follow. But clarifying expectations will also reveal new prob- lem areas and internal ambivalences such as the relationships with the federal health care systems. It is possible, of course, that the Congress will support the de- gree of decentralization in the planning structure and the planning/ resources allocation and decentralization system as values in their own right. There has been less enthusiasm in the executive branch, espec- ially the Office of Management and Budget, for supporting such a locally directed system. Certainly, it needs to be clear that the particular structure will, at its best, produce an open forum for the community to work out what it wants to see invested in health. It will reflect the community and mirror its virtues and weaknesses, but it also can modify public understanding of health issues and lead to changes in attitudes and desires concerning the support of less costly health care activities. On the other hand, if some perceptible reductions in the rise of expenditures do not oycur in areas that health planning agencies can influence (i.e., capital expenditures), it is possible that another mechanism will be set up, and the HSA's role viewed as an expen- sive appendage. *Downs' paper, in Volume II, discusses this at length.

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-23- It is the committee's judgement that the purposes of the planning program for which the program could be, and should be, held accountable, _ . in their order of importance, based on the program's nature and autho- rity, are: 1. To establish and maintain an open 9 participatory structure for articulating community health needs and desirable alter- natives for meeting those needs, to be used in advising both ~ _ governmental and private sector decisionmakers who control - health resources at the local, state and national levels; To contribute to the redirection of the health system, through planning for a more effective, accessible, higher quality and more efficient configuration of facilities and services, that is more closely matched to basic health care needs of the area'- population. This should include developing a carefully thought out position for dealing with the introduction of new techno- logical advances into the health care system, with sensitive consideration and fair-minded appraisal of all important factors, not only costs. Done properly, this purpose should lead to a contribution in the overall containment in the rise of health expenditures, so this purpose and the next one (3) are not truly separable. However, specifying a cost con- tainment mission, as well, within the proper context, is important to ensure that the committee is not misunderstood. 3. To contribute to the "containment of health care costs," that is, to contribute to moderation in the rise of health . care expenditure, primarily through planning a more cost effective health system (as noted in 2), through efforts to improve the health status of the population, especially through programs that promote health and prevent disease, and efforts to limit unnecessary capital investment and direct such investment toward more cost-effective facilities and services. It is important that this use of "cost containment" not be con- fused with budget cuts for health and social services, particularly for low-income, old, and disabled citizens. A more cost-effective health system that meets the requirements of citizens can be achieved through improvements in the deployment of technology and high cost services. Planning is aimed at a better match between requirements and services, not at cutting out the services for which reimbursement is currently inadequate. The federal government's preoccupation with the idea of cost containment has undermined the planning aspect of the program. Improving the health of the people is the overriding goal of the planning system. However, given the sometimes indirect link between

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-24- changes in health services and incremental improvements in health sta- tus, and the difficulty of measuring such changes in the short term and attributing them to the health planning agencies' actions, it is un- reasonable to judge the program on short-term health status changes.* A major interest of the committee was to call for a fair, real- istic evaluation of the health planning program in terms of the local systems that it was intended to affect, not only the nation as a whole. In effect, while the program is aimed at making an overall difference in the way that health resources are deployed in this country, any fair evaluation of the program must be disaggregated. Planning is a national investment, and a fair question to ask is whether or not this is a good public investment by the federal government. But the answer must be reached by looking at the achievements of many different areas and whether or not the respective publics are benefitting from this planning. It will be difficult to combine the findings from individual systems in any acceptable quantitative manner. For example, is a failure in Los Angeles balanced by success in four middle sized communities, thereby supporting a conclusion that the program was not a failure overall? Certainly, given the visibility and size of a city like Los Angeles' it will take a number of solid program successes to balance negative perceptions resulting from a failure. But the fact that this is a nationwide program with nearly 300 agencies, and thousands of volun- teers should inhibit tendencies to generalize about it too often. Agreement is needed on the definition of national interest as it relates to health planning, and on what level of return for the planning investment is acceptable. Given the size and diversity of the nation, the evidence will be mixed. Trends and overall findings will be the only evidence concerning what is happening. Several fundamental characteristics of evaluative studies of social/ political "experiments" are relevant to the consideration of evaluation in health planning. It takes time for organizations to take root, develop "name recognition," visibility, and either develop or fail to develop credibility and an accepted role in the community. (Klarman, 1976, 1978~. The amount of time required varies according to a number of factors including the history of similar activities in the area. For example, a long history of voluntary health planning in Rochester, New York promoted rapid development of health systems planning because the community could understand what the work of the new agency meant. Until the planning program reaches a level of maturity, an evaluation can only count intermediate steps toward something. Movement in the right direction, however, should not be considered trivial. It is critical that the time variable be accepted as important and be fully considered in research and analysis. *This point is discussed by Downs in Volume II.

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-25- Policy makers and program administrator~ often express concern over the importance of personalities in the success, failure, or mediocrity of a program. The health planning program is not exempt from the real- ity that it will take the talent, drive, and commitment of individuals to enable it to fulfill its promise. But the policy question is what factors attract or repel the more talented to participate and how the program might be structured to draw in more talented, responsible and concerned men and women and keep them interested in struggling with a new social institution in ~ difficult, unfriendly environment. It should also be remembered that the planning system exists today, and some depend on it. Planning has value and merit to those, such as third party payers, who benefit from and are users of planning policies. Measures Once some agreement is reached on the purposes of the program, it will be easier to isolate possible effects and measures of effective- ness. For example, the resource standards issued by DHHS are aimed at a more effective and efficient system--through reduced duplication or services and equipment and higher quality care.* The standards have received wide distribution and embody goals that are suited to a planning process intended to take into account complex tradeoffs, so they are good starting points for overall measures. It should be noted that serious questions continue to be raised concerning some of the assumptions underlying certain of the established national resource standards. Members of this committee were uncomfortable about using standards that may be based on questionable assumptions as measures of effectiveness of the program. There are barriers to simple use of the national standards as proper indicators of the suc- cess of the planning agencies. First, standards may appropriately be modified by special local conditions. Second, because planning agencies cannot control the supply of services, progress toward the standards may be beyond the influence of the agencies. Third, plan- ning actions are most likely to take time to make a difference, and be discernible only in reported statistics after a time lag. Finally, standards may have undesired and unpredicted side effects. It is the conviction of this committee that the immediate effects that can be ascribed directly to planning are whether or not agencies have specif- ically addressed problems in their area including those high-l~ghted in the national guidelines, and whether they have proposed plausible, affirmative steps for correcting any problems. *Standards issued to date cover acute care beds' computed tomographic scanners, obstetrical services, neonatal special care units, pediatric inpatient services, open heart surgery, cardiac catheterization, radi- ation therapy, end stage renal disease. These standards were subjects in the committee's first year report. (Institute of Medicine, 1980~.

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-26- In the balance of this section, the committee restates what it believes to be reasonable purposes and suggests some specific methods for evaluating the health planning program. Restatement of Purposes and Discussion Purpose I. To establish and maintain an open, participatory structure for articulating community health needs and desirable alter- natives for meeting those needs, to be used in advising both governmental and private sector decisionmakers who control health resources at the local, state and national levels; The establishment of the health planning forum and the proper com- position of the governing body--at least in terms of structure and sociodemographic characteristics--can be measured in reported statis- tics. Although such descriptive characteristics are useful in ascer- taining whether or not the program's requirements for ensuring broad representation are being met, they do not ensure that the forum is a good or effective one for the community. To determine how well the system is working, the questions listed below should be asked of major public health, consumer, provider, in- surance, planning and service organizations and other opinion leaders. Any point of view may reflect antagonisms based on a variety of factors unrelated to agency effectiveness, so analysis of the data needs to be handled carefully. However, in the aggregate, if the perceptions are very bland or negative, clearly, there are problems. In addition, care is needed because HSAs and SHPDAs are dealing (or should be) in some of a community's most sensitive issues, and health planners can be viewed in unflattering ways. It is because of the inevitable and, one could hope, constructive conflict, that the postures of fair-mindedness, high quality data and analyses, and institutional integrity and credibility are so important. Questions to be asked include: 1. Has the HSA developed credibility in the community? 2. Has the HSA created a useful and fair-minded forum for public policy discussion on health issues? 3. Has the HSA shown leadership in catalyzing interest in and worked to solve critical issues, including health problems of minorities, the handicapped, the mentally ill?

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-27- 4. Has the HSA focused additional attention on areas of unmet need? Is the HSA pressing for innovative approaches to solving complex problems of access/quality cost tradeoffs? 6. Does the HSA serve as an effective agent in helping others to improve the quality and relevance of health care services received by the public? 7. Does the HSA help to promote the health of the residents of the area directly or by working with other agencies and institutions that have that as their primary responsibility? 8. Is the HSA involving new groups in considering health issues? 9. Is the HSA actively working to raise awareness of promises and pitfalls of less traditional services or approaches? 10. Has the governing board managed to use consumers and others for effective advice on public policy? 11. What were the major health care decisions in the community last year and how did the HSA contribute to the decisionmaking? In addition, the study should ascertain what the HSA's governing body members think about the organizations and how the SHCC and SHPDA perceive the HSA. Finally, the effect of the USA and the SHPDA on state decisionmaking could be studied. Specific facts also can be collected. Reporting systems, for ex- ample, can determine (1) if the HSA governing body reflects a good mixture and balance of the principal actors in the health system, (2) if the HSA receives dollar or in-kind services support from local government or the private sector. Health Systems Plans should be reviewed. The plans developed by the agencies demonstrate the level of the understanding of health issues by the extent to which the agency has identified and proposed plausible solutions to critical health problems and by the rationale for selecting certain priority goals and activities. Plans are a source of evidence concerning the quality of the program.

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-28- Purpose II. To contribute to the redirection of the health system through planning for a more effctive, accessible, higher quality and efficient configuration of facilities and services, which is more closely matched to basic health care needs of the area's population, including carefully thought out positions for introducing new technology. Remeasures of the activities and effectiveness of health planning will reveal evidence of the steps the agencies take to change the con- figuration of health services toward improved quality, increased accessibility, and other goals. The national resource standards represent quantitative measures that have received wide publicity and enjoy reasonable acceptance, at least as benchmarks, throughout the nation. They represent targets toward which planning agencies should be moving aggressively and they represent sensible markers for planning. As discussed earlier, the emphasis in evaluation should be on identifying how the planning agencies have worked to redirect the health system and what steps they have taken to effect change in their own areas. A methodology to do this was designed and tested by the Urban Institute (Bell, 1978) and should be studied further. Parts of the approach are being used at the Bureau of Health Planning. Purpose III. To contribute to the "containment of health care costs," that is, to contribute to moderation in the rise of health care expenditure, primarily through planning a more cost effective health system (as noted in Purpose II), through efforts to improve the health status of the population, especially through health promotion and disease prevention, and efforts to limit unnecessary capital investment and direct investment toward more cost-effective facilities and services. One of the primary purposes of the health planning program, as currently structured, is to control the rate of increase in health care expenditures through modifying capital investment. Not only is there a desire for an overall decline in the rate of increase in expenditures, but there is also an interest in a shift in capital investments to other activities, such as preventive services and those that promote health (e.g., smoking cessation, hypertension and weight control clinics).

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-29- Two types of evaluative questions need to be answered: 1. Is there a slowing (adjusted for inflation) in the rise of capital investment and operating expenses that can be attributed to the planning/regulatory apparatus? 2. Is capital being redirected in the health sector? Are the capital investments approved by the planning agency more cost-effective than those denied? The answers to these questions will vary substantially by region, by state, and within states. For example, some areas with very old physical plants have extensive needs for reno- vation and modernization. Other areas may be medically underserved or have growing populations requiring new services or facilities. In the aggregate, a substantial deceleration of new facilities and services should be occurring. It must be emphasized that aggregate statistics are not very informative and can be misleading. The best way to find out whether or not capital investment controls are having an effect of any signi- ficance is to analyze the data on a s~b-state basis and/or a sample of individual projects. Problems with data, techniques, unit of analysis, stage in investment cycles, and attribution should inhibit generalization. This is not to say that rigorous studies should not be done, rather they should be done on a sub-state basis and with sensitivity to the number of confounding factors.* Studies such as Howell (1980) are examples of the kind that should be undertaken in other places as well to begin to understand the dynamics in the industry. Studies (including the Institute of Medicine, 1976) have shown that there are too many hospital beds in the United States. Planning strategies for most areas should be aiming at a reduced bed complement through mergers or closings and provision of lower cost alternative services. Mergers or closings should be monitored to ensure that the cost containment pressures do not result in an increase in underserved populations. To summarize, the committee believes that it is important to state what can reasonably be expected and to assess program performance against that standard. The health planning program cannot accomplish all that political rhetoric has demanded of it. The critical questions, however, are what can it reasonably be expected to accomplish? Would those ac- complishments, if achieved, warrant continuation of the program? And are those goals being achieved? This committee has concluded that *See Downs and Cohodes in Volume II for a discussion of the problems of evaluation studies and some suggestions for appropriate study techniques e

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-30- the health planning program cannot be expected, by itself, to resolve the various difficulties that the American health sector faces. It believes, however, that the program can make a contribution toward such resolution. Even the more limited objectives and expectations are worth pursuing and, the committee offers specific recommendations to improve program operation. A recent statement by Klarman (1979) succinctly captures the spirit of this chapter and the intent of the committee. Much less regulation would be a good thing, if it were not in conflict with other fixed features of our health care system such as third-party payments, direct reimbursement to providers, and consumer ignorance. The foreseeable level of regulation in health care is likely to be high. Yet it should only be sufficient to accomplish its stated purposes. Regulation, as well as planning, should be open, conducted with due process, and visibly fair. With local participation and with focus on the concrete health care problems of com- munities and populations, there may develop a substantial willingness to adopt the recommendations of HSAs and to abide by the results. That is what one would hope for in our type of society, with its mixed set of institutions, diverse preferences, and pluralistic governance.