MSN Case Study on Healthcare Finance
From the Book: Healthcare Finance and Financial Management by Mary A. Paterson, Ph.D, RN (2014)
Case Study: The Island of Tekram
Tekram is an island nation in the South Pacific. The climate is tropical and the nation is self-governing after a period of colonial rule by the British. The population of the island is 500,000 including permanent residents, 300,000 of whom are year-round residents. The remaining inhabitants claim Tekram citizenship but are seasonal residents only. There is one urban center with a population of 150,000. The rest of the population lives in small villages. The people support themselves with fishing and small-scale agriculture. They do not manufacture anything, so Tekram is dependent on trade and tourism for most of the necessities of life. The main trade products are tropical fruit and fish, and the main revenue source for the government is tourism and related industries such as hotels and restaurants. The island has one international airport and a deep-sea harbor that can accommodate ocean-going cruise ships and freighters. The islands energy needs are met by imported oil and a small domestic solar-power generating industry. Potable water is in short supply on the island and during periods of drought it must be imported in tankers.
The average family size on Tekram is six. The majority (70 percent) of households on the island are Christian, the rest either claim no religious affiliation or are Hindus, part of a small population of East Indians that migrated to Tekram during the British rule. The government is a parliamentary democracy patterned after the British system. The president is appointed every four years by the majority party. Tekram is divided into twenty parliamentary districts. Freeplace, the capital and only city, has four of these districts. The average size of a district nationwide is 25,000 individuals or about 4,100 households. All citizens of Tekram may vote; those who are not full-time residents may vote by absentee ballots. The average participation rate in parliamentary elections is 48 percent. Elections must be held every four years but may be more often if the majority party declares an election or suffers a vote of no confidence in the parliament. There is a written constitution, a system of courts, and a small civil service with 5,000 employees. Parliaments meets for eight months of each year, it is composed of a parliamentary council with committees for the governments major activities. Each committee is headed by a minister appointed by the majority party. Health has a separate committee, and there is a minister of health.
Health is a major issue on Tekram. When the nation was founded 30 years ago, the government owned all the health facilities, which had been built by the British. The provided free care to all of Tekrams citizens at the government clinics and hospitals. In Freeplace, Tekram founded a university with a medical a nursing school, but most graduates do not stay on the island, and there is a persistent shortage of nurses and physicians. This shortage, together with the increasing costs of technology and maintenance of the aging health infrastructure, has increased healthcare costs to a level that is unaffordable for the government. During the last parliamentary session, healthcare was moved to a social insurance system. The government is relinquishing management of all healthcare facilities to interested private individuals and organizations. The countrys first private hospital was opened this year by the Church of England as a nonprofit faculty providing care to all. Missionary doctors and nurses make up the majority of the staff, but Tekram heath providers also work at the hospital. While the hospital is committed to giving care to all who need it, the management team knows that all care cannot be provided below cost. The government of Tekram has invited a U.S.-based managed care organization to provide an HMO-model insurance plan to Tekram. Through contributions to the social insurance scheme, the government will provide safety-net coverage for the 15 percent of its citizens who fall below the poverty line. The rest of the population must purchase the insurance, either directly or through their employers. Health insurance coverage is mandatory. There is no requirement for employers to provide health insurance, so the majority of coverage is purchased by households or by the government for its employees and for the poor.
Since the citizens of Tekram are used to having the government provide health services at a low cost, they are becoming increasingly upset about the new scheme. They feel the cost of health insurance is too high and the coverage is not complete. For example, preventive care such as immunizations, routine physicals, and well-baby visits must be paid out-of-pocket. Elective procedures in the hospital and all diagnostic services carry a 20 percent co-payment, and there is a deductible of $200 per disease episode that must be paid regardless of the type of care that is provided. There is no long-term care available, nor is there any occupational health. Mental healthcare is provided if there is an acute mental illness for the 20 percent co-payment. Otherwise mental healthcare, counseling for substance abuse, and all other counseling is paid out-of-pocket. In general, the system provides and pays for essential acute hospital care, but it does not pay for preventive or rehabilitative care. It does not pay for long-term care for the elderly although there is a government old-age pension for former government employees and the poor.
Major health problems in Tekram include cardiovascular disease, stroke, diabetes, arthritis, tuberculosis, and motor-vehicle accidents. The HIV/AIDS rate is low, but the rate of tuberculosis is high in this population. The incidence rate has increased to 60 cases in the population, three of which are drug-resistant. The government has a public health office, and it is very concerned with decreasing the rate of infection for TB, avoiding the further development of drug-resistant TB, and increasing compliance with the antibiotic therapy for TB cases. The office is aware of the impact on tourism if TB gets any further out of control. It has instituted the directly observed therapy (DOTS) approach to the TB epidemic. Starting the DOTS program required an increase of one physicians, one nurse, and one community health worker to the civil service in the health ministry. This increase has resulted in a parliamentary debate on government health expenditures because the new social insurance program, which provide acute care for the poor, already takes the entire dedicated health budge. The persistent budget overruns for the ministry of health are going to require either tax increases or cutting money from the ministries of education, social welfare, or the environment. The Tekram population has made it clear that a tax increase will result in considerable pressure on the parliament to change the government.
You are a consultant, hired by the Tekram ministry of health to provide guidance in this situation. You have been asked to formulate a strategy to address the current crisis in health spending. The ministry is most concerned with the lack of consensus in the Tekrami population on the health goals for the country. It has asked you to formulate a consensus-building strategy to increase agreement on the goals for the countrys health system.
As you review the situation, you realize that the current literacy rate of inly 40 percent has already impacted the capacity of citizens to understand the current health dilemma. In your opinion, funding for education cannot be further reduced. Reducing the budget for environmental services will impact the ability of the government to supply clean potable water to the population in times of drought. This, in turn, inevitably results in an increase in maternal and infant mortality due to water-borne parasites in the native available. The TB epidemic must be controlled because of the economic dependence on tourism. Eighty percent of the social service budget is currently spent providing safety-net social insurance coverage for the poor, and there appears to be no support for decreasing that level of payment.
Your case analysis should answer the following questions:
1. What do you recommend as the basis for the new health strategy in Tekram? Discuss the reasons for your recommendation and the policy evidence from the literature that supports the recommendations.
2. State at least one goal and two objectives that are critical to your strategy. Your goal should be SMART (specific, measurable, attainable, realistic, and timely).
3. Make at least one recommendation on how to build support for your strategy.
4. Discuss at least three methods that the ministry should use to implement your support-building recommendation.
5. Suggest one alternative to the present social insurance scheme, and provide a rationale for the feasibility of this alternative.
You may make reasonable assumptions to support your case discussions; however, these assumptions should be consistent with your understanding of a poorly educated lower middle-class population that is dependent on service industries, subsistence agriculture, and fishing for a livelihood. For example, it would be unreasonable to assume that the population of Tekram could double their GDP in one year by advancing high-technology innovation. However, you might make an assumption that the government could encourage investment in some non-tourist industries if appropriate training infrastructure was developed for some of the population.
MSN Case Study on Healthcare Finance