Economics of Health Care

1. Economics of Health Care Val Schott, MPH Director, Rural Health Policy & Advocacy Director, Oklahoma Office of Rural Health OSU Center for Rural Health Oklahoma State University Center for Health Sciences Center for Rural Health Tulsa, Oklahoma

3. Trends in Health Care Economic Impact of a Rural Hospital Estimate Need for a Primary Care Physician Estimating Cost & Revenue For A Rural Primary Care Physician Presentation Overview

4. Trends in Health Care

5. $4,790 $7,026 $12,782 Health care expenditures for the year 2006 were ____ per capita in the United States.

6. 16.0 % 19.6 % 13.8 % Health care expenditures for the year 2006 amounted to___ percent of gross domestic production.

7. National Trends in Health Care

8. 21% 30% 84% In 2004, payment for physicians services was ______ percent of health care expenditures.

9. National Health Care Expenditures Type of Health Service National Gross Domestic Product

10. Economic Impact of A Rural Hospital:Marshall Memorial Hospital

11. a physical location designated as a Medically Underserved Area (MUA) or Health Professional Shortage Area (HPSA) as that type of hospital is intended to provide service to underserved populations. a rural community where the hospital is 35 miles by primary road or 15 miles by secondary road from another hospital. Both (a) and (b) are correct. Critical Access Hospitals may be located in _______________________.

12. True False Since Critical Access Hospitals are limited to no more than 25 beds and an average length of stay of no more than 96 hours, they are too small to provide any significant economic impact for their rural community, thus the acceptance by the Centers for Medicare and Medicaid (CMS) of this type of facility.

14. MARSHALL MEMORIAL HOSPITALMEDICAL SERVICE AREA

15. Review economic trends of the health sector for the U.S. and Marshall County; Identify the Marshall Memorial Hospital medical service area; Summarize the direct economic activities of Marshall Memorial Hospital; Estimate the secondary impacts of Marshall Memorial Hospital on the economy of Marshall County. Objective of the Report

16. Marshall County Trends in Health Care

17. Marshall Memorial HospitalMedical Service Area

18. Marshall Memorial Hospital Direct Economic Activities

19. Marshall County Employment, Income, & Retail Sales Impact

21. Timetable to set up primary care physician practice (From American Academy of Family Physicians) Estimate the costs and revenues associated with establishing a rural primary care physician practice Starting A Practice: Critical Economic Decisions

22. One year before opening a practice Establish personal and professional goals. Select a location. Evaluate possibilities for recruitment assistance from hospitals. Timetable to Establish Primary Care Physician Practice

23. Six months before opening a practice Decide on office location and start lease negotiations. Select professional advisors. Decide on mode of practice. Begin obtaining required federal and state licenses. Seek sources of funding. Determine deadlines for Yellow Pages and other advertising outlets. Approach third-party payors to become a participating physician. Timetable to Establish Primary Care Physician Practice

24. Three to six months before opening a practice Apply for hospital staff privileges. Begin to recruit office staff. Begin to establish professional contacts. Purchase or lease office furniture and equipment. Select bank and professional liability insurer. Develop fee schedule and establish a billing system. Select a computer system. Timetable to Establish Primary Care Physician Practice

25. One to three months before opening a practice Finalize office staff. Create an official policy manual. Finalize required licenses and permits. Advertise in your local area. Purchase needed office and clinical supplies. Establish scheduling and patient recall systems. Attempt to establish coverage-sharing arrangements. Continue to establish professional contacts. Timetable to Establish Primary Care Physician Practice

26. Need to evaluate the feasibility of choosing a particular location such as: Estimate potential visits, Estimate practice revenues, and Estimate capital and operating costs. Determine Location Feasibility

27. Estimating Potential Local Physician Office Visits Based on National Ambulatory Medical Care Survey, 2006 Summary, No. 3, August 6, 2008.

28. Applying to a typical rural community with 9,151 population *Data from U. S. DHHS estimate that 58.3% of total physician office visits are made to physicians or midlevel practitioners in primary patient care

29. Survey of primary care physicians in Oklahoma – Physician Office Visits

30. Survey of primary care physicians in Oklahoma – Fees per Visit

31. Survey of primary care physicians in Oklahoma – Fees by Payor Source

32. Survey of primary care physicians in Oklahoma – Average Capital Costs for Solo Rural PCP Clinic

33. Survey of primary care physicians in Oklahoma – Average Capital Costs for 2-PCP Rural Clinic

34. Survey of primary care physicians in Oklahoma – Average Annual Salaries of PCP Office Staff

35. Survey of primary care physicians in Oklahoma – Average Operating Costs of Solo PCP Clinic

36. Example Budget for Solo Rural PCP Clinic - Revenues

37. Example Budget for Solo Rural PCP Clinic – Annual Costs and INCOME (first 1-3 years)

38. Example Budget for Solo Rural PCP Clinic – Annual Costs and INCOME (after 3 – 5 years) Costs remain basically the same; revenues increase 10 to 15% after first 3 to 5 years

39. Questions?

41. Acknowledgments • Rural Development - OSU Cooperative Extension Service • OSU Center for Rural Health • OSU Center for Health Sciences

42. For Additional Information… http://ruralhealth.okstate.edu

43. Staff Contact Information