CHAPTER

375

HEALTH POLICY DESIGN

Suzanne Babich, DrPH, Irene Agyepong, DrPH, Egil Marstein,
PhD, and Francisco Yepes, MD, DrPH

Chapter Focus

This chapter is designed to help health managers develop the knowledge and
skills needed to understand, effectively influence, and adapt to global health
policies. It focuses on key concepts in the design of health policies around the
world that are of particular importance for health managers and organizational
leaders.

Learning Objectives

Upon completion of this chapter, you should be able to

• discuss the relevance of global health policy design and analysis for
health managers,

• describe key concepts in global health policy design and analysis,
• explore the implications of sociocultural factors on global health policy

and management practice, and
• apply knowledge of these issues to managerial decision making and

actions.

Competencies

• Advocate for and participate in healthcare policy initiatives.
• Interpret public policy, legislative, and advocacy processes within an

organization.
• Describe the roles and relationships among the entities influencing

global health.
• Analyze context-specific policymaking processes that influence health.

11

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T h e G l o b a l H e a l t h c a r e M a n a g e r376

Key Terms

• Allocative or redistributive
policies

• Global health policy
• Policy

• Policy analysis
• Policymaking
• Regulatory policies
• White paper

Key Concepts

• Global health policy
• Government policy
• Health policy analysis
• Health policy circuit

• Health policy design
• Sociocultural context
• Step method for policy analysis
• Transnational health policy

Introduction

Global health policy can be described as a complex web of rules, both formal
and informal, that police vested interests in the attainment of the highest level
of health possible for all people (World Health Organization [WHO] Regional
Office for South-East Asia 2016). This description acknowledges the role of
various stakeholders as key players in these systems that determine who gets
what health services and with what level quality, length of wait, and cost. The
description also goes beyond personal health services to include policies that
directly or indirectly affect health—whether those policies are rules that allocate
or reallocate important resources (e.g., food, medicines) or regulations that
control the behaviors of individuals and organizations (e.g., food companies,
drug and device manufacturers, coal-burning power plants).

The health policy landscape includes macro-level, transnational policies;
country-level government policies; and micro-level policies in smaller units of
governance or in individual organizations. Examples of macro-level, transna-
tional policies include the doctors’ directive in the European Union (EU),
which aims to promote the free movement of healthcare professionals, as well
as EU laws targeting issues that directly or indirectly affect health or health
services delivery (e.g., bovine spongiform encephalopathy, genetically modi-
fied foods). Often, different levels of health policy overlap. Some country- or
local-level policies, for instance, have a global reach and should therefore be of
vital interest to health managers globally. Examples might include policies to
limit the spread of Zika virus, H1N1/avian influenza, chikungunya, or Ebola.
Although national health policies often focus on domestic health services
allocation, they may also call for specific actions in response to global health

global health
policy
The complex
web of rules,
both formal and
informal, that
police vested
interests in the
attainment of the
highest level of
health possible for
all people.

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C h a p t e r 1 1 : H e a l t h P o l i c y D e s i g n 377

issues, including transnational initiatives on such topics as climate change or
the treatment of refugees and migrants. Policies also exist at the organizational
level, of course, with organizations located all over the world. An organiza-
tion might prescribe health services for employee groups in conjunction with
country-specific national health services.

The professional arena for many health managers today includes opportu-
nities in global organizations, where significant cultural differences require new
knowledge, skills, and abilities. Competent managers need to be knowledge-
able and flexible enough to adapt to these organizational differences. Chapter
6 focused on the leadership principles necessary for managers undertaking that
challenge; this chapter, meanwhile, focuses specifically on the health policies that
are relevant in today’s global context. This chapter focuses not on the policies
that exist at the organization level but rather on the politically structured, insti-
tutionalized frameworks that govern the allocation of health resources for popu-
lation groups. Such policy frameworks are largely shaped by national, regional,
and transnational interest groups, and they come about through a process of
stakeholder intervention, with each group representing a stake in the outcome,
to determine health services procurement practices and distribution. Stakeholder
interest groups include powerful corporations, nongovernmental organizations,
charitable foundations, and competing political institutions seeking to safeguard
their capacities to influence the impact and outcomes of health policies.

Making sense of any health policy issue requires an understanding of
the social and political factors that dictate a policy’s shape, pace, and direc-
tion. Many health managers possess extensive knowledge and experience in
the country in which they work, and a high level of insight into many of the
factors that influence health policies close to their locus of control and practice.
They often have great familiarity with environmental conditions, including
the social, political, economic, and organizational factors that provide the
backdrop for the development and implementation of local policies. However,
given the increasing interdependence of health systems and policies around the
world, today’s health managers—regardless of where they practice—must be
proficient in analyzing and understanding health policies that span geographic
boundaries and cultures.

Key Concepts in Health Policy Design and Analysis

Policies are rules that can be either formal or informal, written or unwritten.
Policymaking is the process of creating those rules. Policy analysis involves
examining those rules, the problems the rules are meant to address, the goals
of the rules, and the criteria used to evaluate the efficacy of the rules. Typically,
policy analysis also assesses alternatives to current policy and, based on results
of the comparisons, makes recommendations from among the alternatives.

policy
A rule, whether
formal or informal,
written or
unwritten.

policymaking
The process of
creating the rules
of policy.

policy analysis
The act of
examining rules,
the problems the
rules are meant
to address, the
goals of the rules,
and the criteria
used to evaluate
the efficacy of the
rules.

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T h e G l o b a l H e a l t h c a r e M a n a g e r378

Health policies have many sources, with governance structures that vary
depending on where in the world the policies originate. Policies may be made
at the federal, state, provincial, or local levels via legislative or elected bodies,
administrative agencies, boards, commissions, courts, and so on. Health poli-
cymakers may include legislators, elected officials, agency members, board or
commission officials, judges, and the like.

The forms that health policies take also vary. They may be set out in
national, state, or provincial constitutions, or they may be put forth in doctrines,
statutes, ordinances, rules and regulations, operational or judicial decisions,
and other forms specific to the governance structure of the country in which
they were created. As a general rule, federal or country-level policies tend to
wield the most power, state or provincial policies have somewhat less power,
and local-level policies have the least amount of strength or authority. As a
result, top-level policies tend to be the slowest and most difficult to change,
whereas local-level policies tend to be the easiest to influence.

Health policies can serve any number of purposes, but most fall into
one of two broad categories:

1. Allocative or redistributive policies are policies that determine the
way public goods or resources are shared. Such policies typically give
more resources to some groups and less to others. Examples include
policies that provide free or reduced-cost services only to people who
fall under a specified income level.

2. Regulatory policies are policies that are designed to affect the behavior
or actions of others through rules that dictate what can and cannot be
done.

The Global Health Policy Circuit

The model in exhibit 11.1 provides a visualization of the complexity of global
health policy processes. The model highlights the following:

• The interconnectedness of public health policy, starting from the point
of policy inception (political initiative)

• The shaping of rules and regulations (governance policies), perhaps
establishing a new policy/reform paradigm

• The introduction of policy premises subsequent to implementation and
sector administration

• Renewed stakeholder initiatives, perhaps engaging in strategic ploys,
drawing attention to a preferred revision, potentially with the result of
new political initiatives—completing the policy circuit

allocative or
redistributive
policies
Policies that
determine the
way public goods
or resources are
shared.

regulatory policies
Policies that are
designed to affect
the behavior or
actions of others
through rules that
dictate what can
and cannot be
done.

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C h a p t e r 1 1 : H e a l t h P o l i c y D e s i g n 379

Governing structures vary among countries. In a social democracy, like
those common in Western nations, policy initiation and implementation emerge
following some level of national debate. Emerging policies commonly reflect
the paradigm that governs knowledge development at a given time. Policies
that break with established epistemology or generally accepted philosophy
about a given topic may be seen as radical proposals, setting the stage for
intensified policy debates.

In a top-down approach to policymaking, policies are formalized at the
more central health system levels and then passed down to peripheral gover-
nance structures responsible for implementation. The ultimate performance
or output of any policy will be shaped by how these peripheral governance
structures actually translate the policy into programs. Their actions and inac-
tions—decisions and nondecisions—can effectively shape the public face of
the policy. Whatever public service or good a policy is intended to govern, the
relevant sector stewards promote that policy.

Ministries of health in many countries may have a hierarchical structure,
with a central or national-level ministry responsible for agenda setting, policy
formulation, and health sector coordination and more peripheral levels, espe-
cially district level and below, responsible for policy implementation. Plans,
budgets, and programs for health services, education, and other areas may
or may not completely reflect the established policy premises, depending on
the extent to which centrally designed policies are modified peripherally in
implementation.

Political
initiative

Governance
policies

Sector
administration

Stakeholder
initiatives

Policy
circuit

Paradigm
I

Premises
II

Ploy
IV

Promotion
III

EXHIBIT 11.1
The Global
Health Policy
Circuit

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T h e G l o b a l H e a l t h c a r e M a n a g e r380

Regardless of how complete and well-intended policies may be, they may,
over time, be contested. A policy might not work as well as hoped, stakeholders
might become unhappy, or public opinion might shift. Changing conditions
in the policy environment might favor a new paradigm that prompts review of
the policy. The discourse that subsequently takes place includes the ploy sec-
tion of the exhibit—when actor agents might mask their actions for whatever
gains may be sought. The potential for new political initiatives at this point
illustrates the circular nature of the policy circuit.

In societies that lack well-functioning governance and legal structures,
policy development and execution practices might be significantly different from
what the model describes. In general, the practices of corrupt or incomplete
policy development are beyond the scope of this chapter. However, in seeking
to understand the policymaking contexts of those situations, the identification
of key stakeholders and their policy goals and practices is critical.

Analyzing Health Policy

Health policy design and analysis are inherently social and political exercises.
The environmental context in which policies play out may be shaped by a variety
of changing conditions, including such factors as the economy, public opinion,
election and budget cycles, and organizational interests. All of these factors can
influence the shape, pace, or direction of a particular policy at a given time.
Throughout the world, the conditions shaping policy environments, including
governance structures and the power of stakeholder influences, vary widely.

At the top levels—the national, state, or transnational levels, such as
within the EU—policy initiatives are approached systematically, often calling
for complex structures and decision-making processes. At these levels, groups
seeking to promote trade and regional development—such as the Association
of Southeast Asian Nations (ASEAN), the European Free Trade Association
(EFTA), the Latin American Free Trade Association (LAFTA), and the South-
ern African Development Community (SADC)—play an important role in
determining how health policies are shaped and how they work once approved.

In Western countries, policy papers known as “white papers” are often
drafted by governments as a first stage in a parliamentary process for establish-
ing a future policy. White papers provide policy analysis as depicted in exhibit
11.2, with an emphasis on the following:

1. Formulating a problem statement and underscoring its relevance
2. Recognizing budgetary implications; identifying financial options
3. Identifying all resources considered necessary to determine a capacity to

enact, following an assessment of critical prerequisites

white paper
A comprehensive
yet concise report
that summarizes
a position on a
complex and often
controversial or
difficult issue; it
aims to increase
stakeholders’
understanding
of the issue to
support the
development of
policy.

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C h a p t e r 1 1 : H e a l t h P o l i c y D e s i g n 381

4. Reflecting on the policy’s presumed credibility with regard to key
stakeholders (constituency acceptance)

5. Concluding its analysis of the policy initiative as summarized in a model
acceptance

Despite this complexity—or, indeed, in recognition of it—health manag-
ers should put forth the effort to understand the basic concepts and steps of
policy analysis, because such knowledge can foster better organizational decision
making and strategic planning. Performing a thorough analysis of a complex
health policy can be extremely time consuming, however, and organizations
will often be limited by time and other resources. Therefore, in organizational
settings, analyses of health policies may be limited to relatively quick reviews
or abbreviated studies, with certain steps in the process skipped or addressed
in only a cursory way.

Given the time-consuming nature of policy analysis, it may be practical
for analysis to be conducted by individuals who have prior knowledge of the
policy in question. Even though such individuals might not be as objective as
an analyst who has no prior knowledge of the case, the amount of time and
energy needed for a newcomer to get familiarized with the necessary back-
ground may be too great (Patton, Sawicki, and Clark 2012).

No single, correct approach exists for conducting a policy analysis; in
fact, the activity is as much an art as a science. Nevertheless, a number of
approaches have been described in the literature, each attempting to apply a

Budgetary
implications

Relevance

Capacity
to enact

Constituency
acceptance

Policy
circuit

Financial
options

(I)

Critical
prerequisites

(II)

Model
acceptance

(IV)

Credibility
(III)

EXHIBIT 11.2
Analysis of
Health Policies

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T h e G l o b a l H e a l t h c a r e M a n a g e r382

structure to a complex, multidimensional situation that typically evolves even as
it is being studied. One of the most popular approaches—the step method—is
widely taught in university courses, in part because it is easy to explain and
intuitive to grasp.

The Step Method for Health Policy Analysis

The step method for the analysis of health policies follows a systematic sequence
of logical activities that comprehensively examine a problem, the policy designed
to address it, the intended consequences of the policy, the policy’s outcomes,
and the variants of the policy that could potentially improve the results. The
analysis may include a recommendation for a “best choice” from among the
suggested alternatives, plans for advocating for the preferred variant, and plans
for evaluating the outcomes of the policy alternative.

The number of steps included in the model can vary depending on
the source, but it typically includes five to eight steps. The core of the analy-
sis—without including advocacy or evaluation plans—generally includes the
following five activities:

1. Defining the problem and its corresponding policy. Think of the old
adage, “There ought to be a law.” This step consists of several linked
components: A problem has to be identified; it has to be deemed
sufficiently significant in magnitude, scope, cost, or some other criteria;
and it has to draw the attention of policymakers. Once the problem has
met these requirements, a policy may be created to address it.

2. Collecting evidence. In this step, a policy analyst becomes educated—
often quickly—on as many facets of the problem as possible within
time and other resource constraints. Evidence includes information
from diverse sources, potentially including reports, news articles,
governmental proceedings, published papers, financial records, scientific
data, and input from stakeholders, including opinions and anecdotes.
The evidence may be objective or subjective.

3. Determining the policy goals and evaluation criteria. The goals and
evaluation criteria are often one and the same. In other words, once an
analyst determines what the policy is meant to accomplish, assessment
of how well the policy is working can be done by comparing the actual
and intended outcomes.

4. Laying out the alternatives. The next step includes brainstorming several
evidence-based variations of the current policy that might reasonably
be expected to yield improved results. A “do nothing” option should
be one of the alternatives, with the status quo serving as the standard

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C h a p t e r 1 1 : H e a l t h P o l i c y D e s i g n 383

against which other alternatives are compared. The alternatives should
be sufficiently diverse that meaningful differences can be discerned
among them. Once several alternatives have been identified, the list
should be culled to the three or four strongest options.

5. Playing out the options and picking one. For each potential policy
alternative, the analyst extrapolates the likely results, assigning scores for
each of the evaluation criteria. Matrixes, spreadsheets, grids, and charts
can help illustrate the comparisons among the alternatives. This step
should lead to the selection of the best option.

After the best option has been selected and the recommendation com-
pleted, the analysis may end, or it may continue with development of an
advocacy plan or a plan for evaluating the new policy, should it be adopted.

Policy analyses are iterative. At any point in the analysis, if the results
are unclear, the analyst can and should return to earlier steps and repeat the
processes until the results enable a move to the next step.

Given the complex and time-consuming nature of policy analysis, most
analyses, in reality, are incomplete or at some point deemed to be “good
enough for now.” Analysts may be forced to cut short or skip entire steps in
the process if faced with time or resource constraints, meaning that a decision
has to be made based on information that is less than ideal.

Exhibit 11.3, using an example from a major capital city in Western
Europe, illustrates one way in which a policy analysis might be set up. In this
example, the problem is that the city’s hospitals are receiving large numbers
of pregnant migrant women who present for delivery without having received
adequate prenatal care, resulting in costly complications and adverse outcomes
for infants and mothers. The policy alternatives represent ways in which the
hospitals might provide prenatal care free of charge for pregnant migrant women
who come to on-site outpatient clinics. Based on the comparison presented in
the exhibit, the fourth policy alternative appears to be the best choice among
those presented.

As noted in chapter 6, cultural competence is a crucial aspect of effective
leadership, but the concept is equally important in the context of global health
policy. Policies that do not take into consideration the community’s unique
social and cultural needs and characteristics risk underperforming or failing to
meet their goals. Policies that are culturally incompetent might, for example,
result in intended beneficiaries losing interest in a program or failing to use
services intended to help them.

Background about the sociocultural factors pertinent to a particular
policy context can be collected during the evidence-gathering phase of policy
analysis. In many cases, it can be acquired through document reviews or discus-
sions with stakeholders. Ideally, though, health policies should be conceived

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T h e G l o b a l H e a l t h c a r e M a n a g e r384

and constructed with the active involvement and leadership of representatives
of the community at which the policy is aimed. Participatory approaches to
community engagement that are considered standard for health services research
are equally relevant to the design and analysis of health policies. Policies are
most valuable when they respect and respond to the health beliefs, practices,
and cultural needs of the diverse populations being served.

Summary

Global health policy is a complex web of rules that police vested interests to
promote the attainment of the highest level of health possible for all people.
Health policies can be either formal or informal, and either written or unwrit-
ten. The health policy landscape includes macro-level, transnational policies;
country-level government policies; and micro-level policies in smaller units of
governance or in individual organizations. Health policies come from a variety
of sources and take a variety of forms, but they typically can be divided into
two broad categories: (1) allocative or redistributive policies, dealing with the
way goods or resources are shared, and (2) regulatory policies that dictate what
can and cannot be done. Health policy analysis involves examining the various
rules, the problems the rules are meant to address, the goals of the rules, and
the criteria used to evaluate the efficacy of the rules. One of the most popu-
lar approaches for health policy analysis is the step method, which follows a
systematic sequence of activities to comprehensively examine a problem, the

Criterion 1:
Cost

Criterion 2:
Time to

Implement
Criterion 3:

Effectiveness

Alternative 1:
Maintain status quo

Poor Good Poor

Alternative 2:
Increase the number of hospital-
based outpatient prenatal clinics

Poor Good Fair

Alternative 3:
Provide free transportation to hos-
pital outpatient prenatal clinics

Fair Good Fair

Alternative 4:
Move clinics to community-based
sites in migrant neighborhoods

Good Good Good

EXHIBIT 11.3
Comparing

Projected
Effectiveness

of Policy
Alternatives

Based on
Evaluation

Criteria

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C h a p t e r 1 1 : H e a l t h P o l i c y D e s i g n 385

policy designed to address it, the policy’s intended consequences, the policy’s
outcomes, and the variants of the policy that could potentially improve the
results.

Discussion Questions

1. Define global health policy.
2. Identify the steps in the policymaking process. How does the process

differ from one country to another? How is it similar?
3. Analyze the impact of sociocultural and political factors on the

establishment and implementation of health policy. How does national
health policy affect organizational management practice?

4. Describe the health policy process in your country. Analyze the
impact that redistributive policy and regulatory policy have on
your organization. How does this affect your approach to strategic
planning?

5. As a healthcare leader or manager, what steps could you take to
influence national health policy? How open is your ministry of health,
or similar organization, to policy analysis emanating from the grassroots
level? How can you work through the national political process to
influence policy?

Case Study: The Global Policy to Immunize Against Human
Papillomavirus

Human papillomavirus (HPV) is a necessary cause, though not the only
cause, of several sex-related cancers, capable of leading to cancers of the
uterine cervix, anus, penis, and pharynx. Of the more than 150 types of
HPV, 15 are carcinogenic, and two are responsible for 70 percent of cases
(Tomljenovic, Spinosa, and Shaw 2013).

After completing phase I, II, and III studies, three HPV vaccines have
been approved by the US Food and Drug Administration (FDA), with the
first—Gardasil—having been approved in 2006. The HPV vaccine has been
endorsed by several major health authorities worldwide, including the World
Health Organization (WHO), the European Medicines Agency (EMA), the
US Centers for Disease Control and Prevention (CDC), and the ministries of
health of more than 100 countries. However, despite its effectiveness and
safety assurances, growing scientific controversy surrounds the use of the

(continued)

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T h e G l o b a l H e a l t h c a r e M a n a g e r386

HPV vaccine, with a number of case reports suggesting serious adverse
effects (Nicol et al. 2016; Brinth et al. 2015). The global health policy support-
ing HPV vaccination meets the generally accepted criterion of having a basis
in a preponderance of scientific evidence. However, debate focuses on the
potential for overestimation of vaccine effectiveness and the underestimation
of vaccine safety risks. In addition, some have raised ethical concerns related
to possible conflicts of interest on the part of scientists who have vested
economic interest in …

7 0

l e a r n i n g O B J e C t i v e s

A policy is a temporary creed liable to be changed, but while it holds good, it has

got to be pursued with apostolic zeal.

—Mohandas Gandhi

One voice can change a room. And if one voice can change a room, then it can

change a city. And if it can change a city, it can change a state. And if it can change

a state, it can change a nation, and if it can change a nation, it can change the world.

Your voice can change the world.

—Barack Obama

C H A P T E R 3

H E A LT H P O L I C Y M A K I N G AT
T H E S TAT E A N D L O C A L L E V E L S
A N D I N T H E P R I VAT E S E C T O R

After completing this chapter, you should be able to

➤ describe features of the US state-level policymaking process and political system and
provide examples of state healthcare legislation,

➤ discuss features of the US local government policymaking process and local political
system and provide examples of local healthcare legislation,

➤ address the health policy–related activities of private health research institutes and
foundations,

➤ understand the implications for the US healthcare system of private industry policies
and practices, and

➤ appreciate the attributes of health policy development at the US state and local levels
and in the private sector.

00_Shi (2374) Book.indb 70 11/21/18 10:55 AM

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7 1C h a p t e r 3 : H e a l t h P o l i c y m a k i n g a t t h e S t a t e a n d L o c a l L e v e l s a n d P r i v a t e S e c t o r

ma s s a C h u s e t t s he a lt h C a r e re f O r m

In 2006, Massachusetts enacted landmark legislation to provide health insurance coverage to
nearly all state residents (KFF 2012). The legislation led to the creation of the Commonwealth
Care health insurance program to provide subsidized coverage for individuals whose income is
below 300 percent of the federal poverty level. It also developed a health insurance exchange
for individuals and small businesses to purchase insurance at more affordable rates than could
be obtained on the open market. The state’s Medicaid program was expanded and merged with
the Children’s Health Insurance Program (CHIP) to form MassHealth. Children from a family
whose income is up to 300 percent of the federal poverty level are covered by this program.

As part of this legislation, Massachusetts mandated that residents purchase health
insurance coverage or be charged a penalty of up to $912. In addition, employers with 11 or
more employees are required to contribute to health insurance coverage for their employees
or pay an annual fair-share contribution of up to $295 per employee.

As of 2012, the percentage of residents without insurance in Massachusetts had declined
to 6.3 percent, in comparison to the 2006 level of 10.9 percent uninsured (KFF 2012). Uninsur-
ance in Massachusetts was about one-third that of the rest of the United States (18.4 percent).
Employer health coverage remains the most common type of insurance, but MassHealth (the
public insurance plan) and Commonwealth Care (which provides subsidies for families and
individuals to purchase private coverage) have grown substantially (KFF 2012; Saluja et al. 2016).

Community health centers and safety net hospitals play a dominant role in caring for
those Massachusetts residents who now have health insurance as a result of the state healthcare
reform legislation. In addition, they continue to provide care for those who remain uninsured.

The Massachusetts experience with healthcare reform legislation provides a real-world
case study demonstrating the potential to significantly reduce the number of uninsured through
an individual mandate combined with affordable health coverage options. It illustrates the
state’s role in bringing about real healthcare reform affecting healthcare access and
delivery.

CO n n e C t i C u t OP i O i d re s P O n s e in i t i at i v e

According to the Connecticut Department of Mental Health and Addiction Services, admission
for heroin addiction has increased since 2011, and heroin has replaced alcohol as the primary
drug reported at admission for substance abuse treatment within the state, with heroin and
other opiates accounting for 42 percent of admissions in fiscal year 2016 (Giard 2017). Connecticut

C a s e s t u d y 2

C a s e s t u d y 1

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I n t r o d u c t i o n t o H e a l t h P o l i c y7 2

Governor Dannel P. Malloy charged the Alcohol and Drug Policy Council (ADPC), a statewide
stakeholder group, with comprehensively addressing Connecticut’s opioid crisis. The Connecti-
cut Opioid REsponse (CORE) team—a partnership among academic, medical, and public health
organizations and state agencies—supports the work of the ADPC by using evidence-based
strategies to achieve measurable outcomes that have a prompt impact on the number of opioid
overdose deaths in Connecticut (Fiellin et al. 2016). The CORE initiative has two main functions:
(1) to serve as a means to convey strategies and methods likely to immediately treat opioid
use disorder and reduce overdose events, and (2) to provide metrics and measures that may
be used to monitor and track progress over time (Fiellin et al. 2016). Namely, CORE identifies
strategies and associated metrics to address the opioid crisis in Connecticut.

The strategic plan involved a multistage process of data gathering from Connecticut
stakeholders, evaluation of evidence-based practices, and stakeholder engagement (Fiellin
et al. 2016). First, a three-month data-collection process led by Yale University’s Schools of
Medicine and Public Health sought recommendations from stakeholders throughout the state.
In addition, the team evaluated evidence-based practices from other states and countries.
Review and integration of these data helped identify Connecticut’s specific data needs and key
questions. Recommendations were further reviewed with regard to scientific strength, potential
three-year impact on overdose mortality, and availability of a measurable outcome that could
be monitored to determine strategic priority.

These efforts resulted in the following six strategies (Fiellin et al. 2016):

1. Increase access to high-quality treatment with methadone and buprenorphine.
2. Reduce overdose risk, especially among those individuals at the highest risk.
3. Increase adherence to opioid prescribing guidelines among providers, especially those

providing prescriptions associated with an increased risk of overdose and death.
4. Increase access to and track use of naloxone.
5. Increase data sharing across relevant agencies and organizations to monitor and

facilitate responses, including rapid responses to outbreaks of overdoses and other
opioid-related events.

6. Increase community understanding of the scale of opioid use disorder, the nature of
the disorder, and the most effective evidence-based responses to promote treatment
uptake and decrease stigma.

Based on the evolving nature of the opioid epidemic, and an evolving evidence base,
the CORE initiative team plans to evaluate its strategies, tactics, and metrics annually and
adjust as needed.

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7 3

A
lthough US health policies are developed primarily at the federal level, state and
local governments and industries in the private sector (nonfederal arenas) also
engage in health policymaking. This chapter focuses on health policymaking in

these arenas. First, state-level health policymaking is presented; that discussion is followed
by sections covering local government and private-sector health-related policy influencers.
The attributes of health policymaking in these sectors are also summarized.

stat e gO v e r n m e n t st r u C t u r e

The federal and state sectors share a common government structure composed of the legis-
lative, executive, and judiciary branches. However, each state also has its own constitution
and bill of rights, which together define the structure and function of the state government
and the local governments within the state’s boundary (Longest 2016). Following is a brief
discussion of the typical state political system.

PO l i t i C a l sy s t e m

State governments are modeled after the US federal government in that each is composed
of executive, legislative, and judicial branches (exhibit 3.1). States are bound by the US
(federal) Constitution to maintain a republican form of government, although they are not
specifically required to adhere to the three-branch system. The executive branch of the state
government is headed by the governor and other state executives, such as the lieutenant
governor, the attorney general, the secretary of state, auditors, and commissioners. All state

republican
A type of democratic
government in which the
head of state is not a
monarch; governmental
activities and affairs are
open to all interested
citizens.

state executives
Officials in the
executive branch of
state government.
Examples include the
governor, who is the
chief executive of a
state or territory, and
the attorney general,
who serves as the main
legal adviser to the state
government and has
executive responsibility
for law enforcement.

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exhiBit 3.1
The US State
Political System

State government

Executive branch
Governor
Lieutenant governor
Attorney general
Secretary of state
Auditors
Commissioners

Legislative branch
Senate
House of representatives/
assembly/house of
delegates

Judicial branch
Supreme Court

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I n t r o d u c t i o n t o H e a l t h P o l i c y7 4

governors are directly elected by the people, as are most other positions in their executive
branch. The exact structure of the executive branch varies from state to state.

The state legislative branch is the main lawmaking body of the government; it also
approves the state budget and fulfills other functions of government. As in the federal gov-
ernment, the state legislature consists of two chambers: a house of representatives—known
in some states as the assembly or house of delegates—and a senate (except Nebraska, which
has only one chamber in its legislature). In most states, senators are elected by the state’s
voters to four-year terms, and members of the house are elected to two-year terms.

A state’s judiciary is generally headed by its version of the US Supreme Court (with
exceptions; for example, New York’s Supreme Court is actually the trial-level court, and the
state’s highest court is referred to as the Court of Appeals). This highest state court hears
appeal cases from lower-level state courts; no trials are held in state supreme courts. Decisions
made by a state supreme court are binding unless they do not adhere to the US Constitution,
in which case its decisions may be appealed in the US Supreme Court. The exact structure
of the courts and the rules governing judicial appointments and elections are determined
on a state-by-state basis, either through state legislation or by the state constitution.

PO l i C y m a k i n g Pr O C e s s at t h e stat e le v e l

The policymaking process at the state level can vary substantially from state to state. In
general, however, states apply the same legislative system as the federal government does
(see, e.g., Maryland General Assembly 2006; State Legislature of Alaska 2018; West Virginia
Legislature 2018). The idea for a new law can come from an elected representative, a group
of elected representatives, the governor, or any other concerned citizen or interest group.
The proposed law is drafted into a bill, which is then sponsored by an elected member of
either the state’s senate chamber or its lower chamber (e.g., house of representatives, general
assembly). Although a bill must be introduced into the legislature by a representative or
senator, both legislators and interest groups draft significant amounts of legislation.

Bills can be introduced in either chamber of the legislature, where they are reviewed
by committees. Many states require that the bill also be accompanied by a financial projec-
tion showing the budgetary impact of the potential law. The bill goes through three readings
before being voted on by the elected representatives. Often, amendments are made after
each reading, and the merits of the bill are debated among the members.

After it passes one chamber, the bill proceeds to three readings in the other chamber.
The same process of debates and amendments is followed. After both houses have agreed
on and passed a final version of the bill, it goes to the governor to be signed into law. In
many states, the governor has the authority to veto a bill that is passed by both chambers
so that it does not become law. In other states, the governor’s veto can be overridden by a
favorable vote of two-thirds or more of the members in both houses so that the bill becomes
law even without the governor’s support.

state legislature
The legislative body of
a US state, also called
the general assembly or
legislative assembly.

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7 5

ex a m P l e s O f stat e he a lt h C a r e le g i s l at i O n

The power and responsibility of states to establish laws that protect the public’s health and
welfare derive from the US Constitution. The focus of healthcare legislation can range from
promoting health (including environmental protection, occupational health, safe food
services, and injury prevention) to providing health services (such as public health nursing,
communicable disease control, family planning and prenatal care, and nutritional counsel-
ing). See exhibit 3.2 for examples of state health policies, review the Learning Point box
titled “Illustration of State Involvement in Health Policy Development” for a description
of health policy activity in Oregon, and read the Learning Point box titled “State Initiatives
on Health Promotion and Disease Prevention” to understand state involvement in health
promotion and disease prevention activity as well as efforts to address the healthcare needs
of its vulnerable citizens.

exhiBit 3.2
Examples of State
Responsibilities
Through Health
Policy

• Serve as a major payer of healthcare services; an average of 28.2 percent of all
state expenditures were Medicaid related in 2015 (Medicaid and CHIP Payment and
Access Commission 2016).

• Fund CHIP, health insurance benefits for state employees and other public-sector
workers, and stand-alone state programs that provide health services to the
uninsured.

• Regulate the state healthcare system (e.g., licensing and monitoring health
professionals and health-related organizations, regulating the state private health
insurance industry).

• Establish and monitor compliance with quality standards for environmental
protection.

• Provide safety net facilities through support of local health departments and
community-based healthcare organizations and through programs that provide
charity care to low-income populations.

• Provide subsidies for graduate medical education and support large-scale
educational campaigns.

LEARNING POINT
Illustration of State Involvement in Health Policy Development

Known as a leader in state healthcare reform (Health Care for All Oregon 2017), Oregon’s
Legislative Assembly passed House Bill 2009 in 2009, which established the Oregon Health
Authority (OregonLive 2018). The legislation created an insurance exchange—a federal subsidy–
eligible set of standardized healthcare plans regulated by the state from which individuals

( c o n t i n u e d )

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I n t r o d u c t i o n t o H e a l t h P o l i c y7 6

LEARNING POINT
Illustration of State Involvement in Health Policy Development (continued)

may purchase health insurance—through the Oregon Health Authority for individuals and
small businesses that do not have group health insurance (Oregon Legislative Assembly 2009).

The law also expanded the Oregon Health Plan to cover low-income working families and
allocated an additional $5 billion to the Medicaid plan over the following ten years. The Oregon
Health Plan is the Medicaid program for Oregon and is overseen by the Oregon Health Author-
ity. Its purpose was to make healthcare more accessible to the working poor while rationing
insurance benefits. President Bill Clinton approved the plan in 1993 but required a revision to
ensure access for people with disabilities. In 2011, Oregon House Bill 3650, which contained
the proposed revision, was passed by the state legislature, and Oregon Senate Bill 1580 was
signed into law, establishing Coordinated Care Organizations (CCOs). A CCO is a network of
all types of healthcare providers who care for people covered under the Oregon Health Plan.
CCOs integrate physical, mental, and dental care for better care and better health outcomes
at lower costs. CCOs focus on preventing illness and disease, improving quality of care, and
managing existing health conditions to keep patients healthy.

Other provisions contained in House Bill 2009 called for expanding the use of electronic
health records through the Oregon Health Authority, establishing quality standards for hospi-
tals and healthcare providers, and mandating that health insurance companies disclose their
administrative costs and executive salaries to maintain transparency and accountability. As with
the federal reforms included in the Affordable Care Act (ACA) of 2010, lifetime maximum limits
on health benefits were eliminated, insurers were prohibited from taking health coverage away
from those already enrolled in a plan, and children who were unmarried could stay on their
parents’ health insurance plan until age 26 (Oregon Legislative Assembly 2009). The ACA was
also expected to provide some financial support for the reforms in Oregon’s House Bill 2009.

The state’s efforts were largely successful. A report by the Oregon Health Authority (2017)
showed that by 2017, about 94 percent of people in Oregon had health insurance coverage.

LEARNING POINT
State Initiatives on Health Promotion and Disease Prevention

All US states and the District of Columbia receive federal grants to initiate their own health
promotion and disease prevention programs (CDC 2018a). These programs focus on a variety
of health problems, such as promoting wellness culture in the workplace, increasing access
to healthy food, and improving physical activity. These programs have the common goal of
improving environments to make healthy living easier. Four examples of these programs are
provided here.

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7 7

LEARNING POINT
State Initiatives on Health Promotion and Disease Prevention (continued)

Exercise and Dietary Modification to Combat Obesity in Michigan
Strong evidence indicates that physical inactivity and excess calorie intake are the primary
causes of obesity, not only for adults but also for young children (CDC 2017b). To address this
public health concern, Michigan has worked on various activities such as partnering with the
local Farmer’s Market Association to accept Supplemental Nutrition Assistance Program cards
(formerly known as food stamps) and providing funding to local health jurisdictions to promote
physical activity with walking campaigns. One highly successful project involved working with
school districts and community organizations to enhance physical activity standards and
healthy eating habits in early care and education settings (i.e., licensed childcare centers and
in-home childcare settings) across the state. As a result of this five-year project, 226 centers
and homes improved children’s physical activity through activities such as 60 minutes of
adult-led playtime every day, and 194 centers and homes made children’s diets healthier by
adding more fruits and vegetables to meals or encouraging parents to bring healthy snacks for
children. To sustain the program, Michigan is making efforts to expand these improvements
in every childcare center and in-home childcare setting in the state (CDC 2016b).

Healthier Retail Environments in Rural Wisconsin
A 2013 study found that In Wisconsin, about 38 percent of adults consumed fruits and 26
percent of adults ate vegetables less than once a day (Young et al. 2017). In addition, rural
residents often have limited access to nutrient-dense, fresh produce because most corner
stores—small retail shops that sell groceries and other household items—in rural Wisconsin
lack a variety of fruits and vegetables. To make healthy options more convenient for local
residents, the Wisconsin Division of Public Health (DPH) partnered with the University of
Wisconsin Extension and 11 community-based organizations in 2015 to promote and expand
the Wisconsin Corner Store Assessment tool for corner stores across the state. The tool guides
corner stores through an assessment of areas for improvement, informing them on factors
such as placement and shelf space of healthy foods in the store (Young et al. 2017).

This state program achieved the most desirable results in rural Lincoln County. Many corner
stores in Lincoln County now offer much healthier food and drink options in their communities
through multiple strategies, including coupons for healthy foods, point-of-purchase promo-
tions, and displays of healthy products. To build on this success, the DPH decided to expand this
program to gas stations in Lincoln County (CDC 2014; Young et al. 2017). Milwaukee County also
launched a similar initiative to encourage corner stores to sell healthy foods by using such strate-
gies as fresh produce signage, in-store demonstrations, and store redesign (Young et al. 2017).

Dietary Interventions in Philadelphia Healthcare Settings
In the state of Pennsylvania, the Philadelphia Department of Public Health launched the Good
Food, Healthy Hospitals (GFHH) initiative, a healthy food and beverage option promotion

( c o n t i n u e d )

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I n t r o d u c t i o n t o H e a l t h P o l i c y7 8

In some instances, an initiative instigated by a private-sector group to address an
urgent public health problem may garner support from the state. For example, see the case
in the Learning Point box titled “West Virginia’s Drug-Free Moms and Babies.”

LEARNING POINT
State Initiatives on Health Promotion and Disease Prevention (continued)

targeting patients, staff, and visitors in local hospitals (Bartoli 2018). Providing hospital patients
suffering from chronic diseases with a healthy diet is a key component of chronic disease
management, the department found, and many of the hospitals in Philadelphia serve residents
of low-income areas where few fresh and healthy food options are available. The Common
Market (a nonprofit organization) and the American Heart Association partnered with the
Philadelphia Department of Public Health in 2014 to implement the GFHH initiative. Specifi-
cally, they encouraged hospitals to adopt five GFHH food standards that applied to purchased
foods and beverages, cafeteria meals, patient meals, catering, and vending machines. Each
standard came with specific guidelines. For example, the patient meal standard prohibited
deep frying as a method of food preparation (Bartoli 2018).

As of June 2017, 15 hospitals had signed a pledge and committed to adopt GFHH standards.
In their first year of implementation, all of these hospitals had met the minimum guidelines
for at least one of the five GFHH standards, and half of them had achieved this goal for mul-
tiple standards. Most hospitals reported increased sales of healthy items even in their first
year of implementation. One local medical center’s cafeteria reported increased sales of
unsweetened waters by 83 percent compared with the previous year, after following a GFHH
price reduction guideline. Most important, these hospitals credited the GFHH standards with
helping to shape hospital policies around healthier food and beverage options (Bartoli 2018).

Bike Share Program in California
Considering that the obesity rate for adults in Sacramento County, California, increased dra-
matically, by nearly 29 percent from 2001 to 2011, the California Department of Public Health
(CDPH) collaborated with five state agencies to initiate a bike share program that motivated
state employees to use free bicycles for business and personal trips during weekdays (Rosenhall
2018). The initial results were encouraging: From May 2015 to May 2016, 235 CDPH employees
had enrolled and made more than 900 trips, biking a total of more than 3,000 miles (CDC 2016a;
Rosenhall 2018). The program thus accomplished the dual benefits of improving employee fit-
ness and decreasing environmental pollution from cars. City officials, taking notice of the CDPH
program’s success, worked to establish a bike share program for the Sacramento metropolitan
area. The new bike rental service, called Social Bicycles, debuted on May 17, 2018, with a fleet
of several dozen bicycles available in downtown Sacramento and along the West Sacramento
waterfront and with plans for an increase to about 900 bikes by the end of the year (Bizjak 2018).

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7 9

lO C a l gO v e r n m e n t st r u C t u r e

Local US governments typically fall into one of two levels: county or municipality (e.g.,
cities, towns, villages). Counties—called boroughs in Alaska and parishes in Louisiana—may

LEARNING POINT
West Virginia’s Drug-Free Moms and Babies

In 2015, West Virginia led the nation in drug overdose mortality among US states, with a rate
of 41.5 deaths per 100,000 people (Mullins 2017). High rates of drug addiction, including but
not limited to opiates, were also believed to affect neonatal outcomes and child health. To
address this growing problem, a group of West Virginia neonatologists and pediatricians met
with members of the Perinatal Partnership and coders in 2014 to address neonatal outcomes
for infants being born to opioid-addicted mothers (Mullins 2017). Specifically, the group sought
to “develop a standardized definition for neonatal withdrawal and guidance on documenting
exposure and withdrawal among newborns” (Mullins 2017).

The group examined how the Drug Free Moms and Babies Project—a medical and behavioral
health program for women during and after pregnancy—leveraged collaborative relationships
to achieve positive outcomes for mothers and babies through a comprehensive, integrated
approach including prevention, early intervention, addiction treatment, and recovery sup-
port services (Mullins 2017; West Virginia Department of Health and Human Services 2018).
The three-year project was supported through funding from the West Virginia Department of
Health and Human Resources; the Division of Behavioral Health and Health Facilities; the West
Virginia Office of Maternal, Child and Family Health; and the Claude Worthington Benedum
Foundation (West Virginia Department of Health and Human Services 2018). …

T
his section consists of three chapters that describe how health policy is made in the United States
and elsewhere in the world. Chapter 2 describes policymaking at the US federal level, and chapter
3 illustrates the process at the US state and local levels and in the private sector. Chapter 4 covers

health policymaking by international agencies such as the World Health Organization and provides
examples of the process in selected countries. The spectrum of health policymaking presented in these
chapters is intended to provide students with a broad perspective of health policy development. Such
knowledge is critical in preparing students to examine the specific health issues commonly addressed
by health policy in the United States and in other countries.

PA R T I I

H E A LT H P O L I C Y M A K I N G

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Account: s4264928.main.eds

L e a r n i n g O b j e c t i v e s

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3

L e a r n i n g O b j e c t i v e s

C H A P T E R 1

O V E R V I E W O F H E A LT H P O L I C Y

After completing this chapter, you should be able to

➤ define key terms related to health policy,

➤ appreciate the influence of health determinants,

➤ understand the framework of health policy formulation,

➤ identify the stakeholders in health policy,

➤ describe the major types of health policies, and

➤ discuss the importance of studying health policy.

I have never had a policy. I have simply tried to do what seemed best each day, as

each day came.

—Abraham Lincoln

The health and vitality of our people are at least as well worth conserving as their

forests, waters, lands, and minerals, and in this great work the national government

must bear a most important part.

—Theodore Roosevelt

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I n t r o d u c t i o n t o H e a l t h P o l i c y4

he a lt h C a r e re f O r m: hi l l a ry Cl i n t O n a n d Ba r a C k OB a m a

Two major healthcare reform initiatives have played out on the US political landscape since
the late twentieth century: the Health Security Act, developed by the Clinton administration
in the 1990s and spearheaded by First Lady Hillary Clinton, which failed to pass into law, and
the Affordable Care Act (ACA), drafted by the Obama administration, which became federal law
in March 2010.

The hallmark of the Clinton plan was its universal coverage mandate, which required all
employers to contribute to a pool of funds to cover the costs of insurance premiums for their
workers, with caps on total employer costs and subsidies for small businesses. Competition
among private health plans and a cap on the growth of insurance premiums were to have held
costs in check, and additional financing was to have been provided through savings from cuts
in projected Medicare and Medicaid spending and increased taxes on tobacco (Oberlander
2007; Pesko and Robarts 2017).

The Obama plan focused on reforming the private health insurance market, extending
insurance coverage to the uninsured, providing better coverage for those with preexisting con-
ditions, improving prescription drug coverage in Medicare, and extending the life of Medicare
trust fund accounts. The ACA was expected to be financed through taxes, such as a 40 percent
tax on “Cadillac” insurance policies (policies that offer the richest benefits) and taxes on
pharmaceuticals, medical devices, and indoor tanning services (KFF 2013), and through other
offsets or provisions of the law that reduce the overall cost of enacting legislation, such as
penalties on uninsured individuals.

The political landscape in 2009, as President Barack Obama’s healthcare reform initia-
tive was being debated, was similar to that in the early 1990s: Both the Clinton and Obama
administrations were affiliated with the Democratic Party, both chambers of the US Congress
were controlled by Democrats, and national opinion strongly favored healthcare reform (Sack
and Connelly 2009).

However, whereas the Obama reform initiative became law, the earlier Clinton healthcare
reform package was defeated in Congress. Although Americans supported healthcare reform
in theory, the Clinton plan was derailed by the heavy opposition of the medical and insurance
industries and by antitax rhetoric. The disenchantment of the electorate following that failed
effort helped Republicans gain control of the House of Representatives and Senate in the
1994 election (Trafford 2010), which all but guaranteed that any further Democratic-designed
proposal would fail due to increasing political polarization in Congress.

After Republican president Donald Trump took office in January 2017, the Trump admin-
istration and the Republican-controlled Congress put forth many efforts to “repeal and replace”
the ACA. However, as of mid-2018, none of these attempts had succeeded.

C a s e s t u d y 1

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C h a p t e r 1 : O v e r v i e w o f H e a l t h P o l i c y 5

he a lt h C a r e re f O r m af t e r t h e aCa

Healthcare reform continues to be a deeply partisan issue in US politics, and political gridlock
in Congress has made efforts at reform challenging. Since 2010, Republicans in Congress have
unsuccessfully attempted to repeal the ACA, voting more than 60 times to repeal or alter the
law (Cowen and Cornwall 2017). In January 2016, the Republican-controlled House and Senate
passed a bill that would have repealed the ACA, but President Obama, a Democrat, promptly
vetoed it. The Congressional Budget Office (CBO) review of the proposal concluded that the bill
would have canceled health insurance for 22 million people by 2018 (Cubanski and Neuman
2018). In the 2016 presidential election campaign, every Republican candidate vowed to “repeal
and replace” the ACA (Jost 2015). In January 2017, within hours of taking office, President Trump
issued his first executive order, moving to dismantle parts of the ACA (Davis and Pear 2017).

On March 7, 2017, Republicans introduced the two bills that constitute the original
American Health Care Act (AHCA) of 2017, H.R. 1628, to partially repeal the ACA. The Trump
administration announced its support for AHCA. On March 12, 2017, the CBO released its budget
analysis, projecting that 52 million Americans would be left uninsured under the AHCA and those
with insurance would have to pay higher premiums through 2020. On May 4, 2017, the House
narrowly passed the AHCA, by a vote of 217–213, and sent the bill to the Senate for delibera-
tion. On June 22, 2017, the Senate released a discussion draft for an amendment to the bill,
which would rename it the Better Care Reconciliation Act of 2017. On July 28, 2017, the bill was
returned to the calendar after the Senate rejected several amendments, including the Health
Care Freedom Act, or the “skinny bill,” that would have repealed the ACA’s individual mandate
retroactive to 2016 and the employer mandate through 2025.

Does this legislation point to a new phase of healthcare reform whose success hinges
on support from both major political parties? As Wilensky (2017) suggested, Republicans and
Democrats might need to find a way to work together to enact comprehensive healthcare
reform beyond the ACA.

Or, does it signal a new approach toward dismantling the ACA through the administrative
process, such as policy implementation? In reaction to Congress’s repeated failure to repeal
the ACA, on October 12, 2017, President Trump issued Executive Order 13813, directing federal
agencies to expand the use of association health groups—groups of small businesses that pool
together to buy health insurance (Trump 2017).

The Tax Cuts and Jobs Act of 2017, passed and signed into law in December 2017, effec-
tively repealed the mandate in the ACA that required all Americans to have health insurance.
Although the ACA was still the law of the land during the first year of the Trump administration,
many of its components were being modified in Trump’s second year.

C a s e s t u d y 2

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I n t r o d u c t i o n t o H e a l t h P o l i c y6

A
t 16.9 percent of the nation’s total economic activity—also known as the gross
domestic product—healthcare spending in the United States leads all countries
in overall and per capita measures (OECD 2018). Yet the US healthcare system

does not perform well compared with those of other industrialized countries. A 2010 World
Health Organization (WHO) report ranked the US health system thirty-seventh among 191
countries (Tandon et al. 2018). In addition, a Commonwealth Fund study on healthcare
performance ranked the United States behind ten other industrialized countries—Australia,
Canada, France, Germany, the Netherlands, New Zealand, Norway, Sweden, Switzerland,
and the United Kingdom—on the basis of quality, efficiency, access, equity, and health
outcome measures (Davis, Schoen, and Stremikis 2014). The US healthcare system also
ranked last in a recent survey of eleven nations (Commonwealth Fund 2017).

Why have health policies tended to fail in the United States while they appear to suc-
ceed in other countries? The answer might be found in the context—the United States—and
the determinants of health and health policy in the country.

The main purpose of this chapter is to present a framework of health policy determi-
nants and discuss their impact in the United States. Understanding this framework will help
the reader appreciate factors that contribute to health policy development in general and in
the United States in particular. The chapter first defines key concepts related to health policy
and later discusses the importance of studying health policy, including an awareness of its
international perspective. The stakeholders of health policy are also presented and analyzed
as key parts of the policy context.

he a lt h de f i n e d

WHO (1946) defines health as “not merely the absence of disease or infirmity but a state
of complete physical, mental and social well-being.” This broad definition recognizes that
health encompasses biological and social elements in addition to individual and community
well-being. Health may be seen as an indicator of personal and collective advancement. It
can signal the level of an individual’s well-being as well as the degree of success achieved
by a society and its government in promoting that well-being (Shi and Stevens 2010). This
definition of health implies that issues such as poverty, lack of education, discrimination,
and other social, cultural, and political conditions found around the world are essentially
public health issues.

However, health is also the result of personal characteristics and choices. This con-
cept is the source of the fundamental tension in public health and has been a major topic
of discussion in the United States in the twenty-first century. Major debates continue over
whether people can be forced to take actions to ensure their own health, such as buying
health insurance (e.g., the “individual mandate” in the ACA), or be prohibited from perform-
ing actions that are unhealthy, such as limiting soft drinks in schools. Health policy in the
United States must attempt to balance the good of the public health with personal liberty,

gross domestic product
The value of all goods
and services produced
within a country for
a given period; a
key indicator of the
country’s economic
activity and financial
well-being.

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C h a p t e r 1 : O v e r v i e w o f H e a l t h P o l i c y 7

often a difficult compromise to make. Indeed, the conflict between the WHO definition of
health and many of the social, cultural, and political issues surrounding the US healthcare
system is one of the most important areas of debate for health policymakers.

Ph y s i C a l he a lt h

The most common measure of physical health is life expectancy—the anticipated number
of remaining years of life at any stage. Exhibit 1.1 shows the ten countries ranking highest
in their population’s life expectancy as of 2015 and includes the US ranking for comparison.

Although good or positive health status is commonly associated with the definition
of health, the most frequently used indicators measure, instead, lack of health or incidence
of poor health—for example, mortality, morbidity, disability, and various indexes that
combine these factors. One such measure is quality-adjusted life years, which combines
mortality and morbidity in a single index. The Learning Point box titled “Measures of
Mortality, Morbidity, and Disability” lists categories by which each indicator is measured.

life expectancy
Anticipated number of
years of life remaining at
a given age.

mortality
Number of deaths in a
given population within
a specified period.

morbidity
Incidence or prevalence
of diseases in a given
population within a
specified period.

disability
A physical or mental
condition that limits
an individual’s ability
to perform functions
considered normal.

quality-adjusted life
years
A combined mortality–
morbidity index that
reflects years of life
free of disability and
symptoms of illness.

KEY LEGISLATION
What Is the Status of Healthcare Reform in the United States?

In the United States, healthcare reform typically denotes a government-sponsored program
that strives to make health insurance available to the uninsured. Heretofore, healthcare reform
has not quite addressed how healthcare should be delivered, such as in resource allocations
across preventive, primary, and tertiary care settings. Although universal health insurance is
a difficult goal to realize, incremental reforms have been successful when political and eco-
nomic environments were favorable. The first such program came in the form of the Old Age
Assistance program, which was enacted as part of the 1935 Social Security Act and provided
direct financial assistance to needy elderly persons.

Full health insurance for the elderly became available under the Medicare program, as did
health insurance for the indigent under the Medicaid program. Both programs were created in
1965 under the Great Society reforms of President Lyndon Johnson in an era when civil rights
and social justice had taken central stage in the United States. Later, authorized under the
Balanced Budget Act of 1997, the State Children’s Health Insurance Program—later renamed
the Children’s Health Insurance Program—was developed, whereby states can use federal
funds to cover children up to age 19 through their existing Medicaid programs.

One of the most significant healthcare reform efforts resulted in the Affordable Care Act
of 2010, designed to bring about major changes to the delivery of US healthcare. The key
objective of the ACA was to provide most, if not all, Americans with health insurance coverage.

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I n t r o d u c t i o n t o H e a l t h P o l i c y8

me n ta l he a lt h

In contrast to physical health, measures of mental health are limited. The major catego-
ries of mental health measures are mental conditions (e.g., depression, disorder, distress),
behaviors (e.g., suicide, drug or alcohol abuse), perceptions (e.g., perceived mental health
status), satisfaction (e.g., with life, work, relationships), and services received (e.g., counsel-
ing, drug treatment).

Mental illness ranks second, after ischemic heart disease, as a nationwide burden
on health and productivity (SAMHSA 2016). An estimated 17.9 percent of the US adult
population in 2014 had at least one diagnosable mental disorder, only 41 percent of whom
received any treatment (SAMHSA 2016). Serious mental illness costs the United States
$193.2 billion in lost earnings per year (SAMHSA 2016). Mental illness is a risk factor for
death from suicide, cardiovascular disease, and cancer. Mental health problems are frequently
associated with social problems. For example, with easy access to guns, mental health often
contributes to gun violence in both public and private settings.

sO C i a l we l l-Be i n g

The most commonly used measure of relative social well-being is socioeconomic status (SES).
An SES index typically considers such factors as education level, income, and occupation.
Quality of life is another common measure and may include the ability to perform various
roles (e.g., self-care, family care, social functioning), perceptions (e.g., emotional well-being,

Life expectancy at birth (years)

Rank Country (state/territory) Overall Male Female

1 Japan 83.9 80.8 87.1

2 Switzerland 83.0 80.8 85.1

3 Spain 83.0 80.1 85.8

4 Italy 82.6 80.3 84.9

5 Australia 82.5 80.4 84.5

6 Iceland 82.5 81.2 83.8

7 Norway 82.4 80.5 84.2

8 France 82.4 79.2 85.5

9 Sweden 82.3 80.4 84.1

10 Korea 82.1 79.0 85.2

26 United States 78.8 76.3 81.2

Source: Data from OECD (2018).

exhiBit 1.1
Top Ten Countries

with the Longest
Life Expectancy,
with the United

States as
Comparison

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C h a p t e r 1 : O v e r v i e w o f H e a l t h P o l i c y 9

pain tolerance, energy level), and living environment (e.g., pollution levels, crime preva-
lence). A third set of social well-being measures, often used by sociologists, is composed of
social contacts and social resources. Examples of social contacts include visits with family
members, friends, and relatives and participation in social events, such as membership
activities, professional conferences, and church gatherings. The social contacts factor can be
used as an indicator of social resources by determining whether an individual can rely on
social contacts for needed support and company and whether the people involved in these
contacts meet the individual’s needs for care and love.

Pu B l i C he a lt h de f i n e d

In the early twentieth century, Winslow (1920) defined public health as “the science and
the art of preventing disease, prolonging life, and promoting physical health and efficiency
through organized community efforts for the sanitation of the environment, the control of

social contacts
The frequency of social
activities a person
undertakes within a
specified period.

social resources
Interpersonal
relationships with social
contacts and the extent
to which the individual
can rely on the people
involved in these
contacts for support.

LEARNING POINT
Measures of Morbidity, Mortality, and Disability

Morbidity measures

• Incidence of specific diseases: number of new cases in a defined population within a
specified period

• Prevalence of specific diseases: number of instances in a defined population within a
specified period

Mortality measures

• Crude (unadjusted for any other factors) death rate
• Age-specific death rate
• Condition-specific death rate
• Infant death rate
• Maternal death rate

Disability measures

• Restricted activity days (e.g., bed days, work-loss days)
• Limitations in performing activities of daily living (i.e., bathing, dressing, toileting, get-

ting into or out of a bed or a chair, continence, eating)
• Limitations in performing instrumental activities of daily living (i.e., doing housework

and chores, grocery shopping, preparing food, using the phone, traveling locally,
taking medicine)

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I n t r o d u c t i o n t o H e a l t h P o l i c y1 0

community infections, the education of the individual in principles of personal hygiene, the
organization of medical and nursing service for the early diagnosis and preventive treatment
of disease, and the development of social machinery which will ensure to every individual in
the community a standard of living adequate for the maintenance of health.” It focuses on
prevention and involves the efforts of society as a whole. Public health is intended to protect
lives and improve the health of populations around the globe. Today, the Johns Hopkins
Bloomberg School of Public Health emphasizes the continued importance of public health
in its school motto, “Protecting Health, Saving Lives—Millions at a Time.”

Whereas healthcare is intended to treat, influence, and care for individuals, public
health operates on a larger scale. The field is described by the American Public Health
Association (APHA 2018) as one that “promotes and protects the health of people in the
communities where they live, learn, work and play.”

Public health has broad implications for a population. Successful public health activities
and initiatives can save money by promoting healthy living and prevention, thus reducing
healthcare costs and disease burden. In addition, these activities can improve quality of life, help
children thrive, and reduce the suffering caused by ill health in a population (APHA 2018).
The practice of public health leads to both direct benefits (e.g., healthier children, less chronic
disease, less need for acute care) and indirect benefits (e.g., fewer days missed from school
and work; increased funding available for other initiatives, such as education) for a society.

It is important to remember that public health, healthcare, and health policy are
interconnected areas of study and practice. All three have great influence on health.

wh at ar e t h e de t e r m i n a n t s O f he a lt h?

Numerous theories on the determinants of health have been proposed since the mid-
twentieth century. Blum (1974) offered a framework called Force Field and Well-Being
Paradigms of Health, which suggests four major influences—the force fields—on health:
environment, lifestyle, heredity, and medical care. According to Blum, the most important
force field is the environment, followed by lifestyle and heredity. Medical care has the least
impact on health and well-being.

Twenty-first-century models focus on socioeconomic context and health behaviors.
For example, the Dahlgren and Whitehead (2006) model divides factors that influence health
into two categories. Fixed factors, the first category, are unchangeable, such as age, sex, and
genetic makeup. The second category is composed of modifiable factors, such as individual
lifestyle choices; social networks and community conditions; the environment in which one
lives and works; and access to important goods and services, such as education, sanitation,
food, and healthcare. The factors in the second category form layers of influence around the
population, and modifying them positively can improve population health.

Ansari and colleagues (2003) proposed a public health model of the determinants of
health in which these factors are categorized into four major groups: social determinants,

determinants of health
Factors that influence
health status.
Typically, they include
socioeconomic status,
environment, behaviors,
heredity, and access to
medical care.

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C h a p t e r 1 : O v e r v i e w o f H e a l t h P o l i c y 1 1

healthcare system attributes, disease-inducing behaviors (see the Learning Point box titled
“Prominent Theories on the Causes of Disease”), and health outcomes.

A conceptual framework developed by the WHO Commission on Social Determinants
of Health (2008) focuses on socioeconomic and political context; structural determinants and
socioeconomic position; intermediary determinants, such as material circumstances, socioenvi-
ronmental circumstances, behavioral and biological factors, social cohesion, and the healthcare
system; and the impact on health equity and well-being measured as health outcomes.

LEARNING POINT
Prominent Theories on the Causes of Disease

Many of the historically dominant theories related to health focus on disease rather than
well-being. The three most prominent theories of disease causality are germ theory, lifestyle
theory, and environmental theory.

Germ theory gained prominence in the nineteenth century with the rise of bacteriology
(Metchnikoff, Pasteur, and Koch 1939). Essentially, the theory holds that every disease has a
specific cause, which should be identifiable. Knowledge of the cause allows for the discovery
of a cure. Microorganisms, the general causal agent identified by germ theory, are thought to
act independently of the environment. Furthermore, the individual who serves as the host
of the microorganism is the source of the disease, which may then be transmitted from one
person to another—a process known as contagion. Strategies to address the disease focus
on identifying people with symptoms and providing follow-up medical treatment. Much
of biomedical research is still based on germ theory. The traditional concept of the agent,
host, and environment as the epidemiological triangle—epidemiology is the study of factors
controlling the presence or absence of a disease—is also based on the single-cause, single-
effect framework of germ theory.

Lifestyle theory tries to isolate specific behaviors (e.g., exercise, diet, smoking, drinking)
as causes of a disease and identifies solutions on the basis of improving or changing these
behaviors. As with germ theory, lifestyle theory defines problems as they relate to individuals
and focuses solutions on individually tailored interventions.

Environmental theory considers the general health and well-being of individuals more
than it does disease. It maintains that health is best understood by examining the larger
context of community. Traditional environmental approaches focused on poor sanitation,
which was connected to certain infectious diseases. With industrialization and its by-products
of overcrowding and filth, contemporary environmental approaches examine the impact of
production and consumption on emerging health problems. Environmental theory consid-
ers disease to be influenced by environmental and social factors. It contends that solutions
should be developed through policy and regulation and focused on systems rather than on
individuals and medical treatment.

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I n t r o d u c t i o n t o H e a l t h P o l i c y1 2

Similarly, the US Department of Health and Human Services (HHS) publication
Healthy People 2020 embraced a holistic approach by considering the range of personal,
social, economic, and environmental factors that determine the health status of individuals
or populations (HHS 2010). Planning is now under way for the HHS Healthy People 2030
initiative and includes establishing a framework for the initiative (including the vision, mis-
sion, foundational principles, plan of action, and overarching goals) and identifying new
objectives (HHS 2018). In the first phase of the process, an expert advisory committee will
develop recommendations for the HHS secretary on the framework and implementation
of Healthy People 2030. Input from members of the public and relevant stakeholders will
guide the development of recommendations. During the second phase, a federal interagency
workgroup will use the advisory committee’s recommendations to establish objectives for
Healthy People 2030 (Haskins 2017). Exhibit 1.2 delineates the evolution of the Healthy
People initiatives and their respective overarching goals.

Exhibit 1.3 provides an overview of health determinants—environment, individual
characteristics, and medical care (discussed in greater detail in the sections that follow)—as

Target year

1990 2000 2010 2020

Overarching
goals

• Decrease
mortality:
infants to
adults

• Increase
independence
among older
adults

• Increase span
of healthy life

• Reduce health
disparities

• Achieve access
to preventive
services for all

• Increase
quality and
years of
healthy life

• Eliminate
health
disparities

• Attain high-quality,
longer lives free of
preventable disease,
disability, injury, and
premature death

• Achieve health equity;
eliminate disparities

• Create social and
physical environments
that promote good
health

• Promote quality of life,
healthy development,
and healthy behaviors
across life stages

No. of topic
areas

15 22 28 42

No. of
objectives/
measures

226 312 1,000 approximately 1,200

Source: Healthy People Initiatives of 1990, 2000, 2010, and 2020 (HHS 2010).

exhiBit 1.2
Evolution of

Healthy People
Initiatives

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…

CHAPTER

3

FUNCTIONS, STRUCTURE, AND
PHYSICAL RESOURCES OF HEALTHCARE
ORGANIZATIONS

Bernardo Ramirez, MD, Antonio Hurtado, MD,
Gary L. Filerman, PhD, and Cherie L. Ramirez, PhD

Chapter Focus

The key idea of this chapter is that form follows function, and function defines
structure. Healthcare organizations vary—not only from country to country,
but also within each country—as they address issues of access, quality, and cost
that are influenced by social, economic, and political factors. The principles
described in this chapter can be applied to ambulatory, acute, chronic, and
home care organizations with varying levels of resources and local organizational
response capacity. The first section of this chapter examines the key functions
of healthcare organizations, with an emphasis on the need for a continuum of
patient-centered care. Later sections review the main components of health-
care organizations and the ways they interact to achieve desired outcomes and
performance improvement. The chapter explores ways of designing, structur-
ing, and analyzing organizations to effectively and efficiently manage physical
resources and carry out key functions.

Learning Objectives

Upon completion of this chapter, you should be able to

• distinguish the key functions of healthcare organizations and relate
them to the priorities of access, cost, and quality;

• develop mechanisms to assess the performance of healthcare
organizations;

• design a structure for an organization that takes into consideration the
resources available in a given community to achieve the best possible
health outcomes;

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T h e G l o b a l H e a l t h c a r e M a n a g e r4

• plan and prioritize the physical resources needed to effectively
accomplish the organization’s key functions, taking into account the
available resources in that particular system; and

• integrate physical, human, and technological resources to provide
appropriate clinical, support, managerial, and supply chain services
in a healthcare organization, taking into consideration all legal,
accreditation, and regulatory mandates.

Competencies

• Demonstrate an understanding of system structure, funding
mechanisms, and the way healthcare services are organized.

• Balance the interrelationships among access, quality, safety, cost,
resource allocation, accountability, care setting, community need, and
professional roles.

• Assess the performance of the organization as a part of the health system.
• Use monitoring systems to ensure that corporate and administrative

functions meet all legal, ethical, and quality/safety standards.
• Effectively apply knowledge of organizational systems, theories, and

behaviors.
• Demonstrate knowledge of governmental, regulatory, professional, and

accreditation agencies.
• Interpret public policy, and assess legislative and advocacy processes

within the organization.
• Effectively manage the supply chain to achieve timeliness and efficiency

of inputs, materials, warehousing, and distribution, so that supplies
reach the end user in a cost-effective manner.

• Adhere to procurement regulations in terms of contract management
and tendering.

• Effectively manage the interdependency and logistics of supply chain
services within the organization.

Key Terms

• Facility design
• Healthcare system
• Health technology assessment

(HTA)

• Prearchitectural medical
functional program

• Regionalization
• Sustainability

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Key Concepts

• Facility design
• Facility management
• Low-resource management
• Medical equipment

• Operations management
• Organizational design
• Performance improvement
• Physical resources management

Introduction

We can defi ne the most important functions of healthcare organizations using
a systemic analysis inspired by Avedis Donabedian’s (1988) original conception
of structure, process, and outcomes. Exhibit 1.1 shows how, as the population
and the healthcare organization interact, the system aligns the available or
required resources to produce the key notions of utilization, access, produc-
tivity, effi ciency, and effectiveness, which interact to shape the organization’s
performance. Performance, meanwhile, depends on the competent actions of
healthcare managers and other human resources in the organization.

Since the mid-1900s, the functions, responsibilities, and competencies
of healthcare managers have developed in different ways around the world. In
the United States and Canada, the role primarily developed as a postgraduate
specialty supported by the W. K. Kellogg Foundation under the umbrella of

HEALTH AS A SYSTEMRESOURCES

HEALTH SERVICES

POPULATION

HEALTH STATUS

PRODUCTIVITY

INDICATORS

STRUCTURE

PROCESS

OUTPUTS

OUTCOMES

TH STATUS

Sources: Data from Bradbury and Ramirez-Minvielle (1995); Donabedian (1966).

EXHIBIT 1.1
Elements of
Health Systems
Analyzed with
a Systemic
Approach

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T h e G l o b a l H e a l t h c a r e M a n a g e r6

the Association of University Programs in Health Administration (AUPHA).
A handful of university programs were established in 1948. As demand grew
and the healthcare field expanded, new graduate and undergraduate university
programs developed in a number of schools related to health or management
disciplines (Counte, Ramirez, and Aaronson 2011).

Around the world, a number of countries—and a number of locations
inside countries—have developed a strong alignment of professional healthcare
managers across healthcare organizations; other locations, however, have almost
no notion of healthcare management as a profession. In some countries, clinicians
are promoted to serve in managerial roles at healthcare organizations without
first having had the opportunity to acquire management competencies (West
et al. 2012). The International Hospital Federation (IHF) has created a special
interest group in health management to promote the professionalization of the
discipline and the use of a leadership competency framework to improve the
impact of managers at all levels of organizations and health systems (IHF 2015).

The main functions of healthcare systems and organizations in the
continuum of care are financing, provision of health services, stewardship, and
resource development (Frenk, Góméz-Dantes, and Moon 2014). Of these
functions, provision of health services and resource development are key, and
they are the ones further explored in this chapter. Provision of health services
starts with sound planning and effective/efficient organization. Financing is
addressed in chapters 2 and 3, and stewardship is discussed in chapters 6 and 11.

The Performance of Health Systems: Six Core Domains

Healthcare organizational performance around the world was the focus of an
extensive study sponsored by the World Bank, in which investigators conducted
a thorough literature review and developed a guide to concepts, determinants,
measurement, and intervention design (Bradley et al. 2010). The World Bank
report examined six core performance domains:

1. Access
2. Utilization
3. Efficiency
4. Quality
5. Sustainability
6. Learning

The first four domains are related to the “iron triangle” of healthcare, a concept
that was introduced by Kissick (1994) and later provided the basis for the “triple

healthcare system
The arrangement
of people,
institutions, and
resources that
deliver healthcare
services to meet
the needs of a
target population.
The system’s
framework aligns
resources to
support the key
performance
domains of
access, utilization,
efficiency, quality,
sustainability, and
learning.

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aim” initiative developed by the Institute for Healthcare Improvement (IHI).
Kissick’s iron triangle consists of access, quality, and cost containment, whereas
the IHI’s “triple aim” adds the dynamics of population health (IHI 2012).

Access incorporates several dimensions—physical access, financial access,
linguistic access, and information access—that are supplemented by service
availability and the provision of nondiscriminatory services. Equitable treat-
ment should be provided regardless of gender, race, ethnicity, religion, age,
or any other physical or socioeconomic condition. Utilization includes dimen-
sions of patient or procedure volume relative to capacity or population health
characteristics. Efficiency is determined by cost- or staff-to-service ratios and
by patient or procedure volume. Quality includes clinical and management
quality, as well as patient experience.

The last two domains—sustainability and learning—are key to ensuring
constant, self-propelled growth in an ever-changing, complex environment such
as healthcare. Sustainability in healthcare can be defined as “the capacity of
health services to function with efficiency, including the financial, environment
and social interaction that guaranties an effective service now and in the future,
with a minimum of external intervention and without limiting the capacity of
future generations to fulfill their needs” (Ramirez, Oetjen, and Malvey 2011,
134). Sustainability can be considered from two distinct perspectives or dimen-
sions. The first perspective focuses on the sustainability of processes that create
a basic functional network throughout the organization, allowing for flexibility
and quality improvement—both of which are necessary for the dynamic change
environment of healthcare. The second perspective deals with organizational
sustainability, and it includes five multidimensional pillars:

1. The environmental pillar represents the initial point of focus for
sustainability, and it includes—but is not limited to—the use of clean
and renewable energy and the conservation of the natural environment.
This pillar incorporates recycling techniques to preserve the quality of
the atmosphere, to reuse solid and liquid waste, and to safely dispose of
contaminants.

2. The sociocultural pillar strengthens community support and promotes
the identification of key cultural, ethnic, and other values among the
community of staff, patients, and users. It incorporates population
health and social marketing strategies.

3. The institutional capacity development pillar promotes the strategic
management of the organization. It aims to strengthen competencies
at all levels and instill an empowering knowledge management culture,
facilitating coordinated efforts of governance, leadership, and personnel
integration and participation.

sustainability
The capacity
for a healthcare
organization to
function efficiently
and in a manner
that supports
effective service
both presently and
in the future.

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T h e G l o b a l H e a l t h c a r e M a n a g e r8

4. The financial pillar ensures the delivery of healthcare programs and
activities that are cost effective and efficient in the use of resources. It is
indispensable for achieving the organization’s goals and objectives.

5. The political pillar involves staff, patient, and community advocacy to
advance the interests of the organization.

Finally, the learning domain empowers the organization to adapt to
change and to explore and adopt innovations. It incorporates efforts to use data
audit and feedback processes, to distribute relevant information and provide
patient education through partnerships with the constituency, and to imple-
ment training and continuing education initiatives for the healthcare workforce.

The Challenge of Organizing Health Services Resources
to Achieve Optimum Performance

The provision of universal access to optimal prevention, care, cure, and reha-
bilitation can be considered an ultimate goal of healthcare. Most governments,
either directly or indirectly, subscribe to this goal; the challenge is—given the
limitations of resources and entrenched infrastructure—achieving the greatest
possible return on the investment toward reaching it. All countries, regard-
less of their level of wealth or industrialization, are limited in their ability to
achieve this goal, often because of political philosophies expressed as public
policy. Even those nations in the most favorable positions often lack the will
or capacity to translate their knowledge of what is possible into practice for
the benefit of all people.

Over many years of technological development and interaction among
professional, political, and economic forces, three enduring organizational foci
have emerged for achieving the optimum health status for a population. They
are (1) hospitals, (2) primary care provision, and (3) regionalization.

Hospitals
In every country, hospitals are the most visible symbol of healthcare develop-
ment and care for the sick. They represent public assurance that there is a place
for people to go for care when needed. Hospitals are also important economic
engines, generating employment and anchoring the economies of communities.
They consume a large portion of the health sector resources in many countries.

The hospital is arguably the most complex contemporary organization
to manage. Hospitals, particularly in developing countries, struggle internally
with inadequate management and governance; limited sources of income;
insufficient human resources; poorly planned, financed, and maintained physi-
cal plants; and rudimentary quality controls. At the same time, they are often

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buffeted by such external forces as regulations, competition, inadequate pay-
ment systems, and conflicting service demands.

Experts from a number of countries, the World Health Organization
(WHO), and the international development agencies of industrialized nations
came together in an extraordinary meeting to address the challenges facing
hospitals today and going forward (German Federal Ministry for Economic
Cooperation and Development [BMZ] / German Corporation for International
Cooperation [GTZ] and WHO 2010). The meeting was based on the premise
that the role of hospitals should change within the upcoming decade, and it
sought to clarify the critical issues concerning hospital reform. It also sought
to formulate a plan to address those issues. There was no official follow-up to
the meeting, but the consensus sent a powerful message to the policy com-
munity. The key issues identified by the meeting are as follows (BMZ/GTZ
and WHO 2010):

• Clarifying the role and function of hospitals in the health system
• Political dimensions and expectations of hospitals
• Hospital isolation in the face of blurring demarcations
• Linkages between hospitals and other levels of the health system
• Cost and benefit of technological progress
• Data to measure hospital performance in relation to population

outcomes
• Universal coverage and accessibility
• Hospital financing within overall health spending
• Hospital governance and autonomy
• The legal framework within which hospitals operate
• Human resources
• Involvement of private hospital actors
• Hospitals in a global health marketplace
• Hospitals and the wider economy

There is no better summary of the challenges facing hospital and health system
administrators and planners.

Primary Care Provision
The development of primary care has emerged as the central strategy to achieve
universal access, comprehensive care, and cost containment, not only in devel-
oping countries but also in industrialized countries. The goal for low-resource
societies is to provide essential services that are realistically within their reach,
with community participation. WHO (1978) has promoted primary care
development since the Alma-Ata Declaration of 1978. The declaration was

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T h e G l o b a l H e a l t h c a r e M a n a g e r10

formulated by public health leaders who were largely committed to the position
that healthcare is a right and that the state has the responsibility to provide it.

Alma-Ata created an enduring tension between two “ideal” models—a
hospital-centric ideal model of health system development, with overtones
of private practice and specialization, and an ideal model based on publicly
supported community-based primary care providers, with the hospital in a
supporting role. The conflict between the two ideal models was summarized
by Frenk, Ruelas, and Donabedian (1989, 1):

In most developing countries the concern is that . . . [hospitals] already absorb such

a high proportion of resources that they seriously threaten any effort to achieve

full coverage of the population. Furthermore, it is widely believed that a health care

system centered around hospitals is intrinsically incompatible with the geographic,

economic, and cultural attributes of many populations. In addition, the mix of services

offered by hospitals . . . is believed to poorly match the prevailing epidemiologic

profile and the population needs for preventive and continuous care.

Gillam (2008, 537) assessed the practical impact of the Alma-Ata Dec-
laration on governments’ policies and actions, noting that “early efforts at
expanding primary care in the late 1970’s and early 1980’s were overtaken
in many parts of the developing world by economic crisis, sharp reductions
in public spending, political instability, and emerging disease. The social and
political goals of Alma Ata provoked early ideological opposition and were never
fully embraced in market oriented, capitalistic countries. Hospitals retained
their disproportionate share of local health economies.”

In setting out a model of a preferred future, the WHO (2008, 55)
states: “Primary-care teams cannot ensure comprehensive responsibility for
their populations without support from specialized services, organizations and
institutions that are based outside the community served . . . [and] typically
concentrated in a ‘first referral level district hospital.’” Assuming that, in many
countries, most of the existent service deliverers are controlled by the system
designers, the model calls for coordination of all resources to be vested in the
primary health team, presumably mandated by law in most cases. Under that
premise, “The primary-care team becomes the mediator between the com-
munity and the other levels”(WHO 2008, 55).

It is important to emphasize that primary care systems are ultimately
dependent on hospitals. To be comprehensive, a system must have a hospital
available to treat complicated, often life-threatening cases. The system also must
be able to receive trauma cases from rural employment and transportation situ-
ations that far exceed the competencies and resources of primary care. Patients
who are unable to access community and primary care services have been known
to travel great distances to reach the nearest hospital in case of emergency.

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Regionalization
Regionalization is the third enduring organizational focus, but a specific defi-
nition of the term is evasive. The term has as many definitions as it has plans
and applications. Roemer (1965) stated that regionalization cannot be defined
on the basis of experience but that agreement can be reached with regard to
its objectives. The following general objectives have emerged, with a degree
of agreement across applications, as central to the regionalization process:

• The efficient utilization of limited health resources
• The efficient utilization of expensive health resources
• The provision of adequate, appropriate, and accessible health services to

a population
• The improvement and maintenance of standards of health services

provision

The application of the concept of regionalization to healthcare provi-
sion can be traced back more than a hundred years. The event that had the
broadest global impact was the United Kingdom’s 1920 “Interim Report on
the Future of Medical and Allied Services,” commonly known as the Dawson
report, after Sir Bertrand Dawson, a physician to the British royal family. The
report proposed a comprehensive national organization of health services that
was organized around base hospitals and integrated most services in defined
regions of the country (Consultative Council on Medical and Allied Services,
Great Britain 1920). The United Kingdom implemented the report’s basic
principles in the country’s National Health Service over the course of 28 years.
The Dawson report has influenced health systems in a variety of countries,
particularly in Europe.

Dawson proposed dividing the country into regions that would (eventu-
ally) meet most of the preventive and curative health needs of the population.
Specialized, scarce, and expensive services for a wider area (or country) would
be available on referral but not duplicated at the regional level. The services
of hospitals would be defined according to a classification system, thereby
ensuring access to basic services while avoiding competition and underuse. The
influence of Dawson’s emphasis on the integration of preventive and curative
resources to achieve a more effective investment balance cannot be overstated.

Hospital-centered regionalization has become a widely discussed
approach to health system organization in a number of countries, particu-
larly in Europe but also elsewhere. For instance, the Chilean National Health
Service reorganization program, which started in the 1960s, created hospital
areas with the understanding that a hospital would have full responsibility for
the health of the population within its service area. With all health activities
linked to the hospital, clinical physicians would have to be directly involved in

regionalization
A broad
organizational
concept with
a variety of
applications;
its key aims
include efficient
use of limited
and expensive
health resources,
the provision
of accessible
health services
to a defined
population, and
the development
of standards for
health services
provision.

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T h e G l o b a l H e a l t h c a r e M a n a g e r12

the field programs, potentially leading to the effective integration of preventive
and curative medicine. At the time of the program’s implementation, private
hospitals were not included; the director of the area was to be the director of
the largest (frequently, the only) hospital in the area.

The rationalization of health-provision resources to serve a defined
population—be it a country, region, district, or community—is a very appealing
idea. In theory, it is most likely to succeed in a central command-and-control
political system, wherein one owner has control over all the components.
However, that theory assumes that the full range of essential services exists
or is accessible in each region. Application becomes more complicated—and
potentially unrealistic—when applied to pluralistic environments with diverse
financing schemes, multiple ownerships, local governments, advocacy orga-
nizations, and competing demands. Also, of course, additional complications
follow from the differing political philosophies about the role of the state.

One key organizational issue focuses on how to integrate new knowl-
edge into the capital planning process. Another issue deals with reducing the
duplication of diagnostic services that can be provided electronically to many
hospitals. An additional question is how to create incentives in the capital
management process that will modify internal organization and facility design
to support such changes (Edwards, Wyatt, and McKee 2004).

Kenya’s pluralistic environment provides an example of how the role of
the private sector can be constrained by the lack of access to capital. A substantial
portion of care is provided by private for-profit and faith-based hospitals that
have difficulty obtaining loans. As a result, funds are not available to start new
hospitals, or to improve or replace existing facilities (Barnes et al. 2010). In
Benin, banks generally loan only to large, well-established hospitals that are
managed or owned by well-known doctors, and smaller enterprises are rarely
considered. Capital funding limitations can also result from poor management
skills, difficulties with property titles, and lack of collateral (Strengthening
Health Outcomes Through the Private Sector [SHOPS] Project 2013).

Addressing these issues will require an understanding of global experience
and an emphasis on the development of leadership and management compe-
tencies. The professionalization of healthcare managers will be indispensable
in advancing the effective and efficient use of organizations’ resources.

Organizational Planning and Design

Organizational planning and design enable managers to align the healthcare orga-
nization’s functions and resources with its mission, vision, values, goals, and objec-
tives. The planning process incorporates a variety of tools to facilitate work relations
and interactions, efficient resource allocation, and effective decision making.

facility design
The design of the
space in which
a business’s
activities take
place. The
planning and
layout of that
space have a
significant impact
on the flow of
work, materials,
and information
through the
system.

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The challenges facing healthcare managers can be either internal or
external to the organization. One of the most important internal challenges
involves the increasing technical complexity of the services being provided,
which stems from continually changing medical technologies and the diver-
sity and professional autonomy of the health professionals who interact in the
delivery of services. Other internal and external challenges are associated with
healthcare managers’ need to balance the components of the iron triangle.
Balancing access and equity with efficient, cost-effective services and qual-
ity outcomes requires robust organizational design and planning, as well as
flexibility to confront the dynamic conditions of the healthcare environment.

Organizational designs take as many forms as needed to address the
uniqueness of a dynamic organization. The designs are usually reflected in an
organizational chart that describes the relations, authority, responsibilities,
and interactions of the different units and individuals. Other documents and
tools—such as organizational manuals, job descriptions, policies, regulations,
and legal or administrative documents—also describe the various functions,
resources, and responsibilities in more detail. A number of these tools are …

L e a r n i n g O b j e c t i v e s

1 1 3

After completing this chapter, you should be able to

➤ describe the major steps and decisions involved in recruitment and selection;

➤ discuss the factors prospective employees consider in deciding to accept a job offer;

➤ address the advantages and disadvantages of internal and external recruitment and other

sources of applicants;

➤ compare the concepts of person–job and person–organization fit and their relevance to

recruitment and selection; and

➤ identify the most important factors related to employee turnover and retention and

describe strategies for improving retention.

C H A P T E R 5

R E C R U I T M E N T, S E L E C T I O N ,
A N D R E T E N T I O N
Bruce J. Fried

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F u n d a m e n t a l s o f H u m a n R e s o u r c e s i n H e a l t h c a r e1 1 4

v i g n e t t e

Joan Hampton is director of a nationally known home health care agency that is currently
recruiting for a nurse manager. The nurse manager job involves supervising other nursing
and ancillary staff, managing the scheduling process, coordinating nursing activities with
other home health services, providing direct service, and ensuring compliance with poli-
cies, procedures, and regulatory requirements. Following are the major job requirements:

• Current and unencumbered state license to practice as a registered nurse
• Three years’ experience as a registered nurse, at least one of which must involve

full-time experience in providing direct patient care in the home health setting; one
year supervisory or management experience preferred

• Current cardiopulmonary resuscitation (CPR) certification
• Ability to assess patient status and identify requirements relative to age-specific needs
• Excellent verbal and written communication skills
• Strong interpersonal skills and ability to work in teams
• Knowledge of federal and state rules and regulations, Joint Commission standards,

and other regulatory requirements
• Strong fiscal planning and human resources management skills

Sandra Goodman has been with the home health agency for five years and has proven
to be a diligent, hardworking, and reliable employee. For the past 15 months, she has held
the temporary position of nurse manager and has done well. She sets high standards for
herself, has become an expert in the agency’s reporting and billing procedures, and under-
stands regulatory requirements and the agency’s financial operations. Sandra has applied
for the permanent position of nurse manager, for which she has many of the qualifications.

Along with Sandra, Michaela Roberts is being considered for the position. Michaela
has seven years of experience in home health care and three years of experience as an emer-
gency department nurse. However, she has no supervisory experience and limited financial
skills. Several nurses in the agency interviewed and liked Michaela and recommended her.

Joan is inclined to offer the job to Sandra because of her experience and because
she could step into the position with little training. However, several nurses have come to
Joan indicating that they will quit if Sandra is offered and accepts the job: Although Sandra
has performed well in the temporary nurse manager role, she has an autocratic personality
and management style that have alienated many of the nurses. She has been known to lose
her temper and insult the staff for failure to follow procedures.

Whereas the other nurses support hiring Michaela, Joan believes that she does not
have the time to properly orient and train her for the position. Michaela is bright and indi-
cates a willingness and aptitude to learn, but Joan is much more comfortable and secure with
Sandra. However, she is also concerned with morale problems and turnover if she decides
to hire Sandra. What advice would you give Joan, and why?

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C h a p t e r 5 : R e c r u i t m e n t , S e l e c t i o n , a n d R e t e n t i o n 1 1 5

in t r O d u C t i O n
Staffing an organization can be defined as “getting the right people into the right positions
in a timely manner.” Yet while this definition is correct, staffing also involves determining
where to find applicants, defining criteria for selecting the most appropriate applicant, and
doing all we can to keep people—retain them—in the organization. Thus, recruitment refers
to various methods to generate a pool of applicants. Selection involves choice: Who among
applicants should be chosen for a particular position? Retention refers to keeping people in
the organization after they have been hired.

We address these three important processes—recruitment, selection, and reten-
tion—in a single chapter because they are integrally interrelated and also related to other
human resources management (HRM) functions. These human resources (HR) practices
are highly interdependent. For example:

◆ The success of recruitment efforts determines in part how selective an
organization can be in hiring. An organization can be more selective when
there is a relatively large supply of qualified applicants from which to choose.

◆ Developing a recruitment plan that seeks to generate a pool of qualified
applicants depends first and foremost on the existence of an accurate, current,
and comprehensive job description.

◆ Employee retention may be enhanced by the effectiveness of an organization’s
orientation and socialization processes.

As with all HRM functions, organizations must be cognizant of legal considerations
when developing and implementing recruitment and selection procedures. For example,
because it is illegal under Title VII of the Civil Rights Act to discriminate in hiring based
on race, gender, and other characteristics, those involved in employee selection need to
be diligent in ensuring that these factors do not bias hiring decisions. (Chapter 3 on legal
issues includes a detailed description of Title VII; chapter 11 discusses diversity and inclu-
sion in the workplace.)

re C r u i t m e n t
Recruitment refers to the means by which organizations attract qualified individuals
on a timely basis and in sufficient numbers and encourage them to apply for jobs. In
starting a recruitment effort, organizations should be clear about the nature of the job
and the desired qualifications. They may also consider additional questions, such as the
following:

◆ Should we recruit and promote from within, or should we focus on recruiting
external applicants—or both?

recruitment

The means by which

organizations attract

qualified individuals

on a timely basis and

in sufficient numbers

and encourage them to

apply for jobs.

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◆ Should we consider alternative approaches to filling jobs with full-time
employees, such as outsourcing, flexible staffing, and hiring part-time or
temporary employees?

◆ How important is it for employees to fit in with the culture of the
organization? Should we favor applicants who better fit the culture but may
require additional training to improve their technical skills?

An organization’s recruitment success depends on many factors, including the attrac-
tiveness of the organization and the job; the community and the labor market in which it
is located; unemployment and the nature of the economy; the organization’s work climate
and culture; managerial attitudes and behavior; and workload.

Recruitment can be challenging for many organizations and specific jobs. A 2016 report
by the Society for Human Resource Management (SHRM) found that more than two-thirds of
human resources professionals reported challenging aspects of recruitment. Half of the surveyed
organizations reported such factors as a low number of applicants, lack of work experience among
applicants, and competition from other employers. Among human resources professionals,
84 percent reported that they had seen skills shortages in the previous years (SHRM 2016b).

Organizations involved in health, social assistance, and manufacturing reported the
highest levels of recruitment troubles. Not surprisingly, 70 percent of organizations said
they use social media in their recruiting (SHRM 2016b).

In the next section, we look at how individuals make choices about seeking jobs
and accepting job offers. These are extremely personal decisions, dependent on a multitude
of factors. However, there are some common factors that recruiters need to be aware of.

f a C t O r s t h at i n f l u e n C e j O B C h O i C e

Accepting a job offer is a big decision with possibly lifelong implications. What do potential
employees look for in a job? After an individual is offered a position, how does that person
make the decision to accept or reject the offer? Applicants are certainly concerned with
compensation, benefits, and opportunities for career mobility and promotion. They may
also consider the availability of other positions and the competitiveness of the job market.

Applicants are sensitive to the attitudes and behaviors of the recruiter or whoever
is their first contact with the organization. First impressions are potent, because the sense
of whether one fits in with the organization is often decided at this stage. Early negative
first impressions may be difficult to reverse. Applicants are more likely to accept positions
in organizations that share their values and style.

These considerations lead to the important issue of how organizations communicate
their values to potential job applicants. The examples that follow indicate how organizations

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communicate their values and why they should be considered an “employer of choice.”
Consider the following recruitment message for WakeMed, a large health system in Raleigh,
North Carolina:

At WakeMed Health & Hospitals, we are guided by a simple—yet powerful—mission:
to improve the health and well-being of our community by providing outstanding and
compassionate care to all. To deliver on this mission, WakeMed employs the “best
minds and the biggest hearts” in the business. Our team comprises a group of talented,
passionate professionals whose commitment to WakeMed is all about putting patients
first. We promote a diverse workforce and are proud to offer competitive salaries, com-
prehensive benefits, educational opportunities and flexible schedules that allow our
employees to excel personally and professionally. We think it’s pretty simple—we care
for our employees and our employees care for the community. (WakeMed 2017)

The Cleveland Clinic focuses on joining “a culture that encourages excellence”:

Healthcare is evolving, and Cleveland Clinic is transforming healthcare—pushing the
limits and paving the way to establish new practices and set new standards. We believe
in moving away from the physician-centric model of care and instead putting the patient
at the center of everything we do. We are developing the most innovative patient experi-
ences with our constant investment in continuing education and leadership development
programs. (Cleveland Clinic 2017)

On its main recruitment page, the Mayo Clinic emphasizes that “as a Mayo Clinic
nurse, you will become a vital member of a dynamic team at one of the world’s most
exceptional health care institutions. You will also discover a culture of teamwork, profes-
sionalism and mutual respect, and—most importantly—a life-changing career” (Mayo
Clinic 2017a).

Emory Healthcare promotes itself to prospective employees in this simple but pow-
erful message:

At Emory Healthcare, we bring the science side and the human side together to change
the face of health care. Our team members are courageous individuals who are willing
to challenge the status quo and help find solutions to complex problems. They are
empowered to influence change for, and with, our patients, their families, the community
and each other. As one of the leading academic medical systems, Emory Healthcare
is eager to share what we learn with hospitals around the country, and the world, to
define a new standard of care for humankind. We believe that, ultimately, we’re all in
this together. Are you ready to join us? (Emory Healthcare 2017)

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F u n d a m e n t a l s o f H u m a n R e s o u r c e s i n H e a l t h c a r e1 1 8

Kaiser Permanente (2017a) emphasizes that “diversity, inclusion, and culturally
competent medical care are defining characteristics of Kaiser Permanente’s past, present, and
future,” noting its obligation “to create a diverse and inclusive environment that encourages
our employees to reach their full potential.”

Organizations promote themselves as good places to work by appealing to a variety
of employee needs, interests, and values. Understanding the factors that affect job choice is
central to developing effective recruitment strategies. It is valuable to distinguish between
individual characteristics and job characteristics.

Individual characteristics are personal considerations that influence a person’s job
decision. The factors that lead a family physician to accept employment with a rural health
center may be distinct from those that lead a nurse to accept employment with an urban
teaching hospital. Life and career stage may affect the relative importance of these factors.
Job characteristics may include such job-related decision-making factors as compensation,
challenge and responsibility, advancement opportunities, job security, geographic location,
and employee benefits. It is difficult for an organization to create the “perfect” job because
no two individuals are the same in their individual characteristics and job preferences (see
“Critical Concept” sidebar).

Compensation and benefits (discussed more fully in chapter 8) are often key elements
in an individual’s decision to accept a position. For some healthcare positions, compen-
sation is complicated by differential pay rates, hiring or signing bonuses, and relocation
assistance. Hot-skill premiums—temporary pay premiums added to base pay for employees

with in-demand skills—have become particularly
common in healthcare, although premiums usually
remain in place even after market pressures ease.
These premiums may be structured in a number of
ways, including incorporating the premium into
the individual’s salary, providing a hiring or annual
bonus, and slotting an employee into a higher
salary range than is usually warranted for that job
(Berthiaume and Culpepper 2008; Mercer 2014).

The relative importance of compensation
to employees is complex. Under certain circum-
stances, employees may leave an organization for
another to obtain only a small incremental increase
in compensation. In other cases, employees may
stay with an organization even when offered a gen-
erous improvement in compensation by another
organization.

The amount of challenge and responsibil-
ity inherent in a particular job is frequently a key

individual

characteristics

Personal

considerations that

influence a person’s job

decision.

job characteristics

Job-related decision-

making factors such

as compensation,

challenge and

responsibility,

advancement

opportunities, job

security, geographic

location, and employee

benefits.

CRITICAL CONCEPT
The “Perfect” Job

Is there a “perfect” job? Rarely. When a person accepts a

job, the person always makes compromises and trade-offs.

For example, the organization may not be able to meet an

applicant’s initial expectations for pay, but professional de-

velopment and career opportunities may offset the lower sal-

ary enough to make the job seem worth accepting. A parent

concerned about childcare responsibilities may reject an offer

of an otherwise perfect job because the two-hour daily com-

mute places undue stress on the child and parents. Employ-

ers and applicants must be aware of the multiple factors that

go into a job acceptance decision and the weight placed on

each of these factors.

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C h a p t e r 5 : R e c r u i t m e n t , S e l e c t i o n , a n d R e t e n t i o n 1 1 9

job choice factor; professionals typically seek positions that put their training to best use.
Many applicants value jobs with advancement and professional development opportunities;
however, there are often limited opportunities for clinical staff to advance while continuing
to do clinical work. Advancement opportunities for technically trained individuals may be
limited to management positions. For some individuals, taking on management respon-
sibilities may lead to feelings of loss of their professional identity. Even more important is
the fact that clinically trained people often do not have the required management skills to
work in a managerial capacity. The clinical nurse specialist (CNS) position is an example of
how nursing has sought to retain nurses in clinical positions while offering career growth
and professional development (see “Did You Know?” sidebar).

Job security is clearly an important determinant of job choice. The current healthcare
and business environment is characterized by great uncertainty, in part due to organizational
change including mergers, acquisitions, and downsizing. Fear regarding job security was once
limited largely to blue-collar workers, but today professionals and managers also feel at risk.

DID YOU KNOW?
Clinical Nurse Specialists

Clinical nurse specialists (CNSs) are advanced practice nurses (APNs) who hold a mas-

ter’s or doctoral degree in a specialized area of nursing practice. Their area of clinical

expertise may be in

• a population (e.g., pediatrics, geriatrics, women’s health),

• a setting (e.g., critical care, emergency room),

• a disease or medical subspecialty (e.g., diabetes, oncology),

• a type of care (e.g., psychiatric, rehabilitation), or

• a type of health problem (e.g., pain, wounds, stress).

In addition to the conventional nursing responsibilities that focus on helping pa-

tients prevent or resolve illness, a CNS’s scope of practice includes diagnosing and

treating diseases, injuries, and disabilities within the individual’s field of expertise.

Clinical nurse specialists provide direct patient care, serve as expert consultants for

nursing staff, and take an active hand in improving healthcare delivery systems. Re-

search has demonstrated that the work of clinical nurse specialists has been associated

with reduced hospital costs and length of stay, reduced frequency of emergency room

visits, and fewer complications among hospitalized patients.

Source: Adapted from National Association of Clinical Nurse Specialists (2017).

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F u n d a m e n t a l s o f H u m a n R e s o u r c e s i n H e a l t h c a r e1 2 0

Geographic location and other lifestyle concerns may be highly important to appli-
cants, particularly for individuals in dual-income families, in which the potential for spouse
employment may play a significant role in acceptance decisions.

Employee benefits continue to grow in importance in job acceptance. In some highly
competitive fields, many companies have moved beyond traditional benefits, such as health
insurance and vacation pay, into such areas as membership in country clubs or health clubs,
on-site day care, and financial counseling. However, given a US healthcare environment facing
increasing financial pressures, it is likely that employee benefits will be reduced in coming years.

Exhibit 5.1 illustrates how three hypothetical job applicants may assess the relative
importance of particular job features. Although the table oversimplifies the job choice
process, it shows how personal preferences and life circumstances may affect job choice.
The first column briefly describes each applicant. The second column states each applicant’s
minimum standards for acceptance along four dimensions: pay, benefits, advancement
opportunities, and travel requirements. These four dimensions are sometimes categorized
as noncompensatory standards. That is, no other element of the job can compensate if these
standards are not met; they are deal breakers. Column 3 is a description of a hypothetical
job being considered by the job applicant. After looking at the minimum standards for job
acceptance (column 2), consider how each of the three applicants would assess the accept-
ability of the particular job. For example, person 2 views health insurance as an absolute
requirement for acceptance, and person 3, who does not like to travel, will be unlikely to
accept a job that requires substantial travel, regardless of anything else.

t h e r e C r u i t m e n t p r O C e s s

The human resources plan should provide a foundation of information for recruitment.
A human resources plan includes specific information about the organization’s strategies,
the range of jobs required by the organization, core organizational values, and recruitment
and hiring practices. Those involved in recruitment and selection must have a thorough
understanding of the position that needs to be filled, the position’s required competencies,
and its relationship to other positions in the organization. A recruitment effort should begin
with a job analysis that provides information about the job and required qualifications (job
analysis and job design are discussed in chapter 4).

Recruitment requires an assessment of the external environment, specifically informa-
tion about the supply of potential applicants, and a market analysis that provides information
about compensation and benefits for people who hold similar jobs in other organizations.
Many organizations obtain this information through wage and salary surveys. It is also
important to review the results of previous recruitment efforts. Have they been successful?
What have been the major obstacles faced in identifying and hiring qualified applicants?
External recruitment sources, such as colleges, competing organizations, professional asso-
ciations, and social media should be assessed to determine whether they have yielded suc-
cessful candidates in the past. Logistical issues may also be examined, such as the timing

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Applicant
Minimum Standards
for Job Acceptance Job Description

Person 1:
23 years old,
single

Pay: At least $40,000

Benefits: Medical insurance; retire-
ment savings plan

Advancement opportunities: Very
important

Travel requirements: Unimportant

Job: Provider relations coordinator

Pay: $45,000

Benefits: Medical and dental insur-
ance with relatively high deductible;
optional vision insurance; basic and
supplementary life insurance; short-
and long-term disability coverage;
retirement savings plan with employer
matching

Advancement opportunities: Recruit-
ment done internally and externally

Travel requirements: Average 25
percent travel

Person 2:
Sole wage
earner for
large family

Pay: At least $70,000

Benefits: Medical and dental insur-
ance; optional vision insurance; basic
and supplementary life insurance;
short- and long-term disability cover-
age; retirement savings plan with
employer matching

Advancement opportunities: Very
important

Travel requirements: Prefers not to
travel more than 25 percent of the
time

Job: Healthcare consultant

Pay: $68,000

Benefits: Medical, dental, and vision
insurance with low deductibles and
copays; basic and supplementary life
insurance; short- and long-term dis-
ability coverage; retirement savings
plan with employer matching

Advancement opportunities: Strong
history of promotions within one year

Travel requirements: Average 50
percent travel

Person 3:
Spouse of
high-wage
earner

Pay: At least $35,000

Benefits: Unimportant

Advancement opportunities:
Unimportant

Travel requirements: Difficulty travel-
ing more than one week per year

Job: Academic medical center re-
search assistant for multisite clinical
trial

Pay: $45,000

Benefits: Medical, dental, and vol-
untary vision insurance; basic and
supplementary life insurance; short-
and long-term disability coverage; re-
tirement savings plan with employer
matching

Advancement opportunities: None

Travel requirements: Three days per
quarter to meet with other research
site personnel

exhiBit 5.1
Three Hypothetical
Applicants

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of a recruitment effort; for some positions, seasonal factors are relevant, such as the time
of graduation from nursing school (Rossheim 2017).

As part of planning for recruitment and reviewing past recruitment efforts, additional
questions include the geographic scope of the search. Will this job require an international
search, or will the local labor market suffice? Or is it possible to recruit an individual from
inside the organization, or a previous job applicant? For internal searches, an updated human
resources information system (HRIS) can provide helpful information. Many systems include
information described in exhibit 5.2. A skills inventory database maintains information on
current employees’ performance records, skills and certifications, educational background,
training completed, seminars attended, work history, and other job-related data. Such a
database is useful for many HR functions, including broadening the pool of applicants and
succession planning. (Succession planning, discussed in chapter 6, is particularly critical for
higher-level employees.) Some organizations use personnel replacement charts, which show
the current position and promotability for each position’s potential replacement. In addition,
former employees who left under favorable conditions are increasingly a source of recruit-
ment, and evidence shows that such “boomerang” employees who come back after time away
bring unique strengths to an organization, including familiarity with the organization and its
culture, while also bringing new ideas and experiences to the workplace (Browne 2016). They
may also send an implicit message to current employees about the desirability of the work
environment (Green 2009). Organizations should also maintain records of applicants who
were not hired in the past because they may be qualified for positions that arise in the future.

Recruitment and selection can be costly, and we often do not consider the wide
range of expenses associated with hiring. For a single position, the cost may be equivalent
to, and in some cases may exceed, the position’s annual salary. As a result, it is important to
measure the efficiency of the recruitment process. Exhibit 5.3 shows measures for assessing
the effectiveness and efficiency of the recruitment process. Each of these measures varies

human …

3

The purpose of this book is to help the reader make career choices based on the
best available evidence. We want to share with you the knowledge and informa-
tion required to either enter the field of healthcare management or, for those
already working in healthcare, move into increasingly responsible and complex
roles. Additionally, we wish to give the reader a sense of the breadth and depth
of career opportunities available in the field of healthcare management. Because
of the inherent limitations of this book, we will not be able to provide the reader
with specific, personal advice and guidance. For that, we recommend that per-
sons needing this information contact the program director of their local cer-
tified undergraduate or accredited graduate program. Before diving into the
specifics of the education and process for finding a job in healthcare, we should
take a few minutes to define what we mean when we say healthcare manage-
ment, and share some perspectives about the breadth and depth of opportunities
in the field.

As of the writing of the second edition of 101 Careers in Healthcare
Management, healthcare remains the largest segment of the economy of the United
States. According to the Center for Medicare & Medicaid Services (CMS), $3.2
trillion was spent on health services in 2015 (CMS, n.d.). This figure represents
just under 17.8% of the total gross domestic product (GDP) or $9,990 per capita.
Our level of spending on health services is the highest of any nation. Where does
this money go? Again, according to CMS, in 2015 we spent $1.02 trillion on hos-
pital services; $640 billion on physician and other clinical services; $96 billion on
other professional services including physical therapy, optometry, chiropractic and
other similar services; $128 billion on dental services; $320 billion on prescription
drugs; $64 billion on durable medical equipment; $157 billion on long-term care;
$89 billion on home health services; $163 billion for other health, residential, and
personal care services; and $59 billion for other nondurable medical products. The
remainder includes expense categories such as governmental administration for
programs like Medicare and Medicaid, net cost of commercial health insurance,
public health activities, and investment in research (CMS, n.d.).

Three trillion two hundred billion dollars is an enormous sum and it begs the
question—who gets all this money? Most of the money spent on health services
funnels into various types of organizations—all of which require professionally
trained and experienced managers and administrators. While there are a number
of physicians and other clinical practitioners who remain in solo or small group
practices (and this number continues to shrink annually), the vast majority of
health services and supporting structures are housed in small, medium, and large

C H A P T E R 1
INTRODUCTION TO HEALTHCARE
MANAGEMENT

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AN: 1623843 ; Leonard H. Friedman, PhD, MPH, FACHE, Anthony R. Kovner, PhD.; 101 Careers in Healthcare Management
Account: s4264928.main.eds

4

I Over view of Healthcare Management

organizations. Table 1.1 gives the reader a sense of the number of different health
service organizations in operation in 2015.

These numbers do not account for all the federal, state, and local governmen-
tal health service organizations, associations, retail pharmacies, and individuals
working as independent contractors. Taken in the aggregate, healthcare is a very
big business with multiple lines of service and support. As a result of all these dif-
ferent parts to the healthcare industry, the reader will frequently hear the term
“health sector” used, which is just another way of expressing the sum total of the
various firms and organizations that either directly or indirectly touch on the
delivery of health services to the individual patient.

WHAT IS HEALTHCARE MANAGEMENT?
So, what exactly is healthcare management, and what is it that healthcare manag-
ers do? For the purposes of this book, let us stipulate that healthcare management
is the practice and application of business management principles within the con-
text of health sector organizations. Note that here, healthcare management does
not propose to manage the health of individuals or communities. We are not refer-
ring to clinicians who treat and manage illness and disease. Rather, our focus is on
the management of the various forms of organizations that are part of the health
system. It is important to note that the practice of healthcare management will
differ depending on which part of the health sector we happen to be examining.
While the core principles of management are the same, there are critical differ-
ences in the way in which management is practiced depending on the mission,
design, and operation of the organization.

By way of illustration, let us compare and contrast the essential management
challenges faced by a not-for-profit hospital and a small, mid-size commercial
health insurance company. We will assume that the two organizations generate the
same amount of revenue each year—the hospital through the provision of patient
services, and the insurance company through the sales of insurance to individu-
als and employer groups. Both of these organizations face similar challenges in

TABLE 1.1 NUMBER OF HEALTH SECTOR ORGANIZATIONS IN 2015

Type of Organization Number

Community hospitals 5,627

Physician practices/clinics 730,366 physicians in group practices

Long-term care 45,600 nursing homes and assisted living

Health insurance companies 857

Pharmaceutical manufacturers 263

Healthcare consulting firms Thousands of large and small firms

Healthcare-related associations Thousands of associations of all sizes

Medical equipment manufacturers 735

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5

1 Introduction to Healthcare Management

making enough money to cover all short- and long-term expenses; attracting and
retaining high-quality employees; competing with similar organizations in their
market; assuring that technology is up to date; and staying current with federal,
state, and local governmental regulations. While similar in many respects, there
are a number of critical differences that make managing hospitals and health
insurance companies particularly complex. The hospital operates as a not-for-
profit firm (the most common structure among hospitals in the United States), and
while they are exempt from paying most taxes, they must provide a level of com-
munity benefit equal to the amount of money not paid in taxes. The hospital gets
reimbursed for services by multiple payers, who typically pay a different rate for
the same service. In many cases, the primary knowledge workers in hospitals (phy-
sicians) are not employed by the hospital and are, therefore, not under the direct
control of the hospital management. Finally, for hospitals that operate emergency
departments (EDs), federal legislation requires that the hospital evaluate and sta-
bilize every patient who enters the ED regardless of their ability to pay. The health
insurance company most likely operates as a for-profit firm that pays all applicable
taxes. All of the key knowledge workers (sales staff, underwriters, claims, customer
service representatives, et al.) are directly employed by the organization. If some-
one wants health insurance, they must pay the monthly premium and if not, the
insurance is canceled. The point to this single example is to illustrate that while
hospitals and health insurance firms both occupy important parts of the health
sector, the administrative and managerial demands on both of these organizations
have important differences.

WHAT IS THE ROLE OF THE HEALTHCARE MANAGER?
Healthcare managers are responsible for carrying out the administrative and
managerial functions of their respective organizations. On a macro level, we can
think of managers occupying entry level, middle, and senior/executive manage-
ment positions. There is an immense amount of literature on what managers do,
but for the purposes of this book, we turn to the work of Dr. Henry Mintzberg
for a brief examination of managerial roles. This is not the only structural analysis
available, but in our assessment, this set of role definitions works well for health
sector organizations. According to Mintzberg, all managers fulfill three main roles
with multiple subroles under each one (Mintzberg, 1989). These roles and subroles
are as follows:

Interpersonal Roles Informational Roles Decisional Roles

Figurehead
Leader
Liaison

Monitor
Disseminator
Spokesperson

Entrepreneur
Disturbance handler
Resource allocator
Negotiator

Each of the roles involve the following activities (Mind Tools, 2017).

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6

I Over view of Healthcare Management

Interpersonal
The managerial roles in this category involve providing information and ideas.

Figurehead
Leader
Liaison

Informational
The managerial roles in this category involve processing information.

Monitor
Disseminator
Spokesperson

Decisional
The managerial roles in this category involve using information.

Entrepreneur
Disturbance handler
Resource allocator
Negotiator

In the final analysis, managing is about getting the work of the organization
done through the efforts of other people. Highly effective health sector managers
understand that in order to do their job properly, two conditions must be met.
The first is a thorough knowledge and understanding of the industry and the
work involved. For example, a person charged with managing the implementation
of a health information technology (IT) system must be well versed both in the
technical aspects of IT and the nuances of healthcare. The second condition (and
perhaps the most important) is the ability to activate each of the roles indicated
by Mintzberg with all of the stakeholders in the organization in order to achieve
the desired results—in this case, a successful IT implementation that satisfies
the needs of the end users. Stated another way, successful healthcare managers
understand and embrace the principle that when distilled to its essence, health-
care is inherently a people business. The only way that entry-level, middle-, or
executive-level managers accomplish their work is through outstanding relation-
ships with persons throughout their organizations and others including patients,
family members, payers, suppliers, regulators, governmental officials, the media,
and uncounted others.

There is a large and growing demand for health sector managers and admin-
istrators. The Bureau of Labor Statistics stated that there were 333,000 persons
employed in the field as medical and health service managers in 2014, and that the
job outlook for the period 2014 to 2024 was faster than average (U.S. Department
of Labor, 2015). The median annual pay for medical and health service managers
in 2016 was $96,540. Taken in the aggregate, there is a high level of demand for
skilled and dedicated persons who wish to make a tangible difference in making
high-quality healthcare accessible to persons across the country.

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7

1 Introduction to Healthcare Management

Given the results of the presidential election in November 2016, there is a
great deal of uncertainty regarding the viability of the Patient Protection and
Affordable Care Act (ACA) and what this will mean to health sector organiza-
tions. While many questions remain at this time, there is no doubt that people will
continue to seek out health services, and it is up to healthcare managers to operate
their organizations in a manner that provides safe and effective care.

The upcoming chapters focus on a brief history of healthcare management,
the education required for a career in healthcare management, how to find the
right job in the field, and the critical competencies in preparation and profession-
alism. We conclude this book with some thoughts about the competencies that
healthcare leaders will need for an uncertain future. We invite you to join us on
this exciting journey of discovery.

REFERENCES
Bureau of Labor Statistics, U.S. Department of Labor. (2015). Medical and Health Services

Managers. In Occupational Outlook Handbook, 2016–17 Edition. Retrieved from
https://www.bls.gov/ooh/management/medical-and-health-services-managers.htm

Center for Medicare & Medicaid Services. (n.d.). Historical. Retrieved from https://
www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/
NationalHealthExpendData/NationalHealthAccountsHistorical.html

Mind Tools. (2017). Mintzberg’s management roles. Retrieved from https://www.mindtools
.com/pages/article/management-roles.htm

Mintzberg, H. (1989). Mintzberg on management. New York, NY: The Free Press.

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9

Chapter 1 gave you a good sense of wh at healthcare management is and what it is
that healthcare managers do. Before examining education for the profession and
recommending strategies to find a job in the field, it is worth taking a bit of time to
look back at the history of healthcare management as a career.

The early days of healthcare management coincided with the growth of hos-
pitals, and transformation of medical practice into a science-based activity. Up
until the later 19th century, hospitals were typically institutions where cure was
infrequent and death was commonplace. For example, the first voluntary hospi-
tal in the United States was established in 1751 at the Pennsylvania Hospital to
care for the sick and poor. A condition of admission to the Pennsylvania Hospital
was the requirement of patients to scrub floors and serve food to others. Patients
who had adequate personal resources were cared for at home by private physi-
cians and rarely, if ever, set foot in a hospital. Hospitals were typically “man-
aged” by physicians (often whose clinical skills had diminished), nurses, or the
clergy.

By the late 19th century, several important scientific discoveries and advances
in medical practice began to transform hospitals into the organizations we see
today. Antiseptic technique and developments in anesthesia simultaneously
reduced the incidence of infection and allowed surgery to be performed without
inducing needless pain and suffering. Coupled with this was the professionaliza-
tion of nursing that began in 1873, with the opening of three schools of nurs-
ing in New York, New Haven, and Boston (Starr, 1984). Along with these and
other developments was the release in 1910 of the Flexner Report. This report was
important in that it called for the uniform training of physicians and reduced the
number of proprietary medical schools (Starr, 1984). The net effect of implement-
ing the Flexner Report was to reduce the number of physicians in practice, but
assure patients and state licensing boards that all physicians had a similar depth
and scope of educational preparation.

As clinical care improved, hospitals began to shift away from providing almost
exclusively charity care toward a model where patients were asked to pay for their
care, resulting in hospitals starting to be run as a business. This change required
a group of workers not previously seen—administrators and managers arranged
in a bureaucratic structure. Day-to-day control of the hospital shifted from physi-
cians and members of boards of trustees to professional managers. Concurrent
with the growth of professional management was the significant increase in the
number and size of hospitals. In the period between 1875 and 1925, the number of

C H A P T E R 2
A BRIEF HISTORY OF HEALTHCARE
MANAGEMENT

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10

I Over view of Healthcare Management

hospitals in the United States grew from just over 170 to about 7,000, and the num-
ber of hospital beds increased from 35,000 to 860,000 (Rosner, 1989). In 1933, the
American College of Hospital Administrators (ACHA) was founded to represent
the professional interests of this growing number of hospital administrators. In
1985, ACHA was rebranded as the American College of Healthcare Executives
(ACHE), in part to reflect the fact that there were many persons practicing health-
care management outside of the hospital setting.

Over the past two decades, we have witnessed an important shift in the pro-
fession and practice of healthcare management. While the profession has its roots
in hospital administration and hospitals continue to employ large numbers of clini-
cal and nonclinical staff in administrative and managerial roles, hospitals are not
the only venue at which healthcare managers practice. As noted in Chapter 1,
we use the term “health sector management” to draw attention to the variety of
organizations that are either directly or indirectly involved with providing care to
patients—the focal point of our healthcare system. For our purposes, let us catego-
rize the health sector into units as shown in Table 2.1.

Excluded from this categorization are practitioners who work in solo practice
or small groups. This includes most dentists and therapists (physical and occupa-
tional). Also excluded are individual consultants or any other health sector profes-
sional who works outside of a “traditional” organizational setting.

It should be noted that within each of the organizations mentioned, there
are multiple types and variations. For example, long-term care includes, but is not
limited to, organizations such as nursing homes, assisted living, adult day care,
home health care, and hospice. Public health includes organizational forms such
as county health departments, the U.S. Public Health Service, Centers for Disease
Control and Prevention, Indian Health Service, and many others.

The point to this discussion is that healthcare management has undergone
a profound transformation since Benjamin Franklin founded the Pennsylvania

TABLE 2.1 HEALTH SECTOR ORGANIZATIONS

Delivery Organizations Direct Support
Organizations

Indirect Support
Organizations

Hospitals Health insurance Regulatory agencies

Physician group practices Health information
technology

Universities and other
educational programs

Long-term care Consulting firms Executive search firms

Federally qualified health
centers

Pharmaceutical
manufacturing and sales

Research and
development

Public health Durable medical equipment Healthcare associations

Mental (behavioral) health Biotechnology firms

Military health and the
Veterans Administration (VA)

Correctional health

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11

2 A Brief History of Healthcare Management

Hospital in 1751. The diversity and complexity of organizations connected at
some level to the delivery of care to the patient require highly professional and
competent management. The subsequent chapters detail what is required in
terms of educational preparation and the personal attributes crucial for success
in this field.

REFERENCES
Rosner, D. (1989). Doing well or doing good: The ambivalent focus of hospital administra-

tion. In D. Long & J. Golden (Eds.), The American general hospital: Communities and
social contexts (pp. 157–169). Ithaca, NY: Cornell University Press.

Starr, P. (1984). Social transformation of American medicine. New York, NY: Basic Books.

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