Who are the Major Players in the US Healthcare System?

The US healthcare system is complex, with many different organizations and individuals playing important roles. Though the system has significant problems with cost, quality, and equity, major shifts over the past decade are leading healthcare organizations to focus more on keeping people healthy rather than just treating illness. Understanding the key players and their incentives is important for forming partnerships aimed at improving community health.

Key Providers

Hospitals

Hospitals are the single largest component of US healthcare spending, accounting for about one-third of total expenditures. The 5,100 acute care hospitals in the US include:

• 3,000 nonprofit hospitals
• 1,300 for-profit hospitals
• 800 government-run hospitals

Many hospitals today are part of large health systems that may also own physician practices, urgent care centers, home health agencies, and other facilities. This integrated structure helps funnel patients to hospitals within the system.

Physicians

About one-quarter of US healthcare spending goes to physicians. There are around 486,000 primary care doctors and 535,000 specialists, most of whom are employed by health systems on a salary basis rather than private practice.

Long-Term Care Facilities

Skilled nursing facilities, nursing homes, and other long-term care providers receive about 13% of healthcare expenditures. They care for the elderly and individuals not ready to go home after hospital discharge.

Prescription Drugs

Despite public perception, prescription drugs account for only about 9% of total US healthcare spending.

Public Health System

The COVID-19 pandemic put a spotlight on the vital role of the public health system. This includes government agencies like the CDC along with state and local health departments. The focus is on population health rather than individual care. Public health activities include health monitoring, research, community health assessments, immunizations, and health education.

Major Payers

Unlike most developed nations, the US does not have universal healthcare coverage. Instead, a mix of public and private insurance pays for care:

• Medicare – Federal health insurance for those over 65 and the disabled, covering 18% of Americans.

• Medicaid – Federal/state program covering low-income individuals. Expanded under the Affordable Care Act.

• Military Health System – Covers active duty personnel, families, and retirees.

• Indian Health Service – Care for Native Americans and Alaska Natives.

• Employer-Sponsored Insurance – Covers about 67% of Americans under 65.

• Individual Insurance – Purchased through ACA exchanges or private insurers.

• Uninsured – About 8.5% of Americans lack health insurance.

Insurers are increasingly incentivized to keep enrollees healthy rather than just pay for services. This is leading to payer initiatives around social determinants of health.

Safety Net Programs

For those who don’t qualify for Medicaid or other coverage, safety net programs exist including:

• Children’s Health Insurance Program (CHIP)
• Disproportionate share hospital payments
• Federally-qualified health centers

Shifting Incentives for Providers

Increasingly, hospitals and doctors are paid based on value rather than volume. This value-based reimbursement rewards better outcomes and cost-effective care rather than just providing more services.

For example, providers may get bonuses for quality metrics like diabetes control rates. They may be penalized for high readmission rates. Bundled payments for procedures are also becoming more common.

These changes encourage providers to look upstream at social determinants of health that affect outcomes. Health systems are investing billions into initiatives targeting issues like housing, nutrition, education, and transportation. Partnerships with community organizations can support these efforts.

The Social Determinants of Health

Research shows that only 20% of a person’s health relates to access to medical care. The other 80% is driven by social factors like income, education, housing, food access, and environment.

Given their financial incentives to control costs and improve community health, healthcare organizations are increasingly addressing social determinants. For example:

• 57 health systems invested $2.5 billion in community initiatives from 2017-2019. Over half focused on housing.

• 76% of hospitals partner with school districts and public health agencies.

• Medicare and Medicaid have programs funding community partnerships to address issues like housing instability.

Key Takeaways

• Hospitals, physicians, and payers like Medicare and commercial insurance drive most healthcare spending.

• Incentives are shifting from paying for volume to paying for value.

• This motivates providers to address social determinants of health through community partnerships.

• Major government programs also encourage initiatives to improve socioeconomic factors affecting health.

• Community organizations can benefit from understanding the key players in this complex system.

The healthcare landscape is changing to acknowledge that health encompasses more than just medical care. While the system still has major shortcomings, new incentives offer opportunities for impactful collaboration to build healthier communities.