Who Are the Players in Healthcare Delivery?

Chapter 3

Components of the
Healthcare Delivery System

3.1 Introduction
The structure of healthcare delivery is composed of an array of organizations and professionals, each of whom brings value to the ultimate outcome
of medical care. Healthcare is a “local business,” and as such, this sector of
our society and economy is impacted by the fragmentation of a wide array
of unconnected providers and payers. This fragmentation brings a number
of challenges to healthcare delivery and outcomes. We address these in this
chapter, but, first, let us reach an understanding of the central players who
provide medical care.
When we think of healthcare providers, hospitals and doctors come to
mind. However, there are many other providers of healthcare (long-term nursing homes, home healthcare, diagnostic services, rehabilitation, ambulatory
care, mini-clinics, mental health and substance abuse programs, etc.). Over
the past decades of the expansion of managed care, healthcare providers
have, on a local or regional level, aggregated into various types of “integrated
delivery networks” in order to position themselves for more balanced managed care contracting, to retain and expand market share and, for some, to
grow in size to support and own managed care functions.
We first discuss the types of providers and provider organizations that are
available and then look at the integration of those providers in chapter 4.
25
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26    Healthcare Delivery in the U.S.A.: An Introduction

3.2 Who Are the Players in Healthcare Delivery?
3.2.1 Healthcare Providers: Inpatient or Outpatient?
Healthcare providers are often classified according to the type of care they
provide or, considered from another perspective, by the condition of the
patients they serve. Providers classified to be of “acute care” are those who
provide “medical services for persons with or at risk for acute or active
medical conditions in a variety of ambulatory and inpatient settings” (1). In
other words, acute care encompasses services that meet serious episodic
needs, such as those arising from injuries and diseases that are subject to
cure through surgical, pharmaceutical, or other therapeutic approaches.
Acute care is provided, as Jonas and Kovner suggest, in the inpatient or
ambulatory setting. Distinction between these two settings might best be
described in terms of the patient: in the inpatient setting, the patient stays
overnight; in the ambulatory, or outpatient, setting, the patient does not stay
overnight — he or she walks (or ambulates) in and out of the medical care
venue on the same day. Inpatients undergo more intensive round-the-clock
medical care until their discharge from the hospital.
Due to the scientific and procedural advances of the past several decades
(discussed in chapter 1), many procedures that once required inpatient admission to a hospital are now performed in the ambulatory arena. Laser surgery
and endoscopy, for example, have allowed physicians to perform minimally
invasive procedures with local anesthetics. The patient is able to recover comfortably and safely at home after undergoing surgery in which the physician
used very small incisions. Thus, increasing numbers of surgical procedures
have moved from the inpatient to the outpatient, or ambulatory, setting.

3.2.2 Scope and Size of Hospitals
Hospitals range in size from the very small to the major academic medical
centers and government-owned facilities that may primarily serve indigents
or other population groups. In all, there were 5,747 hospitals in the United
States in 2006. These are operated as community hospitals, federal government hospitals, nonfederal psychiatric hospitals, nonfederal long-term care
hospitals and units of institutions, such as prisons and college infirmaries
(Table 3.1).
Hospitals are typically categorized by the number of beds they are
licensed to operate and, in a secondary measure, by the number of beds they

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Components of the Healthcare Delivery System    27

Table 3.1 Number of U.S. Hospitals: 2006
Total Number of All U.S. Registered* Hospitals

5747

Number of U.S. Community** Hospitals

4 927

Number of Nongovernment Not-for-Profit Community Hospitals

2919

Number of Investor-Owned (For-Profit) Community Hospitals

889

Number of State and Local Government Community Hospitals

1119

Number of Rural Community Hospitals

2001

Number of Urban Community Hospitals

2926

Number of Federal Government Hospitals

221

Number of Nonfederal Psychiatric Hospitals

451

Number of Nonfederal Long-Term Care Hospitals

129

Number of Hospital Units of Institutions
(Prison Hospitals, College Infirmaries, etc.)

19

*Hospitals that meet American Hospital Association criteria for registration as a
hospital facility.
**All nonfederal, short-term general, and other special hospitals.
Sourec: American Hospital Association. “Fast Facts on U.S. Hospitals.” Updated
October 2007. http://www.aha.org/aha/resource-center/Statistics-and-Studies/
fast-facts.html

have in operation, termed “staffed beds.” The distinction between licensed
and staffed beds relates to the fact that a hospital may not have all of its
licensed beds in use at any point in time. When a hospital experiences an
inpatient utilization level that is substantially below the licensed number of
beds it operates, it will tend to take some of the beds out of service. This
allows for improved operational and cost efficiency, and it allows the hospital to retain the right, under its license, to reopen beds if and when they are
needed. Figure 3.1 reflects the reduction in both numbers of hospitals since
their high number of over 7000 in the 1970s to less than 6000 in 2006. It also
offers a view of the number of beds in operation in the United States and the
sharp reduction in beds that has occurred since the highs of the 1960s. At
that time, the U.S. had approximately 1700 acute care beds per 1000 population. This ratio dropped to a low of about 900 per 1000 population.
Table 3.2 offers a listing of the number of hospitals in each state, U.S. territory, and the District of Columbia, the number of staffed beds, discharges,
utilization by patient days, and gross patient revenue for 2006. From this
chart, the reader can easily calculate the average length of stay (ALOS) in
each state by dividing patient days by total discharges. ALOS is an important statistic to hospital management because reimbursement by Medicare

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US Hospitals by Number and Bed Size: 1950–2006

8,000

1,800

Hospitals

6,000
5,000

1,400
1,200

Beds

1,000

4,000

800

3,000

600

2,000

400

1,000
0

Number of Beds (in thousands)

1,600

7,000
Number of Hospitals

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