IMPACT OF DRG'S ON

N SING

REPORT OF THE MIDWEST ALLIANCE IN NURSING

 

 

 

U.S. DEPARTMENT OF HEALTH C: HUMAN SERVICES
Public Health Serwce
HeoIth Resouvces and Services Administration

 

 

 

 

 

 

c .
PUBLIC HEALTH LIBRARY

 

BERKELEY

LIBRARY ' I

UNIVERSITY OF
CALIFORNIA

HEALTH RESOURCES
AND SERVICES ADMINISTRATION
\ “HRSA—Helping Build A Healthier Nation”

The Health Resources and Services Administration
has leadership responsibility in the US Public
Health Service for health service and resource is-
sues. HRSA pursues its objectives by:

0 Supporting states and communities in delivering
health care to underserved residents, mothers
and children and other groups;

0 Participating in the campaign against AIDS;

- Serving as a focal point for federal organ trans-
plant activities;

 

- Providing leadership in improving health profes-
sions training;

0 Tracking the supply of health professionals and
monitoring their competence through operation
of a nationwide data bank on malpractice claims
and sanctions; and

- Monitoring developments affecting health facil-
ities, especially those in rural areas.

 

 

LIMPACT OF DRG'S ON

 

NURSING

 

REPORT OF THE MIDWEST ALLIANCE IN NURSING”;

 

 

 

US. DEPARTMENT OF HEALTH (1 HUMAN SERVICES
Public Health Service
Health Resources and Services Administration
Bureou of Health Professidns
Division of Nursing

 

 

..';; IDEP‘OSITOR'Y

JUL 21 1988

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PMfiL

This report was prepared under purchase order number HRSA. 87—336(P)
from the Division of Nursing, Bureau of Health Professions, Health
Resources and Services Administration, U.S. Department of Health and
Human Services.

Division of Nursing Project Officer is Mary S. Hill, RN, PhD, Chief,
Nursing Education Branch.

this document is for sale by the National Technical Information Service,
5285 Port Royal Road, Springfield, VA 22161. Accession number: HRP—O907l78.
Issued: July 1988.

ii

R 7“

FOREWORD

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Cost containment efforts in the reimbursement of health facilities under

the prospective payment. system have contributed to changes in the Pug L
responsibilities and role of the nurse providing clinical care to

patients. However, accurate data have not been available to assess the

impact these changes were making on nursing practice and the subsequent
implications for undergraduate nursing education.

In an effort to obtain the needed data the Division of Nursing undertook a
major project with four regional professional nursing organizations. A
panel of experts from each region met at an invitational conference to l)
examine the impact that the implementation of diagnosis related groups in
the reimbursement of hospitals and community settings has had on clincal
nursing care in the region and, 2) to examine the implications of any
changes for undergraduate nursing education, especially in the clinical
area.

The four regional reports, containing monographs submitted by leading
nurse scholars within each region and the conclusions and recommendations
of the panels, are presented in separate publications. They are available
for purchase from the National Technical Information Service (5285 Port
Royal Road, Springfield, Virginia 22161) under the following titles and
accession numbers:

Impact of DRGs on Nursing: Report of the Mid—Atlantic Regional
Nursing Association (HRP—0907180)

Impact of bRGs on Nursing: Report of the Midwest Alliance in Nursing,
Inc. (HEP-0907178)

Impact of DRGs on Nursing: Report of the Southern Regional Education
Board (HRP—0907181)

Impact of DRGs on Nursing: Report of the Western Institute of Nursing
(HRP-0907179)

Through examining current clinical practice and proposing patterns for
changes in nursing education, the work of the regional groups will have
far reaching benefits for both users and providers of nursing care
services.

   

Division of.Nursing

iii

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mar:

Introduction 1
Project Tasks ' 1
Panel Deliberations 4
Recommendations 8
Papers :

Prospective Reimbursement for Health Care and the Clinical
Practice of Nursing in Hospitals
Janet C. Scherubel 11

The Impact of Prospective Payments Systems on Nursing Care
in Community Settings
Sandra R. Edwardson and Barbara V. O’Grady 60

DRGs——Implications for Undergraduate Nursing Curricula
Rosalee C. Yeaworth and Joyce Crutchfield 79

The Questionnaires: Nursing Practice and Nursing

Education 103
Appendix A: List of Participants 11].
Appendix B: Agenda 115

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Final Report

"Information Concerning the Impact of the Prospective Payment System (DRG’s) In the
Reimbursement of Hospitals, on Clinical Nursing Care both In Hospital and In Community
Settings" (RFP HRSA 87-338).

Introduction

In June, 1987, the Midwest Alliance in Nursing (MAIN), and the Western Institute for
Nursing (WIN), Mid Atlantic Regional Nursing Association (MARNA), and Southern Regional
Educational Board (SREB) received funds from the Division of Nursing, to gather ”Information
Concerning the Impact of the Prospective Payment System (DRG's) in the Reimbursement of
Hospitals, on Clinical Nursing Care both in Hospital and in Community Settings" (RFP HRSA 87-
338).

The purpose of this procurement was to gather regional data on the impact and
implications of DRG's on undergraduate curriculum and didactic nursing undergraduate courses.
Specifically, the regional organizations were to solicit three monographs one each from the
perspective of the hospital, the community. and undergraduate education. These papers were to
be considered working documents for an invitational panel of experts who represented hospital
and community agencies and schools of nursing from a particular region at a regional conference.
The panel members were to "examine the issues and point directions for change for didactic and
clinical undergraduate nursing education" specific to their region. Both the monographs and the
panel deliberations and recommendations were to be submitted to the Division of Nursing.

The following report summarizes MAIN's involvement in this project. The report is
divided into three sections.

Project Tasks: -- Overview of the process/methods used by MAIN to accomplish the
identified project tasks.

Panel Deliberations: -- Summary of the discussion and recommendations specific for
each monograph, i.e. hospital, community, and undergraduate education.

Recommendations: -- Presentation of the Panel members recommendations on the
impact of DRG's on undergraduate education in the MAIN region.

Project Tasks
In the procurement document, six tasks were identified to occur over a six month period.

Task 1 concerned meeting with the Project Officer in Rockville, Maryland to discuss the
scope of the project and to resolve issues project issues. In June, the Executive Director of MAIN,
along with the other regional Executive Directors, met to discuss such areas as the overall intent
of the project. selection criteria for the monograph writers and panel members, possible lorrnat for
the regional invitational panels, and utilization and dissemination of the generated materials.
Ideas were shared, project's intent clarified, and need for consistency in selection of monograph
writers and panel members acknowledged.

Task 2 required MAIN to identify and review available literature and other types of
information on the effect of Prospective Payment System (DRG's) in the reimbursement of
hospitals and community settings. MAIN focused primarily on non-nursing literature as the
nursing literature had been previously reviewed and was readily available. MAIN focused on

"case mix" systems in general, not only DRG's. This was done to broaden the perspective of the L
MAIN selected panel members.

The authors reviewed, focused on the relationship between DRG's and re-admission
rates and DRG's and placement of patients in community and long-term care facilities. Also.
articles were reviewed for comparisons between teaching and non-teaching hospitals as both are
placements for undergraduate nursing students.

in September, 1987, MAiN submitted to the Division of Nursing abstracts for 12 of the 28
articles it found most representative of the areas reviewed. Although there was redundancy
among the articles, few authors discussed how case mix systems developed for hospitals could
be used in community settings and vice versa. The impact of DRG's on education was
considered for medical education and teaching and non—teaching hospitals, but not for nursing
undergraduate or graduate education. Without direct references to nursing, MAIN was required
to draw inferences to nursing from the content in the articles. The literature review further
substantiated the need for the project and for identification of regional differences.

Task 3 referred to MAIN identifying three experts: each was to prepare a monograph on
one of the following three topics:

 

1. The impact of DRG's on Clinical Nursing Care in Hospital Settings;
2. The Impact of DRG's on Nursing Care in Community Settings, and
3. DRG's - Implications for Undergraduate Nursing Curricula.

To accomplish this task, MAIN's Executive Committee met and, with consultation from
other nurse leaders, identified knowledgeable individuals in the MAIN region as candidates for the
monographs. The Executive Committee agreed that monographs could be co-authored by
service and education agencies, whether MAiN members or non members: thus, expanding the
scope of the monograph and addressing the inter-relationship of DRG's in service and education
settings. Criteria used in the final selection were:

First hand knowledge of the content areas with ability to be far sighted and futuristic,
Ability to present written and oral ideas,

Ability to meet deadlines,

Commitment to present their monographs at the MAIN invitational panel, and
Representativeness across the MAIN states and from education and service
agencies.

9959!“?

The Executive Director of MAIN contacted the prospective writers, described the project,
assessed their willingness to participate and to meet deadlines, and solicited their resume's.
Monograph writers were offered an honorarium. The individuals selected for approval by the
Project Officer were:

Janet C. Scherubel, Ph.D., R.N., C.C.R.N., Northwestern Memorial Hospital, Chicago,
illinois -- The impact of DRG's on Clinical Nursing Care in Hospital Settings .

Sandra R. Edwardson, Ph.D., R.N., School of Nursing, University of Minnesota,
Minneapolis, Minnesota and Barbara V. O'Grady, MS, RN, Ramsey County Public Health
Nursing Service, St. Paul, Minnesota «The Impact of DRG's on nursing Care in Community
Settings

Rosaiee C. Yeaworth, Ph.D., R.N., F.A.A.N. and Joyce Crutchfield, Ph.D., R.N., College
of Nursing, University of Nebraska Medical Center — DRG's - implications for Undergraduate
Nursing Curricula .

Upon approval, MAIN made final contractual arrangements with the monograph writers.
Monographs were to be between 25-30 pages in length, double spaced, referenced, and
submitted one month prior to the invitational panel. Monograph writers were told these were
working documents for the panel members. Also the writers prepared an ”Executive Summary”
for distribution to the panel members. Two of the monographs were co-authored, which for the
community monograph showed collaboration between education and service and for the
education monograph, illustrated infra—agency collaboration. Drs. Yeaworth and Crutchtield
carried out a survey of representatives from MAIN member hospital and community agencies,
AACN Deans in the Midwest and selected University of Nebraska faculty on how DRG’s had
affected their institutions and educational programs.

Task 4 required MAIN to develop a formal agenda for the proposed invitational panel for
submission to the Project Officer. This task was completed in September, 1987. The networking
begun in Task 1 continued. MAIN contacted two of the other regional Executive Directors which
helped to validate concerns and issues regarding the project.

Task 5 was the convening of the panel of experts to react to the prepared monographs.

1. Selection of Panel Members: -- MAIN solicited names of candidates through the
project's announcement in MAINIines, MAIN's bi-monthly newsletter. The Executive Committee
identified possible members based on the criteria used to select the monograph writers. Those
selected were from diverse backgrounds, educationally, geographically, and professionally.

The list of MAIN's 15 panel members, which included the monograph writers, can be
found in Appendix A. The five panel members from hospitals represented a small rural county
facility in Iowa; two large urban university medical centers, one in Illinois and the other in
Michigan; a middle size religious affiliated acute care facility in Wisconsin; and a secular, not-for-
profit mid-size hospital in Indiana.

The four community panel members represented a large county facility in an urban area
in Minnesota; a visiting nurse association in Indiana; the state health department in Ohio, and the
Indian Health Service.

The six education representatives included two from diploma programs that were moving
toward baccalaureate education, located in Indiana and in South Dakota; one from a small private
college in rural Iowa; two from large university complexes, one located in Nebraska and the other
in Minnesota; and one from a systemwide community college associate degree program in
Missouri.

2. Panel Preparatlon for the Conference: -- Panel members received copies of the
monographs, The 1987 Evaluation and Update of the Staffing Criteria for the Criteria-based
Model, and by Robert M. Veatch prior to the Invitational Conference, held October 22-23, 1987,
Indianapolis, IN. The packet of materials panel members received at registration is included in
Appendix B. Panel members were asked to develop “Focus Questions" for each monograph and
to bring these questions to the conference. These questions were to be used by the moderator to
stimulate discussion and to ensure that all concerns were addressed.

Dr. Mary S. Hill, Division of Nursing, provided an overview of the project. Susan
Crissman, Chairperson of MAIN, moderated the opening session and Thomas E. Stenvig,
Secretary of MAIN moderated the working sessions.

3. Panel Actlvftles: -- During the opening session, the monograph writers summarized
their papers and raised pertinent questions/issues. After each presentation, panel members were

encouraged to raise questions and some general discussion ensued. At this point. the focus
questions were called for to enable the moderators to identify common interest areas and to
assess the general concerns of the members. Panel members requested that these be returned
to them for their use during the work sessions.

Each monograph was discussed in a two hour work session. Each session began with a
general discussion of the specific monograph with panel members addressing their identified
concerns. Then the group of 15 broke into two groups with members randomly assigned to a
group. This was done to stimulate discussion and to avoid set group membership. On one
occasion, the two subgroups were restructured to ensure a balance of community members.
Each work session subgroup selected a recorder who then reported back to the total panel when
the work sessions were reconvened after a 30 minute discussion period. The two recorders
summarized the discussion of their group, presenting themes and recommendations.

The summaries of the work sessions by monograph are presented in the section: Panel
Deliberations. When in subgroups. members concentrated on identifying recommendations,
implications. and directions for future study; whereas when in the larger work sessions, members
addressed global, non-specific issues.

Regarding the call for focus questions, only a few members shared their questions with
the panel members. However, it can not be ascertained whether the questions were used to
formulate other points of discussion brought forth by the individual members. In retrospect, these
focus questions should have been solicited prior to the invitational panel and collated for
presentation to the members.

After the work sessions on the second day, the panel members brain stormed on what
were the major recommendations and implications of the project for the midwest region and for
MAIN. These are presented in the section entitled: Recommendations. By the end of the second
day. the panel members were able to focus on specific recommendations and implications.

Panel Deliberations

As the work sessions progressed, panel members became more definitive and focused.
There was agreement that prospective payment. DRG's, had acted as the catalyst for the
necessary changes in education and clinical practice. DRG's brought into awareness the need
for all health professions to examine their existence and participation in health care.

The impact of DRG's on Clinical Nursing Care In Hospital Settings

Content highlighted for this monograph were the impact of DRG's on patient care and
nursing personnel, the approach of various disciplines to look at DRG's in isolation of other
disciplines, and the needed curriculum changes in public policy, organizational theory. and health
economic content. The lack of compatible data systems and access to system data on patient
care were barriers to obtaining data on patient care outcomes. DRG's were thought to influence
the current vertical integration of many health systems and differentiated practice in hospital
settings.

With the trend of shortened hospital stays and discharge of patients requiring extensive
followup. nurses need knowledge on case management and discharge planning. Such
knowledge and skill will diminish fragmented care.

Nurses employed in hospital settings need to negotiate complex systems. be boundary
spanners. and exhibit critical thinking. Although DRG's were not considered the cause of the
current nurse shortage. they were identified as contributing to its continuance.

From the work session subgroups on DRG's in Hospital Settings, the following influences
of DRG's on nursing and undergraduate education were identified:

1. Undergraduate education needs to teach students how to be clinically safe and
organizationally innovative.

2. The Characteristics of futuristic nurses include:
-- Collegial
-- Flexible
-- Conceptual thinker
-- Ethical
-- Empowered
-- Articulate
-- Risk taker
~- Good communicator
-- Priority setter
-- Caring
-- Committed to and beyond own setting

3. Basic skills and knowledge should relate increasingly to problem solving, decision-
making, public policy and economics. Implied in these suggestions was content that focused on
systems theory, management principles, personnel relations, and reimbursement systems.

4. The nursing ”system" must develop transition programs to assist new graduates in
assuming clinical roles. Preceptor and/or internship programs should be considered and
negotiated with nursing service personnel.

5. Employers need to create an environment that Supports Professional Authority in
Nursing (SPAN) and promotes empowerment of their nursing personnel.

6. Demonstration and collaboration projects between nursing education and nursing
service are needed to look at differentiated practice. Utilization of the Baccalaureate nurse as the
primary care giver and the Associate Degree nurse as the "associate" need to be studied.

The Impact of DRG's on nurslnq Care In Communltv Settings

The major emphases of the monograph on DRG's in Community settings were nursing’s
function as the caretaker, gatekeeper, case manager for the chronically ill elderly, and nursing's
input into developing cost effective care management systems. The lack of similarities in criteria
for reimbursement for in-patient and community care was considered a problem. The panel
members stated limited efforts existed to bridge the gap between in-patient and out-patient levels
of severity and/or acuity. However, it was thought that the concept of ”Managed Care”. even
though not truly understood, would dominate health care.

The panel identified the greatest challenge to community settings as that of efforts to
eliminate gaps in continuity of care. Members thought if both acute care and community
agencies focused on the PATIENT, rather than their internal needs and territorial boundaries,
systems that ensure continuity of care could be developed. To address this problem, some rural
facilities offer home health care and fee-for—service for nurses who do home visits. Also consortia
of nursing administrators are being formed to deal with problems in early discharge and continuity
of care.

The panel thought the influence of DRG's on community practice could be seen must
clearly in differentiated practice. The associate degree graduate was thought to provide
technical. clinical care; whereas, the baccalaureate graduate was identified as the case care
manager who would coordinate care and collaborate with other care providers. Panel members
questioned the assumption that the new graduate, as a "generalist“, could function in all settings.

Problems cited included limited and/or restricted student placements in nursing homes
and out-patient settings due to distance from parent institution and few nursing role models within
nursing homes and out-patient settings. Options in student placements varied for urban and rural
locations. ‘

From the work session subgroups on DRG's in Community Settings, the following
influences of DRG's on nursing and undergraduate education were identified:

1. Client-centered educational experiences that focus on long term care need to be
developed. Consideration should be given to student preference in clinical placement sites in the
senior year with geographical and clinical options.

2. Educators needed to be trained in
a. values conflict,
b. advocacy training for working toward adequacy of funding for nurses and for
clients,
c. communication skills that are necessary for those in pivotal nursing positions,
and ’
d. public policy advocacy.

3. Suggested methods of training educators included:
a. summer practicums in clinical settings used for student placements.
b. value clarification sessions with service and education personnel.
0. faculty workshops.
d. "creative development“ time for faculty.

4. There should be increased emphasis on collaboration and use of skilled clinicians.
Clinical staff would act as preceptors and, in turn, receive positions as adjunct faculty. Student
evaluations would be done by both faculty and clinical staff preceptors.

5. Differentiated practice in community settings would emerge in part due to funding
restrictions and decreasing nursing labor supply.

DRG's - implications for Undergraduate Nursing Curricula

Discussion of the monograph on education began with the survey of Deans and
Director's of AACN programs, selected faculty and nursing service personnel in the MAIN region.
The survey showed a perceived impact of DRG's on nursing curriculum and practice. Concern
was expressed that the survey contained limited information on Associate Degree and Diploma
programs. To address this concern, MAIN agreed to carry out a survey on these two educational
groups upon project completion.

During both the larger work group and work session subgroups for this monograph. the
panel members continued to clarify their perception of differences in the mral and urban health
care systems within the Midwest. There was identified a cluster of states with predominantly rural
care providers; and another state cluster dominated by urban health care centers. Given these
distinctions, it was thought student experiences differed and the influence of DRG's on curriculum
varied.

With the movement away from provider control to payer control with consumer buy in, the
consumer is not the individual patient but the corporation. Consequently, students will need
additional informationxgn the economics, health care financing, and public policy.

   
 

' reported state variations on reimbursement for student services. In Ohio
1‘ ent occurs; whereas in Minnesota and Nebraska this is non-existent. If

e student placements' still occurred in acute care facilities with episodic
ing experiences. Placements in long term care facilities were difficult given the low RN ratio
and high acuity rates in these settings.

 

Changes in the student/faculty advisory system were suggested. Faculty should be
consultants to students in order to decrease fragmented learning and to acknowledge individual
learning needs. Options for specialty concentration in the senior year should be considered.
More use of simulated learning and computer assisted learning was projected. Already some
programs are offering functional minors in business and/or management at either the
undergraduate or graduate level.

It was strongly felt that the biggest impact of DRG's was on baccalaureate and master's
education because of the need for additional content on organizations. systems, public policy and
economics. The implications for associate degree education was in the need for increased
technical skills. Again, comments were made that the baccalaureate student would have direct
clinical experience in community settings; whereas. the associate degree student was more likely
to have observational experiences. Within all settings students needed to be exposed to
"managed care" situations with faculty actively participating.

WIthin this context, the problems of student recmitment and retention were addressed.
Creative mechanisms are needed to attract students. Suggestions were 1) additional
independent study courses tailored to individualized learning needs, 2) tuition incentive programs
between the student and employing agency rather than between the school and the service
agency, and 3) promotion of nursing as a management profession. not as a task oriented
discipline.

From the work session subgroups on DRG's - Implications for Undergraduate Nursing
Curricula the following recommendations were made:

1. Emphasis on more, not less liberal arts content for generalists. Major curriculum
changes are needed that focus on continuity of care, cost containment. and management.
Innovative clinical experiences building on these changes in content and reflecting differences in
mral and urban health care issues need to be developed.

2. lntemship programs and/or preceptor programs after graduation. This concept raises
questions about accountability and reimbursement.

3. Demonstration projects to design, implement, and evaluate these proposed curriculum
changes and preceptor and/or internship programs occurring both pre and post graduation.

4. Emphasis on the short and long term economic viability of the nursing profession in
relation to its identification as a service provider.

5. Utilization of research by faculty and within clinical practice are needed to foster
problem—solving approaches within nurses.

6. lndividualization of curriculum to attract and retain students.

7. Validation of differentiated entry level skills of baccalaureate and associate degree
prepared nurses.

8. Promotion of collaborative relationships between service and education. Such
endeavors may include hospital/agency reimbursement for tuition, agency personnel sharing with
faculty the job functions students assume when employed as aides, technicians in clinical
placement sites, and service personnel, faculty, and students co-designing independent study
courses.

Recommendations

The panel members concluded their activities by developing the following
recommendations.

1. Contrasts exist in the Midwest between its urban cosmopolitan centers and rural
states. Both environments need to consider the Midwest's agricultural roots and the rising elderly
population living on farms, relocating to middle and large urban areas and currently residing in
urban areas.

2. The same implications and impact of DRG's on nursing education may not fit all areas
of the Midwest.

3. Geography and distances in the Midwest may promote different/new delivery modes.

4. Potential and viable areas of practice exist in the Midwest that meet the need for
community based programs that prepare practitioners who will care for the elderly population of
the future.

5. Competition exists in the Midwest because of maldistribution of nursing programs.
Similarly, profound differences in distribution of educational opportunities exist nationally.

6. Adequately planned and suppgrted student experiences should be considered in non-
traditional settings reflective of delivery models and regional demographics.

7. Compromise and innovation in education are essential if consumers (employers) of
new graduates are to be satisfied. Satellite and out—reach programs are just two methods to help
education and service meet their objectives.

8. Role models are needed to enhance social acceptability of CARING for less
acceptable, stigmatized groups. Mentorship is needed in these areas.

9. "Client” focused versus ”site” focused education is mandatory if students are to learn
about managed care, continuity of care and case management. Educational experiences should
decrease segmented teaching and episodic learning experiences, and foster a "gestalt" of
nursing. Students should be able to carry a caseload of patients throughout their education.

10. Within both traditional and innovative clinical experiences, students should be
consistently exposed to problem-solving and investigative approaches.

11. Rewards are needed for these new ventures and modifications in curriculum and
clinical experiences. Rewards should facilitate service and education collaboration and provide
incentives to individuals who modify traditional systems of nursing education. These rewards
include grant allocations for pilot studies, research, and demonstration projects that have an

educational focus. Also, nursing service and faculty personnel need sanctioned release time and
support services to develop and submit such projects to funding sources. A proactive approach
to support of educational collaborative programs is called for!

12. Nursing must be involved in the public policy process. Something comparable to
”pass through” should be developed to support education endeavors in community based non-
traditional settings. Concurrently, nursing public policy research should be funded.

13. Nursing must build on interprganizational, political, and collaborative networks to urge
consideration of a balance between clinical nursing research and educational research.

14. Nursing, as a crucial contributor to health care, needs to be acknowledged and
promoted. Innovative recruitment and retention programs both in service and education are
essential if nursing is to respond to the impact prospective payment and DRG's has had on the
profession. Without these efforts, there will not be students for the innovative curricula and
clinical placements advocated in this report.

The greatest influence prospective payment, DRG's, has had on nursing. is that it has
forced nursing to examine itself and to proactively respond with innovative options to re-
establish nursing as a valued contributor to health care. Prospective payment has brought into
conscious awareness that for nursing to survive, it must change. in addition, both undergraduate
fl graduate educators must change the curricula to reflect the impact of DRG's on hospital and
community service settings. Furthermore, a reassessment of funding priorities is needed to
assist service and education institutions in implementing the recommendations contained in this
report. Finally. DRG's are only one of the myriad of factors that has contributed to the current
and projected crisis in nursing.

 

 

 

 

Executive Summary

Prospective Payment for Health Care
and the

Clinical Practice of Nursing in Hospitals
{3

l

Prospective reimbursement for the costs of health care has
had far reaching effects on the hospital industry. Across the
country, the average length of stay in hospitals has decreased
and the growth of ambulatory services expanded dramatically.
Today the hospital environment may be characterized by a rapid
turnover of patients, increased levels of patient acuity, older
clients with multiple health needs, more efficient delivery of
services and early discharge requirements.

In response to the changing health care environment, nurses
individually and collectively have responded with restructuring
nursing service departments, and the development of new or
modified methods of nursing care delivery. Optimal productivity
in the delivery of care has become an expectation of all hospital
nurses. Nurses have assumed roles previously delegated to
others, as well as shedding many non-nursing responsibilities.
Nurse managers are increasing involved in the fiscal management
of hospital operations. Concerns for the balance between cost
and quality of care have led to increasing emphasis on quality
assurance monitoring and the establishment of standards of care.

In the future, health care will undergo even more changes.
Cost containment measures will continue and most likely increase.

Problems of access to care, and the quality of care delivered are

11

important emerging issues. The growth of multi-hospital systems
is expected to continue, and the need for extended care
facilities expand. Technology will affect all aspects of
hospital management from the development of sophisticated
information systems to the availability of new forms of
treatment. These changes will significantly affect the practice'
of professional nursing.

In order to practice in the new world of health care, nurses
must prepare for it. Educational preparation must be broad based
including the sciences, liberal arts, business, and clinical
practice. Advanced clinical skills are essential, but not
sufficient in and of themselves. Content on health care
financing is needed as cost containment strategies are recognized
and implemented throughout acute care institutions. Technical
skills in computer applications will be necessary to maximize the
use of sophisticated information retrieval systems.

Nurses must be prepared to establish strong, effective,
collegial relationships with all health care disciplines. It is
no longer possible to view the world from a vantage point of the
department of nursing alone. Total hospital operations has
become the focus of effective managerial decision making. In the
community nurses will participate in regional and national health
care planning and research, as well as the political process, to
establish guidelines for the safe, effective and efficient
delivery of care to the population. Nurses can become
influential in the decisions of health care delivery, however

preparation must begin today.

12

Prospective Reimbursement for Health Care
and the
Clinical Practice of Nursing In Hospitals

Janet C. Schembel, Ph.D., R.N., C.C.R.N.
Proiect Director

W.K.Ke|logg DRG Refinement Project
Northwestern Memorial Hospital
Chicago, Illinois

Two issues of importance to professional nurses at the present time are the impact of
prospective payment, based on diagnosis related groups (DRGs), on the clinical practice of
nurses in hospitals, and the widespread shortage of- nurses available to practice in hospitals.
While it is erroneous to assume that DRGs caused the nursing shortage, neither is it correct to
think resolution of the nursing shortage will solve the challenges presented by DRGs. These are
separate and distinct issues which occurred concurrently. The combination of these two factors
have had a tremendous impact on the nurse practicing in the hospital. This paper will focus on
the prospective payment reimbursement system and its effect on the practice of nursing in the
hospital.

Introduction

In order to examine the influence of prospective payment on nursing practice, it is useful
to review the impact of prospective payment on the hospital and the steps taken by acute care
institutions in response to prospective payment. Following this summary, an examination of
selected nursing actions instituted thus far will be described. With this background, a preview oi
the future health care environment provides direction for the development of strategies by which
nurses can prepare for the health care environment of tomorrow.

As the costs of health care escalated to a point in which yearly increases exceeded
general economic indicators, there was a clear need for action (Vladeck, 1984). Drawing from
the extensive work completed in New Jersey. the Health Care Financing Administration
established a new program for reimbursement of Medicare recipients. Prospective payment by
diagnosis related groups (DRGs) replaced the previous retrospective reimbursement methods.
Shaffer (1984) provides a succinct review of the development and implementation of DRGs.

The central tenet of prospective payment reimbursement is the shift from a retrospective
payment system, by which hospitals were reimbursed for the costs incurred in the delivery of
health care to that of a prospective reimbursement mechanism, in which fixed rates of payment
were established in advance. Under prospective payment, reimbursement rates, based on
diagnosis related groups. regional labor markets, and teaching programs are applied in advance
to health care services. In essence, regardless of the cost of services rendered, payment is set
in advance. While case review may lead to exceptions in certain cases, for example those
patients with unusually complex problems or extended hospitalizations (outliers), for the most
part. reimbursement is established based on prescribed formulas.

The restriction in payments serve as a strong incentive to hospitals to contain the costs of
treatment. If a patient is discharged prior to the standard length of stay or requires less costly
services, the hospital realizes additional income. If on the other hand, the patient experiences an
extended hospital stay or extensive therapeutic interventions. the hospital must absorb the
additional costs. Thus, there is tremendous pressure to provide efficient services in a minimal
amount of time. As Young (1986) notes, additional incentives are incorporated in the prospective

13

payment program including an emphasis on ambulatory services, with a concomitant decrease in
nonessential admissions, cost effective use of inpatient services, and specialization in those
areas most profitable.

Impact of Prospective Payment on Hospitals

The prospective payment program was instituted in an effort to control the rising costs of
health care. Hospitals have responded to this challenge and produced demonstrated results. The
average hospital length of stay has decreased overall in the three years since DRG based
payment has been operational. A number of institutions have reported decreases in lengths of
hospital stay. (Knoebel, 1985; Leopold and Lagoe, 1984; Nelson, 1985; Oddis, 1986; Scott,
1984; Turck, and Smith, 1985). Hospitals are responding by increasing the rate of admissions.
The volume of patients treated becomes the mark of success, rather than the overall number of
patient days in a given time period (May, 1985). The rising costs of health care have slowed,
and many institutions have become increasingly cost efficient (Barnard and Scherubel, 1987).

Although substantial progress has been made in containing health care costs, the
implementation of DRGs has produced profound changes in the delivery of health care,
particularly in the hospital setting. The profile of the inpatient population is changing. Patients
are more acutely ill, older, and are hospitalized for progressively shorter periods of time. Several
factors have contributed to the alteration in case mix. .

The incentive toward less costly services has led to the development of ambulatory care
settings for diagnostic testing, management of less acute health problems, and many surgical
procedures (Newell, 1983; Hodes, 1985). Only those patients with complex health care needs, or
acute, severe illnesses are admitted to an inpatient setting (Lancaster, 1986; Leopold and Lagoe,
1986; Thomas, Fox, Clemmer, Orme, Vincent and Menlove, 1987). The nursing care needs of
these patients are extensive. Multiple reports have documented the increasing severity of illness
and nursing intensity of patients within the hospital (Curtin, 1985; Kramer and Schmalenberg,
1987; Lancaster, 1986; Leopold and Lagoe, 1986; Mundinger, 1985; Pesgrove, 1985, Scherubel,
1987; Thompson, 1984). Many hospitals have become large intensive care units (Knoebel,
1985).

in response to the rising acuity of patients, research has been undertaken to examine the
impact of severity of illness on hospital and nursing resource consumption. Findings indicate a
positive association between illness severity, the need for intensive nursing and medical
intervention, and higher costs of treatment. Given that at the present time, there are no severity
adjustments for DRGs, many hospitals, especially tertiary care centers and teaching hospitals,
are experiencing financial losses resulting from the disparity between reimbursement rates and
the actual costs of providing care to severely ill patients (Barbash, Safran, Ransil, Pollack,
Pasternak, 1987; Berman, Green, Kwo, Safian and Botnick, 1986; Butler, Bone and Field, 19885;
Conklin, Lieberman, Barnes, and Lewis, 1984; Douglas, Rose, Butler and Bone, 1987; Eisenberg,
1984; Fiedler, Jones, Miller and Finley, 1985; Gracey, Gillespie, Nobrega, Naessens and Krishan,
1987; Horn, Horn and Moses, 1986; Horn, Horn, and Sharkey, 1984; Jones, 1984; McMahon and
Newbold, 1986; Mullin, 1985; Scherubel, Schwartz, Feinglass, Barnard, and Hughes, 1987;
Smits, Fetter and McMahon, 1984; Wagner and Draper, 1984).

The utilization of expensive intensive care units is under critical examination to develop
maximal use of these units in a cost effective manner. Patients requiring monitoring or close
surveillance are being placed on intermediate care units, while intensive care units are restricted
to those requiring medical and nursing interventions of a critical or complex nature (Butler, Bone
and Field, 1985; Galanes, Harris, Dulski and Chambenin, 1986; Gracey, Gillespie, Nobrega,
Naessens and Krishan, 1987; Lindamood, 1985; Nelson, 1985; Thomas, Fox, Clemmer, Orme,
Vincent and Menlove, 1987; Pasternak, Dean, Gioia and Rogers, 1986). The redistribution of

14

patients previously found only in intensive care units contributes to a heightened patient acuity
level on all patient care units.

An additional factor affecting the hospital case mix is created by the growing numbers of
older patients hospitalized. Use of health care facilities by the elderly is proportionally much
higher than by other age groups due to the presence of multiple chronic and debilitating illnesses.
The elderly patient requires assistance in meeting hygiene and self care needs, recovers more
slowly following acute illness, and frequently needs extended care following hospitalization
(Auerbach 1985; Fleck, 1987; Jencks and Kay, 1987; Turck and Smith, 1985; Vertrees and
Manton, 1986; Wilensky and Chapman, 1987). Provision of these services necessitate skilled,
comprehensive nursing care delivered in a manner which recognizes the special needs of the
elderly patient. Such a goal may be more difficult to achieve due to the accelerated pace of
today's hospital environment and current emphasis on increased productivity.

Not only are hospitalized patients older and more acutely ill, these same patients are
discharged much earlier than in the past in response to restrictions on length of stay (Auerbach,
1985; Diers, 1987; Taylor, 1985). This phenomena is so pervasive, it has been characterized as
patients being discharged "sicker and quicker" (Sovie, 1987). Early discharge has generated a
need for expansion in discharge planning departments and the provision of sophisticated home
health care services including intravenous drug therapy, home ventilator management, and other
skilled nursing services (Auerbach, 1985; Knoebel, 1985; Taylor, 1985).

As a consequence of constraints on the length of stay, inpatient health care services
have been compressed into a shorter period of time or reduced in actual number. To contain
costs, routine diagnostic laboratory and radiology services have been reduced or eliminated and
techniques streamlined to improve productivity (Bauman, 1985; Becker, 1985; Ferraro, 1986;
May, 1985; Turck and Smith, 1985). Specialized programs or procedures may be restricted if
their cost effectiveness cannot be demonstrated (Hodes, 1985; May, 1985). Changes have been
reported in treatment regimens, the use of expensive pharmaceutical protocols, infection control
procedures, social services, dietary, and physical therapy, and the delivery of environmental
support services (Bransome, 1986; Catania, Ibrahim, Guasco and Catania, 1984; Davis, 1984;
Hayes and Carroll, 1986; Huyck and Fairchild, 1987; Kinnison, White, Bowers and Dunlap, 1985;
Knoebel, 1985; Kolar, Stanaszek, Osborne, and Dougherty. 1984; Leopold and Lagoe, 1986;
Oddis, 1986; Patchner and Wattenberg, 1985; Prince, 1986; Swits and DeCosta, 1985; Turck and
Smith 1985; Wenzel, 1985). Continual changes throughout the hospital may create confusion,
stress, and frustration for nurses and other health care providers as they attempt to provide care
to patients (Cooper, 1984; Hodes, 1985).

The incentives to provide cost effective services and decrease length of stay, as well as a
changing patient case mix, have led hospitals to promote higher admission rates and increased
productivity. This practice has been effective in many institutions. Despite these efforts,
hospitals are experiencing lower occupancy rates leading to restrictions in the number of
available beds and personnel to reduce overhead costs (Bauman, 1985; Diers, 1987; Hartley,
1986; Kramer and Schmalenberg, 1987). Some hospitals have eliminated services or referred
clients to other institutions, placing additional demands on tertiary care facilities (Frick, Martin and
Shwartz, 1985; Garber, Fuchs and Silverrnan, 1984; Horn, Bulkley, Sharkey, Chambers, Horn
and Schramm, 1985; Jones, 1985; Goldfarb and Coffey, 1987; Thomas, Fox, Clemmer, Orme,
Vincent and Menlove, 1987; Butler, Bone, and Field, 1985). Whether admission rates have risen
or fallen, and personnel levels are high, low, or stabilized, the uncertainty felt by many nurses
today contributes to increased stress in the hospital environment (Cooper, 1984; Hodes, 1985).

The high costs of health care and DRG restrictions on appropriate hospital admissions

have accentuated the problem of access to health care (Arthur Anderson & Co. & American
College of Hospital Administrators, 1984; Kelly, 1985; Knoebel, 1985). Frequently, it is those in

15

lower socioeconomic levels and the uninsured who suffer (Adelotte, 1987; Kelly, 1985). A
widespread concern exists that a two tier health care system: one for the rich or insured, and a
second level for the economically deprived or uninsured may result (Arthur Anderson & Co. &
American College of Hospital Administrators, 1984; Knoebel, 1985; Pesgrove, 1985; Thomas,
Fox, Clemmer, Orme, Vincent and Menlcve, 1987).

Questions regarding the rationing of health care have been raised (Arthur Anderson &
Co. & American College of Hospital Administrators, 1984; Kelly, 1985; Knoebel, 1985). Kelly
(1985) notes that although citizens have a right to minimal levels of care, access and the quality
of care are lower for Medicare beneficiaries. She adds free care is found in highest proportions in
government hospitals and it is in these settings that the lowest quality of care is found. Nurses
have long supported access to health care for all clients. Limitations on the availability of health
care are of great concern to practicing nurses.

An important question remains regarding the effect of DRGs on health care. What is the
impact of DRGs on the quality of care delivered? (Arthur Anderson & Co. & American College of
Hospital Administrators, 1984; Kelly, 1985; Knoebel, 1985 May, 1985; Stern and Epstein, 1985;
Thompson, 1982). Some writers report dissatisfaction among providers with the level of quality,
particularly in contrast with the advanced services currently available (Cooper, 1984; Hodes,
1985; Jackson and Jenson, 1984; Knoebel, 1985; Kramer and Schmalenberg, 1987; Maples,
1985; May, 1985; Sovie, 1987). Others‘found low correlations between patient satisfaction and
the level of care provided (Carter, Mills, Homan, Blaesing, Heater, Stoll, Mornin and Corrigan,
1987; Erickson, 1987). Currently studies are underway to examine the effects of DRGs on the
quality of care received by patients (Carter, et al. 1987; Scherubel, 1987). Additional studies are
needed to determine the long range impact of DRGs on the level of care provided to consumers.

in summary, prospective payment has created a health care delivery system which
rewards cost effective delivery of services to a large number of clients in a limited period of time.
The hospital of today is characterized by a rapid turnover of patients, increased levels of patient
acuity, older clients with multiple health needs, modifications in available services, and early
discharge requirements (Curtain, 1985; Joel, 1987; Pesgrove, 1985). Other environmental
forces, for example the acute shortage of nurses, regional economic conditions, and population
movement, place additional demands on hospital resources and personnel.

Impact Of Prospective Payment Ol'l NUI’SII’IQ Practice

How has the prospective payment system affected the practice of nursing, particularly the
[nurse in hospital, and how have nurses responded to the changing health care environment?
Prospective payment mechanisms have moved nurses, individually and collectively, into the
mainstream of health care delivery allowing what some have called an opportunity for
professional growth (Christman, 1987; Curtin, 1985; Olson, 1984; Smith, 1984; Spitzer and
Wright, 1987).

Nurses today have responded not only to the changes in the health care environment,
but to the process of health care delivery as well. in many diverse ways, DRGs have been a
positive influence and have accelerated beneficial changes in hospital nursing practice. “In
response to calls for the efficient delivery of nursing care (Curtain, 1985; Halloran, 1986;
Simpson, Hudgings, Williams and Armstrong, 1987), methods of care delivery have been altered
and discharge planning efforts expanded. Nurses' indepth knowledge of hospital settings and
activities have led to the identification and elimination of many costly practices. The cost
effectiveness of nursing care has been demonstrated repeatedly. Nurses practicing in the
hospital today have responded to prospective payment with creativity and commitment to deliver
high quality, cost effective care as the sample of activities described below illustrates.

l6

Many new and innovative nursing care delivery systems have been tested and found to
be cost effective. For example, cooperative care units have been established in which a portion
of the care required is provided by family members or “care partners” (Weis, 1987). Such
arrangements ensure professional nursing care as needed, but emphasize participation of others
in the delivery of care. Efficient use of professional nursing services are maximized with resulting
cost savings to the institution.

A second innovative model of care delivery is that of case management (DeZell, A.D.,
Comeau. E., & Zander, K.. in press; Zander, 1985). In case management, the concept of the
primary nurse is expanded to that of a nurse case manager. The case manager organizes and
directs the care of a patient from admission through discharge, following him as he moves
through the hospital. A case manager may begin caring for a patient in intensive care, follow that
patient to an intermediate care unit, then to a general medical surgical unit. The case manager,
working with primary and associate nurses. provides comprehensive, coordinated care within the
hospital and following discharge through care conferences and referrals (DeZeII, 1987; Zander,
1986)

In response to the shortened length of stay, the entire process of treatment has been
accelerated. An efficient plan for the delivery of nursing care and other therapy is identified and
established immediately upon admission (Servellen, and Mowry, 1985). Cuthbert (1986) noted
that while physicians may control admissions to the hospital, frequently it is the nurse who
controls the time of discharge. Early intervention with stroke patients has been demonstrated to
improve functional abilities, lower the need for discharge to long term facilities, and reduce
mortality rates (Hayes and Carroll, 1986; Redford and Harris, 1980). Nursing interventions
directed toward the prevention of complications and hospital acquired infections may decrease
the length of stay, as both conditions are known to increase time spent in hospitals, particularly in
elderly patients (Scherubel, 1987; Wenzel, 1985).

Discharge planning has increased dramatically in scope. Shorter hospital stays have led
to patients less able to care for themselves at discharge. Many patients return to their homes, yet
are unable to assume previous levels of activity or responsibility. Increasing numbers of patients.
unable to return home, are discharged to skilled care facilities (Auerbach, 1985; Taylor, 1985).
Harron and Shaeffer (1986) found significantly higher nursing care requirements in nursing home
patients admitted following the implementation of DRGs than prior to prospective payment. In
reviewing their data, it was striking to note the shift from relative independence in activities of
daily living, to the need for maximal assistance in basic hygienic needs, a further indication of the
high acuity levels of hospitalized patients. Not only have self care needs increased, the intensity
of complex nursing care therapies have escalated dramatically (Harron and Shaeffer, 1986).
Early assessment and prompt initiation of appropriate referrals assures that home or skilled
residential health care, equipment, and supplies are available for use upon discharge (Auerbach,
1985; Kan, 1985: Maples, 1985; Taylor, 1985).

Patient education programs have been modified in response to shortened
hospitalizations. This is clearly seen in preoperative education programs. Rather than admitting
patients prior to surgery for preoperative education, teaching is being completed in physician
offices and ambulatory settings (Adams, 1984; Ginter, personal communication; Schwartz, 1984).
Learning is assessed in the ambulatory setting, as well as through telephone and written contact
with clients (Ginter, personal communication). ln-hospital education programs have been
expanded to include outpatients as well. Many hospitals have instituted patient libraries and
closed circuit television to meet the educational needs of their clients in a cost effective fashion
(Jazweic, 1987).

Not only has the delivery of nursing care changed as a result of prospective payment. but
in hospital support services have been modified as well. Coordination of all departments is

17

essential to improve efficiency and productivity. Diagnostic testing is now scheduled in a manner
to obtain results quickly and to institute appropriate treatment promptly (Bauman, 1985; Becker,
1985; Curtain, 1985). The nurse has long been involved in coordinating patient activities. This
role assumes even greater importance today as resources are organized to meet patient needs in
a timely fashion.

Nursing service departments have been instmmental in the development of product line
management. In these systems, the entire organization of hospital service delivery is
restructured. Rather than the traditional departmental stmcture, programs are designed to
provide comprehensive services to patients in an efficient manner which cut across departmental
lines (Barnard, 1985; Murray, 1987).

Nurses are questioning hospital practices which may generate unneeded expense.
Deines and Stevens (1987) examined the number of room transfers in a one month period. They
found of over three hundred transfers occurring, almost one quarter were unnecessary and could
have been eliminated. These transfers were costly in time and- effort for many hospital
departments including admitting, dietary and laboratory services, in addition to nursing.

Purchase of hospital supplies consumes a significant portion of the hospital budget. All
members of nursing departments are involved in monitoring the use of supplies. The traditional
new product committees have enlarged their scope from simply the "better" product to the
product which provides the greatest cost benefit ratios (Jazweic, 1987). So important is the cost
efficient use of supplies, some hospitals reward employees for identifying more cost effective
methods of providing services (Gray, 1981; Groner, 1978; Jazweic, 1987; Wolmering, 1987).

Clinical services are not the only area in which nurses have experienced changes in their
practice. In response to the need to provide accurate information on costs of services by DRGs,
hospitals have introduced sophisticated information systems which link clinical and financial data
from all areas. Computerized tracking of requisitions for service, laboratory and radiology results
allows for faster, more accurate communication between departments, increased capture of
patient charges, and improved information storage and retrieval (Bauman, 1985; Catania,
Ibrahim, Guasco, Catania, 1984; Mowry and Korpman, 1987).

Computer oriented care systems have markedly influenced the ways in which nurses
practice. Routine clerical tasks, once completed by nurses and unit secretaries, are now entered
on a computer at substantial cost savings in time and personnel (Mowry and Korpman, 1986).
Sophisticated patient classification systems detailing nursing care delivered are in extensive use
(Adams, 1984; Shaffer, 1984; 1986). Nurses have developed computer skills and now enter data
at the bedside on patient assessments and interventions, examine trends in physiologic
functioning, determine therapeutic interventions from probabilistic decision models, and calculate
alterations in medication administrations.

Computerized charting is becoming commonplace in the hospital. Documentation of care
delivery is more important than ever before. As a result of prospective payment, patient records
are coming under more scrutiny. A variety of payors and peer review organizations are
examining patient records during and following hospitalization. Many reimbursement decisions
are based on the findings of these audits (Hoke, 1985). More graphically stated, in the past a
commonly heard phrase was 'if it isn't charted is wasn't done,‘ that slogan has been modified to 'if
it isn't charted, it won't be reimbursed.’ Clear documentation of clinical assessment,
interventions, and patient care outcomes has become essential.

There has been a resurgence in hospital quality assurance programs, as nursing

departments incorporate standards of care into online data bases for monitoring and analyses
(Gross, personal communication). Nurses at all levels are participating in the development and

18

monitoring of outcome criteria for nursing care (Halloran, 1987; Mowry and Korpman, 1986).
Individual accountability for nursing care delivered is heightened as computers aid in retrieval and
analysis of the cost effectiveness of care (Mowry and Korpman, 1986).

Nurses are involved in the financial aspects of care delivery. Nurses in managerial
positions have increasing fiscal responsibility for the services provided on patient care units.
Whereas in the past, the majority of nursing budgets were prepared in a cemral office, now nurse
managers develop, implement, and monitor personnel and supply budgets. Programs have been
developed within institutions to prepare managers for additional fiscal responsibilities (Jazweic,
1987). Publications describe how to prepare and manage budgets (Roehm and Labarthe (1987).

Nursing managers are actively involved in identifying the costs of nursing care and the
means to reduce those costs (Fosbinder. 1986; Giovannetti, 1985; Halloran, 1985). Nursing
classification systems provide the data base for determining nursing intensity of service by DRG,
the costs incurred in delivering services, and appropriate staffing methodologies to meet the
demands of the acutely ill (Bargagliotti and Smith, 1985; Halloran, Patterson, and Kiley, 1987;
Reider and Lensing, 1986; Servellen and Mowry, 1985; Sovie, Tarcinale, Vanputee, and Stunden,
1985)

In addition to identification of the costs of nursing care, a number of institutional changes
have been taken by nursing departments to reduce the costs of nursing care delivery (Adams,
1984; Kramer and Schmalenberg, 1985; Thomas and Wood, 1985). In some institutions, the
complement of professional nursing staff was trimmed, with the additions of less trained
personnel resulting in increased nursing responsibility to monitor higher numbers of
nonprofessional personnel (Adams, 1984; DRGs..staff cuts, 1984; Minnick, 1987; Thomas and
Wood, 1985). Nursing care delivery under these circumstances may resemble functional or team
nursing (Minnick, 1987). In other institutions, adoption of an all professional nursing staff, or the
involvement of nurse practitioners, enables the continuation of primary nursing in a cost effective
manner (Houston and Cadenhead, 1986; Minnick, 1987).

Frequently, to preserve professional nursing staff, ancillary services have been reduced.
Many of these responsibilities are within the realm of professional nursing, including respiratory
therapy and patient education (Strasen, 1987). Consolidation of responsibilities within nursing
departments have resulted in cost savings and more efficient care delivery from reductions in
duplicated services (Strasen, 1987). In other situations, nurses are assuming non-nursing tasks
such as patient transport and dietary services (Adams, 1984; Mowry and Korpman, 1986). In
these settings, the increasing demands on nursing staff may hamper the delivery of professional
nursing care (Mowry and Korpman, 1986).

In addition to affecting nursing responsibilities, the decreased revenues available to
hospitals has had an impact on the quantity of professional enrichment programs for nurses.
Staff reductions in continuing education departments have restricted access to continuing
professional development (Jazweic, personal communication; Urquhart, Wooding, Budinger and
Henry, 1986). This situation coupled with the increasing fees for participation in continued
education programs may have a long term effect on continued professional development
activities of nurses.

The prospective payment reimbursement system has affected all aspects of nursing
practice. Hospitalized patients require highly skilled, complex nursing care from admission
through discharge. Changes in nursing care delivery systems have improved as well as impeded
nurses abilities to care for patients. Innovative practices have reduced needless expense and
improved the cost effectiveness of health care, while expanded responsibilities stretch the
capacity of nurses to deliver that care. Nurses have become deeply involved in managing the
fiscal aspects of patient care. Individual accountability for efficient and effective nursing care

19

delivery is expanding. The hospital nurse of today is challenged as never before. The health
care environment of tomorrow holds the promise of even greater demands.

The Future Health Care Environment

What will the world be like for nurses practicing in the next century? Prospective
payment may change in scope and form, yet cost containment is surely here to stay. A number
of health care providers have advanced views of the future world of health care. The leaders
from a wide range of health care disciplines are strikingly consistent in their projections for the
future of health care in America. Using a delphi technique, a consensus document was
developed by physicians, administrators, providers, legislators, suppliers, and payors across the
country (Arthur Anderson & Co. & American College of Hospital Administrators, 1984). Nursing
leaders have also outlined their perceptions on the future of health care and advanced
recommendations for nursing's role in that future (Adelotte, 1987; Beyers, 1985; Beyers, 1987;
Billie and Wright, 1987; Christman, 1987; Simpson, Hudgings, Mlliams and Armstrong, 1987;
Spitzer and Wright, 1987). it is noteworthy, that while representatives of nursing did not
participate in the Arthur Anderson delphi study, the thoughts expressed by leaders in nursing are
congmous with those of other health care professionals. Highlights oi the future health care
environment. as viewed by these professionals, are described below.

Further growth is anticipated in multihospital systems, ambulatory facilities, and multiple
alternative delivery systems. Expanded programs in preventative and self care maintenance will
be developed. There will be an increased need for extended care facilities as hospitals are
further restricted to short term care of the critically ill (Adelotte, 1987; Arthur Anderson & Co. &
American College of Hospital Administrators, 1984; Simpson, Hudgings, Williams and Armstrong,

1987; Spitzer and Wright, 1987).

.The elderly population will grow in proportion to other age groups (Adelotte, 1987; Arthur
Anderson & Co. & American College of Hospital Administrators, 1984; Spitzer and Wright, 1987).
As Adelotte (1987) noted, the proportion of those over 65 will double by the year 2020 when the
post war ”baby-boomers” reach 65 years of age. The management of chronic, debilitating
diseases will become increasingly important in this aging population as advances in the
management of acute illness continues (Adelotte, 1987; Christman, 1987).

The problem of access to care will continue to grow and must be addressed (Adelotte,
1987; Arthur Anderson & Co. & American College of Hospital Administrators. 1984; Beyers, 1985;
Kelly, 1985; Knoebel, 1985; Pesgrove, 1985). There is evidence that two levels of health care
may already be in existence (Kelly, 1985). As the numbers of uninsured grow, acute care
institutions, governmental agencies, and health professionals will be faced with increasingly
difficult treatment decisions (Adelotte, 1987; Arthur Anderson & Co. & American College of
Hospital Administrators, 1984; Simpson, Hudgings, Williams and Armstrong, 1987). The
judgments of today may determine the care to be delivered tomorrow.

Consumer expectations of health care may require modification, as alternative care
facilities and new programs expand to meet individual and environmental needs. Consumer
education is needed in preventive health maintenance, the availability of alternative delivery
systems, health care costs (who will pay for health care?), and the level of care to be expected.
The appropriate utilization of health care resources is essential it continued cost containment is to
be successful (Arthur Anderson & Co. & American College of Hospital Administrators, 1984:
Spitzer and Wright, 1987; Simpson, Hudgings, Vlfiliiams and Armstrong, 1987).

it may no longer be possible to provide the highest level of care available to all citizens.

There may be the establishment of ”minimal” expected levels of care for all patients by
governmental agencies, with additional services available to those willing to pay for them. It is

20

strongly recommended that all health providers participate in the formation and monitoring of
guidelines and standards for care to ensure equitable delivery of services to consumers (Adelotte,
1987; Arthur Anderson & Co. & American College of Hospital Administrators, 1984; Beyers, 1985;
Kelly, 1985; Simpson, Hudgings, Williams and Armstrong, 1987; Sovie, 1987).

A continued expansion of sophisticated information systems integrating clinical and
financial data can be expected. Data bases will be important tools for operational decision
making and strategic planning (Adelotte, 1987; Arthur Anderson & Co. & American College of
Hospital Administrators, 1984; Barnard, 1987: Barnard & Scherubel, 1987; Christman, 1987
Simpson, Hudgings, Williams and Armstrong, 1987).

In the future world described by Maxmem (1987), health care will move from a physician
centered through a health team model to a "medic computer“ model. Maxmem believes the first
two phases have been achieved, and health care is entering the "medic computer phase.
Currently. computers are able to record patient histories, interpret diagnostic tests, and produce
decision models for therapeutic interventions. In the future, Maxmem suggests that allied health
personnel or "medics" will perform supportive and information sharing roles. sewing as a link
between the computer and the physician. Maxmem acknowledges physicians are uncomfortable
with these predictions, in fact they reject Such a world. If such a world is to exist, it behooves
humans to control, and channel the powers of computer resources for appropriate use. Bendel
(1987) notes that those in control of health information systems are the ones who provide the
data input and use the information generated by these systems. Nurses currently use computers
in their everyday practice. How will nursing respond to Maxmem’s future world? The potential
exists for a highly technological health care system. By recognizing this challenge, nurses and
other health professionals may derive those aspects of an information system that will benefit the
patient, yet maintain authority and control over the humane aspects of care which represent the
art of nursing (Adelotte, 1987; Christman, 1987; Mowry and Korpman, 1987).

Nurslnq In the Future Health Care Envlronment

As ever increasing numbers of nurses recognize the importance of their contribution to
the health of the population, they will become more involved in defining the care to be provided,
and the role of professional nursing practice (Adelotte, 1987; Beyers, 1987; Christman, 1987;
Urquhart, Wooding, Budinger and Henry. 1986). The nurses of tomorrow must be intelligent.
articulate, creative and self assured. Goertzen (1987) notes there will be a need for highly skilled,
motivated, and adaptable nurses in sufficient numbers to participate in development of health
care policy. Echoing this perception, McBride states nurses are needed, “who can imagine the
ideal. but can also think in terms of what is best under constantly changing, imperfect conditions,"
(1987, p. 125).

The practicing nurse of tomorrow will need advanced education and clinical decision
making skills, technical and computer expertise, commitment and high professional standards to
meet the expectations of expanded nursing practice in a sophisticated health environment
(Adelotte, 1987; Christman, 1987; Beyers, 1987; Spitzer and Wright, 1987). Nurses will practice
in diverse clinical and community settings and must be prepared to do so. Nurse researchers will
conduct extensive studies on the quality, delivery and resource consumption of nursing practice
(Adelotte, 1987; Beyers, 1987; Billie and Wright, 1987; Christman, 1987; Spitzer and Wright,
1987)

Nursing is in an optimal position to influence consumer understanding of the health care
system. Nurses may increase public awareness of health care costs. Nursing has long been
identified as an advocate of quality care responsive to consumer needs. Further, it has been
demonstrated that nurses provide care to patients and their families in a cost effective fashion.
While public perceptions of the scope of practice of professional nursing contains inaccuracies,

21

there is nonetheless, a perception of the value and worth of nursing services. Nurses need to
capitalize on these perceptions (Adelotte, 1987: Beyers, 1987; Christman, 1987; Curtin, 1987,
personal communication, Olson, 1984). Dorsey and Hale (1987) describe the benefits to be
gained by effectively marketing nursing care services.

As the movement toward alternative delivery systems for care increase, nurses have an
opportunity to support the appropriate use of these facilities and generate referrals to these
agencies. Growth is occurring in preventive health and wellness programs. Nurses. skilled in
patient and family education, are well prepared to contribute to these programs, through direct
participation, as well as promotion of their value and accessibility in patient education programs
(Adelotte, 1987; Billie and Wright, 1987; Lancaster, 1986).

The nurses of tomorrow will need to develop a business orientation toward health care in
order to implement cost effective modes of care. it is imperative that nurses become
knowledgeable and educate colleagues at every opportunity on the economics of health care.
Prospective payment, DRGs, financial management of health care delivery in various settings,
and consumption of nursing resources are all appropriate for study (Beyers, 1987; Goertzen,
1987; Jazweic, 1987; Mowry and Korpman, 1986; Smith, 1984; Smith, 1987).

Nurses must continue to identify the costs of nursing care and seek to improve the
efficiency and cost effectiveness of services through nursing research (Christman, 1987; Beyers,
1987; Mowry and Korpman, 1987). Data are needed which incorporate, not only clinical and
financial information, but psychosocial data, health education needs. and nursing diagnoses
(Cateriicchio, 1984; Halloran, 1987; Mowry and Korpman, 1986). This expanded data base may
be used to evaluate admission and discharge status of patients, monitor the level and type of
care provided, wnduct nursing research studies to improve practice, identify nonproductive
activities, and determine appropriate staffing allocations (Cuthbert, 1987; Halloran, 1987; Mowry
and Korpman, 1987; Simpson, Hudgings, Williams and Armstrong, 1987).

Just as it is common for other health providers to consult with colleagues, nurses need to
develop collegial relationships with nurses in other settings, and areas of clinical expertise. Not
only will nurses gain the benefit of the valuable knowledge of their peers, patients will benefit from
the improved coordination of nursing care services among a variety of agencies (Adelotte, 1987;
Beyers, 1987; Billie and Wright, 1987; Christman, 1987; Curtain, personal communication).

Nurses must establish collaborative relationships with physicians, administrators,
legislators and the public to explain the unique contributions of nursing, and work cooperatively
with these groups for optimal patient care delivery in a cost effective manner (Beyers, 1987; Billie
and Wright, 1987; Christman, 1987; Curtain, personal communication). Nurses are the largest
employee group in hospital setting. They have a clear understanding of clinical demands placed
upon the acute care system. Nurses need to work with hospital management to identify cost
effective techniques, equipment and supplies to maintain the fiscal viability of acute care
institutions.

Nurses must assume an active role in the development of health policy. This may be
accomplished through professional nursing organizations, community fomms, advisory groups,
and participation in the legislative process (Arthur Anderson & Co. & American College of
Hospital Administrators, 1984; McBride, 1987; Smith, 1984). Active participation in health policy
development will further increase a recognition of the contributions of nurses and enhance the
effectiveness of nursing practice (Meister, 1985; Mundinger, 1985). Max-Neef (1987) states that
“...politics, economics and health have converged towards a crossroads...health is clearly
becoming a function of politics and economics," p 125, 1987). Nursing, can exert a powerful
influence on the public policy decisions and allocation of resources tomorrow.. The nurse of
tomorrow will need to develop new skills to assume new roles in a cost conscious health services

22

environment. Nurses are moving into positions in admissions, utilization review and discharge
planning departments. Nursing managers participate in organizational development, selection of
equipment and supplies, and development of standards of practice and quality review. Nursing
researchers are identifying innovative. cost effective nursing practices. Practitioners at all levels
are providing high quality sophisticated nursing care. To a great extent patients are admitted to
hospitals for nursing care. As nurses gain an increased realization of this fact, we can use this
knowledge to strengthen the profession and improve the quality of health care. For the nurse of
tomorrow to become a lull partner in health care delivery, efforts must begin with the students
and practitioners of today.

23

References

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59

Executive Summary

THE IMPACT OF PROSPECTIVE PAYMENTS SYSTEMS
ON NURSING CARE IN COMMUNITY SETTINGS

Sandra R. Edwardson and Barbara V. O'Grady

The Movement :9 the Community

Although the implementation of DRG-based reimbursement
contributed to greatly increased use of community-based services
in the 19805, other cost containment measures, demographic
shifts, technological developments, and the emergence of new
health problems have also contributed to the growth.

Changes in the Nature 9; Health Services in the Community

In addition to the increased volume of services provided in
the community, there have been changes in the nature of those
health services as well. Most notable is the increased acuity
and complexity of problems seen in the community. Concerns about
vulnerable and politically powerless and voiceless populations
are also noted. These populations were viewed as being rather
defenseless in an increasingly cost—conscious policy environment.

Consequences for Nursing Care in the Community

Fragmentation 9: services. The danger of fragmentation is
inherent in the nature of community nursing services because many
of the services needed by the client are not routinely available.
The issue becomes more important as the complexity of services
required increased. Yet no single entity exists with
responsibility for developing, maintaining and cdordinating
services the family cannot provide.

Systems developing in the private sector. While HMOs, PPAs
and hospital corporations are beginning to provide community-
based services, they continue to apply a strict medical necessity
criterion in identifying reimburseable expenses.

Systems developing in the public sector. The public sector
approach to developing integrated systems of care tends to focus
on two mechanisms: (1) In case management, single entities are
held accountable for ensuring access, quality, and coordination
of services for individual clients. (2) Coordinated systems are
organizational level attempts to integrate services into a
rational whole.

other relevant developments. Other developments affecting
the care of clients in the community are noted. These include
enrolling Medicare beneficiaries in HMOs, strict redefinitions of
acute care, changes in Medicare fiscal intermediaries,
contracting for services, debate about the role of government,
and volleying for the position of gatekeeper.

Implications for the Profession. Implications are drawn for
the preparation of nurses and needs for knowledge.

60

The Impact of Prospective Payment Systems
on Nursing Care In Community Settings

Sandra R. Edwardson, Ph.D., R.N.
Associate Professor
School of Nursing
University of Minnesota

Barbara V. O’Grady, M.S., R.N.
Director
Ramsey County Public Health Nursing Service

Health care is undergoing revolutionary change due to the restructuring of the way it is
financed (Buchanan, 1986). The federal govemment began the revolution by mandating a shift
from retrospective, cost-based reimbursement to prospective payment based on Diagnosis
Related Groups (DRGs). Other third party payers are following Suit, changing from fee-for-
service reimbursement to prospective payment for hospitalization. In growing numbers,
governments and other third party payers are also adopting prospective payment for other health
services as well. The advantage of this change for payers is that it controls and limits expenses.
The effect for providers is to require more careful financial management to ensure adequate
revenue. The impact on patients is to limit their choice on what services will be covered and
where they will be provided.

This paper will describe the trends that have led to prospective payment systems and the
impact that prospective payment systems has had on nursing care provided in community
settings. Community settings are defined as settings in which people who are not inpatients of an
organization receive health services. Examples include medical clinics, surgical centers or
clinics, nursing centers, and the residence of the patient. Community settings do not include
inpatient facilities such as hospitals, nursing homes or board and care homes.

Because a community is characterized by its geographic location, the unique collection of
people who reside there, and the social system that has developed, health services provided in
the community are likely to take on the character of that community. Similarly, our analysis of the
impact of prospective payment on nursing care in community settings is colored by the
experience of living in the Twin Cities of Minneapolis and St. Paul. The move toward competitive
solutions to health care cost problems began earlier in the Twin Cities than in other areas of the
country and the community has one of the highest penetrations ot HMOs in the country (Iglehart,
1984). Therefore, some of our observations and experiences are based on a local situation that
may differ from those of other states.

The Movement to the Community

There is no doubt that there has been a marked shift from acute and institutionally-based
services to services based in the community in recent years. Ambulatory surgery and home
health care have grown at geometric rates at the same time social movements to redesign care
of the mentally ill and mentally retarded accelerated (Coleman and Smith, 1984; Henderson.
1986)

The introduction of DRGs played a part in this shift. it dramatically reversed incentives for
, providers by shifting from a reimbursement system that rewarded hospitals for longer stays and
? greater expenditures to one that rewards them for short stays and cost control. Prospective
payment was designed so that hospitals would do well only if they changed their admission

61

patterns, decreased the number of services used for each patient. and shifted services from
inpatient to outpatient settings.

From the beginning, health care observers warned that hospitals would have a powerful
incentive to underserve patients and discharge them before they were ready. Analysts predicted
an increase in referrals to skilled nursing facilities and home health agencies (Lorenz, 1984).
Because patients were to be discharged earlier in the course of their illnesses, it was expected
that they would be more acutely ill, need more intensive care, and require longer periods of
community-based services.

Yet all of this seemed to be good public policy. increasing the use of community-based
services not only was expected to be cheaper, but was consistent with the philosophy that care
should be provided in the least restrictive environment possible. Questions were raised about
whether certain types of care formerly provided in hospitals would be available in the community
and in sufficient quantity. but the questions were not answered.

The Relative Impact of DRGs

lt is not clear, however. how much of the shift to communitybased services is the direct result
of the introduction of ORG-based reimbursement. For example, increases in the use of home
health care services after the implementation of DRGs were less than expected (Auerbach,
1985). In New Jersey, where experimentation with DRGs began in 1980, the increasing use of
home health care began before DRGs were implemented because of state regulatory programs
that severely limited increases in the state's hospital cost (Livengood, Smith & Hallstead, 1983).
A study by the Home Health Assembly and the New Jersey Department of Health revealed
referrals from hospitals to home health agencies increased 8 percent in the first year after DRGs
were implemented, but then leveled off in the second and third years to about 6% above previous
levels (Taylor, 1985).

These findings are mirrored on the national level. Use of home health services by Medicare
beneficiaries increased by 13 percent per year between 1967 and 1983 (Health Care Financing
Administration. 1987). Medicare expenditures for home health care have increased 25% per year
from 1977-1983 (Grimaldi. 1985). The number of Medicare-certified home health agencies
increased 40 percent in the first two years after DRGs were implemented nationally. But they had
shown similar growth in the two preceding years (1981 to 1983) when the number of agencies
grew 36 percent (see Figure 1). The very rapid growth in hospital-based and proprietary home
care agencies from 1979 to 1983 and then again from 1983 to 1985 (see Figure 2) confirms that
DRGs were just one of the factors influencing growth.

Other Factors Affectlnq Community Health Servlces

If the DRG system itself was only one of several factors influencing the growth of community
health services, what were the other factors? There were at least four other forces leading to
this growth: other cost containment measures, demographic shifts. technological developments.
and the emergence of new health problems.

Other cost contalnment measures. In summarizing the history of how decisions concerning
the use of health care resources have been made in this country, Havighurst (1986) noted that,
until recently. decisions about health care were dominated by the medical profession. As a result
of decades of deference to self-regulation by medical professionals, "the health care industry
fattened itself on reimbursement from passive third-party payers" (p.708). Health care, which
consumed only 4.6% of GNP in 1950, amounted for 7.7% in 1973 and almost 11% last year. As
Havighurst put it: 'These rising costs became the irritant that kept government constamly

62

 

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63

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Figure 2. Medicare-Certified Home Health Agencies by Selected
Types and Year.

Sources: "Rapid growth", 1984; "Medicare-certified home", 1984;
Sandrick, 1986.

64

searching for a point at which to intervene. aroused previously complaisant purchasers of group
health insurance, and ultimately brought about the collapse of self-regulation" (p. 708).

In the 19705, the federal government experimented with both health planning and direct
regulation in the form of Certificate of Need, Professional Standards Review Organizations and
rate-setting. Each new approach underestimated the ability of health care providers to find
loopholes and provide eloquent rationale for the use of additional health care resources. While
planning and regulation may have slowed the rate of inflation, it did not slow it enough and many
began to question whether government control would ever work.

The issue of whether the federal government should be a regulator of health care came to a .
head in the late seventies as‘Congress succumbed to intense lobbying and, in 1979, demolished
what was left of the Carter cost-caps program. Three other coincidental developments hastened
the demise of the govemment’s role as regulator: the oversupply of hospital beds. the rapidly
expanding supply of physicians, and an intensive campaign to enforce antitmst laws in the health
care sector (Havighurst, 1986). Add to these developments the anti-regulatory bias of the
Reagan administration and the door was opened to competitive forces. The "consumer", whether
that was the third party payer, the employer who purchases health insurance, or the actual
recipient of care. was given an opportunity to get into the driver's seat. The pressures of these
competitive forces augmented the effects of DRGs on reducing the use of institutional services.

HMOs were the first major entrant into the competitive battle. Since the introduction of DRGs,
the number and variety of Preferred Provider Organizations (PPOs) have grown so rapidly that
the name has been changed to Preferred Provider Arrangements (PPAs). In the Minneapolis-St.
Paul area, competition has led to the marriages of insurance companies, HMOs, and PPAs are
proceeding apace and have assumed numerous forms. Hospital closings. mergers. and
affiliations have left only one voluntary hospital that is not part of a muIti-hospital arrangement.

Demographlc shlfts. In addition to the numerous regulatory and competitive forces that
converged on the health care system in the seventies and early eighties, changes in the age
distribution of the population contributed to increased use of community-based services. The
principal demographic change of concern is the aging Of the population. Americans over age 65
are expected to increase from 25 million in 1980 to 66 million in 2040 (”Elderly 21", 1985).
Perhaps more important is the aging of the older population itself. While less than 5% of the
population was 75 or older in 1982, it will be almost 10 percent of the population by 2030. The
impact that this will have on one community-based services is highlighted by Figure 3. Based on
data from the 1979 and 1980 Home Care Supplement to the National Health Interview Survey,
the graph demonstrates the dramatic increase in the need for functional assistance as people
age. The number of individuals requiring at least one type of functional assistance more than
doubled for ages 75 to 84 and more than doubled again for those who were 85 years old or older
(National Center for Health Statistics, 1986).

Technologlcal developments. Technological developments have also fueled the expansion
of community-based services. High-tech procedures such as intravenous hydration, parenteral
and enteral nutrition, apnea monitoring, and ventilators have developed to the point that they are
becoming common in home care (Livengood, Smith & Hallstead. 1983; Coleman & Smith, 1984).
Improvements in surgical techniques allow increasing numbers of procedures to be done in
ambulatory centers. Furthemiore, advances in medical knowledge have created a whole
category of individuals who would have died only a decade ago. Severely handicapped
newborns, children and adults now survive traumatic insults. The chronically ill and disabled live
longer and, therefore, require additional years of maintenance care and treatment.

At the same time, there have been developments reducing the use of technology which also
favor the development of community-based services. Research and experimentation, for

65

Figure 3 Number of Persons Who Need Home Care Per 1,000 Adults
45 Years of Age and Over, By type of Measure and Age:
United states, 1979-1980

 

 

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Source: National Center for Health Statistics, 1986.

66

 

example, have demonstrated that some clients do as well or better in less intensive care settings.
The hospice movement and the revolution in maternity services are two outstanding examples
(Edwardson, 1986; Osteniveis & Champagn, 1979). In relation to mental health services,
Mechanic (1987) argued that although the development of neuroleptic drugs in the fifties provided
an important tool for controlling psychiatric symptoms, it did not cause deinstitutionalization.
Expansion of Social Security Disability Insurance in the 19605, change in hospital admission
patterns, and a shift in the proportion of the population at high risk for mental illness, he said,
were equally important causes of reduced institutionalization.

New health problems. In 1987, we cannot omit the most pressing emerging health care
problem of AIDS. The logic for providing community-based services to AIDS patients is clear.
Aside from the humanitarian argument there are powerful financial incentives. Using San
Francisco as an example, a Robert Wood Johnson Foundation official noted recemly that a day of
hospital care may cost $850 while a day of home health aide service begins at $100 (Droste,
1987)

Changes ln the Nature of Health Services In the Community

So far we have spoken of the numerous variables that contributed to the major shift of health
care services from the institutional to the community setting. in addition to the change in the
volume of services provided in the community, there have also been other changes. There is, for
example, evidence of an increase in the level of acuity among clients seen in the community.
This trend in home health services and mental health services began before the implementation
of DRGs for reasons already noted (Livengood, Smith & Hallstead, 1983; Mechanic, 1987: Taylor,
1985). While DRGs were not the only cause of increased acuity in home care, they are believed
to have contributed to and intensified the trend (Livengood, Smith & Hallstead, 1983; Auerbach,
1985; Taylor, 1985).

Prospective payment has not yet been applied to psychiatric diagnoses, but already there are
concerns that when it is, it may create incentives for hospitals to transfer rapidly those patients
with "economically unsuitable” diagnoses and could lead to a new de-institutionization policy in
which chronic patients are unable to obtain care. even during acute episodes (Morgenlander &
Greenwald. 1985). One analysis estimating the effect of the implementation of DRG-based
reimbursement for outpatient mental health services showed that DRGs failed to account for the
variability of client resource use (Wood & Beardmore, 1986).

Economic pressures have led to concern about other vulnerable populations as well. Muller
and Ventriss (1985) recounted the consequences of 1981 health budget cuts in Los Angeles
County. They drew three lessons. First, the services out first were those that were not revenue-
producing, namely, preventive services. Second, once the retrenchment process was under way,
it was very difficult to stop. Third, there was little incemive for officials to change course because
the retrenchment was directed against the politically powerless (Waters, 1986).

While the politically powerless and voiceless have always been particularly vulnerable to
economic downturns, several features of the current situation seem to make them especially
vulnerable. The shift from a more highly regulated, fee-lor-service system of reimbursement to a
competitive system using capitation results in a market-driven. payer dominated system.
Unfortunately for vulnerable populations, the payer is usually under intense pressure to reduce
expenses.

Faced with the kind of cost inflation we have seen, it is easy to sympathize with policy makers'
motivation to reduce health care costs in whatever way seems reasonable to them. To the
detriment of the vulnerable. however, these policy makers are overwhelmingly upper middle class
individuals with a remarkedly different life experience. Inferring from the policies that have been

67

developed it appears that policy makers assumed that patients who are medically ready to be
discharged from hospitals are ready to care for their nursing and basic living requirements as
well. Regardless of their good intentions, policy makers apparemly assumed that everyone has a
support system similar to their own and that clients, their families and friends, and community
resources would be available to fill the void created by reduced hospital services and limited
home care funding.

Cons_eguences for Nursing Care In the Community

This confluence of forces favoring community based service has had a major impact on the
practice of nursing in the community.

Fragmentation of Services in the Community

Nursing care in the community was defined earlier to include services provided to people who
are not inpatients of an institution. This distinction between health services delivered in inpatient
settings and those delivered in community settings is important because of the difference in
organizational control of the resources needed by the patient. In the inpatient setting, support
services such as nutrition, housekeeping, 24 hour surveillance, personal care and other medical
.and social services are provided by the institution. Nurses have ready access to these services
when caring for patients under their management.

in the community setting, on the other hand, few services are routinely available for patients.
The nurse must assess the services the individual patient needs and ensure that those services
are available and accessible to the patient. Because the services are frequently provided by
other organizations with different funding sources and priorities, the nurse in the community must
use knowledge and skill to bring together the necessary services for the benefit of the patient.
Unfortunately, third party payers do not assume responsibility for paying for these services in the
community to the extent they do in institutions. in many cases, when needed services are not
accessible, the nurse must adapt the care plan or improvise to ensure safe care. If it becomes
apparent that safe care is not possible, the nurse must decide whether to give any care at all. in
such instances. protective services may become involved. Ethical concerns are inevitable and
give rise to questions that must be addressed by the family, nurse, and community organizations.

Given the increasing numbers of individuals requiring complex services from community
health systems that are not necessarily organized to provide them, the need to develop a system
of services for patients needing nursing care in the community has never been greater. in
addition to vulnerable populations such as the mentally ill, mentally retarded. ventilator dependent
children and adults, the disabled and the elderly. there are individuals with acute health
conditions who are treated in the community rather than in institutions. Besides nursing care,
these populations have needs for shelter, nutrition, personal care, homemaking, transportation,
social services, and additional health services, such as rehabilitation to meet individual needs.

At the present time. no single entity is responsible for developing, maintaining and
coordinating these services if the patient and family cannot. County social service departments
provide some services. County public health departments provide others. Many private non-
profit agencies have developed services to meet community needs, often using funds provided by
Area Agencies on Aging, United Way organizations, foundations, grants, etc. Proprietary
agencies have sprung up to meet the needs of clients who can pay for service. The result is a
mix of disparate organizations with a variety of funding sources. missions, target populations and
geographic coverage. This makes the delivery of nursing care in the community difficult,
particularly when patients are acutely ill, require technologically sophisticated procedures, have
unstable conditions. and have no family support.

68

Systems Developing In the Private Sector

Attempts to reduce this fragmentation of services have begun on several fronts. Private
groups such as HMOs, PPAs and hospital corporations are just beginning to recognize the need
for a broad array of services for some patients. For the most part, they look to govemment for
the provision of social services and custodial care if a person is unable to pay for needed services
out of pocket. Third party payers tend to view preventive health care such as teaching and
counseling as a social service. Only medically necessary acute care is covered by the
corporation which may provide the service directly or through a contract. The nurse providing the
medically necessary acute care is not expected to seek out non-covered services such as
transportation assistance or a homemaker because if the nurse identifies a need, the corporation
may feel an obligation to provide service. Therefore, there is an incentive for the nurse to focus
only on the immediate medical problem of the patient.

Nursing can playa critical role in the development of managed systems of care within HMOs,
PPAs and hospital corporations. Currently, the management of these firms is focused primarily
on the physician and the management of acute medical care. As chronic care becomes more
central to the corporate mission, nurses can assume a more central role if they position
themselves within the corporate decision making structures by interpreting the role of the nurse
as case manager and demonstrating its effectiveness. Without this effort, nursing will not emerge
in a central role within these developing private health care corporations.

Systems Developing In the Public Sector

. The public sector is also beginning to develop systems for integrating care. Because of the
multiplicity of organizations providing services to community residents, the public sector is
approaching system development in two ways: case management and coordinated systems of
care.

Case management. Public policy makers are turning increasingly to case management as a
method for organizing services for specific populations. Under these programs, individuals and
organizations are held accountable for ensuring access, quality, and coordination of services.
Since funding tends to be restricted and the control of resources provided by other organizations
is negligible, the danger exists that expectations for the effectiveness of case management in the
public sector will outdistance the ability to perform.

The public sector case management initiatives are usually developed at the state level with
federal waivers that permit Medicaid dollars to be used more flexibly when making health care
decisions. In Minnesota, for example, elderly persons vulnerable for nursing home placement,
the mentally retarded, the mentally ill and chronically ill children are all included in one of several
community waiver programs. The goal of the programs is to develop systems of care in
community settings and substitute community-based for institutional care whenever possible. All
of the programs have been developed by the Department of Human Services at the state level
and implemented through the social service department at the county level. Because the
Minnesota state legislature requires public health nurse involvemem in the Preadmission
Screening Program for older persons vulnerable for nursing home placement, nurses are involved
inscreening and case management in waivered care programs.

Because the health needs of chronically ill ventilator dependent children are so great, nurses
are also involved in that particular program. in some cases, as in Ramsey County, the Public
Health Nursing Agency is even the lead agency. In general, however, social workers within the
social service departments are developing the systems of care with or without the involvement of
nurses.

69

lf nurses are to fill the role of case manager, they must position themselves within the decision
making structures of state and local agencies to promote more understanding of the role of the
nurse in case managemem. In addition. they need to demonstrate the eftectiveness of the
nursing role in service delivery. Specifically, nurses need to develop a common language about
patients' nursing care needs and identify the services and outcomes that nursing provides.

At the same time nurses are positioning themselves to be the case managers. it is important
to recognize that they will not always prevail and that, at times, other professionals may be the
more appropriate case manager. When others are the identified case managers, nurses will
need to identify how they can work collaboratively with these other professionals. Role
clarification and joint practice strategies are needed it nurses are to ensure that the nursing care
needs of chronically ill populations are included in the development of the public sector's systems
of community services.

Although case management is currerttly popular with policy makers as a coordinating and cost
cutting strategy, data from the National Long Term Care Channeling Demonstration Project may
temper their enthusiasm. The project tested two client-centered case management approaches.
In the basic case management model, case managers could augment usual care with a small
number of direct services to fill some service gaps. The financial control model permitted case
managers to order the number, duration, and scope of services they judged to be necessary.
The general conclusion was that the total costs tor care and living expenses were increased by
approximately 7 percent for the basic model and 15 percent for the financial control model.
However, the increased costs were awompanied by a reduction in unmet needs and an increase
in client and informal caregiver satisfaction. The investigators concluded: "The issue for
consideration is whether the largely intangible benefits are worth the net costs of producing them“
(Thornton & Dunstan, p. xiii). Nurses should be in a position to lead or at least participate in the
public policy discussion likely to ensue.

Coordlnated systems of care. The public sector is also developing systems of care for
vulnerable populations by promoting coordination in the delivery of services. Government often
becomes involved in funding new initiatives only after a care model has been tested in programs
funded by private groups. In Minnesota, for example, the McKnight Foundation funded a number
of community initiatives to develop a coordinated system of mental health services for the
chronically mentally ill within communities. In 1987, the Minnesota Legislature passed a Mental
Health Act incorporating into law many of the initiatives tested out in these demonstration
projects.

Another example of public sector initiatives to develop systems of care in communities is the
St. Anthony Park Block Nurse Program in Ramsey County, Minnesota. The program identifies
neighborhoods as an integrating unit of service delivery and includes volunteers in the delivery of
services. As a joint venture of a city neighborhood planning council, a public health nursing
agency, and neighborhood leadership, the Block Nurse Program was developed to provide a
neighborhood based nursing service. Neighborhood nurses, paraprofessionals and volunteers
provide home health services to neighborhood elderly residents under the case management at
nurses. In its infancy, the program was funded by small grants from a variety of private agencies.
Now that it has proven successful, the model is being extended to three other communities in
Minnesota to test whether it can be replicated and cost effective in other places. Funding for
these replications is provided by the W. K. Kellogg Foundation for two communities and the
Division of Nursing for one community.

70

Medicare Beneficiaries Enrolling in HMOs

Minnesota has been a demonstration site for a Health Care Financing Administration
experiment to enroll Medicare beneficiaries in HMOs. This experience also suggests issues likely
to arise in other areas of the country.

Marketing by competing HMOs for the Medicare population has been intense. Unfortunately,
HMO premiums appear to be set with an eye toward marketing considerations. as well as, the
number and type of services needed by recipients. Many Medicare beneficiaries believe all acute
and chronic care needs will be covered by the HMO. when actually fewer services are approved
than within the traditional Medicare fee-for-service program. There is also confusion among
providers about which patients are enrolled in HMOs and which are not. Frequently, the patient
and family are also unsure if they are in an HMO and what type of coverage they have. HMO
enrollment names are often not even accessible to the HMO staff in a timely way resulting in a
period of confusion about who is responsible for payment. In addition, great confusion exists
within most HMOs about who is authorized to make what decisions regarding payment.

The Redeflnltion of Acute Care

Another major challenge in community health is the lack of a meaningful differentiation
between acute and long term or chronic care. Medicare and most private insurance policies
provide coverage primarily for acute medical care. Recent cost saving strategies have narrowed
the definition of acute medical care, so that insurers rule many coverage claims for home care or
nursing home care to be ”custodial care“ and not eligible for reimbursement. Health maintenance
organizations and Preferred Provider Arrangements take an even narrower view of coverage
guidelines. in Ramsey County. Minnesota, where 50% of the Medicare population is enrolled in
HMOs. home care coverage by most HMOs is so minimal the community health nurse is placed
in an ethical dilemma. if she closes the case when authorized care ceases, the patient is left
without necessary care. If she continues the care, no reimbursement exists.

This represents a major departure from past practice. Public health nurses have been used to
assessing acute and chronic care health needs together, developing a plan of care with the
family, and implementing the care plan by providing or arranging for needed service. Acute and
chronic care have been provided on a continuum by the same staff. Funding has been on a fee-
for-service basis with third party reimbursement guidelines understood by the nurse.

For example, if a Medicare patient was referred for home health care by a hospital at the time
of discharge, the patient may have been eligible for eight to ten nursing visits and several home
health aide visits based on Medicare guidelines for rehabilitation of the acute condition. if the
acute episode developed into a chronic condition and the individual needed maintenance care in
the home. the nurse planned with the family for the needed care. The care plan was adapted as
the patient's condition changed with the same staff providing the service regardless of the source
of payment. When Medicare reimbursement was no longer available. patients paid privately
based on their ability to pay. When the client was unable to pay the full fee, a sliding fee scale
was used. Grants and the county tax levy supported the sliding fee scale and provided full
payment for selected target populations.

Now, however, there are not enough funds to support the growing need for money to support
the sliding tee scale. Recognizing that the tax levy was subsidizing the HMOs, the agency
administration recemly felt justified in refusing to pay for legitimate community health nursing
services to HMO patients. The reasoning is that such subsidies are inappropriate from a public
policy perspective because each of the various providers in the developing health care system
should provide comprehensive services, including community health nursing. Therefore,
beginning on July 1, 1987. public health nurses from Ramsey County Public Health Nursing

71

Service were instructed that no tax levy is to be used to pay for service that the patient is entitled
to through prospective payment. Instead they were directed to advocate for the patient with the
third party payer. whether HMO, PPA, Medicare, or private insurer. If needed care is denied, the
nurse then explains to the patient and family how they can appeal the decision through the
insurer organization and report their concerns to public licensing and funding bodies and public
officials. Needless to say, this policy change has been‘a very difficult one for public health nurses
to implement.

Change In Medlcare Flscal Intermedlagy

The changes brought about by prospective payment for hospitalization and Medicare
demonstration projects have been compounded by the change of Medicare fiscal intermediaries
for home health services. Whereas there used to be one fiscal intermediary per state, there are
now only ten for the entire country. Since January 1, 1987, for example, the fiscal intermediary
for Minnesota has been Wisconsin Blue Cross and Blue Shield located in Milwaukee rather than
Minnesota Blue Cross and Blue Shield. Because each fiscal intermediary has developed
somewhat different interpretations of mles and regulations, the change in personnel, reporting
forms and interpretation of regulations have produced considerable confusion about what
services are covered for what period of time.

Contractlng For Services

Yet another change is the evolution of HMOs and PPAs them selves. In the beginning, most
HMOs were closed panel prepaid group practices. Now, however, HMOs and PPAs often are not
direct providers of care. Instead, they contract with a series of direct care providers who may be
far apart, both geographically and philosophically. This has had a profound inpact on all
organizations providing nursing care in community settings. Patients have been diverted to new
care providers as HMOs and PPAs contract for service delivery through physician groups,
hospitals and home care agencies. Each of these organizations has a different contract that sets
forth the services to be provided and the payment to be derived.

Payment is usually at a discounted rate and consider-able price competition exists among
direct care providers for HMO and PPA contracts. As a result, the quality of care can be
compromised as providers seek to decrease their costs in order to secure contracts. Contract
provisions can also disrupt traditional community relationships, thereby threatening the continuity
and comprehensiveness of care. In many cases. patients who have affiliated with an agency for
years are directed by their HMO to go to another provider. The patient and agency can be very
upset at this change.

The practice of market segmentation and the development of product lines may lead to
greater fragmentation of care. As community agencies market certain types of services such as
high tech nursing care or develop product lines such as early maternity discharge services,
HMOs and PPAs may begin to contract with several providers for specialty services and
programs. The need for case management to coordinate services and address patient care
needs will be even greater.

Proper Role of Publlc Agencies

The competition among agencies for HMO contracts and client referrals is intense and
growing stronger as dollars for home care become more restricted. It also leads to new
questioning about the proper role of the public sector. Because private agencies would like the
patients of public agendas and the government subsidy they bring. private agencies challenge
their government counterparts as to whether they should be competing with the private sector at
all. Those in the public sector reply that they deliver nursing services using a public health model

72

of service delivery with a focus on case finding and self care instruction. Private agencies, they
argue, deliver nursing services using a private duty model of service delivery with a focus on
episodic medical care.

The resulting conflict about which model is the most appropriate and most cost effective has
yet to be resolved. The American Nurses' Association Standards for the Practice of Community
Health Nursing (American Nurses Association, 1986) support the public health model. it may be
time to rethink that position. Perhaps the move from inpatient to community care requires an
integration of the private duty model within the public health model to allow for growing
specialization. Or perhaps there is a need for three sets of standards: one for acute care in the
community, one for maintenance care of chronically ill patients, and one for maintenance care of
patients with long term, high tech service needs. Nursing needs to adapt its standards to
accommodate changing needs.

The Gatekeeper Role

Prospective payment systems have clearly made payers and their agents (physicians and
social workers) the gatekeepers in the practice of nursing in the community. They decide which
services are “medically necessary," where the services will be provided, which organization will
provide them, how long services can be given, and what category of personnel will be approved.
Many HMOs restrict the use of registered nurses as opposed to LPNs and home health aids. An
HMO in Ramsey County recemly approved only home health aide service for a ventilator
dependent child. Frequently, an LPN is specified as the service provider even when the
necessary skills require an RN.

HMOs offer two reasons for such decisions: cost saving and community standards of care. if
other agencies in a community provide services using non-RNs for RN level functions, the entire
system will be affected since the community standard of care will be diminished. Nurses need to
be clear about what they do and what impact it has on the outcome of patient care. Nurses also
need to describe their function as it relates to otherteam members.

implications for the Profession of Nursan

These trends and developments have implications for the preparation of nurses who will
be qualified to work in the community.

Entry Level Preparation for Community Health Nursing

Having outlined a very demanding and complex role for the nurse practicing in the community,
an immediate question is, can the staff nurse role be filled by someone with baccalaureate
preparation? Our judgment is that bacca-laureate preparation is adequate, but only after the
nurse has had one to two years of experience in an inpatient facility. Although this perpetuates
the burden placed on the acute care setting to assist the neophyte in the transition from the
student to the practitioner role, the nature of practice in most community settings makes them
poor sites for this role induction.

The most important quality for the new graduate to possess in these rapidly changing and
unpredictable times is conceptual skill. Ever since nurses first began arguing that nursing
education should take place in institutions of higher education rather than in an apprenticeship
system, they have based that argument on the need to develop conceptual skills that permit the
nurse to solve practice problems by using scientific and professional knowledge in an inductive or
deductive reasoning process. The profession will not only need thinkers who can dissect a
problem situation to discover and understand its component parts, but will also want thinkers who

73

can grasp the whole of the situation, escape the confines of current knowledge and produce new
and bold hypotheses and solutions.

After competent nurses are hired. it is equally important to organize the nursing staff to
support the delivery of high quality care. As noted earlier, the nurse in the community setting
practices in far greater isolation from supervision, peer support and consultation. Service usually
occur on the client's turf. In contrast to the hospital where patients are captive and all relevant
supplies, equipmem. and support services are readily available, the nurse in the community must
recognize what is needed and know how to get it. All of these features suggest to us that the
baccalaureate prepared nurse practicing in the community needs to work closely with masters
prepared clinicians expert in patient care in order to gain the confidence, maturity, and expert
knowledge required to practice in the community and to command the respect and confidence of
clients.

Transmlttlng the Art of Muddllng Through

The turbulence of the current situation in health care and the expectation that this turbulence
will continue for the foreseeable future suggests the need to educate and reeducate nurses who
can thrive in the midst of constant change. Somehow we need to abandon all traces of
hidebound traditionalism in nursing and nurture individuals to articulate a vision of the future and
develop a propensity for experimentation and a willingness to assume reasonable risks. Several
leaders addressed the need for a vision for nursing's future better than we could in a recent issue
of Nursing Outlook (Aydellotte, 1987; Goertzen, 1987; McBride, 1987; Felton, 1987). In the
organization of nursing services, innovation and creativity needs to be fostered. Graduate
preparation is critical.

At the same time we exist in an environment that requires nurses to solve clinical and policy
problems creatively, we need to help inexperienced nurses develop the knowledge and skills
needed to temper youthful cockiness and political naivete. This is important for two reasons.
First, the trend toward capitated services and multi-organizational relationships implies that
nurses must know how complex systems operate, know how to recognize political games, know
how to build a consensus, and be comfortable with ambiguity and incremental progress. Finding
a way to help neophytes appreciate that the practice of nursing involves more than their one-to-
one encounters with patients at the very time that they are preoccupied with gaining the
knowledge and skill necessary for that one-to-one encounter presents a major challenge to our
collective creativity.

Second, we are working in an increasingly competitive health care system where survival
depends on developing and maintaining a competitive edge. In such a system, information that
was once freely shared is now considered a trade secret and increasingly, colleagues in other
organizations are viewed as competitors. We believe nurses will need help in sorting out loyalty
to proprietary interest from loyalty to the needs of the profession. They need to learn that. for the
good of the profession, nurses ought to express pride and joy in the successes of their fellow
nurses and support risk takers when they fail.

Who Is Recrulted Into Nurslng

In what we have outlined so far, it is obvious that nursing of the future will require some of the
very best minds. Given the competition for such individuals from other disciplines and
professions, how will we corrpete?

Our sense is that even the most sophisticated recruitment and retention strategies will be of

only marginal usefulness until the practice and the science of nursing is better known by the
public. Image-building campaigns will help. But until we find a way to communicate that nursing

74

care is not just something that comes with the clean linen and meal service in the hospital. we are
unlikely to hold much attraction for the brightest college students of the future.

Each of us can play a role in changing this image. Those of us who thrive on political activities
can demonstrate how nursing knowledge can inform policy decisions and that nurses are
intelligent beings. Those of us who research can be more diligent in translating our research
questions and findings into terms that communicate their relevance to the real problems of
people. Although we may not want to adopt the "collect some data and hold a press conference"
strategy of some investigators, we certainly could do a better job of getting our findings to the
public. Those of us in clinical practice can portray nursing as a learned profession in subtle ways
by explaining our actions and recommendations to patiems in terms of what we have teamed
from nursing studies and by making a point of allowing our clients to see us engage in
consultative encounters with other nurses and health care professionals.

Finally, those of us who teach in schools of nursing have the responsibility to infect students
with a thirst for knowledge and a hunger for problems solving. Assuming that the curriculum
provides the requisite basic knowledge, we can think of no better way to start an epidemic of
intellectual curiosity than for faculty members and clinical scholars to engage students in their
own search for knowledge and in their own problem solving activities.

Graduate preparation. The current and anticipated changes in nursing in the community
have several implications for graduate programs preparing for advanced practice and for full-time
scholarship. There are several advanced practice roles in community nursing requiring graduate
preparing. Preparation for the first, the public health nursing specialist, should concentrate on the
case management role. Although there is much debate about what case management is, we
believe it is the process through which the nurse familiar with community systems and family
support needs. assesses the particular health and social services required by the client, enlists
and coordinates the elements of services. and evaluates the consequences for the client and
family. The public health nursing specialist, then will require a firm grounding in basic public
health concepts and understand the implications of viewing the community as the relevant unit of
analysis.

Preparation for the advanced practice roles of clinical specialist and nurse practitioner will
need to provide more focus in two directions. While we believe it is unrealistic to expect students
to team both the advanced clinical role and the intricacies of practice in the community setting,
they should know about the type of services available in the community, how to gain access to
them, and how to influence the development of the special services required by their clients.
They will also need to be competent in providing consultation to colleagues practicing in the
community.

The implications of current developments in the health care delivery system for preparation of
nursing scholars have mainly to do with emerging knowledge needs and the type of preparation
nurses will need to fill those knowledge needs. From the point of view of those who practice in
the community, one of the first knowledge needs is for a taxonomy of community nursing and a
method for assessing the case mix of an agency. Several major studies have shown that medical
diagnoses and treatments provide inadequate information for specifying the nursing care
requiremems of patients in institutional settings. (McKibbin, Brimmer, Clinton, et al., 1985;
Mitchell, Miller, Welches & Walker, 1984; Riley & Schaefers, 1985; Sovie. Tarcinale. Vanputee &
Stunden, 1985). Our initial exploration revealed that medical variables and commonly used
activity of daily living measures of patient requirements were also not effective in predicting the
nursing care costs of Ramsey County Nursing Service (Rudberg, 1987). Basic descriptive
studies of the nursing care requirements and outcomes of various types of clients in the
community and the correlates of those requirements and outcomes are sorely needed.

75

In addition to research focused on the organizational system in which nursing practiced. the
changing nature of clients and health care problems produces scores of clinical questions -
questions ranging from the prevention of disease, disability, and maladaptation to the
consequences of sophisticated technologies for client comfort, safety and adjustment. We look to
researchers with an interest in the health care needs of clients in the community to answer these
questions. ‘

M!

The past five years have produced new initiatives. demonstration projects and legislation to
move the health care system away from dependence on institutional care. Future changes will
continue to be directed toward the goal of achieving a more cost effective, humane system of
care for the increasing populations needing acute and chronic care.

In the community. there are two systems of managed care. In the private sector, third parties
look to physicians to prescribe and control the use of health care resources. In the public sector,
social workers are often given this role. To influence the future, nurses must impose themselves
on both systems, identifying what nurses can do as case managers and direct care providers.
This will require nurses who can market their services to payers by providing operational data and
research findings documenting how nursing can ensure that consumers will receive high quality
care and good value for their money. Only then can we rest, assured that we have met our
societal obligation to tend to the nursing needs of citizens.

76

References

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City: ANA.

Auerbach, M. (1985). Changes in home health care delivery. Nursing Outlook, a, 290-91.

Aydellotte, MK. (1987). Nursing's preferred future. Nursing Outlook, n5, 114-120.

Buchanan. J. Fl. (1986, October) Educational impacts of New Care Systems. Paper delivered at
the plenary session of the Annual Meeting of the Association of American Medical
Colleges, New Orleans, LA.

Coleman, J.R. & Smith 05. (1984). DRGs and the growth of home health care. Nursing
Econom'fl, 2, 391-5, 408.

Droste, T. (1987). Going home to die: Developing home health care services for AIDS patients.
Hospitals. an 6), 54-58.

Edwardson, SR. (1986). Shedding light on a shifting marketplace: Competition and maternity
care. Nursing and Health Care. 1(2), 73-77.

Elderly 21 percent of population by 2040. (1985). Hosnitals, 59(5), 41 & 44.

Felton, G. (1987). Obstacles to nursing's preferred future. Nursing Outlook, g, 126-128.
Goertzen, LE. (1987). Making nursing's vision a reality. Nursing Outlook, g, 121 -1 23.
Grimaldi, P.L. (1985). PPS for home health services? Nursing Managemem. 1_§(12), 16-18.

Havighurst, CC. (1986). The changing locus of decision-making in the health care sector.
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Health Care Financing Administration. (1987). Medicare enrollment, reimbursement, and
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Administration.

 

Henderson, J. A. (1986) Surgery center growth slows: More procedures done. Modern Health
Care. _1_6(12), 154-157, 160.

Iglehart, J.K. (1984). The Twin Cities' medical marketplace. New England Journal of Medicine.

Livengood, W.S., Smith, C 8. Hallstead, S. (1983). The impact of DRGs on home health care.
Home Healthcare Nurse, 1 (1), 29-34.

Lorenz. BR. (1984). Prospective reimbursement in health care and related problems and
opportunities for home health agencies. Caring. §(2), 27-28.

McBride, AB. (1987). Shaping nursing's preferred future. Nursing Outlook, 35, 124-125.

McKibbin, R.C.. Brimmer, P.F., Clinton, J.F., Galliher, J.M. 8. Hartley, SS. (1985). DRGs and
nursing care. Kansas City: American Nurses' Association.

77

Medicarecertified home health care agencies expand. (1984). Hospitals. 5_8(18), 78.

Mechanic, D. (1987). Correcting misconceptions in mental health policy: Strategies tor
improved care of the seriously mentally ill. The Milbank Quarterly, §§, 203-30.

Mitchell, M., Miller, J., Welches, L. & Walker, 0.0. (1984). Determining cost of direct nursing
care by DRGs. Nursing Management, g, 29-32.

Morgenlander, K.H. & Greenwald, DE. (1985). Psychiatric DRGs: The legal and ethical impact.
Quality Review Bulletin, 1_1 (6), 175-179.

Muller, H.J. & Ventriss, C. (1985). Public health in a retrenchment era: An alternative to
managerialism. Albany: State University of New York Press.

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Rapid growth pattern tracked. (1984). Hospitals, §§(5), 33.
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Sandrick, K. ( 1986). Home care: Cutting health care's safety net. Hospitals. 6_0(10), 48-52.

Sovie, M.D., Tarcinale, M.A., Vanputee, A.W. & Stunden, A.E. Amalgam 01 nursing acuity,
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Taylor, MB. (1985). The effect of DRGs on home health care. Nursing Outlook, 3_3, 288-89.

Thorton, C. & Dunstan, SM. (1986). The evaluation of the national long term care
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Mathematica Policy Research, Inc.

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286-291.

78

Executive Summary
DRGs -- Implications for Undergraduate Nursing Curricula

Rosalee Yeaworth and Joyce Crutchfield

In order to document past and predict future influences which prospective
payment has had on undergraduate nursing curricula, a review of the literature
was done. In addition, a survey was conducted of selected nursing deans,
nursing administrators in acute and community settings and nursing faculty to
help judge the regional applicability of national findings and predictions.

From the literature, several major changes and implications were
identified.

1. The shortened length of hospital stay limits opportunities for students
to provide continuity of care or to evaluate results of care and teaching.

2. The increasingly acute and complex conditions of patients mean that some
patients may be too ill to be cared for by students or that students will have
to care for fewer patients.

3. Patients are much sicker on discharge from acute care so that they and
their families need more teaching, and procedures previously done only in
hospitals now must be done in homes and nursing homes.

4. Accurate and complete documentation of care, and the patients’ conditions
are necessary not only for medical and legal reasons, but for reimbursement
purposes.

5. Students should be made aware of the cost of resources and the expense of
uncoordinated scheduling that lengthens hospital stay.

6. Students should learn the need for costing out nursing, the pros and cons
of the various methods currently in use, and the importance of patient

classification systems.

79

7. With the increased specialization of hospitals as they determine their
profitable DRGs and product lines, students may need experiences in more
agencies to get the same overview.

8. Clients of community and home health agencies are sicker, older and more
complex, so that many agencies are reluctant to arrange for student
experiences with them, yet these agencies want graduates with this
preparation.

9. Nursing homes have more critically ill patients, with more deaths, so
care must be taken in appropriate selection of learning experiences in three
agencies.

The midwest survey used the DRG related items from a questionnaire
developed by the American Association of Colleges of Nursing (AACN) in 1984
for a mailing to selected deans of nursing. Items were added and the revised
questionnaire was sent to 108 deans of AACN member programs in the 13 states
comprising the Midwest Alliance in Nursing (MAIN). There was a 77% return
from this group, with 81 questionnaires used in analysis.

Data was also collected from other relevant groups. The questionnaire
used by AACN for graduates of selected programs was modified and sent to VNA
affiliates, acute care agencies and University of Nebraska College of Nursing
faculty. There was a 72% return from VNAs with 19 questionnaires for
analysis, a 91% return from acute care agencies with 37 questionnaires for
analysis and a 67% return from faculty with 43 questionnaires for analysis.

One hundred percent of the deans believed prospective payment had had
influences on their curriculum, even though many indicated that it was more a
combination of DRGs, technology changes and demographic changes than
prospective payment alone. The biggest change was increased emphasis in

community and home care, followed by greater emphasis on teaching patients and

80

their families and discharge planning. One hundred percent of the respondents
from VNA affiliates indicated increased concern about the numbers of people in
need of care who were falling through the cracks and recommended that students
be taught more about health care regulations, reimbursement agencies, and how
to express client needs to these agencies. Acute care agency respondents
stressed the needs for more referrals for home health or community health care
follow up and increased discharge planning. They wanted graduates who could
set priorities. Faculty saw increased need for nurses with critical care
skills and expressed concern about the numbers of people denied care as a
result of specific reimbursement policies and regulations.

While the survey generally did not reveal many unanticipated effects on
nursing service and nursing education, it confirmed that the concerns and
changes identified in the literature were indeed being experienced in the
midwest. A survey of Associate Degree and Diploma programs in the midwest is

now planned.

81

 

DRGSuImpllcatlons for Undergraduate Nursing Currlcula

Rosalee C. Yeaworth, Ph.D., R.N., F.A.A.N.
Dean

Joyce Crutchfleld, R.N., Ph.D.
Assistant Professor

University of Nebraska Medical Center
Omaha, Nebraska

PUEQOSG

The initiation of the Medicare prospective payment system has led to major changes in
nursing; how and where it is practiced, the knowledge base and skills required, the problems and
decisions faced, the opportunities for ventures and mergers, the educational preparation required,
and where this educational preparation may need to occur. While it is true that advances in
science and technology and other factors are also influencing nursing, the purposes of this
monograph are to document influences which prospective payment (DRGs) has had and to
predict what influences it will have on undergraduate nursing curricula. This monograph is part of
a Division of Nursing, DHHS, funded project entitled: ”Information Concerning the Impact of the
Prospective Payment System (DRGs) in the Reimbursement of Hospitals, on Clinical Nursing
Care Both in Hospital and in Community Settings." Regional nursing associations were recipients
of procurements to produce a series of papers and reports which would reflect information from
their specific geographical region.

Background

Beginning in the 19505, federal policy focused on increasing knowledge in medical
science and providing access to health care services. Massive investment was made in the
National Institutes of Health for biomedical research. The Hill-Burton program resulted in federal
expenditures of almost $4 billion in construction of a vast network of hospitals. Federally financed
regional medical programs assisted hospitals in gaining the latest technology. Federal funding
was made available for schools to produce more physicians. nurses and other health care
professionals. Congress created Medicare and Medicaid to help the elderly and poor gain access
to medical and health care (Smith, 1985; Starr, 1982).

General societal attitudes and behavior were in line with the federal policy. Third party
payers' reimbursement methods encouraged consumption of services. Hospitals were
reimbursed on what was done or used. Physicians' incomes were based on the number of
services they could render. Values reflected the perspective of health care as a right. Excesses
in the demand for and provision of health care began to be obvious. Gradually however, a better
informed public began to ponder the fact that much of the increase in expenditures for research
and care was for advanced technology and for complex medical care to chronically ill, terminally
ill, or developmentally disabled. illness prevention and public health services fared less well in
gaining a share of the health care revenues.

By the 19805, hospital and health care costs exhibited a consistent pattern of rising more
rapidly than the cost of living and of consuming a greater proportion of the annual gross national
product. In addition, the national debt had reached a level incomprehensible to most Americans.
National concern began to converge on ways to reduce public spending and control the costs of
government. The general public began to recognize that potential salary increases were often
going to finance the escalating cost of health care benefits. Business and industry became very

83

alarmed at the percentage of their costs that were going to finance health care benefits for
employees. They also began to question their obligation to subsidize the cost of care for the
indigent and for health care education.

The Surgeon General's Report on Health Promotion and Disease Prevention (1979)
revealed a pattern for the changing perspective and for the direction of future public policy.
Fifteen priority areas for disease prevention, health protection and health promotion were
identified. The mass media also began to reflect the position that people should be more
responsible for their own health by developing and maintaining healthy life styles. The belief that
health care is a right began to give way to the idea that health care is a commodity to be
budgeted for and purchased. The language and message of health care communications began
to borrow more heavily from business and economics. More and more writing and discussion
dealt with the ethical aspects of choices and decisions about use of finite health care resources.

When insolvency threatened the Medicare Tmst Fund, the federal government used this
program to initiate an attempt at health care cost containment. The Tax Equity and Fiscal
Responsibility Act of 1982 directed radical changes in Medicare’s hospital reimbursement by
tightening controls and putting hospitals on prospective pay schedules. The Social Security
Amendments of 1983 enacted a prospective payment system based on 467 Diagnostic Related
Groups (DRG) categories (Shaffer, 1983). This classification system assumes that the types and
quantities of resources used during hospitalization vary directly with the length of stay
(Greenberg, 1985). The major goal of prospective payment is to reward economy rather than
consumption while maintaining quality of services (Young, 1984).

Several problems have been identified as inherent to DRGs. First, they are not a
particularly accurate measure of the use of hospital resources (Bergen and Roth, 1984). Second,
they do not consider the severity of illness or the amount of nursing care required. They make
the assumption that differences in interinstitutional costs of providing care stem from differences
in efficiency and not from differences in the patient population and the quality or amount of care
(Marks, 1987, Stern and Epstein, 1985). Third, DRGs are directed only at hospitals, when rising
costs are the responsibility not only of institutions, but also of physicians and consumers (Rosko
and Broyles, 1984). Physicians control 60 to 70 percent of health care expenditures and their
decisions determine between 70 and 80 percent of all personal medical expenses (Marchant,
1987). Fourth, the DRGs have the potential to encourage hospitals to market for the less ill and
limit access for patients who may need care most or who lack outside resources and support
(Stern and Epstein, 1985). Fifth, they can provide only temporary relief for escalating costs.
Schwartz (1987) presented the argument that most of the current increase in hospital costs are
related to population growth, rising input prices ("the hospital market basket") and the innovation
and diffusion of technology. Schwartz further proposed the dilemma of effecting cost control at
the expense of developing new technology and making it widely available. Finally, other authors
made the argument that attempts at cost containment may simply result in cost shifting. Sales of
diagnostic and treatment equipment to be used outside of the hospital are rising rapidly (Stern
and Epstein, 1985). With decreased length of stay, much of the nursing care previously
performed in the hospital is now being performed in the home or nursing home (Phillips and
Cloonan, 1987). Individuals, their family members and their friends are having to carry out more
care and treatment. Surgicenters, emergicenters and other ambulatory care settings are
providing a large amount of care that was previously provided in the hospital.

Other third-party payers have adopted some of the cost containment measures initiated
by the federal government for Medicare. Fourteen states new base their Medicaid
reimbursement to hospitals on DRGs (Shahoda, 1987). A national survey of 668 hospital CEOs
indicated that 48 percent believed it will take two years or more to include physician charges in a
prospective payment stmcture, and slightly over 41 percent believed that outpatient services will
come under prospective payment within two years (Traska, 1987).

84

Revlew of the Literature Related to Changes

The literature from nursing, medicine, and pharmacy has focused on the implications for
education of shortened length of in-hospital stay and of the increasingly acute and complex
conditions of hospitalized patients (Boston, 1986; Foreman, 1986; Penna and Knapp, 1986).
Patients are often admitted with a medical diagnosis already established, so students have no
opportunity to problem solve or make input to that aspect of care. They are frequently too acutely
ill to be cared for by students. They require so much care that students have to care for fewer
patients. This means that students may not see the variety of problems and personalities that
they may have in the past. The hospital stay may be so short that students do not have the
opportunity to have any continuity in caring for the same patient or to evaluate the results of care
and teaching. ‘

Patients are discharged much sicker, so that many procedures which were previously
done in the hospital are now being done in the nursing home, in ambulatory settings or at home.
Patients and their families need to understand what to expect, to recognize signs and symptoms
of complications, to know what and to whom to report, and to learn to perform procedures that
they will have to do at home. They need to understand about their medications, how they should
be taken, and their purposes and side effects. Teaching must begin with the initial contact and
may have to be done under conditions of duress.

Accurate and complete documentation is critical for reimbursement. What is charted by
nurses can bring in or lose reimbursement dollars for hospitals (Hoke, 1985). On admission,
there should be nursing notes to support the primary and secondary diagnoses on which a
patient's DRG category is based. Continuing documentation is needed to support the need for
the patient to be in the hospital. For patients who stay longer or need extra resources,
documentation is essential for the hospital to be reimbursed for them as cost-outliers or day-
outliers. Teaching and discharge planning for patients and their families need to be thoroughly
documented. With shorter hospital stays, the potential increases for patients to' develop
complications that result in legal action against hospitals, physicians and nurses. Charts become
key sources of legal data. Nurses should be cognizant of legal ramifications of what they do or
do not document.

Correcting inefficient use of resources and poor patient scheduling are important ways in
which hospitals can cut costs (Hobson and Blaney, 1987; Kneedler, 1985). Under prospective
payment, wasted, contaminated. or misused supplies and unnecessary or lost equipment can no
longer be billed. They are direct losses for the hospital. Errors or omissions in scheduling tests
or procedures can extend patients' lengths of stay and result in substantial loss for hospitals.
Scheduling nurses' time appropriately. using the right staffing mix and using measures to reward
productivity are important means of conserving the vital resource of nursing time (Adams and
Johnson, 1986).

Efforts to cost out nursing have intensified. Most nurse managers believe that the true
cost of nursing services must be determined if they are to staff to care for patients safely, to
prevent nursing from subsidizing other departments of the hospital, to charge patients fairly, to
justify nursing budgets and to combat the age old myth that hospitals and nursing homes can't
afford to increase nursing salaries. lmbedding nursing costs in the daily hospital room rate
makes no differentiation in charges for the amount of nursing care required by various patients
and masks efforts to determine the true cost of nursing services (Fosbinder, 1986; Joel, 1983;
Maher and Dolan, 1982; Marks, 1987; McKibben, 1982; Riley and Schaefers, 1983: Shaffer,
1984; Walker, 1983).

85

The Relative lmensity Measures (RlMs) of nursing pioneered by New Jersey nurses for
costing out nursing have been criticized for being measures of the nursing care given, and thus of
assuming that care given equals care required (Grimaldi and Micheletti. 1982). Like the bases for
DRGs. the historical averages supplied by RIMs provide a foundation, but nurses expert in care
of various types of patients need to develop and get consensus on requirements for essential
care. The constamly changing technology indicates that these will be dynamic variables requiring
regular reassessment. All of the articles stress the need for a reliable patient classification
system. All of the efforts to cost out nursing demonstrate a need for nurses to have knowledge of
basic economics, budgeting and accounting. They should have an understanding of research to
the extent that they can fomiulate the key questions needing answers and use appropriate
findings in their practice. They should also be comfortable using computers.

Prospective payment is forcing changes in institutions themselves. More than 100
hospitals have closed. With the business orientation fostered by cost containment. product-line
evaluations will cause hospitals to close high-cost, low usage services. Hospitals will become
more specialized as they seek to care for the DRGs which are proving most profitable to them
(Smith, 1985; Stern and Epstein, 1985). Many small mral hospitals may close or become
emergency and triage centers. -

University and other major teaching hospitals are more expensive places in which to treat
patients. Some of the reasons found for the higher cost include: longer stays, higher use of
ancillary services, higher proportion of professional nurses in total nursing personnel, higher
square footage of hospital space per patient, higher proportions of patients in medical-surgery
and burn intensive care, and higher proportions of Medicare and Medicaid patients (Sloan and
Valvona, 1986). While most of these factors are understandable or even desirable, they could
spell serious problems for teaching hospitals if HMOs and other groups contracting for acute care
services avoid using teaching hospitals.

Community and home health nursing agencies are reporting that a majority of their clients
are sicker, older and require highly complex care such as pumps, venipuncture, parenteral
nutrition or chemotherapy. Families need more sophisticated counseling and teaching. Nurses
need to assume more of a case manager role, coordinating a variety of community agencies to
give support and therapeutic services. They are having to take on a fiscal monitoring role to
prevent clients from being precipitously or inappropriately dropped from care. They are also
concerned that the current reimbursement does not allow for some of the traditionally valued
nursing services and excludes a group of clients who need care but who have no source of funds
(Phillips and Cloonan. 1987).

A study of the influence of prospective payment on Wisconsin nursing homes indicates
that the institutionalized elderly Medicaid population experienced a 72 percent increase in the rate
of hospitalization and a 26 percent decline in hospital length of stay. Between 1982 and 1985,
there was an increase of 26 percent in the rate of deaths occurring in nursing homes. During this
same period, there was a 10 percent decline in hospital deaths. Thus, it would appear that more
seriously ill patients are being transferred to nursing homes for terminal care (Sager, Leventhal &
Easterling, 1987). Students will encounter different learning experiences in these settings.

Implications and Recommendations for Undergraduate Curricula

Some of the literature which identifies changes resulting from prospective payment also
states educational implications. Other literature remains silent, but the implications are obvious.
A few articles focused on changes needed in nursing curricula (Boston, 1986; Bush, 1985;
Perlich, 1985: Reinhard, 1984; Smith, 1984). Some suggestions are as general as: "We need a
curriculum that instills self-reliance, flexibility, adaptability, confidence. versatility. and the political

86

sawy to meet the challenges of today" (Bush, 1985, p. 89). Others offer more specific
suggestions (Boston, 1986; Perlich. 1985).

Because of the shortened length of hospital stay and the increasingly acute and complex
conditions of hospitalized patients, more clinical experiences for students must be obtained
outside of the acute care setting. More practice must be done in simulated and practice lab
situations, so that students are more skilled and confident before attempting to care for patients.
More evening or rotating day/evening time may need to be used for student experiences to allow
for some continuity for students who have to attend classes. Concentrated practicums in the
senior year and internships may be needed. The case for the baccalaureate or even post
baccalaureate as the minimum level of preparation for professional nursing is obvious with the
knowledge and skills needed by nurses (Houston & Cadenhead, 1987; Krauss, 1987).

Assessing the learning needs of patients and families must be taught as an important
aspect of the nursing process from the earliest nursing courses. Educational principles. effective
teaching methods under conditions of stress and motivational techniques need to be introduced
early in nursing programs and continued throughout the educational process.

The importance of accurate dowmentation and the economic and legal aspects of
documentation may need greater attention in undergraduate curricula. An understanding of
medical diagnosis and the principles of prospective payment will be needed relatively early, if
students are to participate in charting that will support the primary and secondary diagnoses of
the DRG category and the patient's need for hospitalization (Hoke, 1985). Some content on
economics and legal aspects of nursing and health care should be begun early and woven
through the curriculum with increasing content and complexity.

Informing students of the price of supplies and equipment should become part of the
routine teaching of skills. The management/leadership course or content should deal with
inventory management. Emphasis should be placed on the importance of overall planning and
scheduling for patients to make the most efficient use of time (Hobson and Blaney, 1985;
Kneedler, 1985). Demonstrations should be provided on the use of computers in keeping
inventories and information on prices. Access to and practice in using computers for hospital
information systems. patient classification, scheduling. budgeting, inventories. and other
information should be part of the management course content.

Other content for management/leadership courses includes the importance of costing out
nursing and the pros and cons of methods developed for doing so. The ability to prioritize patient
care needs can be part of the decision making which should be begun early and threaded
through the curriculum. With all of the decisions to be made about allocation of scarce resources,
ethics also needs to be integrated throughout the curriculum.

In years past. students were viewed as important sources of labor. Now with the
complexity of health care and the business and economic focus, medical and nursing staff are
concerned about their loss of productivity when teaching students. Physicians are concerned that
having medical students in their offices could interfere with their work and reduce the size of their
practices (Deitrick, 1986). As nurses undertake more private practice ventures. it can be
anticipated that their reactions could be much the same. Likewise. community health nursing
agencies need nurses with more advanced clinical skills and more sophistication with high
technology and counseling. but they do not particularly want nursing students involved with their
more complex cases. They, too, are concerned about students decreasing their productivity, and

some agencies are asking or intimating that they will be asking schools to pay for students placed
in their agencies.

87

Not only are some of the sites used in the past becoming reluctant to continue taking
students. but increasing specialization could result in more and different sites needing to be used
for students to gain the same experiences. Students may have to learn many of their basic skill
procedures in nursing homes. The advisability of placing beginning students in nursing homes
may be debatable, especially if more deaths are going to be occurring in these settings. With
more procedures being done in home and community settings, practice with some skills and
technology may need to occur in these settings. Faculty must carefully evaluate the role models
in nursing home, home health and community agencies. Competition for settings is going to be
more severe between various levels of nursing programs and students from different disciplines.
Nursing service administrators are going to have to set some priorities for students in
baccalaureate nursing programs it they are truly committed to hiring nurses with that level of
preparation.

Very competent, skilled, knowledgeable faculty will be needed. Faculty must keep their
skills and knowledge current so that they are effective role models and are comfortable in
teaching. With appropriate clinical agencies becoming scarce resources. careful planning should
be done to be certain that clinical learning experiences are matched to Ieaming goals.

Ambulatory and community settings not presently in use for clinical experiences will have
to be evaluated by faculty. Some faculty may have to undertake some part time private practice
or demonstration projects to develop new roles and open up new settings. Special non-tenure
track appointments or joint appointments and other collaborative relationships deserve more
attention.

There will be unique concerns in academic health science centers. Since care in a
university hospital is more expensive. university hospitals will strive to establish product lines that
will be profitable. Medical college resources will be committed to attract faculty to support these
profitable specialties. Strategic planning will become concentrated around these ”areas of
excellence." The symbiotic relationships between the university hospital and the College of
Medicine put the other health science disciplines' educational budgets at risk. If Medicare pass-
through money to support graduate medical education is stopped. and university hospitals find
themselves hard pressed to add the new programs and equipment believed necessary. the
temptations arise to cut programs defined as less central to the mission of the "medical center."

Colleges of Nursing have a claim to centrality to "medical center" missions because of
their value in helping to produce the highly skilled nurses needed to staff these tertiary care
centers. In trying to build research and graduate programs, they will have to decide if they want
to align with the specialty areas of the "medical center" in order to further strengthen their
centrality. They will need to build their political support and weigh negotiations carefully.

The Midwest Survey

In the background and purpose of the present project, as stated by the Division of
Nursing, reference is made to the American Association of Colleges of Nursing (AACN) study of
selected baccalaureate programs. Deans and a sample of senior students from these programs
were asked questions about the impact of DRGs on their nursing program. A higher percentage
of deans in the West and Midwest than in the South or Northeast reported that prospective
payment had influenced their programs. The background for the present Division of Nursing
project indicated that this regional difference was an impetus for further investigation. involving
regional nursing organizations and having regional experts react to papers should help to address
whether regional differences do indeed exist. However. it seemed that some current regional
data was necessary if this monograph is to help answer the question of regional differences.

88

Methodology for the Midwest Survey

To gather data on the impact of DRGs on undergraduate education in the mldwestern
region, questionnaires were sent to a sample of Deans of AACN member schools, selected
faculty, VNA's and acute care nurse administrators. A questionnaire was developed using the
nine items from the AACN survey of deans, along with ten others suggested from discussions
with faculty and with nurses in nursing service. A section was added with items about strategies
used to manage the changes brought about by prospective payment. To allow for comparison
with the AACN data, this questionnaire was sent to the 108 deans and directors from AACN
member schools in the thirteen states which make up the Midwest Alliance in Nursing (MAIN).
Eighty-three questionnaires (77%) were returned. One response was based on an associate
degree program and one was based on an N.D. program. These latter two were kept for future
analysis.

In addition, the AACN questionnaire developed for baccalaureate graduates one year
after graduation was modified by deleting items about what was happening to the number of RN
staff and to fringe benefits, and by adding items believed more relevant to undergraduate
curriculum planning. It was then sent to convenience samples of 25 Visiting Nurse Association
affiliates, 42 acute care agencies affiliated with MAIN, and 64 faculty from the University of
Nebraska College of Nursing. Eighteen (72%) were returned from the Visiting Nurse Association
affiliates. Thirty-eight (91%) were returned from the acute care agencies, but one turned out to
have been sent to a public health nursing agency, so it was added to the VNA returns for
analysis. Forty-three (67%) were returned by the College of Nursing faculty.

The data from the questionnaires were entered on the computer for numerical counts and
percentage calculations of responses. Summaries are shown in this monograph, but the
specifications for overall length of the monograph did not allow for detailed analysis. The
summaries should be sufficient, however, to show the thinking of deans of AACN member
schools and selected faculty, VNA's. and acute care settings in the Midwest.

Results
Responses by Deans

Table 1 shows the responses of the 81 AACN deans to the influences that prospective
payment has had on the curricula of their undergraduate programs. The result that was reported
by most administrators (82%) was the increased emphasis that has been placed on home health
and community clinical experiences. In regard to this trend, 28 percent reported difficulty in
finding sufficient placements for students in community or home care agencies. Areas of content
that have received added attention in more than 65 percent of the programs included teaching of
patients and families, discharge planning, political/economic/Iegal issues, and wellness/health
promotion/illness prevention topics.

The least frequently selected effect of DRGs was the introduction of statistics as a
curriculum component. Also. the use of simulated learning activities in lieu of clinical experiences
was not extensive. It appears that the decline in numbers of hospital patients had not greatly
affected the nature of student experiences.

An important change reported by 59 percent of the deans/directors was the increased
collaboration between nursing service and nursing education to better prepare nurses to care for
patients with shorter length of stay. In fact, only 5 (6%) of the respondents indicated that they
had been asked to compensate agencies for student placements. However, 23 (28%) of the
schools saw a need for faculty involvement in clinical practice to enhance their understanding of
the implications of health care economics.

89

TABLE 1

Midwest AACI Dean's Percgptions of Effect of DRGs on Nursing Practice (n-81)

 

Effect n

Increased emphasis on home care/community 66
clinical experience.

Increased esphaeis on teaching patient and 57
families, discharge planning.

Increased esphasis on politicsl/economic/ 56
legal issues

More emphasis on prevention. Iellness, 53
health promotion.

Increased collaboration sith nursing 48
service agencies to better prepare nurses
in caring for patients with shorter
length-of-atays.

Added computer course/computer classes to ‘5
make computers available to students.

More emphasis on better documentation of 39
client's condition to show need for care.

Have instituted instruction for faculty and 36
students to better prepare them for
confronting ethical/econosdc issues
associated with health care cost containment.

More teaching to students on cost of 34
equipment. drugs, procedures, giving care
without waste.

Necessitated changes in clinical 33
placements. and/or clinical hours.

Emphasis on the development of critical 33
nursing skills for patient care in
community settings (ventilator care,
chemotherapy. administration. etc.).

Have to use extended or long term 31
care settings for teaching skills to
beginning students.

Have to place decreased number of 29
students at one time on acute care units.

Have to place fewer students with a 25
faculty member.

Alteration in clinical requirements; that 23
is. abbreviated nursing care plans and
focus on discharge planning.

Difficult finding sufficient placements 23
for community/home care experiences.

Need for faculty to be sore directly 23
involved in clinical practice to enhance
their understanding of the implications of
health care economics on quality of nursing
care.

More stimulated clinical activities are used 22

as the inpatient hospital population
decreases.

Introduced statistics or added more 1?
statistics to the curriculum.

No effect. l

90

X of Total

82

7O

70

65

59

56

48

64

42

41

41

38

36

31

28

28

28

27

21

Strategies commonly used by 29 (36%) of the programs to manage the perceived
changes brought about by the prospective payment system included:
1. placing students in agencies on consecutive days to provide continuity of learning
experiences.
2. increased use of agency personnel as preceptors.
3. concentrated clinical experiences such as internships or preceptorships.

Twenty-three (28%) of the administrators indicated an increase in the numbers of part-
time faculty or clinical faculty that were employed by their school, but only 16 (20%) indicated joint
appointments of faculty were implemented as a result of the recent changes in the reimbursement
system. Whether a change in the student/faculty ratio occurred as a result of these activities was
not addressed.

Several deans/directors commented that the curriculum adjustments were occurring in
response to technological and demographic changes as well as to cost—containment measures
initiated by health care agencies. In general, the majority of administrators concurred that the
complexity of care requirements, the increased acuity of patients, and the nursing shortage are
making the learning environment for nursing students very unique at this point in time.

Responses bv Visiting Nurse Association Affiliates

The responses of nurse administrators of Visiting Nurse Association (VNA) affiliates are
shown in Table 2 . All of the sample (n=19) reported that increased numbers of people in need
of care were not receiving essential health care by virtue of restrictions imposed by third party
payers or the limitations of coverage by Medicare/Medicaid. The second major effect that these
nurses identified was re-admission of patients to acute care facilities as a result of early
discharge. Further, 16 (84%) of the respondents noted an increase in referrals to home health
agencies, community health nurses, or long-term Care facilities for nursing care. Responses to
the three items on changing patterns of care provided considerable support for the projected
trends of decreased access of clients to care, and the quality and quantity of care needed by
certain groups of clients.

The effects of changing care requirements on the nature of nursing practice in the VNA
were acknowledged. Fifteen (79%) of the nurse administrators reported that there was an
increased need for nurses with critical care skills to staff their departments. On the other hand,
only 6 (32%) indicated an increased emphasis in their agency on providing health promotion or
disease prevention programs for consumers. A shift in the service orientation from "wellness" to
"illness" seems to be occurring.

The VNA administrators were asked to consider courses and/or class content that should
be added or given increased emphasis in programs preparing professional nurses. items were
ranked in order of importance with 1 being high and 10 being low. Community/home health care
content was given highest priority by 17 (90%) of the respondents. Critical care/intensive care
content was second in importance (with ratings between 1 and 5) by 12 (63%) VNA
administrators. Ratings were evenly divided on items concerning 3) ethics, b) management and
financial content. c) patient teaching, d) illness prevention, and wellness, e) discharge planning,
and f) physical and mental assessment of patients. Less important areas of emphasis in

curriculum redesign were preceptorships/internships, law and health care policy. and computers
in health care or management.

The written comments of four administrators of Visiting Nurse Association affiliates
conveyed concern about educating students on reimbursement agencies -- the complexities of
using them, how to effectively express the clients' needs to them, and the changing guidelines

91

TABLE 2

Midwest Comeunit Nursin Heal h Administrato s' Perce tions of Effect of DRGs
on Nursing Prgctice (n-l75

 

 

East It lflseL—
Increased numbers of people in need of care 19 ‘ 100

falling through the cracks in terms of
restrictions. inability to qualify for third
party payment or the limited amount of

cost covered by Medicare/Medicaid.

Readmission of patients to acute care facilities 18 95
when they may have been discharged too
early.

Increased need for people with 17 90

management/finance knowledge.

More referrals for home health care, 16 86
community health care follow-up and long—
tara care facilities.

Increased need for people with critical care 15 79
skills.
Increased need for nurses to participate in 14 74

political forums and professional
organization activities to increase nursing'a
power base for influencing health policy

decision-making.
Increase in discharge planning. 13 68
Increased need for nurses to have continuing 12 63

education in political. economic. legal and
ethical fields.

Increase in patient census for home health 11 58
agencies and/or long-term care facilities.

Increased emphasis on health promotion. 6 32
disease prevention programs for consumers.

Separation of the cost for nursing services 5 26
apart for- the routine hospitalization
charges billed a patient.

Increase in direct or third party 5 26
reimbursement to nurses for nursing services
and/or health promotion/education services.

No effect. 0 0

92

and sources. Two administrators wrote in information to dispel the idea that community and
home health agencies are overflowing with clients and are choice ventures for entrepreneurs.
One wrote that referrals peaked in 1984 and have been slowly declining as more ambulatory
services are providing care for conditions previously treated in the home. The other indicated that
the dramatic increase in the number of home health agencies and the decrease in the number of
visits covered by Medicare (from approximately 25 to approximately 18) are resulting in
decreases in client census and number of visits.

Responses by Acute Care Administrators

Table 3 shows the responses of nurse administrators from acute care settings.
According to the 37 respondents, the major effect of the prospective payment system and other
cost containment measures on nursing practice involved the amount of care required by
inpatients and the amount of time that patients spend in the hospital. All respondents reported
that more referrals were made to agencies for home health care, community health care, or long
term care. Thirty six nurse administrators (97%) saw a need for increased discharge planning
with clients and families to occur within their institutions.

Thirty (81%) of the acute care administrators reported an increasing demand for nursing
personnel with critical care skills, and for nurses with management/financial knowledge. About 50
percent (n-18) of the nurse administrators reported changes in the number of patients readmitted
to their agencies as a result of early discharge. Also. 65 percent of the respondents believed that
more clients in need of care were being excluded as a result of reimbursement restrictions.

In considering changes in the knowledge base for professional nursing practice, 28 (76%)
of the respondents reported an increased need for continuing education in political. ethical, legal
and economic aspects of health care and nursing. However, only 19 (51%) perceived that
political activity by nurses is needed to influence health policy decision making. Few nurse
administrators (n=11) indicated that changes were occurring in separating the cost of nursing
care from other hospital charges.

Under the comments section on perceived changes in nursing practice, a reoccurring
theme was the necessity for all nurses to be able to set priorities for care delivery. Whereas the
processes of determining nursing care requirements and time management have always been
important, additional emphasis was deemed necessary by several nurse administrators in view of
the increased pace of care delivery in the hospital which coincides with the shorter length of stay.
Some respondents also mentioned that complex care needs of hospitalized patients and 'the
prevailing delivery systems or models of care (i.e., primary nursing) require nurses to develop
care management skills.

Curriculum Suggestions from Nursing Service Administrators

Nurse administrators were asked to rank (1 being high priority and 10 being low) courses
or class content that should be emphasized in curriculum in nursing programs, using a
perspective of the changes that have occurred in conjunction with implementation of prospective
payment . The item on increasing content on ”discharge planning“ was ranked high (1 through 5)
by 26 (70%) of the respondents. Second priority should go to “patient teaching. illness
prevention. and wellness". according to 22 (60%) of the nurse administrators. The next area of
emphasis designated by 19 (51%) of the respondents was "physical and mental assessment of
patients". Conversely, only 13 (35%) individuals ranked ethics as highly important and 12 (37%)
saw computer use in health care and management of great importance. The item concerning
content on law and public policy in health care was ranked high (1 to 5) by only 9 (24%)
individuals.

93

TABLE 3

Midwest Acute Care Nursing Administrators' Perceptions of Effect of DRGs on
Nursing Practice (n=38)

 

Effect n 2 of Total

More referrals for home health care, 37 100
community health care follow-up ‘
and long-term care facilities.

Increase in discharge planning. 36 97

Increased need for people with critical care 30 81
skills.

Increased need for people with 30 81

management/finance knowledge.

Increase in patient census for home health 25 68
agencies and/or long-term care facilities.

Increased numbers of people in need of care 24 6S
falling through the cracks in terms of
restrictions, inability to qualify for third
party payment or the limited amount of cost
covered by Medicare/Medicaid.

Increased need for nurses to have continuing 23 76
education in political, economic, legal and
ethical fields.

Increased emphasis on health 22 6O
promotion/disease prevention programs for
consumers.

Increased need for nurses to participate in 19 51

political forum and professional organization
activities to increase nursing's power based
for influencing health policy decision-making.

Readmission of patients to acute care 18 49
facilities when they may have been discharged
to early.

Separation of the cost for nursing services 11 30

apart from the routine hospitalization charges
billed a patient.

Increase in direct or third party 10 30
reimbursement to nurses for nursing services
and/or health promotion/education services.

No effect. 1 3

94

Additional curriculum changes mentioned in general comments by several nurse
administrators in acute care settings involved strengthening student learning experiences in “case
management" (i.e.. decision making. priority setting, delegating, and leadership), written and oral
communication, and interdisciplinary planning for patient care. Specific nursing content in
peri/intraoperative care, rehabilitation, and ambulatory care were recommended by one or two
respondents. In general, the focus of comments for curriculum changes addressed the
integration of theory into practice in order to prepare students for the realities and demands of the
care delivery systems. However, statements also stressed that programs need to help students
to gain a broad perspective of nursing in relation to the total health care system, and to be
creative in using available knowledge.

Responses by Faculty

Table 4 shows the results from the 43 respondents of the sample, University of
Nebraska, College of Nursing faculty involved in clinical teaching. Awording to 34 (79%) of the
respondents, an increase in demand for staff nurses with critical care skills has occurred. The
item with the second highest number of responses (74%) was that increasing numbers of people
in need of health care are not receiving services as a result of having limited insurance coverage
or encountering reimbursement restrictions under Medicare/Medicaid. The same number of
respondents reported that more referrals for home health care, community health care follow-up,
and for long-term care placement were being made by nurses to meet the needs of patients and
families. Thirty faculty members (70%) perceive a concurrent increase in census for community
health agencies and long term care facilities.

Another change reported by 27 (63%) of the faculty was more re-admissions of patients
to hospitals following a short period of treatment. Yet, only 25 (36%) have noticed an increase in
discharge planning by nurses in acute care agencies. Perhaps personnel other than nurses are
performing this activity.

Overall, faculty noted major changes in the amount and type of nursing care required by
patients during hospitalization and in the post-discharge period. Less demand was apparent in
the number of new programs for consumers on health promotion and illness prevention. Acuity of
illness was associated with changes in the number of R.N.'s used to staff agencies and with the
need for nurses with critical/intensive care skills.

Nurse faculty were asked to rank course(s) and content on a scale of 1 to 10 (1 being
high and 10 being low) according to the emphasis that should be given in the undergraduate
curriculum considering the changes precipitated by prospective payment initiated by third party
payers. Community/home health care was designated as a high priority by 33 (77%) faculty.
Additional emphasis in patient teaching, illness prevention, wellness, and discharge planning
were deemed necessary by 31 faculty. Critical care/Intensive care content was ranked 1 through
5 by 30 (70%) faculty. Physical and psychological assessment of patients were important to over
60 percent of the respondents. In contrast, computers in health care/management, professional
ethics, and law/health care policies were not seen as priority targets for change at this time by
faculty respondents.

Faculty were asked to designate strategies that they used or should be using to manage
recent changes in nursing. Thirty-one (72%) reported placing students in agencies on
consecutive days to promote continuity of the learning experiences with a given patient. Use of
part-time faculty or clinical track laculty was important to 27 (63%) of the respondents. Fifty
percent (n=21) saw preceptorships, internships, or other concentrated clinical experiences for
students as a method for helping students deal with complex care requirements of patients.
Further, 18 (42%) believed that increased use of agency personnel as preceptors was a useful

95

TABLE 4

Selected University of Nebraska Faculty Perceptions of Effect of DRGs on
Nursing Practice (n=43)

 

 

Effect n Z of Total
Increased need for people with critical care 34 79
skills.
Increased numbers of people in need of care 32 74

falling through the cracks in terms of
restrictions, inability to qualify for third
party payment or the limited amount of cost
covered by Medicare/Medicaid.

More referrals for home health care, 32 74
community health care follow—up and long—
term care facilities.

Increase in patient census for home health 30 '70
agencies and/or long—term care facilities.

Readmission of patients to acute care facilities 27 63
when they may have been discharged too
early.

Increased need for nurses to have continuing 26 61

education in political, economic, legal and
ethical fields.

Increase in discharge planning. 25 58

Increased need for people with 20 47
management/finance knowledge.

Increased need for nurses to participate in 20 47
political forums and professional
organization activities to increase nursing's
power base for influencing health policy
decision—making.

Increased emphasis on health promotion/ 17 40
disease prevention programs for consumers.

Increase in direct or third party 10 23
reimbursement to nurses for nursing services
and/or health promotion/education services.

Separation of the cost for nursing services 8 l9
apart form the routine hospitalization
charges billed a patient.

No effect. 1 2

96

strategy. Few faculty (n=5) thought that using programmed courses to free faculty for clinical
teaching was or should be used.

Four faculty members stated that many procedures previously done in hospitals were
now performed in doctor's offices, outpatient clinics, or surgicenters. Thus, student placement in
these settings may provide additional clinical care experiences. Another respondent commented
that the preparation time for clinical experiences by faculty and students has steadily increased
due to the "one time" contacts with clients with short hospital stays. Finally, one individual
cautioned faculty about expecting agency nurses who are already overburdened with high
workloads to assume teaching responsibilities during clinical rotations.

Summary. Implications and Recommendations

This paper represents the opinions of the authors gained from a variety of sources.
including the literature, the survey reported and their personal experiences. A selection of
literature on prospective payment that seemed to have implication for curriculum content,
teaching methods and learning sites was reviewed. A survey was conducted to get opinions of
relevant groups of nurses in the 13 states which comprise MAIN. Of the 180 persons who
responded in this survey. only three persons indicated no effect from DRGs. None of the
respondents from the community setting indicated no effect. Generally, the responses reaffirmed
what has been reported in the literature. There is an increased need for nurses with critical care
skills, greater knowledge of management and finance, ability to function in community and
ambulatory settings and to set priorities in regard to giving what is needed most with the limited
time and resources. Community health nurses were the group most concerned about the
numbers of people in need of care but unable to receive it because of reimbursement restrictions
and qualifications.

Having to prioritize and limit care and knowing of people in need of care who are "falling
through the cracks” of our present system may account for the general decrease in satisfaction of
nurses with quality of care (Kramer & Schmalenberg. 1987). General dissatisfaction of nurses in
the magnet hospitals (hospitals identified by the American Academy of Nursing as being able to
attract and retain nurses) should be cause for concern about role models and recruitments of
students. Also, if curricula and teaching patterns do not reflect the need to set priorities and
deliver the most care in the limited time, the ”reality shock" of new graduates will be greater than
ever before.

This survey was done quickly and involved a convenience sample. Since all the deans
and directors whose programs were members of AACN from the 13 states encompassed in MAIN
were surveyed, the survey primarily represented generic baccalaureate programs. While some
RN completion programs were represented. administrators of associate degree or diploma
programs in nursing were not sampled in this survey. Critical care, community health, and
management have traditionally been considered content dealt with in baccalaureate programs, so
it was anticipated that the influences of prospective payment would be more pronounced on
baccalaureate nursing programs. However, a survey of a sample of directors of associate degree
and diploma programs who are members of MAIN is planned. This will allow for some
comparison across the various types of programs which offer undergraduate curricula.

The community sample was VNA affiliates and did not represent public health nursing in
state or city health departments (with the exception of one picked up from the acute care
sample). The sample of acute care agencies was obtained from MAIN through their membership
list. It was only after the questionnaires were mailed that it was discovered that there were three
health departments represented. Only one of the respondents called our attention to the fact that
she, was not in an acute care setting. so the other two may not have responded. The faculty were

97

all from the University of Nebraska, but were from both the Lincoln and Omaha campuses. The
survey does provide a wide sampling of opinion from four representative sources and it is current.

The AACN survey conducted in 1984 found 81 percent of their sample of deans and
directors of nursing programs believed DRGs had influenced their curricula. That questionnaire
asked, "Have DRGs or other prospective payment systems influenced your nursing program?"
The present questionnaire did not ask that question, but began by asking, “How have DRGs
influenced your nursing program?" Only one dean or director answered ”no effect.” While it
could be argued that asking "how” rather than "whether“ evoked a propensity to indicate there
had been an effect, the fact remains that 99% of the’81 deans responding from the thirteen
midwestern states indicated some effect from DRGs to their program. (Even the dean who
checked no effect checked three items, but indicated that she did not believe they could be
"directly attributed to DRGs exclusively”) Seventy-three of the deans indicated five or more
effects with some checking as many as 17.

In the area of community health and home care. the effect of prospective payment is
particularly ominous. More care is going to be given in these settings, but there is so much
competition and there are limitations on the number of covered visits. Services rendered by
students or students and faculty members are not compensated. Even in Omaha where the VNA
has a national reputation for the quality and organization of its services, and where it has done
seminal work on a classification scheme for client problems in community health nursing, the
county commissioners are considering putting up for bids the contract for public health nursing
services, long provided by the VNA. If the package of services are divided and put up for bids
separately, the potential exists for fragmentation of community health nursing, and services
rendered by agencies which might be unsuitable for educational opportunities.

Visiting Nurse Associations generally have had personnel with appropriate academic
qualifications, have been able to provide a range of community health experiences to allow
students an appropriate overview, and they have held accreditation. If the quality visiting nurse
and public health nursing services are squeezed out by proprietary, for-profit agencies, which
may take a very specialized piece of community and home health, and which may have
personnel with limited or questionable qualifications, schools of nursing can suffer. Having
changes in federal legislation to allow for Medicare pass-through money for nursing education in
qualified community health services, and which allow for billing for services rendered by nursing
students and faculty, may be essential to providing the supply of nurses which will be needed in
the community in the future.

The faculty and nursing service administrators were asked about the effects of DRGs on
nursing practice. Seventy-nine percent of the community health nurses and the faculty and 81
percent of the acute care nurses reported the increased need for people with critical care skills.
Many were quick to point out that the increased technology is as much or more of a cause of this
than DRGs. One acute care administrator expressed it well: "...our transplants, and critical
patients are not in intensive care units. They are on general care units. This means every nurse
needs critical care skills.“

The above mentioned acute care administrator summed up what many seem to be
expressing: 'I believe it may be that faculty role models are more important to future nurse
performance than adding every new idea to the curriculum. We need to spend more time on
helping the faculty remain current..." Just as priorities must be Set for care to be provided, faculty
must also set priorities in regard to curricula. They have long fought to gain more time for their
special area of interest in the curriculum. We cannot keep adding content and learning
experiences. The amount of curriculum content makes a strong case for the masters or
doctorate as the level of entry at a time when the baccalaureate as the level of entry is still being

98

fiercely resisted. it ever there was a time that nurses need to stand together and support quality
academic preparation for nursing, it is now.

99

References

Adams, R. & Johnson, 8 (1986) Acuity and staffing under prospective payment. Journal of
Nursing Administration, E, 21-25.

Bergen, S.S., Jr. & Roth, AC. (1984) Sounding board. Prospective payment and the university
Hospital. The New England Journal of Medicine. 310. 316-318.

Boston, CM. (1986) Health-care economics and the Medicare prospective pricing system:
Implications for undergraduate nursing curricula. JoUrnal of Nursing Education. 2_5, 166-
167.

Bush, J. (1985) DRGs challenge nursing curricula. Journal of Nursing Education. a, 89.

Deitrick, J.E. (1986) Guest editorial: Hospital cost containment and medical education. Bulletin
of the New York Academy of Medicine, 62_, 702-704.

Foreman, S. (1986) The changing medical care system: Some implications for medical
education. Journal of Medical Education. 6_1, 11-21.

Fosbinder, D. (1986) Nursing costs/DEG: A patient classification system and comparative study.
Journal of Nursing Administration. 16, 18-23.

Greenberg, L.W. (1985) Diagnosis-related groups. Their potential impact on pediatric resident
training. American Journal of Diseases of Children. 139. 524-526.

Grimaldi, P.L. & Micheletti, J.A. (1982) RIMs and the cost of nursing care. Nursing Management,
3, 12-22.

Grimaldi, P.L. & Micheletti, J.A. (1982) A defense of the RlMs critique -- RlMs reliability and
value. Nursing Management, fl, 40-41.

Hobson, C.J. & Blaney, DR. (1987) Techniques that cut costs, not care. American Journal of
Nursing, 81, 185-187.

Hoke, J.L. (1985) Charting for dollars. American Journal of Nursing, g, 658-660.

Houston, L.S. & Cadenhead, G. (1986) DRGs and BSNs: The case for the baccalaureate nurse.
Nursing Management, 11, 35-36.

Joel, LE. (1983) DRGs: The state of the art of reimbursement for nursing services, Nursing and
Health Care, A, 560-563.

Kneedler, J.A. (1985) Cost savings through inventory management: 808 - Systems offer
savings. Preoperative Nursind Quarterly. 1, 29-38.

Kramer, M. & Schmalenberg, C. (1987) Magnet hospitals talk about the impact of DRGs on
nursing care-~Part l. Nursing Management, E. 38-42.

Krauss, J.E. (1987) The view from the professional schools: Nursing. Journal of Dental
Education, 51, 160-162.

100

Maher, A.B. & Dolan. B. (1982) Determining cost of nursing services. Nursing Management, 13,
18-21.

Marchant, DJ. (1987) Academia--An endangered species. American Journal of Obstetrics and
GyneooLogy, 156, 185-192.

Marks, F.E. (1987) Refining a classification system for fiscal and staffing management. Journal
of Nursing Administration, 3, 39-43.

McKibben, R. (1982) Registered nurses wages have minor effects on total hospital costs.
American Journal of Nursing. Q.

Penna, R.P. & Knapp, D.A. (1986) Impact of federal reimbursement changes on clinical
pharmacy education and training. American Journal of Hospital Pharmacy. 43, 1773-
1778.

Perlich, L.J.M. (1985) Helping students be cost effective. Nursing Educator, 1Q, 16-18.

Phillips, E.K., & Cloonan, P.A. (1987) DRG ripple effects on community health nursing. Public
Health Nursing, 4, 84-88.

Reinhard, S.C. (1984) Effects of prospective reimbursement on nursing education. In F.A.
Shaffer (Ed.) DRGs: Changes and Challenges (pp. 137-147). New York: National
League for Nursing.

Riley, W. & Schaefers, V. (1983) Costing nursing services. Nursng Management, 3. 40-43.

Rosko, M.D. & Broyles, R.W. (1984) Unintended consequences of prospective payment:
Erosion of hospital financial position and cost shifting. HCM Review, 9, 35-43.

Sager, M.A., Leventhal, E.A., & Easterling, D.V. (1987) The impact of Medicare's prospective
payment system on Wisconsin Nursing Homes. Journal of the American Medical
Association fl, 1762-1766.

 

Schwartz, W.B. (1987) The inevitable failure of cost-containment strategies. Why they can .
provide only temporary relief. Journal of American Medical Association. 257, 220-224.

Shaffer, F.A. (1983) DRGs: History and overview. Nursng and Health Care, 4, 388-396.

Shaffer, F.A. (1984) Nursing: Gearing up for DRGs. Part ll: Management strategies. Nursing
and Health Care, §, 93-99.

Shahoda, T. (1987) States create 2.972 programs to ratchet costs. Hospitals, g, 122.

Sloan, F.A. & Valvona, J. (1986) Uncovering the high costs of teaching hospitals. Health Affairs,
5, 68-85.

Smith, C.T. (1985) Health care delivery system changes: A special challenge for teaching
hospitals. Journal of Medical Education. 6Q, 1-8.

Smith, SE. (1984) The impact of DRGs on educational programs in nursing. In F.A. Shaffer

(Ed), DRGs: Chanqes and Challenges (pp. 129-136). New York: National League for
Nursing.

101

Starr, P. (1982). The Social Transformation ot American Medicine. New York: Basic Books.

Stern. R.S., & Epstein, AM. (1985) Institutional responses to prospective payment based on
diagnosis-related groups. Implications for cost, quality. and access. The New England

Journal of Medicine, fl, 621-627.

Traska, MR. (1987) CEOs see major payment changes within two years. Hospitals, a, 32.

United States Surgeon General (1979) Healthy people. The surgeon General's report on health
promotion and disease prevention. Washington, 0.0.: US. Government Printing Office.

Walker, D. (1983) The cost of nursing care in hospitals. Journal of Nursing Administration. 3.
13-18.

Young, DA. (1984) Prospective payment assessment commission: Mandate, stmcture and
relationships. Nursigg Economics, g, 309-311.

102

‘ University of
. Nebraska Fairiield Hall

Medical Center Unooln. NE 68586-0620
College of Nursing

 

August 7, 1987

Dear Colleague:

I have been asked by the Hidwest Alliance in Nursing (MAIN) to prepare a
monograph on "DRG's - Implications for Undergraduate Nursing Curricula,"
which is part of a project funded by the Division of Nursing.

After finding out more about the task, I have learned that a major impetus
for this project was the data gathered in 1984 by the American Association of
Colleges of Nursing (AACN) from selected senior students and deans of
baccalaureate programs. These data seemed to indicate some regional differ-
ences. Therefore, if the monograph I am to prepare is to speak to what is
happening or needs to happen in baccalaureate nursing education in the hAIN
states as a result of DRG's, I need your help. I cannot base the monograph
solely on my ideas; discussions with local faculty, nurses in acute care and
community care settings, and students, or find the answers inithe literature
-- I need some data from all of you. In addition to what deans and faculty
are saying they are doing, I need to know what nursing service leaders
believe needs to be done in undergraduate nursing curricula to meet needs in
the service setting. AACN was kind enough to supply me with a copy of the
questions which they asked of deans. I added some, based on my ideas,
reading or discussion with others. If you have any other ideas or comments
which might be helpful, please include them.

I would appreciate it very much if you could return this by August 26,1987.
Please don't let it get lost in the "to do pile. " This information should be
helpful to all of us, bnce it is compiled. Thank you.

Sincerely,

::t:?/hué1/ (jg \éé;4~47<§?

Rosalee C. Yeaworth, R.N., Ph.D.
Professor and Dean

RCY/cp
Encl.

— V/Ufifi WWW
69.3 7am“ “1’47 15 7,. m aw a W
c - Mfi/MW/QM ' ’1?“ 407

University oi Nebraska-Lincoln University at Nebraska at Omaha University oi Nebraska Medical Center
103

A.

(Service Questionnaire) VHAA Wpa

What effect(s) have you observed prospective payment plans (DRC's) and
other cost containment'measures to have had on nursing practice in your
agency? Please check ALL that apply.

 

1. Increase in discharge planning.
2. More referrals for home health care, community health care fol-
low-up and long-term care facilities.

3. Increase in patient census for home health agencies and/or
long-term care facilities.

4. Increased emphasis on health promotion/disease prevention
programs for consumers.

5. Increased need for nurses to participate in political forums and

professional organization activities to increase nursing's power
base for influencing health policy decision-making.
6. Increased need for nurses to have continuing education in
political, economic, legal and ethical fields.

7. Increase in direct or third party reimbursement to nurses for
nursing services and/or health promotion/education services.

8. Re-admission of patients to acute care facilities when they may
have been discharged too early.

9. Separation of the cost for nursing services apart from the
routine hospitalization charges billed a patient.

10. Intreased numbers of people in need of care falling through the

cracks in terms of restrictions, inability to quality for third
party payment or the limited amount of cost covered by
Medicare/Medicaid.

11. Increased need for people with critical care skills.

 

12. Increased need for people with management/finance knowledge.
13. No effect.
lb. Other (please specify)

 

 

 

If you were advising nursing faculty on courses or class content that
needed to be added or given increased emphasis on the basis of
prospective payment/cost containment, what would you suggest? Please rank
in order the following. If you think other factors are more important
than those listed, please write them in and include them in your ranking,
using 1 as most important, 2 as second, etc.

l5. Critical care/intensive care.

16. Community/home health care.

17. Use of computers in health care and management.

18. Ethics.

19. Law and policy in health care.

20. Management/accounting/finance.

(over)

104

(cont.)

 

Zl._____ Patient teaching, prevention, wellness.

22._____ Discharge planning.

23._____ Physical and mental assessment of patients.
24.____~ Preceptorships or concentrated clinical experiences.
25._____ Other (please specify)

26. Other (please specify)

 

 

Would you please write in any other comments in regard to changes or
additions that you believe are necessary in undergraduate nursing educa—
tion to prepare nurses for the changes taking please in nursing and health
care?

 

 

 

 

 

 

PLEASE RETURN BY AUGUST 28! 1987. THANK YOU VERY MUCH.

105

' . 42nd and Dewey Avenue
gfna/gtgsrggka Omaha. NE 68105-1065

. (402) 559-6600
Medical Center 102 Fairfield Hall

. L' l . NE -
College of Nursmg me n mogfigg-gggg
Olfice of the Dean

 

August 17, 1987

Dear Faculty:

I have been asked by the Midwest Alliance in Nursing (MAIN) to
prepare a monograph on "DRG's — Implications for Undergraduate Nursing
Curricula" which is part of a project funded by the Division of Nursing.

After finding out more about the task, I have learned that a major
impetus for this project was the data gathered in 1984 by the American
Association of Colleges of Nursing (AACN) from selected senior students
and deans of baccalaureate programs. This data seemed to indicate some
regional differences. Therefore, I have developed questionnaires (based
on some of the AACN questions) for deans, nursing service directors in

acute care settings, and nursing service directors in VNA in the thirteen
states that make up MAIN.

I believe faculty teaching students in clinical settings have a
unique perspective. I would like to survey a sample of faculty from all
thirteen states, but there is a limit to the amount of data to be
gathered in terms of time, energy and resources. So, I am going to rely
on my own faculty for the faculty perspective. You are in a wide variety
of agencies in the two largest cities in Nebraska, so your perceptions
should reflect a rather thorough overview. Please help me out by
completing and returning this questionnaire by August 31. I have asked
that the $500 honorarium for this project be made out to the college to
be placed in the Faculty Development Fund. Thanks.

Sincerely,

. f /
‘Z§;Q~n/M4&L

\

Rosalee C. Yeaworth, R.N., Ph.D.

Professor and Dean
College of Nursing

RCYzjm

University 0! Nebraska—Lincoln University of Nebraska at Omaha Umversily of Nebraska Medical Center

106

PROSPECTIVE PAYMENT AND UNDERGRADUATE CURRICULUM
Faculty Teaching Undergraduate Courses

A. What effect(s) have you observed prospective payment plans (DRG's) and other
cost containment measures to have had on nursing practice?

Please check ALL that apply:

1.
2.

3.

10.

ll.
12.
13.
14.

Increase in discharge planning.

More referrals for home health care, community health care follow-
up and long-term care facilities.

Increase in patient census for home health agencies and/or
long-term care facilities.

Increased emphasis on health promotion/disease prevention programs
for consumers. .
Increased need for nurses to participate in political forums and
professional organization activities to increase nursing's power
base for influencing health policy decision-making.

Increased need for nurses to have continuing education in politi-
cal, economic, legal and ethical fields.

Increase in director or third party reimbursement to nurses for
nursing services and/or health promotion/education services.
Re-admission of patients to acute care facilities when they may
have been discharged too early.

Separation of the cost for nursing services apart from the routine
hospitaliation charges billed a patient.

Increased numbers of people in need of care falling through the
cracks in terms of restrictions, inability to qualify for third
party payment or the limited amount of cost covered by
Medicare/Medicaid.

Increased need for people with critical care skills.

Increased need for people with management/finance knowledge.

No effect.

Other (please specify):

 

 

 

B. What courses or class content needs to be added or given increased emphasis
on the basis of prospective payment/cost containment? Please rank in order
the following. If you think other factors are more important than those
listed, please write them in and include them in your ranking, using 1 as
most important, 2 as second. etc.

15.

16.

17.

18.

Critical care/intensive care.
Community/home health care.
Use of computers in health care and management.

Ethics.
(over)

107

I. (Cont'd.)

19

20.
21.
22.
23.
2k.
25.

HHIH

.2.

law and policy in health care.
Hsnsgesent/accounting/finsnce

Pstient teaching, prevention, wellness.
Dischsrge planning.

Yhysicel and lentel assesseent of patients.

Preceptorships or concentrated clinical experiences.
Other (please specify)

 

C. What strategies ere you using, or should we be using. to help nsnage the
changes? tlesse check ALL thst apply:

25.

26.
27.

28.
29.
30.

31.
32.

H III III

Placing students in agencies on consecutive days to give some
continuity of experiences with a given'patient.

Increased use of agency personnel as preceptors.

Increased use of programmed courses where possible to free faculty
for sore clinical.

Increased use of part-tine faculty or clinical-track faculty.
Joint appointments of faculty.

Preceptorships. internships or other concentrated clinicsl
placeuent for students.
No particular strstegies.
Other (please specify):

 

 

I. Would you please write any other comments in regard to what is happening to
undergraduate nursing education ss a result of cost contsinnent and

prospective payment or strategies for managing the effects thst you would be
willing to share with your colleagues?

 

 

 

Plesse return by August 31. THANK YOU VERY KUCH!

RCY: jn/8/17/87

108

A.

How

10.

ll.

12.

13.

14.

15.

l6.

17.

18.

PROSPECTIVE PAYMENT AND UNDERGRADUATE CURRICULUM
have DRG's influenced your nursing program? Please check ALL that apply:

Necessitated changes in clinical placements, and/or clinical
hours.

More simulated clinical activities are used as the inpatient
hospital population decreased.

Increased emphasis on home care/community clinical experience.

Emphasis on the development of critical nursing skills for patient
care in community settings (ventilator care, chemotherapy,
administration, etc.).

Alteration in clinical requirements; that is, abbreviated nursing
care plans and focus on discharge planning.

Increased emphasis on political/economic/legal issues in the
nursing curriculum.

Increased collaboration with nursing service agencies to better
prepare nurses in caring for patients with shorter length-of—
stays.

Have instituted instruction for faculty and student to better
prepare them for confronting ethical/economic issues associated
with health care cost containment.

Need for faculty to be more directly involved in clinical practice
to enhance their understanding of the implications of health care
economics on quality of nursing care.

Increased emphasis on teaching patient and families, discharge
planning.

have to place decreased number of students at one time on acute
care units.

Difficulty finding sufficient placements for community/home care
experience.

Have to use extended or long term care settings for teaching
skills to beginning students.

Have to place fewer students with a faculty member.

More emphasis on better documentation of client's condition to
show need for care.

More teaching to students on cost of equipment, drugs, procedures,
giving care without waste.

Introduced statistics or added more statistics to the curriculum.

Added computer course/computer classes or made computers available
to students.
—over-

109

19. More emphasis on prevention, wellness, health promotion.
20. No effect.

21. Other (please specify):

 

 

 

Have you been asked to compensate agencies in return for placing students
there?
22. Yes

23. No

 

 

 

 

 

 

 

 

 

 

 

 

 

 

C. If so, how have you handled this?
24.

D. What strategies are you using to help manage the changes? Please check ALL
that apply:

25. Placing students in agencies on consecutive days to give some
continuity of experiences with a given patient.

26. Increased use of agency personnel as preceptors.

27. Increased use of programmed courses where possible to free faculty
for more clinical.

28. Increased use of part-time faculty or clinical track faculty.

29. Joint appointments of faculty.

30. Preceptorships, internships or other concentrated clinical
placement for students.

31. No particular strategies.

32. Other (please specify):

E. Would you please write any other comments in regard to what is happening to
undergraduate nursing education as a result of cost containment and
prospective payment or strategies for managing the effects that you would be
willing to share with your colleagues?

Please return by August 21. THANK YOU VERY MUCH!
_
RCYzmrd/8/6/87

110

APPENDIX A

111

List of Participants

"Information Concerning the Impact of the Prospective Payment
System (DRG’s) in the Reimbursement of Hospitals, on Clinical Nursing
Care both in Hospital and in Community Settings"

October 22—23, 1987
Midwest Alliance in Nursing

Susan Crissman, RN, MNEd; Chairperson, Midwest Alliance in
Nursing; and Vice-President, Memorial Hospital; South Bend, IN.

Jean Denton, RN, MSN; Vice President, Clinical Services, Visiting
Nurse Services; Indianapolis, IN.

Sandra Edwardson, RN, PhD; Associate Professor, School of Nursing,
University of Minnesota; Minneapolis, MN.

Margaret S. Forrest, RN, MSN; Director, School of Nursing,
Memorial Hospital; South Bend, IN.

Sharon Godwin, RN, MSN; Chairperson, Department of Nursing
Education, St. Louis Community College at Meramec; St. Louis, MO.

Penelope Hanson, RN, MSN; Vice President of Educational Services,
Rapid City Regional Hospital; Rapid City, SD.

Mary S. Hill, RN, PhD; Chief, Nursing Education Branch, Public
Health Service, DHHS; Rockville, MD.

Ellen J. Marszalek—Gaucher, RN, MSN, MPH; Senior Vice—President,
University of Michigan Hospitals; Ann Arbor, MI.

Candace Nees, RN, BSN; Director of Nursing, Bueno Vista County
Hospital; Stormlake, IA.

Joya Neff, RN, MPH; Chief Division of Nursing, Ohio Department of
Health; Columbus, OH.

Barbara O’Grady, RN, MS; Director, Ramsey County Public Health
Nursing Service; St. Paul, MN.

Marian M. Pettengill, RN, PhD; Executive Director, Midwest
Alliance in Nursing; Indianapolis, IN.

SueEllen Pinkerton, RN, PhD; ViceFPresident Patient Services, St.
Michael Hospital; Milwaukee, WI.

112

List of Participants (cont'd)

Janet Scherubel, RN, PhD; Project Director, w.K. Kellogg DRG
Refinement Project, Northwestern Hospital; Chicago, IL.

Thomas E. Stenvig, RN, MPH; Secretary, Midwest Alliance in
Nursing; and Community Health Services, Program Management Officer,
Indian Health Services; Aberdeen, SD.

Kathryne L. Vigen, RN, PhD; Head, Department of Nursing, Luther
College; Decorah, IA.

Rosalee Yeaworth, RN, PhD; Dean, Professor and Dean, College of
Nursing, University of Nebraska Medical Center; Omaha, NE.

113

Panel Members
”Information Concerning the Impact of the Prospective Payment System (DRG's) in the Reimbursement of
Hospitals. on Clinical Nursing Care both in Hospital and in Community Settings." The panel of experts '
includes the monograph presenters and the following individuals:
Monograph Presentors:

Barbara O'Grady. RN. MPH and Sandra Edwardson. RN. PhD. (MN): The Impact of DRG’s on
Nursing Care in Community Settings;

Janet Scherubel, RN. PhD. (IL): The Impact of DRG’s on Clinical Nursing Care in Hospital
Settings; and

Rosalee Yeaworth. RN. PhD. (NE): DRG’s - Implications for Undergraduate Nursing Curricula.
Panel Members:

Jean Denton, RN, MSN; Vice President, Clinical Services; Visiting Nurse Services;
Indianapolis. IN.

Margaret S. Forrest, RN, Ph.D.; Director, School of Nursing; Memorial Hospital, South Bend. IN.

Sharon Godwin. RN, MSN; Chairperson, Department of Nursing Education; St. Louis Community
College at Meramec; St. Louis, MO.

Penelope Hanson. RN. MSN; Vice President of Educational Services; Rapid City Regional
Hospital; Rapid City. SD.

Ellen J. Marszalek-Gaucher, RN, MSN, MPH; Senior Vice-President; University of Michigan
Hospitals; Ann Arbor, MI.

Candace Nees. RN. BSN; Director of Nursing; Buena Vista Community Hospital; Stormlake. IA.

SueEllen Pinkerton. RN. Ph.D.; Vice-President Patient Services; St. Michael Hospital;
Milwaukee, WI.

Kathryne L. Vigen, RN, Ph.D.; Head Department of Nursing; Luther College; Decorah. IA.

Joya Neff, RN, MPH; Chief Division of Nursing, Ohio Department of Health; Columbus, OH.

114

APPENDIX B

115

Agenda for the Invitational Panel

"Information Concerning the Impact of the Prospective
Payment System (DRG’s) in the Reimbursement of
Hospitals, on Clinical Nursing Care both in
Hospital and in Community Settings "

October 22, 1987
8:45 - 9 AM Registration
9:00 - 10 AM Welcome:
Elizabeth Grossrnan
Dean
Indiana University

Background/Overview:

Mary S. Hill
Division of Nursing

Purpose of Project/
Charge to the Panel:

Susan Crissman
Chairperson, MAIN

10:00 - 10:15 AM Break

10:15-12 noon Highlights of Monographs
Questions from the Panel:

The Impact of DRG’s on
Clinical Nursing Care in
Hospital Settings:

Janet Schembel

The Impact of DRG’s on Nursing
Care in Community Settings:

Sandra Edwardson
Barbara O’Grady

DRG’s -- Implications for
Undergraduate Nursing
Curricula

Rosalie Yeaworth

116

12 -1 PM
1- 2:45 PM

2:45 - 3 PM
3:00 - 4:45 PM

5:00 - 6:00 PM

9 - 10:45 AM

10:45 - 11 AM
11 - 12:30

Lunch

Discussion of Mon
in Hospital Setting

Moderator: Thomas t ' ; ”5
Secretary, MAIN

Introduction of Panel members
Response to Focus questions
Discussion of Impact, Implications, and
Recommendations for the

present and future.

Break

Discussion of Monograph on DRG’s in
Community Settings:

Moderator: Thomas E. Stenvig,
Response to Focus questions
Discussion of Impact,Implications, and
Recommendations for the present and
future.

Informal Reception

October 23, 1987

117

Discussion of Monograph on Implications
of DRG’s on Undergraduate Curriculum.

Moderator: Thomas E. Stenvig,
Response to Focus questions
Discussion of Impact, Implications, and
Recommendations for the present and
future.

Break

Wrap up

Moderator: Thomas E. Stenvig

Summary of Panel recommendations,
priorities, and strategies.

 

 

 

 

 

 

 

‘1? “ ‘"‘
, 11.11114 HRR'ARY
11111

OCT 17 1988 i\

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BHPr

US DEPARTMENT OF

HEALTH 6 HUMAN SERVICES

Public Health Service

Health Resources and Services Administration
Bureau of Health Professions