By Chang, Cyril F.
Business Perspectives , Vol. 15, No. 2
About the Center for Healthcare Economics
In March 2003, Methodist Healthcare and LeBonheur Systems, Inc., gave The University of Memphis a donation of $1,000,000 to establish the Center for Healthcare Economics in the Fogelman College of Business and Economics. The purpose of the Center is to address complex healthcare issues of efficiency, effectiveness, and equity with a focus on emerging healthcare issues that affect Memphis, Shelby County; and the State of Tennessee.
The Center will provide a physical and administrative structure to facilitate the study of health care and its economic impact. Through a variety of research, internship, instruction, and public service programs, the Center will work closely with entities both internal and external to the University to accomplish its mission. In the immediate future, the key policy areas emphasized by the Center will include, among others:
* Evaluation of government healthcare programs such as TennCare and development of strategies and methods for improving the efficiency and effectiveness of these programs.
* Study of the impact and applicability of regional and state health economics trends.
* Generation of scientific information concerning the costs and benefits of various wellness and health promotion programs for employers and their employees.
* Assistance to stakeholders such as patients and employers in the promotion of cost-effective dissemination of new health technologies and pharmaceutical products.
Why the Center for Healthcare Economics?
Health care touches the life of everyone. Yet health care seems to always be in crisis. Doctors in New Jersey and Mississippi were on strike recently, and nurses are in short supply in major cities across the country. Closer to home, our TennCare program has been in a constant state of flux. Meanwhile, healthcare costs continue to escalate, forcing employers to cut back on health benefits for their current and retired employees. The cost problem is compounded by a delivery system that allocates healthcare dollars in a haphazard way, with too little money spent on health promotion and prevention and too much on expensive procedures for treating acute illnesses that are mostly preventable.
Consider the following two examples based on recent research results. First, Tennessee is identified by the reputable Dartmouth Atlas of Health (http://www.dartmouthatlas.org) as one of the states where Medicare recipients overuse healthcare services in the last six month of their lives. Worse, the extra spending does not seem to bring about better health outcomes and patient satisfaction. Another example is a recent report by Blue Cross and Blue Shield of Tennessee on the tendency to overuse prescription drugs by Tennesseans, as illustrated by the statistics presented in Table 1.
The ever-rising healthcare spending and large quantities of medication consumed can be argued as money well spent if they had made significant improvement in the health of our citizens. But have they? According to the statistics presented in Table 2, Tennessee ranks below the national average in major health indicators that measure the health status of individuals.
The health of Memphis and Shelby County residents is even worse when compared to the state of Tennessee as a whole. Shelby County has 15.8% of the state's total population and 18.9% of the state's low-income residents, or individuals below the federal poverty guidelines live here. More than one in every four individuals in our county are enrolled in TennCare, Tennessee's experimental Medicaid managed-care program for low-income individuals. These statistics suggest poor health, a conclusion echoed by two recent national headline news stories.
In one story, Self magazine named Memphis as the unhealthiest place in the nation for a woman to live. The city ranked dead last out of the 200 metropolitan areas surveyed. …