The University and Its Environment February 20, 1995


The national and state debates on health care reform have enormous consequences for The University of Iowa. As a major, comprehensive tertiary health care center, the University of Iowa Hospitals and Clinics will be profoundly affected by new patient referral, management, and financial control systems. As a leading health education center, programs in the health science colleges face future funding uncertainties and pressures for dramatic changes in educational programs and curricula. As a primary provider of health care for the University community and much of the region, reform of delivery, management, and financing systems will impact virtually every individual associated with the University and UIHC. This section is a brief overview of the issues, challenges, and changes that health care reform bring to the University.

Administrative Changes

In recognition of the vital and increasing role of the health sciences in the overall mission of the University, the UI added the positions of Vice President for Health Sciences and Vice President for Statewide Health Services to its administrative structure in 1993. The VPHS has the responsibility of coordinating the efforts of the UI Hospitals and Clinics, the four health colleges, and several specialized facilities and programs. All of the health units will face special challenges over the next few years as the nation and the state response to structural and financial changes. The Vice President for Statewide Health Services, in collaboration with other University and state leaders, is responsible for planning and development of strategies for a reform program for the state of Iowa's health system and for delivery of health services to the UI community.

National Issues

National attention to health care was stimulated by the recognition of increasing costs, limited coverage, and uneven quality. Health care costs in the United States, representing 14-15% of the Gross Domestic Product, are proportionally much higher than those of other industrialized nations. It is estimated that 38.5 million people are uninsured and many more are underinsured. Access is further limited by maldistribution of providers and hospitals. Some health status indicators such as immunization rate and infant mortality in some areas of the United States are worse than some under-developed countries.
Various health care reform plans have been proposed by the President and members of Congress, but by late 1994 none had gained wide public acceptance or legislative approval. Consequently, it is not clear how health care will be reformed, leaving considerable uncertainty for both the state and the University. We do know however, that the private sector and market forces are shaping some reforms, centering mostly on insurance reform and the continued movement to managed competition. It is likely that future health care insurance will include wider coverage (perhaps falling short of "universal" coverage), competing managed-care "health alliances," and greater regulation of health insurance.
The major conceptual shift in delivering health care is the change from fee-for-service-based revenues to a "capitation" system with income based on fixed reimbursement for the number of patients covered by a particular health care program. In the present system every procedure, patient visit, and hospital admission provides income to the care provider, but under capitated managed care, reimbursement is based on "covered lives" and procedures, visits, and admissions represent costs to the system.
Inefficiencies and excess capacity are very costly and place organizations with such deficiencies at a great disadvantage. Furthermore, more care is offered on an out-patient basis, thereby requiring fewer in-patient beds.

Iowa Health Care Reform

The Iowa Health Care Reform Council has developed recommendations to the Governor for future legislative consideration emphasizing individual responsibility, limited government involvement, and choice of plans and physicians.
Even without new legislation, the health care services system in Iowa has seen tremendous change in recent years. There has been a movement toward networks of health care and organized delivery systems, including medical group and hospital consolidation in major markets. New medical plans and delivery systems are emerging in many state localities ranging from traditional Health Maintenance Organizations (HMO), to Physician-Hospital Organizations (PHO), and to comprehensive, integrated health management programs called Organized Delivery Systems (ODS). It is clear that the Iowa health care market is in flux, changing rapidly, and highly competitive. Special problems, especially those associated with rural communities, remain challenges in Iowa. These include providing care to underserved areas, retaining health professionals in small communities, and dealing with health issues associated with agriculture.

UI Health Sciences Center

In the evolution of health care delivery systems in the United States, academic health centers come under particular stress. There are three particular areas of concern: graduate medical education, increased emphasis on primary care and generalist training, and funding for non-physician health care providers.
Graduate medical education is the broad term used to describe the training of physicians and dentists in specialty and subspecialty areas after the M.D., D.D.S. or comparable degree; they are also referred to as residency training programs. It has been widely recommended that the physician workforce shift from the present 30% generalist to 70% specialist ratio to a 50-50 split, requiring great changes in medical education and availability of training sites. The University of Iowa already produces more generalists than specialists; in 1994, 32% of new MD's will pursue Family Practice residencies (versus a 13% national average); 55% of the 1994 graduating class has chosen primary care residencies.
Supporting basic medical and dental training and graduate medical and dental education will be a challenge under health care reform. There are two crucial issues: adequate financial support and access to patient populations. With respect to funding, state appropriations for medical education are now modest, support from clinical services will decline as third-party payers refuse to provide compensation for medical and dental education as part of care reimbursement, and alternative funding sources are uncertain now. Funding for medical education will be essential to any national plan for health care reform. However, access to patients, through community health centers and by referrals from other primary care providers, will be essential to the future of medical education at Iowa.
Health care reform will see an increase in non-physician providers and allied health professionals as well as an increase in primary care physicians. Education for all health care professionals will be increasingly multidisciplinary, shared with other professionals, and community-based. New occupations and specialties will be developed, requiring educational resources. Expanded communication services such as the Iowa Communications Network and specific projects in telemedicine will place new demands on the UIHC and the other units of the UI Health Sciences Center.

Delivery of Health Care Service to the UI Community

In recognition of the need to expand the health care delivery options to the more than 20,000 University of Iowa employees and their dependents, the University recently announced the availability of two new health care plans, designed to complement the options provided by three existing Comprehensive Health Care Plans (CHIPs). One, the UICare plan, is similar to an HMO plan; virtually all medical care will be provided through UI-employed providers. Each person insured by this plan selects a primary care provider, who will be the individual's Care Manager and is responsible for coordinating health care received from other providers. The second new plan, the UISelect plan, is a "point of service plan," in which costs to the individual depend on the level of participation of the health care provider. Providers include practitioners at the UIHC as well as physicians in the Iowa City area. Three levels of benefits are available through the UISelect plan. Employees of the University can choose either plan or retain coverage provided by one of the existing CHIPs. The University plays a key "provider role" in all of these plans.
Future performance of the various plans will be monitored for possible modifications, additions, and refinements. Future expansion may include coverage for undergraduate and graduate students; the possibility of including health services for dependents of students will be studied.


The course of health care reform is still uncertain, but any policy and/or market-driven changes in the financing, management, and delivery of health care will have implications for the health colleges and most of the University community. With the addition of two new Vice President positions, the University has re-organized its structure to meet new societal and academic demands. In an uncertain environment, the University must be prepared to respond quickly and flexibly to external demands while maintaining the quality of its educational, research, and service missions. As an early example of the changing environment for health care for the UI community, participants in UI benefit programs have two new options to consider for their health care coveage.