Health Care Management

Health care managers are employed by organizations that provide direct patient care, such as hospitals, nursing homes, and physician group practices, and those that support the provision of care and services, such as hospital associations and managed care organizations. These institutions provide many different levels of direct care along what is referred to as the continuum of care.

Levels of Care

Acute Care Hospitals

The highest level of care is provided in acute care hospitals; large, complex organizations with hundreds, or even thousands of employees and dozens or hundreds of supervisory and management personnel. Hospitals may be free-standing or part of a health system. They are classified according to ownership and control: federal, state, county or city government, non-government and not for profit, or investor owned and for profit. Hospitals are also categorized by number of beds, the levels and types of services they provide (i.e., general medical and surgical, psychiatric, rehabilitation, children’s general) and whether they have physician training programs, research programs, and academic affiliations.

Long-Term Acute Care

The next level of care on the continuum is called long-term acute care. These hospitals are either freestanding or units within an acute care hospital that provide care to patients with chronic conditions. This is a level of care that emerged in the 1980s, expanded rapidly in the 1990s, and is still in a growth mode as units and facilities open throughout the country.

Subacute Care

Subacute care is provided in hospitals and nursing homes. Hospital units are often referred to as transitional care units in which patients receive intense rehabilitation and nursing care for an average of eight days after acute hospital care for conditions such as stroke, heart surgery, or orthopedic surgery. Nursing homes, or skilled nursing facilities, provide care to the elderly, disabled, and others requiring long-term care. Either freestanding, part of a regional or national company such as ProMedica Senior Care and ScionHealth, or hospital-based, nursing homes operate subacute or short-term units in which patients discharged from the hospital receive rehabilitation and other clinical services for conditions, such as a stroke or joint replacement.

Assisted Living

Assisted living facilities provide a lower level of care than nursing homes. These facilities are generally used to treat elderly residents unable to live on their own and who require supervision and assistance with activities of daily living.

Adult Day Care

Adult day care programs may be a medical model, providing nursing and therapy services, or a social model, providing activities and recreation programs. These programs provide socialization and medical services, nursing care, physical, occupational, and speech therapy, in the case of the medical model to elderly individuals who live in the community.

Other levels include home health care and ambulatory care. These services are provided by a variety of organizations and individuals, including hospitals, physicians, nurses, therapists, and technologists.

Types of Organizations

Hospitals and Health Systems

A large number of health care managers work in hospitals and health systems. According to the American Hospital Association, there were 6,129 registered hospitals in the United States in 2021. These included 5,157 hospitals classified as community hospitals. Of these, 2,978 were non-government and not for profit; 1,235 were investor-owned, for-profit hospitals; and 944 were state and local government hospitals. Community hospitals are short term and provide either general services (medicine, surgery, pediatrics, obstetrics), a specialty service (orthopedics; rehabilitation; ear, nose, and throat; pediatrics), or care for a specific disease (heart disease, cancer).

Community Hospitals

Community hospitals are often classified as nonteaching hospitals, teaching hospitals, or academic medical centers. Teaching hospitals have medical education programs that train medical students and residents through an affiliation with a medical school. Academic medical centers generally have their own medical schools, numerous residency training programs, other allied health programs (e.g., nursing schools, lab technology programs) and are often part of a university. Because of the requirements of the residency training programs in terms of number and type of patients and services and physician faculty, teaching hospitals tend to be larger and more complex than nonteaching hospitals.

Hospitals are also categorized by the level of service provided, ranging from critical access hospitals in rural areas that provide emergency and basic medical services, to tertiary and quaternary care that provide complex procedures, such as open-heart surgery and organ transplants.

The size of a hospital, expressed in number of beds or net revenue, is another means to group hospitals. Bed size ranges from as few as 25 beds to well over 1,000 beds, and likewise, net revenue varies from $10 million to hundreds of millions of dollars.

For-Profit Hospitals

For-profit, or proprietary hospitals are generally owned by a group of physicians, or are owned and operated by a multi-hospital chain (e.g., HCA Healthcare). These hospitals, unlike not-for-profit and government hospitals, are required to pay taxes. For-profit hospitals tend to be small in terms of bed size, and limit their services to those that are most lucrative; insurance and private payments significantly exceed the cost of providing the care. Multi-hospital chains also provide management contract services through which they run the day-to-day operations of nonprofit hospitals to improve efficiency and increase revenue.

Other Hospitals

Additional types of organizations include federal government hospitals (206 in 2023); nongovernment psychiatric hospitals (659); and long-term care hospitals for chronic medical conditions, such as ventilator care (107).

Health Care Systems

Approximately 3,515 hospitals are a part of a health care system. A system is defined as either a group of two or more hospitals owned or sponsored by a central organization, or a freestanding hospital with three or more additional health care organizations providing different levels (i.e., long-term care) of services. Health systems have been on the rise for the last 25 years for several reasons: as a result of initiatives to reduce scale; through consolidation of departments, such as finance and human resources, and group purchasing; and to provide more leverage in terms of managed care negotiations as well as to increase cross marketing and referrals across the continuum of care (hospital admissions from nursing homes that are part of the system and vice versa).

Other Health Care Providers

Ambulatory Care Facilities and Physician Group Practices

Ambulatory care facilities and physician group practices employ an increasing number of health care managers. This is due in large part to the shift from inpatient care to outpatient care driven by new technology, medical advances, and pressure to reduce health care costs. Ambulatory care is provided in physician offices, ambulatory surgery centers, clinics, and outpatient diagnostic and treatment centers. Each of these facility types may be organized in several ways.

There were 6,179 Medicare-certified ambulatory surgery centers (ASCs) in the United States in August 2023. They performed an estimated 30 million surgeries annually. Ophthalmology, gastroenterology, orthopedic, gynecologic, urologic, podiatric, plastic surgery, and ear, nose, and throat are among the most common types of procedures performed in ASCs. The centers are a cost-effective and convenient means of performing these procedures; studies have indicated that the average cost of a procedure performed in an ambulatory surgery center is 50 to 60 percent lower than the cost of the procedure in a hospital setting. In addition, many patients prefer the center environment to that of a hospital.

Nearly all states currently license these facilities. Several accrediting agencies, including The Joint Commission, the American Osteopathic Association, and the Accreditation Association for Ambulatory Health Care, regularly survey centers to determine compliance with pre-established standards.

How Are ASCs Organized?

A large number of ASCs are operated or sponsored by hospitals or health systems. Some of these centers are partnerships with attending surgeons at the hospital and others are three-party partnerships that include an outside management company. These organizations are generally for-profit entities involved in the planning and startup of a center, and they often secure a management contract to run the facility. Many of the companies have ownership interest and/or manage ASCs in 10 to 20 states across the country.

Groups of physicians have also started their own ambulatory surgery centers, and hire management and nursing personnel to operate them. The directors or managers of ASCs may come from a nursing or management background and are responsible for daily operations, marketing, staffing, budgeting, regulatory compliance, quality assurance, and contracting with insurers. Large, multistate ambulatory surgery companies (e.g., Ambulatory Surgical Centers of America) have regional directors of operations, marketing, and contracting as well as vice presidents of business development and finance for the entire organization.

Group Practices

Physician groups vary in type from primary care groups to single specialty (e.g., cardiology) and multi-specialty groups (internal medicine, gastroenterology, and cardiology). Size can range from several physicians, to practices with several hundred physicians in dozens of specialties. A number of the larger groups have diversified by providing diagnostic imaging, ambulatory surgery, physical therapy, and other services in addition to their office practices. These groups usually hire an administrator to run the business aspects of their practice. In the case of very large practices (i.e., 50 or more physicians) a number of management personnel are employed in the areas of human resources, finance, and managed care contracting.

Diagnostic Imaging Centers

Diagnostic imaging centers are often formed by a radiology group and are of varying sizes. Large groups have 50 or more radiologists, employ several hundred staff, and are affiliated with or have contracts with several hospitals. Public companies are also national providers of imaging services; for example, the industry leader RadNet owns approximately 355 multimodality centers across the United States. The centers perform basic radiologic tests and ultrasounds, as well as more sophisticated tests like CT scans, MRIs, and nuclear medicine studies. The large groups and national companies employ a chief executive officer (CEO), chief financial officer (CFO), and often chief operating officer (COO) to run the daily operations of the business and provide financial management.

Dialysis Centers

Dialysis centers are usually run by health care managers from a nursing background. They provide services to patients with chronic kidney failure or end-stage renal disease, and are certified by Medicare. These organizations are owned and operated by groups of nephrologists (doctors who specialize in kidney care and treating diseases of the kidneys), hospitals, or private companies, or through a number of different arrangements, including partnerships between or among the aforementioned parties, joint ventures, or management contracts. A number of regional and national companies enter into these arrangements and provide purchasing, billing, staffing, medical directorship, and other management services. DaVita Integrated Kidney Care is the country’s largest kidney care provider that is accredited by the National Committee for Quality Assurance. It provides integrated kidney care to more than 27,000 patients each month at more than 2,100 outpatient dialysis centers in the United States. The individual centers range from as few as six hemodialysis stations to 40 or more; staff includes nurses, technicians, dietitians, and social workers. Larger operations not only have an administrator but supervisory staff. DaVita Integrated Kidney Care’s parent company DaVita Inc. has 55,000 employees in the United States.

Health Centers

Nearly 1,400 Health Resources & Services Administration–funded health centers operate at more than 15,000 sites in the country to provide primary care services to underserved communities. The centers provide health care for migrant workers, the homeless, residents of public housing, and the uninsured.

Adult Day Care Centers

Adult day care centers are community-based services that provide an alternative to institutionalization for older adults requiring care and assistance. In addition, they are a means of respite for the caregivers of seniors; the programs operate three to eight hours per day, five days per week. Programs may have as few as 10 participants or as many as 100 or more.

There are two basic models of adult day care, the social model and the medical model. A third model focuses on care for individuals with Alzheimer’s disease and related dementia disorders. The social adult day care centers provide social activities, meals, recreation, and some health-related services; they are not generally licensed by the state in which they operate. Medical centers, known as adult day health centers, provide nursing services and physical, occupational, and speech therapy in addition to social activities for individuals with medical problems who otherwise would be admitted to a long-term care facility. These facilities are generally licensed by the state in which they are located. Centers for Alzheimer’s and dementia provide specific programs and health services for these conditions and are usually state licensed.

Approximately 4,600 adult day care programs operate in the United States. About 80 percent of the programs are nonprofit and about three quarters are affiliated with a larger health care organization such as a nursing home, hospital, or senior organization. The number of centers will most likely increase as the number of physically and cognitively impaired adults grows.

Long-Term Care Facilities

There are more than 15,600 nursing homes in the United States. Also known as skilled nursing facilities, these provide nursing services 24 hours per day. Nursing facilities may be hospital-based, either physically located on a hospital campus or owned and operated by a hospital or health system and in a separate location. Other nursing homes are freestanding facilities. In addition, there are state-owned and operated facilities and veterans homes.

Nursing facilities are either not for profit or for profit. For-profit homes may be individually owned, part of a group of nursing facilities (usually between two and 30) in a geographic area, or members of a national chain that operates hundreds of facilities, such as ProMedica Senior Care. Corporate structures of regional groups and national chains include vice presidents, chief operating officers, chief financial officers, and chief executive officers that oversee operations, finance, purchasing, information technology, human resources, and other functions. Some national chains operate facilities providing different levels of care, such as assisted living and long-term acute care.

Generally, services provided by nursing homes include long-term care for individuals, mainly elderly, who will most likely remain in the facility for the rest of their lives, and what is known as sub-acute care. This type of care is provided to patients discharged from hospitals who are still too sick to go home and require medical (e.g., intravenous therapy, wound care) and rehabilitation services (physical therapy, occupational therapy, and speech therapy) for several weeks. Many facilities have established separate units for these residents. Nursing homes also care for residents with severe dementia and those who are ventilator dependent. These services are provided on discrete units and require separate state licensure.

Assisted Living Facilities

A rapidly expanding level of care for seniors is assisted living. These facilities provide a long-term care alternative that is a kind of middle ground between independent living and a nursing home. Assisted living facilities (ALFs) provide 24-hour supervision and assistance with personal care and health care services for seniors generally over age 75. Personal care assistance is provided for activities that include dressing, bathing, toileting, eating, communicating, and other needs, such as transferring from a bed to a wheelchair. Residents live in studio, one-bedroom, or two-bedroom apartments, eat three prepared meals in a central dining room, and engage in social, educational, and religious activities in common areas.

In the United States, there are more than 30,500 assisted living facilities licensed or certified by the states in which they are located. They range in size from 10 units to more than 150 and may be freestanding, or part of a hospital or nursing home campus. ALFs may also be a component of a continuing care retirement community (CCRC), a center that provides independent senior living residences, nursing home care, and assisted living.

Many assisted living facilities are owned and operated by for-profit chains. A number of these chains, such as ScionHealth, also operate nursing homes and long-term acute care hospitals.

Continuing Care Retirement Communities

The philosophy of “aging in place,” remaining in a safe environment where an individual can live as independently as possible, has contributed to the growth of continuing care retirement communities, also known as life care centers and life care communities. Within a CCRC, a campus with a full range of services, independent living, assisted living, and nursing home residents may transfer from one level of care to another when their condition worsens or needs change, while remaining in a familiar location. Residents enter into a long-term contract for housing, services, and nursing care.

There is a mandatory entrance fee for CCRCs ranging from $40,000 to more than $2 million, with an average initial payment of $402,000, according to the National Investment Center for Seniors Housing & Care. Monthly fees vary from $3,000 to $5,000, according to AARP. The centers are located on large campuses with high-rise, mid-rise, or single-story buildings, and offer living arrangements from studio apartments to single-family homes. The number of residents in a CCRC ranges from 100 to more than 1,000.

CCRCS are owned by for-profit chains, or sponsored by a nonprofit religious or fraternal organizations. Centers are run by an administrator or executive director who usually has a background in managing a nursing facility, ALF, or other health care organization. A management team similar to that in a nursing facility assists the administrator.

Home Health Care

Home health care agencies provide nursing services, medical social services, medical equipment and supplies, home health aide, and physical, occupational, and speech therapy services in a patient’s home for up to 24 hours per day. Home health aides or homemakers assist with personal hygiene, dressing, and feeding under the supervision of a nurse. These agencies may be operated by a hospital, nursing home, or health system, freestanding or part of a local or regional company that provides such services. There are approximately 12,000 home health services in the United States and the number is growing rapidly, driven by the growth in the number of older individuals with greater health care needs, new medical technology facilitating home care for more conditions, and efforts to replace institutional long-term care with less expensive home care. Eighty percent of these agencies are for-profit entities.