OR/MS Today - February 1998 - Health Applications Section Wants You!

February 1998

Health Applications Section Wants You!

OR/MS professionals have the challenge of improving the cost effectiveness, quality and outcomes of health care services. This is a large task given the enormity of the U.S. health care system, with expenditures even larger than the defense industry. This is coupled with dramatic demographic shifts occurring in the population.

Consider that:

The percentage of the U.S. Gross Domestic Product (GDP) spent on health care has risen from 4.7 percent ($23.9 billion) in 1960 to 12.4 percent ($832.5 billion) in 1994, and is expected to reach 16.2 percent of GDP ($2 trillion) in 2005.
Third-party payment for health care expenditures has risen to 80 percent of the total, with government funding more than 44 percent ($367 billion) of total health care expenditures.
The U.S. population continues to age, leading to more people with chronic diseases. By the year 2000, 13 percent of the population will be over the age of 65; by 2040, this proportion will reach 21 percent. The direct medical costs for persons with chronic disease was $470 billion in 1995, and is expected to reach $906 billion by the year 2050.

In the 1980s, the contribution of OR/MS professionals to health care was widely recognized as a way to improve the efficiency of the health care sector. Several decades ago, when operation researchers vigorously pursued efficiency in health care, the terms "efficiency" and "health care" were contradictory terms.

Cost-plus payment mechanisms did not reinforce efficiency. In fact, they discouraged cost control efforts. But this all began to change in the 1980s. The government began to pay a fixed amount to hospitals based on a Medicare patient's diagnosis. Health care systems began to evolve that receive fixed amounts of money to manage the health care dollars of enrolled populations of subscribers, while providing high quality of care to improve health status. These changes have forced the health care sector to actively pursue ways to increase efficiency while simultaneously improving quality and outcomes of care.

Because of the importance of the health care field, INFORMS sponsors a Health Applications Section. The Health Applications Section invites anyone with an interest in health applications to join this section.

The Section has started a journal, Health Care Management Science, devoted to furthering the field of operations research and management science techniques in the health care field. You are invited to submit articles and are encouraged to subscribe.

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