What is the business model for the Indian health system?

On the surface this is a preposterous question because the U.S. government promised to fund the health care needs for American Indians and Alaska Natives. It’s also supposed to be a simple business: Congress funds the system (the IHS, tribal contract facilities and urban programs), the agency spends that budget, and patients are treated.

But that’s why the question is not outlandish. The Indian health system has never had enough money – and therefore it’s essential to secure as many resources as possible in order to effectively treat the most patients.

“As we look at the Indian Health Service, we need to think of it as a business,” said Yvette Roubideaux, IHS director. “A lot of people think of the Indian Health Service as a service. It’s a service that provides health care to American Indians and Alaskan Natives. People who work in IHS think of their positions not just as jobs, but also as something important personally. Many people feel like they are on a mission working for the Indian Health Service – and I think that’s great. But I also think we have to recognize that we are a health care system – and that we’re a business. We have to look at how we run our organization, to improve the way we do business.”

Roubideaux calls this “Internal IHS Reform.” She began the business case by gathering data, listening to tribes and IHS employees. She said that means “to look at what we do well and also to look at what we don’t do well.” And then figure out where the tribes and the staff want to start with internal agency reform.

Roubideaux said the tribes focused on big picture issues: more funding, improvements in contract health program and better consultation networks.

“From the staff we received very few comments about improving health care services and most of the comments were about improving how we do business,” she said. “How we lead and manage people and how we do business as an organization.

“That said a lot to me. You’d think in a health care system, your only focus is improving quality, but here, the staff said loud and clear, there are things about the Indian Health Service as a business that need to be improved.” She said this is particularly interesting and helpful because in order to “ultimately” improve the quality of care, “we have to improve the business.”

These two issues are not separate. Health organizations that improve patient quality are also improving their business operations (and vice versa).

One way to demonstrate both is to compete. American Indians and Alaska Natives often have choices in health care, especially those carrying employer-based insurance or Medicare. In that context the IHS is a competitor to those other health organizations and must demonstrate its expertise.

One of the biggest business challenges for the IHS is increasing revenue. The Obama administration boosted the IHS budget by 13 percent in 2010, but that is still less than what’s spent by other health organizations. Health care reform could help in this regard, too, as more American Indians and Alaska Natives are eligible or participate in insurance that opens up new billing options for IHS.

Consider the story of contract health services. This pool of appropriated money runs dry every year. “It’s a program that we know people aren’t satisfied with because in general American Indian and Alaskan Native people believe that health care is owed to them. Unfortunately with the contract health services program, we’re struggling to meet the needs with available resources,” Roubideaux said. “So the Indian Health Service has policies and regulations in place to help prioritize what referrals are paid for and that, unfortunately, results in some denials and deferments of services. We know the patients don’t like that. We know the tribes don’t like that, but it’s the reality of providing health care with a limited budget.”

The bottom line for contract health is the difference between appropriations – IHS must live within a budget – versus an entitlement program – Medicare pays for every eligible participant. That’s a decision that Congress made, not the Indian Health Service.

Roubideaux said you could think of many ways to decide which referrals to pay for, “but the only fair way is to look at the medical priorities.”

She said one thing IHS can do is to learn from best practices in contract health. That could mean better case management, patient education or billing alternative insurance resources.

Indeed, if health reform passes, that could open up more third-party billing options, again, reducing the stress on contract health funding.

Then new insurance dollars are part of the new business model for IHS.


Mark Trahant is a Kaiser Media Fellow examining the Indian Health Service and its relevance to the national health care reform debate. He is a member of Idaho’s Shoshone-Bannock Tribes. Comment at www.marktrahant.com.