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Law & Ethics

How Managed Care Can Be Ethical

PROLOGUE: The sentiment that managed care is out of step with society, incapable of solving the woes of the health care system, and even villainous is widespread and growing. Indeed, not only has the industry suffered attacks by consumer groups, the entertainment media, and legislators, it has even begun to lose former allies, such as J.D. Kleinke, who, in his forthcoming book, Oxymorons: The Myth of a U.S. Health Care System (Jossey-Bass), reinforces the emerging view that managed care is fighting a losing battle on both the quality and cost fronts.

The one-sided nature of the attack against managed care notwithstanding, the BEST (Best Ethical Strategies for Managed Care) team sees the battle between managed care and its opponents as a competition of legitimate interests. They suggest that the conflicts that define the struggle can be resolved through ethical analysis, in which all parties to a dispute are required to articulate and justify their "ethical values" in an open and fair-minded forum.

Randel, a practicing psychiatrist, was a special expert in the Department of Clinical Bioethics at the Warren G. Magnuson Clinical Center at the National Institutes of Health (NIH) in Bethesda, Maryland. Steven Pearson, a physician-ethicist, is director of the Center for Ethics in Managed Care at Harvard Medical School. James Sabin is clinical professor of psychiatry at Harvard Medical School and the director of the ethics program at Harvard Pilgrim Health Care. Tracey Hyams, a lawyer, is director of research and policy development at the Center for Ethics in Managed Care. Ezekiel Emanuel, an oncologist with a doctorate in political philosophy from Harvard, is chair of the Department of Clinical Bioethics at the NIH’s Magnuson Clinical Center.

Abstract

 
The growth of managed care in the United States has been paralleled by a rising tide of anti–managed care sentiment. The "managed care problem" is understood generally as the need to protect individuals against large companies that care more about their bottom line than about people. The premise of the BEST (Best Ethical Strategies for Managed Care) project is that the "managed care problem" is best understood as an ethical problem—a conflict of values that arises as the country changes from a patient-centered to a population-centered approach to health care. The BEST project team worked with nine managed care organizations to identify their most intractable problems. The team redefined these problems in terms of ethical dilemmas, then studied each organization in search of innovative, exemplary approaches. These exemplary approaches are being shared publicly with the aim that they be adapted and adopted by other organizations facing similar difficulties and by regulators and legislators hoping to improve the health care system.

To the public, managed care is a rapacious behemoth more interested in profits than in patients’ health.⁵ The public’s perception is that needed health care services are denied to save money; incentives now give physicians a "fee for no services"; confidentiality is routinely violated to find and target high-cost users; and so on. These perceptions breed a hostile response of attacks, threats, and mandates. Despite considerable evidence from the malpractice arena that lawsuits do not ensure high-quality care, the right to file tort claims has become the essence of a "strong" patients’ bill of rights.⁶

Feeling misunderstood by the public and undeservedly maligned by sensationalistic and distorted press coverage, a number of health plans have adopted public relations campaigns that highlight accountability and their commitment to high-quality medical care.⁷ They cite data showing that managed care enrollees have satisfaction rates as high as, if not higher than, those of fee-for-service patients; they point to higher immunization rates and studies demonstrating that managed care is equivalent, if not superior, to fee-for-service medicine on a variety of quality measures.⁸ They also argue that unlike the physicians and hospitals in the old fee-for-service system, they are being held accountable for the quality of their outcomes through a myriad of formal and explicit evaluation schemes from the Health Plan Employer Data and Information Set (HEDIS) to state mandates.

In this heated public debate about managed care, there is little recognition of some important considerations. One such consideration is the forces that were behind the rise of managed care during the early 1990s. The pressure for cost containment, and the decision to use managed care as a vehicle to achieve it, came from large purchasers, both public and private. The federal and state governments decided that public budgets could not tolerate the rapidly rising cost of providing health care benefits. Similarly, large employers became increasingly concerned that paying for employees’ health benefits was eroding profitability. The public’s anger, however, has been directed toward the managed care organizations, providing political cover for these large purchasers.

The second important consideration is the public’s aversion to considering resource limits. The public feels cheated and betrayed by all denials of desired treatments, with little understanding of whether such treatments are necessary or even beneficial. There is a pressing need to educate the public about the genuine limitation of resources and about what ensues from this limitation: the need to evaluate effectiveness of interventions and to establish public priorities for how the limited resources will be used.

The Need For A New Approach

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A variety of strategies have been tried to resolve "the managed care problem"; these range from litigation and public condemnation to quantitative and qualitative research. All have inherent limitations (Exhibit 1). For instance, legislation mandating specific services may be helpful if it forces health plans to focus on neglected areas and improve care in particular ways. However, legislation often focuses on a specific treatment, and flexibility is lost. Also, the legislation may be silent on many other services that are important to those less organized, vocal, and politically sophisticated. Although lawsuits may be necessary in particular instances to enforce legislative mandates, both legislation and legal remedies are limited in that they do not provide examples to organizations of how to move forward.

When one speaks of ethics in the context of managed care and the health care delivery system, care must be taken to clarify that this is not traditional medical ethics, which involves principles such as autonomy and beneficence in the context of a physician-patient relationship. In the current context, ethics is best understood as a method of examining conflicts of values where there are competing interests, each of which represents a reasonable, justifiable position.

Shifting values. The rapid and profound changes in the health care system engendered by a shift from a patient-centered, fee-for-service model to a population-centered, capitated model have legitimately called into question the primacy of the central ethical value that previously prevailed in health care: the tradition of doing everything for the patient regardless of cost or degree of effectiveness. The continuing flux in the health care system has engendered uncertainty and conflict about which ethical values should be paramount.

New understandings of ethical obligations and performance must be articulated and implemented. As an industry with a pivotal role allocation decisions of a vital resource—health care—managed care may legitimately be held to a higher standard of conduct than other industries are. Therefore, the managed care industry must articulate to the public its core ethical values, and how conflicts among them will be resolved in an open, legitimate fashion. To date, however, managed care has not embraced any set of ethical principles or procedures; nor have individual organizations delineated how ethical values are identified and balanced in their policies and practices.

Looking at the current crisis through the lens of ethics alters the strategies for solving the problem and offers several distinct advantages. First, it acknowledges explicitly that ethical tensions are inherent in any health care system and that the shift to managed care has merely highlighted these tensions. There is no way a modern health care system, in providing the best possible care to individuals within the constraints of the resources that society is willing devote to health care, can avoid the dilemmas that arise. Indeed, similar dilemmas are surfacing in all Western countries. Second, using the ethics lens acknowledges that there is more than one ethical position on every policy and patient care decision; this means that a systematic decision-making process, perceived to be legitimate, is needed to weigh the diverse perspectives. Finally, it acknowledges that there is no "once-and-for-all solution" to the current challenges. While some conflicts in values may be fundamentally irreconcilable, there are also ways to find common ground, to implement values practically, and to manage value conflicts.

Approaching managed care’s dilemmas with an ethics framework is an ongoing process requiring identification of the values at stake, articulation of which values are most important and how they will be weighed, development of policies that either offer an optimal balance among the competing values or carefully specify which value will be given primacy, and a collaborative search for better alternatives. This approach may not "solve" the managed care problem, but it can lead to increased trust, practices that are perceived be fairer, and states’ adopting best practices into law, thereby reducing the adversarial dynamic that now pervades managed care.

The BEST Approach

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The Best Ethical Strategies for Managed Care (BEST) project reflects an ethics-based formulation. Fundamentally, the aim of the project is practical and constructive: to identify innovative strategies developed by individual organizations that navigate the ethical tensions confronting managed care plans in a practical and ethically justifiable manner. BEST recognizes that the pressures of the current marketplace prevent even the most conscientious organizations from devoting the time and resources needed to consider all ethical issues carefully and explicitly.

Goals. It is the ultimate hope of the BEST researchers that highlighting these innovative strategies could provide direction and road maps for change. Organizations may come to understand their own problems more clearly as conflicts in values and adapt and develop exemplary practices to manage their ethical tensions. Furthermore, organizations may come to see the value of openness and inclusive decision making in regaining the public’s trust. Also, consumers may shift their demands from the right to sue to getting managed care organizations to adopt exemplary ethical practices. Members of the public then may begin to appreciate the complexity of the allocation decisions that managed care organizations face and be motivated to educate themselves and participate in decision making. Finally, regulators and legislators may move away from mandates of specific services and bills of rights to encourage more innovative ethical strategies such as public education and open decision making.

Study methods. Operationally, the project followed five steps. (1) Health care organizations differing in geographical location, tax status, organizational structure, and affiliation were invited to participate. To ensure that the project was focusing on real-world problems, executives and physicians of these organizations met to discuss their thorniest cases and problems. They were not asked to identify ethical problems per se, because they might not—and frequently did not—view the problems in terms of ethics.

(2) The research team classified the problems raised into three broad categories that reflect the fundamental changes in the health care system: changes in the physician-patient relationship, changes in standards of appropriate care, and changes in the locus of decision making. Within these broad categories, ten specific domains were described (Exhibit 2). The research team delineated the relevant value conflicts in each domain. Most of these domains are widely recognized and easily understood, such as confidentiality and conflict of interest. Others may be less intuitive. For instance, "consumer and provider empowerment" refers to the processes and structures by which stakeholders—including plan members, providers, and employers—can have a meaningful voice in a health care organization’s policy formulation and decision making. Care for "vulnerable populations" addresses how an organization ensures that its members who may be less capable of navigating the system receive appropriate health care services. The domain of "community benefit" focuses on how managed care organizations, in keeping with a fundamental value in health care, understand their obligations to the community, not just their members; that is, are they responsible corporate citizens?

Defining Best Practices

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A major concern of the participating organizations was the identification of "best ethical practices." Unfortunately, in the current environment, ethics is too often treated as a report card evaluation, and the notion of best ethical practices evokes judgmental measures of moral worth. In reality, there is rarely just one ethical way of doing things. Some approaches may be unethical because they violate or ignore central ethical values. More typically, however, there is a range of possible approaches to problems, all of which may be deemed ethically justifiable. In an imperfect world, every policy and decision incorporates multiple values. Consequently, there will be many ethical ways to specify, balance, and realize the values. The goal of a project to identify best ethical strategies in an organization is not to declare one strategy ethical and brand all others, even if only by implication, as unethical.

The research team defined a best or an exemplary practice if it fulfilled four criteria: (1) There was a coherent formulation of an area of difficulty embodying an awareness of conflicting interests. Importantly, the organization itself did not have to conceptualize the problem as an ethical issue, since for many executives, conflicting values or interests are not necessarily labeled "ethics." The problem only had to fall within one of the ten domains. (2) There was a plan of considered, innovative action to manage the ethical tension that addressed the values conflicts. This plan embodied a way of specifying and balancing key ethical values, and reasons could be articulated for why the approach was the best way to realize them. Again, there was no need for the organization to characterize the plan in terms of ethics. (3) There was a set of consistently applied procedures that were integrated into the organization’s functioning and that constituted a plausible means of implementing the plan. (4) There was a mechanism to evaluate the effectiveness of the implementation in meeting objectives. Such mechanisms might include internal or external audits, or collection of data. If the plan had existed for several years, there should have been evidence of the evaluation and modifications to enhance the plan’s effectiveness.

Thus, an exemplary ethical practice does not have to be sophisticated in any academic sense. It simply must address the identified tension in a manner that is innovative, is effective, and can be ethically justified because it provides reasons why it realizes the critical values. The exemplary practices identified, while generally not seen by the organizations as explicitly ethical, are ethically noteworthy in that they engage diverse values, consider the various perspectives (the member, provider, and organization) and try to arrive at a reasonable policy that balances the views and values of all.

There is clearly more than one exemplary practice for a given ethical domain. Indeed, for any given domain, different organizations, depending on the organization’s unique circumstances, will create polices that promote different values. For example, one organization’s policy on confidentiality might emphasize a member’s absolute right of privacy, while the policy of another might balance privacy with an emphasis on using records to improve disease management. The aim is to identify distinctive approaches in each domain, highlighting common themes and important differences in how the dilemmas are approached that can provide managed care organizations, consumers, regulators, and others with alternative road maps to enhancing ethical performance.

Preliminary Findings Of Exemplary Practices

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The BEST project is ongoing, but we have discovered a number of exemplary practices. Five examples stand out.

Organizational ethics. This term refers to the structures and procedures that organizations have established to facilitate the systematic identification of ethical issues and their resolution. The aim is for health care organizations to be aware of the value-laden nature of their business and to appreciate the ethical tensions implicit in their daily decisions. Organizations that have had some success in this area foster "cultures" in which the ethical implications of decisions are explicitly acknowledged and actively considered.

An exemplary practice in this area comes from the Holy Cross Health System (HCHS), a provider organization. HCHS has a strong (Catholic) faith-based mission, the cornerstones of which are fidelity, excellence, stewardship, and empowerment. It has developed a process called "mission discernment," whereby major business and clinical decisions are evaluated not only for their financial and strategic implications but also for their ethical implications. HCHS has developed a systematic list of questions that are discussed to determine the impact of all major decisions on achieving the ethical norms essential to the organization’s mission. This list includes the following: What considerations make this decision important in the mission and values of HCHS? How will the quality of services be determined and maintained? How will care for the poor be addressed with this development? What is the community benefit from this development? The mission discernment process is not intended to yield a yes or no decision; rather, it is a process through which the organization investigates how the proposed policies or decisions can be restructured to best realize its mission.

At a site visit to Mt. Carmel Medical Center in Columbus, Ohio, the research team observed a mission discernment process. The proposal being considered was opening a new ambulatory care site integral to the medical center’s expansion strategy. One aspect of the discussion focused on the fact that the neighborhood of the new site included a deaf community. Questions were raised about how the proposed facility would accommodate the needs of the deaf patients, particularly the need for sign language interpreters. After much discussion, the site was accepted on the condition that sign language interpretation for deaf patients would be made available.

Consumer and physician empowerment. Whether justified or not, clinicians and the public fear that managed care organizations have imposed a wall of secrecy around their coverage decisions. Frustration is expressed about "proprietary criteria": the logic behind and reasons for coverage decisions that managed care organizations often refuse to disclose. Not surprisingly, fears about "gag rules" and "proprietary criteria" lead to distrust and anger.

In 1999 BlueCross BlueShield of Tennessee (BCBST) decided to address these concerns directly by making its medical policies available to clinicians, members, and the public. Because medical policies are formulated and amended on an ongoing basis, BCBST chose to make this information available on its Web site, <www.bcbst.com>. The site describes the process that the organization uses generally to determine "medical necessity," and it presents the rationale for specific policies.

As an example, the policy about treatment of varicose veins approves two techniques, both surgical ligation and sclerotherapy (nonsurgical treatment).⁹ It explains that since varicose veins larger than 7 mm are seldom successfully treated by sclerotherapy, repeat sclerotherapy will not be covered unless it had been successful for a patient in the past. The policy defines treatment of small (smaller than 2 mm) varicosities as "cosmetic" and excludes them from coverage. The rationale is presented in clear language, easily understood by physicians and many patients.

BCBST’s approach to medical policy making is exemplary for its process, not for its specific content. Physicians and patients might totally disagree with a particular policy, but since the rationale and relevant medical literature are available to them, they can appeal or protest in a focused manner. By presenting its reasoning as well as its conclusions, BCBST encourages trust and creates the possibility of constructive debate with its key stakeholders.

BCBST’s medical policy Web site can be viewed as a kind of "passive" empowerment. It gives consumers information about their coverage, but it does not directly involve them in policy formulation or coverage decisions. An example of what might be called "active" consumer empowerment can be found at HealthNet, a for-profit managed care organization in southern California. HealthNet is the managed care organization with the second-largest proportion of Medi-Cal (Medicaid) members—totaling 470,000 in seven California counties, with almost 400,000 in Los Angeles County alone. It has participated in Medi-Cal for nearly fifteen years.

In response to a California state mandate, HealthNet has established five Community Advisory Committees (CACs). The main purposes of these committees are to get input on culturally appropriate health materials; to help establish education and outreach priorities; and to provide input on state-mandated community health needs assessments. CAC membership is supposed to reflect the Medi-Cal population; members are consumers, health advocates, and representatives of community-based organizations and local public health programs. To overcome difficulties in recruiting committee members, HealthNet has provided child care services and transportation to meetings as well as small stipends to committee members for their service.

One early need identified by the CACs was plan members’ lack of education on childhood asthma. A video on childhood asthma was made, in versions featuring a number of languages. CAC members participated in revision of the video script and in creation of a "peak flow" diary, used in the management of asthma patients. The video has been so successful that it is being distributed to members in other managed care organizations.

Confidentiality. Confidentiality is a long-standing, deeply held value in the medical profession. Organized health care systems with electronic records and the ability to identify patients with particular illnesses or who use particular health care services contribute to the public’s concerns about managed care and its threats to their privacy. The challenge is to create systems that balance the value of patient confidentiality with the legitimate purposes for which access to medical information is needed, such as authorization of services, monitoring outcomes, and quality of care.

An exemplary practice here comes from Harvard Pilgrim Health Care. In 1995 the staff-model component of the health plan was featured in the Boston Globe because of perceived breaches of patient confidentiality.¹⁰ At that time, and unbeknownst to most members, psychiatric records were included in the staff-model plan’s electronic medical record and were available to all physicians. In response to negative publicity, the plan convened an advisory group that included plan personnel and patients, particularly those with sensitive medical information, such as information related to mental health or human immunodeficiency virus (HIV). This group examined carefully the issues of confidentiality and created a policy that consciously acknowledges the competing ethical "goods" that must be balanced:

We recognize that there will be situations in which the patient’s need for privacy will conflict with the clinician’s "need to know." In those situations, we seek to balance the conflicting needs of protecting the patient’s privacy without compromising our ability to provide safe and effective medical care.¹¹

Several mechanisms were created to help achieve that careful balance, including computerized audit trails that reveal the identity of anyone who has read a member’s chart; special categorization of clinical material that is considered to be particularly sensitive (such as HIV status or termination of pregnancy); the limitation of access to mental health diagnostic codes and narratives to mental health clinicians only; provisions for the disposal of medical records; and documentation guidelines for all newly hired physicians along with confidentiality training and a test of this knowledge.

End-of-life care. Under fee-for-service medicine, there was little case management and poor coordination between inpatient and outpatient services. Managed care, insofar as it improves the integration of health care, presents a genuine opportunity to improve end-of-life care, yet few organizations have focused on this area. One organization that has focused on end-of-life care is the Foundation Health Plan of Florida (FHP).

FHP, like many other managed care organizations, has numerous disease-based case management programs that oversee the care of persons with serious and chronic diseases. FHP has taken this model one step further. It contracts with outside organizations for the case managers, but these organizations become "partners." In the case of end-of-life care, the partner is VITAS, a nationally recognized, for-profit hospice organization. The representatives from the partner organizations work on site at FHP and are integrated into its daily workings. The disease management case managers, together with case managers from VITAS and from a home health organization, comprise a Portal of Delivery (POD), the organizational structure through which care is coordinated at FHP.

This POD makes daily rounds with a medical director from FHP and case managers at FHP’s in-network hospitals. Each day, active patients are discussed by all. When a patient is identified as appropriate for hospice, the case manager contacts the physician and/or the patient or family member. The patient, therefore, may get out of the hospital and into hospice more quickly. Since the case managers are involved with the patient both at home and in the hospital, there is continuity that allows for seamless coordination between sites of care, minimizing disruption for the patient and his or her family. This close integration of services, hospice and home health, with those managing disease produces two benefits. It has educated all of the case managers about the appropriate use of hospice; hospice referrals have risen by 23 percent. FHP is now evaluating whether referrals are made in a more timely manner.

Concluding Comments

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The BEST project identifies examples of organizations that are "doing the right thing," facing the ethical dilemmas of modern health care and devising policies and programs that reasonably balance competing values. The aim of the BEST project is to encourage the incorporation of such practices, and the underlying themes they embody, into the day-to-day workings of managed care organizations. The research team hopes that the project will be used by multiple "audiences" in different ways to achieve this end. Organizations may voluntarily adopt and adapt exemplary practices that other organizations have implemented successfully. Regulatory agencies such as the Joint Commission on Accreditation of Healthcare Organizations (JCAHO) and the National Committee for Quality Assurance (NCQA) may look to these practices in devising creative new accreditation standards. Finally, consumer advocates and legislators may use the exemplary practices as they seek to define a positive direction in which to influence managed care. The ultimate goal shared by many is to ensure ethical delivery of health care, and the BEST team believes that this project can help to attain this end.

Editor's Notes

 
The opinions expressed are those of the authors and do not necessarily reflect those of the National Institutes of Health, the U.S. Public Health Service, or the U.S. Department of Health and Human Services.

NOTES

Top The Need For A... The BEST Approach Defining Best Practices Preliminary Findings Of... Concluding Comments NOTES

 

1. American Association of Health Plans, "Annual Industry Survey" (Unpublished document, AAHP, July 1999).
2. D. Mechanic, "The Managed Care Backlash: Perceptions and Rhetoric in Health Care Policy and the Potential for Health Care Reform," Milbank Quarterly 79, no. 1 (2001): 35–54[Medline]; G.R. Wilensky, "What’s Behind the Public’s Backlash?" Journal of Health Politics, Policy and Law (October 1999): 1015–1019; and M.A. Rodwin, "Backlash as Prelude to Managing Managed Care," Journal of Health Politics, Policy and Law (October 1999): 1115–1126.
3. See D. Rogers, "White House, Patients’ Rights Proponents Begin Talks Aimed at Breaking Impasse," Wall Street Journal, 11 May 2001, B2. A variety of bills have been introduced in both the House and the Senate; to date, none has become law.
4. D. Segal and A. Goldstein, "Tobacco Lawyers Aim at HMOs; Slew of Suits Expected to Test Law Protecting Managed Care," Washington Post, 1 October 1999, E1.
5. G. Anders, Health against Wealth (New York: Houghton Mifflin, 1996); Henry J. Kaiser Family Foundation, "Is There a Managed Care ‘Backlash’?" Press release, 5 November 1997, <www.kff.org/content/archive/1328/mcarepr.html> (16 April 2001); and Kaiser Family Foundation, "New Survey Finds the Public More Worried about Managed Care and More Supportive of Patient Protection Legislation, but Criticisms Still Register," Press release, 17 September 1998, <www.kff.org/content/archive/1438/legislation-rel.html> (16 April 2001).
6. Kaiser Family Foundation, "The Public, Managed Care, and Consumer Protection," Kaiser Public Opinion Update, Revised, 2000, <www.kff.org/content/2000/3005a> (16 April 2001).
7. R. Pear, "Name-Calling Becomes Part of the Struggle to Define the Health Care Debate," New York Times, 8 July 1997, A12.
8. Aetna’s Brochure for Employers, <www.aetnaushc.com/data/quality_managed_care99.pdf> (downloaded 5 June 2000, no longer available online); and T.A. Coughlin and S.K. Long, "Effect of Medicaid Managed Care on Adults," Medical Care (April 2000): 443–446.
9. "Varicose Vein Treatments (Sclerotherapy and Surgical Interventions)," in BlueCross BlueShield of Tennessee Medical Policy Manual, <www.bcbst.com/MPManual> (16 April 2001).
10. A. Bass, "HMO Puts Confidential Records On Line," Boston Globe, 7 March 1995, 25; and J. Sabin, "What Confidentiality Standards Should We Advocate for in Mental Health Care and How Should We Do It?" Psychiatric Services 48, no. 1 (1997): 35–36, 41.[Free Full Text]
11. Letter to plan members of Health Centers Division, Harvard Pilgrim Health Care, 16 March 1995 (p. 1).

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