In the business world, companies hoping to control the rising cost of health- care benefits have begun studying the ways in which healthcare services are used by employees. For a while, these studies helped businesses to restrict unnecessary care. One study, for example, analyzed several hundred insured groups over a three-year period and concluded that hospital admissions had decreased 13 percent. Overall, employers were able to cut medical costs 3 percent through using such studies.

However, concerns arose about the financial benefits of these strategies because of the heavy administrative burden they placed on doctors and hospitals. Indeed, some analysts estimated that as much as 20 percent of the cost of healthcare could be attributed to excess paperwork and other administrative tasks that befall providers. By the year 2020, they warned, such spending could amount to half of total healthcare dollars.

Studying healthcare use had become popular because the cost savings far outweighed the insurance fees charged to employers. Yet over the long term, the increased costs to healthcare providers would lead to higher costs for ser- vices, further shifting costs to patients, andin the endto employers.

These increased costs were especially insidious because the extra time it takes for a physician to answer a phone call or chase down information for a report is not measured.

QUESTIONS

1. To uncover the system at work in this story, begin by looking again at the first paragraph. What two variables do you detect are being discussed in that paragraph?

2. Graph the two variables' behavior over time.

3. Now draw a simple loop that shows these variables' interrelationship. Is the loop reinforcing or balancing? Label it with an R or a B.

4. Reread the second and third paragraphs of the story. What two additional key variables do these paragraphs introduce?

5. Draw a new behavior over time graph that includes the variables you graphed in Step 2 and the additional variables you listed in Step 4.

6. Now draw a new CLD that incorporates all four variables of the story. (Hint: This will be a double-loop CLD.) Be sure all the links are labeled with an s or an o, and that each loop is labeled with an R or a B. Add any important delays.