by Scott MacStravic
May 7, 2008 at 8:46 pm · Filed under Hospital and Health System CEOs, Business of Health
In a previous article on the move toward increasing the places where health care is delivered, I noted a wide variety of additional locations where health care organizations (HCOs) are making care available. But the trend is even greater than I indicated. As reported in another earlier article by George van Antwerp, at least one new organization is offering health care at anyplace a person desiring it happens to be at the time.
American Well functions as a “broker” of physician services, once consumers have signed up as clients with their health history and payment information, and physicians have signed up to offer care in the form of online consultations. It offers consumers information on the qualifications of physicians relevant to the problems they describe, along with ratings of patient satisfaction among consumers who have consulted with them previously through this online service.
This means that consumers can obtain consultations at their home or workplace, or thanks to wireless communications devices, anywhere they and their devices happen to be. Phone communications can be arranged to accompany the online interactions, adding live audio communications to real time online transactions. American Well advertises itself as creating the same “transaction” opportunities as online shopping services such as Amazon.com and Expedia.com in the retail and travel realms.
It also notes that the care consumers get in this manner can be integrated into other sources that consumers use, including their personal physician, where they have one. Extensive records of the online transaction patients have had with American Well can be communicated to such physicians, with the patient’s permission, of course, as soon as the consultation is completed.
This service also includes information on the prices that will be charged by physicians offering the service, and enables such physicians to link their fees to the level of quality and past patient satisfaction they can demonstrate. Physicians can log on to the service when they wish to be available for consultations, and log off when they do not, meaning they control the amount as well as timing of their availability, based on their personal preferences.
Dr. Robert Shoenberg, co-founder of American Well has noted that current health care web sites offer consumers information, but not any opportunity to turn what they learn into transactions, i.e. actually obtaining care. By signing up both consumers and physicians, and enabling consumers to identify who is available to serve them online at a time and place they wish a consultation, American Well enables them to carry out a transaction in essentially the same way they buy from online retail or travel sites.
Consumers who log on to the American well site are walked through a process of indicating their problem or concern, identifying who is available to serve them, getting advise on how they can get the most benefit from their discussion, select a physician meeting their recorded preferences regarding age, gender, languages spoken, etc. They can access “five-star” ratings of each physician available based on previous consumer ratings of each, and determine the price of the transaction set by each physician.
Physicians can determine what topic(s) the consumer wishes to discuss, and offer the option of seeking care from a different specialist. Patients can see the responding physician online, and augment the online consultation with phone contact through the same computer, while enabling the physician to access an online medical record previously created. Each transaction is followed immediately by a feedback survey of the patient, and clicking a button to send the record of the transaction to the patient’s personal physician, including any needs concerns not addressed during the transaction that the personal physician can take care of at the next face visit.
Insurers can exert some control over use of the service by varying co-payment requirements according to the volume of use for individual plan members. In practice, the ready availability of physician online consultations wherever and whenever members wish them should reduce the unnecessary use of emergency rooms and face visits of other kinds. As such, the online service adds to retail clinics as alternative sources of care that can be coordinated with patients’ regular source of care. Nurses at retail clinics could use the online service as an immediate source of consultation when patients present with a problem where physician input is desirable.
This same service can easily become part of a more consumer-driven approach to health management, where consumers lack resources and programs offered by their employer, insurer, or physician. Ideally, insurance plans will come to appreciate the advantages of online health management consultations, in addition to sickness care transactions, and include coverage for them where they prove to be cost effective. [L. Dunbrach & R. Shoenberg “Health 2.0 – The Transformation to Online Care,” HealthIndustryInsights.com Webinar]
In any case, this is one example of a method for consumers obtaining care and physicians delivering it that falls into what is normally espoused as the “new consumerism”. Consumers have far more control over when and where they get care, while able to select physicians with considerable transparency as to qualifications and performance, as well as price. Dr. Shoenberg considers it to be a truly disruptive innovation. The rest of us will have to wait and see.
by Scott MacStravic
May 6, 2008 at 8:14 am · Filed under Business of Health, Variability in PHM Series
Once targets are enrolled, i.e. as many choose to opt in or fail to opt out, there remains the next challenge of sustaining their participation, in terms of frequency and duration of interactions, cooperation in pursuing the intervention goal, and making behavior changes – and completing or continuing in the intervention, depending on which applies. There may also be a separate challenge to sustain the changes in behavior, health status, and economic benefit delivered, since relapses relative to the behavior change targeted, or “slipping” into risk levels of some other behavior or condition is common.
PHM suppliers and sponsors seem generally to rely on the same approaches for sustaining participation and behavior changes as they do in achieving them. Of course, the least expensive course may be simply to ignore those who succeed, and even those who do not, rather than attempt to enroll them in the same intervention again. Re-enrollment efforts may help for those who failed to succeed or still have plenty of room for improvement, or they may be offered a different intervention, linked by assessment to a comparable or at least appreciable level of risk/reward potential.
For those who have succeeded already, some kind of “maintenance” intervention may work, with a lower intensity and cost to sponsors. Or, since almost every member of the population is likely to have many more than one cost factor present, those who succeed in one may be invited to enroll in another, assuming there remains plenty of room for reducing one or more of the costs involved. It may easily be possible to enroll “succeeders” in both one maintenance-level and one new intervention, without reducing the effects of either.
The most powerful approach to promoting sustained and continuous participation, however, is likely to be paying significant attention to what the participant has gained through past and current efforts. When the PHM intervention involves personal coaching, by phone or in person, it should be an automatically included part of each interaction to check what progress each participant has made in changing behavior, improving health status, reducing healthcare use, or improving productivity/performance, as each perceives such changes.
Their perceptions, at a minimum, can be used to reinforce their confidence in success, and thereby their motivation to persist. If, in addition, an effort is made, such as by asking participants to track for themselves, the health-related quality of life, and perhaps “life asset” impact of their participation so far, and their success once achieved, this should reinforce their persistence even more. Progress and success in changing behavior, health status, and productivity or performance, for example, when participants have their recognition of these prompted or reinforced, should add to their self-esteem as well as self-confidence.
Moreover, such changes may well have measurable impact on their life asset of “wealth” as well as “health”. Quitting smoking can save literally thousands of dollars a year in costs of tobacco, for example. Enabling and reminding participants to track how much they are “wasting” while they still smoke, and “earning” while they remain abstinent, can reinforce their commitment. It has been difficult to get smokers to recognize how much their productivity and performance have been impaired by their addiction, but measured improvement in both can add to their sense of “talent” or performance asset as well. And if productivity/performance improvements have come with increased compensation, reminding them of that should help as well.
Participants, themselves, are most likely to be at least potentially aware of many life benefits they are gaining through participation, if they are asked about them, or encouraged to record them in a personal health log or diary. This may be kept private for the participant’s personal use, or shared with the PHM supplier, as each participant chooses. Those that the supplier knows about can be used to provide periodic summaries to participants, to remind them of their achievements.
For PHM suppliers or programs that include frequent assessments, and I know of one that performs assessments at 30, 90 and 180 days, for example, for some clients, at least, can use these assessments to provide reinforcement effects to sustain participation, if it is intended to be longer than 30 or 90 days for example, or sustain change if repeated again after a year. Having three opportunities for participants to report their progress means they will be reminding themselves every time they are asked. If they also keep a shared log of results, the supplier can add its own summaries to these reminders.
Others, including incentaHEALTH and Virgin Health, use self-service kiosks that employees can use to “check in” with weight and other biometric measures whenever they choose. Each participant registers a confidential ID when using the kiosk, so that each’s efforts and biometrics can be tracked, making periodic reporting of progress and achievement easy for PHM providers.
Of course, like so many of the elements of PHM, supplying extra reminders, even asking separately about participant progress and achievement, may add some costs, so balancing the positive effects or sustaining efforts with their costs will be necessary. I know of no PHM supplier that has separated out such costs and effects, so there is no experience that I know of to look at. But research has clearly indicated that the prospect of future benefits is an even more powerful stimulant for continuing relationships than is recognition of past benefits, so reinforcing both seems likely to help. [K. Lemon et al. “Dynamic Customer Relationship Management: Incorporating Future Considerations into the Service Retention Decision” Journal of Marketing, 66:1 Jan 2002 1-14]
With so little known about how suppliers and clients have sustained participation and success in the past, it is difficult to say how much variations in this element add to the overall variability of PHM strategies and interventions. But when efforts are used, or even if they become only gradually added to PHM efforts, they will likely add to the overall variability, since there is no evidence at all, as far as I know, of which methods work best.
by Scott MacStravic
May 6, 2008 at 8:13 am · Filed under Business of Health, Variability in PHM Series
The range of interventions that DIY payers and PHM suppliers have adopted in seeking desired behavior, health status, healthcare/WC/disability cost reductions, and improvements in productivity or performance is vast – as is the range of costs and charges for such interventions. The least intense, expensive, and unfortunately effective method of which I am aware, used by a vast number of single-problem suppliers, and ranging on costs from free to a few dollars per month per participant, is the automated, standardized e-mail prompt/invited website visit combination.
Since visits to websites cost sponsors little or nothing, and online e-mails reminding participant to make such visits add only a little more, these types of interventions can be marketed to consumers for self-paid efforts. I don’t know if any payers use them, though there is one fitness/weight loss intervention I know of that is sold to employer and insurer clients, for undisclosed fees. It is also marketed to consumers through their primary physicians, for as little as $19.95 per month.
At the opposite end of the spectrum are PHM interventions that rely on face visits for screening assessments and coaching interactions, which often include biometric measurements to track how well the participant is progressing, and supply evidence for incentives that are based on biometric improvements, such as weight, blood pressure, sugar, cholesterol, etc. Such visits can also be used to verify smoking, drugs or alcohol abstinence by checking for traces in the blood or urine.
The cost to participants in time to make visits to individual practitioners, or for practitioners to go to worksites for interactions, tends to make this method the most expensive.
When physician-practice-based interventions were used in one Medicare disease management demonstration project, they came with costs that ranged from $80 to $444 per month for each participant = $960 to $5328 per year! It is little wonder that out of the fifteen providers participating in this project, only two have been able thus far to produce results meeting Medicare expectations, and warranting a bonus to the providers for their efforts. [R. Brown, et al. “The Evaluation of the Medicare Coordinated Care Demonstration: Findings for the First Two Years” Mathematica Policy Research, Inc. 2007.
This example is likely to be an “outlier” in PHM generally, particularly for employers, since it reflects only medical care cost reductions, and high-cost elderly chronic disease patients. Another physician practice has reported offering diabetes DM services that only added $104 in costs to normal patient visits, for example, though it lost money by doing so, because only a minority of patients had insurance plans that paid anything at all for the services. [P. Mohler & N. Mohler “Improving Chronic Illness Care in a Private Practice” Family Practice Management, 12:10 Nov/Dec 2005 50-56]
Visit-based PHM programs are not necessarily the most expensive, however. In many cases, visits to physicians’ offices or retail medical clinics for other purposes can substitute for special trips for PHM interactions. And some retail clinics offer PHM services, at either low fee-for-service prices each, or in relatively low-priced (< $100) packages to patients who use them for sickness care as well, or may even come exclusively for PHM services. Kiosks used to monitor biometrics such as weight, blood pressure/glucose and cholesterol can be offered in retail clinics, enabling practitioners to monitor progress and coach at modest costs.
Many PHM suppliers rely on phone coaching, but both the frequency and duration of interactions can vary, as will the costs, as is the case for visit-based interactions. Phone coaches have to rely on participant self-measurement and reporting when tracking cooperation, behavior change, and biometric improvements, of course, unless participants have remote monitoring devices that automatically upload measures to practitioners, or medications adherence devices that monitor when and how often participants take them. And such devices are expensive in themselves, and normally only used in high-risk chronic disease(s) management.
Pretty close to the low-end website-based interventions are the wide range (ten at last count) of interventions offered by HealthMedia, Inc. (Ann Arbor, Michigan). It offers each of the ten at separate costs per population, but the costs tend to be quite low, particularly for large employers with thousands of employees. It also offers “book of business” data on as many as half a million employees who have participated in one or more of these interventions, so payers can get an idea of what results have been achieved in the past over a very large population. It collects only productivity data, combining absenteeism and presenteeism, but individual employers can supply or analyze their direct costs as well to complete savings calculations.
Its intervention relies on online or paper health risk assessments, which include risk/reward psychographics and productivity impairment questions. The answers to its 30-50-question assessments enable virtually total individualization of both the HRA analysis and feedback to HRA participants, and ongoing communications to each one that chooses to enroll in one of their intervention programs. And since even a question with only two possible answers, when there are 50 questions in the assessment, yield a possible 250 = 1 quintillion (fifteen zeros) possible combinations, so it is unlikely that many if any individual participants get the same communications.
The PHM market, generally, is moving away from the one-size fits all approach, toward customization in both content and cost of interventions. Graduating prospective participants into low, medium, and high risk/reward categories is common, with accompanying graduation in the intensity and costs of interventions tailored to each. Formerly high-end suppliers have merged with or acquired lower-cost suppliers, or developed their own lower-cost options, in order to compete effectively with the vast number of rival choices available. Lower-cost suppliers may create or buy capabilities that have better results, but require more intensive and costly interventions to achieve, to accompany their basic methods.
There is no way of saying what is the best choice for any payer newly entering the PHM market, since the problems and potential for each will likely be unique, as well the economic impact of particular solutions with their populations. The plethora of choices available is reflected in a generally dispersed market, where no one supplier is dominant, particularly since many employers and insurers are in the DIY category. In a recent study of employer-sponsored EHM efforts, for example, out of 96 employers who were investing in such efforts, no one supplier had been selected by more than three of the employers, counting those who were operating their own programs. [Wellness: Saving Lives and Money” 2007 Willis Survey (Willis America Employee Benefits North America)]
But the wide range of choices relative to how PHM services are delivered probably adds the most to the enormous variation in PHM choices, when all seven elements are combined.
by Scott MacStravic
May 5, 2008 at 2:33 pm · Filed under Population health management, Variability in PHM Series
Once members of the population have been targeted for participation in particular PHM interventions, the next step is to recruit as many as possible, or at least as many as will contributable value per participant, to each intervention. Such recruitment may actually be part of the assessment process, when members of the population have to be persuaded to engage in a health risk assessment or biometric screening process, for example. In any case, this element is yet another in which there is wide variability across the methods used by different DIY payers or the suppliers they hire.
One of the simplest is the “opt-out” strategy, in which every member of the population targeted is automatically enrolled without their involvement, once the targeting process is complete. They are usually individually notified of their enrollment, and invited to take whatever the first step in actual participation is. In some cases, they are automatically assigned a coach who will call them, or are automatically sent online or mailed information that is part of the intervention process.
This method often results in 90-95% enrollment, since only those who explicitly opt out are deemed non-participants. But the significance of their being enrolled lies in their active participation, cooperation, and changes in behavior, and the rates of each may be quite a bit lower than when other enrollment strategies are followed. The major two options with “opt-in” interventions are: 1) targeting each for a particular intervention based on the identified most promising PHM intervention for each; or less common 2) asking each target to choose among a number of options based on recommendations customized to each.
The enrollment process has to balance two considerations: 1) which intervention promises the greatest return to the investor; and 2) which has the greatest likelihood of delivering on that promise. The opt-out approach probably is strongest on the first criterion, and weakest on the second. Inviting targets to enroll in an intervention pre-selected for each is probably medium on the first and on the second criteria. The “self-determination” approach would probably be weakest on the first and strongest on the second. So it is a balancing act to select the best approach, and one or two may be tried before the best is identified in each case.
The “style” of the intervention and enrollment effort may also make a major difference to the numbers who enroll, participate effectively, and succeed. Early PHM interventions were mostly “one-size-fits-all designed and implemented by the sponsor or supplier. Increasingly, however, interventions are either partly or totally individualized, by either the person who contacts the target, or the automated online/mail communications based on analysis of assessment information. And the customized approaches tend to work far better.
Enrollment is also influenced by whether or not financial or other incentives are offered – for enrollment, participation, or success. Incentives paid for enrollment should achieve the highest enrollment, but not necessarily the highest levels of enthusiastic participation. Incentives paid for participation in or completion of an intervention may achieve high levels of participation, but not necessarily of success. Incentives paid for success may promote both enrollment and participation, particularly among those with the greatest confidence in their probability of succeeding.
Of course, people often delude themselves. Repeated studies have found, for example, that those with the highest levels of capabilities tend to underrate themselves, while those with the lowest levels overrate themselves. If the assessment process identifies targets based on predicted probability of success, it should be safer to pay incentives for participation, since those with low probability, despite confidence therein, would not be targeted. Those with high probability, but perhaps less confidence, would be encouraged to participate by the incentive, where they might not be as encouraged by a reward only for success.
Since incentives add to the costs incurred by insurers or employers, they have to be used carefully. PHM suppliers or peers who have used incentives, if they share their experience, may provide a basis for choosing which type and amount of incentive may work best, though each population is likely to be unique enough to make actual experience with it the best guide in the long run. The combination of customization and the right incentives is likely to work best, judging by experience in PHM so far.
by Scott MacStravic
May 5, 2008 at 2:33 pm · Filed under Employer CEOs, Population health management, Variability in PHM Series
The first purpose of the assessment process is to determine the size of the PHM challenge and of potential gains from implementing a PHM strategy. The assessment process is then also used in the evaluation process, to identify changes in measured “success” dimensions against the baseline data. But another key use of the data is to identify and select which members of the population make the most promising targets for participation in which PHM intervention, together with how many available interventions will likely justify their investment.
This step begins with identifying the baseline costs, both direct and indirect when applied to employee populations, linked to individuals and the health-related factors each has been found to have. Usually, without extensive multivariate analysis and predictive modeling, the “potential” is estimated based solely on the baseline costs. But the real predictor of potential economic gains lies in the particular PHM interventions that will be applied on a DIY or outsourced basis. And this information is peculiar to each PHM strategy, intervention, and supplier, rather than any generalizable average for PHM as a whole.
Moreover, when measurement problems such as side-by-side comparison “self-selection bias” and before/after “regression to the mean” effects have been overcome, there remains the inherent difficulty of predicting realistic potential cost impacts or other benefits based on past data. While past data may accurately describe the past of the very population to be addressed by PHM, it does not translate easily into predictions of the future. And while a given PHM supplier’s own past performance may be “statistically valid and reliable”, it may not be a sound basis for accurate prediction of results in a new population.
Within these limits, PHM investors and suppliers will want to determine which and how many population members represent the best risk/reward potential for which particular PHM interventions. Some suppliers and employers have employed a completely customized approach to PHM, where each individual either chooses each’s own goals or is assigned a coach who will customize the intervention to the individual’s mix of challenges, and address as many of each’s individual problems as possible. Experience suggests that individuals can handle more than one, but rarely more than two or three, so the number of problems to be addressed is normally small.
In many cases, there is one specific problem that is the basis for the PHM intervention to which members of the population will be invited. This does not mean that the intervention will have a very narrow focus, however, though it may. A smoking cessation program normally focuses exclusively on enabling participants to quit, but may have to address a wide range of perceived barriers and related issues, including stress and weight management along with the smoking behavior, per se. And diabetes disease management interventions routinely include attention to blood pressure and cholesterol levels, in addition to blood glucose.
While the baseline costs linked to individuals may guide targeting to some extent, the psychographic data indicating the probability that each will make a needed change and achieve success thereby, together with PHM suppliers’ demonstrated performance will add significantly to how “informed” the choice of targets can become. In many cases, the supplier may guarantee results for particular population segments, interventions, or success dimensions, making the targeting that much better informed.
Targeting necessarily includes consideration of how PHM suppliers charge, and what additional costs may be incurred by targeting more and particular segments or individuals for interventions. When the supplier charges on a “per population” of flat fee basis, it will not add fee costs to include as many members of the population in any given intervention, though most charge a fee for each separate intervention, which will multiply costs by the number of interventions selected, rather than the number of members participating.
When the supplier charges per participant, perhaps with graduated fees based on the risk/reward potential it determines for each and the different intensity/expense for the graduated interventions, it is the number of members targeted for each intervention that will represent the upper limit on fees. Moreover, payers will likely incur additional costs, per member, per participant, or even per successful participant (e.g. when incentives are offered for success rather than participation alone), which have to be considered as well. And while payers may recommend steps their clients should take that incur costs, the client will have the last word on which kinds of support it provides and what it will pay for what.
There will always be the unknown costs of participation or success incentives that will have to be paid, but this will typically be substantially less than the economic gains associated therewith. The past performance of the supplier applied to the baseline costs and economic value of members of the actual population to be addressed should help in ensuring that the client’s total costs are kept lower than the client’s benefits. Controlling the number of members targeted and number of interventions invested in based on risk/reward vs. predicted or controllable costs, is the best overall approach to take.
by Scott MacStravic
May 5, 2008 at 11:28 am · Filed under Employer CEOs, Employee Health Management
When I began my efforts in employee health management (EHM) fifteen years ago, the hospital system where I was responsible for strategy and marketing began the strategy with onsite health fairs for large employers. These gave us as well as the employers involved their first overall indications of the state of their employees’ health, other than that delivered by their health insurance premium increases and claims reports.
Because a fairly significant effort and expense was required in organizing each health fair, with volunteers and paid staff from our system, plus internal promotion efforts by the employer, the fairs were limited to large employers at first, those with thousands of employees in most cases. But there was also significant interest among smaller employers, with only hundreds or even dozens of employees.
We found it possible to organize reasonably efficient screening and educational efforts for smaller employers by inviting a number of them to participate at the same time and place. By conducting the efforts at large office buildings or campuses, for example, we could serve many employers at once, creating sufficient numbers to make it reasonable, and relying on the identification of the different employers for each employee who participated for analytical purposes.
A recent example of employer cooperation in ongoing coaching and monitoring of EHM participants has emerged in Milwaukee, Wisconsin. The QuadMed onsite clinics, which emerged as a separate business for the Quad/Graphics printing company when its own clinics proved successful are being shared by a number of employer clients in the area. These clinics are owned by the employers, while they are operated by QuadMed at the employer sites.
Quad/Graphics, itself, plus clients Briggs & Stratton Corp. and Miller Brewing Co. are “sharing” their onsite clinics with each other’s employees. This includes both the kinds of primary care services that employees and their dependents may need, and any EHM services offered at the clinics as well. By multiplying the locations available, the arrangement makes it easier for dependents, especially, as well as workers on their days off, to access a site nearest to their homes.
With the high price of gasoline, this also reduces the travel costs and time for employees and dependents, and makes it more likely that they will use early detection services such as mammography, for example. Modest co-payments of $5-6 per visit make these sites highly competitive with either retail clinics or physician’s offices in the area. And the more the onsite clinics are used, the more information is included in QuadMed’s data base about each employee or dependent involved. [E. Sanders “Companies Agree to Share Workplace Health Clinics” Business Journal Serving Greater Milwaukee, Apr 25, 2008]
It would not take much to permit smaller employers to cooperate in an onsite medical clinic located in a large office building or campus in the same way that health fairs are made accessible to them. Employer identification for each patient served would enable the billing of services to the proper employer, while offering convenience of location and minimal lost time from work seeking care in return, for employer and employees.
By aggregating a number of employee populations as potential participants in both normal primary care and EHM services at such a convenient location, employees could conveniently get coaching and risk condition or disease state monitoring services. This convenience is already offered by at least one EHM provider, Sutter Health Partners in Sacramento, California, for example, using visiting coaches and biometric screening. Making it permanently available at onsite medical clinics would be that much more convenient.
Such clinics have already been shown to save on the costs of medical care, per se, compared to emergency rooms or urgent care centers, as well as private primary physicians, to say nothing of the time, travel, and out-of-pocket costs saved by employees who use them. Cooperatively supported clinics could be developed by a group of employers working in concert, or by onsite clinic development and operating firms, such as QuadMed, Whole Health Management, Ceridian Health or CHD Meridian.
In general, results from onsite clinics have proven to be significant and positive, since the nearby convenience both promotes employee participation in EHM and saves time away from work for obtaining routine medical care. The clinics often result in earlier identification and intervention for acute and chronic diseases, as well, because of their convenience for workers. Sharing the costs of operation and calculating the direct and indirect savings achieved will be more complicated with cooperatively owned clinics, but there should be enough economic benefit for all.
A special advantage to onsite clinics can be in verification of workers’ qualifying for EHM incentives. The clinics can test employees to be sure they meet goals relative to health behaviors (e.g. testing for nicotine or drug use) and conditions (weight, blood pressure, sugar, cholesterol, etc.) They should also be helpful in biometric screening and ongoing progress tracking in support of employees’ (and dependents’ or retirees’ where applicable) participation and success.
by Scott MacStravic
May 2, 2008 at 12:33 pm · Filed under Business of Health, Population health management, Variability in PHM Series
The sheer number of dimensions of the PHM challenge that are to be measured partly determines the relative difficulty, uncertainty, and costs involved, but the types of dimensions makes an even greater difference. One fairly common practice, however, is to count only the numbers of health risks, chronic conditions, or impairment causes, and link the number of such “factors” to the amounts of sickness care, disability and workers compensation (‘direct”) costs, and productivity or performance impairment (“indirect”) costs, for each individual in the population. This greatly simplifies the measurement challenge, but it may also mislead it.
The difficulty with assessing the specific factors of concern in PHM is that it is normally only possible to identify the overall direct and indirect costs that apply to each individual, together with the presence/absence or degree of the separate factors for each. This means that there is no basis for determining how much each individual factor contributes to the total costs for each, nor predicting how much might be saved through a particular PHM intervention addressing each. In practice, PHM interventions are customized to individuals, at least by what is usually one particular factor affecting each, though potentially for a number of such factors simultaneously, depending on the types of interventions available.
There are four common approaches to gauging individuals’ and populations’ risk/reward levels in terms of costs and economic gains: 1) past claims analysis, 2) health risk assessments); 3) biometric screenings; and 4) “psychographic” surveys. Champions for each tend to think theirs is the best approach, though there is likely to be added value in each of them that is not available in the others. The trouble is, however, that adding more methods adds to costs for insurers and employers, and to participating employees as well, which can directly threaten payers’ return on investment (ROI) by increasing the cost denominator. It can also indirectly threaten ROI by making participation either lower in numbers of people involved, reducing the economic gains achieved, or more expensive to achieve by requiring incentives to be paid, which will affect both numerator and denominator.
Claims analysis is often easiest, because the data already exist, in insurance plans or the employers’ own operational data. This will only apply to direct costs, unless the employer has a P4P system that involves already measuring employee productivity or performance in a way that can be applied to gauging their health-related impairment. Otherwise, only direct costs will be gauged by using existing data, and this will greatly understate the size of the problem and extent of economic benefit for employers, regardless of how much they pay their employees. The degree of understatement will be directly related to the amount of average compensation, with or without team/peer effect or value-based multipliers.
Claims analysis also carries with it the greatest risk of overestimating potential and actual economic gains. This is particularly true when individuals with high/outlier levels of sickness care expense in the baseline year will greatly influence the estimate of potential. Since such individuals are more likely to have lower costs in the following year, thanks to what is called “regression to the mean” than to have the same or higher costs in the next year, a major portion of the potential savings in the assessment, as well as the actual savings in the evaluation, will not be linked to the PHM intervention, but to unrelated “natural” causes.
There are half a dozen validated measures for employee productivity, which should also be fairly good estimates for performance, though I know of none validated for this added dimension of employee value. The book — R. Kessler & P. Stang (Eds), “Health & Work Productivity “, U. Chicago Press 2006 — offers the best compilation of these methods that I know of, and any one might be chosen for PHM use with some confidence. The trouble is that different methods tend to produce different results. Moreover, where comparisons have been made between employees’ self-reported impairment and objectively measured output, it has been found that employees often overstate their degree of impairment. So whichever method is used, there should be sound data available for converting employee reports into most probable reality.
In practice, many PHM suppliers use psychographic measures, along with, or even instead of the others. A few rely totally on individual’s self-reported perceptions and attitudes to predict their future costs, and the same may be used to predict their impairment. This can be inexpensive, where the survey is administered online, for example, and responses are automatically analyzed by computers. But the proof of all such assessments will be in the degree to which they lead to positive ROI based upon them. No merely “scientific” superiority should overcome pragmatic advantages.
Most suppliers who use employee surveys, whether health risk assessments or productivity/impairment questionnaires, can and usually do combine these with psychographic questions to gauge things such as employee motivation, commitment to change, confidence and self-efficacy in self-governance, for example. Answers to such questions, combined with the costs linked to each, can be used to identify and target the most promising individuals for inclusion in PHM interventions. Or they may be used to determine risk/reward segments, whose members will be assigned different levels of intensity and cost for the interventions they get.
There are equally wide variations on how identified risks are defined. “Depression”, for example, may be defined as a diagnosis, with only a small portion of the population identified as having a diagnosed “disease”, or as a “disorder” where a far larger portion is affected, or as an “emotional state” where an even larger portion would be identified as having it. It may even be defined as a general catchall covering all emotional problems and “down” feelings, including anxiety and stress, making it likely to affect the majority of the population.
The variety across internal PHM programs, as well as outsource suppliers, in the methods they employ to assess the baseline situation, which are typically repeated in the evaluation process, add greatly to the overall variability across the large numbers of options available to employers and insurers. We can hope that in the future, there will be improved identification of which are truly the “best practices” in PHM, though there is likely to be constant experimentation with new methods that will compete with even those proven best in the past.
by Scott MacStravic
May 2, 2008 at 12:31 pm · Filed under Business of Health, Population health management, Variability in PHM Series
The first basic split among PHM clients in terms of which dimensions of economic impact will be used in assessing problems and evaluating gains is that between commercial and government insurers on the one hand, and employers on the other. Insurers focus mainly, though not exclusively, on reductions in sickness care costs as the economic gains they are after, with many true “health” care costs part of the PHM intervention. They may also look at member/beneficiary health status and satisfaction with their PHM experience, as well as the duration of their “membership” in specific insurance plans.
Employers tend to look at a far greater number of dimensions, though these include the same ones that insurers look at, since they pay for such insurance, or if self-insured, pay the costs directly. But in addition to sickness care costs, employers worry about workers compensation and short- plus long-term disability (STD and LTD) insurance or direct costs as well. These may be as great as are insured sickness care costs, with some employees, though they are normally far less overall.
The really large economic benefits sought in PHM by employers tend to be that derived from reductions in absences and both productivity and performance impairment while at work (“presenteeism”). Economic losses from lost productivity/performance has been measured at levels two to five times as great as the sickness care costs associated with the many health-related problems that cause impairment. Moreover, employers may achieve economic gains through “positive presenteeism”, the potential that healthy and happy employees will contribute significantly more economic value than is “normal”, not merely “impaired” levels.
While productivity, per se, is the more frequently included dimension, compared to performance, there have been a few cases where specific benefits of improved performance have been addressed by employers. These include employee impact on customer satisfaction and loyalty, word-of-mouth impact on new business, and similar revenue-related benefits, in addition to labor cost reductions. And many employers have examined improvements in employee retention as adding value in the balanced scorecard dimension of “organizational knowledge” as well as reducing costs of replacing employees who leave.
The determination of which dimensions to include affects the complexity and costs of the PHM effort, whenever measuring these dimensions requires going beyond information already being collected as part of normal operations. This is less often the case for insurers, since claims data is frequently all they look at, though if they also consider member health status, satisfaction, and retention, for example, special efforts and added expense may arise in collecting such information.
With employers, complexity and costs of measuring dimensions of the PHM problem and progress in its solution are likely to be significantly greater than for insurers (though insurers may have to address these when they provide PHM services for their employer clients). Measuring workers compensation and disability expenditures is normally routine, already being tracked overall, though there may be added effort used in analyzing collected data so that it serves better to guide and evaluate the PHM effort, itself.
The biggest challenges will be in gauging productivity and especially performance impairment levels and their reduction, i.e. the economic benefits of improving either or both. While productivity is susceptible to both objective measurement in some cases, and validated estimates via surveys that collect employees’ and sometimes team supervisors’ perceptions of output, performance includes multiple dimensions of its own.
Of course, some dimensions of performance, such as customer satisfaction, retention, market share, new business revenue, etc. are likely to be routinely measured. But they are normally measured on an overall or market/segment-specific basis, rather than linked to individual or segments of employees, except for sales results linked to specific sales staff members. Customer satisfaction may be linked to the specific employees known to have served them, where this is likely to be the same individual or team over time, but market share and new business increases may have to be credited more widely, perhaps to the PHM effort overall.
There are probably a half dozen commonly used methods for estimating productivity based on employee self-reported data. These may directly ask employees to recall how many hours of lost productivity they have had in a recent period, perhaps a week, two weeks or a month, where their memory may be reliable. Or it may ask for an estimate of the percentage of their full potential they have been able to deliver, considering their health and any problems identified, that may affect their output.
Similar surveys may be used to gauge the levels of performance employees have been able to deliver, since both absence and presenteeism will likely affect performance as much as they do productivity. And the impairment found in individuals may be “multiplied” by their estimated “team/peer impact”, which has been measured at between 1.25 and 1.35 times the impact of the individual’s absence on average. [“Multiplier Effect: The Financial Consequences of Worker Absences” Knowledge@Wharton Dec 14, 2005 (knowledge.wharton.upenn.edu)]
The economic impact of absent or impaired employees may also be based on the economic value of employees in terms of their overall contribution to the employers’ performance. When employees are paid on a “pay-for-performance” basis, their performance will naturally be measured, though it may prove difficult to determine the extent to which any individual is impaired by their health problems, as opposed to other non-health-related limitations. Fortunately, once performance improvements have been linked to PHM interventions, the measured performance may be more easily translated into economic benefit.
By far the most common approach currently used in evaluating the economic impact of employees’ health-related impairment is to multiply their degree of impairment times their annual compensation levels. This means the different employees will have different costs of lost productivity, whenever they have different levels of compensation. It also fails to take into account any team/peer impact or the likelihood that employees are worth more than they are paid. One study, for example, found employees worth an average of 3.28 times their annual compensation, though the median was only 1.92 times. [P. Strassman “How Much Is an Employee Worth?”, Jan 14, 2006]
While insurers have relatively few and commonly used dimensions when measuring their PHM problem/challenge and the results of their PHM investments, employers have far more complex and potentially costly choices. Fortunately, employers can use the same relatively simple and inexpensive-to-measure dimensions as do insurers, and when they go beyond those, they should also be gaining many times the cost of doing so in the added value they discover across the full range of benefits in having a healthier/happier workforce.
by Scott MacStravic
May 2, 2008 at 12:30 pm · Filed under Business of Health, Population health management, Variability in PHM Series
Population Health Management (PHM) has become a major market for insurers, governments, and employers to invest in – and for a wide range of organizations, from traditional healthcare providers to specialized PHM suppliers to insurers to deliver to that market. The numbers of suppliers keeps growing as the number of payer clients does also. The market is beginning to look like the early stages of many new markets, from automobiles to radios to TV sets, cell phones, and electronic gadgets in general – it offers a vast number of options to purchasers, including the “do-it-yourself” (DIY) alternative to purchasing PHM.
Many traditional healthcare organizations (HCOs), from physician practices to hospitals to integrated health systems (IHSs) have entered this market, as DIY providers to their own workforces, or as competitors in marketing PHM services to payers, mainly to employers. They may do so in order to support their sickness care services marketing strategy by creating and sustaining stronger and more lasting relationships with employers as influencers of both insurance plan decisions on provider networks, and employees’ choices of providers. Or they may see the PHM market as one they would rather join than merely suffer its sought-after effects in reducing sickness care use and expenditures and thereby their sickness care revenue.
Employers have been involved in a “toe-in-the-water” approach to PHM since the 1970s at least. Many began with some kind of DIY “worksite wellness” program for their employees, and a growing number are offering onsite medical clinics that engage in PHM along with traditional sickness care. But most appear to be outsourcing the PHM function to specialized suppliers or HCOs, since there are so many complications in their knowing about their individual employees’ health problems — and most have no great competence in PHM.
Insurers have often been influenced by their own interests or their employer clients’ demands to become PHM DIY suppliers, as well as insurers, to employers, at least. Both Aetna and CIGNA, for example, offer PHM services to employers other than those to which they provide health insurance plans. Since insurers can gain substantial experience, and with large populations, by delivering PHM services to their own insured populations, they can gain both the competence and track record needed to become viable suppliers in the overall market, as well as capable DIY providers for their own health plan members.
Specialized PHM suppliers have been in the PHM market, as operators of worksite medical care clinics for employers, or suppliers of PHM services for commercial and government insurers, for a few decades. There has been a significant movement toward merger and acquisition among such suppliers, resulting in consolidation of their numbers, but many new ones keep entering the market, so the overall numbers of suppliers is still huge. And while some have captured large market shares, there appears to be no single supplier who could be called dominant.
One of the reasons for this is the vast degree of variability among PHM suppliers, due to both their large numbers and the fact that there is nothing close to agreement on what are the “best practices”, the most cost-effective approaches to PHM in any one of its essential elements. These elements include:
- Determination of what dimensions of economic impact will be included in the PHM planning, management, and evaluation
- Assessment of the PHM current state of these dimensions in whatever population (insured plan members, employees, dependents, retirees) is to be involved
- Targeting of which individuals shall be sought as participants in either standardized or differentiated PHM approaches to particular problems, risks, or potential gains are to be addressed
- Recruiting targeted individuals and segments to become active, engaged, and enthusiastic participants
- Sustaining participants throughout the PHM intervention program, at least long enough to achieve some desired effects, if not to the end of a limited intervention, or on a continuous basis if there is no intended end.
- Carrying out the intervention process on those participating, using a wide range of interaction and communications technologies and methods
- Evaluating the effects of interventions over whichever time frame(s) clients wish
Not only are there vastly different approaches to each of these elements being used by different PHM suppliers, but clients may engage different suppliers for two or more of such elements, including doing one or more themselves, or at least sharing the responsibility with outsource suppliers. As a consequence of the numbers of and variations among suppliers, the overall PHM market contains far more variation than is true for almost any other example in the business-to-business (B2B) or business to consumer (B2C) markets.
In subsequent postings, I will describe and discuss the seven separable elements in PHM that are subject to such variations. The combination of this number of basic elements, and the variability in how they are carried out by different suppliers, even within the same supplier for different clients, is what makes the PHM market so replete with variability.
by Scott MacStravic
May 1, 2008 at 9:14 am · Filed under Business of Health, Population health management, Marketing
Honesty is required by law in advertising of medical treatments and pharmaceuticals, though both are subject to some “overenthusiastic” promotion by physicians and drug companies, alike. On the other hand, there have been even more cases of overenthusiastic promotion by manufacturers of vitamins and food supplements, as well as providers of “alternative medicine” services whose methods have not been subject to scientific proof of safety and effectiveness before being advertised.
The regulation of treatments and products used in sickness care has long been a major effort in the interest of protecting patients from unscrupulous manufacturers, retailers, and providers who can easily take advantage of patients desperate for something that works, or those who rely too much on emotional vs. rational bases for making decisions about the care and providers they seek. There are certainly a large number of complementary and alternative medicine treatments that have solid evidence behind them. But in some ways, this makes it easier for unscrupulous sellers to make the case that their offering will work, by citing other examples where medicine has been wrong in concluding that previous CAM therapies were worthless.
The growing popularity of health management, of persons and populations (both deserving to be labeled “PHM”) has opened up a large new market for CAM therapies. Where CAM providers have achieved greater credibility among their patients for their approaches, and even greater success in terms of bang for the buck, thanks to their holistic approach to patient care, or their ability to enlist more enthusiastic collaboration among patients, they may be significantly more successful than are traditional physicians, at least in terms of benefits vs. costs.
Achieving a greater benefit/cost ratio is sure to make CAM providers more popular among payers, whether governments, commercial insurers, or employers. A growing number of insurers, for example, are offering, and employers as well as consumers selecting, lower-priced coverage plans that involve more use of CAM providers for health management of sickness care services. The generally lower prices they charge for their services, and lower overhead/operating costs for their practices, make CAM providers more likely to be able to compete on costs, at least.
The challenge in PHM is to promote honesty in advertising by its providers, whoever they are – specialty organizations that focus on PHM, traditional providers, or CAM alternatives – about what kind of results they are getting for what kinds of costs. If honesty in advertising were enforced in PHM, then unscrupulous or simply ineffective providers would be severely limited in their ability to attract payer clients, or even consumers, whether they pay out of their own pocket, or have a third party doing so.
There would be a significant number of current PHM providers who would probably be forced out of business if there were forced honesty in advertising, or even if there were the kind of comparative testing and reporting of outcomes and providers as is increasingly true with sickness care. Commercial insurance plans are already talking about developing and rating the performance of physician practices in terms of managing the health and costs of patients with chronic diseases. It would be relatively simple to do the same for practices engaged in protecting and improving their patients’ health, such as the MDVIP retainer medicine practices, now numbering over 200 in the US.
If honesty in advertising were required across the board in PHM as well as in sickness care, there would naturally be the same two effects as already noted with publication of comparative quality in sickness care. The lower-performing providers would strive and many succeed in improving their performance to make themselves more competitive with their higher-performing rivals. Or they would be forced out of business, as more consumers and payers would be able to “Buy Right” in PHM, as well as sickness care.
It will take a major improvement in the numbers of payer clients forcing and financing rigorous evaluation of the actual performance that PHM providers achieve. This will have to be done on a set of comparable outcome dimensions, rather than only those that individual PHM providers choose to measure or report. And there would have to be the kinds of rigorous analysis of the different results that different PHM providers get as has already been done in sickness care, and even in disease management D(M), though for the wrong reason.
Instead of rigorous scientific analysis of a number of different PHM providers and methods, there should be equally rigorous analysis of individual PHM providers’ results across their entire book of business. And instead of pursuing a ludicrous and futile answer to the general question of whether PHM works, as has characterized reviews in DM, these analyses should aim to develop comparable performance data on competing PHM providers to identify which do the job best.
This will speed up the ability of PHM sponsors and buyers to identify and selectively prefer those PHM providers who have been shown, in objective, accurate, and rigorous ways, to deliver the best outcomes. Ideally, these “best outcomes” should include both economic effects on payers, and personal health/life quality for those persons and populations that participate and invest their own time and effort, as well as their money in many cases, to achieve these outcomes.
The same amount of money already wasted on answering the unanswerable general question of whether it works could go a long way toward identifying which PHM methods work best. The general question is unanswerable because PHM, as is true for DM, is simply not one “treatment” that can be examined across different populations and problems to find out if it works. PHM and DM are a wide range of significantly different approaches, with highly varying costs and intensity, being applied to highly variable sets of problems and populations. The individual programs that do work should be the focus of analysis, not the collection of diverse programs, where some do and some don’t, virtually guaranteeing the almost always equivocal and uncertain results of studies addressing the general question.
Armed with comparative, rigorous, reliable and valid data on the performance of competing PHM methods and providers, the entire discipline and market of PHM could become dramatically more effective and efficient, and in a far faster time than is possible without such an effort. When the results of publishing such data are combined with regulated, honest advertising, PHM would have its best chance of succeeding, for its providers, its payers, and the populations that should be benefiting from such success.
Next entries »
