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Who Is Investing in Proactive Health Management?

by Scott MacStravic

While traditional sickness care organizations have trepidations about investing in proactively managing the health of populations, whether government or commercially insured, or employees of employers that see their workforce as assets, there are plenty of other organizations that see huge potential there. The “Disease Management” industry alone, focused on managing patients with chronic diseases in order to proactively minimize crises, complications and worsening thereof has already exploded on the radar for over ten years, growing toward a multi-billion dollar industry.

The other elements of PHM are catching up, as health/wellness promotion becomes a major focus of the growing number of employer-sponsored worksite medical clinics, which have the advantage of saving in both costs of medical care and lost productive time thanks to onsite availability. These, along with a growing list of private “vendors” are promoting people’s overall health and fitness, preventing and correcting unhealthy behaviors, managing, even “reversing” risk conditions, to complete the proactive domain.

A whole new type of physician practice has emerged in the past decade, the retainer-based practice with a major focus on proactive management of each patient’s health. Such management is precisely the kind of separate and non-covered service that Medicare allows physicians to charge separately for, while not jeopardizing physicians’ participation in Medicare. MDVIP, for example, an organization of almost 150 retainer physicians is already established in 16 states and 40 markets.

Venture capitalists are betting that there is a significant future for PHM. Summit Partners, for example, demonstrated their confidence by buying into MDVIP, as did Procter & Gamble earlier this year. Revolution Health, an investment firm focusing on promoting health is invested in health spas, health information media, and a chain of retail clinics that combine traditional primary sickness care with proactive wellness care.

Just a few days ago, a Wall Street Journal article noted the interest being displayed by venture capitalists in the growing market of employers seeking ways to control their sickness care insurance costs. [“Healthcare Gets Attention of Venture Capital Firms” HealthLeaders News Apr 11, 2007]

There are already many hospitals and large physician practices engaged in some dimension of PHM, though mainly on a piecemeal basis to a modest degree. Mayo Clinic has a substantial health management program for large employers, with roughly 70 already involved. Numerous large academic medical centers offer executive health programs to area employers, and hundreds of others offer fitness centers and programs. Occupational health was once thought a major opportunity, but it did not turn out well when focused exclusively on sickness care.

The new kinds of healthcare organizations, with modest physician involvement as medical directors and major numbers of nurses on staff as health coaches have most of the market so far. Whether traditional providers can compete on both effectiveness in reducing sickness and its total economic impact, and in doing so at competitive prices, is still to be learned. But clearly those who are looking at the “healthy living” market, already predicted to reach the $1 trillion size in the next five to fifteen years, are betting that there is money to be made there by somebody.


  Alfred J. Fortin wrote @ April 11th, 2007 at 11:19 pm

Just about every health plan in the U.S. has some significant investments in disease management programs. The plans are the major customers of companies such as American Healthways. These programs have been growing every year, for the last decade adding more and more components focusing on an increasing number of diseases. Plans usually have these programs alongside of work site wellness efforts and a myriad of other health promotion and preventative programs. What’s interesting to me is that the dm programs are opening up to healthy individuals to help keep populations within well known health parameters using the strategies they’ve developed in dm (outreach, facilitation, referral etc) to get folks more aware and proactive. It use to be a hard sell to plans, but now more are seeing the value of well constructed and executed programs. In fact I would say that the juice for innovation in this area will come from the private health plans.


  Scott MacStravic wrote @ April 12th, 2007 at 8:26 am

You’re absolutely right. Health insurance plans were among the early adopters of DM, though they tended to start small, with a few diseases and modest involvevment among their total membership and the total workforce of their employer clients. They have since greatly expanded from disease to risk and health management, as have vendors such as Healthways, Inc., but are still primarily focused on reducing healthcare expenditures, where employers, themselves, are starting to realize that there are greater savings and financial improvements available in improving worker productivity and performance. This tends to shift employers’ focus from just the “diseases” that cause the most healthcare expenditures toward including the risk conditions and behaviors that cause the most negative impact on productivity and performance, with goal setting, implementation and evaluation including these broader dimensions of DM success. It also brings in employers as “partners” as much as “clients” for DM interventions, since the employers are the ones who can best determine the overall performance effects of workforce health efforts, rather than the insurance plans, and employers are usually better at promoting employee participation in DM programs.

  Alfred J. Fortin wrote @ April 14th, 2007 at 12:32 am

We’re both on the same page here, but I would just say that competitive bar for health plans is going up in this area, and that the clinical staff working on these issues have multiple motivations beyond the cost imperative. These programs are now widely expected and employers who for years were disinclined to put money in these areas (due to wellness rhetoric being way ahead of the data) are looking harder as the desperation sets in on their bottom line, and the DM results get better. The plan I work for is a non-profit Blue that’s been around for over 70 years and is deeply embedded in the community. And it puts a ton of money into the community health programs. All I’m saying here is, from where I sit, I see less struggle in-house about the cost of these programs and more about the health impact of various emerging strategies.


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