In addition to their credibility as cost-effective sources of health management (HM) services, traditional healthcare providers have the challenge of keeping their actual costs down to a level that will enable them to price such services competitively, and deliver positive benefit for cost results, particularly positive return on investment (ROI).  When considering and designing HM for their own employees, they must compete with outsourcing options in general, and when competing with specialized HM suppliers, they must deliver competitive results.

This will require a wholly different approach to managing costs from what hospitals, physicians, nurse practitioners, etc. are used to.  In sickness care, evidence-based best practices are the standard of care, while extra luxury, amenities, etc. can be offered to affluent patients willing and able to pay for them out-of-pocket.  This is also true for the niche HM market that “boutique” medical practices and “executive health” programs serve, but not for the main HM market, whether for commercial and government insurers or employers.

Fortunately, the employer market and internal applications of HM deal in the highest potential ROI available for HM, so there is in both the greatest potential for covering costs.  Moreover, the full range of HM services have the potential for delivering significant cost-saving, and even revenue-enhancing benefits for virtually every employee, dependent, and retiree that the traditional provider takes on in HM services.  This broadens and increases the potential for positive ROI, as long as costs can be controlled relative to benefits.

The challenge and major difference compared to sickness care relate to the need to treat HM participants differently, depending on their potential return.  It is common practice, for example, to “grade” the risk/reward potential of different HM participation prospects, given their existing health risks, chronic conditions, and potential for change.  High risk/reward participants may require and deliver better results with more intensive HM interventions, while medium risk/reward participants get moderately intensive, and low risk/reward participants get only basic interventions.

If predictive modeling technologies were perfect, HM interventions could be geared to the risk/reward potential of individual participants, in keeping with both their potential and what is predicted to work well enough to enable optimal positive ROI for each.  In practice, however, participant populations are more likely to be approached in segments, based on a combination of their shared risk/reward potential, and their individual preferences, readiness to adopt healthier behaviors, and personality traits that respond to different HM approaches, as well as costs.

Moreover, HM interventions often require frequent adjustment, based on participants’ responses to initial efforts.  Interventions may be reduced or increased in intensity, or modified in approach, depending on what results are achieved in changing their behaviors, improving their health status, and achieving desired financial consequences for providers or their clients.  This type of modification is not greatly different from the kind of adjustments often needed in sickness care, based on patient/family preferences and patients’ medical responses to initial care.  But it must be highly sensitive to the costs that can be afforded based on risk/reward potential, which is likely to vary far more than sickness care payment levels across different payors.

Fortunately, the range of HM interventions is normally far greater than what is available and acceptable practice in sickness care.  For low risk/reward participants, and even for those with higher potential who respond well to them, inexpensive computer-generated and customized risk analyses, recommendations and coaching communications can be generated at costs of a few dollars a month for large populations.  And these often achieve comparable responses among participants to those achieved through face visits and phone coaching.

At the other end of the spectrum, home monitoring of clinical metrics and risk indicators may be necessary and affordable, given the risk/reward potential, for many chronic disease patients with volatile conditions and tendencies.  Congestive heart failure patients, for example, have often been managed with reductions just in sickness care costs of 30-50%, for example, saving many thousands of dollars a year.  Diabetes patients with common co-morbidities such as depression and heart conditions have achieved sickness care cost reductions in the 10-20% range, often amounting to at least a  thousand dollars a year.

But the majority of HM participants will have their major ROI come from improvements in their productivity and performance at work.  For people without existing “diseases”, but the kinds of health risks and problems that affect their value as employees even more, the focus of HM, internal or external, should be on this greater opportunity, though healthcare organizations may not be as familiar with managing them.  The key to all HM is to empower people to make effective changes in their health behaviors and lifestyles, so the basics are the same for all HM challenges.

Otherwise, the benefits from HM interventions will have to be measured in terms of future costs avoided, i.e. the predicted sickness care, disability, workers compensation, and other direct costs they might otherwise have had.  This will always be a “tough sell” compared to measured reductions in costs, or improvements in performance that represent the before vs. after differences made by HM programs.  By developing and proving cost-effective HM interventions with their own employees, providers will be able to learn the best approaches to use in both internal and external applications.

While the cost challenges are quite different in HM compared to sickness care, providers have enough history in cutting costs to take on this challenge as well as the others that pertain to this new market.  And since almost all large providers should be involved in HM for their own employees, it makes sense for them to undertake the learning needed to compete in the larger employer market as well.