The market for health management (HM), of employees, commercial insurance plan members and government insurance beneficiaries, is growing apace as payors and consumers as well recognize the advantages of reducing the incidence and prevalence of disease, along with reducing the crises, complications and worsening of chronic disease that already exists, as disease management (DM) does.  This market is being served by a large number of DM and HM “vendors”, specialized healthcare organizations that only manage health or disease, though have their own medical staff and nurses, acting as medical directors and coaches.

These vendors have been joined by a number of commercial insurance plans that offer HM and DM programs of their own to their members, often charging employer clients extra for the added value thereof, and even offering these programs to employers that are not insurance plan clients.  But there are also traditional healthcare organizations and physicians in private practice that are engaging in DM and HM efforts, as any combination of service to the community and revenue-generating service lines.

Hospitals have often chosen the “low-end market” for DM programs, serving people who are uninsured, or on Medicare or Medicaid for DM services, and often losing money as a result.  They have more often chosen “high-end market” for HM services, however, with executive health programs charging thousands of dollars for one-day intensive predictive diagnostics and physician consultation, though some add continuing nurse coaching as well.  The U.S. Preventive Medicine firm in Texas offers turnkey Centers for Preventive Medicine to hospitals, with three such centers signed up so far, with similar high-end charges for consumers, though also “Prevention Plan” programs for employers.

Physicians are active partners in the U.S. Preventive Medicine programs, and many offer their own HM services as part of “retainer practices” such as the 150 or so MDVIP practices operating in 16 states (www.mdvip.com).  And many physicians, as well as nurse practitioners, offer HM along with other occupational and corporate health services in onsite medical clinics for employers, while a few nurse-practitioner-staffed retail clinics, those in the RediClinic chain, also offer HM services.

There is a large handicap that physicians and hospitals face when delivering DM and HM services, however.  They have a long-established tradition of insisting on the best practices in sickness care, and have adopted a similar attitude toward DM and HM in many cases.  For example, then Stanford University worked with the San Mateo County Hospital’s clinics, even though these serve as the safety net for un- and under-insured residents of the county, the result was an intensive, face-visit-based heart disease DM program involving physicians, nurses, and dietitians, with 14 extra visits over the 17 months of the program as recently reported.

This added $1250 to the “usual care” costs for participants compared to a matched comparison group.  For this added cost, the program was credited with reducing heart disease risks by 1.6% compared to the comparison group.  To cover the costs of all those who participated in this program, this 1.6% risk reduction would have to save $1250 divided by 1.6% equals $78,125 for the county in avoided medical and hospital care costs. [R. Stafford & K. Berra “Critical Factors in Case Management: Practical Lessons from a Cardiac Case Management Program” Disease Management 10:4 Aug 2007 197-207]

By contrast, Family Physicians of Western Colorado in Grand Junction were able to manage their 600+ diabetes patients, using the Chronic Care Model, for only $104 per year.  This would require savings of only $6500 in medical and hospital costs if it reduced risks by 1.6%.  Unfortunately, it had no data on cost savings, only on improved care quality, and only one of its local payors paid for the program, leaving it with over $25,000 in losses for the program. [P. Mohler & N. Mohler “Improving Chronic Illness Care in a Private Practice” Family Practice Management 12:10 Nov/Dec 2005 50-56]

Physicians, and for that matter hospitals and nurse practitioners engaged in HM and DM have to be able to answer the question as to what they add to the savings resulting from such efforts compared to what they add in costs.  There is at least one example of physicians at worksite medical centers adding dramatically to the number of employees signing up for HM/DM initiatives they were offered.  By simply advising their patients to enroll in these initiatives, they were credited with tripling enrollment in such initiatives. [“Workplace Disease Management Program Participation Boosted Three-Fold by Patient Contact with Trusted On-site Clinician” i-Trax/CHD Meridian Feb 22, 2007 (www.i-trax.com)]

Physicians have been repeatedly cited as the most effective source of recommendations for HM and DM program participation, as well as for lifestyle and behavior changes needed for such programs to succeed.  The effectiveness of physicians in reducing sickness care utilization and costs has been demonstrated by the MDVIP practices, where reductions in the 30-90% range have been reported in the states where comparisons have been made.  Physicians at CareSouth Carolina, with clinics in rural South Carolina, were able to manage diabetes patients with annual sickness care costs of only $343 compared to $1591 for patients treated elsewhere, but were not paid for their management efforts. [R. Chaufournier & K. Reims “Hidden Opportunities for Cost Savings in Disease Management” Healthcare Savings Chronicle  (Coalition America, Inc.) Mar 10, 2005 (www.imakenews.com)]

If physicians are going to be involved in HM and DM, as adjuncts to “vendor” or insurer programs, or as sources of complete HM/DM programs for their patients, they will have to control the costs of their added value within the limits of that added value in terms of payors’ willingness to pay for their services.  It has already been shown that providers charging between $80 and $444 a month per patient in a Medicare DM demonstration project have had a really tough time generating the net cost savings required to meet CMS expectations and gain pay-for-performance bonuses.

Physicians may add sufficient value by increasing participation of their patients.  A threefold increase in participation should equate to something close to a threefold increase in savings resulting therefrom, so the added value of this service could be easily calculated.  Physicians on their own may well be able to deliver significant savings at costs similar to the $104 per year per patient of the Grand Junction practice, or they could charge as much as the $1500-1800 retainer fees of MDVIP practices and deliver enough cost savings to justify such fees to payors.

Chances are very good that physicians engaging in HM/DM programs will have far better luck meeting expected and necessary savings if they work with employers, and are able to save not merely on medical/hospital expense, but through improving productivity and performance, which can yield two to five times as much savings as does DM for example when employees are involved.  But they may play their most logical role as DM/HM leader and chief motivator for patients, while nurses, dietitians, physical trainers, and stress management counselors do most of the ongoing coaching of participants.

Whatever their roles, physicians will have to ensure that their contributions of benefits in any HM/DM intervention are greater than their contributions of costs, and in financial terms for most payers.  Since physicians tend to be the most highly paid providers of HM/DM services, this will be a great challenge, though their potential as leaders and motivators can clearly be significant.