Archive for Business of Health
by Scott MacStravic
May 12, 2008 at 11:08 am · Filed under Employer CEOs, Health Plan/Payer CEOs, Business of Health, Variability in PHM Series
Given the large number of PHM suppliers already available, and growing numbers of hospitals, physicians, and other suppliers joining still, the number of options across the seven elements of PHM is enormous. If there were as few as five options available for each element, to say nothing of different mixes of elements for the same purpose, there would be 75 = 16,807 different mixes of the options to consider. In practice, of course, insurers and employers, like consumers when faced with too many choices, first strive to limit the number to a manageable few, perhaps no more than five sets.
This may be accomplished by looking for particular vendors, as outsource suppliers or at least basic models for a DIY option. ON the other hand, some PHM investors have divided up the strategy, and even particular interventions among multiple suppliers, using one for the assessment element, and others for interventions, or one for interventions, and another for evaluation. If each different supplier offers different options for each element, that could greatly increase the mix of options available, even if only a few suppliers are considered. Moreover, suppliers are increasingly adding numbers and types of interventions, in order to be able to offer options graduated in cost and effectiveness to the risk/reward potential of different programs and participants.
One development should reduce the difficulty of making choices in this “overstocked” world. Predictive modeling is improving in its accuracy all the time relative to the risk/reward issue. And since different element options, as well as different suppliers, bring with them different charges and typical costs for their clients, these may more accurately be compared to the risk/reward of the population under consideration, and for targeting prospective participants, thereby improving the chances of investments turning out well.
But the biggest boon to payers will come only when sufficient studies are made of the relative cost and returns on investment of the methods available in the market. It may take decades to do this for each option in each element, but it should not take more than a few years of concerted effort to compare different suppliers, along with more successful DIY efforts. The key is to retain a focus on results and returns, rather than be satisfied with thinking that investing in PHM is a good idea for its own sake.
Employers are probably somewhat more averse to “rigorous evaluation”, when it adds significantly to costs, than are insurers, at least as regards PHM investments. Managers spend relatively little time measuring things, as long as the key items in their balanced scorecard are going well. And if they are not going well, they may have to conserve their funds anyway, so would be unable to invest in measurement. Insurance, with its core competencies of underwriting and risk management, are at least more engaged in measuring things.
One study, for example, has found that only a small minority of employers even measure employee absences, much less presenteeism, despite the fact that both cost them a lot and can be reduced, with presenteeism many times more expensive and potentially rewarding than health-related absence alone. [W. Lynch & H. Gardner “Our People Are Our Greatest Asset… But No, We Don’t Track Their Performance or Attendance” Health as Human Capital, Dec 17, 2006]
Another found that only 38% of employers surveyed in 2007 measured the ROI at all from their PHM investments, though this was up from 23% in 2006. Many seem satisfied that it is an inherently good thing to do, or are confident that it is yielding a positive ROI, at least in the long run, and don’t wish to waste money proving it. [Wellness: Saving Lives and Money” 2007 Willis Survey (Willis America Employee Benefits North America (request: willisebsurvey@willis.com)]
Investing on faith alone will certainly not last long. Finance executives and governing bodies are sure to begin questioning at least any large investment in PHM, so CEOs and whoever else champions PHM should be prepared to prove the business case. In all the cases where efforts have been applied, the business case has been proven, and usually based on the most conservative figures, such as not including full productivity and performance benefits, or not including healthcare cost reductions. [S. Nicholson, et al. “How to Present The Business Case for Health Care Quality to Employers” Applied Health Economics and Health Policy, 4:4 2005 209-218]
Many results have no doubt seriously understated the full economic value of their PHM efforts because they neither counted productivity impairment or its “non-disease/risk” causes nor invested in interventions related thereto. There is ample evidence, for example, that conditions rarely included in disease management programs, including emotional disorders, allergies, arthritis, and chronic pain cause far more productivity impairment than to the most managed diseases. Moreover, poor nutrition, fitness/activity levels, stress, lack of sleep, poor hydration, for example, have been found to be far more valuable when corrected to productivity benefits than to reduced disease and healthcare costs.
We have a long way to go, and far too many choices of how to get there at the moment. What is needed is a concerted and coordinated effort — funded by governments, insurers, and employers – to evaluate the hundreds of options available, or at least screen for the most probably good ones, then rigorously evaluate these to identify and publish information on what are truly best practices. This may begin with what is already being done in sickness care, measuring and reporting who is best, or least bad in this far too expensive side of “health care”. It would make far more sense for it to be done where health can be improved, along with the quality of life for all people, as well as money can be saved by everyone who now pays for sickness care.
And one thing that is certainly clear, given the enormous variations in how PHM is designed, delivered, and evaluated, is that there is no way on earth to determine scientifically if “PHM works”. The definitions and applications of “PHM” are so variable, and of “works” equally so, making any attempt to arrive at a single conclusion about it ridiculous and impossible to begin with. The same has always been true of its separate components – disease management, health/wellness promotion, risk behavior and condition prevention and correction – in addition to whatever combination of these is included in PHM. It may be understandable that academic institutions and governments strive to “test the hypothesis” of whether PHM works, but any such attempt is doomed by the extreme degree of variation in what “PHM” is, and how “works” is measured.
by Scott MacStravic
May 12, 2008 at 11:06 am · Filed under Business of Health, Variability in PHM Series
To a great degree, the evaluation element in PHM comprises repetition of one or more of the assessments done for the initial baseline analysis. Ideally, this repetition, whenever it is repeated, will identify the changes of concern to payers, at least, while any added tracking of results used to sustain participants in their efforts and changes will do the same for the changes of interest to participants. But saying this, there will inevitably be the complication of making a “business case” that credibly demonstrates that the PHM strategy overall, and its individual interventions, have been the causes of the changes discovered.
Because the value dimensions addressed in EHM efforts and evaluations are major concerns of insurers and employers all the time, it is likely that they are doing something else to reduce costs or improve productivity and performance, beyond the effects of PHM interventions. And rarely would insurers, much less employers be willing to devote an entire year’s financial performance to the effects of a PHM investment alone. So generally speaking, the PHM evaluation should include some effort, at least, to separate out what changes in the evaluation dimensions it addresses that were probably affected by other efforts as well.
One of the best ways to track the effects of PHM is to analyze the tracking data that connects PHM efforts, such as HRA, screenings, and other information that was shared with individual participants in the HRA, coaching interventions used with participants in particular PHM interventions, and participant-reported behavior changes, health status biometrics of self-reports, etc. If this “value chain” of causes and effects can be shown to be connected as expected, that will make a strong case for attributing much at least of measured improvements to the PHM effort rather than “extraneous” causes.
Results such as “yes/no” behavior changes, (smoking, alcohol/drug abuse cessation) or “degree” changes, (increased physical activity, improved nutrition, longer average time slept per night, lower stress, etc.) should correlate with the amount and intensity of interventions, together with participant participation measures. In other words, the more the inputs by coaches and participants, the more the outputs in terms of behavior change, either a higher rate of yes/no changes, or a greater degree of change in continuous metrics.
In turn, the more the changes or progress achieved in behavior, the greater should be the improvements in biometrics, risk/impairment factor status, etc. that are supposed to be affected by each. This should also appear as a correlation between the different kinds of measures. And the measured biometrics, health/risk/impairment factor status should be well correlated with changes in healthcare cost, disability, and workers compensation costs, plus productivity and performance metrics or estimates.
The higher the degree of correlation across these changes, the more likely and credible the causal connection between them is. Only randomized and limited intervention clinical trials will meet academic standards, but demonstrated correlation should provide stronger evidence than simply records of changes in the outcome value, and certainly be better than the most popular approach, which among employers, at least, is not to measure ROI at all.
To determine ROI, of course, it is essential to factor in all costs as well as financial gains discovered in the evaluation. These will include all internal costs for payers who do it themselves, and is likely to include internal costs – for staff efforts, incentives paid, internal promotion of participation, team contests, etc.—as well. The costs imposed in the form of PHM supplier charges should be the easiest to identify, since they involve direct payments. When all financial benefits are compared to all costs, the ROI ratios and net earnings can be calculated.
There is a further complication in PHM, however, because, as is the case with some marketing expenditures, some portion of PHM costs should probably be treated as longer-term investments, rather than this year’s costs. While the published cases of long-term PHM results are few, they strongly suggest that when most of the participants in one year’s PHM efforts remain beneficiaries, members, or employees, the second-year results tend to be better than the first, and the third better than the second. The only case I know of where results were tracked for longer than three years found the fourth-year results essentially flat compared to the third.
This case, however, involved a cohort of employees, roughly 6000, who were continually employed and continuously participating in the PHM program for all four years. The pattern they produced, which was savings of $233 per participant in the first year, $375 in the second, $944 in the third, and $950 in the fourth, counted both medical care and disability/workers compensation expense savings, but not the productivity losses most likely associated. [G. Stave, et al. “Quantifiable Impact of the Contract for Health and Wellness” JOEM, 45:2 2003 109-117]
But chances are, when there are high turnover rates among health plan members or employees, the degree of improvement in that case would not be replicated. “Veteran” participants would too often be gone, instead of in their third or fourth year of improvement. And “novice” participants would have to replicate lower first-year results when it is their first year, even if the fifth or tenth for the payer in terms of PHM program investment. But as long as there is less than 100% turnover in the participant population, there seems likely to be improvement in annual results for successive years, at least up to three or four.
Improvements usually occur both because it takes time for participants to gain confidence in the own abilities. It also may take time for health status effects to occur. Fortunately for employers, many improvements in productivity occur quickly, so this should bolster clients’ confidence. One of the factors that take time is the influence that successful participants have on their peers who chose not to participate when first offered. The examples of successful peers, and the word-of-mouth reports spread by them, can be the most effective, and certainly least expensive approach to promoting future participation and improved results.
In general, it may be the third or fourth year until positive or at least desired ROI levels are achieved. Marathon Health, for example, a PHM supplier in Vermont, guarantees a 2:1 ROI, and often achieves 3:1, though not until the third year. The huge increase in the third year cited above may have meant no significant ROI was achBy contrast, HealthMedia is willing to guarantee the results it measures, though not ROI, for whatever period it uses in measuring them should its clients desire (per e-mail from Ted Dacko, CEO). HealthMedia only has two years* history with any of its results, and less than that for interventions introduced more recently, has not yet reported long-term results, but it makes employers who want quick results happy.
Whatever method for evaluation is used, it should meet at least standards for accuracy, reliability and validity, and avoid at least the most common errors due to self-selection bias and regression to the mean. Measuring ROI is clearly superior to pure credence that PHM works, or even relying on results others evaluate and report. The huge variety of methods currently in use, particularly in what is measured, together with the unavoidable costs of measuring many important sources of value from PHM investments, as well as the need to be able to take a long-term view of such investments, makes choosing an approach difficult, but definitely worthwhile.
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 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.
by Scott MacStravic
May 1, 2008 at 9:12 am · Filed under Business of Health, Health Management
The major emphasis in “consumer-directed healthcare” proposals for reforming consumers’ healthcare behavior – turning them into prudent and well-informed purchasers of sickness care when needed. This would be in sharp contrast to the pattern of purchase behaviors where someone else is responsible for paying, and consumers feel entitled to as much care as they feel like getting, at least if they are insured well enough to cover the costs.
But there is an equal and potentially more valuable effect that may arise from shifting more costs, responsibility and information to consumers with respect to sickness care costs. They may begin to seek, on their own, ways to manage their own health so as to reduce their risk of and thereby expenses for sickness care. Already, employers, commercial insurers and government insurance programs have enrolled millions of people in free-to-participants health management (HM) programs, in any one or a mix of: general health and wellness promotion, risk behavior or condition prevention and correction, and chronic disease management.
While the costs of payor-sponsored HM programs tend to be lower than what consumers could purchase as individuals, this is not always the case, particularly when payors don’t get involved until consumers are patients with complex and expensive chronic diseases or multiple co-morbidities, where costs of disease management can run to over $5,000 a year per participant. Consumers have access to a wide range of differently-priced options if they wish to take charge themselves, and are willing to pay out-of-pocket for that right.
Concierge Physician Practices
“Boutique”, “concierge”, “retainer”, “membership” or “patient-paid” practices were started primarily to offer premium access, availability, amenities, and advocacy relative to sickness care when they were introduced just over a decade ago. But most of the later-introduced examples were started, or have chosen to include major proactive HM services along with sickness care, and a few specialize entirely in HM, offering no sickness care.
These practices charge as little as $50 a month, and as much as $100,000 a year, though most are in the $1,000-2,000 range. The MDVIP practices, numbering over 150 in 16 states cite the fact that “VIP” means “value in prevention”, not merely “very important patient”. And they have proven the value to payors, as well as patients, in their services, with dramatic reductions in hospital inpatient care utilization and expense among their patients, compared to average Medicare patients, and members in the best managed care plans. (www.mdvip.com)
Cash-Only Practices
Some physicians have offered health management services on a patient-paid fee for service basis, rather than annual retainers. These are typically “opt–out” practices where physicians chose to reduce their overhead to a minimum by not dealing with insurance, though they normally provide the paperwork necessary for their patients to seek reimbursement for their payments from insurers. I recall an early adopter of this approach was a practice called “HMNo” in Denver, though it has since changed its name and become a retainer practice.
At the “Beyond Care” practice in Branford, Connecticut, the physician offers packaged HM programs related to wellness, fitness, stress management, nutrition, diabetes/metabolic syndrome, etc. and lasting from three to six months. These programs were offered at prices between $1800 and $2800 when I first encountered them, though a recent visit to the practices website found no prices mentioned. (www.beyondcare.net) The Tempus Clinic in Los Gatos, California offers a wide range of HM programs, including its health club memberships, that were once priced at between $10,000 and $30,000, though a recent visit to its website also found no prices mentioned. (www.tempusclinic.com)
Retail Medical Clinics
The majority of these convenient, low-cost, nurse-practitioner-staffed clinics focus almost exclusively on routine sickness care, at convenient locations, affordable prices, and easily accessible hours. But at least some have added significant proactive HM services to their offerings, in addition to the usual array of physicals and immunizations. These are the RediClinic locations, of which there are seven in five states in the South. These offer a “StayWell” set of services to complement their “GetWell” treatments.
These include extensive health risk screening packages, ranging in price from $39 to $89, as well as traditional physicals. And the clinics also offer a four-visit “Stop Smoking for GoodSM” program priced at $128. And they have recently added a variety of “Cholesterol Challenge” programs at some locations, ranging from $49 to $89 in price. They also offer a “Heart Health” program at prices of $79 or $129. (www.rediclinic.com)
Low-End Options
HM programs that rely mainly on automated analysis of health risks and automated online communications, or website self-service can afford to charge highly affordable prices per participant for payor-sponsored population-focused HM programs. The same options are available for individual consumers, as well. Three physician practices in Colorado offer a fitness/weight management program called Physicians Fitness Coach, through incentaHEALTH, in Denver. It includes physicians, along with e-mail communications, and is priced at only $19.95 per month.
Another Colorado practice, Family Physicians of Western Colorado was able to apply the Chronic Care Model of disease management for its diabetes patients at an additional cost to the practice of only $104 per patient per year. It lost money in this effort, because it could only get one health plan to pay for this program, and that plan covered only a minority of its patients. [P. Mohler & N. Mohler “Improving Chronic Illness Care in a Private Practice” Family Practice Management 12:10 Nov/Dec 2005 50-56] But had it chosen to offer it to self-paying patients, this would easily have represented an affordable option for most patients.
With growing numbers of consumers choosing, or being offered no other choice but high-deductible health plans, these self-paid options are becoming increasingly attractive to many of them. Even the higher-end practices such as the MDVIP examples are attracting middle-income patients, some of whom find their annual retainer is a bargain compared to the deductibles and co-payment costs of their insurance plan. And many such plans permit employees to use their health spending accounts to pay for the retainer.
With other options available at prices as low as $20 per month, the number of consumers who could afford to pay for their own, particularly if they lack insurance coverage, is sure to increase. Whether the number who choose such programs will also increase is another question, however. Many will no doubt prefer to try personal HM on their own, without help. But most such efforts have failed, and in the long run, affordable self-paid options may become widely popular.
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