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How Many People’s Health Should We Manage?

by Scott MacStravic

There used to be health management investments at two different ends of the spectrum. Employers mainly invested in “worksite wellness”, aimed at improving employees’ health by enabling them to become generally more fit, while preventing or correcting the worst unhealthy lifestyle habits. Meanwhile, insurers, including Medicare, focused primarily on managing the high-cost “outliers” who tended to run up annual sickness care cost expenses of tens of thousands of dollars a year. They adhered to the Willy Sutton maxim of going where the money was.

Gradually, the two approaches are moving toward each other and merging, so that “disease” management begins to include efforts to prevent chronic diseases in the first place, not merely manage them better once they arise. After all, whatever can be saved by managing such diseases will be less than the savings of reducing their incidence and prevalence. Moreover, as employers identify the causes of lost productivity as well as sickness care expenditures, they are adding efforts aimed at chronic conditions such as musculoskeletal pain/injury, psycho-emotional problems, allergies, headaches, sleeplessness, and high stress that cause far more lost production and impaired performance than traditional “diseases” because they affect far more workers.

What is emerging is a “total” focus – on both the full scope of “health” insofar as its effects on total labor costs and performance are concerned, and on the total population affected, which often includes dependents not just because they generate sickness care costs but because they can cause worker absence and impaired performance. This means that the total impact of health and of investments in its management become the basis for planning, implementing and evaluating health management efforts, at least when employers employees are involved.

One of the major impacts of this inclusiveness is the shift from looking at the ROI ratios achieved to looking at the ROI amounts saved. If a health management effort focuses just on the few with high risk/reward chronic conditions, there might be ROI ratios as high as 2:1 or 3:1 for example, but if the investment is low, the total savings are also low. An employer who invests a million dollars in a disease management effort, and gains an ROI of 2:1 will end up one million dollars better off.

But if that same employer invests five million dollars in a total health management effort that gains a lower ROI of 1.5:1, that means the total savings are $2.5 million, rather than only $1 million. Moreover, adding in productivity and other performance impacts is likely to increase the amount of positive financial impact by as much as four times. This could mean that the actual ROI ratios, from both the narrow DM approach and the broader total health approach, could be more like 8:1 and 6:1 respectively, multiplying the total savings by four times as well. In either case, the savings from total health management are likely to be greater.

No Wonder Disease Management Has Trouble with ROI

by Scott MacStravic

After reading today that yet another of the participants in the Medicare Health Support demonstration project has dropped out, I had the opportunity to read the Mathematica report on the first two years of the project. It reported, among other mixed findings, that the statistical significance of most of its findings was low, due to small samples, more than small differences. But it clearly indicated that some of the participants, at least had demonstrated “cost-effectiveness” in the first two years, with hope for better in future.

The definition of cost effectiveness was fairly broad. A program could be cost-effective if it decreased the costs to Medicare, given the costs of the intervention involved. But it could also be deemed cost-effective if it improved the quality of care and outcomes for patients, without adding to Medicare’s total costs, i.e. no net savings at all. And some of the programs studied at least indicated one or the other kind of cost-effectiveness, though lacking scientific rigor due to difficulties engaging enough beneficiaries in their programs.

But the most surprising thing I read in the report was that the costs of the fifteen programs studied ranged all the way from $89 to $444 per month. The average costs were roughly $220 per month, or $2640 per year! With such a cost handicap to overcome, it seems little wonder that the results were somewhat disappointing. Moreover, there were many beneficiaries participating in the programs whose total healthcare costs were relatively low, to say nothing of the costs that could be attributable specifically to the chronic disease(s) that were the targets for the DM interventions. [R. Brown, et al. “The Evaluation of the Medicare Coordinated Care Demonstration: Findings for the First Two Years” Mathematica Policy Research, Inc. PDF]

I personally know of a number of proactive health interventions that cost one tenth or less the average fees charged in this demonstration. While it is clear that a lot of DM providers have been somewhat “unscientific” and often generous when reporting their results, at least their costs are pretty clearly reported. And with lower costs, made possible through the use of computerized analyses, and computer-customized communications for participants whose risk/reward potential falls well short of thousands of dollars a year, there might have been far more positive ROI.

Moreover, these new technologies are often easier for participants, as well. Online surveys are far simpler to schedule than intensive physician visit assessments and screenings. Online communications, because they are not in real time, can be sent when convenient to providers, and read when convenient to participants, where phone coaching and visits take a lot of time. Most people read a lot faster than others talk, for example.

It may be natural to think that for high-cost patients, high-cost interventions are both necessary and justified. But it might have been interesting if the Medicare demonstrations had included a program offered by one of the high-tech/low cost providers, such as HealthMedia, Inc. of Ann Arbor, Michigan. (In which I have absolutely no financial interest or connection aside from the fact that I have some of their reports and articles in my files.) Starting out with only high-cost interventions seems to handicap the demonstration projects at the outset.

Healthcare Innovations in Disease Management

by Scott MacStravic

The repeating findings that disease management (DM) yields mixed returns is bound to be discouraging to many, particularly with so many payors depending on it to control the rate of healthcare cost increases. Medicare in particular, with the highest proportion of covered lives having chronic diseases, is probably the most dependent on reducing annual cost increases, though commercial insurers and self-insured employers are often invested in DM as well.

Among the many handicaps that DM bears is the fact that diseases are often discovered late, rather than early in their usual progression. Often they are diagnosed only when people incur outlier levels of healthcare expenditures, rather than being diagnosed early enough to prevent such spending. And often, they are “managed” using high-cost technology, including plenty of physician visits and nurse coaching contacts by phone.

There have been significant innovations in computer and communications technologies that should enable the costs of DM to be matched to the probable consequences of its use. Computer health risk assessment and predictive modeling is improving its ability to determine the relative risk and reward potential of individuals with particular diseases and multiple co-morbidities. This should enable more accurate matching of the management techniques and costs to the potential savings from DM.

Moreover, computer technologies enable the creation of individualized management plans and ongoing communications to particular consumer based on their disease, risk/reward potential, personality characteristics, readiness to change, and other factors that guide such communications toward increased effectiveness. Truly tailored communications have been widely shown to be significantly more effective than are one-size-fits-all methods formulated by DM providers.

Communications between DM providers and participants in DM interventions can be individualized and delivered online, combining participants own visits to personal web pages with outbound e-mail messages generated by consumers and delivered at costs of pennies per message. These have been found to have comparable effects to those achieved through phone and face communications.

The challenge is to improve the matching of such innovations to the risk/reward potential of each DM participant in ways that will ensure positive ROI ratios and total savings. Until and unless we identify the best matching of methods with DM challenges, there is no way to determine if DM itself is working, nor to learn its full potential for reducing healthcare cost increases, or even overall healthcare costs.

Does Disease Management Work Yet?

by Scott MacStravic

When the federal Congressional Budget Office published its report on DM in 2004, it concluded that it looked like some particular DM programs aimed at some diseases did save money, but that the evidence overall was mixed.  Since it had employed a “scientific” standard for its evaluation, it acted as if all DM programs are alike, hence many vendors’ approaches were combined, as long as they dealt with the same disease.

This is fine in controlled clinical trials, where the same disease and one specific treatment are involved, even if delivered by many providers.  But it makes no sense at all when there are entirely different vendors or other healthcare organizations, each with its own approach, including DM methods and costs.  The “mixed results” that CBO reported were pretty much what would expect from a diverse set of providers, particularly when only Medicare beneficiaries and sickness cost reductions were involved.

Despite the 2004 findings, Medicare has gone ahead with DM testing, in more or less the same approach, using various providers and different approaches in its “Medicare Health Support” demonstration project.  A recent article noted the mixed results from this project as well, concluding that a different approach was needed. [M. Quilty & W. Todd “Next Generation Disease Management: Back to the Future” Health Leaders News Apr 12, 2007 (www.healthleadersmedia.com)]

But mixed results do not mean no results, and if even one program dealing with one disease saves the kind of money that Medicare wanted, a strong argument can be made that that proves DM’s potential.

By including a wide variety of different providers and approaches, any finding of mixed results only means that not all DM programs work, where the fact that they are mixed shows that some programs do work.  So logic would suggest that the programs that work be embraced and only the ones that do not work ignored.

Moreover, it has been generally the case in any studies that examined DM and other proactive health management efforts over time, that savings tend to improve with time, that results may be much greater in the second and third year, for example, than in the first.   Modest results in the first year should not be seen as failure, but tracked for more years before any conclusion is reached.  By selecting the programs that work and following them longer, Medicare might find that DM can work quite well, thank you, once its variability is recognized.

GlaxoSmithKline, for example, working with its own employees’ health, found that proactive health efforts saved only $233 per participating employee in combined healthcare and disability cost reductions among 6049 employees continuously employed 1996-2000 in its first year.  But savings rose to $375 in the second year, $944 in the third and $950 in fourth.  Savings averaged $613 per participant over four years, almost three times the first year savings level. [G. Stave “Quantifiable Impact of the Contract for Health and Wellness” JOEM 45:2 Feb 2003 109-117] Had the program ended after one year, it would have missed out on almost $14 million in savings.

Given the traditional short-sightedness of governments pressed by necessities related to this year’s budget, it is not surprising that early results are often taken to mean far more than they should, and that the pluses in mixed results are overlooked.  But it might be hoped that this time, Medicare might wait till the full three years of the demonstration project are complete, and consider the possibility that even one or a few successes is actually a good result.

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