Disease management: continuous health-care improvement - includes related article on drug companies - Cover Story

Business & Health, April, 1995 by Ken Terry

Even as their health-care costs level off or decline, large employers are seeking further savings through quality improvement. Citing estimates that 30 to 40 percent of medical services may be inappropriate, some companies are pressing providers for more preventive care and better treatment of chronic diseases.

HMOs are responding with a variety of initiatives to help patients manage their ailments and stay out of the hospital. The attempts of drug companies and pharmaceutical benefit managers to participate in this process have attracted attention under the banner of "disease management." But the concept of improving quality along disease-specific lines didn't originate with the pharmaceutical vendors; rather, it represents the continuing evolution of managed care, from reviewing components of utilization to developing a broader perspective of what happens to patients as they move through the health-care system.

Advocates of disease management hold that a component-based approach to cost containment is bound to fail because it doesn't look at the natural progression of a given disease. "If you try to manage the pharmacy, you get higher emergency-room bills; if you try to manage ER access, the patients come in sicker and have to be admitted to the hospital more often," says Robert Nesse, M.D., vice chairman of the family practice division at the Rochester, Minn.-based Mayo Clinic.

Disease management, in contrast, applies principles of continuous quality improvement to the whole spectrum of care for a particular condition, including outpatient, inpatient, and ancillary services. By persuading physicians to follow practice guidelines, measuring the results, and feeding those results back to the doctors, health plans, and medical groups hope to reduce variations in care and produce better outcomes.

As logical and promising as that approach sounds, several factors hinder its development. For one, there's the matter of cost. Proponents have little hard evidence to show that disease management saves money, and in some circumstances, it may even cost more. Also, few health plans have sufficiently sophisticated information systems to provide all the data that successful disease management requires, and major upgrades of computer hardware and software are big-ticket investments. Finally, many physicians remain skeptical about the appropriateness and effectiveness of clinical guidelines.

DOES IT SAVE MONEY?

Most disease-management programs focus on such chronic problems as asthma, diabetes, hypertension, and low-back pain, along with preventive measures such as mammography and smoking cessation counseling. Primary care in these areas affects 80 percent of health-care costs, says Richard Bartsh, M.D., senior vice president and chief medical officer for Moline, Ill.-based John Deere Health Care. That makes such conditions a particularly attractive target for employers bent on scaling back health expenditures. But disease management's ability to deliver big savings seems to be an article more of faith than of verifiable fact.

Consider John Deere Health Care, which covers two-thirds of Deere & Co.'s 106,000 U.S. health-care enrollees through its own IPA- and staff-model HMOs. John Deere is currently instituting one of the nation's most advanced disease-management systems. But despite the company's multimillion-dollar investment, and the obvious hope that health-care costs will decline as a result, there's no specific target for savings. "We want to make sure we're providing high-quality, efficient care," says Bartsh. "Then we'll see what that costs. Since there's a lot of inefficiency in the system, we think we'll save money over time."

The Business Health Care Action Group, a consortium of 22 large companies with 250,000 covered lives in the Minneapolis area, has a similar outlook. "In the long run, you can reduce costs by improving health," asserts Steven Wetzell, BHCAG's executive director.

Dwight McNeill, manager of managed-care benefits for the Stamford, Conn.-based GTE Corp., also stresses the need for quality improvement, and he does have figures showing it saves money, at least in the short term. Using Health Plan Employer Data and Information Set (HEDIS) 2.0 performance criteria compiled for 90 of the 139 health plans that serve GTE, he ranked the plans and found that those in the top quartile had lower premiums and lower price increases last year than those ranked further down. "Quality plans cost less," declares McNeill. "When we convert an employee and his family from indemnity to HMO, we save $1,000 a year in overall costs. Within the HMO environment, when we migrate people from average-quality to high-quality plans, we save another $500 a year."

In the medical groups and HMOs that have tried it, disease management has scored some minor victories. For example, a Mayo Clinic guideline on urinary tract infections saved $60,000 during a six-month trial at one Mayo center that has 35,000 patient visits a year. While patient outcomes haven't been affected, the center's physicians have saved money by prescribing antibiotics for three days instead of 10, avoiding routine urine cultures, and having nurses triage patients over the phone.