Disease management may cut health costs over time

Daily Record, The (Baltimore), Jun 27, 2002 by Karen Buckelew

Employers seem more willing to increase the portion of medical premiums that their employees pay than to use alternative cost- cutting measures, like disease management and wellness programs, according to an Aon Consulting survey. The survey of 265 companies nationwide showed that while 59 percent have increased their employees' share of premiums, only 20 percent are using disease management programs to help employees prevent their chronic medical conditions from becoming severe and costly. "The first line of defense [against the rising cost of health care] is employers actually ask the employees to pay a larger share of the cost," said Aon's Karen Kissam, a vice president and health and welfare consultant in the Chicago-based insurance company's Baltimore office. Eventually, however, employees shoulder all the burden they can.

That is when companies turn to alternatives like disease management, wellness programs to encourage good health and prescription drug buying pools to keep down the cost of medicine, Kissam said. Only 7 percent of companies surveyed have implemented a self-directed health plan option -- where employees are given a certain amount of money for health care and direct their own care -- and only 1 percent have joined prescription-buying pools. The problem with such alternative programs, Kissam said, is their financial returns have not been pinpointed yet. Before companies invest in such programs, she explained, "They need to make sure there is a return on their investment. But while it is intuitively clear that [the cost-cutting measures] would have a payoff, it's been difficult to quantify that." Employers can expect positive results from wellness programs such as smoking cessation classes and discounted gym memberships, or a program to help employees manage their diabetes, said Kissam. Timonium-based FutureHealth Corp. is banking on such programs to pay off in the long run, said Vice Chairman Carl Sardegna. The company uses proprietary technology to analyze employees' medical data and pinpoint those that need help managing their chronic illnesses, known as "noncompliant" patients. "It identifies the 3 to 5 percent of the working population that accounts for 50 percent to 60 percent of health care costs," Sardegna said. "Then we have trained nurses ... work with the patient who is ill, and do four fundamental things: Make sure the patients understand what their disease is, that they understand the treatment program -- in that we work with their doctor -- that they understand what are the symptoms and how do they deal with crises." The company uses its software to track the 15 chronic illnesses -- like asthma and diabetes -- that cause two-thirds of health care costs in the United States, Sardegna said. FutureHealth's population risk management services began when the company was founded 10 years ago, and Sardegna said demand for similar services is growing. "There is a movement to find a solution to rising health care costs in the past few years," he explained. "The traditional managed care approaches are not working anymore. There's no question [demand] is growing very rapidly." The company also works to identify high- risk employees before they end up in the emergency room, which is why it calls itself a "population risk management" firm rather than disease management, he added. "If you're going to control costs in the long term, you have to deal with people and attempt to prevent an occurrence, not just treat an occurrence when it occurs," Sardegna said. FutureHealth's services do pay off for its more than 400 customers nationwide, he added. "They save money," he said. "Our programs keep people healthy, which tends to improve productivity." Kissam said that while Aon's survey shows employers are being a bit slow to catch on to the alternative cost- cutting measures, the demand for services like FutureHealth's is growing. "You're likely to see more about it in the future," she said. "Especially in large employers -- their cost is a lot more significant, and they are more inclined to look at multiple ways of trying to solve a problem. You're likely to see an increase in it for 2003 -- a lot of our employers have plans that renew on a calendar- year basis."