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More Care, Less Cost
By Maryann Hammers Disease management today encompasses treatment of the whole person, with all the challenges and conditions that might be part of her life. Chronic illnesses receive as much attention as illness-prevention services. And get ready for significant savings---an ROI exceeding 4 to 1, according to one study.
In an effort to check spiraling health costs, Hughes Electronics, a parent of DirecTV, is offering a disease-management program that covers more conditions, more acute illnesses and more people. Since 1998, the El Segundo, California Satellite-communications Company has provided basic disease-management services to its 7,000 employees, and the plan is showing impressive financial results. "It has consistently produced an almost 3-to-1 return on investment," says Pamela Hymel, vice president of human resources. Given that kind of return, it made sense to expand the company’s disease-management offerings. The existing program covered a handful of major conditions, including diabetes, asthma, congestive heart failure and coronary artery disease. Now, more than 30 medical conditions will be eligible, including some not typically served under the disease-management umbrella, such as depression, anxiety and alcohol/substance abuse. A voluntary health-risk assessment and wellness component that focuses on preventing major diseases is also part of the plan. "As we move forward, we want to offer more than disease management," Hymel says. "We want to offer health management. Our ROI studies show that the program is a good investment, not only for our company’s bottom line, but also for our employees’ health, productivity and performance. With our enhanced program, we can have a much greater impact." What’s happening at Hughes reflects an emerging trend. Even as medical benefits shrink, disease-management programs are expanding as part of, or in addition to, a traditional health plan. The reason is simple: employers view disease management as an effective way to control soaring costs. With impressive financial outcomes justifying their investment, more health plans and employers will adopt programs that reach broader populations and drive meaningful change in health and costs. A Hewitt survey of large employers with an average of 11,875 employees shows that almost three-quarters now offer or plan to implement disease-management services. Almost two-thirds of employers say that disease management has helped control their health-care expenditures, with an approximate 2-to-1 or higher return on investment. Cost depends on which conditions are covered, how the program is structured, and whether fees are based on the total number of employees or the number of enrolled participants. Study after study shows that a small fraction of patients with major chronic conditions are responsible for the majority of health-care costs. A January 2004 Watson Wyatt report states that "claimants with annual expenses over $500 for therapeutic services who are treated for 11 (mostly) chronic conditions …account for about 44 percent of health plan payments, but [represent] only about 9 percent of claimants." Through early patient identification, education, nursing support and care coordination, disease management reduces the number of inpatient admissions and emergency-room visits, helps avoid or minimize complications and improves the employee-patient’s quality of life.
More diseases, more people
Until recently, most disease-management programs covered just a few major chronic conditions, usually heart disease, asthma and diabetes. Now many programs cover a dozen or more ailments. "Addressing a wider array of medical conditions is the main focus of today’s disease-management programs," says Terry Fouts, chief medical officer of Great-West Healthcare. Many disease-management companies are moving toward covering depression and other mental illnesses, as both a secondary and a primary condition. As employers seek more comprehensive health-care packages tailored to their specific workforce needs, many are contracting directly with disease-management vendors rather than working through their medical-plan or pharmacy-benefit administrator. Such administrators may offer a watered-down or less robust program or simply not cover the diseases that the employer wants to cover, whether it’s arthritis or allergies. Employers are identifying the most prevalent and high-cost claimants and choosing the specific disease-management program that best fits their workforce profile. Tailor-made packages
By examining their health-insurance and pharmaceutical claims and evaluating their employee population, employers can custom-design packages that not only cover more ailments, but also serve employees who aren’t sick but may be at risk. Disease-management firms used to target just a very small percentage of high-severity claimants, whereas now they are identifying all employees and spouses with a given chronic condition, stratifying them from low to high severity and providing services appropriate to the degree of severity. The focus on health--not just on disease--was important to Hughes’ Hymel, who is also a physician. "We wanted a coordinated approach that integrates lifestyle and wellness to help prevent or lessen the severity of disease," she says. "By monitoring family history, lifestyle and such measurements as blood sugar, cholesterol and blood pressure, we can identify and monitor employees at risk and funnel them into stress-management, smoking- cessation or weight-loss programs that may prevent them from developing a full-blown illness. For example, we can work with someone who is pre-diabetic to lose weight and change their diet so they don’t end up in the diabetic disease-management program." -Adapted from Workforce Management, March 2004, pp. 55-58
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