How Care Management Will Save Richard’s Life—and Billions in Healthcare Costs
In the fall of 2002, Richard was driving his delivery van along a familiar street when his vision unexpectedly became blurry. Because this was a familiar route, he knew where he was going without needing to rely on fuzzy street signs. On arriving home, he called a neighbor who was a nurse about his problem. She suggested that he see an ophthalmologist. After examining him and performing some tests, the ophthalmologist told Richard to see his primary care physician (PCP) because he had diabetes. Richard was incredulous because there was no family history of diabetes. His PCP confirmed he had type 2 diabetes, as well as high blood pressure and an elevated cholesterol. The PCP began treatment and advised him to lose weight. The PCP also placed Richard in the health system’s care management program.
From Powerless to Powerful: How Effective Care Management Saves Lives
At the outset, Richard was overwhelmed. He did not understand his conditions or the treatment, and he was not committed to making the lifestyle changes necessary to manage his diabetes and lose weight. Under the supervision of his nurse care manager he complied with his medications for the first few months, which helped control his blood sugar and blood pressure, but diet and weight loss continued to be a challenge. The educator and dietician on the interdisciplinary care team spent several weeks educating him about the long-term effects and complications of his disease.
As his knowledge grew, Richard began to understand the need to make the necessary changes in his diet and life. He began to make some modest but important lifestyle changes, such as ordering a salad for lunch instead of a hamburger and milkshake. He also started to walk about ten minutes a day, incrementally increasing his walking by five minutes every week. A few months later he was walking an hour a day, seven days a week, and lost 42 pounds. Feeling better, he wanted to lose more weight, so he joined a weight-loss program. Three years after his original diagnosis, his weight was down 142 pounds. During this time, Richard’s type 2 diabetes and other conditions improved to the point that his PCP was able to take him off all medications.
The Cost Benefit of Care Management: Saving Billions in Healthcare Costs
Clearly, Richard’s progress improved the quality of his life, but does it matter beyond his personal goals? In 2013, the American Diabetes Association (ADA) estimated that the total costs of diagnosed diabetes had risen to $245 billion, up 41 percent from 2007. This includes $176 billion in direct medical costs and $69 billion in reduced productivity. The largest components of medical expenditures are hospital inpatient care representing 43 percent of the total medical cost. According to the ADA, people with diagnosed diabetes, on average, have medical expenditures approximately 2.3 times higher than those without diabetes. If all diabetics could achieve the same outcomes as Richard, it would save the nation many billions in healthcare costs.
The National Health Expenditure Accounts (NHEA) has estimated that U.S. healthcare spending grew 5.8 percent in 2015, reaching $3.2 trillion or $9,990 per person. As a share of the nation’s Gross Domestic Product, health spending accounts for 17.8 percent. The nation’s health expenditures are rising at an alarming and unacceptable rate, making American businesses less competitive and diverting much-needed funds from other important societal needs.
According to the CDC, chronic diseases—such as heart disease, stroke, cancer, type 2 diabetes, obesity, and arthritis—are among the most common, costly, and preventable of all health problems. As of 2012, about half of all adults in America—117 million people—had one or more chronic health conditions. One of four adults had two or more chronic health conditions like Richard. Seven of the top 10 causes of death in 2010 were chronic diseases. As a nation, more than 75 percent of our healthcare spending—over $2.4 trillion—is on people with chronic conditions.
Given this data, it is clear the nation has the potential to save hundreds of billions of dollars if all treatable chronic disease patients could experience an outcome like Richard’s. This represents one of the key reasons for the growing emphasis on better care management and population health management. Simply put, it is important to the future of the nation.
How Value-Based Payment Models Support Care Management—and a Culture of Wellness
To facilitate this shift toward population health and wellness, value-based payment (VBP) systems are emerging as a solution to address rising healthcare costs, clinical inefficiency, and duplication of services to make it easier for people to get the care they need and to promote better care management and population health.
Under the traditional fee-for-service (FFS) payment system, healthcare providers are paid based on the number of healthcare services they deliver, such as tests and procedures. While providers can and do strive to provide the best care, payment generally has little to do with whether their patients’ health improves. Outcomes, efficiency, and wellness are not directly rewarded.
Under a VBP model, physicians and hospitals are paid for keeping people healthy and improving the health of those who have chronic conditions in an evidence-based, cost-effective manner. Inherently, a VBP system focuses on outcomes (quality, safety, and cost outcomes) and tends to be more patient and population centric. The incentive is to provide only the care that is absolutely needed in pursuit of results like Richard’s and to use lower cost care options to achieve those results.
Under FFS, care management represents an extra expense for health systems and it is hard to demonstrate a good ROI. Under a VBP model, effective care management is a critically important tool used to keep patients as healthy as possible and out of expensive care environments, like the emergency department and hospital. In this case, more effective care management can demonstrate a clear ROI and contribute the health system’s bottom line. The care team is rewarded for the quality of their outcomes rather than for simply doing things.
The Long Overdue Prioritization of Health and Wellness Through Care Management
Given rising healthcare expenditures, this shift is inevitable and long overdue. It will be rewarding and exciting for healthcare providers that can master data-driven performance improvement and implement the tools necessary to allow clinicians to be the best they can be. Conversely, systems that cannot manage this change will be penalized from a regulatory perspective in the near term, and more importantly and severely, in the marketplace over the long term.