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QUALITY: Does DM save money? The old chestnut rears its ugly head

Poor Chris Selecky of Lifemasters. I had a brief chat with her at a DM conference in August and she was heading to the beach (happily) after selling the company to Healthways. Or so she thought. But then that merger fell apart, mainly because LifeMasters was making less money on a contract than it thought it would.

Now things have gotten much worse. As reported by Vince Kuratis at Better Health Technologies. Selecky announced that Lifemasters has pulled out of its Medicare Health Support project in Oklahoma.

A central factor in their decision was the unexpected medical needs of the Oklahoma project population. These are "really, really sick patients. It takes a lot more to get them under control." She explained that the Oklahoma population included many patients with five or more comorbidities. She pointed out that the rural nature of the population led to unexpected results. Lifemasters found that the population was significantly medically underserved — people had not been receiving appropriate medical care in the past. Arranging for needed care would lead to higher medical costs for Medicare and would prevent Lifemasters from achieving required cost savings.

The entire DM industry is hanging on Medicare Health Support and has really been talking it up. More importantly an even bigger industry is sitting behind MHS expecting that Medicare will start paying for in home monitoring as a consequence. Remember that Forrester thinks that’s going to be a $35bn market in less than 10 years, with Medicare paying most of the freight.

But several studies over the years have suggested that DM improves quality but has found it hard to prove that it saves much money. The response of the DM industry has been, to quote Al Lewis, “let’s go surfing”. in other words, do it anyway and let the academics worry about the savings.  And they’ve convinced some health plans that this works.

But to get Medicare, the big kahuna to pay for DM , they’re going to have to persuade the taxpayers’ agent that spending money on DM will reduce the amount spent elsewhere in the system. If the answer is that we’re not spending enough on health care, and we should spend more, and DM will help us do that, then it’s hard to imagine that DM will get the positive response it’s looking for in a world in which everyone’s budget in Medicare is under pressure.

(Hat tip to the ever wonderful Jane Sarasohn Kahn for pointing this one out to me!)

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5 replies »

  1. My Canadian CEO friend is trying to institute DM in the local regional hospital. She has developed a team communication approach that attempts to coordinate specialities and provide consistant care. Her biggest problem is getting docs to co-operate and get with the program. They don’t like their turf ruffled and find it hard to operate in a team where inputs have to be shared and condidered.

  2. I have watched these programs from prior to inception and found that the major vendors lack of understanding regarding the complexity of these patients and the effort required to save money to be striking. Lifemasters decision and Healthways results should come as no surprise.
    These quotes from Disease Management News dated August 25, 2006 should be instructive as to what to expect:
    Bob Stone EVP of Healthways
    “We knew we were going to have a sicker and older population, but this is even sicker and older than we thought it was.”
    He also said that Healthways had put more resources into the pilot than it had expected, and therefore needed to save more on medical costs.
    Derek Newell SVP Lifemasters
    “We’ve had to put more people on the ground and had to keep them on the ground longer than we thought”
    “Big employers really need a national call center model because there is no other way to get economies of scale… but the traditional call center model is not going to carry the day in this population.”
    McKesson reported a 45 minute wait time on their Medicare hotline due to answering questions pertaining to Medicare Part D.
    If Medicare HMO’s with more levers on the system such as pre-authorization, contracted networks, retrospective reviews etc., net 3% to maybe 10% on a diverse (not all chronic) population; how do we expect a few phone calls, distribution of guidelines and a bunch of mailers to net 5% after fees?

  3. Sounds like the system is so broken that not even DM can save it!
    Full services DM programs are rarely deployed, and if they were, even more money would likely be spent. I don’t know the details of the Oklahoma project, so I can’t comment on the nature of that DM program.
    Anyway, there are so many problems with our healthcare system that no single tactic, including DM, is likely to have a meaningful impact on care quality improvement and cost reduction. Furthermore, even if we deployed a comprehensive strategy, it will take time before we know how to improve outcomes and efficiencies enough to lower overall utilization and thus reduce overall costs. This is because we have to develop and implement better evidence-based guidelines, research ways to foster patient and provider compliance, discover how to match interventions with each patients’ genetic makeup and constellations of comorbidities, encourage providers to deliver care efficiently, etc. None of this can be done on the cheap.
    If and when we gain enough scientific knowledge to understand the precise preventive services and sick-care interventions each patient needs, and once we have the incentives in place to promote continuous improvements in care safety, quality and efficiency, only then will we reap the benefits of better outcomes and lower costs. Until then, we’re being short-sighted, looking for quick fixes, while not committing the effort and resources needed for adequate knowledge growth and to motivate wide-spread attitude and behavioral change. In other words, we keeps slipping and sliding down the same path to nowhere because we foolishly believe that deep knowledge and understanding takes too much time, effort and cost to be worth it. So, we keep doing the same things expecting different results. Duh!

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