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E-CareManagement News

January 24, 2001


In the past several years, the issue of health care quality has received a great amount of press. Most of the news has focused on negatives -- medical errors and patient safety issues that jeopardize lives. 
Numerous studies have critiqued quality in the US health care system. For example, a report from the Institute of Medicine (IOM) -- "To Err is Human: Building a Safer Health System" -- was released in November 1999. This report suggested that as many as 98,000 people in the US die each year due to medical errors.

In 2000, the Leapfrog Group, a consortium of over 60 employers providing health benefits to 20 million+ Americans, disclosed their plan to facilitate purchasing from health care providers that met specific standards for patient safety.

The Leapfrog Group website summarizes the rationale for its initiatives: 

  • American health care remains very far below obtainable levels of basic safety and overall customer value.
  • The health industry would improve much more rapidly if purchasers better recognized and rewarded superior safety and overall value.
  • Purchasing strategies need not only to champion superior overall value, but also to focus on specific innovations offering "great leaps" in basic patient safety.
  • Voluntary commitment to purchasing principles by a critical mass of America's largest employers will provide a large jump-start for encouraging other purchasers to join.
  • Consumer understanding of and support for safety leaps and other critically needed improvements in health care value are pivotal to success.
  • ...and we haven't yet heard the crescendo of the commentary on quality of US health care. The IOM's report, "Crossing the Quality Chasm: A New Health System for The 21st Century", is scheduled for release in the first quarter of 2001. The report will propose a strategy and action plan for improving the organization, delivery, and financing of health.


    The tide is changing. Over the past 15 years, the mantra in US healthcare has been "reduce cost, reduce cost, reduce cost." The new mantra is becoming "reduce variation, reduce variation, reduce variation". 

    Examples of variation are cited in a recent article in USA Today. In Bend, Ore., the rate for back surgeries is 7.3 for every 1,000 Medicare recipients -- more than four times higher than in Syracuse, N.Y., which has 1.5 for every 1,000. This article presents a great everyday explanation (the type mom would understand) of variation in medical practice. (For a more technical discussion of variation, researchers from Dartmouth Medical School have written the book on this subject -- actually, a whole series of books "The Dartmouth Atlas of Health Care". For more background see the Dartmouth Atlas-Michigan

    While initial quality initiatives arising from the IOM report and the Leapfrog Group are focused on medical error and patient safety initiatives, the focus won't end there. Problems with the quality of care have been characterized as: 

  • Misuse -- patient safety and medical errors
  • Overuse -- unnecessary tests, procedures, surgeries, etc.
  • Underuse -- insufficient use of appropriate tests, procedures, surgeries, etc.
  • (For additional background see Dr. Bodenheim's article in the NEJM.) 

    Unwanted variation is a commonality among these quality problems. Misuse suggests negligent variation from defined procedures. Overuse and underuse suggest variation from clinical guidelines; in some cases, the science for guidelines is unresolved, in other cases the challenge is implementation of agreed upon standards.

    So while initial initiatives are focusing on reducing misuse, the TOOLS, TECHNOLOGICAL INFRASTRUCTURE, CULTURE, and MINDSET required to do this are easily extendable toward reducing overuse and underuse. This lays the foundation for "quality driven care management".


    Skeptics among us will say "We've done all this before and it didn't work. In 199x my (hospital, company, health plan, etc.) started a Total Quality program. It started with a big bang, but eventually faded." In fact, Voluntary Hospital Association research shows that over 60% of hospital performance programs have been in place for 6+ years.

    What's different about this round of quality initiatives?

  • EVIDENCE of quality problems keeps mounting.
  • Quality improvement is an ORCHESTRATED EFFORT among virtually all health care monitoring organizations, larger employers, and government. There is also significant support among emerging leaders of the physician community.
  • The Internet and supporting TECHNOLOGICAL INFRASTRUCTURE are brand new.
  • NEW HEALTH CARE CONSUMERS are demanding accountability and best practices from providers.
  • Finally, the issue of quality in health care HAS crossed the threshold of PUBLIC awareness. "Media attention to the Institute of Medicine story has propelled the problem of medical errors to the forefront in just a short period of time. It's an amazing example of agenda setting," said Drew Altman, Ph.D., president of the Kaiser Family Foundation (KFF). For example, a recent opinion poll sponsored by KFF found that wide majorities say information about medical errors (71%) and malpractice suits (70%) would be the biggest help to them in determining the quality of providers.


    Better Health Technologies has been working with several health care clients in exploring opportunistic "quality driven care management" clinical and business models. Here are several nuggets from early work.

    From the standpoint of designing new clinical and business models, "reducing variation" becomes the bull's-eye of the target of opportunity:

  • Identifying high variation in medical procedures, processes, and outcomes. Variation appears in many shapes and sizes, including procedures, diseases and conditions, geography, by physician specialty, etc. 
  • Understanding the sources of the variation
  • Understanding who benefits economically from the current system and who would benefit from reducing variation in a particular area (i.e., follow the money).
  • Designing new clinical approaches and business models to reduce variation 
  • Finally, here are a few critical success factors to use in developing emerging "quality driven care management" business and clinical models.

  • Partnerships are critical. A new value chain based on quality driven care management is emerging. The challenge is too great for any one organization to do alone.
  • Objective care standards and evidence based medicine are required. A key factor for success will be the equivalent of a "Good Housekeeping Seal of Approval" for clinical guidelines.
  • Look for local best practices that can be transplanted and/or commercialized in a regional or national business model.
  • Think bricks AND clicks. Successful business models will provide value propositions that include both specialization and integration (a carve-in approach, rather than a carve out). Specialization means world-class guidelines and best practices provided to patients; integration means care given by a coordinated team of local health care providers.
  • Management guru Peter Drucker lists one of the 5 deadly sins as "feeding problems and starving opportunities". How will you react to recent quality initiatives health care? Problem or opportunity?


    The Boston Consulting Group (BCG) has published an issue brief entitled "Disease Management Takes Flight." You can access either HTML or Adobe versions.Some interesting excerpts:

  • Whether they act internally or through outsourcing or both, incumbents will need to vastly improve the effectiveness of their own disease-management offerings. Those that fail to do so will find themselves at a competitive disadvantage because the treatment of chronic diseases such as diabetes, congestive heart failure, and asthma accounts for the largest portion of health care costs.
  • A BCG analysis of 22 DMSCs (disease-management-service-companies) found that around one-quarter to one-third of them are hitting the trifecta: reducing medical costs (by 8 percent to 30 percent), improving patients' health and quality of life, and satisfying more than 90 percent of program enrollees.
  • The Boston Consulting Group predicts that such expenditures will total about $500 million -- roughly half the market -- in the United States in 2000. This figure represents a significant increase from $68 million in 1997. Based on current health care spending and the potential for cost savings in major chronic conditions, BCG estimates that the U.S. market could reach $20 billion by 2010.
  • Disease management is gaining in popularity because its promise -- simultaneously lowering costs and raising the quality of care -- is not only attractive but also compelling.

    The Commonwealth Fund supported a study entitled "Effective Clinical Practices in Managed Care: Findings from Ten Case Studies" . Plans were invited to participate based on their high performance on Health Plan Employer Data and Information Set (HEDIS) scores.

    The 57 page study identifies factors that contribute to high clinical performance:

    1) A strong working relationship with the plan's physicians,
    2) Quality-focused leadership, culture, and values,
    3) A high-quality physician practice base in the delivery system, and
    4) An emphasis on the use of data and analysis in clinical improvement activities.

    Key themes that emerged about the use of clinical improvement strategies (#4) included:

  • Successful clinician-focused strategies were developed using highly respected clinicians to shape and implement initiatives that were both feasible and useful.
  • Member-focused strategies are increasing in number and emphasis, particularly among plans whose provider networks are expanding or are loosely structured and shared with other plans.
  • Interviewees at plans with two types of cross-cutting strategies -- (1) disease or population registries, and (2) careful processes for aligning benefits, policies, and incentives with other strategies --strongly believed these had improved clinical performance.
  • Commentary: worth reading in detail!


    The journal "Family Practice Management" has conducted a survey of electronic medical record (EMR) systems, including conventional systems and Internet-based ones. The article ranks and rates vendors based on general design, provider features, patient features, and overall scores. Three systems received an overall five-star rating: ChartWare, EpicCare, and Health Probe.

    The article does a superb job of bringing coherency to a confusing topic area. The authors, Susan Rehm, MBA and Susan Kraft, MD have developed an extendable framework, highlighting the most important features of various EMRs and listing vendor attributes. 


    The New York Times recently reported on technologies affecting the practice of medicine at the point of care. A few interesting passages:

  • More than 3 in 10 of the three billion prescriptions each year have to be rechecked, by some estimates, because of confusion over a doctor's handwriting or insurance rules.
  • At least 50 companies, mostly start-ups, are responding to the trend toward the digital doctor.
  • Industry data indicates that a full 20 percent of American physicians already carry hand-held devices, if only to keep track of schedules and stock holdings.
  • "All those devices will eventually be consolidated into a single hand-held device," predicted Dr. Lloyd A. Hey, a Duke University surgeon and a founder of MDeverywhere, a start-up that offers software to help doctors keep track of billable hours.

    A number of studies have suggested that higher-volume settings -- that is, hospitals, physicians, and other types of providers who handle larger numbers of patients -- typically produce better health outcomes. 
    The Committee on Quality of Health Care in America, in conjunction with the National Cancer Policy Board, explored this apparent link. 

    The resulting report, "Interpreting the Volume-Outcome Relationship in the Context of Health Care Quality", presents evidence on the relationship between hospital and physician volume and achieving better quality of care and patient outcomes in eight clinical areas.Key findings:

  • A higher-volume, better-outcome association was observed in three-quarters of the studies reviewed.
  • Volume is, however, an imprecise indicator of quality. Some low-volume providers have excellent outcomes, and conversely, some high-volume providers have poor outcomes. Volume per se does not lead to good outcomes in health care; it is instead a proxy measure for other factors that affect care.
  • With few exceptions, however, the literature does not shed light on the structures or processes of care that underlie the apparent relationship.

    With support from the Commonwealth Fund, the Picker Institute has released a study, "Getting Behind the Numbers: Understanding Patients' Assessments of Managed Care" 

    The authors identified several discretionary plan practices that enhanced both members' experiences with the plan's benefits and services and their clinical interactions with caregivers. 

    Strategies found to support patient-centered performance included:

  • Identifying plan members as primary plan customers
  • Managing consumers' expectations
  • Recognizing consumers' perceptions of plan and provider responsibilities
  • Incorporating members' perceptions in quality measures

    Computer Sciences Corporation has released a survey on global information technology issues and priorities, it's "13th Annual Critical Issues of Information Systems Management"

    Here are some intriguing findings from health care respondents worldwide:

  • 71 percent of this year's survey respondents said that developing an e-business strategy is a top IS management issue.
  • only 38 percent of respondents have an e-business strategy in place now, a figure that is unchanged from 1999.
  • nearly two thirds of healthcare respondents stated that they are not involved with e-business currently, but are considering it. This figure is 63 percent higher than the survey average. It tells us that healthcare executives recognize the need to embrace e-technologies but, for the most part, have yet to do so.
  • Read more here.

    Disclosure -- No BHT clients were mentioned this issue.

    E-CareManagement News is an e-newsletter that tracks a major change in health care and managed care—the paradigm shift from “managing cost” to “managing care”.  This e-newsletter is brought to you by Better Health Technologies, LLC (  BHT provides consulting and business development services relating to disease management, demand management, and patient health information technologies.

    You may copy, reprint or forward this newsletter to friends, colleagues or customers, as long as the use is not for resale or profit and the following copyright notice is included intact. Copyright © 2001, Better Health Technologies, LLC. All rights reserved.

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