May 30, 2000
A PRIMER ON
DISEASE MANAGEMENT TERMINOLOGY - IS DM LIKE A WALL, A SPEAR, A ROPE?
Remember the story about the
and the elephant? The first felt the side of the elephant and
said it is "very like a wall". The second touched the tusk and
declared it is "very like a spear." Another man held the elephant's
swinging tail and said it is "very like a rope." And so on....
This is not unlike how people use the
term "disease management" (DM). The meaning of the term DM depends
very much on your knowledge and perspectives. People are often
referring to VASTLY different things when they use the term.
This essay will offer two PRACTICAL
DISTINCTIONS that will illustrate different implicit meanings of DM.
Understanding these distinctions can help you better to understand
DM in the context in which it is being used.
The two PRACTICAL DISTINCTIONS ARE:
First, distinguish between DM as a
PROCESS and DM as a BUSINESS.
Second, when referring to DM as business, distinguish among three
FIRST, DISTINGUISH BETWEEN DM AS A
PROCESS and DM AS A BUSINESS
Often when people speak of DM, they
are in fact referring to the PROCESS of DM -- a series of steps
bringing about a result.
For example, here is one way to view basic process steps of DM:
Identifying highest risk/cost
patients in a population
Developing treatment protocols and
Developing capabilities to
intervene in patient care
Monitoring and measuring results
DM as a process is very difficult to
get your arms around (is it like a wall, a spear, a rope?
....depends on your perspectives and knowledge, which might be
different than mine).
Just try to measure or quantify a DM
process in terms of budgets, FTEs, capital expenditures, etc. A
process tends to become invisible or transparent within an
organization. It becomes part of "The way we do things around here,"
rather than a discrete set of identifiable activities. A parallel
can be seen in organizations that adopted total quality/continuous
improvement processes in the late 1980s and 1990s - today, it's
virtually impossible to distinguish what's part of the total quality
process and what's not.
So a first step in understanding the
context of the term DM is to understand whether it is being referred
to as PROCESS or as a BUSINESS. If the speaker is using the term DM
to describe a business, then it's also necessary to distinguish
"Which DM business?"
SECOND, WHEN REFERRING TO DM AS A
BUSINESS, DISTINGUISH AMONG THREE COMMON MEANINGS
When people speak of DM as a
business, they tend to have one of three very different meanings in
- Today: DM Outsourcing Services as
a $390 million business.
- The Future: DM Outsourcing
Services as a potential $50-100 billion business (over
the next decade).
- Today: Chronic Care DM as a $700
So what's the big deal about these
different meanings of DM? After all, they're all within a few
hundred billion dollars of each other?
Here's a brief summary of each of
these classifications of DM revenues:
- Today: DM Outsourcing Services as
a $390 million business.
The Disease Management Purchasing
Consortium (DMPC) is a central source of information about DM
"DM outsourcing services" refers to DM services provided primarily
on behalf of health plans by a group of about 150 companies. The
DMPC estimates revenues for this industry at approximately $390
million in 2000. These companies mostly were formed in the mid to
late 1990s. Within this group, the largest companies by disease
category are: Asthma/COPD -- AirLogix; Cancer -- Quality Oncology;
Cardiology -- CorSolutions; Diabetes -- American Healthways; End
Stage Renal Disease -- Baxter Renal Management Strategies;
Hospitalist -- Hospital Inpatient Management Services; MCH/Neonatology
-- Paidos Health Management Services; Rare Diseases -- Accordant
- The Future: DM Outsourcing
Services as a potential $50-100 billion business (over the next
An upbeat future of DM Outsourcing Services was described by Joel
Ray and Julie Sydnor of First Union Capital Markets, in "Disease
Management: The Future of Managed Care" April 1999.
"If one were to apply a 60% chronic disease ratio to total
healthcare spending, this implies over $700 billion would flow to
chronic care products and services this year. ...initial outcomes
analyses of disease management programs appear to be generating
15-30% or more cost savings. If disease managers garner half of
these saving, this would imply that the industry has the potential
to generate top-line sales in the $50 billion to $100 billion
range, generating what we forecast will be a huge ramp-up over the
next decade." (Commentary: Our point here is to show great
divergence in how the business of DM is being defined, not
necessarily to agree or agree with these estimates....that's for
- Today: Chronic Care DM as a $700
The Robert Wood Johnson Foundation's "Chronic
Care in America: A 21st Century Challenge" describes a much
broader meaning of DM. Chronic Care DM represents estimated annual
direct medical costs for persons with chronic conditions -- $425
billion in 1990, $700 billion in 2000.
...AND THE FINAL ANSWER IS...?
We have found PROFOUND CONFUSION even
among our most sophisticated clients about these basic distinctions
relating to DM. The term has VASTLY different meanings when used by
Is there a correct definition for the
term "DM"? Perhaps over time we'll reach more precise definitions,
but today's lesson is simply to recognize that each of us is
describing our perception of different parts of the elephant.
"Things should be made as simple as
possible, but not any simpler." Albert Einstein
STUDY -- "DEFINING THE ePPi-CENTER OF eHEALTH"
analysis of the "ePPI" -- electronic Provider-Partner interface
-- has been published by US Bancorp Piper Jaffray with assistance
A few highlights:
"Automating the administrative
shortcomings in the health care industry will be the low-hanging
fruit for the ePPi; however, the real value is created when the
focus is on care....industry leaders can focus on generating profits
by carving costs from the current broken system or focus on profit
by introducing a new paradigm to the industry. The new paradigm
focuses on improving the quality of care for patients by enabling
them and their providers to more effectively and efficiently make
decisions regarding the therapy options available-be those options
procedural, pharmaceutical, biotechnical, lifestyle-related, or
other....vendors to the health care industry can focus on last
century's solutions, financially based solutions, or they can focus
on this century's solutions, improving clinical workflow. We believe
a clinical focus is necessary to compete in the new health care
economy" (pp. 8-9).
DISEASE TREATMENT IN MICHIGAN
Two chapters of a
study sponsored Blue Cross Blue Shield of Michigan (BCBSM) show
how Michigan residents with a similar disease often receive
completely different treatments, depending on where they live. The
authors are the father-and-son team of John Wennberg, MD, MPH and
David Wennberg, MD, MPH. They are nationally recognized leaders on
research into how health care services vary by geographic region.
The chapters of the study currently
Variations and the Use of Prescription Drugs
"We have found in Michigan, as we
have found elsewhere in the country, that there is substantial
variation -- sometimes up to ten-fold -- reflecting differences in
how likely people with similar conditions are to receive particular
medical interventions," said Dr. John Wennberg.
High or low rates of utilization are
not necessarily good or bad. However, the presence of variation does
suggest opportunities to improve quality and reduce costs.
The state-of-the-art in U.S. health care quality improvement:
national study suggests
up to 98,000 Americans die each year as a result of preventable
The BCBSM study (above) and
document variations in medical treatment patterns of up to 10
times within regions (not 10%, but 10x !)
The state-of-the-art in quality
improvement in other sectors of the American economy: "How do we
reduce our error rate in manufacturing widgets from 2 in a million
to 1 in a million?"
What's wrong with this picture?
SURVEY OF HIMSS
MEMBERS EXPLORES INFORMATICS PRIORITIES
A survey of Healthcare Information
and Management Systems Society (HIMSS) members explored trends in
healthcare information and technology. For example:
Top Healthcare Application Areas
Considered Most Important Over Next 2 Years by Providers
Web-based applications- 71%
Clinical Data Repository- 63%
Point-of-care Support- 52%
Intelligence/Decision Support- 52%
Enterprise Master Patient Index- 47%
Financial Information Systems- 36%
Ambulatory systems- 26%
Supply Chain Management- 24%
CRM/Call Center- 22%
Tele-medicine Systems- 19%
ERP Systems- 18%
summary of the survey is available, (see slide #11 - Top
HEALTHWAYS STUDY ON DIABETES DM FOR MEDICARE PATIENTS
American Healthways has released
a study showing its diabetes DM program improved health status
and lowered costs for Medicare beneficiaries. Key findings include:
Improvements in clinical measures
relating to A1C participation, A1C values, eye exams, foot exams,
serum creatinine, and cholesterol screening.
A reduction of 17% or $114 per
diabetes member per month in total direct health care costs for
the first year of operation.
A report ("DÉJÀ VU ALL OVER
AGAIN: The Soaring Cost of Private Health Insurance and its Impact
on Consumers and Employers") by the National Coalition on Health
Care notes that health insurance premiums are rising faster than
ever at four times the rate of inflation, and that these rates of
increase are expected to continue over the next three years. While
overall premium increases of 9-12% are expected in 2000, small
employers are experiencing 15-20% increases.
A combination of traditional forces
and emerging factors are driving up costs. The TRADITIONAL FORCES
pushing up premium prices include:
New medical technology
Overuse and misuse of medical
Oversupply of hospital beds
High administrative costs
Cost shifting among payers
The EMERGING FACTORS, both economic
and demographic, that are intensifying pressure on premiums include:
A longer and deeper insurance
underwriting cycle, shifting from two or three years up to four or
Wall Street pressure on for-profit
health plans to raise premiums in order to increase profits
Rapidly escalating prescription
drug costs and utilization
Tougher provider negotiations with
health plans for higher reimbursement
Consumer demands for easier and
broader access to care
The medical needs and demands of
77 million baby boomers
LIFE: HOW WOMEN USE THE INTERNET TO CULTIVATE RELATIONSHIPS WITH
FAMILY AND FRIENDS"
The Pew Research Center has recently
Internet Project Report relating to women's use of the Internet.
Findings About Online Health and
Six in ten women (61%) with online
access have gotten medical information, while 47% of men have done
this. On a typical day, 9% of online women get health information
on the Web and just 4% of men do this.
The difference in behavior between
the sexes is most evident in generational terms; older online
women (those over 50) are the most likely to have sought health
information. Some 65% of women that age have sought health
information online. In contrast, young men (those under 30) are
less likely to have sought such material. Only 40% of young men
have accessed health information online. And just 48% of older men
get medical material from the Web.
Other fascinating findings from the
...women have used email to enrich
their important relationships and enlarge their networks. The
Internet has the opposite of an isolating effect on these users.
They report that email has helped them improve their connections
to relatives and friends.
In general, Internet users have
more robust social lives than non-users and the most fervent
Internet users are the ones who more frequently say email use has
improved their bonds with relatives.
62% of those who email relatives
say they like email because they can stay in touch without having
to spend so much time talking to them.
Parents and children who email
each other regularly now communicate online as often as they talk
by phone -- more than 75% of parents and children who email each
other talk on the phone once a week or more often and they email
each other with the same frequency.
MEDICARE TO START
REIMBURSING FOR CHF DM
Financing Administration (HCFA) has announced that it will make
extra payments to Medicare+Choice organizations to reflect the
additional costs of treating congestive heart failure (CHF) patients
outside the hospital.
Payments for outpatient care for
patients with CHF will begin in 2002. This is an interim step before
comprehensive risk adjustment is fully implemented in 2004.
HCFA Administrator Nancy-Ann Deparle
said "Medicare will begin to reward those organizations that commit
their resources to treat patients outside the hospital who have
congestive heart failure, while demonstrating improvement in
patients' quality of care."
This announcement is good news. Why
is this significant?
Medicare is putting its money
where its mouth is. Lack of reimbursement has been a restraining
force in the growth of disease management and care coordination
As the largest single payer,
Medicare is influential in setting industry direction.
Medicare continues to signal the
eventual coverage of care coordination/disease management
article in Modern Physician explores Internet applications for
disease management approaches.
E-CareManagement News is an
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care—the paradigm shift from “managing cost” to “managing care”.
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