Employers are playing an increasingly active role in disease management (DM) initiatives for their employees.  Employers are recognizing that a disproportionate amount of health costs are incurred by a small percentage of their employees (typically 5% of a group accounts for about 60% of health care costs).  Many employers are frustrated by perceptions that health care premiums are rising faster than medical costs and that health plans and providers are not taking enough steps to manage clinical care.

Here are 5 Simple Truths about Employers and DM Initiatives:

1. Employer interest in DM is growing.
2. SOME employers are VERY interested in DM.
3. Many employers have little interest or ability to pursue DM initiatives.
4. Employer interest in DM is driven primarily by concerns about cost.
5. Quality is a distant secondary consideration for employer DM initiatives.

We will briefly discuss each of these.

1)  EMPLOYER INTEREST IN DISEASE MANAGEMENT IS GROWING

The Mercer/Foster Higgins National Survey of

	Among HMO plans, the use of chronic disease management programs jumped sharply in 1999, with 58% of employers' largest health plans including one or more such programs, up from 49% last year.
	Among preferred provider organization (PPO) plans, there was a big jump (from 47% to 58%) in plans providing one or more disease management programs for conditions such as heart disease, diabetes, asthma, back pain, and depression.

Watch for employer interest in DM to take a variety of forms:

	Employers asking their health plans to sponsor DM programs
	Employers contracting directly with DM vendors (and carving-out specific conditions or patients from a health plan)
	Employer coalitions sponsoring community based DM programs

2)  SOME EMPLOYERS ARE VERY INTERESTED IN DISEASE MANAGEMENT.

DaimlerChrysler is representative of a new breed of activist employer -- one that is taking the issue of health care costs into its own hands.

"DaimlerChrysler is a global automotive, transportation and a service company and is not part of the health care industry, but it has learned on the job that sound business practices create value for everyone," said Kathy Oswald, Senior Vice President of Human Resources.  "Health care should be no exception.  That's why we've introduced our supply-chain management model to the health care
field."

DaimlerChrysler facilitated a meeting with a diverse group of health care suppliers - physicians, hospitals, pharmacists, HMOs, PPOs, and others - to collectively develop standard clinical guidelines for five diseases (Asthma, Low Back pain, Diabetes, Congestive Heart Failure, Depression) and pharmaceutical prescribing guidelines.  The initiative titled "Evidence-Based Medicine in Action: A Collaborative Approach," is the next wave in DaimlerChrysler's ongoing efforts to achieve consistently high quality health care and curb runaway costs.

(Makes us wonder how collaborative it FEELS to have DaimlerChrysler tap you on the shoulder and say "'scuse me doctor, can we talk about health care costs?")

The Disease Management Purchasing Consortium (DMPC) has worked primarily on behalf of health plans interested in purchasing DM vendor services.  Al Lewis, Executive Director of the DMPC, reports that two very large deals with employers are in the works.

While he cannot identify the employers, he does speak to the magnitude of the initiatives.  Al states that one of the employers is "going to can its disability management initiative, which they now realize is something done to its employees, not for them, with no guaranteed savings or health status improvement.  They are likely to combine their UM with multi-disease DM to create a true population management model. If they succeed, it spells the end of disability management and the beginning of a mega trend towards true managed health for self-administered employers."

(Here's a suggestion to keep people occupied at your next scavenger hunt:  ask folks to find an article about disease management that doesn't quote Al Lewis.)

3)  MANY EMPLOYERS HAVE LITTLE INTEREST OR ABILITY TO PURSUE DM INITIATIVES

While some of the largest employers are pursuing DM initiatives, many employers face significant barriers to pursuing DM:

	Employers are not clear about how best to measure health care quality
	Employers are reluctant to get into health care delivery or health insurance, viewing these as straying from their core competencies.
	The average large U.S. company offers approximately 19 health plans, with some companies offering as many as 200 plans (Towers Perrin study).

So, what types of employers are MORE LIKELY to undertake DM initiatives?  Here's a checklist of "Employer Characteristics Suggesting Interest in DM":

	Larger employers (better able to manage medical costs as a line item, more sophisticated staff/systems)
	Self insured (at financial risk for medical claims)
	Aging workforce (older people have more chronic conditions)
	Low turnover in workforce (more likely to recoup investments in DM)
	Large number of insured retirees (greater incentives to be proactive in preventing medical claims)
	Already developing a "Total Health Management" type approach toward integrating medical, disability, workers comp, etc. (DM fits well with such a strategy, but DM in isolation can't drive an integrated approach)
	Industry characteristics greatly driven by cost management (e.g., Old Economy vs. New Economy)
	Concentration of employees in an area (conducting DM with widely scattered employees will be difficult)
	Concentration of large employers in an area (watch for DM initiatives being sponsored by existing employer coalitions)
	Concentration of employer's health plans (it's easier to convince 5 health plans to sponsor DM than to convince 50)

4)  EMPLOYER INTEREST IN DISEASE MANAGEMENT IS DRIVEN PRIMARILY BY CONCERNS ABOUT COST.

According to the latest Towers Perrin Health Care Cost survey, the cost of large employers' health benefit plans will increase about 12% on average in 2000, and more than 90% of those polled said they expect double-digit increases to continue over the next few years.

"Something I think people would find surprising is that the most expensive component of a Chrysler brand vehicle isn't steel or plastic, but health care," said Kathy Oswald.

5)  QUALITY IS A DISTANT SECONDARY CONSIDERATION FOR EMPLOYER DM INITIATIVES

A recent comprehensive survey noted "Employers Are More Worried About Costs Than Quality".  The Kaiser Family Foundation has released its 1999 Annual Employer Health Benefits Survey.

Some key relevant findings:

	72% of all firms say they are worried that health care costs will increase faster than they can afford
	At the same time, 26% of firms say they are worried they will have to switch health plans because of concerns about quality of care.
	Accreditation plays a relatively minor role in plan selection.

Among employers offering an HMO or POS plan, just 12% of workers are in firms where plans are required to be accredited by the National Committee for Quality Assurance (NCQA). **  Among all companies, the percentage of workers in firms familiar with accreditation declined from 56% in 1996 to 45% in 1999.  The drop was greatest among large companies, where the decline was from 57% to 33%.

SUMMARY

Health care costs are rising again.  While many employers will undertake watchful waiting, expect many to take the bull by the horns and sponsor DM services for their employees.

Additional resources:

Employers See Broad Value in Promoting Health

Employers, DM Vendors Edging Just a Bit Closer

Mercer's Fax Facts Survey: Health Management

Employers Starting To Hold HMOs Accountable for Quality

Strategies for the Future

Eight Potential Best Practices

SOCIETY OF ACTUARIES (SOA) STUDY -- "MANAGED CARE REPORT CARDS NOT YET AFFECTING ENROLLMENT"

The study, "Managed Care and Performance Measurement: Implications for Insurance Markets," sought evidence tying managed care plans' ratings to plan enrollment -- and, by implication, to employee choice.  Researchers examined 18 published and unpublished studies, including surveys, focus groups, case studies and statistical analyses.  A press release summarizing the study and the full study are available.

"There is little current empirical evidence that consumers (employees of large employers) use this type of information in plan selection."

The Kaiser Foundation Study -- 1999 Annual Employer Health Benefits Survey (referenced above) came to a similar conclusion:

Percentage of Covered Workers in Firms Citing Features as "Very Important" When Choosing a Health Plan

However, the authors of the SOA study caution that it would be premature to conclude that plan performance ratings are useless or will never impact plan enrollments:  1)problem areas found in the rating process may be corrected, leading to better patient care, cost savings or both; 2) ratings reports may be refined, improving clarity for consumers and purchasers; 3) ratings may be disseminated more widely, increasing usage by consumers.

PURCHASERS SEE THE VALUE IN HEALTH BEHAVIOR CHANGE PROGRAMS, BUT ARE RELUCTANT TO BUY OR NEGOTIATE THESE BENEFITS FOR WORKERS

The Center for Advancement of Health recently issued Health Behavior Change in Managed Care: A Status Report.  The report is the first of its kind to assess the degree to which proven behavior change strategies are integrated into medical care. The report is based on a 1999 survey of HMO medical directors, interviews with health care purchasers, and a review of the literature.  Some key findings:

Behavioral health risks (diet, inactivity, smoking) are tied to higher ambulatory care and hospitalization costs and account for as much as 70 percent of all medical care spending.  However, health plans said they were reluctant to incorporate behavior change> interventions into their systems of care, in part because the cost impact of doing so is unclear.

Although there are many examples of evidence-based interventions that work, the Center's analysis shows that incorporating these interventions into medical practice remains a "limited and piecemeal" effort.  Part of the problem, according to the findings, is that managed care decision-makers, health care purchasers, providers and consumers have had difficulty distinguishing effective behavior change approaches from unproven ones.

TOP HEALTH STORIES FOR 1999

Here's a quick quiz for you:  "In the mind of the public, what were the top health related news stories in October/November 1999? ....in all of 1999?"  Give up?  Detailed answers to these questions can be found in the Kaiser/Harvard Health News Index.

The short answer:  about half of Americans followed closely two health news stories in late October and November.  Fifty-one percent (51%) of Americans closely followed the report by the National Academy of Sciences' Institute of Medicine on the large number of medical errors in hospitals.  News coverage of UnitedHealth Group's announcement of a new policy to give doctors the final decision on whether patient treatments are necessary was followed by nearly half (48%) of the public.

Intriguingly, these same two issues were listed as #1 and #2 in the Top Five Most Closely Followed Health Policy Stories of 1999.

The report goes on to suggest that AWARENESS of an issue does NOT translate to accurate UNDERSTANDING of the issue.  For example, when asked "Which policy change in health coverage did UnitedHealth Group recently announce?"

	57% responded "don't know"
	29% responded "To give physicians the final say on patient treatments" (the correct answer)

PHYSICIANS OFFERED FREE SERVICES BY E-HEALTH COMPANIES

American Medical News reports that physicians are being offered free services or equipment by Internet firms desperate for eyeballs.

HEALTH PORTAL RATINGS -- CONSUMERS AND MEDICAL PROFESSIONALS

Gomez Advisors has issued consumer ratings for the Top Internet Health Content Sites.

The top 5 overall sites:

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 (http://www.bhtinfo.com).  BHT provides consulting and business development services relating to disease management, demand management, and patient health information technologies.

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