May 30, 2000

A PRIMER ON DISEASE MANAGEMENT TERMINOLOGY - IS DM LIKE A WALL, A SPEAR, A ROPE?

Remember the story about the blind men 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 common meanings.

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:

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 mind:

1. Today: DM Outsourcing Services as a $390 million business.
2. The Future: DM Outsourcing Services as a potential $50-100 billion   business (over the next decade).
3. Today: Chronic Care DM as a $700 billion business.

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:

1. Today: DM Outsourcing Services as a $390 million business.
   The Disease Management Purchasing Consortium (DMPC) is a central source of information about DM outsourcing services.
   "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 Health.
2. The Future: DM Outsourcing Services as a potential $50-100 billion business (over the next decade).
   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 another day.)
3. Today: Chronic Care DM as a $700 billion business.
   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 different people.

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

PIPER JAFFRAY/SYBASE STUDY -- "DEFINING THE ePPi-CENTER OF eHEALTH"

An insightful analysis of the "ePPI" -- electronic Provider-Partner interface -- has been published by US Bancorp Piper Jaffray with assistance from Sybase.

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).

VARIATION IN 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 available:

1. Coronary artery disease 
2. Practice 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.

COMMENTARY:
The state-of-the-art in U.S. health care quality improvement:

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%

A summary of the survey is available, (see slide #11 - Top Healthcare Applications)

AMERICAN 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:

RISING HEALTH INSURANCE PREMIUMS

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:

The EMERGING FACTORS, both economic and demographic, that are intensifying pressure on premiums include:

"TRACKING ONLINE LIFE: HOW WOMEN USE THE INTERNET TO CULTIVATE RELATIONSHIPS WITH FAMILY AND FRIENDS"

The Pew Research Center has recently released an Internet Project Report relating to women's use of the Internet.

Findings About Online Health and Medical Information:

Other fascinating findings from the Summary:

MEDICARE TO START REIMBURSING FOR CHF DM

The Health Care 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?

CYBERCARE ARTICLE

A recent article in Modern Physician explores Internet applications for disease management approaches.



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