June 25, 2001

FIVE CRITICAL OBSERVATIONS ABOUT DISEASE MANAGEMENT ASSEMBLING 

"Build or buy?" is one of the most fundamental questions faced by any organization. A few years ago, it was unclear how this question should be answered in relation to chronic disease programs. The question is raised by a wide range of organizations involved in chronic disease management (DM) -- including delivery systems, physicians, health plans, and DM support or outsourcing companies.

A third option -- assembling -- is making sense to an increasing number of organizations. Assembling is somewhere between building and buying. Assembling involves buying or building program COMPONENTS, but tailoring the components and integrating them to suit the unique needs of your organization. Examples of DM program components include clinical guidelines, a medical call center, web based education or tracking, program staff, information technology (hardware and software), remote biometric monitoring, and others.

We offer five critical observations about make/buy/assemble options:

1) The jury is in -- building is too complex.
2) The jury is in -- buying is a viable option for specialized, high impact conditions. 
3) The jury is still out - will buying expand beyond specialized, high impact conditions?
4) Assembling is growing. Assembling is becoming viewed as a core competency by a growing number of organizations.
5) Assembling will continue to grow. Multiple trends fuel the growth of assembling.

1) THE JURY IS IN -- BUILDING IS TOO COMPLEX.
The jury is in -- the build approach is too complex, and we don't expect to see any major players begin experimenting with this approach.
Some delivery systems and health plans have attempted to build their own comprehensive chronic disease management programs. (Those that are showing success have been at it for the better part of a decade.) While there are a few examples of organizations with staying power (Kaiser, Group Health of Puget Sound), there are many more examples of those that have dropped out of the race (e.g., University of Pennsylvania Health System, Oxford Health Plan). Most recently, Aetna abandoned its build approach, seemingly driven more by a need to improve it financial performance than due to a systematic review of clinical operations.

The best reasons favoring building relate to maintaining control over transactions with patients and physicians and to capturing value. Over time, it's become apparent that these advantages are more theoretical than real.
It's also becoming clear that NO ONE organization can develop all the specialized DM expertise. Lessons learned: building is time consuming, financially draining, and requires great organizational tolerance for trial and error.

2) THE JURY IS IN -- BUYING IS A VIABLE OPTION FOR SPECIALIZED, HIGH IMPACT CONDITIONS.
The jury is also back with a PARTIAL verdict about the buy alternative. The buy alternative makes sense for specialized, high impact diseases. It's not clear whether buying will expand beyond these conditions.

The buy alternative makes most sense under the following circumstances: 

Buying has a number of advantages - its fast (programs can be up and running in months), it avoids capital expenditures, it avoids hiring new staff, and it provides access to very specialized DM expertise.

3) THE JURY IS STILL OUT - WILL BUYING EXPAND BEYOND SPECIALIZED, HIGH IMPACT CONDITIONS?
A question that's still open is whether buying will be seen as a long-term solution or as an entree to acquiring internal expertise, i.e., a foot in the door to the complex world of chronic disease management.

To say that buying is a "viable" alternative doesn't necessarily mean that it's the best alternative. Many organizations are choosing to assemble even for specialized, high impact clinical conditions.

Buying is a particularly attractive alternative when an organization is starting chronic care management from scratch. A growing number of organizations view buying as a way to get started quickly and develop their own in-house expertise over time.

4) ASSEMBLING IS GROWING. ASSEMBLING IS BECOMING VIEWED AS A CORE COMPETENCY BY A GROWING NUMBER OF ORGANIZATIONS.
Assembling is becoming the modern version of building.
Health plans and delivery systems are being compelled to consider managing chronic disease as a core competency of the organization.

Assembling is increasingly viewed as a core competency to create and capture value -- both financially and clinically. 

What's the case for considering assembling as a core competency?

5) ASSEMBLING WILL CONTINUE TO GROW. MULTIPLE TRENDS FUEL THE GROWTH OF ASSEMBLING
We predict that a growing proportion of health care organizations will be taking the assemble route. Many trends fuel the growth of assembling:
First, QUALITY is becoming more important as a DIFFERENTIATOR. During the past decade, patients have had difficulties evaluating health care quality and purchasers have been primarily concerned with cost issues.

Today, health care consumerism is becoming more prevalent. Numerous national quality initiatives supported by employers are under way. Demonstrable quality is becoming more important to patients and health care purchasers. This creates incentives and expectations for health plans and delivery systems to create superior offerings, e.g. by offering better care for chronic conditions.

Second, SHIFTING DEMOGRAPHICS change health care strategy. In the past some health care organizations strategized TO attract the healthiest patients and NOT TO cater to higher cost patients with chronic conditions. This strategy has just about run its course -- baby boomers have gotten older.

As baby boomers age it becomes difficult to rationalize avoiding enrolling high cost patients or NOT proactively managing their care. The thinking becomes "if we can no longer avoid treating or enrolling high cost patients, we better get good at managing their care." Aging of the population INCREASINGLY compels health plans and delivery systems to consider managing chronic disease as a core competency.

Third, assembling better AVOIDS LOCK-IN AND MINIMIZES SWITCHING COSTS. Can you pick the best DM vendor today? Probably. However, how confident are you that today you can pick who will be the best vendor 3 years from now? In plain old English, assembling avoids risks and costs associated with putting too many eggs in one basket. Assembling allows organizations the option to switch individual DM components as it becomes apparent that better and/or cheaper alternatives become available.

Fourth, assembling promises better INTEGRATION of DM into local health care delivery. While DM outsourcing companies have been able to deliver on the value proposition of SPECIALIZATION (e.g., world class clinical guidelines), they are still working at optimizing the value proposition of INTEGRATION. For example, physician apathy/resistance to DM is a sign of less than optimal integration into local care delivery. Highmark Blue Cross Blue Shield is an example of an organization taking an assemble approach, with one goal being improved physician relations. While the jury is still out on this issue, too, we observe that many DM outsourcing companies are being asked to unbundle their offerings into components.

Fifth, pharmaceutical COMPANIES and others are GIVING AWAY COMPONENTS of the assemble solution. Should you create or buy patient education materials, clinical guidelines, and patient management software when some vendors will provide these offerings as value-added extras to their core products or services? (Caution - beware of strings attached.)
Finally, many organizations ALREADY HAVE SOME OF THE COMPONENTS. Examples of DM components are listed in the second paragraph. The task now focuses on INTEGRATING various components.
Assembling DM components is more than just a tactic. It's a mindset, a philosophy, a strategy. Many organizations are preparing for this long journey and taking the first steps.

INTERACTIVE TECHNOLOGIES SUPPORT DIABETES CARE

"Making a difference with interactive technology: Considerations in using and evaluating computerized aids for diabetes self-management education"
Diabetes Spectrum, Spring 2001

This article examines four interactive technologies (ITs) showing actual or potential positive outcomes on the self-management of diabetes: 1) handheld, portable, or mobile devices; 2) automated telephone disease management systems; 3) CD-ROM programs; and 4) the Internet.
The authors conclude: ITs do not currently appear to be sufficiently sophisticated or data-based to be recommended as the sole modality for diabetes self-management education. Rather, their optimal use is as a supplement to other forms of patient education.

HAVE YOU NOTICED?

....that one disease and care management company has shown SPECTACULAR stock performance recently? That company is American Healthways (AMHC). In March 2000, the company's stock was at $3.63; as of June 22, 2001 shares sold for $35.93! You can view a slide presentation and/or listen to management's discussion (click on the text near the upper right corner of the page)

SURVEY -- EMPLOYERS COMMITTED TO PLAYING AN ACTIVE ROLE IN HEALTH CARE DESPITE CONCERNS ABOUT RISING COSTS

"Facing Health Care Challenges in an Era of Change"
Towers Perrin, May 2001

The vast majority of employers surveyed in a new Towers Perrin study say they are committed to remaining actively engaged in providing health care benefits to their employees. Despite concerns about rising costs, only one in eight respondents indicate that they will switch to a more passive role within the next two to three years.

Most Important Health Benefit Issues
(Issue Rated "Highly Important" by Respondents)

Rising health care costs............96%
Quality ....................................95
Health plan administration .........92
Compliance .............................87
Vendor management ................86
Consumerism ..........................65
Retiree health ..........................51
e-Health ..................................44
Group purchasing ....................43
Defined contribution approach ...24
to health benefits
Exit strategy ...........................16

Commentary:
....Seeing health care "quality" near the top suggests we're moving to a RELATIVE cost/quality employer purchasing mindset....is this a shift from the predominantly cost focused mindset of the past decade? Keep an eye on this trend.

U.S. EXECUTIVES, NURSES, PHYSICIANS -- QUALITY OF CARE IS "UNACCEPTABLE" 

"Pursuing Perfection" Survey
Conducted for The Robert Wood Johnson Foundation by Wirthlin Research
May 8, 2001
Press release and PowerPoint summary

A nationwide survey of more than one thousand health care professionals shows that:

RMS/HUMANA ESRD PROGRAM IMPROVES SURVIVAL RATE, LOWERS HOSPITALIZATION

"Evaluation of Disease-State Management of Dialysis Patients"
American Journal of Kidney Disease, May 2001 
Humana press release

Results for the end-stage renal dialysis (ESRD) disease management program (provided by RMS Disease Management) included:

STUDY SHOWS HIGH RISK PATIENTS CAN PREVENT DIABETES WITH LIFESTYLE CHANGES

"Prevention of Type 2 Diabetes Mellitus by Changes in Lifestyle among Subjects with Impaired Glucose Tolerance"
New England Journal of Medicine; May 3, 2001

Conclusion: Type 2 diabetes can be prevented by changes in the lifestyles of high-risk subjects. These changes include simple lifestyle changes such as moderate exercise and adoption of a prudent diet.

AHA - "DIABETES PATIENTS DON'T UNDERSTAND RISKS OR CAUSES OF HEART DISEASE"

"Diabetes Patients In Dark Concerning Heart Disease"
American Heart Association; May 21, 2001

63% of diabetes patients experience cardiovascular disease, yet only 33% consider heart conditions to be among the "most serious" diabetes-related complications.

THE SIX HABITS OF HIGHLY EFFECTIVE BETA-BLOCKER PRESCRIBING HOSPITALS

"A Qualitative Study of Increasing Beta-Blocker Use After Myocardial Infarction "
Journal of the American Medical Association; May 23/30, 2001

Results: The interviews revealed 6 broad factors that characterized hospital-based improvement efforts: goals of the efforts, administrative support, support among clinicians, design and implementation of improvement initiatives, use of data, and modifying variables. Hospitals with greater improvements in beta-blocker use over time demonstrated 4 characteristics not found in hospitals with less or no improvement: shared goals for improvement, substantial administrative support, strong physician leadership advocating beta-blocker use, and use of credible data feedback.

CHCF/RAND STUDY EXAMINES QUALITY OF WWW HEALTH INFORMATION

"Proceed with Caution: A Report on the Quality of Health Information on the Internet"
Commissioned by the California HealthCare Foundation (CHCF) and Conducted by RAND, May 2001
Press Release, Summary, Complete Study, Chart Pack

From the press release: The study....is the most comprehensive evaluation to date of the quality, accessibility, and readability of the data in a vast, rapidly expanding e-health universe that now numbers millions of Web pages and thousands of sites. The study is also the first to analyze both English- and Spanish-language Web sites and search engines. Research focused on information about four common medical conditions: breast cancer, childhood asthma, depression, and obesity.

Key Findings
Finding 1: Search engines are inefficient tools for locating relevant health information
Finding 2: Answers to important questions that consumers should be able to find are often incomplete, although when information is provided it is generally accurate.
Finding 3: Most Web-based health information is difficult for the average consumer to understand.

Disclosure -- No 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 (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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