DISEASE MANAGEMENT: A CASE FOR COST EFFECTIVENESS AND QUALITY. Presented by Rob Parke Lalit Baveja
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1 DISEASE MANAGEMENT: A CASE FOR COST EFFECTIVENESS AND QUALITY CARE Presented by Rob Parke Lalit Baveja Jaiwardhan Vij February 12-13,
2 Agenda India s s Chronic Disease Burden Overview of Disease Management (DM) Overview O i of DM in India Evolution and current state of DM globally Value Proposition and actuarial issues in estimating ROI The outlook for DM in India Discussion 2 February 12-13, 2009
3 Lalit Baveja India s s Chronic Disease Burden Overview of Disease Management (DM) Overview O i of DM in India 3 February 12-13, 2009
4 India s Chronic Disease Burden Over 35 million people with diabetes, expected to increase around 80 million by % of the world s cardiac cases will be from India by the year 2012 Hypertension H t i cases is expected to see a quantum leap from an estimated million in 2000 to million in February 12-13, 2009
5 Key Healthcare Issues Rising medical trend Focus is on the treatment of acute conditions rather than preventive care No incentives to treat all aspects of chronic conditions. Poor quality Health care is uncoordinated, wasteful and lacks continuity Declining health Status & poor patient-compliance More than 50% of the medicines prescribed are not taken at all Only 4% patients followed dietary advice and 55% had uncontrolled clinical outcomes Need to trounce India s growing chronic disease burden 5 February 12-13, 2009
6 Overview of Disease Management (DM) DM is a process of reducing healthcare costs and/or improving quality of life for individuals by preventing / minimizing the effects of a disease, usually a chronic condition, through integrative care. DM brings two stream together Managing g clinical activities Interventions for financial outcomes 6 February 12-13, 2009
7 The Care Continuum where it all fits Wellness Disease Management Source: Adapted from Healthways Investor report. 7 February 12-13, 2009
8 Do DM/Wellness Make Sense? Terminally Ill Chronically Ill % of Plan Membership % of Medical Costs 1% 10% 20% Type of Intervention End of Life Care & Case Management At Risk for Chronic Illness 15% 55% Disease Management Healthy 64% 20% Lifestyle Programs 15% Wellness & Prevention Source: Boston Consulting Group and Banc of America Securities LLC estimates. 8 February 12-13, 2009
9 Course of action of DM Identify chronically ill populations Stratify chronics into risk levels Nurses N call high h risk chronics to encourage compliance/adherence with health management protocols Mailings M and other outreach activities iti to low risk chronics 5 core disease states common chronic CAD, CHF, COPD, asthma, diabetes Other programs cancer, depression, obesity, ESRD, rare diseases 9 February 12-13, 2009
10 Course of action of Wellness Identify at risk populations (HRAs and biometric testing) Assist at risk populations voluntarily change behaviors associated with modifiable risk factors On-line, telephonic and worksite coaching, mailings and other outreach activities 10 February 12-13, 2009
11 Common Wellness Programs Smoking cessation Cholesterol management Hypertension management Exercise/Physical fitness Nutrition Weight control Cancer detection/prevention Back care Substance abuse prevention Stress management Jobs hazards/injury prevention Flu shots 11 February 12-13, 2009
12 Benefits to Stakeholders Individual Government Health Providers Pharma Plans and Companies Payers Improved Healthier Competitive Improved Increased quality of life more differentiator compliance sales productive with best Convenience population p Reduced practice Public e.g. services costs relations at home Reduced spending on Reduced healthcare costs from unwarranted use of acute services 12 February 12-13, 2009
13 Status of DM in India DM at a nascent stage Less than 10% of population covered by some form of health insurance Products to cover chronic conditions are yet to fully develop National N l Programs by the government 13 February 12-13, 2009
14 Status of DM in India continued Pharma Sponsored DM Specialist Diabetes Centers Insurance I Company Diabetes Care Stand alone DMO Guidelines and treatment protocols Disease Management Association of India 14 February 12-13, 2009
15 Rob Parke Evolution and current state of DM globally Trends Driving the demand for DM/Wellness Major M j Threats to DMOs 15 February 12-13, 2009
16 Evolution and current state of DM globally DM began in the USA in the early 1980s Soon after HMO staff/ group model embraced the concept Pharmaceutical l companies identified d it as a way to promote and sell drugs. Several S l entrepreneurs stepped in the mid-1990s to develop independent Disease Management Organizations (DMOs) Industry has since grown to $2 billion a year. The evolution started t from targeting ti single disease transformed to cover numerous diseases and co- morbidities and most recently wellness programs. 16 February 12-13, 2009
17 The Market for DM Estimated Annual Disease Management Revenues (Estimates for 2007) $2, % 95% $1, % $1, % $1,400.0 $,000 70% Revenue (in Millions) ( $1,200.0 $1,000.0 $800.0 $ % 41% 34% 28% 26% 28% 28% 29% 60% 50% 40% 30% An nnual Growth $400.0 $ % 15% 10% $ % 17 February 12-13, 2009
18 Trends Driving the demand for DM/Wellness Consumerism Preventive care/wellness Information technology Quality initiatives 18 February 12-13, 2009
19 Major Threats to DMOs DM/Wellness Value Proposition Lack of empirical support Financial ROI methodological flaws Purchasers expectations Health Plan In-sourcing Easily replicated in house Care Management Alternative Model of DM/Wellness like services Online Patient centered medical home by Physicians 19 February 12-13, 2009
20 Jaiwardhan Vij Value Proposition and actuarial issues in estimating ROI The outlook for DM in India 20 February 12-13, 2009
21 Estimation of ROI Three methods of calculations Comparison C i of requested to approved services May Overstate savings Comparison of Medical expenses between control and intervention group Theoretically desirable but hard to achieve in practice Comparison of pre-enrollment enrollment to post-enrollment medical expenses Most often used 21 February 12-13, 2009
22 Issues in Estimating ROI Regression to the Mean Commercial Diabetes Average Claim Cost 20,000 Q1: $17,982 16, Years Claims ($) 12,000 Q1: $10,137 Q1 - Q4: $9, Years Weighted Average 0-18 Weighted Average ,000 Q1 - Q4: $4,706 Q5 - Q16: $4,759 4,000 Q-3 - Q0: $2,995 Q5 - Q16: $3,022 Q-3 - Q0: $1,402 0 Q-3 Q-1 Q1 Q3 Q5 Q7 Q9 Q11 Q13 Q15 Quarters 22 February 12-13, 2009
23 Issues in Estimating ROI continued 23 February 12-13, 2009
24 Issues in Estimating ROI continued Data Inadequate to identify DM participant Faulty Coding in data records leads to false positives or negatives Difficulty getting data into decision support system Statistical Credibility High-cost, high-variance population is small in number Further attempting to adjust for population differences 24 February 12-13, 2009
25 Issues in Estimating ROI continued Trend Benefit Design Claim i Adjudicationdi Incurred or Paid claims Severity Changes in health care delivery infrastructure 25 February 12-13, 2009
26 Outlook for DM in India The rising healthcare costs tied with a huge population Increasing incidence of Non Communicable Diseases Increased I d Healthcare spending by the government & private sector So, S need for DM in India is apparent 26 February 12-13, 2009
27 Outlook for DM in India..continued Alternative health insurance products covering Chronic conditions Outpatient care Data quality, completeness and consistency Encouraging collaboration among providers Behavior modification programs Appropriate use of Information Technology 27 February 12-13, 2009
28 DM Model Government Is there an Actuary in the room? DMOs DM Industry Insurers Providers 28 February 12-13, 2009
29 Role of the Government Policy maker, Provider and the Payer Selecting key clinicians champions as leaders Financial i l incentive for providers to support chronic DM Introducing appropriate clinical outcomes measures Develop disease registries and data collation to identify at risk population 29 February 12-13, 2009
30 Role of Insurers Increase promotion of stand alone products Include DM in generic products Support S t DM pilot programs Work in collaboration with DMOs and providers to evaluate the 30 February 12-13, 2009
31 Role Providers Collaborate in developing chronic DM protocols Advocate the benefits of DM programs 31 February 12-13, 2009
32 Role of DMOs Involve physicians and providers as key stakeholders. Establish strategic networks of providers, pharmaceuticals, diagnostics and informatics. Develop new delivery strategies Develop D l a viable value proposition that t demonstrates t both clinical improvements and financial benefits. 32 February 12-13, 2009
33 Discussion
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