HBR on Managing Expensive Patients

By December 23, 2019 Commentary

An article in the Harvard Business Review discusses the management of high-cost patients.   (HBR Article)   The article starts with the well-established notion that in any given year, around 5% of the population accounts for half of health spending.  But as it also notes, finding those 5% before the money is spent isn’t easy; persistence in having high health care costs isn’t a given.  The difficulty in identifying who will be a high spender ahead of time means that having intensive care management programs that deliver a return isn’t easy.  Researchers at the Kaiser system divide the high-cost population into three segments–the one-time catastrophic patients; people with one or more chronic diseases which can be kept under control with proper care; and patients who have severe chronic diseases that aren’t easily returned to a more manageable state.  The first and third groups each account for about 17% of all spending in a year and the middle group for 15%.  I would add that in that third category are falling a large number of cancer patients, as treatments for many cancers are becoming good enough to keep people alive, but aren’t curative.  Cancer is becoming a chronic disease and one that is very expensive to treat.  Kaiser has developed a program to focus on the second group through better primary care, with the objective of avoiding expensive acute exacerbations of the chronic disease, especially hospitalizations.  Having better care management through primary care avoids the expense of stand-alone disease or care management efforts.  Kaiser claims the model has resulted in both better quality and lower spending.  And it may have the added benefit of keeping many patients from reaching high-cost status.

The authors then looked at similar efforts by three stand-alone primary care companies, which operate clinics in 17 states and collectively serve over 250,000 patients.  As with Kaiser, these companies have a care model that relies on intensive primary care to identify patient health needs and proactively address them.  Common elements of their care models include a team approach that adds nurse practitioners, mental health professionals, social workers and pharmacists, to the core physician base; and substantial use of information technology to support the care team.  They found that these companies also had better quality outcomes and reduced ER utilization and hospitalizations, often by 20% to 50%.  Now one interesting thing to consider is that in a risk-based payment world, the system doesn’t necessarily save anything, the risk-based providers just make more money.  Only if payers keeping pushing down on reimbursement will the system see reductions in spending growth.  So Medicare Advantage, for example, needs to be looking at how much money health plans, and their downstream at-risk providers, are making and adjusting payments accordingly, allowing plans and providers to get some, but not all of the rewards of better care management.  And I believe that more attention can be placed on what the authors describe as the third group of high-cost patients.  Finding treatments that cure, not just extend the lives of patients with these severe chronic conditions should be a priority, as should reducing the cost of the treatments.

Kevin Roche

Author Kevin Roche

The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry through Roche Consulting, LLC. Mr. Roche is available to assist health care companies through consulting arrangements and may be reached at khroche@healthy-skeptic.com.

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