Healthcare Reform is missing the mark to reduce a key driver of healthcare costs

Healthcare Reform is missing the mark to reduce a key driver of healthcare cost, chronic diseases. It does not contain a strategy or approach to control or reduce the costs associated with chronic diseases. A chronic disease is a medical condition that cannot be cured and usually lasts a lifetime. An example of a chronic disease is Diabetes. The CDC estimates that seventy five percent of U.S. healthcare costs can be attributed to chronic diseases and is responsible for seven out of ten deaths. There is also the associated cost of disability with chronic diseases that takes productive people out of the workforce. When this occurs, a financial burden is placed on their family and subsequently the U.S. healthcare system.

Healthcare reform under the stewardship of the current administration and Centers for Medicaid and Medicare Administration (CMS), are testing various healthcare delivery models and forms of payment such as an Accountable Care Organization (ACO) and Bundled Payments to reduce healthcare costs while improving the quality of services. Neither of these models or other approaches appropriately addresses how to reduce the cost of chronic diseases. Both healthcare delivery models being tested have elements that contribute to a solution for reducing the cost of chronic diseases and improving the quality of a patient’s care.

Here is what it will take from a healthcare delivery model and reimbursement structure to reduce costs and improve the quality of care for people with chronic diseases. It is a balance of front-end loading the solution with proactive services to help people manage their chronic diseases which in turn minimize further complications and the risk of disability. The backend component of the solution is sophisticated treatment protocols that address a disease condition when it becomes unmanageable. The objective is to focus on addressing the condition early and proactively to maintain a high quality of life and productivity for each person while reducing the cost of medical treatment. The model that should have been put in place as a component of healthcare reform to reduce the cost of chronic diseases is comprised of the following five elements:

  1. Specialized Medical Home – A medical home that is the primary point of care in assessing and planning a patient’s treatment protocol. It is highly specialized around the chronic diseases with a team of varying clinical disciplines. An example would be a medical home that specializes in the treatment of diabetes. The medical team is comprised of primary physician practitioners, endocrinologists, internists, eye doctors, podiatrists, dietician, exercise trainer and nursing personnel. This team would be highly specialized in the treatment of diabetes and would work as a team treating the patients.
  2. Integrated Information Technology – For a team to be effective, they need to plan each patient’s clinical treatment protocol and collectively monitor the progress. These clinical protocols would be comprised of the latest research and the demonstrated best practices around the patient’s condition. The information technology would extend to the patient’s home and wherever they travel. All the clinical vitals required to monitor a patient’s condition would be uploaded frequently to a database. Alerts would be generated to the clinical staff notifying them when a patient’s vitals fall outside of acceptable levels initiating a phone call or clinical visit.
  3. Disease Management Program – This is a team of clinical personnel that are part of the Medical Home which coordinate the treatment protocol of the patient between all the specialists while monitoring the patient’s progress and vitals. They will also help the patient find the most cost effective sources for purchasing pharmaceutical and homecare products.
  4. Payment Stream with At-Risk Conditions – The reimbursement to the clinical team will be structured in a manner that reflects a combination of a managed care and Bundled Payment approach. The clinical team will receive a fixed payment on a monthly basis for each patient they treat. The clinical team will go at risk in absorbing the costs for clinical services related to a patient’s complications and poor quality outcomes. Therefore, the medical team is unified in working together in delivering the most cost effective and highest quality of care to prevent unexpected expenses that financially impacts the entire clinical team.
  5. Patient alignment – An incentive needs to be structured into the program motivating the patient to follow the guidelines for personal behavior management of the chronic disease. This includes, transmitting their vitals on a regular basis for monitoring by the clinical staff, adhering to a clinical treatment plan which may include regular medical visits, dietary modification and exercise. An example of a patient alignment model may be financial reward such as sharing in a percentage of the cost savings generated from this program or sliding scale co-pay for medical and pharmaceutical products. The higher adherence to the program, the lower the co-pay.

Variations of this model have been implemented in Europe, Canada and the U.S. The difference with prior models and the one outlined is the risk and reward approach of aligning the clinical team and the patient towards a unified goal. It creates a motivation for both parties to work together in driving the highest quality outcomes at the lowest cost.

2 comments Add your comment


August 26th, 2011
4:46 pm

I like the financial reward suggestion because I believe better outcomes result from the patient being involved, motivated and inquisitive. Also on this list should be a requirement for doctors to educate and engage with the patient and develop a trusting relationship so the patient feels supported when asking questions. These are some questions I think about:

Bob Wells

August 27th, 2011
12:03 am

Susan I agree with you, and good feedback regarding the role of the physician. I have found that when incentives which everyone cares about are aligned, it’s amazing the results that can be produced. The present system drives misalignment and behavior that may not be in the best interest of all parties involved. I look forward to other creative ideas or suggestions.