Disease management ROI still is a tough sell

As state Medicaid programs, businesses, and health plans face increasing fiscal pressure, many are looking at disease management efforts as a way of saving money. But do such programs really save money? Is there a significant return on investment (ROI)?

A new study from Cornell University and Thomson Medstat says that while some of the programs can save money, hard evidence of their economic impact remains scant. Researchers led by Cornell University director of the Institute for Health and Productivity Studies Ron Goetzel reviewed 44 studies analyzing the economic impact and ROI for disease management programs. They found mixed results for programs targeting depression, diabetes, and asthma, and positive ROI for programs targeting congestive heart failure and multiple illnesses.

Mr. Goetzel said his research sheds light on disease management, but doesn't provide conclusive findings because relatively few economic analyses have been conducted. Also, he said, many of the studies that have been done involved a small number of subjects, and the programs that were analyzed varied significantly in format.

"Overall, there has been little scientifically rigorous research conducted to determine the financial impact of disease management," Mr. Goetzel said. "That's a concern because companies and government agencies have increasingly adopted disease management to control the cost of care for individuals with chronic medical conditions, a minority of the population responsible for a majority of health care spending. Despite the fact that disease management programs can deliver significant health benefits, employers and health plans still need a sound business case to continue offering these programs. More and better research on the business case is required."

Dr. Sandeep Wadhwa, who directs disease management programs for McKesson Corp., tells State Health Watch that while many people have criticized Mr. Goetzel's review, he believes it was "pretty well done" and accurately reported that ROI is difficult to determine because of the inconsistencies among programs and the fact that many studies have had relatively few subjects.

"I agree that more research is necessary," Mr. Wadhwa says. "I understand the tension between wanting to wait for rigorous studies and less significant data on techniques that can help payers save costs."

Two types of evaluation

Researchers have recognized that measuring the financial return associated with disease management is difficult because changes in health care costs over time cannot be assumed to be solely due to intervention in the population receiving disease management services.

Wilson Research principal Thomas Wilson wrote in a 2003 Academy Health issue brief on state disease management program ROI that many external factors can reduce health care costs. For example, he said, costs could have dropped in the disease management population because that group had been exposed recently to a heavily promoted new drug or because they experienced a change in benefit design, or a number of other external factors.

To address that problem, analysts must compare their disease management population to an appropriately chosen and measured reference population, allowing them to answer this question: What would have happened to the disease management population's health and health care resource use had it not received that intervention?

There are two general approaches to calculating ROI — direct and indirect. A direct assessment uses only primary data and must include at least one ultimate outcome metric available in the intervention and reference populations. To substantiate the ROI estimate, measures for at least one proximate outcome metric should be taken in both groups. If the clinical metrics change in the same direction as the financials, the financial impact probably was paralleled by a change in a clinical metric.

An indirect ROI assessment uses secondary data, such as a benchmark-type design. This analysis must include at least one proximate outcome metric, with the ultimate outcome inferred. An example of an indirect assessment would be imputed savings of lowering blood pressure over a five-year period, based on an acceptable formula for calculating savings. Mr. Wilson pointed out that indirect assessments are easily biased by both non-equivalence and lack of comparability.

The estimation of ROI requires comparing the cost differences between the intervention and reference groups on the ultimate outcome metric, divided by the disease management program cost.

"ROI is always an estimate and there are many biases that can influence it," Mr. Wilson said. "There will never be an ROI study that cannot be improved. Thus, the analysis should include a discussion of the study's strengths and weaknesses. … Given the uncertainty associated with disease management analyses, it is probably not possible to 'prove' that disease management positively affects ROI by the legal standard of 'beyond a reasonable doubt.' That means ROI assessments should not be based on a single study. Rather, evidence should be refreshed constantly with new data. This will assure those who pay the health care bills that the investments they made months or years earlier were intelligent ones."

Mr. Goetzel said most of the 44 studies he reviewed focused on whether disease management programs encourage application of evidence-based clinical guidelines in treating acute and chronic disease, and whether adherence to guidelines improves patient health and functioning. Only a small subset of the studies also considered financial savings from disease management and, in particular, whether the programs can achieve a positive ROI.

Results are presented for programs attempting to improve asthma, congestive heart failure, diabetes, depression, and multiple condition disease management. Mr. Goetzel noted the researchers avoided addressing the issue of whether disease management programs are effective from a health improvement perspective.

"We assumed that following evidence-based clinical guidelines would improve the health and functioning of patients," he wrote, "though it is also acknowledged that all health care interventions may produce unintended consequences. … Our primary interest was whether disease management held the potential for saving money and producing a positive ROI."

From a purely financial perspective, he said, disease management programs directed at patients suffering from congestive heart failure may save more money that the cost. Those programs produced a positive ROI, even in the short run (one to two years). Also, programs that target multiple health and disease conditions, and which emphasize self-care and informed decision-making, also hold promise to be cost-beneficial.

Mixed results came when the researchers considered programs directed at asthma, diabetes, and depression.

"The evidence for asthma programs showed that these programs can achieve a positive ROI," according to Mr. Goetzel, "but findings were not consistent, especially when examining rigorous evaluations. In the case of depression management programs, none of the studies examined found a medical cost offset for appropriate treatment of depression patients using pharmacological agents and/or psychotherapy. Quite uniformly across the various studies examined, good treatment of depression cost more money (about $500 more a year). The story may be different when considering productivity and functionality outcomes [e.g., absence, disability, on-the-job productivity, and performing activities of daily living]."

McKesson's Mr. Wadhwa says that while the evidence in favor of disease management isn't compelling as many would like, when states need to make decisions to reduce costs and improve quality, the disease management studies provide more evidence than they have for many other possible interventions.

Missing from Mr. Goetzel's work, Mr. Wadhwa says, is the need for an opportunity analysis — looking for those conditions or populations where there is a greater opportunity for savings.

"I believe that should be the first step — to be sure there is enough severity of illness that a disease management intervention can have an impact," he says.

In McKesson's disease management practice, Mr. Wadhwa says, some clients were told to look elsewhere if saving money is the goal but proceed if they want improved quality.

He says it's McKesson's experience that heart failure programs deliver short-term savings and improve patient health status quickly. It's also true with McKesson programs in Medicaid and Medicare populations, he said. McKesson also sees significant impact in asthma programs. "Asthma interventions can be very effective if you look at the total patient cost and not just asthma costs," he says.

Mr. Wadhwa says in the future, he expects disease management programs to be seen increasingly as part of the physician-patient relationship. He says there is a need to get care out of doctors' offices and disease management services can make care more effective.

He also expects to see more expertise in disease management developed for patient mental health and behavioral health services. McKesson sees a need to strengthen its offerings in that area, he says.

[Download the study from www.cms.hhs.gov/HealthCareFinancingReview/10_2005_Edition.asp#TopOfPage. Contact Dr. Wadhwa at (415) 983-8300. ]