On the cover: Disease management decision makers confront the build vs. buy issue

Build vs. buy: What's right for your disease management efforts?

Experts say trend shifting toward outsourcing

To build or to buy: That is the burning disease management question. It comes from constantly increasing demands to improve care and save money and from the burgeoning industry of vendors who claim they can do all that for you and do it better.

Which way should you go? It depends on the specific circumstances, industry experts say, but more and more people are going the buy route or are implementing hybrid programs in which they develop some components themselves and buy others from a vendor.

"Many health plans are still building disease management programs, but there is a shift in people starting to see the wisdom that there might be enough high-quality vendors out there that they would be better off buying," says Harry Leider, MD, MBA, corporate medical director and vice president of health services for Kansas City, MO-based HealthNet. "People who have traditionally built are starting to ask themselves whether they'd rather spend a year and a half and a lot of money building one or two disease management programs or buy five in that same amount of time."

The shift is happening for a number of reasons, says Leider, whose 450,000-member health plan has bought vendor programs and developed hybrids. Leider, who formerly helped build disease management programs for Harvard Pilgrim Health Care in Brookline, MA, says there are more competent vendors out there than there were even a year ago. More of those companies now have sound outcomes data that have been published in peer-reviewed journals, and more are willing to offer references from their clients. There have also been increasing interest and education in disease management through industry conferences and the formation of the Disease Management Purchasing Consortium (DMPC), based in Newton, MA, Leider says.

About a year ago, Al Lewis, executive director of the DMPC, saw that health plans needed help answering the build vs. buy question and formed the company to assist plans in disease management outsourcing efforts. Besides helping health plans hook up with appropriate vendors and negotiate contracts, DMPC also offers membership in an advisory council that gives advice and makes information available on vendors, contracts, and industry projections. Twenty health plans are members of the consortium, and 45 are advisory council members. Lewis says you should look for value propositions from vendors that put them at risk for guaranteeing quality.

Lewis agrees with Leider that the trend over time has moved toward buying programs. Nevertheless, he believes there are cases in which a provider should build. And he thinks it's better to buy the whole package instead of just pieces of it. For example, Lewis recommends contracting for cancer in general and not for individual cancers. To find out which way you should go, Lewis and Leider suggest asking yourself these questions:

o How many members are affected? If it's under .5%, you should buy. If it's over 1% to 2%, build it. You might do your own maternal health program because 2% of your under-65 members are going to get pregnant every year, but you outsource your neonatology program because a health plan with 200,000 members is going to have only 200-300 premature babies every year.

o How costly is the condition? The more costly it is, the more likely it is to be difficult. You should certainly farm out end stage renal disease, Lewis says, but keep peptic ulcer disease in-house.

o Are you set up to do it? If you have support from top management down and will be given the budget and resources, then build your own program because you'll get to take advantage of all the cost savings. But if you're going to have to do it with existing resources, you'd be better off buying.

o Can you get immediate savings? Some diseases, like peptic ulcer disease, won't show immediate savings, so you might want to do those on your own. With congestive heart failure, on the other hand, you'll see savings right away. If you can get that guarantee from a vendor, buy it.

"There are a lot of excellent vendors in most disease categories," Lewis says. "You could spend twice as much and take twice as long to get half as many patients enrolled in your own disease management program as you could if you bought one. It makes sense in a lot of cases to buy, but some health plans think buying is almost like cheating. They think they're not fulfilling their mission if they let another company tell them how to set up a program."

At Aetna U.S. Healthcare, based in Blue Bell, PA, and Middletown, CT, organizational pride certainly had an impact on the decision to build disease management programs, says Rose Kaufman, RN, a member of the company's core disease management team. "We know there's tons of good stuff out there, but we want to do it and make it ours. We know we can do it."

But Aetna's obvious advantage, Kaufman points out, is its size and availability of resources. The company has a performance measurement division that can provide front-end data such as member identification as well as back-end data such as outcomes and comparisons with other plans. Aetna did some outsourcing before its merger with U.S. Healthcare in 1996, but the company has now decided to build its own programs to ensure consistency in delivery and data collection, Kaufman says. In deciding which diseases to start with, an executive advisory committee is using such criteria as the number of patients affected, the costs, and the ability to make an impact on the disease through patient and physician education. So far, national programs in asthma, congestive heart failure, diabetes, and low back pain have been started, and four more are in the works.

Thomas Morrow, MD, vice president and medical director of One Health Plan of Georgia, which covers about 300,000 people in the Southeast, says most companies are not big enough to build disease management programs that are successful and can hold up over time. Doing it yourself requires people, time, money, and other resources that most companies just can't give up. You also have to develop, warehouse and mail your educational materials by yourself and come up with a fairly sophisticated data tracking system. "Many companies try to fit disease management into their existing work flow and totally depend on one or two people to set the whole thing up," says Morrow, who also has been a Washington, DC-based National Committee for Quality Assurance surveyor for five years. "Then when that person with all the training leaves, the whole program falls apart."

Morrow says organizations that are big enough should probably consider building part of their programs and buying other parts, like educational materials. One Health Plan has bought disease management programs in asthma and diabetes from a pharmacy benefit management company but is doing its own telephone-based case management for the patients involved. "Ten years from now, I think we'll see everybody buying programs, and we'll see many hybrids because it will just cost less," Morrow says. "Most of us don't build our own furniture or sew our own clothes anymore. We might have some of those skills, but there's somebody else out there whose whole focus is furniture or clothes and they can do it better, faster, and less expensively than we can. It's the same thing in disease management."

But on the other hand, if nobody's doing a program the way you want it done, you might just have to do it yourself. That's what happened at the University of Oklahoma Health Sciences Center/VA Medical Center in Oklahoma City. With a large Native American population in that area, and consequently a large number of diabetics, the department of ophthalmology saw a great chance to improve care for diabetic retinopathy, says Lloyd Hildebrand, MD, assistant professor of ophthalmology at the University of Oklahoma and associate director of the Center for Telemedicine.

They looked at diabetes disease management programs, but usually the intervention for diabetic retinopathy was to direct the patient to a specialist. But that's exactly the problem: Patients weren't going to specialists until they had already started irreversible vision loss. So Hildebrand and his colleagues have spent five years designing a digital disease management program in which patients' eyes are photographed at their primary care site and the images are transferred electronically to experts who can make surgical decisions. If surgery is required, a surgeon can take a portable laser to the patient.

"It makes it more convenient for the patient, empowers primary care physicians to get the right intervention, and gives them access to an intense channel of experts who are uniquely qualified to provide high-quality care," he says.

The hospital is working with a data systems company to build the networking and servers and plans to expand the digital data idea to other aspects of diabetes and to other diseases such as breast cancer, congestive heart failure, and pediatric asthma management.

"I agree that a global approach - doing an entire diabetes program instead of just one aspect of the disease - is better in most cases, but we wanted to take a focused intensive approach to this major problem that can be remedied and will result in improved outcomes," Hildebrand says. "We think it's best to start off with something we can deliver with resounding success."

For more information, contact:

· Harry Leider, MD, MBA, corporate medical director and vice president of health services, HealthNet, 2300 Main St., Suite 700, Kansas City, MO 64108.

· Al Lewis, executive director, Disease Management Purchasing Consortium, 1037 Chestnut St., Newton, MA 02164. Telephone: (781) 237-7208.

· Rose Kaufman, RN, Aetna U.S. Healthcare, 1000 Middle St., MC2T, Middletown, CT 06456. Telephone: (860) 636-5178.

· Thomas Morrow, MD, vice president and medical director, One Health Plan of Georgia, 114 Perimeter Center Place, Suite 1010, Atlanta, GA 30346. Telephone: (770) 901-9937.

· Lloyd Hildebrand, MD, assistant professor of ophthalmology, University of Oklahoma Health Sciences Center, 608 Stanton L. Young Blvd., Oklahoma City, OK 73104. Telephone: (405) 271-1082.