Cost and Consequences of Chronic Disease ManagementPresented at National University of

Ireland, Galway

Daniel F. Fahey, Ph.D.

Daniel F. Fahey, Ph.D.

1965 B.A. in Sociology (UC Santa Barbara) 1970 M.S. in Public Administration (CSULA) 1972 Master of Public Health (UCLA) 1993 Ph.D., Public Administration (Arizona

State University)

Daniel F. Fahey, Ph.D.Career Summary 1965 - 1972 Los Angeles County 1972 -1990 Hospital Administrator 1990 - 2001 Medical Group Administrator 1992 – present - Fellow in ACHE 2001 - present, Professor, Health Services

Administration, Cal State University, San Bernardino

Chronic Conditions in the U.S.•Chronic conditions are expected to last a year or more, limit what one can do and may require ongoing care.

•Chronic conditions are a significant and growing challenge.

•People with chronic conditions have significantly higher utilization and health care costs.

•Coordination of services for people with chronic conditions is lacking.

•There are opportunities for change.

Some Facts

In the U.S., over 125 million suffer from at least one chronic condition (2000)

By 2020, this will increase to 157 million Over 60 million suffer from multiple chronic

conditions, which may increase to 80 million by 2020

40% of non-institutionalize persons in the U.S. have one or more chronic conditions

Future Chronic Disease Costs By 2020, U.S. will spend $685 billion annually

in direct medical costs By 2015, nursing home and home health care

costs will double to $320 billion Total cost of 7 major chronic diseases will be

$4 trillion by 2023 U.S. health care will be 20% of GDP by 2020 % of U.S. population over 65 will double by

2030

Medicare/Medicaid Spending

Chronic conditions for those over 65 years of age account for 77% of all Medicare spending

Medicare and Medicaid patients have 5x higher cost than others in U.S.

Individuals with chronic conditions 5x more likely to see a physician than others

Also much more likely to be admitted to a hospital

The Number of People with Chronic Conditions is Rapidly Increasing

Source: Wu, Shin-Yi and Green, Anthony. Projection of Chronic Illness Prevalence and Cost Inflation. RAND Corporation, October 2000.

118

125

133

141

149

157

164

171

100

120

140

160

180

200

1995 2000 2005 2010 2015 2020 2025 2030

Year

Nu

mb

er

of

Peo

ple

Wit

h C

hro

nic

Co

nd

itio

ns

(mil

lio

ns)

Chronic Disease Cost Impact

15 chronic conditions accounted for 56% of the $200 billion increase in healthcare spending in the U.S. from 1987-2000

5 conditions accounted for ½ of this increase Health disease Pulmonary disease Mental disease Cancer HypertensionAlzheimer’s and Diabetes will soon pass these as the most

common chronic diseases

Impact of Diabetes

Number of Americans with diabetes growing 8% per year

By 2030, over 30 million will have diabetes (70% more than today)

Cost projected to be $200 billion by 2030 Aging and obesity contributing to disease

increase

Impact of Alzheimer’s Disease By 2050, 16 million may be affected in U.S. Prevalence will increase 4 times over next 50

years 60% will be over 85 years of age (with more

than one chronic disease)

Almost Half of People with a Chronic Condition have Multiple Chronic Conditions

24%

11%

5%4%

1%

0%

5%

10%

15%

20%

25%

30%

1 2 3 4 5+

Number of Chronic Conditions

Per

cen

t o

f A

ll A

mer

ican

s

Source: Wu, Shin-Yi and Green, Anthony, Projection of Chronic Illness Prevalence and Cost Inflation. RAND Corporation, October 2000.

Health Care Spending for People with Chronic Conditions Accounts for 78 % of All Health Care Spending

78%

96%

97%

95%

68%

58%

77%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

All Americans

Ages 65+ with MedicareOnly

Ages 65+ with Medicareand Medicaid

Ages 65+ with Medicareand Private Insurance

Privately Insured

Uninsured

Medicaid Beneficiaries

Percent of Spending on People With Chronic Conditions

Source: Medical Expenditure Panel Survey, 1998.

1/4 of Individuals with Chronic Illness also have Activity Limitations

Both

30 Million 7 Million90 million

Activity Limitation OnlyChronic Illness Only

• Eighty-one percent of those with activity limitations also have a chronic condition.

• Although there are 37 million people with activity limitations living in the community, about 2.7 million adults are severely impaired and need assistance with three or more activities of daily living -- eating, dressing, getting in or out of a bed or a chair, or using the toilet (Feder, Komisar, and Niefeld, “Long-Term Care In The United States: An Overview,” Health Affairs 19:3, May 2000).

Source: Medical Expenditure Panel Survey, 1998.

n = 127 Million

Most People with Chronic Conditions have Private Health Insurance

Unknown2%

Other Govermnet Insurance

3%

65+ Medicare only 8%

Uninsured7%

65+ Medicare/ Private

13%

Medicaid9%65+ Medicare/

Medicaid3%

Private Insurance55%

.

Source: Medical Expenditure Panel Survey, 1998.

Population of People with Chronic Conditions in 1998 n =120 million

Private Insurance Changes

Most private insurance is employer-paid group coverage

Employers moving from defined benefits to defined contribution

Push to Health Savings Accounts Overall reduction in group coverage Employers penalizing employees for adverse

life style (obesity, smoking)

People with Chronic Conditions are the Heaviest Users of Medical Care

76%

72%

88%

96%

0% 20% 40% 60% 80% 100%

Inpatient Stays

Physician Visits

Prescriptions

Home HealthVisits

Percent of Services Used by People With Chronic Conditions

Source: Medical Expenditure Panel Survey, 1998.

Physicians Believe that Poor Care Coordination Produces Bad Outcomes

Source: National Public Engagement Campaign on Chronic Illness–Physician Survey, conducted by Mathematica Policy Research, Inc., 2001.

24%

34%

34%

36%

44%

49%

54%

0% 10% 20% 30% 40% 50% 60%

Unnecessary nursing home placement

Experience of unnecessary pain

Patients not functioning to potential

Unnecessary hospitalization

Adverse Drug Interactions

Emotional problems unattended

Receipt of contradictory information

Ad

vers

e O

utc

omes

Percent of Physicians Who Believe that Adverse Outcomes Result from Poor Care Coordination

Poor Care Coordination Leads to Unnecessary Hospitalizations

0 718

36

62

95

131

169

219236

261

0

50

100

150

200

250

300

0 1 2 3 4 5 6 7 8 9 10+

Number of Chronic Conditions

Hos

pita

lizai

tons

for

A

mbu

lato

ry C

are

Sens

itiv

e C

ondi

tion

s P

er 1

000

Med

icar

e B

enef

icia

ries

Age

s 65

+

Source: Medicare Standard Analytic File, 1999.

Social Model

Reliance on support groups Limited collaboration with primary care

physician Primary care giver is often spouse or adult

child Examples are Alzheimer’s Disease, Asthma,

Diabetes, and Obesity Little or no insurance coverage

Medical Model

Care is often fragmented Little communication among providers Different programs have different eligibility

criteria, sets of providers, and not linked Focus on high risk, expensive care which is

reimbursed Ideal is to avoid trigger acute episodes,

reduce stress, comply with medications

System Change ConceptWhy a Chronic Care Model? Traditional emphasis on physician, not

system Characteristics of successful intervention

were not identified or implemented Commonalities across chronic conditions

unappreciated

Better idea is Chronic Care Model Increased support for self management Strengthening the primary care role Offering responsive specialist care Improved case management

How do we improve the system?

BenefitsEncourage prevention and healthy life style

Disease ManagementFocus on high risk, high cost diseases

PaymentsCase management compensationPharmacy coordinatorPay for Performance

QualityCare coordination as a quality measure for

health systems

Self Management Support Emphasize the patient’s central role Use effective self management support

strategies, including assessment, goal setting, action planning, problem-solving, and follow-up

Organize resources to provide support

Role of Primary Care Physician Studies show that many with chronic

conditions do not receive effective therapy Suggestion that chronic disease be shifted to

specialists or disease management programs Cite example of hospital Asthma utilization Studies suggest that the design of the care

system, not physician specialty, is the primary determinant of chronic care quality

Delivery System Design

Define roles and distribute tasks among team members

Use planned interaction to support evidence-based care

Provide clinical case management services for high risk patients

Ensure regular follow-up Give care that patients understand and that

fits their culture (Kaiser training)

Managed Care Programs

Coordinated team effort (nurse practitioner, social worker)

Early identification of chronic disease patients Case Managers coordinate transportation,

group or individual therapy, long term care

Features of Case Management Regularly assess disease control, adherence,

and self-management status Either adjust treatment or communicate need

to primary care provider Provide self-management support Provide intense follow-up Provide navigation through the health care

process

Study Results

Very few empirical studies addressing optimum program outcomes and cost savings

2002 survey of chronic care articles determined that 18 of 27 studies demonstrated lower costs from Chronic Care Model

2007 study found that disease management improves quality of care but effect on health care costs is uncertain

Congressional Budget Office concluded there is insufficient evidence that disease management reduces health care spending (2006)

Conclusion

Chronic disease is an important and growing health care issues globally

Social circumstances (age, income, ethnicity, occupation) affects chances of having a chronic disease

A small number of patients account for a disproportionate amount of health care spending

There is evidence that chronic care can be better managed through a Chronic Care Model, whether there are direct costs savings or not

References

Does the Chronic Care Model Work? Group Health’s MacColl Institute, Robert Wood Johnson Foundation grant – 2004 www.improvingchroniccare.org

Chronic Conditions in the U.S., Jane Horvath, Partnership for Solutions, Johns Hopkins and Robert Wood Johnson Foundation grant, 2005

An Unhealthy Truth: Rising Rates of Chronic Disease and the Future of health in America, Partnership to Fight Chronic Disease, 2006

Thank you