Cost and Consequences of Chronic Disease Management Presented at National University of Ireland, Galway 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 Los Angeles County Hospital Administrator Medical Group Administrator 1992 – present - Fellow in ACHE 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 % 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.

Chronic Disease Cost Impact 15 chronic conditions accounted for 56% of the $200 billion increase in healthcare spending in the U.S. from conditions accounted for ½ of this increase  Health disease  Pulmonary disease  Mental disease  Cancer  Hypertension Alzheimer’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 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 Source: Medical Expenditure Panel Survey, 1998.

1/4 of Individuals with Chronic Illness also have Activity Limitations Both 30 Million7 Million90 million Activity Limitation Only Chronic 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, n = 127 Million

Most People with Chronic Conditions have Private Health Insurance. Source: Medical Expenditure Panel Survey, 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 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.

Poor Care Coordination Leads to Unnecessary Hospitalizations 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 Concept Why 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? Benefits Encourage prevention and healthy life style Disease Management Focus on high risk, high cost diseases Payments Case management compensation Pharmacy coordinator Pay for Performance Quality Care 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 – 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