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June 5, 2012 | Mike Coyne

Hospitals need to coordinate better to deliver the best care — and save money

Leaders on Beacon Hill should know that one of the key factors driving up health care spending is poorly managed and uncoordinated care delivery. Too often, patients are getting treatment from multiple providers that don’t talk to each other and lack any incentive to work together to keep costs down. This raises the overall price tag, and doesn’t result in better care.

Population health management — that is, coordinating health care in a more organized and informed fashion — is critical to improving results, and will entail three key factors: identifying and supporting the sickest patients, minimizing or preventing disease progression, and promoting a culture of health.

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Better collaboration between payers and providers, and a mutually beneficial change in compensation and reimbursement that pays for outcomes, not use, will both be critical to the success of these initiatives.

Care management that supports the sickest patients

Five percent of the population will drive 30 percent of next year’s health care costs. Identifying these patients early and implementing proactive disease and case management will enable both payers and providers to cut down on spending and improve care.

Inappropriate management of high-cost conditions like diabetes, asthma, and hypertension is one of the leading causes of excessive spending. Due to the nature of fee-for-service financing, the sickest patients often fail to receive preventative care — which can lead to hospitalizations and emergency room over-utilization. In other words, appropriate care is often delivered in the most expensive settings.

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In a population health management system, payers and providers can identify and manage high-risk and emerging high-risk populations by analyzing clinical and financial data to spot problems. This knowledge can then support the implementation of targeted clinical interventions and wellness initiatives that lead to better patient outcomes.

Quality improvement that prevents disease progression

A study by RAND Corporation found that 45 percent of people with chronic illnesses are not receiving recommended care. Today, heart disease, diabetes, and other chronic diseases are among the most prevalent conditions driving both near-term and long-term spending. To improve this number, insurers and providers must focus resources on making sure doctors are abiding by best practices and that patients are adhering to their patient treatment plans.

Gaps in care, lack of preventive measures, and non-compliance to prescribed medications are just a few highly controllable factors contributing to adverse outcomes. Through data analysis it is easy to identify and focus on these areas where there is a best course of action and the patient is not compliant to it. And, most importantly, there is an immediate upside for both the patient’s health and the bottom line.

Wellness engagement that promotes a culture of health

According to the Centers for Disease Control and Prevention, the cost associated with treating obesity has reached $147 billion. Often caused by unhealthy habits, obesity can lead to costly and often deadly chronic conditions — including diabetes, coronary heart disease, and cancer.

With over one third of US adults now obese, the financial impact and the potential loss of life are staggering. But obesity is just one life-style factor impacting these trends. Smoking, unhealthy diets, lack of exercise, and more, all have long-term adverse affects on health. Payers and providers must focus on proactive long-term patient engagement strategies that promote healthier behaviors. After all, the cost and resources needed to prevent obesity will always be much lower than the price we pay for associated chronic conditions.

Collaboration and coordination

To be most effective, population health management must be coordinated. A combination of targeted outreach and point-of-care patient interventions can go a long way at improving clinical, financial, and utilization metrics. But we’re not there yet.

So what’s the problem? In the current fee-for-service model, coordination is a four letter word. More utilization equates to more revenue for providers, weakening their incentive to cooperate with each other. What’s the solution? Insurers should reward physicians for improving outcomes associated with ambulatory care sensitive conditions like asthma and diabetes, and appropriately managing the health of the population. Most importantly, penalize those that drop the ball and fail to deliver value-based care.

Risk-sharing contracts, pay-for-performance, and other programs that measure providers on the quality of services rendered will promote greater competition and a stronger emphasis on healthier outcomes.

Next Steps

Today, over 98 percent of Massachusetts residents have access to health insurance, but the ever-rising cost of care may soon hamper the progress we’ve made.

Still, Governor Deval Patrick was correct when he said that health care cost increases in Massachusetts can be slowed without harming hospitals and doctors, and while benefiting consumers throughout the state. Population health management is just one piece of the puzzle. Innovative ideas focused on preventing fraud, improving efficiency, and reducing medical waste and hospital readmissions should also be implemented in order for us to achieve our cost containment goals. Many of these solutions are not difficult to implement, and are based on common sense approaches.

As the governor said, some payers and providers are already mobilizing. As the nation watches our every move, the success of our next steps will be critical.

Mike Coyne is CEO of Verisk Health, a data analytics firm that serves insurers, employers, and providers.

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