Concierge Medicine Lowers Health Care Costs

Cutting Health Care Costs With ‘Concierge Medicine

By: Robert Peral, M.D. for FORBES, November 21, 2013

As a nation, we spent $2.8 trillion on health care in 2012. That’s 18 percent of the U.S. Gross Domestic Product (GDP), making our nation’s health care system the fifth-largest economy in the world. That’s more than the entire economy of France. In fact, that’s more than 95 percent of what all countries spend in a year on everything from food and clothes to infrastructure.

Dr. Ezekiel “Zeke” Emanuel – an oncologist by training, a former White House adviser and current professor at the University of Pennsylvania – discussed these staggering statistics during a recent presentation on “The Future of Health Care” in Oakland, Calif.

Finding a new approach to an old health care problem

Dr. Emanuel pointed out that health care behaves like a luxury good. In every country, as GDP per capita rises, the demand for luxury goods increases. Medical care follows this same pattern. In the U.S., we have the highest GDP in the world and, as this model predicts, the highest total health care spend. What’s unexpected is that we spend at a rate of more than two standard deviations higher than the economic model would predict. That’s an extra half-trillion dollars each year.

We have little to show for these added dollars. Compared to the other members of the G20, our health outcomes – from life expectancy to infant mortality – are average at best.

Of course, a variety of economists and policy experts have discussed and debated the dimensions of this health care problem. But what surprised many who listened to Dr. Emanuel was his proposed solution.

“Tertiary prevention,” Dr. Emanuel asserted, “is the key to saving money.”

I’ve been the CEO of the nation’s largest medical group for 15 years and I had never heard this term used in this way. It sounded like an oxymoron. “Prevention” is a word most often associated with the care we provide for healthy patients. Prevention helps people avoid developing medical conditions in the first place. But of course, it makes perfect sense for this high risk population.

Ten percent of the U.S. population accounts for approximately two-thirds of total health care costs. We spend over a billion dollars a year on this population. Reducing the cost of care has been a focus of many disease management programs. Preventing the costs of the next generation of medical complications could be a more powerful solution.

Why the traditional model hasn’t bent the cost curve

Insurance companies (and independent vendors who contract directly with employers) have targeted those who generate the highest health care spend in the past. They’ve used a combination of disease management and utilization management programs. At first, most of these programs appear to be successful. But over time, the cost of intervention tends to exceed the dollars saved. Before embracing a new approach, we need to understand why these past efforts have failed.

One reason is that the highest-cost population is heterogeneous. Let’s look at the 5 percent who use the most resources in any given year:

  • About one third of this 5 percent experiences a one-time, high-cost event. It could be an extremely premature birth, a major car accident or a new complex cancer. For these individuals, the dollars spent on interventions don’t change much.
  • Another third comes from patients with diseases so severe that interventions rarely alter their need for ICU admissions or expensive medications.
  • Only in the final third of these highest-cost patients could intervention prove beneficial from a cost perspective.

Despite this fact, most traditional programs focus on the entire group, which adds significant expense without making enough of a difference in cost.

Tertiary prevention could address the cost crisis

The concept of “tertiary prevention” is to intervene in ways that avoid the large costs of the future. And to do that, we need to focus on the high-use population that has the highest probability for improved outcomes. These are the patients with major chronic illnesses who haven’t yet experienced the worst of the complications.

Take patients with diabetes: In the early and middle stages of their disease, they require more care than the average patient. But it’s not until their disease progresses that they generate the highest expenses. Caring for someone with diabetes is expensive. But those costs rise dramatically when major complications arise – kidney failure, heart attack, stroke, or the need for lower leg amputation.

We know how to delay and avoid many of these tertiary problems: by reducing blood pressure, improving blood lipids and helping patients effectively manage their insulin. And each can be accomplished with relatively low-cost medications. The difference between success and failure is whether patients follow their treatment plans.

This is where “tertiary prevention” makes a difference. The sickest patients already are obtaining the care. Given the severity of their conditions, they have no choice. It is the people who haven’t yet experienced the complications who put off obtaining the care they need.

The first step is identifying the right population and their care gaps. Sophisticated analytics can help care providers take advantage of electronic health records and disease registries. With this information, they can identify which patients are most likely to benefit from intervention.

The next step is developing approaches that are low-cost but effective in helping patients comply with their recommended treatment plan.

Find out how personalized “concierge medicine” can make the difference here:

READ THE FULL STORY

About Concierge Medicine Journal

Concierge Medicine Journal (CMJ) curates breaking concierge medicine news, and editorial opinion on a wide variety of topics relevant to the practice of Concierge Medicine.

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