Cost and Consequences of
Chronic Disease Management
Presented at National University of
Ireland, Galway
Daniel F. Fahey, Ph.D.
Daniel F. Fahey, Ph.D.
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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
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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
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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
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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
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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
Number of People With Chronic
Conditions (millions)
200
180
171
164
157
160
149
141
140
133
125
120
118
100
1995
2000
2005
2010
2015
2020
2025
2030
Year
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 1987-2000
5 conditions accounted for ½ of this increase
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Health disease
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Pulmonary disease
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Mental disease
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Cancer
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Hypertension
Alzheimer’s and Diabetes will soon pass these as the most
common chronic diseases
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Impact of Diabetes
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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
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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
30%
Percent of All Americans
25%
24%
20%
15%
11%
10%
5%
5%
4%
1%
0%
1
2
3
4
5+
Number of 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
Medicaid Beneficiaries
77%
Uninsured
58%
Privately Insured
68%
Ages 65+ with Medicare
and Private Insurance
95%
Ages 65+ with Medicare
and Medicaid
97%
Ages 65+ with Medicare
Only
96%
All Americans
78%
0%
10% 20%
30% 40% 50% 60% 70%
80% 90%
100
%
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
Activity Limitation Only
Chronic
Illness Only
90 million
30 Million
7 Million
n = 127 Million
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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.
Most People with Chronic Conditions
have Private Health Insurance
Medicaid
9%
65+ Medicare/
Medicaid
3%
Uninsured
7%
Private Insurance
55%
65+ Medicare only
8%
65+ Medicare/
Private
13%
Unknown
2%
Other Govermnet
Insurance
3%
Population of People with Chronic Conditions in 1998
.
n =120 million
Source: Medical Expenditure Panel Survey, 1998.
Private Insurance Changes
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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
Home Health
Visits
96%
Prescriptions
88%
Physician Visits
72%
Inpatient Stays
0%
76%
20%
40%
60%
80%
100%
Percent of Services Used by People With Chronic Conditions
Source: Medical Expenditure Panel Survey, 1998.
Physicians Believe that Poor Care
Coordination Produces Bad Outcomes
Receipt of contradictory information
54%
Adverse Outcomes
Emotional problems unattended
49%
Adverse Drug Interactions
44%
Unnecessary hospitalization
36%
Patients not functioning to potential
34%
Experience of unnecessary pain
34%
Unnecessary nursing home placement
0%
24%
10%
20%
30%
40%
50%
60%
Percent of Physicians Who Believe that Adverse
Outcomes Result from Poor Care Coordination
Source: National Public Engagement Campaign on Chronic Illness–Physician Survey, conducted
by Mathematica Policy Research, Inc., 2001.
Hospitalizaitons for
Ambulatory Care Sensitive
Conditions Per 1000 Medicare
Beneficiaries Ages 65+
Poor Care Coordination Leads to
Unnecessary Hospitalizations
300
261
236
250
219
200
169
131
150
95
100
62
36
50
0
7
0
1
18
0
2
3
4
5
6
7
Number of Chronic Conditions
Source: Medicare Standard Analytic File, 1999.
8
9
10+
Social Model
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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
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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?
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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
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Increased support for self management
Strengthening the primary care role
Offering responsive specialist care
Improved case management
How do we improve the system?
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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
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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
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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
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Define roles and distribute tasks among team
members
Use planned interaction to support evidencebased 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
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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
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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
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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
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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
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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