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Health Care Costs: Why Do They Increase? What Can We Do?

Managing High Cost Cases


Mary G. Henderson, Ph.D., Principal, William M, Mercer, Inc., Chicago, IL.

An ongoing challenge facing providers, payers, and policymakers is that a relatively small number of individuals who require extraordinary medical care consume a disproportionately large amount of health care resources that cost billions of dollars every year. High-cost populations may include persons with such conditions as high-risk pregnancy, cancer, heart disease, and HIV/AIDS, as well as disabled populations.

According to Mary G. Henderson, Ph.D., it has been estimated that over half of chronic illness is preventable, one third of primary care visits are unnecessary, and half of the surgeries performed are inappropriate.

Health risks such as lack of exercise, high blood pressure, smoking, obesity, depression, and stress cost money. In addition to medical costs, health risks impact worker productivity, which may have a greater value than medical costs. Multiple risks cost more and have greater impact.

The health management continuum ranges from low risk to catastrophic illness. Low risk individuals can benefit from health promotion activities, while those with a catastrophic illness require early identification and aggressive management. According to Henderson, coordinated care, or case management, can significantly reduce length of disability and potentially have a positive impact on costs and productivity.

Henderson has identified five steps to the case management process:

  1. Identification of both the right individual and target conditions for case management. This phase assesses total cost burden, organizational benefit, cost effectiveness, focus, and redundancy of services.
  2. Program selection involves evaluating programs for clinical excellence with established guidelines and measurement protocols, having a behavioral focus, comparing delivery channels, and possibly integrating with other programs.
  3. Recruitment strategies examine proven recruitment and retention rates, links with other delivery channels, established connection and trust, and patient and provider incentives.
  4. Measurement and feedback evaluate patient indicators (e.g., symptoms, clinical outcomes, satisfaction, and skills) and case management indicators (e.g., program delivery, compliance, use, and level of integration).
  5. Re-identification re-assesses after a period of time whether these are right individuals and target conditions for case management.

Evaluation of a case management process can range from process evaluation to see if the program was implemented successfully, to rigorous research that addresses whether the changes can be demonstrated reliably over time.

Henderson offered what she considered key success factors to making a case management process work, including:

  • Physician participation.
  • Clear interventions and goals.
  • Staff training and expertise.
  • Financial incentives.
  • Ability to measure results.

Additional Resources

National Chronic Care Consortium. Case Management: Methods and Issues. The Robert Wood Johnson Foundation Medicare/Medicaid Integration Program. MMIP Technical Assistance Paper No. 6. University of Maryland Center on Aging: College Park, MD; 2000 Dec.

National Chronic Care Consortium. Targeting Beneficiaries Who Are Most at Risk. The Robert Wood Johnson Foundation Medicare/Medicaid Integration Program. MMIP Technical Assistance Paper No. 7. University of Maryland Center on Aging: College Park, MD; 2001 Jan.

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