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Causes of and Potential Solutions to the High Cost of Health Care

Health Care Cost Drivers and Policy Options

On October 10, 2003, Kenneth E. Thorpe, Ph.D., made a presentation in a Web-assisted Audioconference at Session 1, which was entitled Health Care Cost Drivers and Policy Options.

This is the text version of Dr. Thorpe's slide presentation. Select to access the PowerPoint® Slides (522 KB).

Health Care Cost Drivers and Policy Options

Kenneth E. Thorpe, Ph.D.
Robert W. Woodruff Professor and Chair
Department of Health Policy and Management
Rollins School of Public Health
Emory University

Slide 1

Options for Controlling Costs

  • Managing Consumption.
    • Copays, benefit design.
    • Pharmaceutical benefit design.
      • Preauthorization.
  • Behavioral and Lifestyle Intervention.
  • Managing the Delivery of Care.
    • Disease and Care Management.
  • Broader Structural Reforms.

Slide 2

Managing the Consumption of Healthcare

  • Benefit Design.
    • Employer Premium Contribution.
    • Increase Cost Sharing.
    • Reduce Benefits.
  • Broader Reforms.
    • Consumer-Driven Models.
  • Behavioral and Lifestyle Interventions.

Slide 3

Managing Pharmaceutical Spending: Managing the Components of Growth

Slide is a flowchart with three tiers. The first tier is called "options". The first box on this tier says -Competitive Binding and -Price Negotiation. The Second tier is "why". There is an arrow that goes from the first box to a box labeled, "general economic trends". The third tier reads, "Rx Trend (15-25 percent)" The first "why" box has an arrow to a box on this tier that reads, "Price increases (20-35 percent)." Next to the first "options" box is another that says, "Better formulary management, tiering structure, mandatory generic substitution." This box is connected to two boxes on the "why" tier. The first says "direct-to-consumer: advertising, rising incidence of chronic disease." This leads to the "Rx trend" tier to a box that says, "Increased number of prescriptions (30-40 percent)" The other arrow from the "options" tier to the "why" tier leads to a box that says, "March of science, rise of new molecular entities." This box connects to the "Rx Trend" tier and the box on that tier says, "changing mix of drugs, (25-33 percent)"

Slide 4

Behavioral and Lifestyle Interventions: Can They Work?

  • YES! But again, design matters.
  • Targets smoking, stress, weight, blood pressure, high risk activities.
  • Key Design Feature.
    • Risk assessment.
    • High participation among high risk individuals (use financial incentives in plan design).
  • Savings: Range from zero to a return on investment (ROI) of 6:1.

Slide 5

Managing the Delivery of Healthcare

  • Care and Disease Management.
  • Typical Conditions.
    • Chronic Obstructive Pulmonary Disease, Congestive Heart Failure, Coronary Artery Disease, Diabetes, Asthma.
  • Others.
    • Hypertension, Behavioral Health, Cancer, Pain Management.

Slide 6

Care and disease management: Does it work?

  • Evaluations: What's Possible?
  • Best designed programs could save 10 to 30 percent for specific group patients.
  • Ex: Congestive heart failure (fluid in lungs) sends typical patient to hospital 2-3 times per year.
    • Intervention? NEED IT AT HOME!
      • Expert to teach patient about disease.
      • Importance of medication compliance.
      • Diet.
      • Monitoring weight.
      • Check in with patient remotely or in person.

Slide 7

Managing the Delivery of Healthcare

Flowchart ranging from "Low to High" with three gradients.

On the low end it reads, "Predictive Modeling, Health Risk Assessment, Condition Education."

On the middle part it reads, "Nurse on demand, care reminders, medication compliance."

On the high end it reads:

  • Intensive Monitoring.
    • Weight.
    • Blood Pressure.
    • Glucose Levels.
    • Pulse.
    • Pulse Ox.
  • Care direction and physician communication.
  • Requires community based (home) and physician care.

Slide 8

Managing Medicaid Spending

  • Reduce covered benefits.
  • Control utilization (commercial disease management modules).
  • Limit provider payments.
  • Freeze enrollment.
  • Manage drug costs (through negotiations over price, "lock-in" disease management savings with drug companies).

Slide 9

Managing the market and delivery system

  • Size Matters (Medicaid + State Employees).
    • Pharmaceutical negotiations.
    • Hospital / Provider contacts.
  • Regulation.
    • Certificate of Need (CON).
    • Rate-setting.
  • Patient Safety Initiative and Error Reduction.
    • Reporting systems.
    • Interventions (computerized physician order entry).

Return to Audioconference

Current as of July 2003

Internet Citation:

Health Care Cost Drivers and Policy Options. Slide Presentation by Kenneth E. Thorpe, at Web-Assisted Audioconference, "Causes of and Potential Solutions to the High Cost of Health Care." Agency for Healthcare Research and Quality, Rockville, MD.

Return to Audioconference>

The information on this page is archived and provided for reference purposes only.

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