Another Endorsement of Population Health Management

While it's not an explicit endorsement of the population health management industry, it comes pretty darn close.

Writing in the New England Journal, David Asch and Kevin Volpp point to three market "signals" that are being missed by the traditional medical-industrial complex:

1. There is growing consensus that the doctors have it wrong: being healthy is not a merely a "biologic" process.  Rather, social circumstances, environmental influences and personal behavior account for the bulk of well being. 

2. While providers are being called to task on a host of specific process and outcome measures, communities and employers are more interested in and getting better at measuring overall health.

3. While there are short-term approaches to reducing waste and increasing efficiency in the health care system (like bundled payments or episodes of care), everyone agrees on the long-term solution: a healthier population.

Drs. Asch and Volpp predict health systems will transition from selling product-oriented sickness treatment "within their walls" to customer-oriented "health" delivery. They better, or they'll end up like bankrupt Eastman Kodak, which thought it was the film, not imaging, business

And the Disease Management Care Blog agrees. Look no further than this web site of an outsider business devoted to the very services described in this Journal article.  In fact, as far back as March of 2009, the DMCB described one PHM industry veteran's challenge to make America rank #1 in the world in an overarching, comprehensive and easy understood measure of health status.

It sounded like a good idea back then.  This timely Journal article reminds us it still is.

And the good news is that the PHM service providers are already working on it.

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Lessons From The Practice-based Opportunities for Weight Reduction (POWER) Study: More Evidence of the Effectiveness of Remote Care Management for Obesity

"I need to call someone..."

The Disease Management Care Blog apologizes in advance for a long post about an important study comparing two state-of-the-art weight loss interventions.  Get some caffeine and hang in there.  If you are interested in the science of disease management and its role in obesity, you will not be disappointed.

Talk to some of the Ayatollahs dominating the academic medical-industrial complex about telephonic disease management and they'll give you the same look that they give to something unsightly that they just discovered on the end of their finger after rubbing their nose.  The idea that some remote (ugh!), telephone-based (bleh!) for-profit (yuck!) company could contribute anything to their vision of the health delivery is health policy apostasy.

But what how does this ideology stack up against the evidence?  

Until recently, we haven’t really known because there were few head-to-head comparisons of traditional “disease management” vs. traditional patient counseling.  But now we have the just-published POWER (“Practice-based Opportunities for Weight Reduction” study that was funded by the NHLBI and (whoa!) Healthways.  The authors were from Johns Hopkins University, which has a long-term consulting agreement with Healthways. They had final say on the research methodology and the paper's contents.

POWER was a prospective clinical trial that randomly assigned patients to one of three weight loss intervention strategies.  One consisted of “remote” telephonic treatment counseling, the second provided in-person counseling and the third was a control group.  The in-person sessions were provided by Johns Hopkins employees while the remote telephone counseling was provided by Healthways.

Study patients with obesity and at least one risk factor (hypertension, hyperlipidemia or diabetes) were recruited from six Baltimore primary care practices from 2008 through 2009.

All the interventions used basic nutritional and exercise guidelines that were delivered with state-of-the art “social cognitive theory,” "behavioral self-management,” “positive reinforcement” and “motivational interviewing.” Both of the intervention groups had access to a web site with learning modules plus feedback. If there was no log-on to the web site every 7 days, patients were sent a reminder email. 

Persons in the disease management-style remote support arm of the study got 12 weekly calls lasting 20 minutes for three months, which was followed by 3 monthly calls.   Persons assigned to the traditional in-person coaching arm got nine group sessions and three individual sessions over the 3 months followed by one group and two individual monthly sessions over three months. 

Participants’ weight loss was assessed at 6 and 24 months.

The patients' primary care physicians received summary reports and encouraged their patients’ participation.

Readers should note that this was an “effectiveness” trial.  Unlike “efficacy” trials, the protocol dispensed with the usual run-in period or making sure patients were adherent to the protocol before or during the study.

1370 persons were screened and 415 were randomized.  64% were women, the mean age was 54 years, 41% were black, 97% had commercial insurance and the mean BMI was a hefty 36.6.

After randomization, there was some drop out: 366 were weighed at 6 months, 355 at 12 months and 392 at 24 months. 

At 6 months: the control group lost 1.4 kilograms (kg) while there was 6.1 kg lost in the remote support, and 5.8 kg. lost in the in-person group.  That's 3.1 lbs vs. 13.4 lbs vs. 12.8 lbs.

At 24 months, the weight loss .8 kg in the control, 4.6 Kg in remote support and 5.1 Kg for in-person.  That's 1.8 lbs, 10.1 lbs and 11.2 lbs. That translates to body weight changes of 1.1%, 5.0% and 5.2%.  The percent of persons hitting at least 5% weight loss was 18.8% in the control group, 41.4% in the in-person support group and 38.2% in the group getting remote support. 7.8% of controls, 27.5% and 18.8% of controls, remote and in-person support patients, respectively, reached a BMI less than 30  

There was no statistically significant difference in weight loss outcomes between the two intervention groups.  In other words, the small changes between the disease management and in-person counseling could have been the result of chance.

What can readers conclude?

1.  This was a solidly performed study with important implications for a still-evolving national strategy in the battle against obesity.  If an intervention can lead approximately 40% of persons to lose 5% of their weight over two years, maybe the science of non-invasive weight reduction has gotten to the point where insurers should cover it.  While the DMCB remains suspicious about “mandates” and “the minimum benefit,” there are other policy levers that could be pushed to make this happen.  This is doubly true when you think about the costly alternatives of drugs and weight loss surgery.

2.  Seen through the lens of a disease management vs. in-person counseling competition, the industry’s “best” (Healthways) went toe to toe with the health system’s best (Johns Hopkins) and it was a tie.  When it comes to weight loss, it now comes down to who can do it cheaper and who can scale it.

3.  While this was a solid study, readers should be aware of its imperfections.  Since there were so few patients on Medicare or Medicaid, we don't know how this would work in patients with public insurance. This was not double blinded, so it’s possible that the outcomes were skewed because patients and their doctors were aware of their assigned treatment arm. The drops-outs' weights went unmeasured and their data could have changed the results.  There was a high reliance on group sessions in the "in-person" arm of the study, which may not be as effective as one-on-one counseling. The in-person sessions were also “remote” from the PCPs’ offices and may have been a poor substitute for the one-on-one counseling envisioned for a robust PCMH.  Successful weight loss is usually defined at 10% of body weight at one year instead of 5% at 2 years.  It’s also difficult to discern the relative contribution of the web site vs. the physician support vs. the nurse counseling.  We don’t know what happened to the patients’ blood pressure, cholesterol levels or their blood glucose control.  Finally, Hopkins had a doubtful but potential conflict of interest in a study that showed non-superiority vs. one of their customers.

4 While the DMCB doesn’t want to quibble, close scrutiny of the p-values in a table comparing the percent of persons reaching a BMI less than 30 for the in-person vs. remote support cohorts shows that it came quite close to being statistically significant at p = .07.  In other words, Healthways (27.5%)  almost beat Johns Hopkins (18.8%).  Using the same criteria in this study widely hailed as proving that Group Health’s medical home saves money, Healthways did beat Johns Hopkins.

5  Healthways deserves kudos for submitting to and committing resources to a clinical trial.  To the DMCB, the search for scientific truth is a price of doing business.  Their shareholders may think that cash is better spent on pursuing customers or driving efficiencies, but this research is an investment that will yield returns over the long run.  Other for-profits "get it" and so does Healthways.  The only question is why isn't this spashed on the company's web site?

6  If both interventions are equivalent, the DMCB suggests that they are not necessarily exclusive.  A truly enlighted approach to this would be to let patients choose which form of counseling they prefer.  What's more, if patients were allowed to choose, the amount of weight loss for both groups would probably be even greater.

7. Last but not least, this is further evidence that "disease management" has grown up.  This "DM Ver 2.0" is based on far more sophisticated principles of behavior change than those used in the Medicare Health Support debacle.  What's more, this Johns Hopkins paper reminds us that physicians, in the course of routine patient encounters, are simply not an option when it comes to weight loss counseling.  They're too busy and their job is to provide a supporting role.

"POWER" - one more acronym and one more piece of evidence to use in defense of disease and population-based care management.

Being Bullish on Disease Management

Because it's a bellwether for the investor-owned care coordination provider companies, the Disease Management Care Blog likes to keep an eye on Healthways.  It recently eyed this drop in its share price:

Ouch.

As part of its third quarter earnings announcement, the company revealed that mega-health insurer Cigna is "winding down" its Healthways contract in 2012.  Since Cigna accounts for about $110 million in revenue, loss of 17% of the top line was not good news for the company.  Investors reacted by punishing Healthways with a  43% decline in the stock price, while S&P downgraded the company.

The DMCB is not a Healthways investor, but even if it were, it wouldn't be worried.  Stuff like this has happened before to the company and and the market will always have an cyclic pattern of purchasers deciding to insource then outsource and then later insource their care management programs.  In fact, Healthways is pointing to the arrival of some other contracts. That's simply the nature of this business.

In the announcement linked above, Healthways points out that the future's quite bright because of the following market trends:

1) Health plan preparation for the implementation of state health insurance exchanges, which is projected to cause significant disruption of their individual and small group fully insured business;

2) Change from a volume-based to a value-based payment system and the associated shift of financial risk and responsibility for cost and quality from health plans to providers;

3) Increasing payer requests for a comprehensive, integrated solution that addresses longitudinal health risk and care needs for total populations;

4) Global adoption of population health management by both foreign government and foreign private sector health organizations; and

5) Recognition by large employers of the expanded value of improved well-being to reduce medical cost and improve individual and company productivity and performance.

The DMCB finds the reasoning quite sound and applicable to the entire industry.  Based on the implacable logic of short-term investing, the loss of one big contract is a big deal.  On the other hand, the DCMB remains bullish on the industry's longer-term value-proposition built on cost control, risk mitigation and prevention.

Last but not least, note that the commercial health insurance business hasn't abandoned disease management.  Insurers are looking to extract the greatest value and, if that means insourcing it, so be it.  Ultimately, it's the patients who win.

Shirley Temple couldn't have said it better.  Care coordination remains a reason to be optimistic and smile.....



Image from Wikipedia

Moderating Risk for Health Insurers: They're Very Much In Charge and Will Stay That Way

When you listen to the health reform advocates, it's easy to conclude that the health insurance industry's days are numbered. Thanks to health reform, goes the logic, those malevolent insurers will no longer be able arbitrarily rescind policies of patients and refuse to pay doctors what they deserve. They're going to be defanged by empowered, organized and regulated provider organizations that, thanks to their enlightenment, accept insurance risk and reduce costs. As a result, they say, direct buyer-provider contracting will turn those evil insurers into hollowed-out utilities that are destined for the scrapheap.

The Disease Management Care Blog respectfully disagrees. There is considerable market demand for the intellectual and financial capital it takes to manage risk transfer. Insurers know that, and they're not about to let a hostile President armed with bad anecdotes from the broken individual market get in the way of their fiduciary duty to find the best quality at the lowest cost for their tens of millions of enrollees. For many insurers, then, notions like wellness, disease management, the medical home and ACOs are subject to the same tough greenshade scrutiny: show me the money.

Which is why the DMCB thinks this Hawaii Medical Service Association (i.e., Hawaii's Blue Cross Blue Shield or BCBS) press release is telling. By way of background, recall that Healthways has been working with HMSA for years. Based on positive outcomes such as this, HMSA has basically decided to completely outsource health, wellness, prevention and disease management - along with over a hundred employees - to Healthways. The contract can't be a small one and may be one reason why the company continues to hold its own.

Which leads the DMCB to two lessons for the Healthways-style wannabe ACOs, medical homes and care management companies vying for a piece of the "risk" action:

Show you can really and meaningfully reduce risk and increase quality and only then will you succeed. For example, the Patient Centered Medical Home (PCMH) has begun to show some mojo in this regard, and if the initial success continues, it will be rewarded in more and more settings.

What is given can be taken away. Healthways learned that lesson bitterly years ago thanks to another BCBS plan. While the DMCB is not privvy to the details, it expects HMSA will aggressively monitor how its partner is performing on an ongoing basis. As a result, the company will need to prove itself on an onoing basis .... or else.

Doesn't sound like the health insurers are on the run at all.

Healthways Disinters Medicare Health Support

Until now, the DMCB assumed that the hapless Medicare Health Support (MHS) pilot had not only died, but been embalmed, sealed in its casket and buried under six feet of lets-not-speak-of-it-again. But lo, Healthways has pulled out its shovel and has propped up the remains at our national health reform banquet. Come... see, say a host of elder wise-men Tom Daschle, Newt Gingrich and Ken Thorpe, it lives, it... LIVES!

As readers may recall, MHS was the unsuccessful, prospective, randomized and controlled trial of disease management vs. usual care for FFS Medicare beneficiaries. There were several vendors involved, including Healthways. The financial terms for the intervention group involved a monthly fee for disease management in exchange for the expectation of reduced claims expense with budget neutrality or savings in excess of fees. Unfortunately, the study was hobbled by a number of execution problems that included the unequal assignment of beneficiaries to the control and intervention groups, delays in notifying the vendors about hospitalizations and low patient contact rates. Combined with the disease management industry's irrational exuberance, the final negative did-not-save-money results were bitterly disappointing. You can read the disillusioned DMCB's past thoughts on the final results here and here.

What do you know, Healthways decided to take another look at its MHS data. Recall that the MHS report ultimately concluded that, compared to the control group, health care costs increased less (i.e., didn't go up as much) as a result of disease management, but that the savings, versus its average monthly fee of $94, were not budget neutral (go to page 67).

As the Disease Management Care Blog understands it, third party research through Emory University, Harvard University, The University of Milan and The University of Trieste applied a "Coarsened Exact Matching" to achieve a better statistical balance between the intervention and control groups. Based on this analysis, a recalculated mean savings per beneficiary totalled $2,848 per year, resulting in a net cost savings of $73 per beneficiary.

As noted in this news report, the Feds are unlikely to be impressed and are still likely to get a clawback of some of their fees. Given the lack of any movement in Healthway's stock price (HWAY), the market isn't impressed either.

Yet, should the DMCB and its growing readership be impressed? The DMCB isn't sure:

1) It's challenging to evaluate Healthways' claims based on a press release that provides only summary results. Given the stakes, the claim that savings were ultimately achieved warrants greater detail, more transparency and the input of peer review. Sure, it takes time and effort, but, in the long run, it's worth it.

2) The key feature of this statistical breakthrough is the use of "coarsened extract matching." The DMCB never heard of that before. That same problem is probably getting in the way of other interested stakeholders.

3) And then there's a credibility issue: the uphill part of any post-hoc analysis - even if third party and even if it is Harvard - is overcoming the perception that the methodology used was chosen precisely because of the likelihood of yielding a desired result.

No wonder why few seem impressed. Yet, the DMCB isn't sure reburial of the remains is necessary at this time. It'll look forward to seeing more data and analysis. Sort of like poking it with a fork.... to see if it... moves.

An Update on Healthways

Underwelmed by all the repetitive media cacophony over the dire Swine Flu news*, the Disease Management Care Blog detoured on over to the latest Healthways earnings call transcript to see what insights it could glean about the industry. As previously noted, Healthways is one of the few publically traded disease management-only companies. If it is doing well, it bodes well for the rest of the industry.

It seems there was good news, resulting in just over a dollar or 11% increase in the share price.

What made the increase remarkable was that it occurred despite Healthways having lost money, thanks to having to settle a $40 million suit - thanks to some past sins by its predecessor company. Investors apparently forgave the total 1st quarter loss of $14.8 million because, in the background, there was real revenue growth. The number of persons Healthways serves (or 'covered lives' in health insurance parlance) reached an impressive 35.8 million (up by 3 million). It signed nine new insurer contracts and renewed or extended another 9 contracts. Excluding the legal settlement mentioned above, Healthways achieved revenue of $0.02 per share. That ain't bad, given the specter of rising unemployment and fewer people being able to afford health insurance. What's more, there were more persons participating in its Silver Sneakers programs, and it looks like there will be business in Australia and Germany. Cash flow seems healthy and Healthways is making capital investments in IT.

The insights?

Once again, while disease management and population-based care programs continue to come under intense scrutiny in Washington D.C., the debate seems to be over in the commerical helath insurance markets. They continue to see value in what companies like Healthways brings to the well-being of enrollees. Ever more insurers are buying into this.

While the earnings call mentioned the loss of the Minnesota Blue Cross Blue Shield business, note that that wasn't due to its abandonment of disease management. Rather, that insurance plan still values the concept, because the only difference is that it's been brought in-house. It will take at least a year to see how successful that strategy is, assuming Minnesota is willing to share its experience with the DMCB.

In addition, Healthways is clearly positioning itself as a one stop shop solution that crosses the spectrum of care for popultions with wellness, prevention and chronic illness programs. This ain't your old disease management stuff anymore.

Last but not least, Healthways is well aware of the Patient Centered Medical Home. Here's a telling quote from Ben Leedle during the call:

And we’ll continue to hear more and more about the medical home which I think has lots of different supporters with lots of different definitions. I think the general construct there is there needs to be a whole lot more coordination for the consumer in and around how to navigate the resources that already exist and to take advantage of new ones like what our company brings in the area of wellness and prevention. And to put those resources at the helm of the captain of the ship, which in a lot of these models is the primary care physician. We know a little something about how to help get that done.

Yup.

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*The DMCB thinks it will only be a matter of time until someone blames the emergence of a new influenza A variant on global warming. You may want to be skeptical if it comes up.

Healthways Crawls Back

As regular readers know, the Disease Management Care Blog likes to keep an eye on Healthways' financials. Because it's a publically traded disease management organization, the DMCB thinks its rising and falling fortunes are a bellwether for the rest of industry, particularly the privately held companies (an example might be LifeMasters) and the entities that are subsidiaries in in larger companies (an example might be McKesson).

It took a while for the DMCB to catch up with the latest report that was released on January 8. Briefly, it looks like 'top line' revenue for the three months ending November 30 is up compared to a year earlier by almost $10 million. By the time all this money trickled though the organization, there was a net of $12.6 million, which was also up compared to last year by over a million. The number of covered lives in the U.S. and internationally is up, internal costs are being pared, there has been 'continued improvement in result from the Hedicare Health Support pilot (comment: does that mean losses and/or foregone fees are not as steep as anticipated?) and Silver Sneakers is expanding. Debt is down but so is their cash on hand (from about $35 million to just over $4 million).

Not bad. Healthways may be crawling back. And it would appear the street agrees. The image below may be blurry but check out the slight upward trend in the stock price waayyyy over on the right. There's also an analysis from that crazy guy Cramer here. That's pretty good for a company in today's markets.

As discussed many times, the DCMB is generally bullish on the disease management industry. More companies are seeking self-insured arrangements (that include disease management), disease management organizations can scale telephonic coaching with maximum efficiency better than anyone else, the DMCB doesn't think most health insurers ultimately want to own clinical care programs and last but not least, health care reform is tilting in the direction of care management for chronic illness.

The disease management industry is also tied to the health insurance business cycle. Such are the fortunes of a maturing industry with good years and bad. In the short term, the DMCB expects growth to be blunted as a) unemployment continues to climb and persons lose the insurance that's paying for their disease management and b) insurers push back on price. Healthways is also dealing with a potentially expensive lawsuit that could theoretically result in ' treble damages plus up to $11,000 per false claim .' Yikes

In the long term, however, prospects for the core business of helping healthcare consumers manage their chronic illness remain good. P/E ratio still around 8 and the stock may be on a rebound. Draw your own conclusions.

The DMCB does not knowingly invest in the disease management industry and, like many amateurs trying to build a retirement fund, relies on a professional financial manager to help it lose its money.

A Penny for the DMCB's Thoughts on Healthways' Earnings Miss

In a prior post, the Disease Management Care Blog promised follow-up on Healthways’ last quarter earnings report. Even though there was a considerable jump in income accompanied by an earnings increase from 31 to 49 cents a share, earnings per share still missed the Street’s expectations by one cent. That's right, a penny. That was enough to reward the company with a continued stock price slump into the $10 range, where it’s been languishing plus or minus a dollar since ever since.

Does this fine company deserve to be hammered over such a small earnings misstep? Maybe not, but reports on Healthways (here and here) seem to be using the penny as chance to fret over the long term prospects for the company:

• With Democratic control of the Presidency and Congress likely, Medicare Advantage plans are destined to get squeezed. As a result, they’ll have less to spend on disease management.

• The bad news from Medicare Health Support lessens the short term likelihood of a Medicare contract and could batter Healthways’ ability to assure its commercial customers that it truly has the goods to reduce claims expense.

• Health Plans have the ability to bring programs in house, further undercutting Healthways’ long term business prospects.

• The balance sheet is described as highly leveraged with considerable debt vs. cash on hand.

As an aside, the DMCB notes Healthways has also brought in a new chief operating officer. Is that an indication that management or the Board of Directors is happy with the course of the company?

While it agrees with most of the points above, the DMCB also thinks companies like Healthways may be struggling because they haven’t adjusted their business model to being better, faster, cheaper or complementing the medical home, helping patients navigate increasingly complicated insurance benefits (like CDHPs), tackling pharmacy issues, integrating their information systems with electronic health records and being fully transparent about showing what works and what doesn’t work.

The DMCB disagrees, however with the notion that Health Plans have a ready ability to bring disease management (DM) in house:

First off, the number of telephonic health coaches (usually nurses) and accompanying IT support represents a considerable expense. Outside full service DM companies can scale DM far more efficiently. If DM can cut their costs and lower their prices – which they’ve resisted to date – health plans will find outsourcing to be the better alternative. The likelihood of this will grow with increasing regulation of insurers' administrative expenses.

Secondly, health plans are first and foremost insurance companies. In most managed care organizations, clinical programs like ‘disease management’ hold a second fiddle to core activities such as building surplus, meeting State regulatory requirements, underwriting, managing claims and managing the ‘float.’ Leaders in health insurance have little loyalty to programs that many feel should be borne by the health care system and are outside their management comfort zone.

And this will get worse. Because of the advent of health savings accounts, insurers like Wellpoint want to also be banks. According to Federal Reserve and FDIC, a mix of insurance and banking with clinical services are permissible just so long as ‘subsidiary’ companies (like HMC, wholly owned by Wellpoint) don’t pose a substantial risk to their parent companies. Increasing expense or distraction from managing these subsidiary functions over the long run may well prompt insurer/bankers/financiers to spin this off or return to outsourcing it.

Ultimately, the DMCB thinks insourcing and outsourcing DM will continue in faddish waves. Right now, Plans seem to be more interested in insourcing. There is no guarantee that will continue, especially if the DM industry can adapt to these changing times and respond with a more efficient modern approach to chronic care for populations at a more attractive price point.

It's Times Like This That Transform Industries

This is not a pretty picture. In the last three months, Healthways’ stock price has gone from just over $25 a share to about $9. The Disease Management Care Blog checked the various finance ‘HWAY’ message boards and blogs and couldn’t find any special insight into what’s going on. Everyone’s stock prices are down and maybe HWAY is just suffering along with the rest.

So what is going on? Of course, Healthways' customers - the health insurers - are stressed and their stock prices have tumbled also. Not only have the investments holding up their reserves and surpluses taken a hit, business-purchasers will be in no mood to put up with future premium increases – which will further stress the bottom line. Health insurers and self insured employers may be forced to offer low-premium/bare bones benefit products stripped of wellness or prevention. On the chronic condition side, expect the Medical Directors, Chief Actuaries and CFOs to have some tough discussions on whether their contracts with disease management companies actually improve the medical loss ratio. Finally, the DMCB has also raised questions about the business model and the need to adapt to changing expectations.

But the Disease Management Care Blog is still bullish on the industry and especially the concept. Disease management remains a policy favorite at many levels in Federal and State government and employers are unlikely to simply walk away from their health care activism. What’s more, there aren’t many other patient-friendly ideas out there that increase quality and temper costs. Expect 'disease management' to remain one of the go-to solutions in the short and long term.

With a P/E ratio of 8, the DMCB doesn’t think Healthways is going to vaporize. Instead, it is looking for something else is going to happen. There is a Healthways Earnings Conference Call on Thursday Oct 16 at 5 PM EST and the DMCB will try to be there (or at least read the transcript) and be on the alert for hints.

It’s times like this that force industries to transform. It not only makes grist for the blogging mill, it’s ultimately good for healthcare consumers.

image from the Motley Fool.

The Atmospherics Just Keep Getting Worse for Healthways

With all the bad news that the company has had to endure, now this:

Shares of Healthways, a Franklin-based health management company, edged almost 5 percent lower on Thursday, two days after a Goldman Sachs analyst said the firm could be a takeover target now that its stock is so low-priced.

And who would be doing the targeting you ask?

But Thomas Carroll, an analyst at Stifel Nicolaus in Baltimore, said he believes that Ben R. Leedle Jr., the company's relatively young chief executive officer, doesn't want to sell out. Carroll said that if Healthways were to sell, a pharmacy benefits manager would be the most likely buyer. "Then, maybe a company like Walgreens," he said. "Probably not a managed care organization. I'd be surprised to see that."

The Disease Management Care Blog has had an ongoing interest in Healthways because it's a bellwether for the for-profit DM industry. The DMCB has predicted in prior posts that 'combined' or 'integrated' approaches to population health are likely. Who would have thought that combined or integrated could be synonymous with merger or acquisition.

Brief Updates on Heathways and the Medicare Group Practice Demo

Follow-up on prior musings of the Disease Management Care Blog:

Here’s an additional report that answers one of the questions poised by the DMCB on the Physician Group Practice Demo: were the awards enough to make up for the direct costs and foregone revenue? Read about Medicare’s definition of ‘win-win’ for yourself.

And, the DMCB wonders if Jim Cramer of ‘Mad Money’ hasn’t been reading its posts on Healthways.

News and Commentary About Healthways: Lead or Follow?

Uh oh. That regular ritual known as the ‘earnings forecast’ has precipitated some chaos in Healthways’ stock price. If you go to the Healthways ‘News and Events’ site, an otherwise ho-hum press release announcing a change in the fiscal year to a calendar basis and on-target expected price earnings for this year concluded with this telling paragraph [bolding added]:

‘Healthways today establishes its guidance for earnings per diluted share for the three months ending November 30, 2008, in a range of $0.34 to $0.37, which would represent an increase of 13% to 23% from the three months ended November 30, 2007. Mr. Leedle added, "While this guidance anticipates solid earnings growth from the comparable prior-year period, the sequential-quarter performance reflects a decline in revenue due to the impact of certain contract renegotiations, reduced revenues associated with the winding down of a previously discussed contract terminating at the end of calendar 2008 and the full-quarter effect of small contract losses due to health plan consolidation. This earnings guidance also anticipates incremental costs associated with the implementation of contracts scheduled to begin on January 1st.’

According to the flurry of news reports hitting the Disease Management Care Blog’s in-box, the expectations of earnings of 34 to 37 cents per share for the quarter ending November 30 contrasts quite unfavorably with the street’s expectations of 46 cents a share. Shareholders got grumpy and sold sold sold, provoking a 20% stock price drop, to its lowest level since the fall of 2003.

In scanning the news reports, shareholders apparently believe face-to-face care models are in the ascent and strapped insurers are ironically pushing back over the pricing of Healthways’ suite of services, especially ‘optional’ wellness and prevention programs. While overseas contracts may be a bright spot, they just ain’t enough to overcome the spectre of lower pricing and commoditization. Investors are looking for fatter return on their capital.

On the other hand, the Disease Management Care Blog notes that one quarter does not a long term investment make, and that the November 30 quarter is being buffeted by the an unfortunate combination of contract terminations and new program installs. The DMCB’s prior posts have been generally bullish on the folks from Franklin. However, that long (really long!) bullishness is based on three predictions - that the DMCB is still hanging tough on:

a) the population-based disease management ‘story’ is still being told and it'll take many more quarters-chapters before we know how this will sort out, and

b) once the high-touch medical home pilots show just how hard it is to reduce costs, disease management will look more attractive because…

c) models that combine the best of remote behaviorally-based disease management and clinically centered medical home will emerge, especially as synergistic insurance benefits are created (a naive yet conceptually simple example: waived co-pays for care of chronic illness) and the EHR finally shows demonstrable value (simple example: automatic test ordering and notification for all persons meeting tailored criteria for the diagnosis of a chronic condition).

The question for the leadership at Healthways: do you want to lead the way or follow in developing new links in the quality-cost value chain? The slump in your share price suggests so far that investors suspect it's the latter.

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Some Unsolicited Advice for the Disease Management Community on the Realities of Traditional "Research"

Ouch. Some ham-fisted dismay about Dr. Mattke’s paper on what the literature has to say on disease management from some colleagues in the for-profit side of the industry. In response, the Disease Management Care Blog has some unsolicited advice:

Getting to the ‘truth’ in health services research (HSR) is an imperfect science and a fickle journey. It can be waylaid by hidden bias, complex statistical analysis and imperfect generalizability. The conclusions are rarely bullet proof. There may be better approaches to asking the right questions, but once you enter this arena, you have to live by its rules.

The rules include having your fellow HSR expert-travelers delight in repartee and swordsmanship. What's more, the many readers of published research are independent-minded scientists who have been acculturated to judge the merits of conclusions with a skeptical and sometimes lethal eye. The best attempt at telling the truth will always be subject to the merciless scrutiny of your colleagues. Getting past peer review and publication is not the end, it is the beginning.

Peer reviewed publication is not one of several marketing ‘channels’ that exists to advertise or brand a product or service for a particular audience. Rather, it is an open and standing invitation for more critical review and even more research. The conclusions may ultimately be unexpected or even unwelcome. That is what truth-finding is all about. Your - our - patients will ultimately be better off for it.

Healthways and CMS Shakes Hands. Is a Phase II Next?

Healthways and CMS have signed an "Amendment" which 'changes the financial performance target for both its Initial Cohort and Refresh Cohort to budget neutrality from 5.0% net savings and 2.5% net savings, respectively.' The Disease Management Care Blog checked the CMS web site for more info. Finding none, it listened in on a recording of the May 6 Healthways Investor Relations web cast.

As the DMCB understands it, a new analysis of a 'refresh cohort' consisting of approximately 4000 enrollees with just chronic heart failure shows the company is within reach of achieving budget neutrality. They feel it is possible that in the remaining months, they can demonstrate an additional $3-$4 hundred thousand in savings and get from 93% of fees to 100%. If they reach it, they note that the original legislation requires the Secretary of HHS to launch Phase II because (and this was read out loud during the call):

"With respect to chronic care improvement programs conducted under subsection (b), if the Secretary finds that the results of the independent evaluation conducted under subsection (b)(6) indicate that the conditions specified in paragraph (2) have been met by a program (or components of such program), the Secretary shall enter into agreements consistent with subsection (f) to expand the implementation of the program (or components) to additional geographic areas not covered under the program as conducted under subsection (b), which may include the implementation of the program on a national basis.

special emphasis on 'a program' not all programs.

Because of the budget neutrality agreement, Healthways has been able to recognize $5.2 million of revenue that was otherwise tied up in its Medicare Health Support pilot. Guess what they are doing with this money? Instead of letting it flow into the company's bottom line, they are using it to disperse bonuses to the 'colleague' employees who are working in the MHS Program.

Does anyone have any doubt that the colleagues are going to work hard in the coming months to achieve the neutrality? Einstein has been quoted as saying the two most powerful forces in the Universe are gravity and compounding interest. From previous experience, the DMCB knows a 3rd force is nurses. It also knows of all the chronic illnesses, heart failure is probably the most amenable to efforts to decrease inpatient utilization.

The Disease Management Care Blog Puts a Circaseptan Spin on the Gallup-Healthways Well-Being Index

The Disease Management Care Blog has been following the Gallup-Healthways Well-Being index with some interest and expects the Index to eventually discover many needs in want of Healthways’ solutions. Following a flurry of press releases on how persons in the United States are ‘struggling’ while others are ‘thriving,’ the DMCB checked out the original on-line report to find out which group I belonged to and see how some Healthways solutions can help me.

Using a ‘ladder’ analogy, just under ½ of Americans are high up on the well-being index and expect to go even higher in the next 5 years. Hints about which countries have much lower and higher scores can be found here and here. What caught the DMCB’s eye, however, wasn’t the Danes’ contentment, but the weekly periodicity of the index. What gives?

There’s been a long-known association between the rhythms of time and human health. For example, there is a well known morning to evening variability in the incidence of heart attack and sudden death. This ‘circadian’ rhythm seems to be related to the increased physical activity, change in posture, increased heart rate, changes in blood viscosity and platelet reactivity associated with morning time. Of course, fertility status is monthly. Broader-timed seasonal variations have also been repeatedly observed in diseases such as multiple sclerosis and ulcerative colitis. Interestingly, the same appears to be true for control of blood glucose in diabetes mellitus. The reasons are less well known but may be related to viral activity or other environmental factors.

But the DMCB was curious about the weekly variation. In looking at the “Daily Mood Among Americans,” graph toward the bottom of the report, there is no overall change from January to April but there is a distinct weekly undulation in the index. Maybe it’s because of the social impact of weekends, which also appeared to be associated with 9 out of 10 of the happiest days during the period of study.

More is at stake than just happiness, however. Scientists have detected that there can be a weekly variation in the incidence of heart attack and stroke. It’s possible that stress could be playing a role, since many workers dread returning to the job on Mondays, or the retired miss their former jobs the most when the weekend is over. There is also the possibility that access to health care may be lessened on weekends and persons may wait until Monday before notifying a health care provider of symptoms. Some toxic effects of alcohol abuse may also declare themselves in the days following a binge.

However, there may be more to it than just social dimensions of our 5 day work week. Not only is there a more direct link to mood, check out the weekly variation in blood pressure that can exist among persons with no reason to enjoy weekends. The point is that humans may also have an innate 7 day rhythm that has even broader implications. Accordingly, the weekly variation in our well-being may not only be sociologic, but partly 'hard-wired' physiologic.

Not that Healthways can do anything about that - yet. The Disease Management Care Blog checked their web site and did not find a circaseptanally-oriented program offering that can sociologically or physiologically push me further up the Index ladder. Instead of thinking about this as a DM solution in search of a condition, I volunteer to have any DM vendor enhance my Well-Being Index by deploying this award-winning, peer reviewed, proven alternative personalized engagement and coaching strategy for me.

World Health Care Congress Quotes for Your Reading Pleasure

Quotable paraphrases heard at the World Health Care Congress:

'Wonder if you need an online personal health record? No? Well... did you wonder if you needed a BlackBerry?'

New title for mothers: 'Family Health Managers' or 'FHMs.'

'It’s not the best hospital, it’s the hospital [or doctor] that best matches the preferences and values of each patient.'

Have high deductable plans interfered with disease management program enrollment? Answer from a disease management vendor: 'No.'

Following a four presenter lengthy one hour nostrum-filled, earnest, wordy, complicated, disorganized and biased PowerPoint session on a multi-party disease management initiative attacking diabetic eye disease for a major Blues Plan, the DCMB asked if there was any impact on HEDIS rates: “Don’t know.”


'How many of the persons in this audience WALKED to school?' Vast majority of hands went up. 'How many of your CHILDREN walked to to school?' Very few hands went up.

What is Minnesota BCBS Up To?

The Disease Management Care Blog attended a session describing what Minnesota Blue Cross Blue Shield has been up to in the ‘medical home’ arena. As regular readers will recall, this particular Blue was one of the reasons why Healthway’s stock experienced a recent price decline following the announcement that it may withdraw from its contract.

It appears that Minnesota BCBS was petitioned by a number of provider organizations to support a ‘medical home’ in lieu of traditional disease management. The experience with one 400 physician medical group was very telling. This particular group had an electronic health record with registry support as well as physician-led teams staffed with non-physician practitioners. Minnesota BCBS agreed to give it a try and turned off the disease management for the patients assigned to this clinic. Over time, there was a meaningful improvement in clinical outcomes. Minnesota BCBS took the next step and compared the medical home-enabled clinic’s outcomes data to another similar clinic that still had live disease management. They found that the improvement in outcomes not only appeared to be significantly better compared to the convenience control clinic, but that there was also a meaningful difference in per member per month cost favoring the medical home.

Based on what the DMCB heard, this doesn’t mean Minnesota BCBS is prepared to cover all versions of the medical home throughout its network starting tomorrow. For example, the pilot above did not include any changes in reimbursement. However, other clinics have expressed an interest offering this and there are efforts underway to develop a payment mechanism. “It’s worth our time to work with clinics that have medical homes.”

Without being prompted to do so, the speaker pointed out that he believes the “call center” function works better in a central location that is supervised by the insurer. The intrepid DMCB asked about this, and the reply was interesting but unsurprising: a “distributed” call center function spread out among multiple clinics is destined to be higher cost: ‘we found one nurse can cover a thousand patients with CAD.’ The speaker suggested one way to approach this would be to allow the medical homes to individually or collectively “outsource” its telephonic remote support. To further support this, BCBS has had some positive experience in which remote disease management nurses were able to enter, interact with and document in the electronic health record for review by the care team.

Interesting stuff. The DMCB doesn't know if what is true in Minnesota is necessarily transferable to the rest of the United States, especially smaller clinics. However, it can't blame Minnesota BCBS for thinking about using its network for population based care while integrating the more scalable support functions from a central location.

Physicians Support Medicare Health Support

Healthways is continuing to pull out all the stops in getting Medicare Health Support back on track. According to its press release, ‘more than 500 health care professionals’ and ‘400 family care givers’ have ‘appealed’ to members of Congress on behalf continuing the program. There is even a web site that hosts the scripting of personal emails.

The DMCB suspects Healthways had a hand in prompting the appeals but nonetheless, getting 500 health care professionals to do anything in unison is remarkable.

But then again, influencing health care providers is one of the things that the disease management industry strives to do. Maybe it's better at it than previously appreciated.

The Gallup-Healthways Well Being Index

Want some more insight about the business model underlying the Gallup-Healthways “Well Being Index” venture? Check out this March 21 report that contrasts smoking vs. income by race.

They’ve calculated that there is a market for detailed information like this that will in turn enable businesses and governments to segment populations in multiple ways. This will allow precisely aimed health care interventions (oh, yes and marketing too) that are correlated to multiple dimensions such as income, place of employment, purchasing preferences or party-dude efficiency.

The Disease Management Care Blog heard Newt Gingrich salute this initiative, heralding it as another example of how our terabyte society will commercially coordinate itself into a state of maximum well being. But give this approach some credit. This is speedy, efficient and backed by an organization that knows how to do this. In my opinion, the data are methodologically close enough, confirms what we already know from prior studies in a highly granular fashion and points the way to designing interventions to reduce the burden of tobacco abuse where they are most needed.

Note that the Centers for Disease Control and Prevention have been collecting tobacco use data for many years. Unlike the Well Being Index, all their information is non-commercial and available on line. The DMCB doesn’t think the CDC information is quite as user friendly or as amenable to the wide range of possible sub-group analyses. Maybe Newt has a point about this area of the healthcare medical-industrial complex: there are new parts that work and then there are long-established parts that don’t work work less efficiently.

Healthways Tells Us About the State of the Disease Management Industry

Ben Leedle, Healthways’ CEO, recently completed that quarterly ritual known as the Earnings Call. The Disease Management Care Blog looked past the nascent optimism and went for the story behind the transcript – it makes for interesting reading because it tells us a lot about the disease management industry in general. I’ve culled telling (if sometimes awkwardly worded) parts of the transcript below and paired them with my industry insights. See if you agree:

The DM market is more than just outsourcing vs. not outsourcing by individual insurers - insurers are seeking to do both:

‘we believe the best in class solutions for health plans will always be a combination of in-source and out-sourced capabilities that are well-knit together.’

The U.S. business environment for DM is good:

‘continuing success in g rowing [sic] our domestic business can be found in the more than 200 contracts signed year-to-date.’

One reason it’s good is because there is demand for wellness intertwined DM:

‘we are seeing is a very strong shift and a rapid move for disease management and wellness programs to be integrated.’

Another reason why it’s good is because health plans want to use DM to avoid becoming commoditized and just paying claims:

‘pressure on the health plans to show their relevancy to do just that. So I think it is going to press them, as we’ve said for a long, long time, that at the end of the day it will be about outcome and that the market will pursue at a higher rate of expectation that you can deliver and improve those outcomes.’

And international markets too:

‘Our second central growth initiative is to expand our addressable market beyond our domestic business. One way we are doing this is through our international initiative…with DAK, the second largest statutory insurer in Germany….Brazil became our latest new addressable market with the signing of a ten year disease management services agreement with Fleury FA'

As far as we’re concerned, the debate about the science is over:

‘Twenty-one significant publications, nearly one-third of all the published peer reviewed outcome studies in our industry over the past ten years have evaluated our solutions and proven the value of the work that we do with our customers. Sixteen of these studies evaluated our disease management outcomes. Five evaluated results of health improvement solutions.’

Turning terabytes of data to information and information to insight are an emerging and important part of the business model:

'Gallup will make at least 365,000+ annual surveys for the next 25 years. Coupled with the deep clinical, behavior change and claims data Healthways will provide, the Gallup Healthways Well-being Index will…measure the health and well being of population(s) to guide strategies for improvement and to evaluate the effectiveness of selected solutions….We leverage one of the largest and diverse databases for health improvement on the planet. We maintain more than 200 terabytes of consumer data across claims, clinical, utilization and intervention support categories.'

What was not said:

Chronic care model, medical home.

We’re from the government and we’re here to help you with timely access to data, following the intent of Congress and complete transparency, not:

'What we don’t know any more than you do is where that data came from or have the opportunity for CMS to share with us how they came to those conclusions…we went public with a statement about request for that clarification….I think the one thing to keep in mind is the difference between any kind of financial reconciliation related to the Cooperative Agreement and the construct and concept and work that will be done to evaluate the performance of these pilots consistent with the way that the Statute was written. I think there is still confusion in the marketplace around the difference in those two things and it is going to be really important that you keep that in mind….I can’t draw any conclusion around it until I understand directly from CMS how they arrived at those numbers and for what time periods they arrived for it and what was their work done in being able to calculate relative trend lines and the rate of change that has to occur with remaining months.'