Let's Do The Math

Future Health Corporation

By Shannon Brownlee

Washington Post Staff Writer

Six years ago, at age 51, Sandra Sherman was diagnosed with breast cancer and underwent a mastectomy. Three years later, she was told she had pancreatic cancer and less than 18 months to live. That cancer and the subsequent surgery, which removed part of her stomach and rerouted her intestines, left her a diabetic.

Yet today Sherman is back driving a school bus, with no sign of cancer and her diabetes under control. Miraculous recovery? Not as Sherman sees it. She credits the down-to-earth efforts of Kim Tawney, the nurse who phoned her every week for six months and provided medical advice and practical solutions for the many problems, surprises, bureaucratic hassles, blind alleys and other rough patches Sherman faced during her treatments and recoveries. Hurdles such as finding a nurse who could make home visits when Sherman could not manage the daily drive from her home in rural Charlotte Hall, in St. Mary's County, to a Baltimore hospital for chemotherapy. Hurdles such as teaching Sherman, step by step, how to control her diabetes through exercise and nutrition.

"Kim," Sherman says, "is one amazing lady."

Even more amazing is the fact that the sort of hyper-attentive, highly personalized care and advice Tawney provided didn't cost Sherman any money -- and in fact saved her health insurance firm a lot, too. Tawney works for a small Maryland company called FutureHealth, which operates under the revolutionary principle that identifying the small percentage of patients in an insurance pool who are most likely to land in the hospital and then devoting resources to keeping them healthy can significantly reduce the cost of caring for the entire group. This means an insurer can reduce restrictions on other covered members and still save money.

That may seem like a radical notion in an era when most managed care groups devote themselves to managing the entire insured population, often with rules and restrictions that aggravate patients, doctors, nurses and the companies that pay to have their workers insured. But according to a national survey commissioned by the federal Health Care Financing Administration (HCFA), companies that use approaches similar to FutureHealth's not only can keep some of their sickest patients healthier, they can also bring down hospitalizations by 30 to 50 percent and save as much as 35 percent on health care costs.

"The bottom line is, the people we work with are healthier, and people who are healthier cost less money," says Tawney, who is now a vice president of FutureHealth.

FutureHealth is a small company in a huge industry, managing only about 400,000 people in insurance pools around the country. It calls itself a "population risk management firm," though it has some things in common with "case management" companies (which manage the costs and care of hospitalized patients) and "disease management" firms (which manage the care of patients with specific diseases). FutureHealth adds to these services the ability to identify people who are likely to become costly users of health insurance dollars before they have landed in the hospital. While FutureHealth has made only modest commercial headway in its nine years, it's an excellent illustration of how a compelling idea can -- and can't -- make an impact on the nation's much-maligned and increasingly expensive health care bureaucracy.

Applied nationwide, says Gerard Anderson, professor of hygiene and public health at Johns Hopkins University in Baltimore, the practice of identifying and paying better attention to people at high risk of landing in the hospital could cut billions of dollars from medical costs per year. Yet the insurance industry has been reluctant to adopt such approaches.

"We wait for people to get sick enough to be hospitalized," says Anderson, "treat them and send them home until the next time."

Let's Do The Math

FutureHealth's program is based on some straightforward arithmetic.

Statistics show that a small fraction of people in most insurance pool accounts for a majority of costs. Nationwide, between 3 percent and 5 percent of patients rack up 50 percent to 60 percent of the medical costs paid by their insurer, according to HCFA, which oversees Medicare spending and collects health statistics from across the country. Of course, some of those patients have temporary, unpredictable ailments that cost a lot to treat no matter what, such as injuries from automobile accidents or cancer.

The majority of expensive patients, however, have serious chronic conditions, such as high blood pressure, osteoporosis, congestive heart failure, asthma or diabetes, diseases that left unchecked would lead to repeated hospitalizations and ultimately to even more dangerous -- not to mention expensive -- ailments. Uncontrolled diabetes, for example, is the most common cause of kidney failure, according to the American Diabetes Association. The treatment: either dialysis or a $200,000 kidney transplant. Asthma, which in many cases is controllable, accounts for half a million hospitalizations each year, according to the federal Centers for Disease Control and Prevention.

The founder and CEO of FutureHealth, Clair Rosse, 48, reasoned that if she could help patients with chronic illnesses stay healthy -- and stay out of the hospital -- she could save insurers and employers money. An MBA who has been a registered nurse, Rosse founded the company in 1992 with three employees and a single insurance company as a client. She set out to devise a system that could identify the patients in an insurance pool who were most likely to benefit from more intensive and personalized attention.

Those patients, it turns out, are not only the ones who have chronic disorders, but who are also likely to be "noncompliant." These are people who cannot or will not follow doctors' orders and as a result are likely to wind up in the hospital when their chronic conditions flare up. Several studies conducted over the past two decades have shown that on average, 50 percent of patients with chronic disorders do not follow doctors' orders.

For example, an analysis published in 1990 that looked at 26 separate studies found that between 40 and 50 percent of diabetics fail to control their blood sugar adequately. A Hopkins study found that 40 percent of people with high blood pressure stop taking their medication after one year, putting themselves at heightened risk for strokes and heart attacks. And according to a 1995 paper in the journal Transplantation, 20 to 25 percent of kidney transplant patients risk losing their transplanted organ by failing to comply with treatment programs.

From her experience as an RN, Rosse knew that while some patients simply don't care about their own health, most would like to be healthier but lack either the will or the knowledge -- or regular professional support -- to do it. "People go in to the doctor's office, find out they have diabetes, and think, 'Oh my god I'm going to die,' " says Rosse. "They don't retain the information they need to take care of themselves when they go home."

Her company now uses a proprietary software program, licensed from and developed with Hopkins's Applied Physics Lab, to scan the medical records of a pool of insured people. The program looks not only for patients who have been diagnosed with chronic illnesses, but particularly for those whose disorders are not being adequately treated. For instance, a person who has had a heart attack automatically sends up a red flag, because patients who survive their heart attacks must manage their cholesterol and blood pressure to avoid future hospitalizations. Most do not.

A person with diabetes who is not seeing an ophthalmologist once a year also shows up in Rosse's system, because the disease can lead to damage to the eyes and blindness -- and diabetics who are not taking care of their eyes are likely not controlling their blood sugar very well. The company also scans for asthmatics who are regulars at the emergency room, as well as pregnant women, transplant patients and people with osteoporosis and high blood pressure.

Such patients, if properly managed and offered the right care, are prime targets for cost savings. Often these people have not yet incurred large medical expenses but have the potential to do so. Controlling high cholesterol or high blood pressure with drugs costs about $5,000 per year -- provided the patient is willing to take his medicine. But compared with the cost of treating a single, simple heart attack -- $25,000 -- the drugs are a good deal. Getting a diabetic to lower his average blood sugar level by a little more than 10 percent can save $4,000 per year in medical costs, according to a study by the American Diabetes Association.

Managing The Unmanageable

Once the computer system has identified the highest-risk patients, FutureHealth mails them literature describing the company's services and explaining that they will not cost the patient a penny. Then a nurse calls to offer assistance. This can get tricky, as the line between offering compassionate and effective care and intruding into people's personal lives can be hard to identify. Patients are not obligated in any way to cooperate with FutureHealth care managers.

"This is a sales job," says Tawney. "Nurses have about 30 seconds to establish that this is a legitimate service."

Even so, the vast majority of people receiving their first call -- 85 percent, by FutureHealth's estimates -- are not ready to change the way they live in order to be healthier.

The company is willing to wait, and cajole. Tawney trains the company's nurses to recognize five psychological stages people go through before they can break bad habits. Most of the high-risk patients they contact are in the "pre-contemplation" stage.

"They don't even want to think about stopping smoking or losing weight," says Tawney. Nurses simply encourage such people to think about their health and say they will call again in a few months.

Once a person has begun considering how to make a change, nurses know they can start encouraging them. "You know they are getting ready to stop smoking when they start saying things like, 'I think the patch is better than the gum,' " says Tawney. "That's when we start telling them the benefits of cessation and the dangers of smoking. It's time for high information load, but still low pressure."

By the time a patient is prepared to act, a nurse may begin calling daily. Nurses offer pep talks and advice, such as how to cook brown rice or how to get a blood sample for a blood-sugar test. Some patients require daily or weekly attention for several months, or even a home visit to demonstrate how to use a medical device.

Helen Harrison, a FutureHealth nurse, persuaded a woman who was not controlling her diabetes -- and was suffering complications from bypass surgery as a result -- to track both her blood sugar and her diet. After a week of this, the woman could see that her blood sugar was skyrocketing when she ate certain foods. "It finally dawned on her she couldn't eat a bag of potato chips," says Harrison. After that, it was easy for Harrison to help the woman plan more-healthful meals.

Along with teaching their patients how to take care of chronic conditions, FutureHealth nurses also coordinate care among a patient's doctors, negotiate discounts on drugs and supplies, and steer patients through the medical system.

That's the kind of intensive care Timothy Topper, a warehouse worker in Hershey, Pa., needed last year after checking into the hospital on New Year's Eve for what he thought would be a routine operation to remove a kidney stone. Before the operation, Topper, 48, was told he would be back in shape for work by the end of the holidays. Six months later, he was cycling in and out of the Hershey hospital every few weeks and feeling suicidal.

During the operation, it turns out, the surgeon had nicked one of Topper's ureters, the tubes that run from each kidney to drain urine into the bladder. To keep the ureter from being choked off by scar tissue, Topper had to endure having a stent -- a tiny tube-shape scaffold -- inserted through his penis. The stent irritated his bladder, making him feel like urinating constantly. Every few weeks, when the stent had to be changed, Topper got a bladder infection that required another hospitalization, at an average cost of $1,500 a day. Within six months, his treatment had cost his insurer, Educators Mutual Life, nearly $27,000.

FutureHealth nurse Shirley Carlton was assigned to Topper's case. She called him regularly and tracked his medical records. When it was clear he was not getting better, she negotiated with his insurer to send him to a urologist at Johns Hopkins University Medical Center, where his kidney was removed. The surgery cost the insurer $15,000, but it put a stop to Topper's pain and the repeated hospitalizations.

Today Topper is back to work and grateful for the help of FutureHealth. "If I ever meet Shirley Carlton, I'm going to give her a big hug," he says.

Other cases demand far less attention from the nurses, who can help many patients simply by mailing them literature about their diseases or directing them to the company's Web site (www.myfuturehealth.net). One nurse was able to keep an asthmatic child from nearly weekly visits to the emergency room, at a cost of $600 each, by telling his mother to purchase a spacer, a $30 device that snaps onto an inhaler, allowing the child to get anti-inflammatory drugs into the lungs fast enough to stop an asthma attack. Neither the patient's doctor nor insurer had thought to recommend this.

Reality Check

FutureHealth's data show that personalized care can produce savings ranging from 5 to 25 percent, even after taking into account the cost of the nurses' time and interventions. This, in theory, translates into savings for the employer paying for health insurance -- and yields a presumably healthier, less absent and less stressed workforce.

One of the company's clients, an aluminum manufacturer, has seen its medical costs increase since signing on with FutureHealth, but at a far slower rate than the national average. In 1993, the company paid $310 per month in medical claims per employee, about $20 less than the national average. In 1999, the company's claims were $350 per month on average, compared with $420 nationwide.

"I think this is going to be the model that drives what healthcare does in the new century," says Frank Ammerman, vice president for business systems at EducatorsMutual Life, which provides health insurance to about 60,000 people. Indeed, similar programs around the country are beginning to report reductions in costs paid by insurers.

The journal Business and Health. Pregnancy offers one prime target for preventive care. According to a study by the Institute of Medicine, every dollar invested in prenatal care and education brings down health care expenses by $3. That's because women who do not receive prenatal care are more likely to have birth complications and premature babies than those who see a doctor regularly and know the signs of preterm labor, and a single premature baby can cost between $20,000 and $1 million. FutureHealth's maternity program had a 6 percent preterm delivery rate for 1999, compared with 11 percent nationally. Most insurers do not attempt to identify mothers at high risk for preterm delivery or manage their care differently from the typical case.

"It's not rocket science," says Mary Naylor, a professor at the University of Pennsylvania School of Nursing and director of a study that reduced costs by assigning a nurse to elderly patients to manage their care once they left the hospital. "It's a return to what we learned in social work and Nursing 101 -- taking care of the whole patient."

Trouble is, taking care of the whole patient is not something that comes easily to the health insurance system. Most insurers, says Hopkins's Gerard Anderson, traditionally have failed to see it as being in their best interest to pay nurses and doctors to spend the time it takes to care for patients with chronic conditions before they are seriously ill. Insurance pays when a patient is hospitalized and for doctor visits, but few insurers are willing to cover the long-term follow-up that may be necessary to prevent the next crisis.

That's understandable to some degree, because many patients with chronic disorders will have several health insurers over the course of their illness, either because they change jobs or because their employer changes insurers. Part of the problem for insurers is that the big payoff from taking extra care of a person with a chronic illness may not appear for several years, when the person would otherwise have gone on to develop an acute, debilitating disease. Insurers have traditionally perceived that if Company A makes the investment in caring for chronically ill patients up front, chances are good that Company C will reap the savings.

Which may explain why proactive approaches to managing potentially costly patients has been slow to gain acceptance. In the nine years since Rosse founded FutureHealth, it has grown to manage employees covered by a dozen corporate clients. It now employs nearly 60 nurses and last year had $5.5 million in revenues. It has gained one competitor in the "risk management" niche. "We were the first company to do this," says Rosse. "Nobody wanted to use us until we had data showing the savings."

The New Century

In the coming century, rising medical costs are projected to collide with the aging of the population. As a result, the United States will have an enormous group of people with costly chronic diseases.

There are 125 million people with chronic diseases today, according to a new group called Partnership for Solutions, a three-year, $7 million project backed by the Johns Hopkins University and the Robert Wood Johnson Foundation, and that number is projected to reach 157 million by 2020.

These people are expected to account for about three-quarters of medical expenditures. About 70 programs around the country have demonstrated the ability to improve health for the chronically ill and lower costs, according to Mathematica Policy Research Inc., a New Jersey company that recently completed a search for so-called coordinated care for HCFA.

This month Partnership for Solutions, launched to support research about and funding for treatment of chronic illnesses, announced projects underway including efforts to analyze the benefits packages of major corporations in relation to chronic disease and to investigate current financial incentives for the treatment of the chronically ill.

Which is good, because experts warn that efforts to contain costs aren't likely to make a dent as long as the medical system rewards doctors and hospitals mainly for providing care for acute problems and offers little compensation for preventive care. As long as the treatment of illness is the main generator of profits, that treatment will remain at the center of the healthcare industry's attention. Empty beds don't generate revenue for hospitals, and healthy patients don't need the surgeries and other expert interventions that pay doctors' and nurses' salaries. Wellness programs and preemptive care can reduce employers' costs, but they do nothing to compensate providers of care.

"We need to shift the policy of reimbursement so that programs that are giving the best care should be paid" for keeping people healthy, says David Bernard, co-founder of Doctor Quality, an online company that provides patients and employers with information about doctors and hospitals. "Doctors and hospitals should be measured on how healthy they keep their patients," not merely on how well they respond to acute medical problems. "But no one asks if the doctor who sees diabetics four times a year is lowering their blood sugar or making sure they see an eye doctor."

With the federal government having a big and immediate stake in holding down healthcare costs, it is starting to pay attention. HCFA plans to begin this year to fund 15 risk- and disease-management pilot programs. If one or more prove effective at boosting health and lowering costs -- that is, if this approach saves taxpayers' money by keeping the chronically ill healthy and out of the hospital -- Medicare would begin paying for preventive care for the chronically ill. This in turn could prod more private insurers to follow suit. But the path is long.

"Getting the insurance industry to change," says Gerard Anderson, who is national program director for Partnership for Solutions, "is like turning a battleship."

Patient, Heal Thyself

It's easy to blame a big, impersonalized industry like health insurance -- especially one that has annoyed and enraged so many people -- for America's healthcare cost problems. But early experiments with cost control for chronic illness illustrate that by far the most intractable group is the American public itself -- those who insist on eating french fries instead of fruit, drinking soda instead of water and flopping in front of the television after dinner instead of taking a walk. Against this reality, the challenge is daunting.

FutureHealth nurse Harrison tells the story of a 40-year-old diabetic who must use insulin to control her blood sugar. Despite having had the disorder for her entire adult life, says Harrison, the woman refuses to care for herself, eating foods that exacerbate her condition and testing her blood sugar only once or twice a week rather than several times daily.

Harrison is undeterred. "You just keep the conversation short," she says. "And promise to call again in two weeks."

Shannon Brownlee, formerly a senior writer for U.S. News and World Report, is an Annapolis-based writer.

Copyright © 2001 The Washington Post Company.

This article posted April 21, 2001.