An increasing number of companies are using disease management (DM) programs to control employee healthcare costs. You might be considering starting such a program for your own employees. Is that a good idea? Do DM programs really generate a positive return on investment (ROI)? Or has their financial impact been overstated?

A new study from Cornell University and Thomson Medstat, published on August 4, sheds some light on these questions. The findings: Most of the DM programs studied did have a positive ROI; but the extent of savings achieved fell short of the company's expectations. Here's a look at the study results and what they might bode for your own health program.

What Is Disease Management?

The term disease management means different things to different people. In a room full of doctors, DM is a clinical term referring to the use of a coordinated, multidisciplinary strategy to handle patients who have or are at risk of getting certain medical conditions. It involves not just treating the condition but preventing it in the first place.

HR and safety professionals, employers and healthcare insurers accept that DM is a sound medical strategy. But when they use the term "DM," they're generally talking about financing these services to make them available to employees.

The employers' business strategy is to save money by securing all the services for managing a disease in one integrated package on a prospective basis. This is much cheaper than buying each component a la carte as the need arises. Employers also like DMs because they focus on prevention and thus keep the workforce healthy and productive.

How do employers secure DM services for their employees? As with other health services, big companies can make their own arrangements with doctors, hospitals, pharmacies and other providers. Others have to rely on managed care organizations and/or pharmacy benefit managers to make the provider arrangements.

In either case, there are DM programs for different chronic medical conditions that cost a lot to manage, such as depression, diabetes and leukemia. There are also programs for multiple conditions. Employers try to figure out which conditions their employees are susceptible to and secure the appropriate DM services.

Is DM a Sound Investment?

DM programs have been around for more than a decade and most companies use them (roughly 95 percent according to a recent survey of 550 companies by Watson Wyatt). In addition, there's a lot of evidence that DM programs have improved care quality and outcomes.

When they first appeared, DMs were seen not only as a means of improving care but as an answer to spiraling healthcare costs. But now the bloom seems to be off that rose. Recent reports suggest that the economic returns on DM have been less than advertised. The most notable: A 2004 report from the US Congressional Budget Office that found "insufficient evidence to conclude that disease management programs can generally reduce overall health spending."

Conclusion

For all the discussion that the issue has generated, there has not been much research into the ROI of DM programs. The Cornell-Medstat study is the first attempt to gather a representative sampling of DM programs and analyze their ROI. That makes it a significant study. Next week, in Part 2 of this series, we'll look at the results of the study.

HISTORIC MOMENTS IN WORKPLACE SAFETY

Nova Scotia miners commemorate the 10th anniversary of the Westray disaster.

The Westray Mine Disaster

At 5:20 AM on May 9, 1992, an explosion tore through an underground coal mine in Plymouth , Nova Scotia . Fires started. The ground above collapsed. None of the 26 miners inside the mine came out alive.

The so-called Westray affair was one of the worst workplace disasters in Canadian history. What made it especially hard to take was that it was preventable.

The mine operators knew that combustible methane gases were building up inside the mines but didn't provide necessary ventilation or take other steps to abate the problem. Worse, the officials failed to warn the miners of the danger. They just kept sending them down the mines.

What produced the spark that set off the all but inevitable explosion was never found. But it was probably one of the cutting machines used in the mine.

The Canadian government brought criminal charges against the mining officials but the case was ultimately dismissed because of problems with the evidence. The Westray disaster and subsequent miscarriage of justice produced a public outcry and a demand for tougher laws. The result was a new national law called Bill C-45, which took effect last year. C-45 is designed to ensure that if, heaven forbid, another disaster like Westray were to occur, companies and their officials will be held accountable.

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