Population Health Costs Could Explode as Employee Health Declines

Saturday, November 16, 2019

A chronic disease is one lasting 3 months or more, as defined by the U.S. National Center for Health Statistics. Chronic disease affects health and quality of life, but it is also a major driver of healthcare costs. Take note of these eye-popping statistics from the CDC:

  • In 2012, about 50% of all adults—117 million people—had one or more chronic health condition(s).
  • 25% of all adults had 2 or more chronic health conditions.
  • 7 of the top 10 causes of death in 2010 were chronic diseases.
  • 2 of these chronic diseases—heart disease and cancer—together accounted for nearly 48% of all deaths.
  • 75% of all healthcare spending is for people with 1 or more chronic medical conditions.

It’s great that we are living longer, but one of the by-products of this fortune is the cost of caring for an aging population. As the population ages, more people are categorized as high risk for multiple chronic diseases. At least 80% of people older than 50 are living with one chronic condition, while 50% of those over age 50 are living with two chronic conditions.

The costs associated with chronic diseases are astronomical. According to the CDC:

  • 86% of the nation’s $2.7 trillion annual healthcare expenditures are for people with chronic and mental health conditions.
  • People with chronic conditions cost 5 times more those without these conditions.

These numbers don’t take into account presenteeism and absenteeism costs associated with chronic disease.

The costs associated with chronic disease are astronomical.

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Disease Management Programs Reduce Costs

Data analytics, in tandem with a disease management programs, can decrease these chronic care costs and improve health along with it. Demographic characteristics and healthcare utilization are analyzed to identify individuals who will benefit from a disease management program.

Here are a couple of specific examples outlining the benefits of disease management:

RAND Study

According to a RAND study of a Fortune 100 employer over a 10-year period, the disease management program saved $136 per member per month (PMPM) for employees participating in the program.

There was also a 30% reduction in hospital admissions.

Georgetown University Health Policy Institute Study

According to a Georgetown University Health Policy Institute study, healthcare service use and expenditures decreased for about 7,000 people in a diabetes management program after one year. While enrolled in the program, individuals were more likely to receive tests to monitor their blood sugar, foot and eye exams, and cholesterol screenings. Hospital admissions and bed days each decreased by about 20 percent compared to the period prior to enrollment.

These outcomes likely contributed to total savings of $44 per month per enrollee.

The study also found thatpPeople ages 40 and older with heart disease, lung disease, or arthritis enrolled in a six-month disease management program used fewer healthcare services. Two years later, patients reported feeling less distressed about their health and that they were better able to manage their conditions. A reduction in outpatient visits, including emergency room and physician visits and hospital stays reduced healthcare expenditures by $590 per participant over a period of two years.

At a program cost of $70 to $200 per participant, the actual cost-savings ranged from $390 to $520.

The following are some specific examples of how controlling an individual’s condition can save money, and perhaps lives.

Diabetes

The American Diabetes Association reports that in 2012, 22 million people were diagnosed with diabetes, costing the healthcare system $245 billion:

  • $69 billion of that was due to productivity costs.

Healthcare costs for a person with diabetes are more than $13,000 per year. For every 1-point reduction in HbA1c (a measure of blood sugar over time), a 40% reduction in microvascular complications are reported (blindness, kidney disease, and nerve damage), and up to $4,100 can be saved in annual healthcare costs.

More than 66% of the people living with diabetes have high blood pressure, and their risk for stroke is 2 to 4 times higher than those without the disease.

More than 66% of the people living with diabetes have high blood pressure, and their risk for stroke is 2 to 4 times higher than those without the disease.

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Hypertension

For more than 70% of Americans with hypertension, their blood pressure is poorly controlled. A 12 to 13-point reduction in systolic blood pressure can reduce:

  • Heart attack risk by 21%
  • Stroke risk by 37%.

A heart attack costs $78,221 in the first 90 days, not counting the effect on the individual and family.

Cancer

Treatment of early stage breast cancer costs $11,000. Diagnosis at a late stage means more intensive treatment that may not be as effective, at a cost of $140,000.

Treatment of early stage cervical cancer costs $2,000. More intensive treatment due to later stage diagnosis means more intense treatment that may not be as effective. The cost is $30,000.

These are just a few examples of the many ways identifying people at risk for chronic conditions or those currently in a chronic condition state can help improve employee health and reduce employer costs.


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