Companies head off costly health care

They identify, advise high-risk patients on cheaper remedies

May 13, 2001|By M. William Salganik | M. William Salganik,SUN STAFF

Just over two years ago, her baby was born with a rare genetic disorder, and, Joelle Scholl, of Lancaster, Pa., recalled that as soon as she got home from the hospital, "People said, `This Kathleen Shelley keeps calling.' "

Kathleen Shelley, a nurse who used to work in the newborn intensive care unit at Johns Hopkins Hospital, was calling from a cubicle in Timonium.

In the top drawer of her desk, she keeps photos of some of the young patients whose parents she advises. She is employed by a company called FutureHealth. She is trying to keep health costs down - even if she has to spend money to do it.

In the case of Patrick Scholl, she recommended expensive shots to prevent a respiratory virus to which the infant was susceptible. "I never would have thought to have asked for that," Joelle Scholl says.

The nurse "fought the insurance company," successfully, to get them to cover seven shots at $1,600 apiece, Scholl recalls - but the shots, in the mother's view, likely prevented a hospitalization of one to two months that could have cost $100,000.

FutureHealth is in a business called "disease management" or "care management." Claire Rosse - an R.N. and an M.B.A. - started it about a decade ago, based on the simple premise that a small number of high-risk patients account for a disproportionate number of insurance costs.

Several studies show that about 8 percent of patients are responsible for more than 50 percent of medical costs, said Dr. David B. Nash, editor in chief of the academic journal Disease Management.

Rosse read the studies and thought, "We should find those patients and work with them." She proposed the idea to BlueCross BlueShield of Maryland, where she worked, but the insurer was in tough financial times and couldn't finance a new business initiative.

"So I said, `OK, I really believe in this. I want to leave and start a company,' " Rosse said. She began with three employees in July 1992, "and I thought people would rush to my door."

They didn't rush. She said that it took a few years for people to get used to the concept and that potential growth was slow because it was hard to raise capital.

Now, however, FutureHealth has 60 employees and about $5 million in annual revenue. The company is hired by small insurance companies or by third-party administrators who operate self-insured plans for employers. It serves about 400 employer groups with about 450,000 employees.

Overall, employers can save up to 7 percent on health costs by using FutureHealth, the company says.

Rosse said FutureHealth uses custom software that scans insurance claims to identify "people at risk."

While FutureHealth reaches out to those high-risk employees through health fairs and other work place promotions, most of the work is done by nurses on phones.

Once contacted, the employees decide whether to participate. About 70 percent do, but "it has to be voluntary, and it has to be confidential," she said.

FutureHealth reports to employers on overall medical cost trends, but not on individual cases.

The nurses begin with a 20-minute questionnaire, then follow the patient and offer advice.

Scholl said Shelley explained Patrick's different medicines, suggested questions she should ask his doctor, and helped her arrange for insurance to cover unusual costs, ranging from an expensive baby formula to helicopter transportation to a specialty hospital.

Scholl recalled her worried calls with Shelley, "She said, `Calm down, take care of Patrick, and I'll deal with the bills and make the calls.' "

Shelley, who has been with FutureHealth for three years, said she is able to smooth the way because she is familiar with insurance companies' procedures.

Among the items she has gotten insurers to cover, she said, is a "talking" computer for an 11-year-old cerebral palsy victim who is legally blind and cannot speak.

While some efforts to control medical costs focus on reviewing requests for care or denying payment for unnecessary services, Rosse said FutureHealth's emphasis is different.

Studies show that 50 percent of patients with chronic diseases don't follow medical advice, so the nurses try to make sure people are taking their medication, getting checkups on schedule and following their exercise and diet regimens.

Many companies have struggled to find the right clinical and business model for care management, said Nash, who also is director of the office of health policy and clinical outcomes at Thomas Jefferson University, an academic medical center in Philadelphia.

Magellan Health Services Inc. of Columbia, for example, bought two disease management companies, but losses forced it to shut them down, resulting in $99 million in write-downs last year. The companies focused largely on reviewing claims after care had been given.

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