Disease Management: A Leap of Faith to Lower-Cost,Higher-Quality Health Care

Originally published by the Center for Studying Health System Change (HSC), a nonpartisan policy research organization funded principally by the Robert Wood Johnson Foundation.

Disease Management: A Leap of Faith to Lower-Cost, Higher-Quality Health Care

As managed care's early promise to reduce costs and improve quality faded, employers and health plans began exploring more targeted approaches to control rapidly rising health expenses. This October 2003 issue brief by Ashley C. Short, Glen P. Mays, and Jessica Mittler examined the growing popularity of disease management programs, drawing on HSC's 2002-03 site visits to 12 nationally representative communities. In addition to condition-based disease management, some health plans and employers were using intensive case management services to coordinate care for high-risk patients with complex medical conditions. Despite high expectations, evidence that these programs succeeded in controlling costs and improving quality remained limited.

Rising Costs Set the Stage for Disease Management

Disease management programs targeted patients with chronic conditions such as asthma, diabetes, congestive heart failure, and depression. The core logic was straightforward: a relatively small number of chronically ill patients generated a disproportionate share of health care spending. By identifying these individuals early, educating them about their conditions, monitoring adherence to treatment protocols, and coordinating their care across providers, disease management aimed to prevent the costly complications, hospital admissions, and emergency visits that drove spending higher.

The appeal of disease management grew as managed care's broader cost-control mechanisms fell out of favor. Utilization review, prior authorization, and gatekeeper models had provoked a consumer and employer backlash during the late 1990s, and health plans were reluctant to reimpose the restrictions that had made them unpopular. Disease management offered an alternative: rather than restricting access across the board, it targeted resources on the patients most likely to generate high costs, leaving the rest of the enrolled population largely unaffected.

Program Models Across Communities

Across the 12 CTS communities, disease management took multiple forms. Some health plans built in-house programs staffed by nurses and other clinicians who reached out to patients by telephone, tracked their medication use and lab results, and helped them navigate appointments with multiple specialists. Other plans outsourced these functions to specialized disease management vendors, which operated centralized call centers and relied on proprietary algorithms to flag patients who were at elevated risk for hospitalization or other costly events.

Alongside condition-specific programs, some employers and health plans deployed intensive case management for patients with particularly complex and expensive medical needs. These programs assigned dedicated care managers to individual patients recovering from major surgeries, organ transplants, or serious injuries, coordinating treatment among surgeons, primary care physicians, rehabilitation specialists, and post-acute care facilities. The goal was to prevent gaps in care that could lead to complications, readmissions, and additional spending.

Physician Engagement Challenges

Getting physicians to participate in disease management programs proved consistently difficult. Many doctors regarded the programs as unwelcome intrusions into the physician-patient relationship. They questioned whether nurses at a distant call center, working from standardized protocols, could add value for patients the physician already knew and treated. Some worried that disease management recommendations would conflict with their own clinical judgment or expose them to liability if they failed to follow the program's suggestions.

Programs that earned greater physician acceptance tended to share relevant patient data directly with the treating physician and align their clinical recommendations with established evidence-based guidelines. When disease management functioned as a supplement to physician care rather than a substitute for it, resistance typically diminished. Some communities reported success when health plans framed disease management as a tool that could reduce the administrative burden on physicians by handling patient education and follow-up tasks that would otherwise fall to the practice.

Limited Evidence of Cost Savings

Despite the enthusiasm surrounding disease management, rigorous evidence that these programs actually reduced total health care costs remained thin. Most published evaluations at the time were conducted or sponsored by the disease management companies themselves, raising questions about their objectivity and generalizability. Independent studies using randomized control groups and sufficient follow-up periods were rare. Some programs demonstrated improvements in clinical process measures, such as higher rates of recommended screenings and lab tests for diabetic patients, but converting process improvements into documented cost reductions proved much harder.

Calculating a return on investment was inherently difficult because the savings from prevented hospitalizations and avoided complications were uncertain and could take years to materialize. Employers and health plans were essentially making a bet that upfront spending on care coordination would eventually translate into lower total costs and better health outcomes. The brief noted that this leap of faith was reasonable given the logic behind targeting high-cost patients, but that the field needed much better evidence to guide program design and investment decisions.

Policy Implications

The growing adoption of disease management reflected a fundamental shift in thinking about health care cost control, from restricting access across the board to improving care for the patients who generated the most spending. This approach aligned with mounting research showing that a small fraction of the population drove a majority of costs and that better coordination of their care could yield meaningful savings. But the brief warned against treating disease management as a cure-all. More rigorous, independent evaluation was needed to determine which program designs, target populations, and implementation approaches actually worked, and which represented little more than an additional layer of administrative cost layered onto an already expensive health care system.

Sources and Further Reading

Centers for Medicare and Medicaid Services — Federal health programs and chronic care management.

Health Affairs — Peer-reviewed health policy research.

Robert Wood Johnson Foundation — Health policy research philanthropy.