Disease management article I’d like to believe:
An adoring piece in the November issue of The Atlanticsuggests that someone has finally figured out how to make disease management profitable. For years, the idea was that investing money in prevention upfront, especially in chronic conditions such as diabetes and heart failure, could result in both health improvements and cost savings down the road. While a number of pilot programs demonstrated health improvements, the inconvenient truth was that durable cost savings, at the level of P and L, proved remarkably elusive. As a consequence, programs would often invoke concepts like absenteeism, and failing that, presenteeism to make their case.
Yet according to The Atlantic article, at least one company, CareMore, has now figured out how to make this model work, and achieve both health improvements and sufficient cost savings to turn a profit (though I found myself wishing I could look carefully under the hood). The secret of their success? Embedding what might be termed the classical disease management model (e.g. telephone reminders, more frequent monitoring) within a vertically-integrated provider/Medicare Advantage plan offering coordinated care, aligned physician incentives, and a narrow primary care network (points all highlighted in this characteristically insightful analysis from the Recon Strategy group).
A relevant 2009 academic paper by Milstein and Gilbertson also includes CareMore as one of four examples of “Medical Home Runs” – primary care practices that demonstrate significantly reduced costs while maintaining quality. According to the authors, the key success factors are:
- Exceptional individualized caring for chronic illness
- Efficient service provision (often achieved by focus on specific patient group – e.g. older patients with chronic conditions – as well as standardization of care processes and replacement of MDs with less expensive care providers where possible [an approach also highlighted in Clay Christensen’s “The Innovator’s Prescription”])
- Careful selection of specialists
CareMore was acquired this summer by the large insurer WellPoint, who now plans to replicate the model more broadly. I truly hope this effort to scale the program is successful, yet the financial challenges experienced by so many previous efforts in this area suggest a need for continued vigilance. Moreover, we need to be especially mindful of the “stone soup” problem, and be sure that the features we might like to believe are critical, and which are touted as critical (i.e., providing care kindly and proactively) are driving success, rather than merely providing an appealing face (a cynic might say “necessary distraction”) for an aggressive underlying business strategy associated with more constraints and choice limitations than many patients may initially appreciate or recognize.
New book I can’t wait to read:
“Thinking, fast and slow,” by Daniel Kahneman, is due out later this month. Kahneman (along w/the late Amos Tversky, to whom the new book is dedicated) founded the discipline of behavioral economics, an achievement that won Kahneman the Nobel Prize in 2002. Most of Kahneman’s previous writing (other than his Nobel address, here ) have been highly technical and not easily accessible – a market vacuum that has been filled by a remarkable number of authors who have channeled, adapted, been inspired by, and in some cases, even extended, his original concepts. Taleb, Thaler, Sunstein, andGladwell have all been directly influenced by Kahneman (and in some cases have also collaborated with him). Now, it seems we finally have the chance to read his story directly, without an intermediary — an experience perhaps akin to reading the Torah for the first time after years studying the Talmud. At least it’s the right time of year for thoughtful reflection.
Two podcast series:
- The Stanford Entrepreneurial Thought Leader Series has started up again, with a fantastic kickoff lecture by David Friedberg, who was an astrophysicist at Berkeley, then spent time in I-banking, private equity, and Google before deciding to found his own company (Climate.com, née WeatherBill.com) selling what is essentially weather insurance. Fascinating story that’s inspiring (mostly) and sobering (just a little), highlighting the potential of entrepreneurship (a term he seems to disavow) while discussing the many risks, challenges, and obstacles encountered along the way.
- Freakonomics – first there was the book – a collaboration between NYT writer Stephen Dubner and wunkerkind economist Steven Levitt – then there were the NYT-associated blog and podcasts, and then earlier this year, they went rogue (sort of), leaving the NYT cocoon behind to become an indie venture (whichthey evidently hope will evolve into a “media juggernaut”). Not clear that juggernaut status has been achieved, but the podcasts are consistently appealing – sort of “Planet Money” meets “This American Life.” Their recent show about the folly of prediction is especially recommended.
Two Merck stories:
- First, as this recent article in Xconomy suggests, Merck is clearly placing a big bet on biosimilars, therapeutics inspired by (but appreciably more complex than) traditional small molecule generics. The general idea is that in an increasingly cost-conscious world, as the song says, it’s better to be the hammer than the nail, and having suffered for so long at the hands of generic small-molecule competitors, the idea of developing what are essentially generic biologics, and delivering a value-priced (relatively-speaking) product, must seem especially appealing. Of course, Merck doesn’t exactly of a history making biologics, so they are clearly hoping they can acquire and seamlessly integrate both the expertise and the facilities; success will also require a viable regulatory path – details of which are due to be released shortly (as discussedhere).
- Second, the FDA has recently approved a new Merck combination product that brings together a generic cholesterol-lowing medication (simvastatin [Zocor]) and a proprietary diabetes drug (sitagliptin [Januvia]) together; the combo, reportedly, will sell for the same price as Januvia alone. The key commercial question here is whether this line-extension play will fare better than Pfizer’s high-profile effort in this arena, Caduet (combining a different statin, atorvastatin [Lipitor], with a hypertension drug, amlodipine [Norvasc]), a product that generated disappointing returns.
(Disclosure: Merck is a previous employer; I have no prior involvement with these programs.)
Two new commentaries:
Finally, at TheAtlantic.com this week, I discuss:
- Design thinking can improve healthcare, but can it deliver new cures?
- Will consumer-oriented health companies make physicians obsolete?