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LifeMasters: DM’s phoenix rises from failed merger with Healthways

Case study

LifeMasters: DM’s phoenix rises from failed merger with Healthways

LifeMasters Supported SelfCare, Inc., needed to do some soul-searching after a failed $307.5 million merger with di-sease management (DM) giant Healthways two years ago.

Irvine, CA–based LifeMasters faced an uncertain future after spending a year working on the merger while its competitors expanded into broader programs. The question for LifeMasters was one that most DM companies have needed to ask themselves: Should it follow the pack and broaden programs or focus on what it does well? The company decided on the latter option.

“When that merger ended, we really had to step back and take a look at not only our company but the industry and where the industry was going,” says Christobel Selecky, president and CEO of LifeMasters.

Since the failed merger, LifeMasters has decreased its work force from 1,000 employees to about 700. Selecky says the company has been able to move forward with fewer workers because of greater technology and data integration, which allows nurses to have a more well-rounded view of a patient’s history.

The past two years have seen LifeMasters’ revenues remain flat compared to the year prior to the proposed merger, at a time when much of the DM industry has faced financial challenges. The company also moved out of one Medicare demonstration project and has thrived in another.

After the failed merger, LifeMasters needed to review its offerings, and one place it looked was its participation in the Centers for Medicare & Medicaid Services’ (CMS) Medicare Health Support (MHS) demonstration project, which tested DM’s effectiveness in a Medicare population. Already concerned about its present and future, LifeMasters received early reports from CMS’ external contractor that showed healthcare costs were higher in LifeMasters’ project than in the control group; Selecky blames this on the selection of participants. The company decided it was not in a position to risk 100% of fees in the MHS project and pulled out of the demonstration, which is ending this year after CMS ultimately deemed it unsuccessful. LifeMasters instead focused on its clinical background. Selecky says LifeMasters is continually trying new techniques, studying them, and learning from them.

Program officials analyzed different approaches to find out how to spark people who were ready to make changes to their health. They also researched motivational interviewing and screening and survey tools to understand the circumstances in which people experience a readiness of change. “Where we are now is we are continuing, I believe, to lead the industry in the application of scientific principles to continue to improve techniques you need for successful disease management,” says Selecky.

Selecky says her clients want ROI specifics, and, through its research, LifeMasters can provide that information. “They only want to buy stuff that they believe will yield a return on their investment,” she says.

Customization

LifeMasters’ business line is split between commercial customers (two-thirds) and Medicare (one-third). That mix means flexibility is important in offering programs depending on the patient population. For instance, LifeMasters is working with CMS on a demonstration project in the Florida counties of Miami-Dade, Broward, Palm Beach, Marion, Volusia, Seminole, and Alachua. The program is offered to beneficiaries who are dual-eligible for Medicare and Medicaid and have congestive heart failure (CHF) or a combination of CHF, diabetes, and coronary artery disease.

LifeMasters says results show that beneficiaries have “experienced improvements in managing serious conditions.” CMS has been pleased with the results and extended LifeMasters’ Florida project earlier this year.

In the Sunshine State project, Selecky says more face-to-face meetings help reach the dual-eligible population.

“With duals, we are dealing with elderly and people who are economically underserved as well,” says Selecky.

The face-to-face work being done in Florida works for those dual-eligible beneficiaries, but when it comes to other customers, LifeMasters has to change course. For example, for a car manufacturer, LifeMasters reached out to family members and spouses of the largely male assembly line employees, knowing that women make most of a family’s healthcare decisions. For another client, such as a labor union in Manhattan that had a large number of non-English speakers, the DM company needed to tackle cultural differences and distrust of organizations. For that population, LifeMasters worked with the patients’ physicians to engage the members.

Selecky says these examples show that the old stereotype about DM services being solely composed of call center nurses is wrong. “That is a tactic of disease management, but it is only one tactic,” she says, adding that online and on-site visits are parts of a DM outreach program.

Jaan Sidorov, MD, MHSA, FACP, an independent consultant who owns and operates Sidorov Health Solutions in Harrisburg, PA, says there is much fluidity to the industry. The medical home, pay for performance, wellness programs, telemonitoring, and a host of other advancements will affect DM companies. Sidorov says he believes there is a place for traditional DM companies, but they will also have to adapt to what buyers want.

Sidorov says insurers and employers are interested in wellness and prevention, but there could be a place for a company such as LifeMasters that specializes in chronic disease. “If someone can execute very well in the chronic disease segment of the healthcare needs spectrum, LifeMasters can argue that this is something they have done for a long time and know how to do,” he says.

By adapting to what buyers want and the greater push toward chronic care, LifeMasters could be well-positioned, but Sidorov says there are so many changes occurring in healthcare that predicting the future is difficult. “Whether or not it winds up being a dominant player remains to be seen. I wouldn’t want to predict that at all personally because I think the industry is still very much in flux, and that business model is continuing to change,” he says.