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Should Health Plans Become Integrated Systems to Cut Costs?

Joe Cantlupe, for HealthLeaders Media, January 27, 2010

Existing medical cost management systems in health plans are fragmented, and should be transformed into an integrated healthcare management system to deliver "consistent, sustainable" improvement in healthcare, a new report recommends.

The Computer Sciences Corp. (CSC) report, "Integrated Health Management for Health Plans," said an integrated healthcare management system, which involves myriad level of services in least restrictive settings, addresses the needs of patients and is cost-effective.

An integrated health plan addresses the costs of lifestyle factors, including chronic disease and high-cost interventions, the report said. It was noted, however, that implementing such an integrated system could be "difficult and expensive."

The report contends that reliance on administrative cost reductions is important but not sufficient. Instead, medical cost management—typically in the form of restrictions on provider payments and use—should be transformed to integrated care management.

"Health plans must transform their approach to medical cost management in order to make it effective, and deliver sustained high-quality care at an acceptable cost," according to the report.

The report outlines key steps for health plans to achieve integrated health management:

  • Deploy a "health intelligence" approach to optimize current care management process
  • Employ traditional medical management techniques that include wellness and lifestyle interventions, disease management, case management, and end-of-life programs
  • Coordinate wellness activities of home, workplace, and care settings once an integrated health management program is in place
  • Use integrated intervention results to inform other health plan stakeholders

The authors, Scott McConkey, a senior partner and managing director of the CSC healthcare group, and Jordan Battani, a researcher in CSC's emerging practices group, contend that changing traditional approaches in health plans is necessary, especially with rising healthcare costs.

"Health plans get slammed for contributing to those costs, but in practical terms, they have little control over the factors that cause the underlying costs," Battani says. "They don't deliver care and they don't get involved in all the decisions made in the hospital settings."

The report noted, "Health care cost inflation rates have proven to be remarkably resistant to change, consistently outpacing general inflation for at least a decade."

"Traditional approaches to health care cost management in the form of restrictions on provider payments and utilization, have sometimes been effective in the short run, but that success has generally been followed by periods of backlash after which health care costs begin to rise again," according to the report.

The report stated that implementing a robust integrated health management network "is a large-scale, long-term set of activities, and like other business intelligence implementation efforts, it can be difficult and expensive."

"Successful health plans will be the ones that master the underlying cause of cost inflation," the authors concluded. "Transforming existing medical and care management practices into an integrated health management program is a good place to start."


Joe Cantlupe is a senior editor with HealthLeaders Media Online.
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