Seeking ROI With PHM
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This article appears in the June 2012 issue of HealthLeaders magazine.
When it comes to population health management, prevention may be the financial cure for skyrocketing healthcare costs. PHM is more than an all-encompassing term for prevention, wellness, and chronic care; it's at the core of healthcare reform and it offers hospitals and health systems a pathway to long-term patient care cost reductions. However, aside from a willing participatory patient population, a successful PHM program needs three elements: collaboration, communication, and data.
PHM is often defined as the health outcomes of a group achieved by addressing a broad range of factors that impact that group's health, such as environment, social structure, and resource distribution. There are pilot PHM programs across the United States reporting anecdotal success in improving patient outcomes while reducing costs. But it remains a slow climb, perhaps too slow considering the relentless upward trajectory of U.S. healthcare spending: Almost two-thirds (64%) goes to just 10% of patients, and about half (47.5%) is spent on 5% of those patients, according to a study from the National Institute for Health Care Management.
"There's a great deal of angst in healthcare around cost, and there's a dramatic increase in interest in getting away from fee-for-service and moving toward a value- or reward-based system," says Richard Armstrong, MD, vice president of medical affairs for QualChoice, an Arkansas-based health plan. "But right now healthcare providers are not fully aware of what their patient population's dynamics are, so we need to better define a baseline so we can address the problems." QualChoice, which reported premium income of $150 million in 2010, got into PHM about eight years ago.
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