Business Intelligence 

Dean C. Coddington
Keith D. Moore

These days, one often hears healthcare organizations speak of their commitment to improving quality of care and "bending the cost curve." But there's more than a little irony involved if the organization that's talking this line is not focusing attention on improving care for patients with chronic disease.

There is compelling evidence that improving the management of chronic diseases such as diabetes, congestive heart failure, and chronic obstructive pulmonary disease [COPD]-and getting patients to adhere to best practices-holds huge potential for improving quality of care and lowering costs.

We were somewhat surprised-and pleased-to learn during our recent research for the American Hospital Association (AHA) that several organizations had prepared chronic disease registries and were actively encouraging primary care physicians (and in some cases, nurse care coordinators) to take a more active role in managing these patients. Given that the high proportion of the U.S population with chronic disease-variously estimated at 25 to 30 percent-accounts for at least 70 percent of all healthcare spending,focusing on these individuals makes sense.

As one former hospital CEO told us, "When you go fishing, you go where you think the fish are!" Chronic disease is where the fish are in terms of opportunities to lower cost trends.

Business intelligence capabilities (e.g., electronic health records [EHRs], analytics for claims data, good cost accounting information) are essential building blocks in tackling this opportunity.

Requirements for Managing Patients with Chronic Disease

For organizations receiving primarily fee-for-service payment, the decision to invest in chronic disease management tends to come from a desire to "do the right thing," given that under this form of payment, physicians and hospitals receive no rewards for attempting to better manage the conditions of patients with chronic diseases. On the other hand, for those organizations that are assuming financial risk (e.g., a Medicare Advantage program), there are significant financial rewards available. For those healthcare organizations that are anticipating changes in the payment system (e.g., pay for outcomes rather than volume), focusing on patients with chronic disease is a promising first step. Following are key considerations for such an effort.

The importance of having an EHR. Having an EHR facilitates the development of chronic disease registries and monitoring of this patient population. Two organizations we studied prepared their registries manually. (A comment by one of these organizations was telling: "We hired a couple of college students to comb through our paper records to identify those with diabetes, congestive heart failure, and COPD.") Those with the EHR had a much easier job, not only in identifying patients with chronic disease, but also in establishing protocols and monitoring adherence.

The benefit of having access to insurance claims data. Many organizations are also using analysis of insurance claims data to identify patients with chronic diseases. Several "analytics" software packages are available to assist with this task, and the more timely availability of claims data from CMS and private insurers is bringing this business intelligence opportunity to the forefront.

The need for a strong primary care network. Our experience has indicated that it usually takes a strong primary care network to effectively manage care for patients with chronic diseases. These networks can be physicians organized in an independent practice association, a physician hospital organization, or a clinically integrated network. Or the model might involve employment of primary care physicians. For example, Metro Health in Grand Rapids, Mich., has 80 employed primary care physicians in a dozen locations (all connected by a clinical information system), and they take the lead in managing patients with chronic disease.

The role of embedded nurse care coordinators. We also have seen substantial evidence of the benefits derived from having nurse care coordinators, usually embedded in a primary care practice. Organizations we have interviewed report that one nurse care coordinator can manage 200 patients with chronic disease.

For example, a nurse coordinator can:

  • Establish a personal relationship with each patient
  • Make sure prescriptions are filled and medications are taken as prescribed
  • Monitor blood sugar recordings for diabetics, and encourage proper diet
  • Insist that diabetic patients show up for periodic physical exams (including eye and foot checks) and for blood tests to check on A1c levels

The value of patient-centered medical homes. Organizations are also quickly recognizing that patient-centered medical homes have an important role to play. One practice administrator attested to the ability of these homes to improve care for patients of all types while also improving the earnings of the physicians.

The role of insurance companies offering financial incentives. Financial incentives also help. In some cases, insurance companies are providing incentives directly to medical groups by paying for care coordinators. Catholic Medical Partners in Buffalo is an example of an organization that receives significant financial help from health plans.

Potential Pay Offs

Does investment in caring for the chronically ill pay off financially for providers, health plans, and payers? We have found evidence that it does.

One study of 11 different care coordination efforts found that four could demonstrate an 8 to 33 percent reduction in hospitalizations for those individuals who had a high risk of hospitalization.a The study describes characteristics of successful care coordination similar to those described above.

An article in The New Yorker reported earlier this year that an experiment at Massachusetts General Hospital in Boston resulted in a 15 percent drop in hospital stays and trips to the emergency department.b The hospital had 2,600 chronically ill high-cost patients who represented $60 million in Medicare spending. The patients were in 19 primary care practices, and steps were taken to ensure that "each had a nurse whose sole job was to improve the coordination of care for these patients."

Our research for the AHA included a case study of New West Physicians, an 80-provider primary care group near Denver that focuses on identifying and managing patients with one or more chronic disease.c On diabetes, for example, the group established a diabetes education center. The practice also performs three quality studies per year on the full gamut of patients with chronic disease. The results of these studies are reviewed with individual physicians and, as appropriate, with the clinic's executive committee. Because New West has a relatively large risk-adjusted contract (professional services) for a Medicare Advantage plan, focusing on chronic disease management and reducing unnecessary specialist and hospital referrals have generated substantial bonuses for its primary care physicians.

The Need for Incentives-and Business Intelligence

Focusing on patients who have chronic disease is almost like picking low-hanging fruit. Of course, the major problem is that for most healthcare systems, including hospitals, there are no financial incentives, and in fact, there are disincentives to follow this course. From a revenue viewpoint in a fee-for-service environment, it is like shooting yourself in the foot.

There is a pressing need for payers to give providers-hospitals, health systems, and physicians-strong incentives to focus on caring for patients with chronic disease. Healthcare organizations need to be collecting the business intelligence (e.g., clinical information, cost accounting) that demonstrates the value of focusing on the chronic disease market segment.

Dean C. Coddington is a senior consultant, McManis Consulting, Denver, and a member of HFMA's Colorado Chapter (

Keith D. Moore is CEO, McManis Consulting, Denver (


a. Brown, et al., "Six Features of Medicare Coordinated Care Demonstration Programs That Cut Hospital Admissions of High-Risk Patients," Health Affairs, June 2012.

b. Gawande, A., "The Hot Spotters," The New Yorker, Jan. 24, 2011.

c. Read the complete case study on New West Physicians.

Publication Date: Wednesday, August 01, 2012

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