Investor's Business Daily
A Cure For Rising Medical Costs?
Friday April 20, 7:00 pm ET
Steve Watkins
Large employers are using ever-more-innovative strategies to rein in spiraling health care costs, but sometimes the best tools are the simplest -- like making sure workers aren't being misdiagnosed by their doctors.
It happens more often than you probably think. And the problem is driving costs through the roof.
Various studies point 15 patients being wrongly diagnosed about 15% of the time. A 2004 study of patient safety by health care ratings firm Health Grades (NasdaqCM:HGRD - News) found that doctors failed to diagnose and treat a condition in a timely manner for 155 of every 1,000 hospitalized patients.
An Institute of Medicine study said that 98,000 deaths in the U.S. take place each year due to medical errors and could be prevented.
Looking For Options
The national costs of medical errors that could have been prevented is estimated at $17 billion to $29 billion a year, the Health Grades study found. More than half of that comes from medical costs. Lost income and other expenses make up the rest. Large employers absorb a hefty chunk of those costs.
"It's a big issue, and I think employers are looking for ways to get at that problem," said Travis Smith, senior consultant in Hewitt Associates' health management practice.
One place they're looking is Best Doctors, a Boston-based medical consultant. Its aim is to help patients with serious or complex medical issues find out if their diagnosis is correct and determine the best treatment.
The privately held firm, which counts EMC Corp. (NYSE:EMC - News) and Con-Agra Foods (NYSE:CAG - News) among its clients, assigns two doctors from Harvard Medical School to each case. The doctors don't see the patient, but they look at records, test results and the patient's history to find the right diagnosis.
"They do what the (patient's original) doctors would do if they had the time to do it," said Best Doctors President Evan Falchuk. "We like to think we put medicine back into the process."
Typically, about 5% of Best Doctors' patients represent 40% or more of a group's total medical expenses, Falchuk says. Many of those 5% face problems with diagnosis and treatment. Clients who use the service save an average of $20,000 to $25,000 per case.
One patient signed on to the program after being diagnosed with a brain tumor. His original doctors told him he didn't have long to live. Best Doctors looked at the patient's records and first thought it was multiple sclerosis. They later found that it was a virus that could be treated.
ParadigmHealth, another privately held firm, offers a similar service.
Doctors also use software from various companies to help them look at all options for diagnosis and treatment.
Still, the health care system is just starting to combat wrong diagnoses, says Arnold Milstein, chief physician at consulting firm Mercer Health and Benefits.
The problem is that it's tough to document that the cost savings are big enough to persuade employers to jump on board, Milstein says. The savings have to exceed the cost of the remedy.
"No one has been able to show that yet," he said, despite claims by Best Doctors and others.
Still, the program has caught on with EMC. The information storage firm aimed to improve health care for its employees when it began offering Best Doctors on Jan. 1, says Delia Vetter, EMC's senior director of benefits.
Only 39 EMC employees have used the service. Though that's a tiny portion of the firm's 19,600 North American employees, it's still more than originally projected.
"We've had more cases to date than (Best Doctors) had expected us to have the entire year," Vetter said.
EMC figures it could save up to $500,000 a year through Best Doctors, Vetter says. On top of that, reinsurers charge EMC a lower rate -- a big plus for large, self-insured firms.
Bruce Sundquist, vice president of claims at reinsurer Munich Re America, started working with Best Doctors for his clients' workers' compensation claims eight years ago.
He figures the average cost savings are about 15% over a patient's lifetime. Munich Re, which owns a stake of less than 5% in Best Doctors, has dealt with a couple thousand cases through the program, Sundquist says.
"The results are phenomenal," he said.
'More Involved'
Best Doctors is just one way employers are grabbing the bull by the horns when it comes to health care costs.
"We're seeing employers get more medically involved with patients," Hewitt's Smith said.
As an example, he points to Pitney Bowes (NYSE:PBI - News). It has launched a plan to cut costs for medication taken by patients with chronic conditions such as diabetes. When they take their medication, their care costs fall sharply.
In addition to offering the Best Doctors program to its workers, EMC offers workers the chance to take part in clinical studies.
Ultimately, Milstein sees the "purchasing herd" looking at solutions such as Best Doctors as one of many options. In the end, that group is likely to wait to see if case management vendors offer it to companies.
"Most people want a single-solution vendor," Milstein said. "If it catches on, it will probably be rapidly."
biz.yahoo.com |
