Subject: Firms Turn to 'Case Management' To Bring Down Health-Care Costs
Date: Published: 12/30/87 138 lines
Source:  WALL STREET JOURNAL. Copyright Dow Jones & Co. Inc. 

    Firms Turn to 'Case Management'
    To Bring Down Health-Care Costs
    ---
    By Roger Ricklefs
    Staff Reporter of The Wall Street Journal

    With 12,000 employees around the nation, Sheraton Corp. 
 spent $12.2 million on health care last year.
    Three tiny infants accounted for 10% of the cost.
    The special care that saved the lives of the seriously
 premature babies didn't exist a decade ago.  But it cost about
 $400,000 per child, says Carl Angel, director of compensation
 and employee benefits for the Boston-based hotel chain.
    Faced with costs like those, companies are starting
 aggressive programs to tackle their costliest medical
 nightmares.  Last January, Sheraton joined an increasingly
 lengthy roster of companies by instituting "case management."
 Under the case-management approach, employers, or consultants
 they retain, identify medical cases likely to become
 expensive.  Then they work with doctors, patients and family
 members to minimize hospital stays and find alternative
 treatments such as home or outpatient care or use of
 specialized facilities.
    Depending on the company's plan, employee participation in
 case management may be voluntary, encouraged by incentives,
 or mandatory.  The distinction is important because, from the
 patient's viewpoint, the case-management approach is full of
 risks.  Doctors, for example, fear a reduction in care
 quality.  "Employers have no interest in this except to save
 money," says Francis Davis, a Shawnee, Okla., physician who
 is also publisher of Private Practice magazine.  For their
 part, employees may feel pressured to accept cheaper care
 when their health is in serious danger.
    Companies have often turned to case management following
 disappointments with other cost-cutting tactics, such as
 increasing deductibles.  "Companies are frustrated with the
 effect of their health-care cost-control programs because
 they haven't addressed catastrophic illness," says Thomas C. 
 Billet, assistant vice president of Johnson & Higgins,
 benefits consultants based in New York.
    In a recent Johnson & Higgins survey, 1% of employees
 accounted for 22% of company health-care costs and 5.6%
 accounted for half of these costs.  Miraculous but costly new
 medical treatments are aggravating the problem every year.
    At Sheraton, Mr. Angel says that case management has saved
 the ITT Corp. subsidiary about $1 million this year alone.  As
 one example of Sheraton's savings, he cites a female employee
 with a severe back problem.  After one doctor had recommended
 surgery for the woman and had told her it would take a year
 for her to become productive again, Sheraton brought case
 management into play.  Under that approach, the woman was
 examined by a specialist in back disorders, who recommended a
 course of treatment including occupational therapy, exercises
 and certain drugs but no surgery.  Following the second
 recommendation, the woman was back at work in 90 days, and
 the cost to Sheraton was $15,000 -- compared with the $95,000
 estimate for the treatment that involved surgery.
    Many families say case management has helped them, too, by
 leading them through thickets of available services.  "Without
 the help we've gotten, we just couldn't do this," says Glynis
 Smith, a Columbia, Tenn., bookkeeper whose son was born three
 months prematurely and spent eight months in a hospital.  The
 baby's medical care was being covered by Mrs. Smith's
 husband's insurance plan, which called in Parkside Health
 Management Corp., Park Ridge, Ill., to help arrange nursing
 care and other services at home.  "These people know the
 resources available and they helped work out long-term plans
 with us," Mrs. Smith adds.
    The AIDS crisis has particularly spurred companies to use
 case management.  "We realized we needed a policy on AIDS, and
 this caused us to develop a companywide policy on all
 catastrophic illness," says Victoria George, benefits
 specialist at the Bank of America, San Francisco.  The bank
 says the case-management program it started last year cost
 about $155,000 to operate this year -- and saved $1.2 million
 in cases involving cancer, accidents, AIDS and other
 problems.
    AIDS cases lend themselves to case management because home
 care will often suffice and patients frequently prefer it to
 hospitalization.  "With case management, the cost of an AIDS
 case can be as low as $30,000 to $40,000" over the course of
 the illness, says Linda Havlin, consultant at Hewitt
 Associates, a benefits-consulting concern based in
 Lincolnshire, Ill.  "There has been an overreaction to how
 much AIDS would cost," she says, citing early reports of
 six-digit bills.
    Intracorp., a Wayne, Pa., concern active in medical case
 management, says coordinated home care for a Dallas AIDS
 patient saved $60,000.  For $30 a day, a homemaker came in the
 morning, AIDS volunteer groups helped in the afternoon and a
 lover provided evening care for the patient, who was anxious
 to remain at home.
    Companies are also using case management, among other
 approaches, to attack soaring mental-health and drug-related
 costs.  "With some of our clients, mental-health care
 {including drug-dependency treatment} that was 15% or 20% of
 health-plan costs a few years ago is 40% now," says Mr. 
 Billet of Johnson & Higgins.  Drug-abuse programs cost up to
 $18,000, and some employees enter such programs four or five
 times, he adds.  "Some companies are putting a two-time
 lifetime limit on treatment," he adds.
    And some are calling in specialists that manage
 mental-health care, like Preferred Health Care Ltd., Wilton,
 Conn.  Founded five years ago, the concern provides case
 management and other services for employers with a total of
 4.5 million employees and dependents.
    "We struck a deal with a hospital chain" for psychiatric
 care at a total cost of 15% to 30% less than regular rates,
 says Rick Lee, senior vice president of Preferred.  In
 addition, the concern says it can often steer patients away
 from expensive treatment they don't need.  "The kids who used
 to be sent to boarding school are now sent to psychiatric
 hospitals," Mr. Lee says.
    But the advantages of case management don't sway many
 doctors.  Indeed, John M. Burns, vice president of health and
 environmental resources at Honeywell Inc., Minneapolis, and
 himself a physician, sees doctor resistance as an obstacle to
 the approach.  "If I am a physician with someone in a hospital
 on a per-diem basis, am I going to want him to go home?  " he
 asks.  (Honeywell began a pilot case-management program last
 year, which it is currently evaluating.)  
    Alan R. Nelson, board chairman of the American Medical
 Association, says:  "There is a great deal of worry nationwide
 about the erosion of {doctors'} professional autonomy."
 Though data about actual practices are insufficient, the Salt
 Lake City physician believes case management has a
 "worrisome" potential to reduce quality of care.  He adds:  "We
 intend to monitor it very closely."

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