Jen:
Welcome to the Pitfalls and Potential of Population Health Management for Controlling Healthcare Costs. We want to start by thanking everyone for making time to join us today. We know that time is precious, so we appreciate you and hope you find the next 30 minutes a valuable use of your time. In the next 30 minutes, our goal is to introduce you to EHG, and if you already know us, remind you about who we are, what we do, what makes us different, and how we can help. Help you understand the missed opportunity with population health management, and how PHM can help you achieve health impact and generate an ROI for your program.
Again, we realize how valuable your time is, and we’ll keep today’s presentation to 30 minutes. As we go through the presentation, please feel free to send any questions over chat. We will leave time at the end for Q&A and we’ll address those questions at that time.
Engagement Health Group is an industry-leading PHM company created by bringing together Corporate Health Partners, Jack’s company, and Engagement Health Group, my company. We are a coaching solutions first organization focused on working with clients and individual members to engage them and improve their health and well-being. As you can see from this slide, we provide wellness and clinical initiatives to support all members across the health spectrum with different needs from wellness technology and health promotion programming to condition and critical care management, including our targeted programs like mental well-being, diabetes management, and weight loss programs.
We have the experience, solutions, and people to meet all your current and future PHM needs. Working with one partner can really bring you the solutions that you need and want and evolve your program over time. In addition, working with one partner allows you to remove redundancy and cost for you and confusion and frustration for your members. As you can see from this slide, our experience and comprehensive solutions yield high engagement, high client and member satisfaction, resulting in significant health improvement with over 50% of high-risk members completely resolving their areas of risk in one year, and generating the three to one return on investment. We’ll show you how you can achieve this kind of health impact and return in the coming slides.
But before we dig into effective PHM, let me introduce you to my partner, Jack, and myself. Jack Curtis is the CEO and Co-Founder of EHG. He has a long history, a very long history, just kidding, Jack, a long history in the corporate wellness space, collaborating with industry peers and leaders, truly becoming a thought leader. He started CHP in 2002 with a passion for employee engagement and preventing chronic disease, which he brings to EHG.
As a trained clinical pharmacist, I consider myself a wellness industry outsider. As President and Founder of Engagement Health Group in 2004, my goal was to commercialize pharmacist-managed condition management programming to help clients and members dealing with chronic disease and comorbidities. Using this model, Engagement Health Group has become known to our consultant partners and clients for our coaching programs that deliver measurable health impact with an average ROI of three to one.
This experience is now part of the EHG family, making EHG a comprehensive, industry leading PHM partner. So, before we start talking about effective PHM programming and measuring impact and managing programming, let’s get aligned on what PHM is or what it means. A PHM is the process of using big data analytics to define patient cohorts, stratify members by their risk of experiencing certain events, deliver care to the targeted individual needs of those members, and report on individual and group outcomes to ensure quality and accountability, as defined by health IT analytics. EHG does this day in and day out for our clients and their members. Next slide. PHM partners should provide effective solutions to successfully help you manage members across the health spectrum, from wellness to health management.
The three things that I learned during my clinical pharmacy training and residency that created my passion for starting a PHM company were one, healthcare is really good at taking care of us when we’re sick. We have the best hospitals, specialist equipment, but it’s not really great at helping us manage chronic disease. Wellness is really good at keeping healthy people healthy, educating, raising awareness, promoting well-being and preventing disease, but also, again, not great at managing chronic disease. So integrating effective condition management into wellness programs, or essentially creating an effective PHM programming company like pharmacist managed condition management coaching could close the gaps in health care and wellness and not only improve health, but deliver ROI. Your PHM partner should help you close the gaps in healthcare and wellness to deliver results for you and your members.
PHM is a very effective approach to managing the risk to your health plan. Jack and I have seen this time and time again over the last 20 years. Are you wondering whether your wellness program is a PHM program or if your current PHM partner is providing effective solutions? Are you wondering whether you need a PHM program? You should really ask yourself these questions to better understand if you are effectively managing the health risks to your health plan. Now I’ll transition to Jack, and he’ll tell you about effective PHM programming and how to create the business case for that investment and then measure the health and financial impact of your program.
Jack:
Thanks, Jen. Appreciate that. Yeah, I’d like to join Jen in thanking all of you who are listening in today. Really appreciate that. And it’s great to have you join us on our quest to make the world a healthier place. I think by virtue of being here, you’re part of that. So, thank you.
Now that Jen’s explained what PHM is, let’s dig into how it works. Some of the things we’ll cover today are how to stratify risk, how each level of risk drives cost. Reducing health risk does also reduce health cost. Health costs follow health risk. the resources that are needed for each level of risk, creating that model that Jen referred to, and then how it breaks down if you don’t have engagement. A lot of you probably know this already, but let’s look at how we stratify risk.
First, we have to have data to work from. We like to have claims data that shows gaps in care, but that’s retrospective, so that’s looking back at things that have already happened. we also like to have the biometric data, which is prospective and looking forward at things that are coming at the health plan, but maybe have not materialized quite yet. From that data, then we can stratify the participants into four tiers of risk, low, moderate, high, and critical. The tiers primarily reflect on how the members are doing relative to chronic disease. So, if you look across the top, you know, we have low, moderate, high, and critical. Relative to the chronic disease state, they may not have it yet with low risk. It’s approaching. They may have metabolic syndrome. At moderate risk, they have chronic disease, but it’s under control.
High risk, we look at it, they have chronic disease, but they have gaps in care. It’s uncontrolled. And then we have the critical as well. Let’s look next at how each level of risk here, and by the way, there’s 50%. And the low risk, and then that filters down in our book to 25% moderate, 20% are high, and 5% are critical. Looking at how that drives costs, so we talked about the low risk is 50% of the population, but they only drive 5% of the cost. The moderate risk are 25%, and they drive 10%. High risk are 25%. I mean, they’re 20% and they drive 25% of cost and critical are 5% of your members and they drive 60% of the cost.
You’ll notice here there’s kind of this inverse relationship as the risk goes up, obviously the costs are going up. Now let’s look at that stratification, figure out the average cost of members in each level. So, if you do the math here on what percent of the members are in each level and what percent of the health plan cost that they account for, then you can start to see that low risk are on the average $1,580 per member per year that are in that category. Moderate risk are $6,319. High risk are $19,746. And critical are almost 200,000 per year, and that’s on the average. Some are much higher than that. These are the people that are having trouble with the stop-loss coverage at that point.
So many studies show that there’s a natural flow of risk towards greater risk and greater cost as we age. Within a cohort population, the average risk increases without intervention. It’s about 2% annually. For every member at high risk, then we can move from, say, moderate to low. We can save a significant amount of dollars each year. So, from moderate to low, we can save, take 6,319 minus 1580. That’s 4,739 per year. More importantly, if we can move them from high risk to moderate risk, that’s a savings of 13,427 per year. And to my point, relative to risk migration, as risk increases as we age, if we can stop these moderate risks from becoming high or the low risk to become moderate, then there’s significant savings to be had there.
So, what do you do about that? Well, the important thing is we can mitigate that risk increase if we have a comprehensive population health management program. And that means that we have the right resources for the right people at the right time across the entire spectrum of risk. It’s not just nice things for the people that are healthy and rewarding them for their good behavior and their low risk, but it’s doing something all the way up to the critical care. Although there are common needs throughout these different levels of risk, there are also differing needs at each level. Every level has its own needs. If we just focus on the highest risk, we know that the other levels are going to backfill faster than you can migrate people out of the critical into high, say.
So that’s why it’s important to address all the levels of risk. What do I mean by the right resources for the right people at the right time? And this is a simplification, of course, in the interest of time, and you’ll get the gist of it. Everybody is going to need program management, and a platform to keep the data on. As we mentioned before, we like to have data-driven approach to stratification. So having health screenings, whether that’s an on-site screening or it’s from a PCP form that they complete at their annual exam or it’s home kits or whatever lab, a national lab, however we can get that data, that data is really important. And then reviewing that data with the people that are at risk.
Health promotion is always important throughout the year, and that’s the challenges, the lunch and learns, the educational opportunities, on-demand coaching for people that have a need. Maybe they’re healthy, but they want to lose some weight, or they have signs that their cholesterol is increasing, and they want to work on that, and they need to talk to a coach.
When you really get into moderate, high, and critical, then you need a comprehensive approach based on behavioral health coaching. And as Jen mentioned in the introduction, behavioral health coaching is the common thread that brought us both together. We really believe in that process, and it is a process. It starts with motivational interviewing and connecting with people, setting goals, appropriate action plans, the troubleshooting, and keeping them motivated throughout the year.
It’s a process that really is oriented toward getting results, and it is what’s needed for those people that are moderate to keep from getting chronic disease that’s out of control. At that point, we start to need the claims analysis to find which ones have gaps in care and they really need this higher level, which for us is condition management. With us, that means we have a pharmacist that joins the coach on the team and forms a care team along with the primary care physician to help those people determine close those gaps in care. And for half the people, we do that within a year. And then critical care management takes a whole team of experts to handle all the aspects of those people who are really suffering. They have multiple doctors, multiple prescriptions, multiple visits to doctors and ER and even the hospital at that point. That’s why it takes a different approach for each level of risk.
At this point, let’s look at a model for how we can kind of make the business case for population health management. And I blurred some of this out because we’re going to go live to Excel if I can pull that off. But just say there’s some inputs into the model. You take the number of employees for that group and the average plan cost. And this is, I think, for Mercer’s last study. So for 1,900 employees at $15,797 per employee per year, That’s the total plan cost. If our participation goal is 80%, we’ll talk about why we might want to look for 80% in just a minute.
Then there might be 1,520 that are engaged. And with the math that we’ll show you in the little model that we’ve created, you can see that with a comprehensive approach, you can get a 2.7 to 1 benefit to cost ratio based on net savings to the plan. Plan savings net of program cost is $1.4 million, so that’s pretty significant. It’s 4.5% of the total plan cost. And the investment to reach this, based on the math in our own programming, it’s only 2.7% of plan cost. So, it’s less than a plan’s increasing, probably half as much or a third as much as the plan is increasing each year. So, with that, let me jump out of that for a second and jump to another model.
Again, you can put the inuts in here, the number of employees, the plan cost, etc.. There’s some other things that are happening off the screen. But put the input in, the number of employees, the average plan cost. It’ll calculate the total plan cost. Or you can go the other way around. If you know the total plan cost, it’ll get you the PEPY. Plug in a participation goal. And, again, we’ll talk about why you might want to shoot for 80% or so. And then it’ll tell you in this model.
Based on the math we’ve already talked about, the number of employees that are percentage of employees in each bucket, the number of employees that are in each bucket based on the number that are participating, the percent of the health plan costs that they’re driving, the total plan costs that are in each bucket of risk from low to critical. And then the average plan costs. So, these are some of the things that we saw in the charts that we looked at earlier. engagement goal, the equivalent program cost. This is what’s happening off the screen. It gets into our pricing, which isn’t the focus here. But you can see here that you’re spending more as you go up in risk, significantly more, because they’re spending more in the health plan.
It takes more to deal with that situation. So, you can get the total annual program cost for each risk level. We’ve plugged in what we see in our book of business as a benefit to cost ratio. And I’ll be honest, I was pretty conservative here on the low risk, as Dee Eddington used to say when he was still with us, that low risk is the best investment you can make and you get your best return there, but you just don’t get it very quickly. It happens over time. So, I just put a really conservative benefit to cost ratio of 1:1, but I know from my history of 20 years that with health coaching, we can get 2:1. And then as Jen mentioned earlier, with the condition management and the critical care management, we can get three to one benefit to cost ratio.
If we plug those in as a predictive model, so we’re claiming we can get that. And here’s the benefit each year and the total plan cost. And that’s how we got at those numbers that you saw on the slide. The benefit to cost ratio, the savings, as a net, as relative to program cost, the percentage and the investment. Likewise, there’s another calculator that can look retrospectively. So, say you’ve bought off on this and you’ve gone at it and you can create this for your clients, whether or not you work for us, but work with us, but you can plug in how many employees there were, the annual health plan costs and so forth. And then a lot of these numbers we’ve already seen.
We know what the baseline was when you start and we first collect that biometric data. But then after the first year, what do you expect to get? And we talked about that 2% risk escalation as you go. And so that starts to show up in the model. You can plug in, did we get that or not? And we can plug in every cell that’s in yellow or plug in costs. So, year two, what do we expect? What do we get? Year three. And then we can look at the program cost or the plan cost in each year. And then we look at the program cost, which we can look at retrospectively. There’s also a dashboard here, which some of that you’ve seen already.
Some of these charts we’ve already seen. But what you haven’t seen is this one, which is a visual representation of what we just modeled. Here’s that expected risk increase and cost increase. And then here’s what actually happens with a comprehensive population health management program. So, you can see not only does it curb the trend, it doesn’t just flatten the trend, it actually can reverse the trend. I’ll qualify that and say that’s just with the cohort population. So, what if your cohort population, you only got 20% of the population engaged in the program? It’s not going to have a very significant impact on the program. But if you can get 80% of the people engaged in the program or more, you can start to really manage those health care costs.
I think that’s an overview, and we’ll look for questions, and if anybody wants to get into this in detail, I can follow up later.
So that’s the overview of what a population health management program can do for you. It’s the business case that we just talked about. And there are a number of ways you can go at it. Ideally, you jump in with both feet and you start with something for everybody dealing with their levels of risk. But that’s not always possible for whatever reason, namely budget. So, there are a couple of different ways you can go at that. that each level needs. But we can also talk about here’s how you could go at it.
You could start with the low risk first. And really, you’ve got something for everybody. You’ve got year-round health promotion. You’ve got screenings. You’re starting to catch things early. And you can layer on behavioral health coaching, condition management, and get to critical care that way. The other approach of many is to start with the highest risk first and then work upstream. The advantage there is that with the high risk, then if you save 6%, say, which is what our model is showing, if you say 6% on 60% of the cost that these critical care folks are driving, that’s 3.6% of the total plan cost. And that also, by the way, is what we modeled that the whole program cost like 3.6% or less of the total plan costs.
So, if you start with this approach, it can help you fund the whole Population Health Management program. Another thing I wanted to point out is these are just direct costs. Most of you know that direct costs are only the tip of the iceberg when it comes to the total impact of poor health. If you look at the indirect costs, such as sick days, short and long-term disability, workers’ comp, presenteeism, and some folks would even throw in turnover as a, or at least some portion of turnover as a reflection of poor health. Those things are two to three times the direct cost. So even if we just broke even on a population health management program on a direct cost basis, there are still immense benefits to putting it in place.
I’ve been promising we would get back to this. It’s about engagement. It doesn’t make any difference how good the programming is or how good the modeling is or what on paper we show as a return on investment or cost to benefit ratio. If nobody’s in it, it doesn’t really matter. And I would venture to say it’s not really a population health management program. and certainly not a culture of health if you’ve only got 20 or 30 percent of the people engaged in it. In fact, if it’s less than 40 percent, it’s biased towards the healthy, and it tends to leave out the members who most need the help. So how does PHM break down with poor engagement?
One, if the majority aren’t engaged, we don’t have sufficient data. We’re not really driving preventive care. across the population. We’re unable to follow through on problems and coordinate care. We can’t fully measure the health of the population, therefore we can’t really manage it. And those with health disparities or who have social determinants of health are often the ones left behind. On the other hand, when the majority are engaged, we can achieve very compelling results as we showed in the model. That’s why we press for and achieve 70 to 90 percent. Actually, we have one client with 99% true engagement. So that’s really why it’s so important to press for not only having good programming, but really good engagement as well.
We don’t have a live customer with us today, but we did have a benefits advisor, that gave their perspective on how our population health management worked:
In this case study, the participation in the program has consistently been 95% to 100%. There’s no incentive for health coaching, so 100% of the participants truly engaged. Participant satisfaction showed they’re not just being herded into this and they feel poked, prodded, and pushed into it. They’re really satisfied and really happy and pleased with the benefits. 88% said their lifestyle choices and their health were improved. And then from the analytics that were available on this client, the percentage of participants at high risk was cut by 17%. Remember, I said it naturally grows by 2% per year. Actually, with this intervention, we cut 17% over a three-year period from 52% to 43%. Some of the risk factors, if we peel the onion back and look a little deeper into what was included, obesity, hypertension, tobacco use, all made significant impacts. Bottom line, the consultant said the claims are running 15% below when the program started and 37% off of their prior 10% trend, which s not uncommon. So the quote is, “We believe EHG has assisted our client truly bending the medical and pharmacy cost curve.
In summary, what are the points that we made? The vast majority of the population needs to be engaged or else it’s not really population health management. In order to be successful, you got to have the right resources for the right members at the right time across that spectrum of risk. And all that needs to be integrated and coordinated. And that’s really challenging if you have a dozen point solutions. If you can find that all in one place, that’s going to be so much easier to manage and so much easier to execute. And therefore, it’s reflected in the benefits, the benefit to cost ratio. So with true engagement, proper design and execution, the results really are compelling.
So, what’s next? In June, we’ll talk about the missing ingredient in population health management. In August, we’ll talk about without engagement, nothing else matters. We’ve dive deeper into those. And then we’ll also talk about how the most powerful medicine is free in October.
Thanks again for joining us today. We really appreciate that. I hope you’ve enjoyed and appreciated what we’ve talked about.
There are some questions and we will get to some of those. In fact, we’ve got two more minutes. I’ll dig into that. One is how do you measure engagement? For us, it’s not just registration on an app or a portal. It’s much deeper. It’s completing a lot of those critical steps that we mentioned earlier in the slides. It’s doing health assessment, collecting the biometric data, working with a health coach at whatever level, and completing a certain percent of those series. So, they truly need to be engaged when we talk about engagement.
How do we achieve 70% to 99% engagement? That’s probably what we’ll be talking about next time, when we’ll dig into that more. But real simply, it’s leadership by example. It’s great communications. It’s meaningful incentives. We know incentives don’t change behavior long term, but they give them the nudge to engage and give the programming a try. So it’s up to us to deliver good programming and to help really get them engaged.
So with that that, we’re going to be real respectful of your time and wrap up.
We thank you again. We appreciate your attendance and all that you’re doing to help make a difference. Our nation certainly needs it. Thanks again for joining us. Hope you’ll be with us next time and look forward to it. We’ll send you the recording, the transcript, we’ll answer your questions, and we’ll send a copy of the slides.
Thank you so much. Have a great afternoon, everyone.