What will it take for disease management to demonstrate a return on investment? New perspectives on an old theme.

BACKGROUND Disease management programs are expected (and usually contractually required) to reduce total costs in the diseases they manage. OBJECTIVES To discuss the appropriateness of using utilization indexes in lieu of cost and the importance of reviewing utilization trends to determine whether sufficient opportunity exists for a program to be financially effective; and to conduct an analysis to determine the number of admissions that must be reduced for a program to achieve various levels of return on investment. STUDY DESIGN Descriptive. METHODS Historical inpatient cost trends, discharges per 10,000 population, the mean length of stay, and emergency department visits per 10,000 population for acute myocardial infarction, congestive heart failure, asthma, and diabetes mellitus are presented. A "number-needed-to-decrease" analysis is performed to determine the number of admissions or emergency department visits that must be reduced to meet varying levels of return on investment. RESULTS (1) Hospital days per 10,000 population for these conditions trended downward, while costs during the same period escalated. (2) Discharge and emergency department visit rates per 10,000 population were flat and low during the observation period, while the mean length of stay declined. Results of the number-needed-to-decrease analysis suggest that disease management programs will have to decrease admissions 10% to 30% to cover program fees alone. CONCLUSION A review of historical utilization trends and a number-needed-to-decrease analysis should be conducted before disease management program implementation to determine whether sufficient opportunity exists to reduce utilization to levels that will ensure a positive return on investment.