Disease Management with a Focus on ROI

Mark Greenway and Bruce C. Kelley

© 2003 Wiley Periodicals, Inc.Published online in Wiley InterScience (www.interscience.wiley.com). DOI 10.1002/ert.10093

Integrated disability management, healthintervention, employee assistance programs,

and disease management are all part of atrend toward improving employee health andproductivity. Although most CEOs wouldagree that such efforts constitute a nobleendeavor, the same leaders often bemoan thelack of research to support the business casefor these programs, i.e., the financial valuethat is created for the organization.

Like many organizations, J.B. Hunt Trans-port Services, Inc.—one of the largest trans-portation logistics providers in North Amer-ica—recently set out to manage costs,improve employee health, and enhanceemployees’ knowledge of health care througha comprehensive disease-management pro-gram. But unlike most companies, J.B. Huntchose to work with a disease-managementvendor that uses pharmacists as coaches.This article describes the type of programthat J.B. Hunt selected and the benefits thatboth the company and its employees reapedas a result.

COST-MANAGEMENT GOALS

The statistics are staggering. Health-carecosts increased at an alarming rate of 15 per-cent in 2002 across all types of health-careplans, slightly up from a 14.7 percentincrease in 2001. For 2003, the rate ofincrease is once again expected to be approxi-

mately 15 percent. At this rate, employerscould see health-care costs double by 2007.1

Obviously, employers challenged by thecurrent economy can’t sustain these types ofincreases indefinitely. Many have resorted tocost-sharing measures such as increasingemployee copays and premium contributions.And virtually all organizations have begun tosearch for more efficient business practicesto combat the double-digit cost increases.

With 16,000 employees and annual salesof more than $2.5 billion, J.B. Hunt is nostranger to efficient business practices. Overthe past few years alone, this transportationcompany implemented several cost-manage-ment initiatives to help meet shareholderexpectations, including comprehensive dis-ease management. J.B. Hunt’s approach tothe disease-management program was inno-vative—it encompassed a pilot program, per-sonalized care, and alternatives to the tradi-tional medical coach/employee relationship.The company’s goals for this plan werelofty—reduce medical plan payments andimprove employee health, plus offer competi-tive benefits and choice to employees at acost lower than that of the competition.

DESIGNING THE PROGRAM

After investigating a few potential disease-management programs, J.B. Hunt decided topartner with TrestleTree, a company that has

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focused on recent corporate mandates to con-trol exploding health-care spending through avariety of disease-management strategies.Before implementing a corporatewide pro-gram, however, J.B. Hunt wanted to conducta pilot program within corporate headquar-ters to “test drive” the concept. Confining thepilot to the headquarters’ population pro-vided an ideal setting to assess effectiveness,employee reaction, and costs. On average,corporate employees at J.B. Hunt areyounger—and healthier—than other employeegroups. The logic was, in short, that if diseasemanagement works and saves money forthese employees, then it would surely provebeneficial for older employees and those withexisting or developing health problems thatpay more out-of-pocket for medical care.

The company brought in human resourcesconsulting firm Watson Wyatt to study theimpact of the TrestleTree program. The objec-tive was to determine whether plan payments

per participant would decline by more thanthe cost of the program.

Although a pilot program within corpo-rate headquarters offered an ideal setting toassess implementation, there were also somechallenges: First, this subgroup, one of theyoungest and healthiest within the entireorganization, was spending 40 percent belowthe entire company average on health care.Second, like all employees over the past fewyears, those within the pilot test had experi-enced increased cost sharing—which meantit would be difficult to show savings to theplan. Keeping these potential barriers inmind, management was determined to vali-

Mark Greenway and Bruce C. Kelley10

date the program before expanding it com-panywide.

Getting Started

J.B. Hunt promoted the program throughcompany communications and meetings dur-ing an open enrollment period. TrestleTreerecruited volunteers that had been diag-nosed by a physician as having asthma, dia-betes, or heart disease. A health coach fromTrestleTree then contacted volunteers, col-lected baseline information, validated eligi-bility, and enrolled them in the program.The baseline period encompassed claimsincurred July 1, 2000, through June 30,2001, with a two-month runout. The studyperiod included claims incurred October 1,2001, through June 30, 2002, with a two-month runout.

Most other disease-management vendorsscreen claims to identify and recruit high-costclaimants with target chronic conditions.TrestleTree held enrollment meetings andencouraged all employees who had been diag-nosed with one of the conditions to partici-pate. That meant more lower-cost employeeswere recruited. Because of this, applying abefore-to-after study design was not biased byregression to the mean, which does occur inprograms when participants are recruited aftertheir cost has peaked and are returning to nor-mal levels.

In July 2001, the program was offered atcorporate headquarters. By the end ofSeptember 2001, 202 employees had beenenrolled. Some of the initial enrollees wereeliminated from the pilot—those who had noclaim payments in the baseline year andthose who did not participate in the programafter enrollment. Ultimately, 159 participantswere included in the study.

Confining the pilot to the headquarters’ population pro-vided an ideal setting to assess effectiveness, employeereaction, and costs.

Autumn 2003

The Coach Approach

Traditional disease-management approachesemphasize regular contact between employ-ees and a medical professional. Programsvary, but generally vendors use nurses whoare supported by a very few physicians. Thenurses provide health coaching only to partic-ipants with a high severity of illness, and themajority of participants simply receivehealth-education materials. J.B. Hunt took adifferent tack and tapped into TrestleTree’sintensive, monthly health-behavior-modifica-tion relationship system. Rather than interact-ing with the traditional mix of medical pro-fessionals, program participants wereconnected with specially trained “PersonalPharmacist Coaches.”

Pharmacist health coaches provide manybenefits over a standard “nurse/patient”approach. Because they deal with doctors ona day-to-day basis, pharmacists generallyhave a good rapport with doctors and enjoyopen lines of communication with them.Additionally, TrestleTree found that the phar-macists welcomed the opportunity to partici-pate in the program because it added anotherdimension to their daily routines. Perhapsmost important, pharmacists brought anessential depth of understanding of behaviorchange to the disease-management process.

Participants across all severity levels, diag-nosed with asthma, diabetes, hypertension,and hypercholesterolimia, were providedwith behavior-modifying coaching. Initialmeetings were held to assess participants’needs, determine the severity of their condi-tions, and establish coaching plans. Partici-pants in all severity levels also receivedcoaching to address critical health behav-iors (i.e., exercise, nutrition, illness monitor-ing, smoking, medication adherence) neces-

Disease Management with a Focus on ROI 11

sary to prevent crisis health-care events orreduce reliance on emergency care for treat-ing chronic illnesses.

Periodic evaluations of participants’ riskfactors and compliance with treatment planswere conducted by the pharmacist coaches.Using video and teleconferencing for healthinterventions, the personal pharmacistcoaches worked with participants on issuessuch as lifestyle behavior improvement, phar-macy compliance, and treatment-plan compli-ance.

Throughout the pilot program, the focuswas on J.B. Hunt’s goals of helping employ-ees become more effective consumers ofhealth care—all with an eye toward anincreased use of self-service for the com-pany’s very mobile population (based on thesuccess of the pilot, the disease-management

program would be implemented for theentire workforce, made up largely of truckdrivers).

Pilot Results

The pilot program lasted nine months, duringwhich employees worked with their healthcoaches and submitted any necessary claims.The results of J.B. Hunt’s TrestleTree disease-management pilot program were impressive.Feedback from employees showed overall sat-isfaction with the program, and evaluationsof the pharmacists were good.

The financial results illustrated the pro-gram’s success from a business perspective—J.B. Hunt achieved the return on investment(ROI) that it was seeking. During the baseline

Rather than interacting with the traditional mix of medicalprofessionals, program participants were connected withspecially trained “Personal Pharmacist Coaches.”

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period (the year before the pilot), plan pay-ments per participant per month averaged$149. During the study period, plan pay-ments per participant per month averaged$104—a savings of $45 per participant permonth, or $540 per participant per year.

Viewed another way, the company saved atotal of $1.50 per employee for every $1.00spent. And in the final six months of the pro-gram, those figures increased by more thanone-third, with an ROI during this period ofgreater than 2 to 1. Savings increased to$61.04 per participant per month in the lasttwo quarters of the program period (seeExhibit 1).

Given the success of the program and thevalidation of the findings, J.B. Hunt extendedTrestleTree’s program to its population ofdrivers and plans to continue offering disease-management services to all its employees.

A Step in the Right Direction

J.B. Hunt’s experience is an excellent casestudy in disease-management program imple-mentation. Although the long-term effects are

Mark Greenway and Bruce C. Kelley12

still unknown, there is encouraging evidenceto suggest that disease-management programsdo decrease health-care costs, improve health,and enhance functionality and personal per-formance, both on and off the job.

Leading vendors of disease managementoffer their services with the expectation that,if the programs are implemented properly,ROI after year one will be approximately 2 to1. Some vendors have published book-of-busi-ness savings that range from 11 to 32 percentof claims for program participants—whichmeans ROI of between 3 to 1 and 5 to 1 (seeExhibit 2).

CONCLUSIONS

Watson Wyatt’s research has shown that about7 percent of employees have chronic condi-tions that drive 30 percent of company health-care costs annually. Helping these employeesmanage their lifestyle habits and health-careneeds can therefore make a significant differ-ence in the company’s health-plan payments.

A comprehensive disease-management pro-gram is a positive way to achieve that objec-

$149.63

$103.72

$45.91

$88.59

$61.04

$0.00

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

$140.00

$160.00

Baseline Period Cost

Program Period Cost

Program Period Savings

Last 2 Quarters’

Cost

Last 2 Quarters’ Savings

Exhibit 1. Trend in Claims Costs and Savings Per Participant Per Month

Autumn 2003

tive. On an annualized basis, J.B. Hunt’s pilotdisease-management program produced sav-ings of about $550 per participant per year.Organizations that wrestle with the proper pro-gram design might follow J.B. Hunt’s lead. Byoffering a pilot to a suitable segment ofemployees, using appropriate health coaches,or experimenting with other alternatives to

Disease Management with a Focus on ROI 13

ensure success, the result can be healthier, bet-ter-educated employee health-care consumers.

NOTES

1. Washington Business Group on Health. Watson Wyatt.(2003). Creating a sustainable health care program. Eighthannual survey report. Washinton, DC.

Study Reference Program Focus FindingsMazzuca, Economic evaluation Arthritis ❏ Stanford Arthritis Program x ofarthritis patient education, cost $54/patient and health-care Bulletin on the Rheumatic cost savings of:Diseases, 1994 ❏ $702 for rheumatoid arthritis

❏ $243 for osteoarthritis

Asthma program Asthma ❏ Reduced hospitalization ratesslashes hospitalization costs, for managed patients to 14.8%Disease State Management, 1995 as compared with unmanaged

patients who had rates of 42.5%

Demand management holds key Congestive ❏ Reduced readmission rate fromto prepaid profits, Capitation Heart Failure 12% to 3%Management Report, 1995 ❏ Saved $750,000 by reduction

Rubin, Clinical and economic Diabetes ❏ $50 per member per monthimpact of implementing a savings in diabetes treatment comprehensive diabetes management costs over 12 monthsprogram in managed care, Clinical ❏ Hospital admissions dropped Endocrinology & Metabolism, 1998 by 18%

❏ Eye and foot exams as well as Hemoglobin A1c tests increased among diabetics

Economic impact of a diabetes Diabetes ❏ Program reduced costs by 17%disease-management program ❏ Savings of $1,474 per in a self-insured health plan, participantDisease Management, 2001

Exhibit 2. Review of Literature on Disease-Management Programs

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Mark Greenway and Bruce C. Kelley14

Mark Greenway is vice president of human resources at J.B. Hunt Transport Services,Inc. He has extensive experience in the HR field and is responsible for the hiring, train-ing, and development of employees, as well as the administration of employee benefits.Over the past 15 years, Mr. Greenway has held various management and operations posi-tions at J.B. Hunt, including those in risk management, customer service, and strategicplanning. Mr. Greenway is a past president of the Southwest Benefits Association, a non-profit educational association. He may be reached via e-mail at mark_greenway@jbhunt.com. Bruce C. Kelley, Ph.D., is a senior consultant for the Group and Health Carepractice of Watson Wyatt Worldwide. An expert in health management, he has over 25years of experience working with large national clients in the areas of health promotion,disease prevention, self-care, disease management, information-based benefits decisionsupport, and managed health care. Dr. Kelley earned his M.S. and Ph.D. degrees in pre-ventive medicine from the College of Medicine at Ohio State University. He may bereached via e-mail at bruce.kelley@watsonwyatt.com.