An ounce of prevention is worth… nothing?

The New York Times has been running a series on the diabetes epidemic, and Mickey shared with me his perspective on today’s article. In the current US system, there is little incentive for payers to make near-term investments in prevention, because from a financial perspective they are simply providing benefits for some other payer who will be covering the patient further down the line. Most countries address this problem with a single payer system (the payer is the same over time), but Mickey suggests an approach that might work in a multi-payer, free market environment.

At four hospitals across the city, they set up centers that featured a new model of treatment. They would be boot camps for diabetics, who struggle daily to reduce the sugar levels in their blood. The centers would teach them to check those levels, count calories and exercise with discipline, while undergoing prolonged monitoring by teams of specialists.

But seven years later, even as the number of New Yorkers with Type 2 diabetes has nearly doubled, three of the four centers, including Beth Israel’s, have closed.

They did not shut down because they had failed their patients. They closed because they had failed to make money. They were victims of the byzantine world of American health care, in which the real profit is made not by controlling chronic diseases like diabetes but by treating their many complications.

“It’s almost as though the system encourages people to get sick and then people get paid to treat them,” said Dr. Matthew E. Fink, a former president of Beth Israel.

Ten months after the hospital’s center was founded, it had hemorrhaged more than $1.1 million. And the hospital gave its director, Dr. Gerald Bernstein, three and a half months to direct its patients elsewhere.

The center’s demise, its founders and other experts say, is evidence of a medical system so focused on acute illnesses that it is struggling to respond to diabetes, a chronic disease that looms as the largest health crisis facing the city.

The obvious solution is for insurers to take capitated risk. There needs to be some way of rating the severity of an illness and then letting patients move among insurers, trading capitated contracts at a market value.
In such a system an insurer that cut cost by controlling diabetes would attract patients and also make money.
Diabetes seems like a good place to start such a market in capitated risk since it is easy to quantitate the severity of diabetes.
January 11, 2006

3 thoughts on “An ounce of prevention is worth… nothing?”

  1. David:

    Great post!

    I am intrigued by your idea of marketing cap’d risks. Do you have time to post a little more bout how such a system my look/work?

    This has the potential for being a solid method for dealing with not just diabetes, but depression and MS (to name a couple) such chronic, but not necessarily acute, conditions.


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