Treating Diseases and Managing Costs

Are employers interested in disease management? Are physicians interested in improving quality of care? Are patients interested in any of this? A provocative discussion.


  • James N. Astuto, Regional Health Care Manager, GTE Corp., Atlanta
  • Nancy Wilson Dickey, M.D., Immediate Past President, American Medical Association
  • Thomas C. Hawkins, M.D., Medical Director, Customers and Product Management, Harvard Pilgrim Health Care
  • Michael Alan Kaufman, M.D., J.D., Senior Vice President and Chief Medical Officer, WellPoint Health Networks
  • Jerry Reeves, M.D., Senior Vice President and Chief Medical Officer, Humana Inc.


  • Gene Beed, M.D., President, H.Z.U
  • Glenna M. Crooks, Ph.D., President, Strategic Health Policy Inc.


From left: Nancy Dickey, M.D., discusses direct-to-consumer advertising with Thomas Hawkins, M.D., Michael Kaufman, M.D., Jerry Reeves, M.D., and James Astuto.

GENE BEED, M.D.: How do we come up with programs that help folks who have diseases make their life better? And the flip side: If we’re managing quality and managing disease, how do we also manage cost — which is part of the equation?

NANCY DICKEY, M.D.: I run a family-practice residency program in Texas, attempting to teach these concepts to young physicians. These physicians are reasonably willing to see themselves as employees, and that means changes in their relationships with patients. A part of their fidelity, now, has to be to who cuts their paycheck.

THOMAS HAWKINS, M.D.: The concepts of patient choice and how we might balance finances so the consumer has more participation in the cost and choice — that, colliding with the information revolution, is just going to be amazing.

MICHAEL KAUFMAN, M.D.: Most of us in medical administration believe high-quality care is cost-effective care. Those of us who practiced in the “old system” didn’t have the opportunity to formulate DM strategies. In the evolution of managed care, there have been incredible innovations that are now obscured in debate.

BEED: Jim, as a purchaser, what’s on your “wish list” for DM?

JAMES ASTUTO: We’ve heard for years that ABC HMO has a DM program, but I don’t think we’ve ever really seen one. I would be glad to see how we can use any such program. I’m really outcomes driven. And I make it personal, because my uncle’s sister just went blind from diabetes because she didn’t manage her disease properly. It’s really easy to depersonalize it and say, “Okay, people are going to go blind.” That’s terrible! I don’t want my feet cut off, and I don’t think anybody else does. When we got into managed care, the goal was never to get to zero. But man, I want to see fewer people go blind. So can we make it better for patients?

KAUFMAN: I get asked by employers about DM. What they want is really simple: “Could I randomly call one of my diabetics and say, ‘Is anybody keeping track of you?'” I think they’re afraid to do that, because they’re not certain that every diabetic patient is being actively managed.

JERRY REEVES, M.D.: Let me push back a minute. I don’t believe a single employer has chosen Humana because of its DM programs. We started in 1996 with our congestive heart failure and hospitalist programs, and found that for those with stage 3 and 4 CHF, this intervention decreased inpatient costs 61 percent and increased survival. It increased the cost of drugs, because patients were complying with ACE inhibitor therapy. But the overall cost of care went down 51 percent.

BEED: How have you communicated those programs to folks like Jim?

REEVES: Our sales folks say that what they hear from employers is price and service, and by service, they mean how fast the phone is answered. Their eyes glaze over when it gets to health care.

BEED: Jim, how come?

ASTUTO: Well, this is the Ivory Tower versus reality. When the sales force comes out, they can hardly spell managed care. I’ve complained about this for years. Plans like Humana have good programs, but it’s not communicated to us.

BEED: How about it from the medical side? Does DM get communicated? Are you looking at employee productivity and decreased absenteeism?

DICKEY: I think medicine tries to demonstrate quality. But unfortunately, no. I think increasingly, physicians — particularly if they’re employees — look to medical directors. The equation would be very different if individual physicians were held accountable. The more individual physicians get report cards about how they, not the group, perform, the more will buy into the impact of this.

BEED: A simple example: varicella vaccine. Why do we immunize kids against varicella? So Jim’s employees can be at work, instead of at home with a kid with chicken pox. What have we done to tell folks like Jim, “Hey we’re keeping your employees at work because we’re immunizing their kids”?

KAUFMAN: We have. Some employers get it. Stress in the workplace is beginning to get employers’ attention, because they are leveraged on smaller numbers of people who work longer hours.

REEVES: We have tried to work with employers to develop productivity measures so that we could monitor whether our programs help. Problem is, we can’t get data from employers. It’s difficult for them to give us information that measures productivity. Another element is that we, as a society, aren’t ready to deal with the fact that depression is so prevalent. When you talk about knowledge-based companies, their ability to have employees who are at the top of their games is severely affected by depression. Yet they aren’t willing to make it easy for folks to be screened and enter depression programs.

GLENNA CROOKS, PH.D.: [Takes a question from the audience.]

QUESTION: Throughout this conference, we’ve heard about accountability and data. Dr. Dickey, can you express the AMA’s position toward a unified physician database?

DICKEY: The two pieces that are most important to patients and to the system are measuring outcomes and processes of care, and having a report card of how individual physicians perform. The development of those has been immensely slow. The kinds of report cards we get from managed care companies tend to be superficial. They’re too often based on money, not outcomes. It’s going to require a huge amount of work to measure that in a fair and equitable way and present it to employers or patients, but we’re committed to seeing it happen. Doctors, I think, are a little concerned. We think of the bad measurements of the past. I watched physicians lose their ability to practice in a given hospital because the care they’d given in a 20-bed, West Texas hospital was evaluated by the director of the intensive care unit at Parkland Hospital in Dallas. That guy had no concept of what it was like to take care of patients in a 20-bed hospital where “stat” meant, “Can you get me the answer before tomorrow?” All that said, we have to do it, and we have to speed up the time line. We ought to have measurement systems in place within the next four or five years, and we should recognize they won’t be perfect. But until you get the system on the table, you’re not going to improve it.

ASTUTO: You have four fabulous doctors here. By definition, two are below average. So which two of you are above average, and which two are below? I have never met a physician who wasn’t at least 90th percentile. “I’m the best.” How will consumers know who’s the 20th percentile and who’s the 90th?

BEED: Dr. Dickey, isn’t the AMA just going to produce the Lake Woebegone syndrome, where all docs will be above average?

DICKEY: These are kids who were probably valedictorians in high school. Medical school is a real awakening for physicians: “We can’t all be in the top 10 percent, because only 10 percent of us can be in the top 10 percent.” But we’re not talking about a bell-shaped curve. We’re talking about the fact that 90 percent of physicians ought to perform appropriate care. There is no reason virtually all of us can’t be on the A+ end of the curve.

ASTUTO: I will go back to my favorite disease, the GERD epidemic sweeping America. I go on the Internet and type in “GERD,” and the American College of Gastroenterology comes up. There [are guidelines for] how you take care of that: lifestyle modification, Tums, and Rolaids. The next step is over-the-counter H2s. Next is high-dose H2s. If someone has a diagnosis of GERD, you give him the PPIs. Either everybody in America has GERD, or nobody is following guidelines.

HAWKINS: Guidelines are very much dependent on patient compliance. Patients have to be accountable to themselves to effect a lifestyle change, to take the Tums. People come to the physician, they want an immediate solution, and they want it done in seconds. Where the cookbook breaks down is that it involves an interactive relationship. Three parties to the contract are necessary to effect change. When patients become active participants, outcomes are wonderful.

BEED: [Takes an audience comment.]

COMMENT: I work for a pharmacy benefit manager, and many of our employers are concerned about lifestyle. One thing they’ve asked from us is some sort of model to rank drugs based on lifestyle.

DICKEY: I think physicians want to be sure there’s flexibility in the system so we can address individual needs. We know the litany — and GERD is a good one — about treatments, but we also want our patients to come back to our offices. We are tired of being policemen. So to the degree that either the employer or insurer or PBM can motivate my patients to talk to me about alternatives to the PPI, you enhance my ability to interface with my patients. I want to be sure that there’s flexibility in there so that I can take care of the patient who for some reason should skip steps two, three, and four, and go directly to the PPI.

BEED: [Takes another question from the audience.]

QUESTION: Where are we going to say, “This is acceptable medicine, and after that there’s some room for art” — and how do we get consumers to understand that?


Reeves: Americans are inventing the unaffordable and paying the unsustainable. The ability to continue with that is hitting the upper end.

REEVES: We send guidelines for expected good care for diabetes directly to our members, so they can go, card in hand, to their physicians and say, “I’d like to have this hemoglobin A1c and this lipid level, because my understanding is that if I’m getting good care, this would have been done in the past year.” And I think there is a role like that. Not all physicians embrace that, because that sets up expectations. But I’m sure Dr. Dickey and all who are in practice have patients who come in with expectations all day long. I think there is a way for us to help them with those expectations.

DICKEY: And I’d be delighted if more of my patients said, “Let’s make sure I get my hemoglobin A1c every three months and my ophthalmology evaluation every year.” We spend a lot more energy telling patients about the magic prescription or the magic operation than we do talking about the fact that health care really ought to be this partnership — “Here are things you can do for yourself, here are things we can do with you, and here are things that you’re going to have to look for from the third-party payer, because they’re too expensive for you to reach into your pocket.”

BEED: [Takes another question.]

QUESTION: Is there a central body with any authority that can impress upon physicians that the cost of health care cannot go through the ceiling? I’m a businessman in a competitive position. The health care system cannot continue to jerk out a funnel of money. There are four physicians on this stage, and I’d like to hear, if I could, some realistic solutions.

DICKEY: The question is “accountability to whom?” Don’t forget, I have some accountability to my patient, as well as whomever’s paying. You’ve got to define the difference between reasonably good medical decisions and cost-driven decisions. And the best way is to make sure that patients have skin in this game. For employers who are concerned about the cost of care, there’s a quick, easy solution right now: a defined contribution, instead of a defined benefit. Many will choose a managed care plan. But then when they complain that somebody is imposing on them about whether they have to do the first four steps before they get the PPI, they made that choice, as opposed to somebody saying, “This is what I’m willing to buy for you — take it or leave it.”

REEVES: One thing that we can do, and Jim can help us with this, is routinely have three- or four-tier pharmacy-benefit plans, so that PPIs would be on a tier where it doesn’t cost the same as Tums. He has to keep employees happy, because they may go to another employer that doesn’t push this kind of benefit. So we’re in this together.

HAWKINS: We catch a lot of flak for three-tier pharmacy systems. But it is absolutely going to change the dynamic. The really amazing benefit of this is that the physician and the patient are going to have to talk about cost and quality trade-offs.

ASTUTO: This is amazing! There isn’t one of them who will put on a black hat. So we’re going to screw the patient again, because you don’t want to say “No”? We use three-tier copayments because we have been dragged into it. I disagree with them totally. The person who truly has GERD will go back to the PPI, at $50 a month. We’ve got people who only make $35,000. That is a very tough nut for them to swallow. Because why? Dr. Dickey is right. She is practicing high-quality care. But you did not hear “cost-effective” once!

KAUFMAN: Actually, she did say that.

ASTUTO: I didn’t hear it out of her the last time! She said high-quality care. It’s high quality, but it’s the most expensive!

HAWKINS: I disagree. You are out of touch with the age of consumerism.

ASTUTO: Wait a minute, Tom! I’m going to tell you what we pay for! We pay for illness or injury. We pay for safe and effective therapy. And we pay for the least-costly therapy because you guys don’t have the guts to go out there and say “No!” You want us to be the bad guys and say, “OK, you pay $50 for that drug from now on!” She wants to be the manager of that person’s care? Manage it right!

DICKEY: [So you tell your employees,] “We provide for you the best possible care that’s out there — and by the way, the cheapest possible care when we can get your doctors to knuckle under”?

ASTUTO: No, no, no, no! Absolutely, the most cost-effective! I didn’t say cheapest!

REEVES: The most cost-effective will be a three-tier benefit when you’re talking about pharmacy.

ASTUTO: No, no, no! A PPI for somebody that has heartburn is not the most cost-effective therapy.

REEVES: We can’t tell the patients they can’t have the quick fix. We can advise them, but it’s not our option to say, “You don’t have the option.”

HAWKINS: OK, Jerry Springer, here we go!

BEED: [Takes a question from the audience.]

QUESTION: We’ve talked a lot about expectations and entitlements, but I haven’t heard much about the consequences of the decisions patients make. How far are we going with either not giving people insurance through an underwriting process, or denying them that treatment option because they choose not to make lifestyle modifications?

REEVES: Americans are inventing the unaffordable and paying the unsustainable. We are reaching a point where the ability to continue with that is hitting the upper end. The economy is doing well now. But trust me, it isn’t going to stay this way. The time will come when we get more focused on limited resources. There will be a push to make hard decisions that balance stakeholders’ needs.

BEED: [Takes a question from the audience.]

QUESTION: Dr. Dickey talked about finger pointing as a major barrier to consumers trusting the system. And we’ve seen a little finger pointing here. Are the national organizations — PhRMA, AMA, APhA — working together in any sort of way to reduce the tension and the oratory?

DICKEY: I can assure you there are conversations. Do they reduce the oratory? I’m going to respond personally, and I might get severely criticized if my board were sitting here. In my opinion, most of the discussions are relatively superficial. It’s not committed to resolving the underlying problems and attempting to find some common ground. Too often, we walk out of those meetings, find the nearest reporter, and start finger pointing. At the same time, I think there is [a feeling] that maybe we need to talk about it. But over the last 10 years, I’ve heard rhetoric and not a lot of resolution.

HAWKINS: I think there is among some of the most exasperated players in this game a complete wish to begin to collaborate. Out of chaos comes opportunity. That is the good part about this — it’s so messy right now that people throw their arms up and say, “Forget that. Let’s sit down and rethink this whole thing.”

BEED: We’ve had a lot of discussion over the last couple of days. What’s the most important thing for everyone to take away from this conversation?

REEVES: Conflict is inherent. Employers want to buy smart. Patients want anything that might work. Doctors want a successful practice. I think there are new opportunities with information technology that will help patients be informed decision makers. And I think there are new benefit designs that will push them to get engaged in rational decision making about their care.

HAWKINS: I am most excited about the possibility that we will be able to use information systems to squeeze out huge waste. There is a lot of hidden money that could be tapped into all kinds of programs. But the connections are all broken. [It’s like] banking. [Years ago], the typical transaction cost was $1.50. When they went to phone-based systems, it dropped to a buck. When they went to ATMs, it dropped to 75 or 50 cents. Now on the web, it’s 10 cents. That money can be plowed back into service and things that people want.


Kaufman [right]: It is heartening … this idea of moving toward a collaborative relationship between managed care, physicians, and pharmaceutical makers at the same time.

KAUFMAN: It is heartening to listen to Dr. Dickey address this idea of moving toward a collaborative relationship between the managed care industry, physicians, and pharmaceutical manufacturers at the same time. Our goal is to improve quality of care and improve outcomes. The challenge is getting there fast enough, and addressing legislation that in many ways doesn’t foster those relationships. I feel like we’re trying to run as fast as we can, but we have to run faster, and I thought this was a very nice early step in that process.

BEED: Dr. Dickey, you have the last word.

DICKEY: I hear the preceding comments and say, “Amen.” We have the opportunity. We have extraordinary resources, both financial and intellectual. We’re not quite clear as a society about where we want to end up. But the opportunity to collaborate and capitalize on the possibilities is happening. If we can bring ourselves to this table and sit on our hands so that we don’t point fingers for a little while, the opportunities exist.

CROOKS: Thank you.



Payor, Provider, Patient: Healthcare by Consensus


Old Saying Appropriate For Current Environment

David Brennan, Senior Vice President, Commercialization and Portfolio Management, AstraZeneca Pharmaceuticals


Health Status, Health Maintenance, and Health Care in the 21st Century

Louis Sullivan, M.D. , President, Morehouse School of Medicine;
Secretary, U.S. Department of Health and Human Services, 1989–1993


Health Care Reform: Payor, Provider, Patient


Health Care Reform: The Consumer’s Viewpoint


Changing the Public’s Image of Managed Care

Nancy Wilson Dickey, M.D. , Immediate Past President and member, executive committee, AMA


Treating Diseases and Managing Cost


The Power of Perspective

John Cassis, President, the Cassis Group



The 12th Annual Symposium for Managed Care Professionals was held November 11–13, 1999 in Scottsdale, Arizona, and was sponsored by AstraZeneca.

The opinions expressed in this special supplement are those of the symposium participants, and do not necessarily reflect the views of the sponsor or the publisher, editor, or editorial board of Managed Care.