Managed Care - July 2012 - (Page 25)

Case studies That Flunk Every plausibility Test Known to Mankind population management claims: The Seven Rules of Plausibility provide means to test the claims of population management vendors. With case studies and commentary. By Al lewis President, Disease Management Purchasing Consortium Everything in life has an ‘‘80–20’’ rule. Example: 20 percent of the population accounts for more than 80 percent of income; 80 percent of a ball club’s salary goes to 20 percent of its players, and so forth. The 80–20 rule is everywhere. In population health spending, the 80–20 rule is that 80 percent of the time, there is no 80–20 rule. For instance, the Centers for Disease Control claims that the 50 percent of adults who have chronic disease account for 75 percent of health care spending. A 75–50 rule is about as far from an 80–20 rule as you can get, and means that costs are diff used About this article Al Lewis has been a thorn in the side of the disease management industry for years, and with his new book, Why Nobody Believes the Numbers, he may have reached his zenith. Written with Al’s down-to-earth acerbic wit and mathematical savvy, this excerpt from chapter 3 will amuse, educate, and/or enrage you. Who is Al Lewis? He has a bachelor’s in economics and a law degree from Harvard (where he taught economics); has held management positions at Interqual and Bain Capital; and was an analyst at Lehman Brothers. See his LinkedIn page for many more credits: http:// tinyurl.com/al-lewis-dm Among those who have praised this book, which was published last month, are the Brandeis University economist Stuart Altman; Regina Herzlinger, professor of business administration at Harvard Business School, and Tom Scully, former administrator of the Centers for Medicare and Medicaid Services. This excerpt printed with the permission of John Wiley and Sons Inc. Copyright ©2012 by Al Lewis. It has been shortened and modiﬁed for continuity. throughout the system, rather than concentrated. (It is also not the slightest bit clear how they can deﬁne ‘‘chronic disease’’ so broadly that fully 50 percent of us have it. Are they including insomnia? Tooth decay? Dandruff ? Ring around the collar? And how do they even know I suffer from these afﬂictions, let alone how much I spend on white noise machines, toothpaste, or Head and Shoulders? But we shall leave both these questions and Those Dirty Rings for another day.) Consistent with that observation about unconcentrated costs, it turns out that large chunks of potential savings are not sitting in one place just waiting to be harvested by a vendor imploring people to smoke fewer Marlboros and eat more broccoli. Yes, the lesson will be: A simple, usually voluntary, program isn’t going to make a noticeable dent in health spending. But try explaining this to the population health improvement industry (PHI), which prides itself on saying they do exactly that. Fortunately a modicum of math and critical thinking, using one or more of seven informal, common-sense rules can help determine whether this pride is justiﬁed. These rules are not footnoted or otherwise sourced, because there is no precedent and no governing body for validating PHI outcomes. Or, to quote the immortal words of the great philosopher Groucho Marx: ‘‘Who are you gonna believe, me or your own eyes?’’ The goal of these common-sense rules is not to validate every study that is truly valid, which would be a Herculean task, but rather to invalidate those claims that are obviously invalid, a ﬁrst level JULY 2012 / MANAGED CARE 25 http://tinyurl.com/al-lewis-dm http://tinyurl.com/al-lewis-dm

Table of Contents for the Digital Edition of Managed Care - July 2012

Managed Care - July 2012
Table of Contents
Editor’s Memo
Letters
Viewpoint
Legislation & Regulation
News & Commentary
Compensation Monitor
The New Closed Formularies
‘Why Nobody Believes the Numbers’
Q&A With Paul E. Terry, PhD
Home Infusion’s Present and Promise
Fixed-Dose Combo Therapies Show Promise
Plan Watch
Formulary Files
Tomorrow’s Medicine
Outlook

Managed Care - July 2012