Healthways is naturally trying to put a positive spin on its impending loss of a big contract with Cigna, but in truth this likely marks the end of an era for disease management companies.
Large insurers are increasingly moving disease management programs in-house as they gain experience with DM and design medical home pilots. Healthways executives point to other long-term opportunities due to healthcare reform, which offers incentives to providers for improving quality and outcomes. Regional health plans, employers, accountable care organizations, physicians and hospitals are all potential clients.
But those are not on the scale of Cigna, which has contracted with Healthways for 14 years. Its five-year contract expires in 2013, and represents about 17 percent of Healthways revenues. Other large insurers are handling disease management in-house. UnitedHealth Group has a business unit, OptumHealth, that provides DM, care management, and wellness to its own members, self-insured clients, and other health plans.
The earliest disease management programs emerged in the 1990s and were begun by pharmaceutical companies. But fears of conflict of interest led to a stand-alone industry, with Healthways being a pioneer. The early DM companies focused on a single disease, such as diabetes, before branching out into other therapeutic areas and comorbidities.
Last year the industry's trade group, formerly called the Disease Management Association of America, changed its name to the Care Continuum Alliance, reflecting the broader scope of care management to include wellness, prevention and other patient initiatives. Meanwhile, virtually every sizeable health plan is undertaking some major care management pilot, through medical homes, accountable care organizations and partnerships with hospitals and physicians.
So where does that leave disease management companies? Their role is likely that of niche players for rare diseases, since health plans won't have a high enough percentage of membership to justify certain programs that can be handled by a vendor.
There may also be a greater role for disease management companies to contract with the growing number of employers who are moving to self-insured benefits, but they will face stiff competition from health plans like UnitedHealth that now have the experience, infrastructure, and data to sell their DM programs to other companies.