While lawmakers lock horns over the American Health Care Act, which would lower individual health insurance premiums for some Americans by making them prohibitively expensive for millions of others, innovators around the country are attempting to tackle healthcare costs in a very different way. They’re employing a strategy called “hot-spotting” to improve the health of the patients who drive approximately 50% of U.S. healthcare spending.
Hot-spotting focuses on patients with high care needs caused by multiple, complex chronic conditions, often coupled with severe functional limitations. Traditional healthcare solutions–uncoordinated, dizzyingly complex, and optimized to address episodes of acute illness or injury–have proven woefully inadequate in meeting such needs. Hot-spotting is an ambitious alternative. Typically combining primary care, specialist chronic disease care, and social services or referrals, it revolves around one coordinated care plan tailored to the unique needs of each high-needs, high-cost patient.
The potential pay-offs of hot-spotting
A number of early hot-spotting programs have shown promising results. One example, MedStar’s Mobile Healthcare Program in Fort Worth, Texas, focuses on improving the health of high 9-1-1 and Emergency Department (ED) utilizers. Healthcare providers visit these patients proactively at home to perform medical assessments, coach them in health self-management, and refer them to local resources for additional health-related needs.
Since 2009, the program has generated an estimated $9 million in savings due to reduction in ambulance transports, ED utilization and hospital admissions. Our research into business model innovation helps explain some of hot-spotting’s initial success as a solution for high-needs, high-cost patients, and why healthcare innovators should continue to invest in it.
Why hot-spotting is well-suited for complex, chronic disease management
When a product isn’t yet good enough to address the needs of a particular customer segment (like traditional care for high-need, high-cost patients) companies must integrate, or control the entire product design and production process, in order to improve it. This is necessary because in a “not-good-enough” product, unpredictable and complex interdependencies exist between its components.
Given this, an integrated management team is the only “tool” that can align components’ design and assembly toward optimal overall product performance. IBM employed an integrated strategy to improve performance of its early mainframe computers. This enabled the firm to dominate the early computer industry when mainframes weren’t yet meeting customer needs.
The alternative is a modular strategy, which is usually appropriate for products that are more than good enough to address the needs of a particular customer segment. Interfaces between components in these products are well-defined, so components are plug-compatible. Different organizations can work independently to develop them, and they’ll still fit and perform well together in the end. Dell Computers astutely employed both strategies to disrupt the personal computer industry in the 1990’s, tightly integrating to produce components needed to improve the speed, customization and convenience of its products, while outsourcing modular components that specialist providers could produce at arm’s length.
For high-needs, high-cost patients, myriad and complex interdependencies exist between determinants of health, clinical treatments, and patients’ values and beliefs. For example, clinical decisions about how to manage one condition will affect options for managing comorbidities in both predictable and unpredictable ways. Unexpected changes in behavioral health and social welfare can impact a patient’s ability to keep up with a regime, and require nimble responses and novel solutions to keep treatment on track.
And patients’ own aspirations for their health and healthcare will evolve over time, changing a critical definition of care success, hence the way numerous and interrelated aspects of care must be aligned to attain it. Hot-spotting represents an integrated solution for addressing such interdependencies, through close coordination of expertise and action across providers, clinical disciplines and industry sectors.
Success stories we’ve researched, from computer and television manufacturing to telecommunications and steelmaking, reveal that integration is key to improving products that aren’t yet “good enough.” Innovators striving to reduce healthcare costs by improving the health of high-needs, high-cost patients, should continue to explore and refine the practice of hot-spotting.
For more about innovation in chronic disease care, see: