The Costly Care of the Few

A Saturday in October in New York is a wonderful thing to experience; crisp air, changing leaves and the last gasps of summer belie a pending winter on the horizon. Oxeon Partners recently spent a fall Saturday volunteering at Dyker Beach State Park in Brooklyn. We were there to coach Paul, Jason, Ty and the rest of the Brooklyn Special Olympics Softball team competing in the New York City Regional Softball Tournament. Although given the option to coach in the bocce ball portion of the tournament, we chose to spend our time coaching third base, dodging foul balls, high-fiving and hugging a remarkable group of athletes on the diamond.

Marcus (Brooklyn’s pitcher who had forgotten his belt and thus was running the bases one-handed) is an African-American male in his sixties who has lived in his current Long-Term Care facility/Institution for over 30 years. His primary diagnosis is Intellectual Disability, but his co-morbidities are extensive with conditions such as Type 2 Diabetes, Impulse Control Disorder and many others. He explained that his family has largely abandoned him, relegating him to a facility that is closing its doors in 2015 as New York State consolidates group homes and shifts the way they handle Medicaid Long-Term Care members (M-LTC).

Marcus is a wonderful pitcher, a powerhouse of a hitter to left field and is a warm and loving human being with a tremendous sense of humor. He made us laugh all day with his wit and his love for baseball.

He is also Dual-Eligible, a Medicare and a Medicaid recipient and thus a major consumer of healthcare services. What struck us mid-way through our day with Marcus was both that our system cannot continue to provide care in the current way it is being provided to him, and at the same time, we cannot leave people like him behind.

In the work we do at Oxeon, we see businesses working to “move the needle” by making very small changes that impact very large populations. We also see businesses being built to manage complex populations – the 10% of patients who consume 60% of healthcare expenditures. Marcus most certainly falls into that category, and here in New York State there are major initiatives underway to deliver better care at more sustainable economic levels.

Annually, the Federal Government spends over $300 billion to provide healthcare for Dual-Eligible populations. New York State alone consumes roughly $16 billion of that annual spend. Sixteen Billion Dollars. Why are the costs so disproportionately high for the nine million Dual-Eligible Americans? Demographics and education are contributors. Barriers to access, the lack of attention paid to social wellness and the fragmented coordination of care at both the Federal and State level only exacerbate the problem. The average amount of funds spent annually per Dual-Eligible member in New York is $30,384 – the highest rate in the nation at almost twice the national average of $15,459. Duals have twice the rate of combined physical and cognitive conditions as typical Medicare members; behavioral health issues are proving to be a major driver of expense in this population. We spend an average of $56,000 a year on any patient needing long-term institutional care, and with 20% of duals in an institutional setting (with an additional 16% in nursing homes)—this population takes the gold for most expensive per capita.

In New York State, we are rolling out a capitated model for M-LTC and FIDA (Fully-Integrated Duals Advantage) plans. The State has issued 25 state insurance licenses to businesses intending to compete to enroll and service these members, starting with 120,000 potential enrollees. Staggeringly, there are over 450,000 additional members waiting to enroll in subsequent phases beginning in 2014.

One of those 25 licenses was issued to AlphaCare, a built-for-purpose company founded in 2012 with a commitment to insure and care for these underserved populations. As a client of Oxeon Partners, we have come to see firsthand the potential for societal impact as well as the opportunity for tremendous business results. If AlphaCare isn’t the epitome of “doing well while doing good”, we don’t know what is.

Joel Landau, co-founder of the company, has been working relentlessly to drive the company’s success. “Here at AlphaCare, our short and long term goal is to create a health plan where anyone would want their family members and friends to receive their care. Our philosophy is that care is centered and customized to meet the unique needs of each member. What is special about our M-LTC program is that each member’s care planning and coordination begins in the patient home. Our AlphaCare nurses visit with the members in order to conduct a comprehensive assessment of their physical, psychological and social needs. Our members are cared for by an interdisciplinary care team that makes sure their personal, cultural, health and social preferences are taken into consideration.”

AlphaCare has developed strong collaborative relationships with the providers and community resources that their members must rely on to successfully live in the community, in order to ensure their members are cared for in a manner that promotes independence and integration. When asked if he would point to one thing that drives the success of their approach, Landau’s conviction is unwavering, “Quality, quality, quality.”

They have developed a state-of-the-art care management and care coordination model in order to take on capitated risk with this complex population. Since opening enrollment in August, the company has seen significant growth in referrals, employees and provider relationships and are positioning themselves now for an incredibly informative, innovative and exciting time here in New York.

For many of these demonstration projects, the true results of achieving the triple aim won’t be seen for months, if not years. However any progress made, albeit small, has the potential to drastically affect the wellbeing of these patients. What struck us at Oxeon, as we were encouraging hits and sportsmanship for Marcus and his teammates, was that AlphaCare and similar businesses have much more work to do to provide these wonderful people with coordinated care at economic levels that are sustainable for our society. Without change, Marcus and his team will be left behind. With change and innovation, we believe that these companies will begin to bend the cost curve and improve the quality of life of their patients, and in achieving both, be wildly successful businesses.