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DHS news release

January 18, 2005

Contact: Bonnie Widerburg (503) 731-4180

Program contact: Tom Turek, M.D. (503) 945-5770

New disease-management strategy saves Oregon at least $6 million

A contract with a private company to help selected Oregon Health Plan members better manage their own care helped the state avoid at least $6 million in medical costs in its first year, Oregon Department of Human Services (DHS) officials reported Tuesday.

DHS has had a contract with McKesson Health Solutions since October 2002 to work with more than 11,000 asthma, diabetes and congestive heart failure patients covered by the Health Plan. Patients have access to a 24-hour toll-free phone line where they may consult with a registered nurse, and nurses also visit patients in their homes as needed.

"The $6 million in avoided costs is not only a highly conservative figure but it's also only part of the story," said Barney Speight, state Medicaid director at DHS. "We also saw patients doing a better job of managing their disease, making fewer visits to hospital emergency rooms and smoking less.

"There's no question that these patients' quality of life improved because they had more control over their chronic disease."

The avoided costs resulted from factors such as patients' fewer emergency room visits, fewer and shorter hospital stays and fewer hospital readmissions.

Speight said McKesson nurses delivered services such as counseling patients about symptoms and care and helping patients locate appropriate medical providers.

McKesson figured the one-year net savings at almost $23 million, but acknowledged that part of the savings resulted from other DHS cost-cutting measures such as reducing hospital rates and introducing new controls on pharmacy expenditures.

Even DHS' more-conservative $6-million savings figure, reflecting both state and federal funds, indicates the Colorado-based company's work more than doubled the contract's guaranteed savings for asthma and diabetes patients, for whom savings returned $4.40 and $4.80, respectively, for every dollar the state paid the company.

The program's returns were based primarily on patients' medical and hospital costs compared with baseline data from the two-year period prior to start-up of the contract with McKesson.

McKesson and DHS will now begin evaluating savings from the contract's second year, which concluded Sept. 30, 2004. Speight said he also is interested in expanding McKesson's services to patients with chronic obstructive pulmonary disease and coronary artery disease as well as to some other patients previously excluded.

DHS entered into the McKesson contract as a result of direction from the 2001 Legislature.