The Quiet Health-Care Revolution

While legislators talk about “bending the cost curve,” one company serving Medicare patients has discovered how to provide better care at lower cost—with wireless scales, free transportation, regular toenail trimmings, and doctors who put the patient first.

CareMore responded by creating a wound clinic, staffed by nurses whose primary job was to care for diabetic patients with small cuts. The wound-clinic nurses would change the dressing every other day and spend a few minutes talking with the patient, making sure the wound was healing on schedule. Over time, amputation rates for CareMore’s diabetic patients fell to 60 percent below the Medicare average.

Another recent CareMore innovation is wireless monitoring for patients with congestive heart failure or hypertension: the former, such as Ellen, receive wireless scales on which to weigh themselves every day; the latter, wireless blood-pressure cuffs. After six months of using the wireless-scale system, CareMore found that hospital readmissions for congestive heart failure had fallen by 56 percent. Now the company is testing similar systems for diabetes monitoring, as well as the use of camera phones for daily conversations with a nurse practitioner.

Not all of these innovations are unique to CareMore—wound clinics for diabetics, for example, are becoming more common. But the company’s focus on integrated care is exceptional, and at the center of it all is a care manager called an “extensivist.” The term originated to describe a physician who served as a bridge, or “extension,” connecting hospital care with outpatient follow-up treatments. At CareMore, it refers to a doctor who coordinates multiple kinds of care for an individual patient. The underlying philosophy is simple: a patient is one unified human being, not a collection of disconnected symptoms. One New England Journal of Medicine study looking at the care received by Medicare beneficiaries found that those with chronic conditions such as diabetes, heart disease, and lung cancer were typically visiting several different primary-care doctors and specialists. These doctors only rarely speak to one another, coordinate their plans, or consult on the possible interactions among their treatments. In such cases, it generally falls to the patients to keep track of their various treatments—a role that very few laypeople have the time, energy, and expertise to play effectively. “When we started CareMore, we found … a sizable fraction of our patients would inevitably get readmitted over and over again, if you treated them like routine patients,” explains Charles Holzner. “So to keep our patients out of the hospital, I began seeing them myself every week or two. I basically became their personal doctor, making sure they understood their postoperative regimen and were following it correctly. But very rapidly, I became overloaded. So I told Dr. Zinberg, ‘We need more people like me.’”

An extensivist must be a knowledgeable physician, of course, and must have the proper tools available. (One such tool is QuickView, a system of unified electronic health-care records of the kind that the Affordable Care Act aims to promote on an experimental basis around the country, but which is already up and running at CareMore.) But people skills and a talent for clear, effective communication are even more important. “I saw that when I got involved in a patient’s care, if I gained his trust, he would do anything I told him to do,” Holzner emphasizes. “So showing patients that we have their best interests at heart—unlike some of the HMOs and other providers out there—is key to a strong and healthy relationship.”

The chief beneficiaries of CareMore’s innovations are, of course, its patients. According to polls conducted by the company, 97 percent are either very satisfied or somewhat satisfied with their CareMore health plan, and more than 80 percent have recommended the company to a friend.

In the long run, though, the company’s impact on the economics of health care may be more important still. When he launched CareMore in 1993, Sheldon Zinberg told his partners, “If you put people before profit, everyone profits.” During its first four years, operating as a more-or-less conventional health-care provider, CareMore accumulated losses of about $11 million. But as the system of Medicare-financed, coordinated care Zinberg had initially envisioned came into being, the company turned the corner, showing a $24 million profit in 2000. It has remained solidly in the black ever since.

The economic logic behind CareMore is unusual. Every additional service it provides costs money, and the professionals at CareMore have to take on tasks and responsibilities that physicians don’t traditionally assume. CareMore employs more staffers per patient than other companies, and they spend more time with patients and their families than is typical. But every dollar CareMore spends saves multiple dollars down the line, resulting in those member costs that are 18 percent below the industry average.

The crucial question is whether the CareMore model—or models like it—can work on a much larger scale. The American health-care marketplace, after all, has had many one-off success stories that have defied replication. The few examples of successful expansion—Kaiser Permanente and the Mayo Clinic, for instance—tend to highlight just how slow and difficult the process can be. And many medical groups have found to their dismay that something peculiar to their culture or leadership does not translate to new clinics or markets.

It was with this challenge in mind that a group of private-equity investors purchased CareMore from Zinberg and his partners in 2006 and made Alan Hoops the CEO. Hoops’s experience and mind-set were well suited to the task of expanding and replicating the CareMore model for new regions and patients. As the chairman and CEO of PacifiCare in the 1990s, he’d led the health-care company to achieve exceptional growth, with revenues increasing from $2 billion in 1993 to $11 billion in 2000. Hoops also started PacifiCare’s Secure Horizons program, which under his leadership became the country’s largest Medicare HMO, serving more than 1 million beneficiaries.

Hoops knew from the beginning that CareMore’s operational and clinical processes could be documented, systematized, streamlined, and replicated. But he also knew that the real magic of the company was in the physician-led culture and the top-to-bottom commitment to patients. The growth challenge, as he saw it, involved replicating the model in local communities, not building “scale” in a single location. “Scale implies we need huge numbers of patients to make our system work,” Hoops explains. “That’s not so. We can set up shop in a community, attract 3,000 to 5,000 patients, and begin having an impact in terms of reduced costs and improved patient outcomes right away.”

Hoops’s focus has been on making this replication strategy work—and so far he appears to have been successful. From 2005 to 2010, CareMore managed to grow its membership by 15 percent each year. And despite differences in population demographics and community environments, CareMore has branched out into Arizona and Nevada, while expanding in its native California. The company hires a leadership team for a new market almost a year in advance and has them work in an existing clinic to learn the specific CareMore patient-care model. When the new center opens, an experienced leadership team works side by side with the new team for the first six months of operation. New employees are integrated into the company culture and encouraged to become active members of the continuous-learning and -improvement environment.

Hoops’s efforts to replicate the CareMore model should gain new momentum following the company’s August acquisition by WellPoint, which operates Blue Cross and Blue Shield plans across the country. WellPoint serves 34 million members in its affiliated health plans and another 35 million through subsidiaries. “CareMore was a perfect strategic fit with the direction in which we’re moving our company,” said Angela Braly, the CEO of WellPoint. “We have been focused on delivering greater health-care value, and finding ways to put the patient in the center of the system … That’s the entire focus of the CareMore model.”

WellPoint’s extensive infrastructure, access to capital, national Health Information Technology capabilities, and existing relationships with patients and physicians could all accelerate the process of replicating the CareMore model. “In our service areas, 1 million Baby Boomers will be joining Medicare from now until 2030,” Braly said. “That’s an extraordinary level of potential demand.”

Moreover, the population that CareMore serves—the elderly, and in particular the frail, high-risk elderly—is crucial when it comes to controlling overall health-care costs. “We talk as if we need to overhaul the entire health-care system,” Hoops says. “But that’s not quite correct. The biggest problem—and opportunity—lies with the part of the system that serves our high-risk populations. That’s the part of the system that’s unsustainable.”

Braly believes that as CareMore continues to expand, it will help redirect the health-care conversation in Washington. “Many people are skeptical that it is possible to significantly improve quality and reduce costs at the same time,” she says. “The CareMore experience shows that if you change the underlying process, you can, in fact, achieve both objectives, and you can do so consistently.”

It remains to be seen whether the WellPoint-CareMore partnership will work as planned and replicate CareMore’s experience on a mass scale. But whether this endeavor succeeds or not, the integrated, early-intervention model pioneered by Sheldon Zinberg in the mid-1990s is likely to offer lessons for American health-care reform, now and in the future.

Adrian Slywotzky and Tom Main are partners at Oliver Wyman, a global consulting firm. This article is adapted from Slywotzky’s new book, Demand: Creating What People Love Before They Know They Want It.
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