`Build versus Buy' in Disease Management: Separating Fact from Myth

This article exposes and corrects some of the major myths about outsourcing disease management to a specialised expert vendor. Currently, a number of health plan medical directors feel that outsourcing costs more than building internally, will not provide a return on investment, and requires a large budget. None of these beliefs are true. Outsourcing usually provides guaranteed savings and, because most chief financial officers will allow the costs to flow through medical losses, it does not require a separate budget. Even when faced with these facts, some people persist in their beliefs that the guaranteed savings are somehow fallacious. In reality, legitimate vendors guarantee savings which could withstand any biostatistical and contractual scrutiny. These guaranteed savings are far from trivial; in total they often exceed 2 to 4% of all medical losses. Furthermore, quality is not sacrificed in the vendors' quest for savings. Cost savings are achieved through quality enhancement; a cost-quality trade-off does not occur. In fact, the cost and quality enhancements that are achievable through disease management make it such a powerful weapon for a health plan that it suffers from its own success; possibilities often look too good to be true. The possibilities are real and most claims are quite true, once they are distinguished from the mythology discussed in this article.