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There is ample evidence that reducing variation improves quality and reduces costs. Health care is notorious for the amount of variation encountered even in areas where evidence based protocols exist. For diabetes the evidence shows clearly that achieving the standards set by the American Diabetes Association (ADA) and the National Committee for Quality Assurance (NCQA) improves the health of diabetics and reduces costs.

Two years ago, our group of 200 physicians decided to focus on improving the care of our diabetic patients. We have an electronic medical record system currently used by about 100 of our providers with more coming on each month. Included in this number are some mid level providers. This EMR allows us to measure the quality and cost of our diabetes care.

We began the process by developing a flow chart approach to the management of type II diabetes. These are the diabetics who typically get the disease as an adult due to their body becoming less responsive to the effects of insulin as opposed to Type I diabetes where the pancreas quits making insulin. Over several iterations this flowchart was eventually accepted as a recommendation for type II diabetes care by our physician leadership.

This past year we had accumulated enough data to start reporting on cost and quality. For quality we used the measures from the American Diabetes Association and the National Committee for Quality Assurance, while the cost measure was the per month cost of medications to control blood sugar, blood pressure and cholesterol.

What we found was surprising. There was no correlation between cost and quality. We had physicians whose patients were spending on average over $400 per month, but whose quality score was only 30 out of 100. Our lowest cost physician whose patients were spending $65 per month scored 100 on quality. If all our physicians had the same cost as our low cost physician, our diabetic patients would save over $58,000,000 per year in drug costs.

Consumer Reports has an article where they make recommendations as to which medication are the best buys in diabetes management. The Mayo Clinic also has an article talking about the cost and value of the more expensive vs. less expensive drugs. Both sources point out the fact that the older generic drugs work better, have fewer side effects and cost a fraction of what the newer drugs cost. Why then do many physicians use the more expensive drugs?

Every day 100,000 pharmaceutical sales representatives hit the road to call on the 700,000 practicing physicians in the United States. The pharmaceutical industry spends $61,000 per physician per year according to the article in PLoS, promoting their drugs. They spend twice as much marketing their drugs as they do on research and development to find new drugs. The insurance industry offers nothing to counter this marketing push from the pharmaceutical industry. Given these facts, what would you expect? This is a recurring theme of mine; when you offer incentives for a behavior you tend to get that behavior. The result is we are spending 2-3 times as much on medication for diabetes as we need to. How do we change this?

Quality has to come first. We know that diabetics who have their sugar, blood pressure and cholesterol under control cost less to care for, enjoy a better quality of life and are more productive at work. Quality then is the foundation of a program to reduce overall diabetes cost. NCQA has a recognition program for physicians who meet the NCQA/ADA quality standards for diabetes care. You can see which physicians have met this standard by going to this web page. In the state of Indiana where I practice, there are only 30 physicians out of 12,500 who have met this standard.

The next step is to pay the physicians who meet the NCQA standards 1/2 the difference between the cost their patients incur for medications and the average cost of diabetic medications. A busy primary care physician who worked hard at controlling costs and improving care could earn an extra $50,000 per year on top of an average income of $120,000 to $150,000. This incentive would get the behavior we need to improve quality and lower cost for diabetes. Those patients or their insurer would save $50,000 on medications plus another $50,000 to $100,000 from improved diabetes care due to lower hospital costs. So, using a portion of the savings the physician is able to generate as an incentive to drive the correct behavior would save $100,000 to $150,000 per primary care physician or about $21 billion per year while improving the quality of life for millions of diabetics.