New Market Incentives to Prevent Asthma Complications

November 4, 2012 — The Affordable Care Act, often called Obamacare, remains a polarizing topic. But at its core the Affordable Care Act (ACA) is designed to spur the private sector to search for new ways to organize health care, to focus on the benefits of prevention, and to develop new, innovative ways to pay for it. Fresno, California is soon to be the site of an unusual experiment aimed at getting private investors to put money into prevention — specifically, into preventing asthma complications.

Part of the law funds clinical prevention efforts that encourage doctors, clinics, hospitals, and insurers to join forces and offer strong prevention-oriented services. The vehicle is a new version of a “social impact bond” that would pay the cost of a prevention program with the goal of saving money on treatment. Those savings, if they materialize, would be used to repay the investors and provide them a small profit. A pilot program to address asthma in Fresno, where 17.3% of residents have the disease, will launch in January 2013. 

Every day in Fresno, 20 asthma sufferers go to the emergency department and three are hospitalized. “Asthma is a devastating problem in Fresno, and the number one reason kids miss school,” says Kevin Hamilton, deputy chief of programs for Clinica Sierra Vista, a nonprofit health agency with 24 clinics in and around the San Joaquin Valley. 

For years, public health researchers have been running programs that demonstrate that asthma symptoms can be substantially reduced by working in homes to remove or clean moldy carpets, provide indoor air filters, and reduce infestations of dust mites and cockroaches. The problem is that the healthcare system is so fragmented that if one party — a foundation or a government-funded program—makes an investment to reduce asthma, the savings accrue to another party — a private or public insurer.

That’s where the social impact bond comes in. With support from the endowment, a Connecticut-based firm called Collective Health has been developing a pilot project that aims to show that a well-designed asthma intervention can save enough money to induce private investors to kick in. The pilot is slated to start in January, said Rick Brush, the firm’s founder and CEO.

Brush and his partners, including Clinica Sierra Vista, have identified 200 high-risk asthma patients who each rack up an average of $16,371 per year for hospital stays and emergency room visits. Brush aims to trim $7,773 from that cost by educating each person on the best ways to manage their symptoms and by bringing a crew into each home to get rid of mold, roaches, mice, and dust mites. Overall, they expect to cut emergency room visits by 30 percent and hospitalizations by 50 percent. For a cost of $540,000, they hope to save about $1 million in a year.

Read the entire Forbes article by clicking here.