September 1997

Grant Results


During 1992 and 1993, staff at the Johns Hopkins Health System created a plan to develop and market a managed care product offering capitated specialist care for the employed chronically ill.

If found feasible, the grantee wanted to implement the project at the Johns Hopkins Health System. The project team hoped to demonstrate in an implementation project that their product could result in cost savings, higher quality care, greater patient satisfaction and less work loss.

Key Results
The planning phase produced a full-scale implementation plan with the following four key components:

  • Clinical team and treatment protocols for four chronic conditions:
    • Diabetes.
    • Affective disorders.
    • Chronic cardiovascular conditions including hypertension.
    • Musculoskeletal diseases including back pain.
  • A delivery system integrating five clinical elements:
    • Specialist physicians.
    • Nurse specialist-gatekeepers.
    • Primary care providers.
    • An experienced third-party administrator.
    • Other referral resources and emergency procedures for services outside the plan's providers.
  • A marketing plan based on focus groups conducted of employees with chronic diseases, assessing their needs and barriers to their enrollment in the proposed delivery system.
  • An evaluation plan to determine if this managed, capitated health care delivery model would be effective in yielding lower annual per-patient costs of care, greater patient satisfaction, better quality of care and decreased employee work loss.

The Robert Wood Johnson Foundation (RWJF) supported this project through a grant of $176,193.

 See Grant Detail & Contact Information
 Back to the Table of Contents


As managed care evolves rapidly in the United States, issues of access and the health care costs of people with chronic conditions are taking on increased importance. More than 18 percent of the population age 17 to 65 experience activity limitations due to chronic conditions. Employers' health care costs are increased by the claims experience of their chronically ill employees. If persons with chronic illness are to be retained in the overall insurance pool, then it will become increasingly important to find better ways to manage their care and the cost of that care.

Although 75 percent of US physicians are specialists, with capitated insurance coverage, people with chronic conditions may be kept from receiving specialist care because of the incentive to hold down such referrals, even though a lack of specialist care can cause avoidable, recidivistic inpatient admission rates, disproportionate productivity losses, and adverse health outcomes.

The proposal for this project was originally sent to the Foundation's Health Care Financing and Organization (HCFO) program, a national program managed by the Alpha Center in Washington, D.C. The Foundation decided to fund a planning grant directly, instead of through HCFO, hoping it could lead to a full-scale implementation project that would address some of these issues.

 Back to the Table of Contents


The project was to plan a well managed, capitated health care delivery system for the employed chronically ill that could result in cost savings and higher quality care. The planning phase supported a team of experts (the principal investigator, health policy researchers, epidemiologists, and insurance consultants) to explore the mechanisms by which such a program could be developed under the Johns Hopkins self-insured employee group health plan and as an option within a Blue Cross/Blue Shield HMO, and to prepare a proposal to RWJF to fund an implementation.

The project had four specific objectives; each was met as follows:

1. Define managed care strategies for four or more chronic illnesses.

  • Diabetes, affective disorders, chronic cardiovascular conditions including hypertension, and musculoskeletal diseases including back pain, were identified as optimal chronic conditions to be studied in such a program. These illnesses were chosen because they are common, serious conditions that are likely to affect employees' access to quality care and to impose high direct and indirect costs on employers and payers, and because they offered a high potential contribution for specialty medicine to improve on current care patterns. If the model for these conditions demonstrated that it could deliver high quality care at a competitive cost, it was thought to be adaptable to many more chronic diseases.

2. Design a delivery system of specialists in the Johns Hopkins Health System working in tandem with specialized nurse practitioners serving as the gatekeepers/case managers of care.

  • The delivery system design integrated five clinical elements: specialist physicians; nurse specialists; primary care providers; other referral resources and emergency procedures outside the plan's providers; and experienced third-party administrator. The research study designed to test this system targeted the four chronic conditions above and planned to offer a Johns Hopkins-based health care delivery system to several large employers in Maryland, enrolling 800 employees and/or spouses for a three-year period. Johns Hopkins planned to negotiate a capitated rate for delivery of all health care to those who enrolled in this health plan. Benefits were to be tailored to the needs of each chronic disease, combining a defined set of health promotion/disease prevention measures with on-going specialist care. The specialists were to be accessed through nurses specially trained to manage these chronic conditions and to care for the less urgent problems themselves, rationally controlling access to the specialists.
  • A state-licensed HMO, third-party administrator, and preferred provider organization, Preferred Health Network, signed on to perform claims processing and utilization review. Blue Cross/Blue Shield had been the first choice to provide these services, but they decided to develop a similar product. A second choice, the Johns Hopkins Medical Service Corporation, was interested in working on the project, but did not have the information services capabilities needed to function efficiently as a third-party administrator.

3. Package and market the strategies as a benefit option within the Johns Hopkins self-insured group health plan and a Blue Cross/Blue Shield HMO product.

  • Focus groups of Johns Hopkins Hospital and University employees with chronic diseases assessed their needs and any barriers that might exist to their enrollment in the proposed delivery system. The feedback indicated that a new delivery system for people with chronic conditions would be well accepted by potential enrollees if the following features were emphasized: expertise and availability of the specialty team; relatively low out-of-pocket expenses; lack of preexisting condition exclusions; liberal coverage of prescription drugs, medical supplies and equipment, preventive services, and patient education (which are only variably covered in typical benefit plans and are immediately recognizable to patients with chronic conditions as a cause of significant out-of-pocket costs); and 24-hour availability of coordinated care by a nurse specially trained in managing chronic diseases.

4. An evaluation plan designed to compare utilization, costs, demographics, and risk selection for enrollees in this managed care product with those who have similar chronic illnesses but are not enrolled.

  • An evaluation plan was developed to test if this managed, capitated health care delivery model would yield lower annual per-patient costs of care, greater patient satisfaction, better quality of care, and decreased employee work loss. The plan included statistical tests to compare the experimental and control patients regarding claims data, clinical records, and work loss. Patient experiences in the health system and satisfaction with the new delivery model were to be measured by responses to enrollee surveys at 6-month, 12-month, 24-month, and 36-month intervals, including a disease-specific instrument to assess clinical and delivery system issues specific to each chronic condition.

The planning phase resulted in a full-scale proposal to the Foundation for a four-year $1.5 million project to establish and evaluate the quality and cost of a delivery system devoted to the treatment of chronically ill patients by a team of specialist physicians and nurse practitioners in a managed care environment. The grantee proposed comparing the care of patients in the new delivery system at Johns Hopkins to the care of a selected control group of similar chronically ill patients treated in a managed care setting with generalist physicians.

The patients were to be obtained through an arrangement with the Johns Hopkins Hospital and University and with Baltimore Gas and Electric. The comparison group of patients would have consisted of patient records derived from a claims database of more than 460,000 people enrolled in capitated plans.


There was no dissemination of grant products outside of the Foundation. However, the Baltimore Sun did publish an article (May 15, 1994) about the project.

 Back to the Table of Contents


The implementation grant was not funded by the Foundation. In the turn-down letter, the Foundation program officer wrote that staff felt the concept of a specialist physician/nurse team caring for patients with chronic disease was an interesting one, but that the Johns Hopkins setting would not be sufficiently generalizable to warrant the large investment of funds.

The letter also questioned the necessity of using a database of cases as a control group rather than a natural group of patients from an HMO setting. By the end of the decision-making process on the implementation grant, an extended process, Johns Hopkins had also lost interest in the project as changes in the managed care environment made the project less of a priority.

 Back to the Table of Contents



Management of Chronic Disease in the Employed Population


The Johns Hopkins Hospital (Baltimore,  MD)

  • Amount: $ 176,193
    Dates: April 1992 to March 1993
    ID#:  019665


Christopher D. Saudek, M.D.
(410) 955-2132

 Back to the Table of Contents

Report prepared by: Beth Brainard
Reviewed by: Patricia Patrizi
Reviewed by: Molly McKaughan
Program Officer: Nancy L. Barrand

Most Requested