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You don't have to spend a lot on bells and whistles. Instead, put the principles of managing demand to work in your practice.

Fam Pract Manag. 1998;5(8):49-62

For a small or medium-sized family practice, the prospect of managing patient demand may seem impossible, or at least out of reach financially. But don't let that stand in your way. Managing demand is an approach to promoting health care quality and reducing costs; it doesn't have to be a collection of expensive products. Even if your practice and your demand problems are small, the process of managing demand for care can work for you — really. Read on, and I'll show you an example of how a $200 program could save a small practice nearly $2,000 while improving continuity of care.

The originators of the demand management concept in health care, Donald M. Vickery, MD, and Wendy D. Lynch, PhD, have defined it as a group of support systems that enable and encourage consumers to use medical care appropriately — not a means of decreasing or increasing patients' demand for care.1 Others describe it as a system of tools to “optimize resources” in managed care.2 But it's probably most helpful to think of managing demand as the process of getting people the care they need, when they need it, in a way that leaves them satisfied with their health care encounter.

Providing better care, not reducing access

“Managing the demand for care” may sound like the euphemism du jour for limiting patients' access. But managing demand actually is a strategy for getting people the care they need, when they need it, in a way that leaves them satisfied.

A number of factors are leading health care providers, purchasers and payers to embrace this perspective on how patients should access health care.

  • Experience with disease management has shown that for several chronic illnesses, taking a programmatic approach with patients improves their quality of life and reduces morbidity.

  • Although reducing morbidity is important, much more than morbidity affects the demand for care. It's estimated that personal beliefs and the effects of social networks account for 42 percent of the variance in patients' decisions to seek care, whereas morbidity explains only 12 percent of the variance.1 As a result, programs to manage demand tend to target both morbidity and demand factors unrelated to it.

  • The various aspects of primary care encounters — including physician preparation for the visit, the history taking, the physical examination and physician- patient communication — often don't live up to patients' expectations.3 Consumerism is driving physicians to be more sensitive to patients' care-related needs as patients define them. But physicians don't have to remain content with responding to patients' demands. Programs to manage demand offer the opportunity to influence patients' expectations about their care.

  • An important part of managing demand is increasing preventive care, and the evidence of prevention's potential benefits are impressive, both economically and clinically. It's estimated that about two-thirds of all deaths and years of potential life lost have preventable causes.1

  • Finally, managing demand can lead to significant savings in the most costly components of health care. Some estimates are that these programs can reduce physician visits by 35 percent and hospital days by 30 percent.4,1

Most of the literature on managing demand describes programs implemented by large delivery systems and managed care organizations (MCOs) covering tens of thousands of patients and costing tens of thousands of dollars. These programs often include sophisticated products and services, such as tools for health-risk assessment, nurse triage systems and in-home telemonitoring. I'll discuss products for managing demand later. But for the most part, their prices put them well beyond the reach of family practices.

Although buying demand-related products and services may not be feasible, implementing the process of managing demand is a great idea for small and medium-sized practices. Here's the key: Before spending any money on a tool to help you manage demand, determine the type and scope of the problem you need to solve and the type of solution you need. If you understand the process of managing demand, you will be much more likely to make the most cost-effective decisions about allocating your resources.

What is that process, and how can you use it? Here are 11 steps for developing and implementing a system to manage demand in a small to medium-sized family practice — at only a modest cost.

1. Be sure incentives are aligned

To begin with, you need to determine whether you have a financial incentive to manage demand. If your practice is heavily capitated or otherwise “at risk,” then the need to reduce your office visits and hospital admissions may be a strong incentive to develop a program. If most of your income comes from fee-for-service (FFS) practice and you aren't under utilization pressures, then managing demand might be a strategy for boosting patient satisfaction and keeping patients coming back to your office.

2. Forecast demand for services

You need good forecasts of the demand for health care services before you can know how that demand should be managed. There are many different forecasting methods, but time-series forecasting may be best suited for this task. Time series are models that predict demand based on the assumption that future demand is a function of past demand.5 The idea is to examine what has happened over a period of time and use a series of that data to make a forecast.

To predict demand, you would prepare a list of the types of service demands from your patients, such as phone calls, office visits, emergency department (ED) visits and hospitalizations. For each type, you would determine the number of encounters for a given time period (perhaps the previous year) and then break down that data by disease state. This information will help you decide which patients and which services should be the focus of your efforts (for example, patients with asthma-related ED visits).

Of course, a process this complex may not be necessary. For example, profiling data from your MCOs may make it quite clear where your practice's demand-related challenges lie.

3. Identify a target population

Which groups of your patients should your program target? The most dissatisfied? Those who use the ED most? Those with the most frequent hospitalizations? MCOs' programs to manage demand often profile patients by their risk factors, utilization patterns, self-reported health-risk awareness, attitude factors and other variables that influence behavior and resource utilization. Remember that morbidity is only a modest factor leading patients to seek care.

At the practice level, determining a target population is fairly straightforward: Combine your assessment of your risk (step 1) with your forecast of patients' demand for services (step 2) and determine where your practice will see the biggest bang for the buck.

4. Define appropriate use of medical resources

What's the best way to treat the patients in the population you've identified? If your demand problem is hospitalizations for congestive heart failure (CHF), you might consult practice guidelines for the treatment of CHF (see “Sources of clinical guidelines,” June 1998) and interpret those “best practices” for your patients. If your demand problem is that you receive more phone calls from parents of young children than your staff can handle, you might develop guidelines for when they should and should not call the office. For whatever problem and population you identify, your practice must set expectations about utilization.

5. Identify barriers to appropriate utilization

You also need to find the barriers to the appropriate use of medical care by your target populations. Determining whether your demand problems are functions of morbidity, perceived need, patient preference or non-health-related motives — the four components of demand1 — will help you see how to deal with those problems.

For example, you can affect the demand for care attributable to morbidity by implementing a prevention program. If your practice's patients with CHF are recurrently being admitted with exacerbations (morbidity), a step toward appropriate use of care might be closer monitoring. You could develop an interval call program by which your staff would contact patients with CHF and remind them to weigh themselves, take their medications and keep office appointments (prevention).

If your demand problems stem from patients' perceived need for care, you might try to improve your patient education. There's considerable evidence of the effectiveness of self-care education in decreasing the demand (patients' perceived need) for health care. Examples of results include a 17 percent reduction in visits to physicians and a 35 percent reduction in visits for minor illnesses with use of printed self-care materials.1 (For more information on the role of patient education in managing demand, see “Demand Management: The Patient Education Connection.”)

Education has also been shown to reduce patients' preferences for higher-risk interventions. In one study, patients with benign prostatic hypertrophy who were given an interactive videotape comparing watchful waiting with surgery were 50 percent less likely to opt for surgery.1

Non-health-related motives for seeking care can also lead to problems with demand. Examples include the use of medical services to justify sick leave, disability claims or workers' compensation claims. But little information is available about the effect of these motives on patients' demand for care. For most family practices, focusing on the other components of demand will be the best use of your resources.

6. Use the tools of the trade

Once you've identified the barriers to optimum demand in your practice, you need to select the right tool for breaking them down. Although there are many types of tools, the most commonly used (especially by large health care organizations) include these:

  • Health risk appraisals (HRAs). HRAs are surveys to help you identify your “walking time bombs.”2 HRAs ask patients about their health histories, lifestyles, behaviors and decisions that could negatively affect their health. Physicians can then evaluate the results and implement targeted interventions to reduce the chances of illness or injury. Several HRAs are available commercially (see “A resource for health risk appraisals”), or a practice could develop its own basic assessment tool.

  • Patient education. This category includes a wide range of information — from direct instruction by health care providers to learning initiated by patients. Materials can vary from handouts like those published by the AAFP to videotapes to self-care books. Although patient education has always been part of family practice, its use in managing demand is more systematic; specific information is targeted to specific patients with a goal of making their use of care more appropriate. Patient education also includes the use of interactive learning tools — such as CD-ROMs, web sites and fax-on-demand systems — that allow patients to request condition-specific information. (Again, see "Demand Management: The Patient Education Connection.")

  • Telephonic diagnosis and triage services. These services make nurses or other trained staff members available to field patients' calls and guide the conversations using physician-approved protocols for common and emergency conditions. Large health care organizations subcontract with outside firms to provide these services 24 hours a day. But in a small or medium-sized practice, physicians could develop basic triage protocols for the staff to follow.

  • Home health telemonitoring. Large health care organizations use telemonitoring systems to help care for debilitated or convalescing patients. With telemonitoring equipment and modems, health care professionals can stay on top of these patients' vital signs and clinical status. From a demand perspective, this means providers can intervene to deal with problems and exacerbations before the patients' conditions deteriorate to the point that an office visit — or hospitalization — is necessary. The costs and implementation challenges put these systems beyond the reach of most family practices. But a small or medium-sized practice might use this concept by having a nurse or midlevel provider monitor certain patients by phone each month (or more frequently, depending on the patients' risk levels).

A resource for health risk appraisals

Since 1992, the Society of Prospective Medicine (SPM) has published the Handbook of Health Risk Appraisals. Although this handbook is no longer available, the organization is planning to release an expanded edition at its annual meeting Oct. 25 to 28. Retitled the Handbook of Health Assessment Tools, the guide will review traditional health assessments, general health outcome measures and lifestyle assessments. A proposed table of contents includes an overview of health assessments, their theoretical basis, how to select and use health assessments, the application of health assessments in different settings, and product listings, descriptions and comparisons. The cost, including shipping, is $84.95 before the book's release and $150 afterward. For more information, contact the SPM at 412-749-1177 or

7. Assess your available resources

You can see from this discussion of tools that integrated delivery systems or large MCOs are usually the settings for large programs to manage demand. But it's also clear that you can use basically the same tools in your own office, just on a different scale — tack hammers rather than sledgehammers. So think about how you can use readily available educational materials, your computer system, your phone system, an office assistant or nurse, and your knowledge of your patients to influence their demand for care.

8. Take advantage of freebies

It's likely that several of the MCOs and the dominant hospital system in your community have resources available (for at least some of your patients) that you can use to help manage demand. For example, about 10 percent of my patients are members of United Community Health Plan (CHP)/Kaiser Permanente. Each member of the United CHP Medicare managed care plan will soon receive a self-care book (Healthwise for Life: Medical Self-Care for Healthy Aging. M. Mettler, D.W. Kemper, D.L. Stilwell, ed. Boise, Idaho: Healthwise; 1996). In addition, one of the hospital systems in my area offers Nurse Direct, a health information telephone system. The more you know about what other organizations are doing to manage your patients' demand, the better you will be able to leverage those efforts.

9. Plan for evaluation

A critical part of designing a program to manage demand is thinking about how you will judge its success. At the outset, identify what demand-related variables you will measure and when you will measure them.

10. Decide whether to build or buy

Several companies sell products and services to manage demand. A prominent example is Golden, Colo.-based Health Decisions International LLC (800-403-0099 or, which was founded by demand management codefiner Vickery. The company's products include a 24-hour, 365-day nurse counseling service that helps callers determine what medical attention they need; assess treatment options presented by a physician; manage their own chronic conditions; learn about fertility, pregnancy and infant care; and learn about changing unhealthy behaviors. Health Decisions also offers an audio library of four- to eight-minute discussions of medical topics.

Companies like Health Decisions describe the costs of their services in terms of a “benefit-to-cost ratio” — the cost of the service per patient relative to the reduction in resource utilization. The prices vary and are closely guarded. When pushed for cost estimates, nearly all companies declined to give specifics. One company representative did say that the ballpark cost of one phone-triage event is about $2 per minute, with an average call of 12 minutes — but that's all the representative was willing to say. My conversations with several companies indicate that they target their services to large multispecialty groups, integrated delivery systems and MCOs. The companies estimate that access to telephonic services is cost-effective for populations no smaller than 5,000 to 10,000 patients.

For organizations with large patient populations, the contracted programs can show good results. LifeMasters Supported Self-Care, a disease management firm in San Francisco (800-777-1307), offers an education and triage program via telephone for patients with CHF. It was implemented by a California multispecialty group and hospital that are at risk for care of these patients. The group and hospital estimated they saved $950 per patient per month; the cost of the program was $200 per patient per month.6

Financial outlays like this are not in the realm of possibility for most small and medium-sized, independent family practices that aren't part of risk partnerships. Yet applying the principles of managing demand, with a modest allocation of resources, could be a very effective way to solve a given demand problem in your office.

11. Make your program SMART

It's time to roll out your program. To make it successful, ensure that it passes the SMART test: Your program should be specific, measurable, aligned with your incentives, realistic and time-limited.

A case study

Now let's see how a program to manage demand might work in a typical practice.

Setting: Neighborhood Family Medicine is an independent, six-physician family practice with about 25,000 active charts. Four of the six physicians have open practices with office-visit slots available.

Payer mix: About three-fourths of the practice's patients are members of discounted FFS health care plans. Twenty percent of its patients are members of one MCO, XYZ Care.

Demand problem: Recent profiling by XYZ Care found that ED visits for the practice's patients far exceed the standard for family medicine. The practice has limited capital available for managing demand.

Incentives: The practice is incentivized to reduce ED utilization for its XYZ Care patients. XYZ Care also is incentivized to reduce ED utilization, but Community General Hospital, which has the only available ED, is not.

Here's how Neighborhood Family Medicine might use the 11-step process to deal with its excess ED visits:

  1. Be sure incentives are aligned. Dr. Jones, the managing partner of Neighborhood Family Medicine, estimates that XYZ Care's adverse profiling cost the practice $2,000 in lost returns from its withhold fund. Clearly, reducing ED utilization is to the advantage of the practice as well as the MCO. And since ED visits for nonurgent care tend to result in fragmented, episodic care, reducing the percentage of unnecessary ED visits should benefit patients as well.

  2. Forecast demand for services. Dr. Jones asks the office's medical records staff to pull copies of the ED evaluations of Neighborhood Family Medicine patients for last year. Eighty patients visited the ED without referrals.

  3. Identify a target population. A physician in the practice reviews the ED evaluations and determines that 70 of these 80 patients were candidates for ambulatory care visits. Most of them were seen for upper respiratory infections, and 50 patients were seen before 5 p.m. Had these 50 visits taken place in the office, they would have brought in an estimated gross revenue of $1,750, excluding ancillary services.

  4. Define appropriate use of medical care. The mission statement of Neighborhood Family Medicine includes a commitment to using a scheduling process that allows for add-ins to the daily schedule so that patients with immediate, but not urgent, problems can be seen in the office.

  5. Identify barriers to appropriate utilization. The practice's office manager conducts five-minute interviews with 25 of the 50 patients seen unnecessarily in the ED last year. The majority identify an educational barrier to using the office rather than the ED: They aren't aware that the office allows for add-in appointments.

  6. Use the tools of the trade. The tool of choice to manage this demand problem is patient education. The physicians decide to post notices in the office about the add-in policy and include it in the practice's brochure when the brochure is revised later this year. They also decide to send postcards about the add-in policy to all patients who used the ED last year without referrals. (The cost of producing and mailing 80 postcards as well as printing notices for the office would be about $200.)

  7. Assess your available resources. The practice has on-hand the resources it needs for this effort: its personnel, the office phone, colored paper for the office notices, postcards and its computer system, which can address and print the postcards. Of course, the work of the staff and one of the physicians — pulling charts, reviewing ED evaluations, conducting phone interviews and evaluating the program's results — also represents a cost of the program, in a sense. But because the additional tasks aren't likely to force hourly staff to work overtime, to require the practice to hire additional staff or to keep the salaried staff from getting the rest of their work done, they don't demand a specific allocation of resources.

  8. Take advantage of freebies. Freebies aren't applicable in this example.

  9. Plan for evaluation. At the end of a year, the practice will re-evaluate its patients' unreferred ED visits. The next profile from XYZ Care also will show how well the program's goals were met.

  10. Build or buy. Since the practice has the resources it needs for the program, it has no need to buy one.

  11. Make the program SMART. The program offers a specific solution (patient education using written material). Its results are measurable, as the plan for evaluation indicates. The program is aligned with the practice's financial incentives. Its goals are realistic: By redirecting patients out of ED use and into the office, the practice hopes to capture 50 percent of the withhold it lost this year ($1,000) and 50 percent of the potential office visits ($875), for a total savings of $1,875. The cost of the program is estimated at $200, so its benefit-to-cost ratio would be $9.38 to $1 if the program meets its goals. Finally, a date has been set for evaluating the program's results, so it is time-limited.

Suggested reading

Do the right thing

In addition to showing how managing demand can save a practice money, this example shows the more important benefit of this approach: It's generally the right thing to do for your patients. Someone with a respiratory infection will get better care from you, in your office, than from whomever is on rotation at the local ED — and it will cost less. Similar logic applies when you try to keep patients with chronic conditions well-managed at home, and in your office from time to time, rather than returning to the hospital. If they're caring for themselves, with the help of a program that offers education and monitoring, that means they're not sick enough to need hospitalization. Managing patient demand for health care services is one example of how, in the “emerging health care environment,” you can align your incentives with your patients' best interest so that everyone wins.

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Copyright © 1998 by the American Academy of Family Physicians.

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