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The business model innovations that we described in Chapters 3 and 4 are important elements of a strategy to reduce the cost, increase the quality, and improve accessibility of health care. But the business model innovations for the treatment of chronic disease that we describe in this chapter are perhaps the most important innovations of all.

Ninety million Americans currently have chronic conditions such as diabetes, hypertension, arthritis, and dementia. More than one-third of young adults aged 18 to 34, two-thirds of adults aged 45 to 64, and nearly 90 percent of the elderly have at least one chronic disease.1 Acute conditions like infectious diseases, trauma, and maternity care create real costs, of course. But chronic disorders account for three-quarters of direct medical care costs in the United States. And of the myriad chronic diseases, five of them—diabetes, congestive heart failure, coronary artery disease, asthma, and depression—account for most of these costs.2 Many often have their genesis in two other chronic illnesses, obesity and tobacco addiction. A key reason why such a large share of our health-care dollars is spent during the last 18 months of life is that this is when the complications of chronic disease have finally set in with a vengeance.3

In sum: any program for resolving our runaway health-care costs that does not have a credible plan for changing the way we care for the chronically ill can't make more than a small dent in the total problem.

Chronic illness is a relatively new phenomenon, because only recently has technological progress transformed many once-fatal diseases into chronic ones. Before the 1920s, for example, childhood-onset diabetes was an acute disease: those diagnosed with it died within a few months. But the ability to inject animal and now biosynthetic insulin has transformed Type I diabetes from an acute, fatal disease into a chronic condition. Coronary artery disease was largely an acute illness until the 1970s. It went largely undiagnosed until patients experienced, and often died from, a heart attack. Bypasses, stents, and statins have now transformed heart disease into a chronic condition. AIDS and some cancers have been transformed into chronic conditions in just the past decade. New drugs and devices are changing multiple sclerosis and cystic fibrosis from recurring, ultimately fatal episodes of acute illness into diseases whose victims can experience a better quality of life.

Though these triumphs are a cause for celebration, the number of patients who live with a chronic disease, the growth rate of that number, and the cost of their ongoing health maintenance over ever-longer periods of time are staggering.4 A key contributor to this costliness, however, is that the primary business models being used to care for these patients—physicians' practices and hospitals—were primarily set up to deal with acute diseases. They make money when people are sick, not by keeping them well. There are more than ...

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