NU Online News Service, Oct. 20, 2004, 4:10 EST

A combination of an aging U.S. population and high health care costs spell big growth opportunities for disease management firms, a new report says.[@@].

The report, by the investment banking firm Cochran, Caronia & Co., Chicago, projects 5 to 10 years of double digit growth for the disease management industry.

The industry focuses on controlling the quality and cost of daily care for people who suffer from chronic diseases such as diabetes and asthma.

The report says 44% of people with chronic diseases account for 78% of healthcare spending in the U.S.

“More employers are finding that they can slash health care costs and enhance productivity by emphasizing prevention and better coordination of the care of such patients,” said Adam Klauber, director of investment research for Cochran, Caronia.

Typically, disease management firms operate under contract to health plans, hospitals and employers who self-insure. They seek to influence patient behavior to cut down on medication and doctor visits and improve the patients’ health and quality of life.

The report estimates only about 5% to 10% of the disease management market is tapped by the industry.

Medicare and Medicaid patients represent a largely untapped part of the market. Medicare alone could increase the size of the market by 40%, the authors point out.

Congress last year passed legislation steering more chronically ill patients into disease management, and the first federal contracts for the services will be announced in December.