Overview of the Business Case

Benefit x Cost

It is critically important to provide people with diabetes the tools and skills to self-manage this chronic disease.43 This is the purpose of DSMES services. As discussed in the Overcoming Barriers to Referral and Treatment section of this toolkit, use of DSMES services is lower than it should be. In the United States, less than 5% of Medicare beneficiaries with diabetes and 6.8% of privately insured people with diabetes participate in a DSMES service within the first year of diagnosis.2,3

Identifying and addressing barriers is important for the sustainability of DSMES services. As part of the business plan, services should identify and address barriers at multiple levels, including programmatic barriers to starting or sustaining DSMES services, health care provider barriers to referral, and barriers to individual access and participation.

Although DSMES services have not always shown strong financial viability, that trend is changing. According to the 2015 National Practice Survey, over half (54%) of DSMES services were at least revenue- or cost-neutral, and 14% ran at a profit. Although the remaining third (32%) ran at a loss in 2015, this percentage represents a steady decline from the high of 43% running at a loss in 2007.42

Making a business case for DSMES services is critical to long-term service success and sustainability. The primary business case rests on the fact that DSMES services are associated with “increased use of primary and preventive services and lower use of acute, inpatient hospital services.”43 Research shows when diabetes educators and physicians collaborate, “positive clinical quality and cost savings” result.44

One study found a 34% lower hospitalization rate for people with diabetes who had had at least one educational visit compared to people with diabetes who had had no educational visits. A cost analysis of disease management services combined with diabetes education reported a return on investment of $4.34:1.45 In a three-year retrospective claims analysis of four million covered lives (including 250,000 Medicare beneficiaries), Medicare beneficiaries who completed a DSMES service demonstrated an average cost savings of $135 per month.43

Given the evidence that health care costs for people with diabetes are lower for those who attend at least one DSMES session, it follows that the benefits of DSMES services outweigh the costs of providing the services.44 Participation in DSMES services can improve hemoglobin A1C by 0.6% as much as many medications and without side effects.46

As a further demonstration of the relationship between DSMES, clinical quality outcomes, and health care costs, evidence indicates that individuals who participate in DSMES are more likely to follow best practice treatment recommendations and have lower claims costs. Thus, increasing referral rates to DSMES (especially among low-referring physicians) and increasing underserved populations’ access to DSMES are logical strategies for increasing health care quality and reducing costs.43

Page last reviewed: March 29, 2018