The 3-year disease management effect: understanding the positive return on investment.

Objective: Conventional wisdom suggests that health promotion programs yield a positive return on investment (ROI) in year 3. In the case of the University of Minnesota's program, a positive ROI was achieved in the third year, but it was due entirely to the effectiveness of the disease management (DM) program. The objective of this study is to investigate why.

Methods: Differences-in-differences regression equations were estimated to determine the effect of DM participation on spending (overall and service specific), hospitalizations, and avoidable hospitalizations.

Results: Disease management participation reduced expenditures overall, and especially in the third year for employees, and reduced hospitalizations and avoidable hospitalizations.

Conclusions: The positive ROI at Minnesota was due to increased effectiveness of DM in the third year (mostly due to fewer hospitalizations) but also to the simple durability of the average DM effect.