Unlocking the ROI for Patient Activation Measure® (PAM®) in Australia: Evidence and Insights

Australia’s healthcare system faces significant challenges from the growing burden of chronic conditions. According to the Australian Institute of Health and Welfare (AIHW), 15.4 million Australians (61% of the population) live with chronic conditions, contributing to healthcare expenditure exceeding $38 billion annually (1). These costs are largely driven by conditions such as cardiovascular disease, musculoskeletal disorders, diabetes, and cancer, which often require ongoing management and incur substantial resource demands.

Studies suggest that approximately 40% of individuals with chronic conditions are categorised as having low activation levels (PAM® Levels 1 and 2), depending on the population, chronic conditions, and context (6, 15). Low-activation patients face significant barriers in self-managing their health, leading to higher utilisation of high-cost services such as emergency departments and hospital admissions. Targeted interventions to improve activation levels within this group offer a critical opportunity to enhance outcomes while reducing healthcare costs (2).

Global Evidence on ROI for PAM® International research underscores the effectiveness of the Patient Activation Measure® (PAM®) in improving health outcomes and reducing costs:

• United States: Studies demonstrate that a 1-point increase in PAM® score correlates with a 2% to 3% reduction in healthcare costs and a comparable improvement in health outcomes (2). For example, Medicare data reveals significant cost reductions in managing chronic conditions like diabetes and cardiovascular disease. Research by Remmers et al. shows that improved patient activation among diabetes patients is associated with better health outcomes and reduced healthcare utilisation, highlighting the cost-effectiveness of targeted PAM® interventions (2).
• United Kingdom: The NHS has integrated PAM® into several initiatives, showing a 38% reduction in emergency admissions and shorter hospital stays for patients with higher activation levels (4). These results highlight the value of PAM® in targeting interventions for resource-intensive conditions.
• Australia: Recent findings by Dammery et al. during the COVID-19 pandemic demonstrate that higher patient activation is a strong predictor of better self-management and health behaviours, reinforcing the relevance of PAM® in supporting patients during periods of high stress and health system strain (6).

Projected ROI for PAM® in Australia using global data as a foundation provides a detailed estimation of PAM®’s ROI in the Australian context:

1. Baseline Costs:
   • Australia spends approximately $2,470 per person annually on chronic condition care, based on the AIHW’s reported $38 billion expenditure across 15.4 million individuals (1).
   • According to AIWH, these costs could be even higher with a breakdown including:

• Musculoskeletal disorders such as back pain and arthritis are responsible for more health spending than any other group of conditions ($14.6 billion, or 10.4%).
• Cardiovascular diseases($12.7 billion) and cancer and other neoplasms ($12.1 billion) ranked second and third highest for health spending.
• Mental andsubstance use disorders overtook injuries in 2019–20 as the 4th highest disease group for spending ($10.8 billion).
• Over one-third of disease spending was related to musculoskeletal disorders, cardiovascular diseases, cancers and other neoplasms and mental and substance use disorders.
• The two conditions with the highest spending were injuries where the external cause was falls ($4.7 billion)and dental caries ($4.5 billion).

2. Savings for Low-Activation Patients:
   • With 40% of chronic condition patients (6.16 million people) at low activation levels, moving these individuals 1 point up the PAM® scale would reduce costs by 3%, equating to $456 million annually. A saving of 17%.
   • This figure is supported by research from China, where approximately 50% of chronic pain patients fall within PAM® Levels 1 and 2 (11). Given Australia’s relatively high education levels and healthcare literacy, the estimate of 40% is considered accurate and appropriate for calculating potential savings in the Australian context.
   • Targeted strategies focusing on improving activation in these groups can deliver substantial financial and clinical benefits. Chronic conditions such as cardiovascular diseases, musculoskeletal disorders, and mental health issues—major contributors to healthcare costs—are particularly amenable to patient activation interventions (10).

Larger Movements on the PAM® Scale Increasing PAM® scores has profound implications for chronic disease management and overall healthcare costs. Research shows that improving activation levels leads to better self-management of various chronic conditions, such as diabetes, cardiovascular disease, and musculoskeletal disorders, which are major contributors to healthcare costs (3, 8).

Additionally, research by Lindsay et al. indicates that an increase in PAM® level is associated with 8.3% lower follow-up costs for high-risk patients, demonstrating the financial benefits of activation improvements in vulnerable populations (3).

• For a 10-point increase, the savings for the 40% low-activation group (6.16 million people) would reach:
  • $74.10 × 10 points × 6.16 million = $4.56 billion annually. This improvement translates to reduced emergency department visits, fewer hospitalisations, and better adherence to preventive care programs (6).

These figures assume that chronic condition costs are similar across categories and that improvements in PAM® scores are distributed equally across all conditions. Greater returns could be achieved by targeting higher-cost chronic conditions, such as cardiovascular diseases, musculoskeletal disorders, and mental health issues, which are the leading contributors to Australia’s health expenditure (1, 15).

Larger improvements on the PAM® scale, transitions between activation levels, or selective targeting of patients with higher-cost chronic conditions amplify these savings significantly. For example, transitioning patients from PAM® Level 1 to Level 2 not only reduces emergency care reliance but also fosters sustainable behaviour change, compounding both financial and health benefits over time (2).

Key Considerations for Implementation

1. Equity and Access:
   • PAM® is particularly effective for individuals in socioeconomically disadvantaged areas, where health literacy and access to care are limited. By addressing these inequities, PAM® promotes better health outcomes for underserved populations. Research by Marshall et al. highlights how patient activation improves outcomes in vulnerable populations, such as individuals living with HIV, by fostering better engagement and adherence to care (7).
2. Data-Driven Resource Allocation:
   • PAM® data enables healthcare providers to stratify patients by activation levels, directing resources where they will have the greatest impact. This approach reduces inefficiencies and ensures cost-effectiveness (8).
3. Systemic Benefits:
   • Beyond financial savings, PAM® improves treatment adherence, reduces preventable hospitalisations, and enhances patient satisfaction, supporting broader health system sustainability (3).

Conclusion The integration of PAM® into Australia’s healthcare system offers a transformative opportunity to reduce costs and improve outcomes. By focusing on low-activation patients and leveraging global evidence, Australia can achieve savings of up to $456 million annually for a 1-point PAM® score increase. Larger improvements, such as 10-point increases, could save billions, highlighting PAM® as a cost-effective solution for addressing chronic disease management and fostering health equity. With the right investment and targeted implementation such as integration into the MyMedicare Program, PAM® can drive meaningful, measurable change across Australia’s healthcare landscape (6).

Acknowledgement: We are grateful to Professor Ajit Narayanan, Professor Emeritus  (AUT, Exon), for providing comments on an early draft of this article.

 

 

References

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3. Hibbard JH, Greene J. What the evidence shows about patient activation: better health outcomes and care experiences; fewer data on costs. Health Aff (Millwood). 2013;32(2):207–214.
4. NHS England. Social prescribing and community-based support. Available from: https://www.england.nhs.uk/personalisedcare/social-prescribing/.
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6. Dammery G, Vitangcol K, Ansell J, et al. The Patient Activation Measure (PAM) and the pandemic: Predictors of patient activation among Australian health consumers during the COVID-19 pandemic. Health Expect. 2023;26:1107-1117. doi:10.1111/hex.13725.
7. Marshall R, Beach MC, Saha S, et al. Patient activation and improved outcomes in HIV-infected patients. J Gen Intern Med. 2013;28(5):668-674. doi:10.1007/s11606-012-2307-y.
8. Henderson C, Knapp M, Fernandez JL, et al. Cost-effectiveness of telehealth for patients with long-term conditions (Whole System Demonstrator telehealth questionnaire study). BMJ Open. 2013;3(6):e003013. doi:10.1136/bmjopen-2013-003013.
9. Where in Australia is chronic disease most prevalent? 2020. Available from: https://www1.racgp.org.au/newsgp/clinical/where-in-australia-is-chronic-disease-most-prevale.
10. Disease expenditure in Australia 2019-20. Available from: https://www.aihw.gov.au/reports/health-welfare-expenditure/disease-expenditure-in-australia-2019-20/contents/summary.
11. Yao F, Zheng M, Wang X, et al. Patient activation level and its associated factors in adults with chronic pain: a cross-sectional survey. Medicine. 2021;100(19):e25929. doi:10.1097/MD.0000000000025929.