Direct Primary Care: Provider, Purchaser and Payer Perspective
By Dave Chase
First Posted at Forbes on 7/14/2013
DPC Provider perspective
For this report, the authors interviewed CEOs or executives of a dozen DPC companies. The comments below reflect the comments made by these CEOs when asked the questions listed in the profiles. In addition, there was an open-ended discussion to learn more about their organizations.
DPC practitioners believe that they achieve the Triple Aim[i] (improve patient experience, improve health and lower per capital costs) perhaps better than any other delivery model in place in the U.S., and they are mystified that DPC hasn’t grown faster than it has. They recognize the inertia that exists even if there isn’t high satisfaction with current models. Their perspective is straightforward and explained by an analogy. DPC practitioners outline that people wouldn’t put up with co-pays, EOBs, deductibles, pre-approvals and other things taken for granted in healthcare today if that was applied to the equivalent items in car maintenance. No one pulls out his or her State Farm card for a trip to the mechanic, yet that’s what is done with day-to-day healthcare. They view the administrative burden as an “insurance bureaucracy tax” that can add 40% to the cost of healthcare yet is something that both providers and consumers are unhappy with (see the Net Promoter Score graphic in the Consumer Attitudes section that shows how low health insurance ranks versus other industries).
DPC in Public Sector Funded Healthcare
Another way to look at it is DPC providers’ response to the question of using DPC as a way to deliver public sector-funded primary care. This concept elicited a strong response from DPC leaders that summarizes their perspective on DPC and the rest of the healthcare system. Here is how Dr. Garrison Bliss described it:
“The issue of using DPC for the poor is from our point of view a no brainer. Why use the most expensive inflationary system available (by which I mean the insurance system, whether public or private) to take care of those with the least money and most in need of basic services? The structure that makes sense to me is to create a thriving marketplace in direct primary care, competing on price, access and quality – and working exclusively for our patients. Then add a fixed monthly stipend for primary care for every Medicaid patient in the United States – a stipend that covers the lowest priced/highest functioning primary care available.”
The following is a composite of the arguments DPC providers make for why DPC would be a good way to provide primary care to Medicare and Medicaid beneficiaries where there was universal agreement across the DPC providers:
- No government management system to control or manage care – it manages itself with the patient at the helm.
- Converting dependent impoverished citizens into patients with economic clout and respectful treatment.
- Eliminating the cost overhead of insurance billing on both the MD and the government side.
- No more barriers to basic care for Medicare and Medicaid patients – they can use all they need.
- Eliminating the fee-for-service incentive disaster that produces massive overutilization and huge downstream expenses.
- Financially stabilizing the primary care world with consistent monthly fee payments to cover fixed costs while allowing those doctors with better ideas or higher prices to go for the upscale patients or those wanting better art work and longer visits.
- Free up primary care doctors to further improve their quality, access and patient centered services – not their billing savvy.
- If the government wanted to regulate, they could demand an annual report on each patient they support, giving the actual utilization, health care outcomes and proof of appropriate management of common illnesses, immunizations and cancer screening. The government could actually pay for results, not process. Primary care practices would have to be certified as producing an acceptable level of results and patients would have access to success profiles both in terms of cost and quality when selecting their doctor for next year.
- The government could track the overall costs created by each practice and make those numbers public as well. The high cost practices would eventually lose certification, particularly if the money ended up in the hands of their employer (hospitals, big multispecialty clinics).
- If the government wants to tackle the HotSpotters patients[ii], they just need to up the monthly ante for the sickest patients – they will get their money back with huge interest from the reduced downstream costs and reduced transaction costs that these patients generate. With the big fees they will also be able to require more complete reporting of how their chronic illnesses are being managed.
It is generally assumed that self-insured employers are gigantic corporations; however, many are organizations with as few as 50 employees who are turning to self-insurance with stop-loss policies that protect them from rare, but potentially financially devastating, claims. These self-insured employers are driving much of the move to a re-emphasis of the importance of primary care. The bottom line is the bottom line. Studies such as IBM’s find increased access to primary care provides the highest ROI for allocation of their healthcare spending.
Highgate Hotels[iii], Ivie & Associates[iv] (a marketing & adverting agency), The Beryl Companies[v] (operates a healthcare customer contact center for some of the nation’s leading hospitals) are three examples of self-insured employers working with DPC providers. These organizations work with White Glove Health that works with over 400 employers (a mix of self-insured and fully insured employers). The following items are some of the ways they measure the success of the DPC model:
- Lower absenteeism.
- Reduced ER visits (they’ve seen a 10-40% reduction) and other medical costs (they’ve seen reductions of $25,000-130,000 in the first year and more in subsequent years).
- Decreased employee stress & Improved morale.
- Saving time going to/from a doctor’s office and waiting room time which can add 2-4 hours away from work.
Jennifer Limon, Manager of Compensation and Benefits at Beryl says the whole tone of the annual open enrollment season has changed measurably:
“Instead of delivering the bad news during open enrollment: costs are going up, benefits are being reduced—it is a positive time where we are able to report that costs are not going up and we receive feedback from our co-workers about how pleased they are with the healthcare coverage that the company is providing
Ms. Limon goes on to say that employees now have an incentive to seek care early that can head off more serious issues. Indeed, because the WhiteGlove visits are seen as inexpensive, the firm expects to see costs continue to decline as workers seek early treatment.
“We were looking for ways to help reduce healthcare costs and absenteeism,” explains Andrew Pryor, VP, and Human Resources for Beryl. “Our absenteeism rate affects our revenue. When we reviewed our company’s current health plan, we discovered that three out of four co-worker’s visits were for routine and preventative-care issues, for conditions such as sinus or ear infections. We also found that a typical visit took two to four hours out of the day, when we accounted for travel time and waiting at the physician’s office.”
It was IBM’s study of their $2B spend on healthcare globally that moved the company to action. The findings from their global study led to a surprisingly simple formula described by Dr. Paul Grundy (Head of IBM’s healthcare transformation) as follows: “More primary care access led to a healthier population which, in turn, led to less money spent. This is why IBM has become proponents of the Patient-centered Medical Home as the foundation of the transformation of healthcare delivery.” Separately, in Denmark[vi], the government broadly implemented the PCMH model re-emphasizing the importance of primary care. As a byproduct, the number of hospitals (and hospital days) has dropped by more than half proving the old adage “an ounce of prevention is worth a pound of cure.”
DPC has gained an early foothold with aforementioned unions. About 20% (or 1000) of Qliance’s patients are members of United Food and Commercial Workers union. Iora Health has had a strong focus on unions, and is working with UnitedHERE Union in Atlantic City, the Freelancer’s Union in Brooklyn and the Culinary Workers Union in Las Vegas. Their model is different than other DPC practitioners in that the unions make a substantial commitment by identifying their highest-cost members and targeting them for the Iora program. The critical mass of patients from the unions allows an Iora Health location to be established with much of the financial risk mitigated since there is a full patient panel.
Payers of healthcare will be able to realize the benefits of DPC in controlling costs and increasing patient wellness only if the solution is more widely available and easily adopted by providers. “Access to a physician, screening tests and baseline generic drugs are not expensive when paid directly to the provider, much like an onsite clinic”, states Chris Shoffner, VP of Physician Care Direct. “Through technology, any provider can immediately become a DPC provider. That is how we scale the DPC solution and meet the needs of the payer, provider and patient in the future.”
Although DPC is included in the federal health reform and it has demonstrated some strong results, the authors of this report found many payers and purchasers were not aware of the existence of these companies and this model of care. This section looks at the broad definition of payers and purchasers from self-insured employers to unions to insurance companies.
Proponents of DPC assert that the most cost effective way to pay for healthcare is to pair DPC with a high-deductible wraparound policy. The idea is that insurance is used for what it’s best for — rare items (house fires, cancer, major car accident). For day-to-day healthcare, DPC is paid for in a model that is akin to a gym membership — a flat monthly fee regardless of how much one uses it (though some have co-pays mainly due to state insurance regulations). Contracting with DPC is a relatively new phenomenon. This is a description of the activity that’s been announced to date by the major DPC companies. (Note: we’ve been told there are additional discussions underway, however to date, Cigna and MEBS are the only carriers to announce anything.)
Cigna is the first major carrier to embrace DPC. They are pairing DPC with their plan for self-insured companies with more than 50 employees. As an early adopter of pairing DPC with a complementary insurance program, hypothetically they gain at least two key advantages over their competition:
- New business generation. It is a key tactic for capturing new business by having a unique offering to prospective clients.
- They will have a full year of experience working with DPC practices before the Insurance Exchanges that are part of the federal health reform kick in.
Cigna’s marketing statement of what they are doing states:
“Cigna has adapted their Level Funding Plan for employers to accommodate Qliance as a primary care network option for companies who want to enhance primary care access for their employees, improve the quality of care, and drive overall healthcare savings. Cigna, the first insurance carrier to actively include Qliance in their plan, has been on the forefront of finding innovative solutions for the employer market, and Qliance is proud to be an active partner in their efforts.”
Chris Blanton, President and General Manager of Cigna PNW, asserts that his organization and Qliance both want to improve access to quality, affordable care:
“Employers who use Cigna’s self-funded plan options and Qliance’s enhanced primary care solution are able to offer their employees access to high-quality, patient-centered comprehensive care with savings opportunities for employers and their employees. With the ever growing shortage of primary care services in today’s marketplace, we see this as a unique opportunity to address the issues of access, quality and affordability.”
Note: Subsequent to the publication of this report, I learned of a soon-to-be-announced major development in support of DPC. That is, a national insurance player is going to aggressively promote a DPC “wraparound” policy. It should be announced this Summer.
Associated Mutual is a health plan with strength in serving unions such as the AFL-CIO and Ohio Health Care Trust. They are based in Grand Rapids, Michigan. Associated Mutual ‘ President, Tim Spink described how he was initially skeptical of offering DPC as it sounded more expensive than the per member per month costs for primary care that they assume in their baseline model. He thought if he was paying $x per year to a physician and many of those covered lives won’t go to the physician in a given year, it sounds like it would be more expensive than a traditional fee-for-service model. Or he compared it to HMOs. It can look like it’s significantly higher cost than HMO. The big difference that overcame his skepticism is the nature of the ongoing patient-provider relationship. Further, there is much more covered in the fixed cost going to the physician than what he initially thought. The way Spink looked at it is that it’s more about elimination of CPT codes. That is, there are two key byproducts of a DPC practice:
- A very large percentage of common medical issues can be handled in a DPC practice especially when they have no financial incentive to refer patients out since they aren’t subject to productivity objectives driven by the fee-for-service model.
- As outlined in the DPC and the Healthcare Delivery System section, they dramatically drive down utilization of the most expensive facets of healthcare (hospitalizations, ER visits, surgeries and specialist visits).
[vi] General Practice and Primary Care in Denmark, The Journal of the American Board of Family Medicine, March 2012