A better healthcare solution?
I'm looking at an investment in a West-coast company with an interesting new healthcare services model. Here is the description. Reactions welcome!
Thanks,
Tim
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Their plan is to reinvent primary health care via a network of medical practices employed by and directly accountable to their patients.
Observations/assertions they make about the healthcare system that highlight the potential for this opportunity:
* >40% of all hc costs are consumed in insurance reimbursement-related work
* >50% reduction in cost of care for common illnesses is possible if initially treated via primary care (vs. emergency room or specialists)
* 90% of medical issues can be addressed by primary care
The thesis goes: if you could eliminate the insurance reimbursement-related costs, and make good, plentiful primary care more available, you could significantly reduce healthcare costs.
Their offering:
* Monthly flat charge for unlimited primary care
* 500-800 patients per doc vs. average 2500-3500 per doc traditionally in pc
* Docs have 10-12 appointments/day vs. 25-30 traditionally in primary care
* They claim a 30 minute typical patient visit vs. 7 minutes traditionally
* Charge is $54-$128/month (average $87), based on age
* Includes hospital rounds.
* They take anyone, regardless of medical history
* No submission for insurance reimbursement; much cost/time-drag eliminated
* Longer (60-90 minute) appointments for annual checkups
* Available 24x7. Includes phone/email consultations.
* On-site imaging, labs and drug dispensary
* Has the right incentives to promote wellness care, disease mgt, etc.
Note that under this model, the provider generates $680K/yr of revenue per doc at 650 patients per doc.
In order to provide comprehensive coverage:
* They can be combined with a high-deductible health plan (HDHP)
* Their service + HDHP + expected deductible cost is 30-50% cheaper than traditional comprehensive health insurance, while providing better care
* The pool of these people covered by this better primary care might enable an even cheaper HDHP offering (assume good pc care promotes health)
* For those without HDHP, there are pre-negotiated cash discounts for patients who wish to pay cash to outside specialists for care beyond pc
Compared with plans from employers who self-insure:
* Primary care is better (more extensive) for the above reasons
* Its still cheaper (though not as much cheaper).
Thanks,
Tim
-------
Their plan is to reinvent primary health care via a network of medical practices employed by and directly accountable to their patients.
Observations/assertions they make about the healthcare system that highlight the potential for this opportunity:
* >40% of all hc costs are consumed in insurance reimbursement-related work
* >50% reduction in cost of care for common illnesses is possible if initially treated via primary care (vs. emergency room or specialists)
* 90% of medical issues can be addressed by primary care
The thesis goes: if you could eliminate the insurance reimbursement-related costs, and make good, plentiful primary care more available, you could significantly reduce healthcare costs.
Their offering:
* Monthly flat charge for unlimited primary care
* 500-800 patients per doc vs. average 2500-3500 per doc traditionally in pc
* Docs have 10-12 appointments/day vs. 25-30 traditionally in primary care
* They claim a 30 minute typical patient visit vs. 7 minutes traditionally
* Charge is $54-$128/month (average $87), based on age
* Includes hospital rounds.
* They take anyone, regardless of medical history
* No submission for insurance reimbursement; much cost/time-drag eliminated
* Longer (60-90 minute) appointments for annual checkups
* Available 24x7. Includes phone/email consultations.
* On-site imaging, labs and drug dispensary
* Has the right incentives to promote wellness care, disease mgt, etc.
Note that under this model, the provider generates $680K/yr of revenue per doc at 650 patients per doc.
In order to provide comprehensive coverage:
* They can be combined with a high-deductible health plan (HDHP)
* Their service + HDHP + expected deductible cost is 30-50% cheaper than traditional comprehensive health insurance, while providing better care
* The pool of these people covered by this better primary care might enable an even cheaper HDHP offering (assume good pc care promotes health)
* For those without HDHP, there are pre-negotiated cash discounts for patients who wish to pay cash to outside specialists for care beyond pc
Compared with plans from employers who self-insure:
* Primary care is better (more extensive) for the above reasons
* Its still cheaper (though not as much cheaper).
posted by Tim Rowe at 12:28 PM
6 Comments:
sounds very interesting at first blush!
it seems in most years, a reasonably healthy person should come out better under this plan.
Based on their math, you will always come out better. That even if you pay the full deductible for your high deductible plan, the total cost is lower than a conventional comprehensive health plan. I have not validated this, of course.
I see.
are they going after everybody? or do they have a plan to target self-employed and small business people first?
Open to everyone, but in terms of marketing the biggest win is most likely smaller employers who don't yet self-insure.
Fast Company has some consideration of the issue:
http://www.fastcompany.com/magazine/135/the-doctor-of-the-future.html?page=0%2C0
As a general comment, building on something Vijay said here and someone else said on FB...
Primary care is consumed mostly by "reasonably healthy" adults: annual check-ups, etc. "What about specialists?" Specifically pediatricians, orthopedics (for sports injuries), and, importantly, geriatrics. Once you're out of "reasonably healthy", the expenses get high quickly and no employer can avoid those costs if they offer healthcare. If you remove the "generally healthy" folks from the insurance pool, can you expect the rates for the edge cases the employer is required to cover will rise to compensate?
Also, I've been consulting with a healthcare industry expert. Her commentary was that there are a lot of other costs... not just insurance filing... to look at. And she did not see how this proposal was any different from concierge medicine.
Please don't think me pessimistic: I think healthcare in this country needs to be fixed... and I am truly hoping that the new administration creates incentives to drive innovative business practices. I'm just not sure that this business, in isolation of the above incentives, will be as good as they say it is.
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