The Doctor Comes to You

I can recall, though somewhat incompletely after forty years, when I worked for Dr. Paul Ellwood, first at the Kenny Rehabilitation Institute, then at the Institute for Interdisciplinary Studies, the name adopted by Kenny’s research arm after it split from the hospital arm. After I left the research arm, it became “InterStudy”, and Dr. Ellwood created the name “Health Maintenance Organization”, as a last-minute substitute for “Health Management Organization”, which was deemed politically incorrect by leaders in Washington, D.C.

The model for the HMO originally was prepaid group practice organizations that combined healthcare delivery with insurance, and therefore had the best reasons for striving to “maintain” the health of populations for which they are financially responsible. Such organizations had become popular in the Depression and World War II, when obtaining a steady stream of revenue for physician groups and an organized source of medical care for war workers were popular ideas, and before the major push in developing hospitals came in the Hill-Burton legislation after the war.

The original idea was that HMOs would really maintain health, though the idea soon became overpowered by “managed care organizations” (MCOs) which focused far more on managing costs than care, and far more on care and costs than on health. The HMO label continues in two forms – 1) insurance plan designs that have primary physician “gatekeepers”, and are falling in popularity among employers and employees, and 2) prepaid group practices that have insurance responsibility, that are growing in popularity, if anything.

The original model of prepaid group practice was the Ross-Loos Medical Group in Los Angeles, started in 1929, and later integrated into the CIGNA insurance company, disappearing in 1999). Kaiser Permanente and Group Health of Puget Sound are among the current examples. They have had to compete with both “HMO”-labeled insurance plans, which are far less integrated forms of medical practice, as well as with MCOs and the surviving examples of traditional indemnity insurance plans.

But now the idea of “maintaining”, really “managing” health has caught on anew, as employers in particular recognize its value in improving the health of their workforces, and thereby reducing sickcare costs, and even more important and valuable, improving workforce productivity and performance. Group Health of Puget Sound, for example, offers a wide range of disease and health management programs for its members, helped by a major investment in information technology that enables online communication for members interested in managing their health and diseases. [P. Neurath “Doc, You’ve Got Mail” Puget Sound Business Journal Dec 31, 2007]

Kaiser Permanents offers its “Thrive” program to its millions of members, with major elements thereof operated by HealthMedia, Inc. in Ann Arbor, Michigan with its wide range of online health and disease management programs. Both Group Health and Kaiser Permanente enable members to integrate their “health” care with their “sickness” care, which may be one of the more promising ways to address the healthcare cost crisis. And as health management for populations and individuals becomes increasingly popular among commercial and government insurers, and particularly among employers, prepaid group practices many enjoy an advantage.

Hospitals and physicians that are not part of a prepaid group practice integrated system have a “disconnect” among the employees and health insurance plan members they serve. Both are almost entirely dependent on sickness care revenue for their current revenue and survival, while health and disease management both aim to reduce the need, demand, use, and expenditures for such care. The savings delivered to insurers, in particular, come entirely from sickness care use/expense reduction, which means that any traditional hospitals and physician practices eat into their own revenue when they make populations healthier.

This has not kept traditional providers from engaging in health and disease management, however. There are strong mission-based reasons for mission-driven providers to do so, given the greater benefits to communities of having healthier residents. And as the willingness of third-party payers to cover the continuingly increasing costs of sickness care — rising at two to five times the rate of general inflation for years – keeps decreasing, it makes sense for providers to “balance their risks” by joining in the move toward managing health and disease, rather than merely treating it.

Already, primary physicians are joining in this move, as they push to become and be both recognized and paid as “medical homes” for patients, where health and disease will be managed on a pre-paid or retainer basis. In addition hundreds of primary physicians have switched to or included “retainer medicine” practices where there is often a major focus on managing health, in addition to treating sickness, with the retainer justified by some combination of special availability, access and amenities for sickcare, and otherwise uninsured health management services.

Totally retainer-based practices, such as the 150 or so MDVIP practices operating in 16 states rely on a combination of billing insurance for sick care and providing health management services under their annual retainers as their form of “pre-paid” medical care. The 570-physicians of Physicians Organization of Western Michigan in Grand Rapids offers there forms of health management, one retainer-based, another truly pre-paid medicine with a pre-paid set of primary physician visits plus a small deductible for each visit, along with nurse health coaching, and the third a nurse health coaching program available to patients at its associated retail medicine clinics (www.powm.com)

Retail medicine is also a source of health management services, ranging from annual physicals and immunizations to continuous monitoring and management across the hundreds of retail clinics. The RediClinic offers a variety of “Stay Well” programs in addition to its “Get Well” sickness care. Convenience Care Clinics, just launched in December, offer a “comprehensive wellness and prevention program with a proactive approach to healthcare delivery versus the other reactive types”. [“Newly Formed Convenience Care Clinics to Franchise Revolutionary Healthcare Concept Nationwide” Dec 11, 2007]

Other retail clinics, including the Sutter Express Care clinics operated by Sutter Health in the Sacramento, California area, offer wellness services as well. And a growing number of similar clinics operating at the worksite, by employers, themselves, or specialized providers of worksite medicine, such as CHD Meridian Healthcare in Chadds Ford, Pennsylvania, increasingly combine health management with convenient sickness care, as employers discover the economic benefits in that combination.

Regardless of any advantages that prepaid group practices may enjoy, they have a horde of competitors. In a study of 96 employers who offer wellness programs to their employees, for example, no single health management supplier served more than three such employers, with the vast majority serving only one of those surveyed. [Wellness: Saving Lives and Money” 2007 Willis Survey (Willis America Employee Benefits North America (request: willisebsurvey@willis.com)]

Moreover, there has long been a tendency for traditional sickness care providers to operate at the high end of costs when engaging in health or disease management, as shown by the fifteen who participated in a Medicare disease management demonstration project, where the fees charged ranged from $80 to $444 per month!, or $960 to $5328 per year. While high-risk chronic disease patients may require and justify such high fees, they led to only two of the fifteen providers involved in that project being able to meet Medicare requirements for cost savings net of fees. [R. Brown, et al. “The Evaluation of the Medicare Coordinated Care Demonstration: Findings for the First Two Years” Mathematica Policy Research, Inc. 2007]

Prepaid medical practices and integrated systems such as Kaiser and Group Health may be able to translate their pre-existing motivations for keeping members healthy and empowering them to manage their own health and disease into a major advantage in the general health management markets, particularly in EHM. They have the necessary apparatus and experience, as well as track records to use if they choose to add EHM, or even PHM to their offerings. This would seem a logical good fit for them, and one that employers might more readily accept than traditional providers’ combining sickness care as a source of revenue for themselves, as well as savings for employers.

Source: World Health Care Blog
Original Publication Date: January 11, 2008