Editor’s note: This guest post was written by Dave Chase, the CEO of Avado.com, a patient portal & relationship management company that was a TechCrunch Disrupt finalist. Previously he was a management consultant for Accenture’s healthcare practice and founder of Microsoft’s Health business. You can follow him on Twitter@chasedave.
In several of my past pieces, I have written about the importance of a disruptive model of care and payment called Direct Primary Care (DPC) such as The Most Important Organization In Silicon Valley That No One Has Heard About. As the DPC models scale, they become a great option for individuals and small business. However, larger organizations have another option at their disposal that I’m as excited about as the DPC models.
Employers fed up with the annual “get less for more” health story when they get annual health plan updates have taken matters into their own hands. This has created one of the hottest sectors of the economy — onsite clinic providers. These are companies providing corporations with primary care onsite at employer workplaces. Each of the onsite clinic provider CEOs (e.g., Concentra, CareHere) I have spoken with have shared that their business is growing 100% annually. Reportedly 20% of employers with over 500 employees are implementing onsite clinic programs.
Faced with healthcare’s hyperinflation which is hurting their competitiveness, employers have been trying an array of solutions. Led by IBM’s study of their $2 billion annual health expenditure, the overwhelming evidence comes to a surprisingly simple conclusion: more primary care = healthier population = less money spent. Ben Franklin was right. An ounce of prevention is worth a pound of cure. Time and again, it’s been shown that proactive primary care can reduce the most expensive downstream healthcare costs — surgeries, scans, emergency department and specialist visits — by 40-80%. Rather than waiting for small issues to become full-blown medical incidents, proactive primary care can make a big difference.
These disruptive onsite clinics are proving that employers don’t have to endure the “get less for more” program anymore. Larger employers are finding onsite clinics have the same cost and health benefits as DPC models, but it goes beyond just direct costs. The good news for startups is the onsite clinic providers aren’t entrenched with old technology and almost comically convoluted and interminable decision processes at traditional healthcare providers that have prevented innovative technologies from gaining a toehold.
Where do the savings come from?
In the U.S., we tackle healthcare in a way that would be the equivalent of having the best firefighters and firefighting equipment in the world and then paying them more if there were more fires. Thus, you might find firefighters implicitly encouraging kids to play with fireworks on dry hillsides and allow buildings to be built with only one exit and no sprinklers. Even today, many hospitals measure their occupancy like a hotel. That is, higher occupancy is perceived positively similar to the fictional firefighter hoping for more fires so they get paid more. Instead, the key to slaying the healthcare cost beast is to view expensive interventions such as hospitalizations (other than child-birth) as a failure rather than something to be optimized. In the “do more, bill more” model we’ve been afflicted with, we get exactly what we reward. That is, full-blown medical conflagrations that are lucrative for healthcare providers but devastating to healthcare budgets that we all ultimately pay for directly or indirectly.
One other benefit employers realize with onsite clinics is that their employees aren’t wasting half a day going to a doctor’s appointment. Not only is the clinic nearby, but the need to even go to the clinic is reduced. In the flawed fee-for-service model, a doctor can only be paid if you visit their clinic. Not surprisingly, many doctors will optimize for the patient to come to their office as frequently as possible as it allows for more billing events. In contrast, DPC and onsite primary care physicians share the fact that as much as 2/3 of clinic visits don’t require a face-to-face encounter. Rather, phone or electronic communication is sufficient. For example, one doctor shared how he hasn’t seen a patient with Shingles in 5 years. These patients simply take a photo with their camera phone, email it to him and he can easily tell it is Shingles. He can then call in a prescription saving everyone time and money.
Fortunately, onsite clinic providers aren’t incentivized by convoluted health reimbursement models that reward the most expensive care possible. Both DPC and onsite clinic models are rewarded for value and outcomes, rather than mere activity. Further, the smartest of these recognize who the most important member of the care team is — the individual. After all, the individual is the only person who goes to 100% of their appointments and the 99+% of their life spent away from the clinic is when they return to or maintain their health. Having implemented HealthIT systems in dozens of health systems, it’s evident from a systems perspective that the patient is treated as a vessel to attach billing codes to rather than an equal member of the care team. It should be no surprise that legacy HealthIT is optimized around the flawed model, rather than the new models. Entire new categories of software emerge as healthcare providers recognize the most important member of the care team has largely been ignored.
The organizations that treat the individual as a member of the care team practice a “Collaborative Care” model that is making a real dent in healthcare costs. For the more difficult issues such as obesity and substance abuse, the Collaborative Care model extends to other care providers. In other words, not only is the patient-provider connection important but the provider-provider connection is also critical. For example, after a few years of trying various approaches, a large media company’s onsite provider assigned health coaches to their employees and had rewards and penalties for following care plans. The coaches coordinate between the primary care physician (who is also rewarded for individuals sticking to care plans) and the individual to great effect. There’s the dual win of a healthier employee and less money spent. Emerging technology solutions are making this much easier so the entire care team (individual, coach and doctor) are in sync to achieve the health goal.
The most successful onsite providers are rewarded for being patient-centered, accountable and coordinated. In contrast, the flawed “do more, bill more” reimbursement model that is still pervasive implicitly rewards a provider-centric, unaccountable (e.g., it’s good news when a sick patient comes back more frequently) and uncoordinated model. For traditional healthcare providers, they should heed the warning that providers are making newspaper industry mistakes. As more employers learn of the great benefits from a well-executed onsite clinic model, they will continue this Do it Yourself Health Reform trend that is happening one employer at a time.
Dave is the CEO/founder of Avado, a Patient Portal & Relationship Management system. Avado was founded on the premise that it will be virtually impossible to succeed in the new healthcare reimbursement models without recognizing that for 3/4 of healthcare spend (chronic disease), it’s the individual who controls decisions that drive outcomes. Avado gives the individual (aka “patient”) a seat at the care team table rather than being an afterthought as outlined in a TechCrunch piece entitled “Patients are...