Employer-Directed Contracting

Stanley N. Schwartz MD FACPHealthcare Consultant, The Holmes Organisation

Tallgrass Analytics LLC

• Stan Schwartz MD:

• Direct Primary Care models

• Jim Millaway (The Holmes Organisation)

• Models that transform specialty care

• Ann Paul (St John/Oklahoma Health Initiatives & Brice Habeck (QuikTrip Corporation):

• The Accountable Care Organization commercial model

Warren Buffett

“a tapeworm eating, you know, at our economic body.”

What are you buying?

• Healthcare?

• Insurance?

Direct Primary Care (DPC)

Insurance

Insurance is the equitable transfer of the risk of a loss, from one entity to another in exchange for payment.

It is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss.

Why insure something you are almost certain

to use—or certainly should use?

What if you bought insurance for your gasoline?

• Cost of gas based on risk of future use, not current use.

• Purchases at an out-of-network station would cost way more

• Trips out of town would need pre-authorization

• Someone at the next pump might be paying a lot more or a lot less for the same gas

• No card, higher price—or no gas at all!

Insurance or

pre-payment?

Terms

Direct Primary CareMembership Care

Concierge Medicine

Two distinct service types (generalizations)

Direct Primary Care Concierge

Typical Panel sizeusually less than1000 usually less than 600

Retainer $50-80 / month $125-200 /month

Payable monthly quarterly or annually

24/7 cell access usually not almost always

Instant appointments sometimes usually

Insurance not for primary care

covered services billed to insurance

Purchased through employerindividual and

private

LocationTypically at/near

workplaceoften chosen close to

home

Direct Primary Care

Traditional Primary Care

Employed by independent group health system

Physician Compensation Typically salary +

Typically volume, usually relative value units, (“production”)

+

Non-face-to-face services

part of work in the salary structure

Most not compensated*

Specialty Care

may be chosen based on available

prices and discounts

usually within system; many

services provided at hospital rates

CoordinationOften do not share

EHRShared EHR creates

single record

Hospital Caresingle or multiple

affiliations provided by system

* chronic care in 2015 recognized under Medicare

New Chronic Care Payment by Medicare

• to start in 2015

• monthly payment of $41.92

• “multiple, significant chronic conditions” requiring care plans, coordination and medication management

Other DPC services• generic dispensing at cost or service markup

• discount arrangements with radiology and other ancillary services

• Common laboratory tests may be covered

• Many offer 24/7 electronic communication with providers (patient portals)

• Many offer same-day or next-day appointments

Potential benefits to employers

• early intervention

• reduced loss of work productivity

• “Working mother of three with diabetes”

Drawbacks?• Lack of infrastructure and resources for high-

level clinical quality measurements and population health activities

• Being outside an integrated system could produce friction at points of transitions of care

• Exacerbate primary care shortage? Or stem primary care attrition due to career changes and retirement?

The Equalizer

• Connected physicians and entities can share medical information

• Referral and communication pathway

• Provider-agnostic and network-agnostic

• Data usually extremely current

“Price is what you pay.Value is what you get.”