With the number of retail clinics expected to double by 2015 and millions of Americans shopping for coverage through the health insurance marketplaces, health care is quickly transforming from a provider- and payer-driven industry into a consumer-driven one. Succeeding at retail health will require new skills and attributes that many providers and payers have not cultivated in the past.
“Those that become easy to do business with and become very retail-oriented and customer-focused are going to have an opportunity to succeed in this space,” said Kevin Klobucar, president and CEO of Blue Care Network, the HMO affiliate of Blue Cross Blue Shield of Michigan. “And those that don’t do it very well are not going to be able to win in the marketplace.”
The phenomenon has three big drivers: As patients face ever increasing out-of-pocket expenses, they are becoming more discerning shoppers of healthcare services, meaning providers need to attract patients with better service. In addition, provider payment is increasingly being tied to patient satisfaction. Plus, as providers take on more financial risk tied to the quality and cost of services, they need to engage patients to be active partners in their own care.
Various healthcare players—including health systems, payers, physician practices, and retailers—share some of the strategies they are using to respond in this new environment.
In response to the launch of the insurance exchanges, some health systems are broadly reorienting themselves to think and act like retailers. For example, leaders at CHE-Trinity Health (formed by the recent merger of Catholic Health East and Trinity Health) think health systems must organize themselves to succeed financially in a consumer-oriented retail environment in which many—and eventually most—people choose their coverage and shoulder an increasing amount of financial responsibility to pay for it.
New decision makers. As estimated 7 million Americans will be eligible to buy insurance in the new public health insurance exchanges that started marketing Oct. 1 for coverage that takes effect Jan. 1. For providers, this marks the biggest influx of insured patients in recent history. It will bring major challenges because many of these patients will be unfamiliar with cost sharing, benefit limits, provider networks, and other concepts associated with health insurance.
To help with this, CHE-Trinity is sending its own volunteers out with laptops to popular destinations like laundromats and churches to educate consumers about the insurance decisions they will need to make. The health system also plans to use kiosks in its ambulatory offices and hospitals to help patients who do not have home Internet access register for insurance online.
In the exchange environment, consumers rather than employers will be making decisions, and they will focus on cost and quality from an individual perspective, which is very different from that of an employer that must balance the needs of an entire workforce. “There are huge implications on several levels, and for us, ‘winning’ means successfully transitioning into that new wave of consumer/patient interaction and retail orientation,” said Preston Gee, former senior vice president of strategic planning and marketing at the Trinity Health division.
Value-based payment arrangements. To that end, Trinity Health evaluated payers in each of the 10 states in which it operates to identify the ones most likely to succeed in the health insurance marketplace and worked to position itself as the low-cost, high-quality partner of choice for those payers.
That positioning was fairly easy to establish because Trinity Health has long participated in payer-initiated programs to improve the value of care. Blue Cross Blue Shield of Michigan (BCBSM), for example, has designated several Trinity Health hospitals as Blue Distinction Centers in recognition of their better patient outcomes and lower rates of complications and readmissions, compared with some other hospitals in the state. Some Trinity Health hospitals have earned a plus sign to that distinction, indicating they are 20 percent more cost-efficient than the average hospital.
“Ultimately, healthcare reform is about providing access to affordable products in the marketplace, so we are seeing more and more insurers and health systems getting together to figure out how we tackle this thing,” Klobucar said.
In May, CHE-Trinity Health and the Michigan Blues announced a new value-based reimbursement agreement for the system’s 12 hospitals. Under this payment model, hospitals that work closely with their affiliated physicians to improve efficiency and achieve better population health outcomes will share in the savings they generate for BCBSM. To support the value-based contract, BCBSM and CHE-Trinity are collaborating to create a shared performance management system and work processes that hardwire clinical best practices into care delivery.
In addition, BCBSM and Mercy Health—CHE-Trinity’s division serving three counties in the Grand Rapids market—jointly announced an HMO product that will be launched on the health insurance exchange when it opens enrollment in October. Unless they have a referral to an out-of-network provider, people who buy the insurance will be limited to Mercy Health’s four hospitals and more than 700 physicians, but they will get the lowest-priced BCBSM insurance available.
Rapid expansion. In addition to its agreements with CHE-Trinity, BCBSM has also issued a request for proposals from hospitals to join an exclusive provider organization and to hospitals and physicians to join an HMO that will offer products “at very low price points to individual consumers” in southeast Michigan beginning in 2015. “We are trying to begin to work with providers who are willing, ready, and able to partner with us,” Klobucar said.
Like other retailers, BCBSM is planning a wide range of marketing activities to reach its target consumers. Just being listed on the public exchange is not sufficient, Klobucar said.
The exchanges are just one element that is pushing retail principles to the fore, Klobucar said. “We see consumerism prevailing now in the marketplace,” he said. “Even if people aren’t buying the policies on their own and they’re still coming through their employer group, they are expecting to get serviced and see value like they see from Amazon and others in the retail-oriented world.”
Forward-thinking providers like Aurora Health Care in Wisconsin, Geisinger Health in Pennsylvania, and Alegent Health in Nebraska were quick to recognize that consumerism was coming to health care. For nearly a decade, they have operated retail clinics in grocery stores, shopping malls, travel plazas, and other non- traditional care sites. They were willing to accept losses in the early years because they believed the clinics would eventually become an important component on the continuum of care.
Major retail chains like CVS and Walgreen’s shared their enthusiasm for the quick-clinic concept. When the retailers first opened health clinics staffed by nurse practitioners and physician assistants more than a decade ago, they were scorned by a medical community that thought patients valued access to a physician more than the convenience of getting a strep culture and toothpaste in one stop on the way home from work. The fact that clinics in Walmart, Target, and other retail chains logged an estimated 5.97 million patient visits in 2009 alone suggests otherwise (Health Affairs, September 2012 vol. 31 no. 9 2123-2129).
Defining value. Questions about the quality at quick clinics were silenced when RAND researchers found that the quality of care was similar to that at physician offices, urgent care centers, and emergency departments (EDs). Moreover, the costs of treating acute illnesses at retail clinics were up to 40 percent lower than in physicians’ offices and urgent care centers—and 80 percent lower than EDs (Annals of Internal Medicine, Sept 1, 2009).
Today, Cleveland Clinic, Duke Health, and dozens of other health systems are partners with retail chains, providing physician oversight of their quick clinics. Plus, leading health plans are offering financial incentives to encourage their members to use retail clinics when appropriate.
Some project that many consumers who gain coverage via health insurance exchanges or Medicaid expansion will frequently seek care at a quick clinic. For one thing, primary care capacity in some communities may be insufficient to meet new demand. For another, newly insured consumers may be overwhelmed by the responsibility of choosing a primary care provider, but they know where to find Target.
Engaging patients. Once there, the retail chains use their deep understanding of consumer preferences and habits to give patients a good experience that makes them want to return, said Marc Baer, Target’s senior director of managed care.
“In a time when health plans and benefit providers are trying to figure out how to get people to engage in staying healthy or getting healthy, we fundamentally believe that simplicity, plus a great guest experience, will lead to engagement,” he said. “As the healthcare ecosystem evolves, there are lessons that can be learned from industries like retail and companies like Target because, frankly, it’s what everybody is after: how to get people to engage.”
Working with PCPs. Unlike CVS Caremark, which expects monitoring of diabetes, hypertension, and other chronic conditions to account for 25 percent of its quick clinic volume within five years, Target is not currently planning to add chronic disease management to its roster.
Rather, patients who receive care at a Target clinic are encouraged to find a primary care physician (PCP) and are given a list of area providers who are accepting new patients. If they already have a PCP, Target will send a record of the visit to that physician. “We fundamentally believe that we are a complement to primary care, not a substitute for it,” Baer said. “But that doesn’t mean that we can’t play a role in helping to make it easier for people.”
Unlike Walgreens, Target has not formed an accountable care organization. But Baer’s eye is trained on how health reform is changing the industry and how Target fits into the future.
“That will undoubtedly create a lot of innovation opportunities,” he said. “We are really engaging in that conversation so that we will be ready to do what we need to do to meet the needs of our guests.”
The 300 patients in physician Susan Wilder’s Lifescape Premier primary care practice in Scottsdale, Ariz., pay an annual $3,500 retainer that entitles them to:
Acute care visits, personalized intensive nutritional programs, diagnostic services, and skin care are billed separately. The practice offers same- or next-day appointments, home or facility visits when indicated, extended and weekend hours, and advocacy with specialists, emergency facilities, and other providers.
Wilder is one of the growing number of so-called direct care physicians who do not accept public or private insurance payments. The American Academy of Private Physicians estimates that more than 5,000 physicians are operating outside the insurance system and introducing a wide range of business models.
Increasing efficiency. “By getting us out from under this archaic, volume-based, overly-complex payer system and working directly for the patient, we are going to have a whole wealth of different practice options that fit every price point—from the quick clinics to nurse practitioner home visit practices to high-end, high-service concierge practices like mine,” Wilder said.
Although she encourages patients to have insurance to cover hospitalizations and specialty care, she believes the insurance system does not work well for primary care patients or providers. “The administrative inefficiency and cost of funneling primary care services, which are basically lower-dollar line items, through this ridiculously complex insurance system, and paying seven to 12 cents on the dollar for the cost of collecting on those small-dollar claims is an absolutely nonsensical proposition,” she said.
Her patients include insured individuals who are willing to pay out-of-pocket for her help with their chronic illness and mental illness; healthy patients who place a premium on health maintenance; and lower-income individuals who choose to pay for direct care rather than buy insurance.
Giving up on payer support. LifeScape Premier evolved from Wilder’s attempt to create a patient-centered medical home practice nearly a decade ago. She accepted insurance, but was unable to find payers willing to support the team-based approach to care, extended hours, and other medical home services.
Wilder’s current “hybrid concierge” model includes two practices operating in a single location. She is the sole physician in LifeScape Premier, and all her patients pay the concierge fee. Six other providers work through LifeScape Medical Associates, which accepts insurance; some of those clinicians have concierge clients as well.
The two practices refer to one another to meet the needs of their respective patients. For example, Wilder’s insured patients are referred to LifeScape Medical Associates if they need diagnostic tests; alternatively, if a LifeScape Medical Associates patient needs nutritional counseling or another service Wilder provides, she bills as an out-of-network provider.
In her view, the direct care movement will advance not because of high-touch amenities but because it provides more value than what she calls “hit-and-run” medicine. “When you’re churning patients at a rapid clip, you’re mainly throwing prescriptions at symptoms. You are not pulling out chronic disease at its root—you are hedge trimming,” she said.
That delivery approach keeps the cost of chronic care high because patients’ health status does not improve, she said. “And you are increasing the employee costs for the businesses in the area. “So is the direct care model going to grow? Absolutely. And it should.”
Catering to high-net-worth patients. At the University of California San Diego Health System, patients in the concierge medicine program all have private insurance or Medicare. Their annual fee pays for unfettered access to a physician who is responsible for only 200 patients.
Lawrence Friedman, MD, interim CEO of the health system’s faculty practice, said that the university’s first concierge practice, which opened in March 2012, was borne out of patient demand. The program targets high- net-worth individuals who want to get the academic medical center’s quality of care delivered with five-star amenities.
“It was clear that we had some patients who had a desire to get much more personalized primary care services provided at the level that you would expect when you go to a nice hotel,” he said. “These are people who are willing to pay a little extra money to get a doctor who is on call for them 24/7, whose personal cell phone number they get, who are willing to make house calls and willing to take care of them even when they are traveling, wherever they are in the world.”
Since that first practice opened in La Jolla, UCSD has opened two more concierge practices and is considering a couple of other possible sites. In La Jolla, patients pay $2,500 a year, which includes a comprehensive annual physical, house calls, two visits with a nutritionist, two with an exercise physiologist, and two with a psychiatrist who specializes in stress management, as well as telemedicine access for international travelers. At the other locations, the annual retainer is $1,500; the ancillary visits are not included but can be purchased a la carte.
Although the concierge service is included on the health system’s website, it not marketed through advertising. Friedman said UCSD leaders want to avoid portraying a two-tier system since patients receive the same quality and safety of care regardless of payment. He compares the concierge option to choices in air travel. “What you really want when you fly is to get there on time and be completely safe,” he said. “Some people are fine doing that by sitting in coach; some people prefer to have more leg room and they pay a little bit extra for it. We’re providing choice in an environment where the safety and quality of care is the same.”
When retail concepts first started creeping into care delivery, it was easy to dismiss concierge practices and quick clinics as fringe components of America’s healthcare system. But as consumers become responsible for choosing their insurance—and, in so doing, choosing their providers, health care is becoming a retail industry.
“Healthcare executives need to see this as a seismic shift in the way that care is going to be purchased,” Gee said.
Lola Butcher is a freelance writer and editor based in Missouri and a regular contributing writer to Leadership.
Quoted in this article (in order of appearance): Kevin Klobucar is president and CEO, Blue Care Network, Detroit. Preston Gee, vice president of strategic marketing, Christus Health, Dallas, and former vice president of strategic planning and marketing, Trinity Health. Marc Baer is senior director of managed care, Target, Minneapolis. Susan Wilder, MD, is a physician, LifeScape Premier, Scottsdale, Ariz. Lawrence Friedman, MD, is director of ambulatory services and interim CEO of the faculty practice, University of California San Diego Health System, San Diego.
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