Also, if you think about what other risk-bearing primary care players got right, it was the business model: to be able to take full risk and have the flexibility to invest in what would keep the patient healthy and independent. But what they didn't necessarily do was to transform the care model. So we think what Welcome Health is poised to do is both —to build upon so many of the lessons learned from risk-bearing providers that are out there in the market today and to truly transform the care model to be centered around the home.
It’s also essential that the approach be guided by the principles of geriatrics. We think that is critically important as we address things like prevention and the real management of somebody's life as they age. Without that as a foundation, we would not succeed.
Can you give us some background about SCAN and Welcome Health, and how that arrangement came about?
SCAN Health Plan was founded in the 1970s, and its original intent was to find unique ways to keep seniors healthy and independent. Starting in the 1980s up to the early 2000s, SCAN received funding by the federal government in what was called the Social HMO Demonstration Project to fund services that were not covered by Medicare at that point. In the early 2000s, SCAN became a nonprofit Medicare Advantage [MA] plan, and it since has grown to 220,000 members. As we think about the next phase of growth for SCAN, we are entering new markets, namely Arizona and Nevada in 2022, with our MA product, and we’re also diversifying our organization to serve our members in unique ways.
A major part of that diversification is building companies. SCAN is partnering with seasoned entrepreneurs to build companies from scratch that are payer-agnostic and can bring high-quality care to seniors. While we are investing in these companies to extend our reach and impact, SCAN is also a first customer and capital partner to the companies as they go out and build scale. Welcome Health is an important part of that effort.
I'm a physician by background — an internist. I spent the majority of my career at Cedars Sinai, most recently as a senior vice president. I have also taken care of many patients. In my role at Cedars, I oversaw a lot of the value-based care initiatives. I came over to SCAN only recently and was very excited about all the organization’s initiatives — including the opportunity to lead a comprehensive geriatric in-home care program.
What is it about your program that sets it apart from other approaches, particularly those that hospitals are pursuing ways to extend their ability to deliver care beyond their walls? And how does the program work from the patient’s standpoint?
This will be a new offering, at least in the markets that we serve to the best of our knowledge. We haven't identified any other services out there that deliver care the way that we described it. We employ primary care physicians with an emphasis on geriatricians.
But, again, the focus is primary care. So we also are partnering with other providers because some of our patients will need some subspecialty care. And we will partner with health systems and the communities that we serve to help us deliver that subspecialty care when it's required. And some patients, despite our best efforts, unfortunately, will also need to be hospitalized. So we also need to partner with hospitals in the communities that we serve.
Where are you in terms of implementing this strategy? And what's your time frame? What are you looking at in terms of a developmental process? And what kind of investment in infrastructure does this program require?
We are in the process of launching it. And we've hired some of the top geriatricians in the greater Los Angeles community who are excited about new care delivery model for seniors and about transforming care. So we've been extremely fortunate and bringing them on board. And we're developing all of the processes and the infrastructure so that we believe early next calendar year, the first half of 2022, we will begin treating our first patients.
We made a meaningful investment in the company to get it through Phase 1 of growth. That means we have to build the team, build the technology and the logistics infrastructure to serve patients in this way, and build out the partnerships and marketing prowess to attract patients into the model.
So all those pieces are well underway to being built now so we can start seeing patients in the first quarter of 2022. SCAN will be a significant capital partner to this business, and certainly a customer. But at the end of the day, we are thinking about the impact we want to have on the broader community, which is to extend the reach of high-quality services to as many patients as possible.
Welcome Health is not a SCAN-focused business. It's a payer-agnostic business that will strike contracts with other health plans and other entities over time, as well.
How do you look at this undertaking from a cost-benefit perspective? In other words, how do you see it transforming into something that is viable from a financial standpoint?
SCAN did market research and focus groups, and they found there’s a tremendous unmet need. Many patients were saying things like, “My gosh, if there was a service that could care for me in my home, I would prefer that. Sign me up! I don't like the challenges of going to the doctor's office or waiting in emergency departments on weekends if I don't have to.”
So we got a clear message from patients that they are looking for this type of service, which gives us reason to believe adoption will be significant. And we have a business plan, with five-year projections and investment required and break even. But we believe a significant percentage of seniors will opt for more convenient, high-quality and affordable geriatric care in the home when it is available.
And just like what Topol talks about in his book, seniors will look back and say, “Do you remember the days when, if you had something simple that could be cared for in the home, you had to get on the freeway and pay $20 for parking and sit in a waiting room for half an hour for something that took the doctor five minutes to do?” And people will reflect and say with amazement, “Was that really the way a lot of care was provided in 2021? I'm having trouble believing that!”
We also are totally committed to this approach. Over time, we'll continue to fund the business and bring in other investors over time to fund the business alongside us. We just want to have the best minds and best partners around the table who can amplify the impact of a great service. That's our orientation. And it’s a national strategy. It will take years, but over time, we would like to build a national business that can bring Welcome Health’s services into the hands of as many seniors as possible.
And we think an initial focus on [Los Angeles] County and Orange County is a great place to start. If those counties were a state, it would be the fifth largest state in the country, after California, New York, Texas and Florida. So we have a lot of seniors, a lot of MA patients to serve, even just starting with a local strategy.
What advice would you have for healthcare organizations similar to yours, or just for providers in general, that are considering participating in an initiative like this one?
If you go outside of healthcare and look at services industries, you’ll see that the company that provides the highest-quality service leading to the best experience at the most affordable cost almost always wins. It would be unrealistic to think healthcare would be an exception to that rule. So we have to think about meeting the patients where they are.
And it’s clear than in many cases, patients will prefer their care be delivered in the home, because it means they don’t have to struggle to go into the doctor’s office for a relatively minor condition or for a physical exam. And for seniors, it eases the burden for their children from possibly having to take a day off work each time a parent needs to go to the doctor.
I think that why we can expect this trend to continue, and you need to take a far-sighted view.
So my one other piece of advice is to stay on top of this trend. If you don’t, you could find yourself left behind in five years from now.