A "HealthTweep" Pulse Check

So what’s a ‘preferred hospital’ anyway?  A fair question, since ‘beauty’ is for the most part in the mind of the beholder!

Preferred Hospitals remains a conceptual ‘on the come’ value proposition at this point; but when I first thought of the idea, I had in mind structuring a network of participating hospitals and physicians directed primarily to the 47 million Americans without health insurance. The network’s ’secret sauce’ consisted of providers who contractually committed to a substantially discounted (equivalent to the best or “most favored nation’s”) rates, otherwise extended to ‘wholesale buyers’, i.e., health plans, with the greatest group purchasing leverage.

In the economics of managed care, the more members a health plan trafficked in a specific market, the greater provider discounts they could expect. Most favored nations rates often equated to 50 cents on the dollar (or less!) , i.e., a 50% discount. Thus, the value proposition (to the uninsured) was twofold: (1) the contract rates would be actually honored, and therefore the member would receive a benefit in exchange for the modest dues paid vs. told ‘we don’t participate with that plan’; and (2) the provider’s rates would be adjusted to ‘fair value’ at least as determined by the entities with the greatest purchasing power in that market.

The great irony is hospitals and physicians too often (whether by design or not) reserve their ‘retail book’, i.e., billed charges, for the least able to bear the burden of charge based ’sticker shock’. Many offer cash discounts as a courtesy in the +/- 25% range, but too often fail to present that option upfront before the downstream litany of collection calls.

At the time I originally entertained the idea, the discounted medical plan marketplace (DMPO) was populated with flimsy players, many of whom where exposed by the Georgetown University Study ‘Discount Medical Cards: Innovation or Illusion?‘ So it appeared this idea would have traction in the marketplace. While I enthusiastically jumped in, I found myself banging my head on the wall, over and over again. The value proposition seemed so apparent to me; especially linking the emerging growth of retainer, concierge or micropractices to a targeted and under-served market that contrary to popular wisdom was not a indigent demographic per se. Further, I reasoned (incorrectly I might add) that many of the forward thinking, and compassionate hospital systems (especially the one I worked for in DFW), forged under benefit of tax exemptions would proactively embrace a solution designed to reach an underserved market, and thus make a material deposit into the ‘community benefit’ bank. With IRS and the Congress on the non-profit hospital trail (i.e., Chuck Grassley, et al) looking into the veracity of 990 filiings, certainly these hospitals would see the light and embrace the greater good this model so obviously afforded; not!

None-the-less, I began to negotiate ‘upstream’ with several national PPO network managers, who in search of incremental revenues, and fighting ’silent PPO allegations’, were electing to ‘rent’ and private label their networks in exchange for a per member, per month (PMPM) fee that ranged at that time between $3.50 – $4.00. Yet, as a start up with no membership, it became solely a cat and mouse affair. The PMPM basis was a function of the membership base which at that time was zero. From their perspective, it was a pure play ‘on the come’ business model, and good intentions not withstanding, we could not come to terms.

I also approached several colleagues, and friends in the personalized, retainer model, or concierge medicine market, and attempted to interest them in the business model. Most notably the Society for Innovative Medical Practice Design (SIMPD) was a logical partner or sponsor (I reasoned) to which I ‘pitched’ the idea, though to no avail. They were just not interested in ‘marketing” their nascent member panel at the time, nor reaching out to this underserved market per se.

Thus, no traction developed, and after much time soliticing support, and partner participation, I elected to back off of the business model.

So fast forward a few years and witness the ‘health reform 2.0 moment’ we’re all having. Revived thoughts have surfaced as to what and how a preferred hospitals network might be structured?

Here are a few ‘indicia’ of an emerging preferred hospitals manifesto:

• Commit to pricing, cost and quality transparency
• Adopt social media guidelines to engage and empower patient utilization of the hospital’s services (pre-admission, during and post discharge; especially follow-up concerns)
• Offer ‘members’ most favored nations’ rates via a credible discount medical plan(s)
• Waive where possible, or otherwise, defer collection of all upfront fees, copays, estimated co-insurance, and/or deductibles
• Participate in budget driven and consumer specific time payment programs (as determined by independent financial counselors) via auto-debit direct from the patient’s bank (interest free)

This is only a start. I welcome your thoughts.

Program Note: Due to ‘technical difficulties’ the interview with Jay was disrupted and will be rescheduled shortly! This live web is a continuing experiment and the tech gremlins do tend to appear now and then. My continued apologies to Jay.

Jay Parkinson, MD, MPH, of Hello Health, joins me for a conversation on emerging alternative medical practices from Concierge, Boutique to retainer based models, including the HelloHealth strain. Jay is a pioneer in the adoption, and integration of social media tools into medical practice; and will share his insights, and vision for the promise and pitfalls of social media innovation in medicine.

Amidst the current ‘fever pitch’ buzz of health reform, there is considerable conversation about lowering health care costs, while improving both quality and access. The US health care system is at risk of implosion. Whether we look at it from the underfunded programs of Medicare or Medicaid, or the cost prohibitive employer sponsored health insurance system – which has priced iteslf out of reach absent the planned cost shifting of so called ‘high deductible health plans’ – few are happy campers; and approximately 46 million Americans are without health insurance.

We will connect the dots of emerging medical practice models to the broader health reform agenda by considering the vision and value system of one of medicine’s clear innovator’s.

Join us on June 19th, at 11 AM EDT/ 8AM PDT for a live broadcast that will also archive for later broadcast or RSS subscription to Google Reader, iTunes or other feed aggregator.

It seems not a day goes by without another announcement of this or that primary care medical practice electing to leave entirely, or in part, the traditional model of medical care. Yet, this is a trend most worthy of considerable exploration.

Absent effective health reform (minimally: primary care payment equity, and administrative simplification), the current drip, drip, drip outmigration of physicians from a traditional billing and collections medical practice into these ‘new age’ models has the potential to grow into an outright tsunami in the near term.

Movement by primary care physicians into the boutique, concierge or retainer based medical models is not without a downside. Some say that it is clear evidence of the emergence of an impending ‘perfect storm’ in medicine that will collapse the primary care safety net at the precise time when it anticipates its greatest demand (i.e., retirement of the baby boomer generation).

When one takes into consideration the overwhelming preference for medical students to opt for higher paying specialties vs. the primary care specialties of Family Medicine, Internal Medicine, and Pediatrics, the trend is quite disturbing – health reform incentives (to grow capacity) notwithstanding.

At one level, it is a rational response by physicians to a failed healthcare finance and delivery paradigm; while at the same time, extracting essential primary care infrastructure from a delivery system that completely relies on it’s availability.

There are many models in the retainer or concierge medicine market. Once you’ve seen one, you’ve seen only one; there is no standardization. From MDVIP, to Jay Parkinson, MD, at Hello Health, this is a dynamic and rapidly evolving industry.

We will feature this medical phenomenon from the inside out at one of our next programs. There is much to discuss.