Three recent developments demonstrate not only the leverage that physicians could have in the coming healthcare landscape, but also how health insurers may find themselves squeezed out of the primary-care space by delivery models that are equipped with convenient access, extensive claims data and more immediate wellness and disease programs.

  • The increasing popularity of onsite clinics among large employers
  • The growth of the direct physician care model
  • The expected purchase of a large physician group by DaVita, a kidney dialysis company.

Larger employers are already seeing the value in providing primary-care services for workers, and using health insurance only for the costliest care. Onsite clinics are becoming increasingly popular for these groups, most of which have already switched to self-insurance. Self-insurance is being marketed to even smaller groups, and they may be more attracted to the option because of some provisions in federal healthcare reform.

A company such as Crowne Consulting, which places onsite clinics at worksites throughout Florida, asks its participating employers to not file claims for visits to their clinics. Since [employers] are paying all the claims up until their stop loss, they get the impact the first day they open the health center, according to Ray Tomlinson, president of Crowne. Our costs for the health centers, including operations, administration, everything, are in the neighborhood of 30 to 70 percent less than what they were paying under the fee-for-service model.

As for the growing direct physician care model, recently profiled in The New York Times, it was once marketed for wealthy people as doctors on retainers. But the evolution of concierge care involves groups such as Qliance and MedLion, which are charging more affordable fees ($50 to $60 a month) to give members access to basic primary care, along with some other services, such as labs and urgent care. For more complicated care that requires inpatient or outpatient care, the high-deductible insurance kicks in as catastrophic coverage.

This is much closer to the consumer-driven model that health plans have been talking about for years, except without much input from the health plans. A larger share of risk will be taken on by employers or physicians (through shared savings/bundled payments), providing them with greater incentive to make sure that they have a healthy workforce through preventive care and post-inpatient care.

As previously chronicled in this space, Denver-based DaVita purchased HealthCare Partners for $4.4 billion a few weeks ago. HealthCare Partners is one of the largest physician groups in the nation and a pioneer in the accountable care model, having been designated as such by CMS in late 2011. The physician-led group won the Pioneer ACO designations mostly because it already had a strong electronic health record backbone and experience with capitated patients, giving it a superior position for managing patient care, efficiency and costs.

HealthCare Partners doesn't have any inpatient facilities. In comparison, in central Florida, where HealthCare Partners JSA Healthcare subsidiary operates, Orlando Health recently finalized the purchase of a 171-bed hospital for $181.3 million; the same health system is building a new 10-story patient tower for $300 million. If the going rate for a hospital facility is around $250 million, DaVita could have purchased more than 17 hospitals for the same amount it paid for HCP.

DaVita is apparently banking on the premise that the near-term future of healthcare in America is not based on hospitals, but keeping patients out of them. Hospitals as a group are still holding on to fee-for-service, and have little incentive to turn away reimbursement from payers; the hospital construction binge that was briefly put on hold during the recession is restarting. It is once again driven by patient volume, not preventive care.

All of these developments beg the question: How far are we from seeing more widespread adoption of very large groups striking deals directly with hospital systems, or more likely, accountable care organizations that link physicians and hospitals directly to employers. If these ACOs can offer groups lower costs and better preventive care than the health plans, where do the health plans fit.

It may well be that health plans should pray for the continued good health of the reform bill, for they may need the individual mandate and health insurance exchanges to survive.

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