People refer to the system we have today as a “sick-care system” instead of a healthcare system, and I think that’s fairly accurate. It’s one where most medical care is reactive in nature, which means something’s gone wrong with a patient’s health and then physicians or very skilled clinical personnel step in to try to fix that problem. In my experience, that’s not necessarily the best way to operate.
Ever hear the old adage, “an ounce of prevention is worth a pound of cure?” That’s never been more true or more necessary, as the cost of healthcare spirals out of control and insurance companies continue to dictate the type of healthcare patients receive.
The traditional healthcare model needs to change and lessons from the past can help guide the healthcare industry, today and into the future.
Where We’ve Been as a Healthcare Industry
The entire healthcare industry evolved to become what it is today. If we rewind and go back to where healthcare started, we’re talking about rewinding the clock to pre-World War II, when healthcare was very much a cottage industry.
Small-town physicians ran mostly independent practices, and nonprofits and religious-affiliated groups ran the hospitals and clinics. With the advent of WWII, there were wage controls imposed on the American economy to help the war effort and one way companies got around those controls so they could attract better talent — because workers were scarce during the war — was by offering perks, and one of those perks became health insurance. So, when we talk about the dominance of health insurance in the healthcare landscape today in America, we’re dating back to something that happened over 70 years ago in response to a wartime economy and the restrictions imposed by the government.
What’s happened is, over the course of time, insurance really grew to absorb more and more of healthcare as we know it. In other industries, such as auto and home, insurance stayed somewhat consistent with what insurance really is: guarding against an unforeseen or unpredictable risk that might come out of left field someday. Only in healthcare did health insurance really expand to cover more of your everyday, predictable health issues and health costs. As what happens in any industry where insurance grows and starts to gobble up more of the routine services, that becomes very expensive for the consumer and service provider.
Insurance became more like prepaid medical care for any sort of health services, and it became a very expensive product mostly borne by employers, or the government in many cases, as with the advent of Medicare and Medicaid. But it also rewired people’s thinking about what health insurance should provide and how people purchase healthcare in the industry.
Where We Are Today as a Healthcare Industry
Many people think if they have health insurance, then they’ll be covered for anything that might happen. What people are finding out now, with their high deductibles and imposed narrow networks, is that having health insurance does not guarantee access to high-quality, affordable healthcare.
We’re really at a crossroads with the decoupling of health insurance from healthcare. That’s where we see the emergence of alternative practice models like direct primary care that harken back to the age when health insurance did not dictate everything about an individual’s healthcare. They had more choice, more flexibility, and it was more affordable for them in general.
Call it the pre-insurance healthcare marketplace. It looked a little bit different. You certainly didn’t have the mega health network systems, with everything combined, from your ground-level primary care physician all the way up through hospital servicing and your insurance.
In the old days, you had independent physicians who were free to determine with their patients the best type of care appropriate for each individual patient. What you saw was a little more variety, consumers with more choice. If they wanted to get a second opinion, that was perfectly acceptable. You would just go to the next doctor and get one.
You saw physicians in a much better place professionally. Instead of being employees in some vast integrated health delivery network, they usually owned their own businesses, they had the freedom and the flexibility to tailor their services to their particular client base, to set prices so the local community could afford their services, rather than pricing being dictated to them by either insurance reimbursements or from an employer like a hospital.
The problems that have emerged in the healthcare system today, with physicians burning out at tremendous rates and a looming physician shortage approaching, and patients like you and I really unsatisfied with their healthcare options, are all the result of the last 30 years. As the industry evolved, some of that choice, affordability and access disappeared in the face of what was probably well-meaning, but certainly challenging healthcare reforms that seem to come between doctors and their patients.
Where We’re Going as a Healthcare Industry
The decoupling of health insurance from healthcare is a psychological, transformative process that’s occurring within the minds of consumers and patients today. That’s terribly exciting, because we can actually see the re-emergence of some of the great efficiencies and the benefits of a more free-market system within healthcare.
I predict we’re going to see insurance companies returning to more traditional policies that protect patients from catastrophic, unforeseen events. That’s what insurance is supposed to do, protect you from financial ruin for those types of issues.
I think we’ll see other innovations, such as direct primary care, start to fill the gap when insurance retreats back into the box from which it originally sprang. We’ll see direct primary care as one option where individuals can, for a predictable and transparent low monthly price, open up all of the access they would ever need to a primary care physician. For most of us, that’s the only physician and care we’re going to need in a given year.
With your primary care physician taking care of you — no more networks, no more deductibles or copays — you receive the healthcare you need. Health insurance falls into the background, and it’s there to help you financially with hospital stays or specialized procedures. Because in the end, insurance in any industry is a financial instrument, and no one should ever trust their health to a financial instrument if they can avoid it.
I think technology is another big game-changer. We’re seeing the emergence of telemedicine in a big way. No longer needing to interrupt your day and busy schedule, telemedicine allows you to communicate or procure care from a physician digitally when it’s appropriate. Of course, the emergence of new therapies and treatments is also important to keep in mind. But the healthcare industry can improve its delivery of some of those solutions to consumers in a timely and affordable manner.
We’re going to see rapid reforms coming in the way that individuals purchase healthcare. By reintroducing some of those free-market principles absent the last 30 years, prices are going to decrease. Everyone knows healthcare can never be free. That’s just impossible, but we can drive the prices down to where it’s affordable for most everyone.
Freedom Healthworks Provides the Missing Link
We like to think of ourselves as that missing link to help bridge the gap for physicians from the current marketplace into the future. When we launched Freedom Healthworks, there was no well-lit path through the weeds to get from a practice in the current healthcare system to a practice in the new healthcare system.
We did seize upon the best practices of pioneers, and kudos to them for launching their own practices without much guidance as they went along. For the majority of physicians, who may not be such mavericks and willing to fly by the seat of their pants or learn by trial and error, our organization can provide a much better, a much more predictable option to help them succeed.
To ease the transition, we identified three primary barriers for physicians:
- Transition is difficult — In any business, a big transition can be daunting, especially when you are essentially leaving behind one model for a new model, with a new revenue stream, a new cost structure, the entire thing. We take the risk out of that almost entirely because we’ve mapped out a series of very predictable, very orchestrated steps and phases.
- Physicians either don’t want to run a business, don’t have the skillset, or don’t want the hassle — I understand all three of those positions, so we help them operate the business and provide many of the benefits they might receive as part of a health network — without imposing the negative aspects of centralized management. All the good aspects, but none of the negatives that come from practicing within a group. Our physicians benefit from a strength in numbers they might not otherwise get as a solo practitioner.
- Economic risk — Starting any business takes money, commitment, and a certain amount of risk tolerance. While the majority of small businesses struggle, we can really de-risk that quite a bit. We institute best practices and support mechanisms that allow physicians to succeed with a much lower risk profile. We help with getting patients in the door and containing costs, so you can establish a fairly predictable trajectory, grow your practice, and reach the level that you set in terms of a goal.
The direct primary care model is always going to be viewed through the lens of health insurance. We’re now hardwired in our society to correlate healthcare with insurance. While that decoupling is underway, it’s still the way the vast majority of us view our healthcare. But, tremendous change is still afoot. We saw massive changes a couple of years ago with the passage of the Affordable Care Act (ACA), and now we’re seeing some of the unwinding of that healthcare reform.
One thing in particular on the horizon that’s very intriguing is the re-emergence of what I’ll call the “ultra-high deductible plan.” What we’re going to see, especially starting in 2019, is these ultra-high deductible plans starting to emerge once again. This is health insurance where some of the minimum essential coverages that were required before will no longer be required. Prices will go down to reflect a fewer number of items bundled into that insurance, but they may reflect more accurately what healthcare consumers want.
Instead of being forced to buy insurance with 10 items included, as a consumer I can decide I only need five of those items or I only need high-deductible, catastrophic hospital coverage. I’ll take some of the savings from that and purchase membership in one of these DPC practices, and I’ll have a better healthcare outcome in the end, regardless.
The corresponding piece to that is the rapid rise in interest from employers. Many of us, again going back to the legacy of WWII, still get our health insurance through employers. That’s not going to change anytime soon, but employers are starting to embrace alternative models like direct primary care as a way to contain costs but provide a better benefit.
Right now, we’ve got a great economy and the labor market is tight. People who own businesses are looking for ways to attract talent and stand apart from competitors. Simply offering health insurance is really not enough; it’s become somewhat of an expectation when you get hired by a company. Now, companies that offer both an insurance component and direct primary care — what many term “concierge practice membership” — is a very compelling offering to prospective employees.
Freedom Healthworks is at the nexus of both trends, and we want patients and physicians to have affordable choices now, not 10 years from now. As consumers, we can be free again to pick and choose the type of insurance coverage we would like to have and we deem valuable to us. You could say: I’m a fairly young, healthy individual. I’m going to choose the coverage I want. I want my major medical in case something happens and I need to be hospitalized, and I want a couple of other coverages, but I’ll be able to see when I choose each coverage how that impacts my premium, which is really important.
Any industry operating with zero pricing transparencies is one that’s ripe for disruption, and healthcare is right there. It’s difficult to put a price tag on anything in healthcare. When we customize our own health insurance coverage and see how each component affects the premium, it helps us make informed decisions in terms of what we value and what we don’t.
The bottom line is everybody needs primary care. It’s the foundational piece for your entire health coverage spend. As you go up the pyramid, the different ancillary care components like major medical coverage are the pieces that we’re now going to have some flexibility in designing.
Ideally, we’ll see the emergence of a situation where many folks can budget $200 a month for their total healthcare spend, without subsidy or an employer picking up the tab. You would pay $100 a month for health insurance and $100 a month for membership in a direct primary care practice, and you are covered. You can check the box on your total health coverage as an individual, and know you’re getting great healthcare, zero barriers to access, and full confidence you’re covered should something go drastically wrong with your health.
I would encourage anyone, be it a doctor, an industry leader, a small business owner looking for alternatives, or simply a consumer who’s concerned about the state of healthcare, to reach out to Freedom Healthworks or email me directly with comments, questions, suggestions or criticisms. Let’s continue the conversation. I think we’re at a pivotal crossroads right now for the industry and we’re going to see some incredible innovation emerge in the next few years.