Category: Uncategorized

Episode 52: HSA Bill Update & ‘Why I Do DPC?’–with Dr Phil Eskew & Docs from the DPC Summit


Resources

  1. House Ways and Means Committee Vote Update (Dr Phil’s Blog Post)
  2. HR 6317 Text
  3. Video of Markup from Ways and Means Website
  4. Direct Primary Care Coalition Update on the Markup

Survey on New Intro Music for the DPC Podcast

Summary

At present it is technically not legal for patients to use their HSAs to pay for direct primary care, but a bill to change this has been years in the making. This direct primary care and HSA bill, known as the Primary Care Enhancement Act (Formerly HR365, now HR6317), was just marked up through the Joint Committee on Taxation and passed the House Ways and Means Committee. In the process, the bill’s original text was changed to include some new provisions, including a $150 cap of the monthly fee. In this episode, Dr Phil Eskew, legal expert and DPC doctor, discusses what the changes mean for direct primary care practices and what lies ahead for the bill to become law.

As well in this episode, Dr Roussel interviews Dr Yusuf Mathai (Sherwood, OR), Dr Claudia Emmons (Ocala, FL) and Dr Chris Larson (Austin, TX) from the DPC Podcast booth at the DPC Summit about why they chose DPC.

Time Stamped
[4:08] What’s happened in the past couple of weeks in the direct primary care and HSA bill?

[4:55] Why the Joint Committee on Taxation wanted to change the bill?

[5:12] What are the changes made to HR 365 (now HR 6317)? Why they made them?

[7:14] What happens after a House vote to HR 6317 for the bill to become law?

[9:44] Why Dr Yusuf Mathai decided to start a DPC Practice?

[10:48] Why Dr Claudia Emmons decided to switch from fee-for-service to DPC?

[12:37] Why Dr Christopher Larson went into DPC?

Guests

Dr Phil Eskew

Dr Phil Eskew, DO, MBA, JD is a DPC doctor. He is also of chief legal counsel at ProactivMD and the DPC Coalition and is recognized as the pre-eminent legal expert on DPC and the law.

Dr Yusuf Mathai

Dr Yusuf Mathai is a family physician from Oregon who has chosen to embark on DPC after 7-8 years of practice in fee-for-service medicine.

Dr Claudia Emmons

Dr Claudia Emmons is an internal medicine physician from Ocala, FL who decided to switch her practice over to a DPC practice after running an insurance based practice for several years.

 

Dr Chris Larson

Dr Chris Larson is a family physician from Austin, TX who started a DPC practice as a physician after switching to medicine from a finance career.

 

Related Episodes

Episode 4

Episode 51: Bringing Clarity in this Dysfunctional Industry…with Mr Richard Brewer

Resources

  1. Paragon  Benefits
  2. What is a Third Party Administrator? (Blog Post by a DPC Practice)
  3. Understanding Self-Funded, Fully Insured Employers (Spruce Blog Post)

Summary
Few would argue that healthcare administration today is a dysfunctional industry. Incentives are misaligned and consequently cost does not translate to value. Employers and consumers get the short end of the stick. Direct primary care changes this by restoring the doctor patient relationship and eliminating excessive third party oversight. Still, however, patient’s need insurance for needs that can not be met by a DPC practice. In comes the need for employer self-funded plans, and Paragon Benefits, a third party administrator in Georgia, offers just this–employer self-funded plans that customize coverage to the needs of the employer. As a consequence, given that these plans are customized, they allow the employer save money that would otherwise go to a middle-man. What’s more, Paragon’s plans can be customized to pair up with DPC and cut-out the premium inflation that would go to low value primary care under a fee-for-service plan.

Time Stamped
[2:31] So Mr Brewer can you tell me a little about the history of Paragon?

[3:08] Changes to third party administrator companies under the Affordable Care Act?

[3:58] The motto of the company is “bringing clarity in this dysfunctional industry.” Why is that?

[5:35] Size of employers that Paragon specializes in.

[6:51] How many lives are covered on Paragon plans?

[7:47] What are the main geographic areas you serve?

[8:05] What networks do you use? How many of your plans are reference based?

[10:26] How can an employer/DPC doctor pair together to work with Paragon?

Guest

Mr Richard Brewer is a chief sales representative for Paragon Benefits. He has 20 years of experience in healthcare benefits administration.

 

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Episode 50

Episode 50 MyMDConnect’s DPC-Based Insurance Plan–with Dr Jeremy Smith


References

  1. MyMDConnect

Summary
One of the biggest challenges Direct Primary Care doctors have faced in getting their model to grow is finding compatible insurance plans for their patients. Many employers, for instance, love the convenience and value of DPC practice membership for employees but the cost often does not translate to reduced payments on insurance premiums. That is, until companies like MyMDConnect have come along. They offer self funded insurance plans that specifically pair with DPC practice membership.

Dr Jeremy Smith, a family doctor from Northeast Texas, founded MyMDConnect as a solution to employers who sought health insurance plans that save money and provide value. Partnering with an insurance agent who was as fed up with fee-for-service health care as he was, he started a plan that integrates all of the necessary components of a self funded insurance policy. This plan, moreover, often saves 40-60% compared to traditional major medical because of the cost savings that DPC membership offers–not only in terms of reduced cost for doctors visits but also because of less ER visits, hospitalizations, specialist visits and duplicate testing.

MyMDConnect has signed up businesses throughout the Southeastern US and is rapidly growing as employers seek innovative alternatives to bureaucracy-laden, valueless traditional health plans. In the interview Dr Smith talks about how he got into DPC, how he came up with the idea of a DPC-Based insurance plan and how other doctors can join MyMDConnect and offer low-cost, high-value insurance plans to their DPC practice members.

TimeStamped
[3:30] Can you tell us about the history of MyMD connect. How did you get into the employer self funded insurance market?

[11:27] Can you explain how the plan works?

[14:46] What is the minimum employer size?

[17:14] What geographic areas does MyMD connect serve?

[18:32] What plans can MyMD connect offer if there is no DPC available?

[19:24] How many covered lives do you have under MyMD connect plans?

[20:36] How can a DPC doctor or employer or broker get a hold of you?

Dr Jeremy Smith

Guest

Dr Smith is a family doctor who has a DPC practice in Nacogdoches, TX. He started MyMDConnect as a way to offer employers a comprehensive self-insurance plan to pair with DPC.

 

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Episode 51 (coming)

Episode 49: Behind the Scenes & A Look Ahead–with Mr Jeff Blackwell


Episode 49: Behind the Scenes
Summary
There is much more to a podcast than what the ear can hear. The work that goes on behind the scenes is often not seen or talked about for many podcasts. Much less does a listener learn who is the audio editor or what he or she has to do with the show. In this episode, Dr Roussel talks with Mr Jeff Blackwell, the editor of the DPC Podcast about the work that goes on behind the scenes. In it they talk about the work done to craft the DPC message for every show. Mr Jeff moreover describes his passion for radio and how his and Dr Roussel’s paths crossed to lead to a fruitful collaboration in making a disruptive health care podcast.

Time Stamped (times on the way)
First of all, starting next episode on Thursday, we’re going to stick to a more regular schedule of posting Tuesdays and Thursdays at 530am CT/630AM ET.
As well, we’re going to put any Q&As at the beginning of the show and we’ll do our best to limit this to 1-2 minutes. Quick responses to listener-submitted questions.
As far as the topics ahead, here’s what we have in store for our show topics:

  1. For the next couple of episodes we’re going to be wrapping up our discussions from the Hint Summit with Dr Jeremy Smith of MyMD Connect about the employer reference-based insurance plan he’s started that is purely DPC focused and with Mr Richard Brewer of Paragon Benefits, a third party administrator  which offers reference based insurance plans that pair with dpc.
  2. For the next few episodes we’re going to be talking to hosts other health care podcast hosts
  3. Then Marketing your DPC practice
  4. Then DPC friendly EHRs and apps
  5. Then exploring some health coaching options within DPC
  6. Then holistic and alternative medicine within DPC
  7. Finally Medical Education and DPC–talking with residency PD’s and medical school faculty about promoting primary care through DPC

So Jeff, take it away, what does go on behind the scenes at the DPC Podcast?
Something I haven’t asked you before, what got you interested in audio & radio as a career?
Interesting story of how we met…
Now, you’ve learned a thing or two about DPC and doing a health care podcast…

Mr Jeff Blackwell

Guest
Mr Jeff Blackwell has been in radio and broadcasting for over 40 years and has worked as a live audio engineer for ESPN, Fox Sports at the US Olympic trials as well as a voice engineer for Scooby Doo and many more. Also a lesser known fact about Mr Jeff, he’s been designated by some Louisana Tourist Centers as the best “Voice of God” voice in the Baton Rouge area.

Episode 48: How to Pick a Benefits Broker–with Mr David Contorno


Summary
David Contorno is a one-of-a-kind benefits broker. What’s more, he’s leading the nation in a reform from old ways of doing business to new, innovative value based solutions. For Mr David, moreover, value is not some gimmick slapped on top of a plan to appease a client or some lip service done in the name of more business, it really is value. How do we know? He’s put his money where his mouth is. As a successful young agent, he cut out major carriers that were offering hundreds of thousands of dollars in commissions and went directly to his clients to negotiate a fair commission to work truly on their behalf.

In the interview, Mr David talks about the perverse financial incentives that keep brokers going back to major carriers, even though their health insurance plans often provide little value in return. He moreover elaborates on how he personally came to realize that these plans were not in the best interest of his clients and how he cut out those carriers to go directly to employers and provide them the plans they need. By pairing Direct Primary Care with self-funded plans, Mr Contorno has been able to save employers a minimum of 24% on their overall healthcare expenses and on average well over 40%, with a much higher satisfaction from his clients.

TimeStamped

[1:51] So, in your chapter “How to pick a benefits consultant,” you point out perverse broker incentives that contribute to a wasteful status quo. Why is this and how did we get here?

[4:23] Why have benefits brokers been so reluctant to venture into employer self-insurance?

[6:27] How does self-insurance save companies money?

[6:58]  For an interested broker, where can he/she start if he wants to set up an employee self insurance plan to say pair up with DPC?

[8:57] How interested brokers can learn more?

Mr David Contorno

Guest
Mr David Contorno is one of America’s leading benefits brokers. He has been brokering insurance plans since the age of 14 and founded Lake Norman Benefits in his 20s. He now works as a benefits broker for the Hilb Group and focuses on educating other benefits brokers to provide high-value plans through the Health Rosetta project.

Episode 47: The CEO’s Guide to Lowering Cost, Improving Value–with Mr Dave Chase


Quote
“The deeper I got into analyzing the healthcare system, the more I realized that it’s the most immediate threat to America.”
–Mr Dave Chase

Resources

  1. Dave Chase LinkedIn Profile
  2. “The CEO’s Guide to Restoring the American Dream” — Link to Free Download of Dave’s Book
  3. Health Rosetta
  4. Forbes Articles by Dave Chase
  5. TedTalk by Dave Chase

Summary

As of this writing, most US-based companies are hemorrhaging money into healthcare and getting little value in return. Sadly, less than 20% of dollars spent on healthcare by companies actually goes to doctors who provide high-value care. The rest goes to pay for fraud, administrative overhead and other wasteful ventures. As Mr Dave Chase notes, we are not chained to the status quo. For the CEO or executive who wants to save money and improve value on their healthcare dollars, they can provide better benefits for less by making some simple changes. In the interview, Mr Dave Chase, author of “The CEO’s Guide to Restoring the American Dream,” founder of the Health Rosetta Eco-System, regular Forbes author and successful healthcare startup entrepreneur, talks about the solution for companies to “get it right” with healthcare.

Dave has offered a free download of the book we discussed — CEO’s Guide to Restoring the American Dream (follow the link for the download). You can learn about how under-performing health plans have caused great harm to America but how organizations are proving how straightforward it is to fix.

Time Stamped

[2:24] So what was your inspiration behind writing the “CEO’s Guide to Restoring the American Dream”?

[3:33] In part I of the book, “The Current Situation,” you talk about the current financial crisis we’re facing in healtchare expenditures. Can you give us an overview of why companies are hemorrhaging so much money on healthcare and getting so little in return?

[6:02] To “get it right” you talk about getting it right with benefits consultants, yet many consultants are stuck with the broker/dealer/peddler relationship with little interest in changing the status quo and providing value. Where can a company start to “get it right?”

[7:25] If you were to give one piece of advice to a CEO or company executive when it comes to lowering costs and increasing value of their employees’ healthcare, what would it be?

Mr Dave Chase

Guest

Mr Dave Chase is a successful entrepreneur, speaker and author. He has founded two $1 billion companies within Microsoft, and co-founded a healthcare startup Avado that was eventually acquired by WebMD. He is the author of “The CEO’s Guide to Restoring the American Dream,” numerous Forbes articles and co-author/co-founder of the Health Rosetta Eco-System. In addition to his many professional ventures, Mr Chase is a father, husband and an avid mountain sport athlete.

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Episode 46: Q&A: The Elephant & Rider Analogy: Does it Work for DPC?

Quote

What I love about DPC is that we are doing just that, keeping the beauty of being a primary care doctor present while adopting the modern technology and innovations of the 21st century to help make our lives happier, healthier and hopefully a little bit wiser.

–Dr Roussel

 

Summary

Many metaphors have been used to describe institutional stagnation. When a social institution such as healthcare fails to live up to society’s expectations, the impulse to understand why the institution is failing is certainly reasonable. One such metaphor used to describe the failure of our healthcare system has been the elephant and rider analogy. In particular this elephant and rider metaphor has been used to apply to direct primary care. The mind, so goes the metaphor, is like an elephant and a rider. Our choices on the one hand come from a rational rider who seeks to guide the elephant, while on the other hand they come from the elephant within us–irrational forces that guide our behavior despite our attempts at rational control of ourselves.

 

In this episode, Dr Roussel elaborates on the metaphor’s application to Direct Primary Care. “Does it work for DPC?” he asks, and if it doesn’t, what’s a better alternative?

 

Time Stamped

 

[1:26] As the DPC movement continues to grow, one of the issues we’ve come up against is institutional changes. What does it take to change a system where perverse incentives discourage making a positive change?

 

[1:41] An analogy that’s been used to describe the situation is one that was originally introduced by psychologist Jonathan Haidt in the Happiness Hypothesis, elaborated on in “The Righteous Mind.” It’s been used by many other writers, other particular notable writers are the Heath Brothers & their book “Switch” about challenges with institutional change. The idea goes that we are all led by unconscious behaviors as a result of millions of years of evolutionary forces, creating our lower brain, our limbic system, I might even add autonomic nervous system and brain stem to that. This is the elephant in the analogy. We also have a neocortex, the reasoning, planning part of our brains. This is the rider

 

[2:30] The prevailing paradigm for the past couple of centuries really has been that we as humans will always make rational, reasonable choices. When in reality, say supporters of the elephant rider hypothesis, we are all led by the elephant. The unconscious thoughts, impulses, that stem from our primitive history.

 

[3:03] If we can all better understand this, we can be better riders of the elephant. We can live in harmony with the elephant, be aware of the effect of environment on the elephant, how learned behaviors don’t change quickly, how fight or flight can keep us from working together, etc. For healthcare, goes the analogy, if we can recognize the perverse forces encouraging doctors, healthcare workers, brokers, insurance companies to act in a way that does not benefit the system, that forces us to continue this dog-eat-dog way of behavior in the healthcare market, then we can start to change those forces, bring the elephant into the Savannah with lush green grass, water and all live in harmony.

 

[3:51] Now I’m simplifying the model but the basic idea is that that awareness of those forces–of our primitive impulse–can help us address the systemic issues at hand. To be clear, I’m certainly a supporter of mindfulness of systemic forces, and I love metaphor and I do like this analogy.

 

[4:23] I do think it’s important to point out some challenges when applying the elephant rider analogy to healthcare. That’s what I want to talk about. This is deep, and theoretical, I know, so I’m not offended if this episode is not your cup of tea, but I think discussing the purpose and the meaning of DPC is important to a movement that many of us believe is formed out of value, meaning and conviction.

 

[4:52] To start, one of my most influential classes in college was called ‘Civilization and Barbarism’ and the course focused on Shakespeare’s play The Tempest. In particular, we focused much of our attention, for the class, on the character Caliban, who has sort of a quasi-human almost animal character, with poor control of his appetite and ‘uncivilized’ behavior. The point of the class was to show that at the outset, to many literary critics contemporary to Shakespeare Caliban represented the European vision of the uncivilized native. On deeper inspection, the metaphor of Caliban can be equally applied to Western colonial powers whose attempt to ‘civilize’ the world actually represented an attempt to institutionalize their own primitive impulses. Now historically this is only partially true, but in any case the point is that awareness and mindfulness can serve as its own barrier to institutional change.

 

[5:57] The birth of the ascetics and many other derivative schools of the late Roman empire saw mindfulness not as a tool for social change but as a path to avoid the painful realities of a chaotic, fading civilization. The idea wasn’t to change the world but reach such a state of mindfulness that the outside world didn’t matter anymore. I point this out not to minimize the importance of the metaphor or of mindfulness but to bring up a couple of important caveats when thinking about institutional change:

 

  1. [06:31] There may be sinister forces at play with regards to resistance to change in healthcare. Some may indeed want to preserve the status quo simply because it keeps their company, making more profit than without the status quo–even if such a resistance comes at the expense of everyone’s wellbeing. That shouldn’t stop change from being pushed.
  2. [06:58] More importantly, pictoralizing the elephant and rider as two separate entities does encourage a mind-body sort of mentality that can be a slippery slope to the same sort of issues that started our institutional problems in the first place. Much of the over technicalization of medicine can be traced to a set of education reforms in the 1920s called the Flexner reforms, where the US DOE attempted to standardize medical education as an attempt to–to use our analogy–increase control of the rider over the elephant–to root out our uncivilized, basest instincts and encourage a more rigorous, scientifically-based medical education. This undoubtedly led to an over-technicalized medical education that in no small part contributed to over-specialization of the profession and even the CPT based coding system we now have that has made primary care so unpopular.

 

[08:09] To put it simply, I’m loathe to accept rational control of the subconscious mind as a path forward.

 

[08:18] So what does this mean?

 

  1. [08:23] I think it’s important to remember that Hippocrates in many ways is still a model for the profession. For Hippocrates medicine was a process on the one hand, with a history, physical, diagnosis and exam, but it was also an art. The process of phronesis I think describes clinical judgment beautifully. Not quite a technical procedure, rather an art of bringing together experience, art, science and knowledge. The point of the a good judgment was to help the doctor and patient reach a state of happiness, Aristotle called it eudaimonia, a balance of mind and body and society, a harmony worked towards though never quite fully achieved. I would consider this a much more unified view of the elephant and rider than a simple bottom and top, rider and elephant analogy.
  2. [09:23] The profession is in a constant state of flux with society where old habits are being thrown away, but it’s always important to discern what needs to be kept from what needs to be left behind. As we move from metaphors of health 1.0, 2.0, 3.0 etc, I think it’s important to figure out what was beautiful and good about being the docs that ‘our grandmother used to have’ from that which was wasteful and even harmful about that same system.

 

[09:56] What I love about DPC is that we are doing just that, keeping the beauty of being a primary care doctor present while adopting the modern technology and innovations of the 21st century to help make our lives happier, healthier and hopefully a little bit wiser.

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Episode 45: Bundled Payment for Surgeries–with Mr Dutch Rojas


Resources

  1. Sano Surgery
  2. Article in Modern Healthcare about bundled payment
  3. Dutch Rojas’ Profile LinkedIn

Summary
In the advent of managed care, getting a surgery can often mean getting bills from many places. A single joint replacement can result in a bill from the hospital, the lab, the imaging company, the radiology group, the anesthesia group, the surgeon and potentially more. This can result in high costs for a procedure. While insurance may often pay these bills, for insured patients, the cost of a plan will go up as a result. Traditional insurance carriers have been loathe to change this, however, as they have a vested interest in keeping prices high, since they make more money when the premium is higher. For self-insured employers however, saving money on surgeries can translate to substantial savings on the price of the premium.

In comes Dutch Rojas, founder of Sano Surgery.

As a broker of bundled payments, Dutch Rojas brings together employers, brokers and surgical centers to negotiate a bundled price for a surgery. This can often yield considerable price savings. To give a simple example, a knee replacement when paid for by insurance can cost over $60,000. When paid for by a self-insured company, this can put considerable burden on the plan, especially with multiple employees per year that need a knee replacement. When paid for by a bundled agreement, many surgical centers will accept less than $25,000. As a result, the plan saves money.

In the interview Mr Dutch explains how bundled payment works, why surgical centers are willing to accept bundled payments, why health insurance plans are reluctant to negotiate bundled agreements and how to go about negotiating a bundled agreement.

Time Stamped
[3:03] So can you tell me about bundled payment? How does it work and how does it save money?
[4:20] Can you give some examples of how bundled payment has saved patient’s money?
[05:23] Why have hospital systems and traditional insurance companies veered away from bundled payment?
[07:17] Are there any surgeries that can’t be paid for with bundled payment?
[08:41] How can a plan go about getting a bundled payment contract?
[11:43] Why do both healthcare plans and surgeons/anesthesiologists/surgical centers prefer bundled payment?
[13:45] How can a bundled payment affect premium price?
[15:40] How does DPC fit into a plan with bundled payments?

Dutch Rojas

Guest

Mr Dutch Rojas is the founder and CEO of Sano Surgery. He has over 2 decades of experience in the ambulatory surgery market as a broker. Prior to that Mr Dutch was a US Marine.

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Episode 44: The Hint Summit Recap–with Dr Paul Thomas


Episode 44: Hint Summit Recap

Resources
Hint Summit

Hint Health

Health Rosetta

Plum Health

Summary
In June 2018, DPC doctors and industry leaders from insurance, IT, human resources and healthcare companies united in San Francisco at the Hint Summit to collaborate on direct primary care. How, they asked, can we work together to make DPC a cornerstone of the healthcare system? Bringing together thought leaders from different areas of the healthcare system, speakers talked about not only what is holding the system back, but what needs to happen to move forward. Dr Zubin Damania (ZDoggMD) spoke of the elephant-rider analogy, encouraging mindfulness about perverse institutional incentives that prevent doctors and hospital from doing the right thing; Dave Chase spoke about the waste and fraud that is happening as a result of our current third party payment system, and how that can change with transforming the employee benefits industry; David Contorno spoke of reforming healthcare brokerage practices to focus on the needs of employers and not carriers; Dutch Rojas spoke on focusing on value when negotiating for surgical services; Garrison Bliss, the founder of Direct Primary Care, encouraged DPC doctors to carry the baton, live their mission and develop lasting relationships with patients; and many more doctors & business leaders gave exciting talks about the transformation to health 3.0–what needs to happen to make a healthcare system focused on transparency, value and relationship.

In the interview, Dr Roussel interviews Dr Paul Thomas, founder of Plum Health in Detroit and Hint Summit Summit attendee, as he discusses key points from the major talks in the summit. In their discussion they not only review the major points from the speakers but also what their message means for the DPC movement.

Time Stamped

[03:35] Dr. Zubin Damania (ZDoggMD) talk on the elephant-rider metaphor, its relevance to DPC and on TurnTable Health

[05:50] David Contorno talks about the ‘old model’ of benefits brokerage and how his change of practices has provided more value to companies.

[07:30] Dave Chase talks on institutional waste and how to funnel dollars spent on healthcare to high value providers.

[09:20] Dutch Rojas talks about negotiating value for payment of healthcare services.

[10:36] Garrison Bliss encourages doctors to carry the baton forward in this movement to reform primary care.

[11:16] Joel Bessmer talks about how metrics can show that DPC saves money.

[12:42] Dr Jeremy Smith talks about his work providing a DPC-focused insurance plan.

[14:06] Zak Holdsworth talks about Hint’s vision for changing the status quo of healthcare.

[15:23] Jay Keese gives an update on HR 365/ SB 1358 allowing HSA’s to pay for DPC membership.

[16:34] Ryan Nuehofel talks about building an alliance for the future.

[18:19] Health Rosetta Micro-Summit focuses on bringing in key community leaders to the table to educate them on how to improve value and lower costs for healthcare.

Dr Paul Thomas

Guest

Dr Paul Thomas is a family physician from Detroit, Michigan. He graduated residency in 2016 and founded Plum Health straight out of residency.  He attended the 2018 Hint Summit and was gracious enough to share the product of his meticulous notes with the DPC Podcast.

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Episode 43: The Amazon Healthcare Venture with Chase & Berkshire Hathaway: What it Means for DPC

Resources

  1. Harvard Business Review Editorial on Amazon Healthcare Venture
  2. New York Times Article Announcing Amazon Berkshire JP Morgan Joint Effort
  3. Amazon Healthcare Venture Upset Healthcare Executives

Summary
In January of 2016, Amazon, Berkshire Hathaway and Chase announced the formation of a new  ‘Amazon healthcare’ company aimed at lowering the cost of healthcare and increasing value to their employees. Conceived as a joint idea between CEOs Jeff Bezos (Amazon), Warren Buffett (Berkshire Hathaway) and Jamie Diamond (Chase), the venture is aimed at bringing healthcare spending under control internally after the failure of the US government to find a meaningful solution to unsustainable healthcare inflation. In this episode, Dr Roussel provides his reflections on the potential disruption of such a venture for healthcare delivery in the US, including its potential to separate primary care from fee for service healthcare, to disrupt the current healthcare networks that dominate the market with a reference-based payment system and to push down prices for prescription drugs that have been inflated by multiple layers of intermediaries. Furthermore, Dr Roussel provides some reflections on the importance an ‘Amazon healthcare’ venture could have on the DPC community.

ShowNotes
Last January Amazon, Berkshire and Chase announce the formation of a new ‘Amazon healthcare’ company to provide healthcare to its employees. I learned about this project from talking with Dr Garrison Bliss, and while at first the venture’s importance wasn’t quite clear to me, the more I’ve learned about it, the more that the venture has the potential to affect healthcare in a transformative way. The project is an effort by CEO’s Jeff Bezos, Warren Buffet and Jamie Diamond to approach healthcare the ‘Amazon healthcare’ way, lowering cost and improving value, in the wake of our government’s failure to accomplish any meaningful healthcare reform. Certainly many details are TBD, however the combined efforts of three talented companies—Amazon, who specializes in logistics; Berkshire Hathaway, who specializes in insurance; and Chase, who specializes in finance—along with the capital they have access to has potential to foster disruption on a large scale with a customer orientation not heretofore seen in healthcare.

While the project is early on, there are several likely outcomes of the project so far.

  1. To start, the ‘Amazon healthcare’ venture is likely to have a heavy up-front investment in primary care. This is evidenced by the fact that they hired a doctor from Iora Healthcare to head the project. Also, these companies are likely well aware that heavy investment in primary care leads to better outcomes. Finally, in Bezos’ own words, they want the venture to be free from “profit-making incentives” that currently is the status quo of the present-day healthcare market.
  2. The venture also has the potential to dramatically alter the way that claims are paid for healthcare services. Whether or not they will construct healthcare facilities is unknown, but they will have to handle paying for services outside of their system. It is not inconceivable that they could create a reference based payment scheme that forces a degree of transparency not currently witnessed in our healthcare system.
  3. Finally, the venture has within it the potential to dramatically reduce the price of prescription drugs available to employees. Bezos has indicated his interest in selling pharmaceuticals independent of the venture, and certainly Amazon’s expertise in creating transparency in the retail market is likely to be exercised in cutting out much of the waste in prescription drug prices.

What this means for DPC is in some ways TBD but there are several potential outcomes.

  1. A major ‘Amazon healthcare’ plan that pays for primary care separate from the fee-for-service based payment could create a more favorable environment for primary care payment totally independent from the rest of healthcare services.
  2. This project has the potential to create a network-free means of payment for healthcare services. With a large company that pays for healthcare services independent of a network this could force other suppliers of services (eg mainly hospitals) to be far more transparent about their price for services as opposed to their current inflationary and protectionist modus operandi.
  3. There is much potential to cut out waste when it comes to prescription drug pricing. This can help lower premium cost and make payment for prescription drugs outside of premiums far more reasonable. PBMs and Retail pharmacies have much to fear in this venture.

I certainly recognize that these projections are quite speculative, but I do think the companies are onto something and their joint venture has the potential to have a substantive impact on DPC.

 

JP Morgan Chase
Berkshire Hathaway
Amazon

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