Health plans look to save on each patient visit

Economic pressures have driven Americans to reduce how often they see their doctors, fill prescriptions and go to the hospital -- saving insurers some money, and giving them the chance to turn their attention to driving down the cost of each individual physician visit.

In some cases, health plans are sending their own staff or spending money up front to help physicians cut overhead, allowing them to see more patients without needing more pay, or take on financial risk as part of new payment models.

Health plans aren't abandoning efforts to eliminate what they see as excess visits to the doctor or hospital. But increasingly, health plans are taking a more hands-on approach to cutting what they call unit costs, even spending money to save money in the long run on the cost of each individual patient visit.

Jay Gellert, president and chief executive officer of Los Angeles-based insurer Health Net, introduced the idea as one of the major themes of the Fall Forum hosted by the insurance trade group America's Health Insurance Plans in Chicago Nov. 15. He said health plans have long focused on driving down unnecessary utilization, trying to get people to use less care -- partly because it was easier than the alternative.

"No one wants to talk about unit cost," he said.

Yet that is where the real disparity between U.S. health care spending and other developed nations lies, Gellert said.

Recent figures released by the Organisation for Economic Co-operation and Development compared health spending in comparable developed countries and found that the U.S. spent more on health care than its peers on a per-capita basis.

According to the OECD analysis, "Overall, it seems that high prices are probably a more important cause of high spending than high provision of services."

Business assistance

Brad Wilson, president and CEO of BlueCross BlueShield of North Carolina, said his company has been piloting ways to help physicians streamline as a way to cut unit costs. For example, in cooperation with Allscripts, the Blues plan has offered to pay 85% of the cost of an electronic medical record system for primary care physicians' offices. It also has sent claims processing staff to work on-site at network hospitals to cut down administrative overhead for the hospitals.

Physicians prefer this kind of business-focused intervention by a health plan over interference and advice about clinical practice, Wilson said. "Doctors want help running their business, not with the clinical practice."

Greg Griggs, executive vice president of the North Carolina Academy of Family Physicians, said member physicians welcomed the Allscripts effort in particular, and that they understand that the Blues' investment will help save the insurer money in the long run.

The group's members understand that the company wants to drive down spending by investing in primary care, Griggs said.

"If they encourage practices to become medical homes, have extended hours and extended functions that help with care coordination, it is going to make for a healthier population and save money."

Sentara Health System has been working with both Sentara-owned and independent primary care practices on what it calls "primary care redesign," said Mike Dudley, president of Sentara Health Plans, the insurance arm of the integrated health system based in Norfolk, Va. He shared a stage with Gellert at the AHIP meeting.

Physicians "are as interested in driving down cost structures as we are in driving down unit cost," Dudley said. "If unit cost is a problem, how can doctors and hospitals take a cut without understanding what is driving their costs?"

He said Sentara staff visit individual physician offices to plan and implement the redesign, which includes things like putting in place a patient registry and setting up e-visit capabilities, group visits and phone visits, he said.

Efficiency the goal

The long-range goal is to help primary care practices serve many more patients in the most efficient way, ultimately lowering the per-visit cost, but also improving quality and addressing the primary care shortage, he said.

"They're going to serve more patients, more efficiently, and their compensation should not go down," Dudley said. "But they'll be able to ... do it in a way that's more satisfying to physicians and patients."

Dudley emphasized Sentara's efforts are meant to be "collegial," rather than "just becoming a bigger elephant so we can squash the other elephant at the negotiating table," Dudley said.

But for health plans and others in the industry, leaving behind the old-fashioned contract negotiation dramas is difficult, said John Keith, principal for the Healthcare Practice at Deloitte Consulting.

"It's in their DNA. It's difficult for them to step away from it," he said. "Everything has been a volume and rate game. But that model is limited and is at its breaking point."