The Direct Primary Care Movement Gets Huge Boost From the Biggest Health Insurer  

Recently, headlines screamed about UnitedHealth threatening to leave the ACA Exchanges. As Bruce Japsen reported, United is losing hundreds of millions on the public exchanges. Meanwhile, virtually no one has noticed perhaps the smartest move I’ve seen any health insurer make — build a de novo value-based primary care model from the ground up that is optimized for the consumer and small business market that the exchanges target. A proper primary care model is foundational to the Health Rosetta now guiding wise healthcare purchasers.

It should come as no surprise that most health plans aren’t doing very well with consumers. After all, health insurers have the lowest Net Promoter Score (NPS) of any industry. As I’ve pointed out many times, the status quo health benefits couldn’t be worse and there is catastrophic misalignment of resources to have a successful population health program. It’s not uncommon for some health insurers to actually have a negative NPS. Meanwhile, there are startups who have tackled healthcare’s most vexing problem — pricing failure — via Transparent Medical Networks. It can make one wonder what all those health plan and benefits people have been doing while a startup could slay the healthcare cost beast relatively easily. The evidence is crystal clear that health plans have made no dent in making the country healthier, improving the consumer experience or controlling costs and we know how doctors feel about dealing with insurance. This is highlighted in the New Health Plans, New Health Benefits section of the 95 Theses for a New Health Ecosystem.

81. The dirty secret of health plans is that higher care costs have, counterintuitively, led to greater profits for the plans. This is changing. Winning health plans will capitalize on the opportunity to fundamentally rethink plan design to be optimized for the fee-for-value era. 

The excuse failing health plans make about losing money on the exchanges is that the patient population is sicker than expected and they act helpless in dealing with that reality. It’s as though they hadn’t noticed what is around all of us — a lot of sick and obese people. Fortunately, there are No Excuses organizations such as Camden Coalition, CareMore, Iora Health, the SouthCentral Foundation and others who have shown they can successfully tackle the most challenging patient populations.

United has partnered with one of those organizations through a subsidiary. They wisely adopted the lessons from Health Orgs Dooming Their "Innovation" To Failure. While most health organizations are taking the “MSN” approach to responding to new market opportunities, United is taking the “Xbox” approach. That is, give a new line of business enough freedom to innovate without being shackled by the mothership.

United Skunkworks Project Rapidly Growing

The only meaningful reporting about this new development came from a Chicago-based blogger named Dave Johnson who is the CEO and founder of 4sight Health and wrote about United’s move excerpted below. 

United’s CFO Dan Schumacher announced that the company now expects those losses will approach $1 billion. Hemsley has indicated United may exit the public exchanges altogether in 2017.
With much less fanfare, a wholly-owned UnitedHealth subsidiary, Harken Health, is marketing new health insurance products on public exchanges in Chicago and Atlanta. Harken Health describes itself as “a new kind of health care company that unites relationship-based primary care with flexible and competitively-priced health insurance in a membership-based model.” ...
While there has been no public announcement,  Iora Health is clearly operating the first Harken practices. A quick Google search reveals significant physician and professional overlap between the two companies. Even more telling, Harken Health employs the Iora business model.
Choosing to partner with Iora Health speaks to United’s willingness to explore and potentially embrace disruptive delivery models. Harken Health is United’s response to societal demands for better, more affordable, convenient and humane healthcare services. If successful, Harken positions United to succeed in a consumer-oriented, post-reform healthcare environment where service provision aligns with customer needs.

Regular readers know that I’ve written extensively about Iora Health. They are one of the best examples of the Health Rosetta that business coalitions have embraced as a framework to revolutionize health benefits. Responding to consumers is remarkably simple. They want access to good care at a fair price. As I wrote about earlier, some of the biggest chunk of the workforce — millennials — would rather clean their toilet than try to understand their health plans. One could argue the obfuscation is designed into legacy health plans. In contrast, if you enable great access to outstanding care and then provide insurance offerings behind that, you can get remarkable results against Quadruple Aim objectives. Unlike organizations such as United who have abysmal NPS scores, Iora practices typically have a NPS in the 90’s — better than a Google, Apple or other top performers. Within the health plan sector, Kaiser has the highest NPS (35) which isn’t in the same area code as Iora.

[Disclosure: As I've disclosed many times, the Health Rosetta is a non-commercial open-source project that provides a reference model for how purchasers of healthcare should procure health services. In my role as managing partner of Healthfundr, a seed stage venture fund, the Health Rosetta is the foundation of our investment thesis.]

Interview with UnitedHealth subsidiary, Harken Health’s CEO

Since United’s move was the smartest I’ve seen any established health insurer make, I wanted to dig deeper. The following are the responses from Tom Vanderheyden, Co-Founder and CEO of Harken Health. My questions are in bold with Vanderheyden’s responses after them.

  • Who is employing Harken clinicians (what does their W2 say) -- on LinkedIn, it shows doctors and team members with both Iora and Harken as where they work.  The Harken Health Center team members (doctors, nurses, health coaches and all team members) are employed by Iora Health which provides its clinical services and relationship-based care to Harken Health members.
  • Do you expect to work with Optum in any way? We contract with Optum Rx for our member’s prescription drug services. 
  • Will you make Harken available to self-insured employers? At this time Harken’s focus is on individuals and small businesses seeking a fully-insured plan. However, Harken Health was created with a mindset that access to quality, relationship-based primary care should be available to everyone.  Our model takes this long term vision into account and we will continue to explore opportunities outside of individual and small business coverage. 
  • What is the focus on the fully insured arena -- it appears you are selling to individuals & small business on the exchanges. Access to membership is currently available both on and off exchange to individuals via, an independent insurance broker or on Individuals may also be offered Harken Health through their employers if their company has less than 50 employees, who can purchase Harken plans through an independent insurance broker.
  • Will Harken extend to Medicare Advantage? At this time our focus is on individuals and small businesses. However, Harken Health was created with mindset that access to quality, relationship-based primary care should be available to everyone.  Our model takes this long term vision into account and we will continue to explore opportunities outside of individual and small business coverage. 
  • What can you say about expansion to Miami?  It is too soon to comment on markets outside of Atlanta and Chicago at this time. 
  • Does Harken plan to go national? Where do they expect to be in 5 years (not literally the markets...but how many cities/states/practices)?  We are excited by the success during our launch year in Atlanta and Chicago and we look forward to bringing our innovative, relationship-based primary care and health insurance to markets across the United States. However, it is too soon to comment on additional markets and national expansion at this time. 

What’s Next?

Naturally, Vanderheyden was circumspect about their future plans. However, it’s not difficult to see where they are headed. For example, they are hiring in Miami for a Director of Regional OperationsPrimary Care Physician, and Market Medical Director as you can see if you do a search for jobs on Iora’s site — the titles mirror current Harken clinic titles. This will add to the 10 practices in Atlanta and Chicago.

If Harken is like other Iora practices, there are typically in the neighborhood of 3,000 patients per practice (this would suggest there are roughly 30,000 patients in year one for Harken). Iora has proven they can scale quite rapidly and have demonstrated successful practices in every part of the country and in models ranging from self-pay practices paid by undocumented workers ignored by the ACA to union-based practices to employers to Medicare Advantage. Generally these sorts of models can, at least, double in reach every year. Like all exponentials, the numbers are relatively unimpressive in the early years. In a market like Chicago, that could mean a half million members in 5 years. By the time incumbents have a forceful response, it’s too late. One only need to look at newspapers — regional health systems and health plans are acting in a very similar manner to what newspapers did in the late 90’s and early 2000’s.  

As we’ve seen with employers such as a 500 employee manufacturer who is saving 30% per capita on health benefits, one doesn’t have to be big to make a big dent and deliver fantastic benefits to employees. In fact, the approach this small business took is having huge ramifications. Who could have imagined that the largest non-profit health system in the country would go to fully transparent prices. I know of some of the largest hospitals and health systems in active discussions (or deployment) with companies such as Iora. Force-fitting legacy fee-for-service plans may be DOA for organizations such as United but modern plans using value-based primary care are alive and well.  

This article also appeared on Forbes


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