December 18th, 2009 by David E. Williams of the Health business blog
This is the transcript of my recent podcast interview with Qliance’s Dr. Garrison Bliss.
David Williams: This is David E. Williams, co-founder of MedPharma Partners and author of the Health Business Blog. I’m speaking today with Dr. Garrison Bliss. He’s co-founder and Chief Medical Officer of Qliance Medical Management. Dr. Bliss, thanks for your time today.
Dr. Garrison Bliss: My pleasure.
Williams: What is Qliance?
Bliss: Qliance is a primary care focused medical practice. We are currently located in Seattle and Kent, Washington. Our purpose is to completely remake the concept of primary care in such a way that we have a self-sufficient, highly effective patient centered health care system that can cover roughly 80% of what people need for medical care during their lifetimes and that will not require insurance as an infrastructure in order to survive.
Williams: I’ve seen you refer to your model as a direct primary care medical home. What are the elements of that? How does it differ from a “patient centered medical home,” a term that is used often these days?
Bliss: The patient centered medical home is a description of a kind of primary care that intends to be all inclusive, that provides both basic health care requirements for people in terms of urgent care, but also it provides the kind of care that will allow people to continue to be healthy throughout their lives. The purpose of that kind of an arrangement is to evolve a kind of care that doesn’t simply deal with the moment-to-moment needs of people who are acutely ill, but also to provide the preventive care that they will require and to reduce the probability of illness going forward.
The direct practice concept may or may not involve that kind of a medical home design, but the concept of direct practice is that physicians work for their patients both as a practical matter and as a financial matter. The money that pays for your primary care comes from the patient. Now the patient may not be the ultimate source of that money; employers could pay their employees money that the employees could then expend on whatever primary care provider they wish to spend it on. But the general concept of direct practice is that we work for our patients.
We know that we work for our patients. We don’t work for their insurance company. We don’t work for their employer. We don’t work for their government. And when you start with that basic financial structure, it changes the nature of what the care is going to be like. In an insurance driven system in which you do not work directly for your patient, the patient is an opportunity to bill an insurance company and the design of the care has increasingly been built around the idea of creating charges. If you want to make a living as a primary care physician in the United States, if you simply saw patients and examined them and wrote prescriptions on their recommendations you would actually not be able to make a living. For most physicians in the United States that simply wouldn’t be a viable alternative. You would be seeing 35 – 45 people a day in order to make a living, which is largely what has happened in this country.
But if you really want to be more effective, what you do is you do more x-rays in your office, you do in-office laboratory work that would make money. You would refer to the CT scanner in your building, of which you are going to be a part owner. You would refer to your friends in your big clinic who are specialists so that your group would do well and then they would support you in return. So, there are all kinds of financial repercussions of insurance driven systems that we are trying to avoid in the direct practice movement.
Williams: You have some fairly large claims of cost savings. I don’t mean just for the primary care component, but for overall health care costs if somebody signs up for your model. Can you walk me through the magnitude of savings and what they come from?
Bliss: Primary care accounts for a very small percentage of the budget in health care. It’s probably under 5% even though roughly 80% of what happens is going to happen in a primary care office, and it’s the old 80/20 rule. In medicine it may be even 90/10: that 80% of the work generates 20% of the cost. In our case it’s probably less than 10% of the cost that generates 80% to 90% of the cost.
In order for us to have a meaningful impact on health care costs, the way that we can do that is by reducing the amount of use of downstream high tech, highly expensive innovative health care. It turns out that that’s not so difficult. The reason why we are using so many emergency rooms, for instance, is that primary care is almost defunct in this country. People really can’t get in to see their doctor in a timely fashion so they get sicker until they have to go to the emergency room, because that’s the only option left.
The number of emergency room visits has been increasing. The number of emergency room doctors has been going up. The amount of dollars per visit to an emergency room is enormous relative to the number of dollars for a visit to a primary care physician to accomplish the same thing. The complexity of a visit to an emergency room is much greater because the emergency room doctor never met you before, generally has no chart on you, and has to treat you as if you were a brand new patient: do a complete work-up and usually a tremendous amount of laboratory work and often much more imaging. If we can avoid emergency room visits –and my projection is that we can reduce emergency room visits by something between 20% and 50% by simply having a functional primary care office, then we can make a huge dent in the cost of health care.
In addition, if we can prevent hospitalizations by taking care of people in the office before they’re massively ill, we can make a huge dent. There is some initial data from one primary care organization called MDVIP that they can reduce hospitalization rates by 50%. We know that in projects that have been done in places like North Carolina; there was a Medicaid project that was done with a medical home design, that they could reduce their overall health care costs by about 11%, and that is not with a particularly sophisticated primary care system.
The way we’re approaching the problem at Qliance is by creating not just a primary care medical home, that is we do primary care preventive care, but also by having the hours extended. We’re open 12 hours a day Monday through Friday and we’re open on Saturdays and Sundays, which is when a lot of that emergency room traffic happens. So if you have a cough and a fever you can come here. We’re equipped to handle that problem. If you have an asthma attack we can manage it. If you have a kidney stone, you can come here and we can do all the basics that need to be done and you can avoid $3,000 to $4,000 in charges. In addition, if you come to us, since you’re paying on a monthly fee basis for our care, your out of pocket cost is almost zero to come here as opposed to $3,000, $4,000, or $5,000 in emergency rooms. So that’s how we intend to change the downstream cost configuration and I think that there is a very high probability that we can do that.
Williams: That certainly sounds exciting. I noticed the way that you’re structured financially you’re really just capturing the revenue from the primary care side and then advising people to get a wrap around insurance policy. But at least from what you described, if you’re successful in your current model, the ones that are going to make serious money from this are the people that are providing those wrap around insurance policies and are not going to have to pay out very much on your patients. Have I got that right?
Bliss: We are not an insurance policy. Let’s look at just the hard dollar savings for an employer who decides to buy a high deductible health plan plus Qliance for their employees. The high deductible health plan itself, if you go from $1,000 deductible to a $2,500 deductible, you’re often saving as much as 50% on premium alone. Even if you spend all of the deductible, so even if the employer decided that they were going to provide an HRA for instance, and they were going to cover all of the deductible that the employee might have to pay for that $2,500 deductible, they still will save about 20% on the cost of their health care even if every employer spends the entire deductible every year. So that’s serious hard dollar savings that you could do regardless of what we do with downstream costs.
Williams: What happens if you have a patient that can’t be taken care of well in primary care and they really do need to have more specialist involvement or hospital involvement? Do they lose the benefit of your model?
Bliss: Actually not. The question is where is the edge on that. If they have to go to the hospital obviously they are in that system. We are not an insurance company, so you need that insurance to cover you for the very high cost items and that’s the best use of insurance. We’re not advocating getting rid of insurance all together, we’re just advocating having it become actual insurance again instead of a financing system for all of health care.
The problem that happens now is that once you leave the hospital you have no real primary care infrastructure to walk into: someone to manage your hypertension and your diabetes, someone who can follow up on your infection and make sure that if you’re having problems and not recovering that something is done about it so you don’t end up back in the hospital. That system does not really exist in a very robust fashion in the United States, in part because we made a decision many years ago that we weren’t going to pay for primary care, at least not pay enough for it so that it would be survivable and functional.
We can do a lot for patients even if they end up in a complex system. We can also manage a lot of chronic care issues. You may want to see your specialist once a year for your heart disease, but we can certainly help manage your congestive heart failure. If you’re having problems with chest discomfort, we can find out whether that’s something that requires a cardiologist or whether that’s something simpler and more manageable at our level, so we can also make sure that you get to a specialist who is going to treat you efficiently and effectively.
We can begin to make use of fairly significant data in this country. It’s collected mostly by insurance companies and generally ignored, but there’s a lot of information available about which specialists and which hospitals provide the highest quality and the lowest cost. Since many of our patients are paying a chunk of this money out of pocket, they want to know that and we’re happy to help provide that information for them.
We’re working right now trying to incorporate that kind of information into our referral patterns so that our patients are not simply paying the highest price for the lowest quality product out there when they’re outside of our office. We can also provide them with cash discounts; it’s another way that we can help people who are not in our office getting our care, but are interfacing with the rest of the universe of health care. We can negotiate with laboratories, for instance. The laboratory we work with provides two prices for lab work. There is the retail price, which is what everybody else pays who has insurance. If you’ve ever had lab work done, you know that the bill goes out, the insurance company cuts the bill by 50% and then pays some portion of it and the patient pays the difference. We have another price, which is the negotiated price, a cash price. If the money is paid directly through us to the lab company they don’t have to bill, they don’t have deal with the insurance company, they don’t have to deal with the discounting. They’re paid cash up front then we can get a price that’s 50% to 75% less for our patients who want to pay cash. Often that’s below their co-pay. Even for insured patients, it turns out to be a deal that they want to do. There are many ways in which we can start to help our patients get better care, get a better deal, whether or not they have an insurance company involved in the financial dealings.
Williams: We’ve talked quite a bit about the benefits to patients and to employers, but it sounds like there is probably also an interesting value proposition in it for primary care physicians themselves. What does this practice look like to a physician who may go into a primary care practice? Is Qliance an attractive place to practice?
Bliss: I like to say that we have built the Ark for primary care physicians. Right now, given the finances of primary care, you are probably a loss leader in a large clinic that keeps your around because you refer to the people who do make money in the clinic. You are expected to see 35 to 45 patients per day and you’re paid on production, meaning that the more you mill people through the office, the more money you make. The more efficient your care is, the less money you make, so you try to avoid talking with your patients on the phone or e-mailing your patients because no one gets paid for that or at least not enough to make it worth while.
You end up in this financial system that actually makes your medical care worse. And although primary care physicians are actually quite famous for the fact that money is not their chief motivator (they’ve gone into the least financially rewarding part of health care), it’s unpleasant and difficult for them to see every day that not only are they making less money than all of their colleagues, but they’re not able to practice medicine the way they want to practice medicine.
They’re not able to spend the time with patients that they need to. So we’ve created an environment in which the shortest visit time is 30 minutes. You have a full hour to do a physical exam on a patient and often more if you need it. No one is paid for production here. You’re paid to keep your patients happy. You’re paid to meet our quality guidelines. If your panel size is somewhere between 500 and 800 patients, which is what we’re aiming for here, that’s roughly a quarter to a third of what the average primary care doc in the United States is seeing. If you do a good job of it then you will make as much money as you will make in any of these other systems and you will have the reward of doing it right and the pleasure of being a real doctor in a functioning health care system.
So we think that this is a great place for primary care doctors to come. So far we’ve had no great problem finding doctors of very high quality who want to come and try out our way. We know that there is a huge shortage. It’s in the 40,000 physician range or higher. It depends on how you calculate it. There are going to be problems finding physicians eventually as we grow, but we’re hoping that more and more doctors will want to go into primary care because all of the sudden it becomes not only rewarding in terms of the care itself, but also it’s finally rewarding in terms of the pay scale that we will be able to afford and also the lifestyle.
Our doctors are going to be working 40 hour work weeks, not 80 hour work weeks, and they’re not going to spend the weekends catching up on their paperwork for the last five days. There are a lot of things that we can do here that will make this much more attractive for physicians as well.
Williams: Last question: what is the Direct Primary Care Coalition and what are you seeking to achieve with it?
Bliss: The Direct Primary Care Coalition was an attempt to identify and band together the direct practice in the United States. There has been a movement probably for the last 15 years in the United States to create monthly fee design practices of one kind or another, but the direct practice is one of those variants. So not to get too arcane about this, but when you’re in a monthly fee practice, you can charge your monthly fee and charge insurance for everything that you do so that your patients’ insurance will pay for all the medical care and then they pay you a monthly fee on the side for access, or you can simply have a monthly fee for primary care and the insurance company is not involved and they don’t pay anything for the care itself. Direct practices are of the latter variety.
We were trying to identify who those practice are and get them organized so that they can participate in the debate that’s going on in Washington D.C. right now and also begin to look at creating networks. So if our patients are traveling, they’ll be able to go to a similar practice and we may be able to make some arrangements so their financial costs will be a minimum if they’re out of state. But mostly we want to have like-minded physicians and groups be able to talk to each other and know where we are. So that was the impetus behind creating the coalition.
Williams: I’ve been speaking today with Dr. Garrison Bliss, co-founder and Chief Medical Officer of Qliance Medical Management. Thanks again.
Bliss: Thank you very much. It was a pleasure.