Healthcare “Syntopical”: The Grassroots Health Care Revolution 4 (part 8 of 15)

Chapter 7: Centers of Value: Companies Move Business

 If you are looking for an elective surgery, consider looking for the cheapest price. … The more procedures a medical team performs, the better it gets. The better it gets, the more surgery it attracts. … Second, the highest-quality providers are often the ones that are the most serious about lean disciplines. … Higher quality begets more volume; less waste begets lower costs and prices; lower prices and high quality beget more volume and higher profits.


Chapter 8: Restructured Pricing: Companies Demand Better Models

If Safeway can offer its employees the choice of five accredited endoscopy shops where they can buy colonoscopies for $1500 or less, and they are within a reasonable distance, why would they ever pay more? Whey indeed. So they don’t

Safeway and a number of other payers have developed what is called Reference-Based Pricing (RBP) to keep a lid on health care costs. They simply say to their employees, “You can go anywhere you want, and we will cover the costs up to $1500. If you pick an uncompetitive clinic, and the charge is higher than that, fine, but you pay the difference out of your pocket.”

Another provider uses a plan they call TrueCost that sets payments at Medicare rates, plus a 40 percent “provider bonus.” … another provider uses a cap of 175 percent of Medicare if an employee chooses to go outside of network.

BidRx is using direct dynamic pricing (online auction) for pharmaceuticals. It allows patient and doctor to go to its website, call up any prescription drug, look at a baseline price, check out all the valid substitutes, including generics and their lower prices, ask for an auction price, punch a button, and order at the low, “dynamic” price. The inexpensive drug arrives by mail a few days later from the low-bid pharmacy.

Smart employers have made generic drugs free to employees because they are so cost effective. … pharmacy benefit management systems that offer incentives for generic substitutions and disincentives for high-priced brand drugs generally work well. They often have three tiers for generics, low-price drugs, and high price drugs. Copays are set highest for the high-price brands.

Smart purchasers also use a “step system,” in which employees are asked to try lower-price alternatives before moving step by step to more expensive, still-patented pharmaceuticals.

Yet another payment reform is moving rapidly across the country. Employers pay a retainer to contracted doctors and nurses for primary care. They are paid a set amount each month per member, so they cease to be worried about pumping up volumes for procedures as promoted by CPT codes. … That is called a capitated plan, in this case for primary care only.

Still another reform is the simplest of them all: straight cash payments. … some convenience clinics and other providers are offering low, fixed prices for cash payments.


Chapter 9: On-Site Clinics: Companies Take Over Primary Care

Essentially, the on-site primary care turns the existing business model upside down. Instead of the specialist at the center of medical attention, the primary care doctor becomes the quarterback – just like he or she was in the family-doctor era a couple generations ago.

It is the employer’s doctor, not the big system’s captive doctor, who controls key medical spending decisions.

  • The company doctor orders tests and screenings at the best prices and quality
  • The company doctor orders up the specialists, but only when warranted by patient condition – not as routine protocol
  • The company doctor or nurse practitioner orders prescriptions, with generics as the first option.
  • The company doctor orders, in collaboration with employees, admissions to hospitals or outpatient clinics.

In short, the employer and its on-site team (nurse practitioner, or physician’s assistant, nurse coaches, dietician) offer proactive, intimate, convenient, cost-effective, integrated care in wat is called “a medical home.” The primary care doctor could be seen as the CEO of the medical home.


Chronic Diseases: Companies Go Where the Money Goes

Safeway has installed targeted programs and incentives to get its employees and their families to adopt healthy behaviors. Safeway hones in on five conditions: tobacco usage, healthy weight, blood pressure, blood sugar control, and cholesterol. If an individual passes metrics tests in those five areas, he or she wins a premium reduction of $1040; $2080 for a family that passes. Progress towards goals also earns premium rebates.

A new frontier for proactive primary care is mental health. Levels of mental illness can be elicited in the annual assessment process through a simple, proven eight-question screen, called the PHQ-9. … Remove any stigma attached to seeking help for such illnesses as anxiety, depression, and addiction. … adding behavioral treatment professionals to the on-site teams will be the next step.



  • $6000 deductible ($2,500 is the median threshold to incentivize behavior change)
  • Split savings 50/50 found by shopping around for service that costs more than the deductible, or for finding overcharges.
  • Give a cash bonus / rate reduction for using a pre-determined Center of Value
  • Make 2ndopinions on elective surgeries free
  • Need to shop Stop-Loss and Insurance to protect against catastrophic claims ($35,000 median premium) and Aggregate-Loss Insurance to protect against a bad overall year. (125% of expected)
  • Need to shop around for a healthcare network
  • Need to shop around for Claims Processing (ASO)
  • Search for a joint clinic to act as an “on-site” provider of primary care ie “Medical Home”
  • Set prescription co-pays to a 3-tier system based on price and availability of generics
  • Get warranties on top of bundled prices so there are no readmission costs
  • Negotiate low primary care prices for using cash
  • Consider an “in-house” doctor to direct all medical decisions with cost and quality for the consumer in mind. Ie create a “medical home”
  • Reduce premium prices for passing (5) health tests



  • Anthem and Humana for visible pricing
  • QuadMed for on-site clinics
  • Costco for Prescriptions
  • UnitedHealthcare for Stop-Loss insurance for 10-person company
  • Alithias for transparency tool
  • UnitedHealthcare myHealthcare Cost Estimator for transparency
  • Auxiant FocusHealth transparency tool
  • Castlight for transparency
  • Compass Professional Health Services for transparency
  • Mutual of Omaha mpower360 for transparency
  • New York made public the charges on 1,400 procedures in 2013
  • Wisconsin has the Wisconsin Health Information Organization (WHIO) All-Payer Claims Database (APCD) and “Datamart” for hospital level transparency
  • Par80 for “direct dynamic pricing” which is essentially an online auction for medical procedures
  • BidRx for direct dynamic drugs
  • RxCut by Free For All inc for direct dynamic drugs
  • Walgreen’s Take Care Health Systems for worksite primary care clinics
  • Humana’s Concentra for primary care clinics
  • ModernMed renamed Paladina Health for concierge primary care
  • Safeway Health consulting services