With Obamacare and creation of health insurance exchanges, many believed that health insurers would compete for patients much the same way hotels, rental cars companies, and airlines compete for customers. By comparing identical benefits packages from different insurers, patients could select their insurer based on the monthly premium and the extent of the hospital and physician network.
In a recent Vox article, Ezra Klein urged insurers do “something like Southwest Airlines: low prices, narrow networks, exceptional customer service, and not much else.” Klein believes insurers don’t have the tools necessary to meaningfully impacting a patient’s long-term health and avoidance of costly medical complications that would justify the upfront costs of prevention and treatment if a patient simply switched to a different insurer the following year.
To succeed in health care, own every touch point
The problem with Klein’s premise is that unlike insurers, Southwest Airlines can ensure an exceptional customer experience because it owns every touch point of its delivery system of flying people across the country. Southwest deliberately chooses one type of airplane (Boeing 737s), focuses on mid-sized airports to speed turnaround times and maximize use of their expensive airplane assets, and improves operational efficiency to provide low prices.
Insurers do none of these things.
Until insurers own the delivery system, they will have little understanding of the patient experience through the health care system. Without formal hierarchy, structure, or oversight of the entire delivery system, insurers have no way of providing patients hassle-free, worry-free, convenient and timely coordinated and connected care.
Because insurers are not interested in running a delivery system, they can only differentiate themselves by customer service or the online tools to help patients determine their benefits or bills. The doctors and hospitals contracted by the insurer likely have negatively impacted the insurer’s brands. Insurers are seen by many as greedy by cutting reimbursement and meddlesome in their attempts to improve clinical outcomes.
With an inability to manage the patient experience, insurers can’t become a beloved brand like Southwest Airlines.
Health insurance startup Oscar begins integrating delivery system
So it isn’t surprising that health insurance startup Oscar found it very difficult to do well despite “touting [its] use [of] technology to push less costly care and more consumer-friendly coverage.” Even with consumer friendly marketing, many patients “[were] disappointed to find the insurer behaving like everyone else.” Like other insurers, Oscar was unable to manage the patient experience and the medical costs of their contracted networks. As a result, Oscar will be asking New York regulators to “raise rates by a weighted average of nearly 20 percent for 2017.”
So to improve costs and the patient experience, Oscar is now creating a virtual call center. It will provide primary care and urgent care via telehealth. A recent job posting for a virtual primary care physician listed the clinical responsibilities of not only treating the top 20 common diagnoses but also other health care conditions by using labs, imaging and accessing specialists and community health resources. Oscar doctors “will also work side-by-side with our technology and product teams to build new tools that will let us care for our members virtually.”
In other words, Oscar Health will use virtual primary care physicians to help manage their costs and utilization while also managing the perception of their brand. Launch is expected sometime in 2016.
Zoom+ is Kaiser Permanente for the 21st century
Alternatively, the health care organization, Zoom+, is going in a similar direction. Touted by some as “the Kaiser Permanente of the 21st century without the baggage,” Zoom+ started as a chain of retail clinics. Specifically, over the past decade they have been focused on creating “an integrated health system you can control with your phone.”
However, that wasn’t enough. To own their destiny, they needed to also become an insurer so no longer would they be “captives of insurers, captive of large systems.” They wanted the ability to “sell directly to businesses, governments, individuals, and control that full stack if [they] wanted to. [They] had to make sure [they] had access to the economics to do the innovation that [they] want to do.” Full stack meaning, “to be the patients’ primary care provider, specialist care provider, and emergency room, all in one. And all that care would be mediated through, and when appropriate delivered through, the phone.” They wanted to control their future.
In other words, to succeed, health care organizations need to be both the insurer and the provider of health care delivery.
Will integrated health care startups make health care better?
For insurers or health care providers to win, they need to be like a Kaiser Permanente (KP), where patient health outcomes continue to be nation-leading and patient experience among the best in the nation. KP owns every touch point from scheduling appointments to having their own doctors and staff to provide care but also reinforce their organizational values and building long-term relationships with patients who come back year after year.
Yet despite these multi-year accolades, KP and other accountable care organizations (ACOs) have been unable to expand nationally. Americans continue to paying a price as “the chasm between where most of American health care is right now and where it needs to go, preferably in the near future, remains vast” notes Dr. Robert Pearl, CEO of the Permanente Medical Group.
To close the gap, better health care won’t come from the existing fee for service structure doctors and hospitals transforming themselves into ACOs. Instead bridging that chasm will come from start-ups much the same way KP was, “a mere 70 years ago, [and] a relative “new kid on the block.””.
The only difference is that it won’t take 70 years.
It will take 10.
Davis Liu is a family physician and head of service development, Lemonaid Health. He is the author of The Thrifty Patient – Vital Insider Tips for Saving Money and Staying Healthy and Stay Healthy, Live Longer, Spend Wisely. He can be reached at his self-titled site, Davis Liu, MD, and on Twitter @DavisLiuMD.
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