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Direct Primary Care: A Segue to Direct-to-Employer?

Analysis  |  By Steven Porter  
   October 15, 2018

As direct-to-employer contracts gain steam between providers and large companies, should health systems be trying out direct primary care on their own workforce?  

This article appears in the September/October 2018 edition of HealthLeaders magazine.

Direct contracting between major employers and health systems can lead to savings, but it also opens providers up to financial risk—which may be untenable for those seeking a safer bet.

While many direct contracts have shown positive results, others have fallen short of expectations for at least one party. Providence St. Joseph Health, for example, last year ended a fairly prominent partnership it built three years earlier with Boeing around the system's debut direct-to-employer accountable care organization product.

Boeing was the first employer to contract with the ACO, Providence-Swedish Health Alliance, which had sought to deliver affordable quality care to the airplane maker's Seattle-area employees. Boeing still sees value in direct contracting for employee healthcare services, but Providence St. Joseph Health confirms that the system determined the arrangement was simply not financially sustainable.

Striking the right balance so a direct-to-employer contract works well and is mutually beneficial for both provider and employer can be tricky. But what if the provider and employer are one and the same? What if a hospital or health system chases the promise of value-based care by providing services directly to its own employees as it might for a third-party workforce?

The basic idea may be familiar, but it's finding fresh applications as health leaders look for ways to guide their organizations safely into the future of healthcare delivery.

Starting With Primary Care

One place where the well-worn idea has resulted in a small operation with big potential is the busy intersection of West Center Road and 132nd Street in Omaha, Nebraska, where there's a nearby CHI Health Clinic sandwiched between a fabric store, diner, and barber shop in a cluster of strip malls surrounded by residential neighborhoods.

That's the spot where CHI Health, the Catholic Health Initiatives (CHI) division for Nebraska and southwest Iowa, last year launched its first direct primary care (DPC) model with one salaried doctor and one advanced practice registered nurse who care primarily for the health system's own employees. The model borrows a playbook from independent physicians who pine for the good old days when patients knew their doctors personally and doctors didn't feel like cogs in a machine.

The DPC model frees primary care physicians to take a needs-driven approach to their patient interactions rather than being driven by a reimbursement model, says CHI Health CEO Cliff Robertson, MD, MBA, who also serves as CHI's senior vice president of divisional operations.

There are no bills to insurance, no insurance claims to be processed, just a monthly subscription paid directly to the practice by the patient or the patient's employer. That means there's no incentive to force patients into the office for an unnecessary face-to-face visit in person, when a webcam, phone call, or email exchange would do, says Robertson.

Sidebar: Why We Need Advanced Practice Clinicians

The DPC model removes the physician-patient relationship from the "toxicity" of fee-for-service reimbursement and establishes an environment more suitable for value-based care, Robertson tells HealthLeaders.

"I was a primary care doc. I know what it's like to have to be efficient and productive and to see patients quickly because the only way I can generate revenue to cover my overhead and then ultimately pay me something was to be very efficient with those clinic visits," Robertson adds, describing the DPC model as a beautifully simple solution.

"When you remove the primary care patient and the primary care physician from a fee-for-service transactional model, you really open a door to a delivery model of primary care that is the way primary care should be," he says. "I personally think this is the future of primary care."

Early Results Promising

Counting employees and their families, CHI Health has about 20,000 beneficiaries on its employee health plans. Most of them take advantage of the more traditional PPO product, but a small number—about 1,130 during the first quarter of 2018—have opted into the DPC model. Preliminary results suggest it is working to both limit costs and improve patient satisfaction.

The employees who select the DPC model keep more of their paychecks and have zero deductibles and copays for primary care services, Robertson says.

"The benefits were designed to create the appropriate incentive to use primary care and to reflect the expected total cost of care savings demonstrated in these models," he adds.

When a beneficiary in the DPC model needs higher-acuity care, he or she can access the same coverage, with the same deductible for specialty services and hospital use, as their peers with PPO coverage. But early results suggest DPC participants use these more-expensive options less.

First-quarter facility and specialist claims were about $387 per member per month, according to numbers released by CHI Health. That's 20% less than the $488 PMPM facility and specialist claims recorded for PPO beneficiaries during the same time period. These raw claims data have not been risk-adjusted, but CHI Health does not expect the DPC population to be significantly healthier than the PPO population, given the plan design.

CHI Health Clinic's DPC model has outperformed traditional primary care settings in terms of patient satisfaction, too, as evidenced by Clinician and Group Consumer Assessment of Healthcare Providers and Systems (CGCAHPS) survey results, says Matt Hazen, CHI Health division director for service excellence, corporate, and retail.

The DPC clinic scored at or above the 90th percentile in 10 of the 13 CGCAHPS survey questions for January through June this year, Hazen notes. The clinic scored at the 94th percentile overall, while the entire CHI organization scored at the 64th percentile.

As both the employer sponsoring the health plan and the provider delivering care, CHI Health can access potential quality-improvement and cost-cutting benefits on both sides of the equation. What's more, CHI Health now has a proof-of-concept and staging platform on which to build direct-to-employer contracts with other companies or offer DPC services to the general public, says Pamela Ballou-Nelson, RN, CMPE, MA, MSPH, PhD, an MGMA principal consultant and former clinical quality director for Adventist Health Network in Chicago.

"If you're a health system, that's often the best way to do it: experiment with your own employees first," Ballou-Nelson says.

While it has become increasingly common for large non-healthcare employers to have on-site or near-site health clinics run by traditional providers, there are indications that the way these primary care centers operate could be poised to shift, possibly with a nudge from outside disruptors.

Apple, for example, has opted to branch out, reportedly staffing its own AC Wellness clinic to offer concierge health and wellness services to its employees in the Bay Area, rather than contracting with a hospital, health system, or a standalone DPC company.

Similarly, Amazon—which already has the healthcare industry in a tizzy over its hitherto unnamed joint venture with Berkshire Hathaway and JPMorgan Chase run by famed surgeon and journalist Atul Gawande—reportedly has plans to open clinics of its own for Seattle-area employees.

Related: On Direct Provider Contracting, Stakeholders Tell CMS to Keep It Simple

Considering the online retail giant's track record and its stated objective to disrupt the healthcare industry, it's reasonable to wonder whether Amazon might try to scale up its clinic model if it finds success experimenting on its own employees first.

All of this comes as the Centers for Medicare & Medicaid Services mulls what to do with information collected earlier this year on the prospect of experimenting with what CMS called "direct provider contracting" between payers and primary care or multispecialty groups.

Bits of Advice

The trial-and-error slog is, of course, not new to healthcare providers. Hospitals and health systems have for generations experimented with a variety of tactics and varying degrees of success. These interrelated value-based devices and concepts include not only DPC models and ACOs but also basic principles of Patient-Centered Medical Home, Physician-Hospital Organizations, narrow networks, capitation, and others, Ballou-Nelson says.

Although there's no way to guarantee success in any of these endeavors, there's one thing you simply won't survive without, she adds: data analytics.

"You have to be able to have good data to succeed in this kind of business," Ballou-Nelson says. "You're just not going to make it if you can't collect the data from all of the participants in the plan and to have that information available, so you can analyze it and know where to go."

"We're good at collecting data in healthcare, but we're not so good at analyzing it yet," she adds.

Establishing a direct care relationship with a pool of employees gives providers access to patient data without a third-party health plan's filter getting in the way. Think of these bits and bytes of information as the building blocks for your next steps. How you refine and implement the next iteration of your strategic vision hinges on your ability to interpret what the data are saying about what does or doesn't work, Ballou-Nelson says.

Concierge and Other Concerns

Those who would criticize what CHI Health Clinic is doing are likely to cite concerns that DPC is generally too similar to concierge service. Despite acknowledging a filament of similarity, Robertson says the two should not be confused.

"Traditionally, concierge practices have charged a retainer for some additional services but would still bill insurance for visits that were delivered," he says.

That both concierge and DPC practices achieve greater levels of access and extended office visits by limiting the number of patients in a practice's panel, however, is enough for some critics to reject them both as ineffectual to solve the U.S. healthcare delivery system's problems.

"I think every patient would like the kind of care that DPC promises. I know I would," says Carolyn Engelhard, MPA, associate professor of public health sciences and public policy at the University of Virginia in Charlottesville.

"I would love to know that I could email my physician or text him or her, that I could get same-day appointments, that I could have 30-minute appointments or 45-minute appointments. I think this is the way every patient wants to be cared for; unfortunately, our healthcare reimbursement system doesn't reward that," Engelhard adds.

DPC Frontier, a website founded by Phil Eskew, DO, JD, MBA, a steering committee member for the Direct Primary Care Coalition, has mapped nearly 900 DPC practices across 48 states and the District of Columbia, including several DPC sites established by Strada Healthcare in Omaha. The details vary significantly from practice to practice, but many of these DPCs operate independently from full-spectrum health systems.

Such local initiatives are, argues Engelhard, more likely to further fragment the care continuum than they are to solve national problems.

"By having DPC as a cottage industry and a carve-out from a larger healthcare system, you're actually sort of, in my view, going backwards," Engelhard says, likening DPC's vision of primary care to the nostalgic manner in which a solitary physician might be depicted in a Norman Rockwell painting.

"I would like to think that the leaders in our healthcare systems around this country are part of the solution nationally and not just trying to focus in on their little part of the world," she says, "because they're never going to be able to change the big picture of it unless we get our hands around some of these larger issues that are national in scope."

Those big-picture priorities should include offering incentives for careers in primary care, grappling with excessive waste and fragmentation, and figuring out how to make healthcare generally more affordable, Engelhard adds.

But proponents of DPC contend the model actually helps to accomplish at least some of the preferred priorities Engelhard identifies.

Defending, Promoting

Self-described DPC "zealot" Christopher Larson, DO, founder and CEO of the DPC practice Euphora Health, based in Austin, Texas, says many of those who criticize the DPC model are academics who fail to distinguish it from concierge care.

"I don't know that those arguments are thought out with an intimate knowledge of direct primary care that a direct primary care doctor would have," says Larson.

With regard to concerns that DPC's smaller panels could reduce patient access to care, Larson has two responses. First, if DPC can reduce physician burnout and make primary care generally more enjoyable for providers, then it will make a career in primary care more attractive to physicians, perhaps increasing the number of practicing physicians enough to offset the smaller panels. Second, while DPC panel sizes will always need to be smaller than their general primary care counterparts, the panels may not need to be as small as some assume, thanks to technology.

Larson's practice in Austin has contracts with two large employers: one is 160 miles away in Houston, and the other is 370 miles away in Lubbock. That's possible because Euphora Health offers "virtual DPC." Larson travels to each site a couple of times per year and cares for patients remotely in between.

Larson, a member of the American College of Osteopathic Family Physicians (ACOFP), is one of the many independent physicians who have ventured out on their own to experiment with direct primary care, many of them opting out of Medicare entirely.

These independent doctors who swap DPC advice during summits hosted by ACOFP may seem quite a bit different from the executives steering the nation's largest health systems. But leaders at CHI Health and elsewhere see something worth emulating.

"We know that other small employers have begun to see the power of this model for their employees, and personally, I think it will continue to grow as a preferred option for primary care," Robertson says.

There's just one CHI Health Clinic offering DPC today. But a second clinic in Omaha will transition to the DPC model in January. And the system could add as many as two or three more sites within the next five years, Robertson says.

If the model proves itself to be scalable and preliminary results hold steady, then DPC could offer not only a better way to do primary care but also a sturdy foundation for further experimentation, offering risk-averse health systems an avenue to explore direct-to-employer relationships. 

“When you remove the primary care patient and the primary care physician from a fee-for-service transactional model, you really open a door to a delivery model of primary care that is the way primary care should be.”

Steven Porter is an associate content manager and Strategy editor for HealthLeaders, a Simplify Compliance brand.

Photo credit: (at top) Cliff Robertson, MD, MBA, CEO of CHI Health (Eric Francis/Getty Images)


Experimenting with direct primary care, rather than diving headlong into a direct-to-employer contract, could offer a stepping stone to innovations in value-based care.

You will fail if you don't figure out how to thoroughly analyze your own patient data.

Critics often cite the weaknesses of concierge care, but proponents contend direct primary care is different and far more scalable.

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