Insurance Advisors Can Save Healthcare

Of course, insurance advisors can’t save healthcare alone, but you will be playing a pivotal role.

We must first recognize the key players:

Employers (purchasers of healthcare via health insurance)
Employees/dependents (consumers of healthcare)
Physicians/hospitals/clinics (providers of healthcare)
Insurance carriers (financiers of healthcare)
Insurance brokers/advisors (role varies dramatically)

To truly save healthcare, it will require collective change from at least four of these five player groups. I’ll let you decide who may be the odd-player-out.

By now you are, or should be, aware of a new trend in the design of benefit programs is moving away from traditional carriers/networks and towards direct-pay programs where purchasers/consumers are contracting directly with the providers of care. While this approach has been producing real results for several years in isolated situations, it is a trend still in its infancy.

As you might expect, with some of the player’s self-interests at play, its eventual maturity is anything but certain, and certainly not imminent.

It is a path to maturity for which brokers/advisors need to be paving the way.

In a comment he left on one of my LinkedIn updates where I partially reflected on the emerging trend of these direct-pay programs, Robert Nelson, MD (Spokesperson - Georgia Chapter of the Free Market Medical Assoc.) made the following request,

“I would love to hear the perspective from the supply side that actually performs the care and interfaces with brokers & TPAs on price transparent direct contracts, from a position of owner (provider of service).”

In response to Dr. Nelson, Dr. Keith Smith (Medical Director at Surgery Center of Oklahoma) observed,

“The rate at which a physician (or facility like mine) transitions to a 100% pure, non-insurance model will, and should, vary depending on the degree to which the local practice environment functions like a cartel. In areas of the country where large hospital systems and abusive carriers exist predominantly and work together, the speed with which a disruptor can achieve independence will be slower than in areas that are not so cartelized.

I am aware, however, of DPC (direct primary care) practices that have successfully launched in highly cartelized environments with tremendous success, partly because the physician(s) had decided that if their venture was unsuccessful they were going to quit practicing anyway. At the Surgery Center of Oklahoma, we worked with insurance for years but do not at this time.

Once a mutually beneficial arrangement with a self-funded employer (or a cash-paying individual) makes its entrance in a practice or facility, the abuses and coercion of the carriers cannot as easily be ignored or tolerated. One ‘win-win’ arrangement creates a desire for nothing but ‘win-win’ arrangements and the journey to a pure model has begun.”

Sean Kelley (President at Texas Free Market Surgery & MedSimple), then added the following observation:

“I agree with Dr. Smith about the impact of market conditions on adoption of new non-insurance, Direct Pay models. The cartels have erected competitive barriers over time with just this type of disruption in mind; the opacity at every level and supported by the entire cast of characters in the healthcare value chain are testaments to this fact.

(1) Most doctors want to see a new model emerge and will support it, some more energetically than others who fear a backlash or are at the end of their careers. DPCs have the most risk while independent specialists are able to straddle in our model and Dr. Smith’s.

(2) Many broker/consultants desire change, though only a select few are risking their existing accounts; they are more likely to use a new Direct Pay model as a wedge to gain an edge with new prospects.

(3) Purchasers are unprepared for this type of disruption; the health plan data they get is highly summarized, making it impossible to compare what they currently pay for services to Direct Pay providers like Texas Free Market Surgery or Surgery Center of Oklahoma. Additionally, health plan purchase decision processes are mostly ad hoc with multiple leaders holding tacit vetoes over Direct Pay contracting.

(4) Given this landscape, it takes years to create a few “win-win” arrangements with the true innovative purchasers before the rest of the market will even start to pay attention. Many of the status-quo incumbents believe that almost any new model will eventually asphyxiate and go away. I firmly believe adoption of the Direct Pay model is mostly constrained by the demand or purchasing side. Purchasers hold the key; if there are enough purchasers, open and willing to enter into Direct Pay contracts with transparent, high-quality healthcare providers, most will react to the change and flock to the new Direct Pay model."

For me, this was an unbelievably insightful exchange.

Some of my key takeaways

From Dr. Smith:

In many markets, the providers of care and the insurance carriers operate in a cartel-like fashion to protect their own interest and to slow, if not outright halt, disruptive (direct-pay) innovations.

However, once a provider is able to break the stranglehold of the “cartel” and experience a win-win with the purchasers/consumers of healthcare, this new structure is addictive and the traditional approach becomes unacceptable.

From Sean Kelley:

Agrees that this cartel-type behavior is real and all too common.

Both providers of care and brokers/advisors desire to see change take place, but are afraid of its consequences on their respective practices. Many providers may only become drivers of the change as they approach the end of their careers while many advisors will only become drivers when pursuing new business, but are not so willing to put existing client relationships at risk.

Purchasers need access to THEIR data, a key to them becoming comfortable in changing the way they make their purchasing decisions.

The rate at which this trend reaches maturity is largely dictated by demand from the purchasers. With increasing demand, and the subsequent success stories sure to follow, there will soon be a tipping point at which the rest of the market will follow suit.

This is exciting stuff!

We are on the cusp (okay, that may be overly optimistic, but we can kinda, sorta see the cusp) of fixing one of the most challenging issues facing our country and our economy. But, it will take change, sharing, and collaboration at a level that I’m not sure many industries have ever experienced.

If Sean Kelley is correct, and I believe he is, the biggest key to driving this trend to maturity is demand from purchasers. And, the key to increasing that demand is education of those purchasers.

This is where brokers/advisors become THE linchpin

Advisors, your job as educators for your clients about how to most effectively finance the purchase of healthcare has never been more critical. Of course, you can’t educate them until you have spent significant time studying the issues and solutions yourself.

The curriculum for your education is already being built. But, just know, as with any emerging trend, the curriculum continues to evolve. There are conversations taking place every day on LinkedIn that should be required reading for you.

There are many generously sharing their ideas and experiences online. In addition to the people already mentioned above, here are a few others to follow to help get you connected to the larger community working to drive these changes in the healthcare system:

And members of our Q4iNetwork who are deeply involved:

In addition to the daily, online conversations, you NEED to read Dave Chase’s book, “CEO’s Guide to Restoring the American Dream”.

Before we are truly prepared to educate the purchasers, there is a lot of collaboration that needs to take place within and between the groups of interested parties.

Providers of care need to collaborate and communicate with one another to ensure the right access to care and infrastructure are in place. Benefit advisors need to collaborate and communicate with one another to ensure there is the necessary critical mass taking this approach to their respective clients. And, the providers and advisors must collaborate and communicate with one another to help make this transformation of healthcare as smooth as possible for the purchasers.

Change is never easy, but this change comes with particularly complex challenges. Not the least of which is changing a purchasing pattern that drives one-sixth of our economy. This change can’t happen in a vacuum (one employer at a time) if it is to be sustainable and rapid. We have to ensure it scales, and scales quickly.

As my friend Josh Butler recently observed, change is only scalable through collaboration. All interested parties must come together as part of the solution or find themselves on the outside, victims of the solution.

photo by Bluraz