Combining medical provider and payer in one entity could help contain health care costs. A Southwest Florida nonprofit puts that thesis to the test.
The rising costs of health care have been well documented, but efforts at containment have had mixed success.
As Mike Ellis sees it, part of the problem is the provider of medical care and the payer are usually separate entities. Ellis, president and CEO of Healthcare Network of Southwest Florida, believes housing the provider and payer in the same spot could be a solution to the problem of containing rising costs that has bedeviled health care experts for years.
For example, Ellis says rewarding primary care physicians with more favorable reimbursements and taking a team approach of doctors, psychologists, nutritionists and others to care could encourage patients to visit their primary care doctors rather than visiting the more costly emergency room of a hospital. “You save the health care system a ton of money,” Ellis says.
That could be particularly effective for low-income people who depend on the state's Medicaid reimbursement and older people who depend on the federal Medicare reimbursement program. The theory is more than an academic conversation to Ellis: Healthcare Network of Southwest Florida, a nonprofit provider of medical and dental services to 36,000 patients with 16 locations in Collier County, formed an insurance company called Integral Quality Care in 2008 to do just that.
Integral has been growing its presence in Florida steadily since it was founded. When the state instituted statewide managed care for Medicaid last year, Integral Quality Care won the right to be the insurance provider in Hillsborough County and the western Panhandle. Today, Integral covers 90,000 people, tripling the number it covered in Collier County alone when it was founded. “Over time, we could go all over Florida,” says Ellis.
Medical care focused on prevention rather than emergency care makes common sense, and it is a theory other organizations nationwide have embraced. But Ellis is gathering data from his own organization's experience to prove it. “With a year and a half we'll know that cost-saving potential,” he says.
Creating an insurance agency certainly hasn't been easy. Healthcare Network, with 350 employees, had to set aside $15 million in reserves for Integral Quality Care, for example. “It was a very scary time,” Ellis acknowledges.
Integral only made $500,000 last year, on payments of $160 million. But Ellis says three to five years from now the insurance company could bring in substantial profits, on the order of $3 million to $5 million a year. “It could be significant,” Ellis says.
That's money that could be used to fund new programs. One area that Ellis would like to expand is dental care for low-income adults. Another one is providing transportation for patients who can't afford it. “We're growing the infrastructure of both organizations,” he says.
Because of its unique structure, health care experts will be watching Healthcare Network's experience. “This is as exciting as it's been in years,” says Ellis.
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