- September 7, 2012
Tom Blankenship has built bona fide health care business successes twice in 20 years.
First it was with a heart and vascular center in Sarasota. That grew into a $50 million business under Blankenship's leadership, with offices in three counties. Next was a medical billing and office management firm, Partners in Practice. That grew from a startup in 2000 to more than $200 million in billings in less than a decade, with clients from Miami to South Carolina. Blankenship sold Partners in Practice in 2009.
Blankenship's third and latest foray into health care is likely the trickiest one yet. He founded a health insurance firm, Lakewood Ranch-based BeHealthy. Three years and millions of dollars in personal investments in the making, the firm offers Medicare clients in Sarasota and Manatee counties a Medicare Advantage Plan. Medicare Advantage is a federally authorized program where a private company contracts with Medicare to provide an approved list of benefits.
A startup health insurance firm is certainly a rarity, given the costs, regulations and, of course, competition from giants like Blue Cross Blue Shield, Humana and UnitedHealthcare. “Running a health insurance firm is very complicated,” says Blankenship. “Nobody else out there is doing this. Maybe that's because nobody's crazy enough.”
Sanity aside, Blankenship has ambitious goals for BeHealthy. The firm, which began to sell plans in late 2013, has about 35 employees and through early November it had signed up about 600 customers to Medicare Advantage plans. Blankenship expects to lose money on the business for at least the first three years. But he also projects at least 5,000 customers by 2017.
Blankenship and his business partner, Neil Bedi, are the majority BeHealthy investors. Blankenship declines to say how much he and Bedi have invested in the early going, only that it's in the millions, and it's a lot. Bedi runs Sarasota-based primary care medical practice MaxHealth.
Blankenship believes one of his advantages in Sarasota-Bradenton is some of the bigger competitors have mostly overlooked potential Medicare Advantage clients in the marketplace. Those firms, says Blankenship, focus on bigger cities and markets where there is more volume.
BeHealthy, says Blankenship, will provide clients some boutique-style services with a Medicare Advantage plan, including transportation to and from doctor's visits. Blankenship says he also plans to work with local doctors and practices through relationships he has built over the past 20 years. His ultimate goal, past building a successful business, is to get doctors to think more proactively with patients, and move away from a fee-for-service mentality. “The fee-for-service model is something that will destroy this country,” says Blankenship. “It rewards physicians to react, not to be proactive.”
Challenges, on both the mission and the business model, run deep.
Regulations, for example, are thick in health insurance. Just to get approved for business, BeHealthy had to fill out rigorous reports with the Florida Agency for Health Care Administration, the Florida Office of Insurance Regulation and the federal Centers for Medicare and Medicaid Services. The process took two years.
Another looming obstacle is to persuade people to sign up for any Medicare Advantage plan, much less one from an unproven entity like BeHealthy. Big competitors have name recognition and marketing budgets Blankenship can't touch. “People just don't understand the benefits or what Medicare Advantage is,” Blankenship says.
An equalizer in the battle for customers is every insurance firm nationwide that offers Medicare Advantage has to adhere to the Affordable Care Act 85-15 rule. That requires insurance firms to spend at least 85% of revenues on patient care and no more than 15% on overhead and marketing.
Blankenship believes BeHealthy will overcome the odds. “I took a leap of faith,” says Blankenship. “I hope it's successful.”
Follow Mark Gordon on Twitter @markigordon