Mark Watson, executive director of human resources for Union County, will openly admit he is the ultimate skeptic. Naturally, he was pretty skeptical when his colleague, friend, and debate partner, Bill Webb, pitched to him the idea of integrating a direct primary car option for county workers — an option that would guarantee them 24-hour access to a board-certified family doctor.
Patients can text, Skype, email, and call their doctor whenever. They can schedule same-day appointments. Doctor visits don’t require co-pays or co-insurance. Waiting rooms are mostly unnecessary.
Not only would the patient-doctor relationship be restored, but the employer who pays for those health benefits would also gain a relationship with the doctor. It just seemed too good to be true.
After meeting upon meeting, some more skepticism, and a few years’ worth of convincing colleagues that it would work, the idea came to fruition in April 2015, when Union County secured a contract with Paladina Health to establish one of its DPC clinics central to the sheriff’s office, Human Services, and other government buildings.
I’ve written a lot about how DPC saves money on health claims because doctors can spend more time effectively managing patient care since they don’t participate with insurance. There are many different DPC models. Entrepreneurial-minded physicians are hanging their own shingles. Others are running their practices as nonprofits in which patient membership fees offset the cost of charitable care provided to low-income patients unable to pay. And then there are larger organizations such as Paladina whose salaried physicians care for employees of large self-insured employers – like Union County.
The Paladina Clinic located at 1640 Campus Park Drive in Monroe emits a different vibe than most physician offices. The walls are painted with warm orange hues, and the spacious examination rooms don’t give that sterile, austere feeling. You also won’t find the receptionist greeting you behind a sliding glass window. No barriers to care, literally.
After meeting with Watson, Webb, representatives of Paladina Health, and Dr. William G. Martin III, one of the clinic’s family doctors, I learned about the heavy lifting that went into laying the DPC foundation for county workers. While it took time for Watson and Co. to devise a way for the additional DPC benefit option to come out as budget-neutral, working with a stable high-deductible health plan played to their advantage.
Budget neutrality was achieved by simply unplugging certain plan features – like an employee’s $750 health reimbursement account – and reallocating those funds to plug in Paladina’s direct-care services. Workers are now paying less out of pocket, and Union County is able to provide a value-added benefit at a fixed cost – a dream for any CFO.
Fortunately, the hard work is paying off in just one year’s time. Patients are posting positive feedback about Paladina’s services on Union County’s Facebook page. Dr. Martin says he is most professionally satisfied now, knowing that after 20 years of private practice, he no longer gets paid to “chase paper” from insurance carriers. The only paper he is chasing is his patients’ charts.
It was also at this meeting that Watson mentioned he was waiting on updated claims data to compare with the county’s projected annual savings of $1 million on medical expenses alone. Not long ago, the John Locke Foundation held an event in which he presented the latest findings on cost savings for Union County DPC participants compared to workers who opt to stick solely with the employer’s consumer-driven health plan. Take a look at the stats below:
- Of Union County’s 2,000 covered lives, 40 percent are DPC participants, while the remaining 60 percent are signed up with the CDHP.
- DPC participants incur 38 percent less in medical expenses than CDHP participants, yielding annual savings of $1,408,089.
- DPC participants incur 37 percent less in prescription expenses compared to CDHP participants, yielding annual savings of $269,680.
- DPC participants spend 46 percent less out of pocket for prescription and medical expenses than CDHP patients, a $333,639 annual savings.
- 73 percent of DPC participants report significant improvement in their overall health since electing the DPC option.
For anyone skeptical that the clinic attracts a healthier patient pool, the available data indicate otherwise. The total number of paid claims exceeding $50,000 is evenly divided between DPC enrollees and traditional health plan enrollees.
But because there are fewer DPC enrollees at this juncture, it makes sense to conclude that the DPC pool skews higher-risk. Watson followed up with this point by saying that half of DPC enrollees have at least one chronic condition, while 26 percent have at least two.
With these reported stats, its no wonder that surrounding N.C. counties have expressed a strong interest in investing in such an opportunity. Imagine the savings that could accrue across the state if more self-insured municipalities bought into a Paladina-like setup. The DPC model goes beyond reforming our nation’s health care system. It’s blazing a trail to effectively transform it.
Katherine Restrepo is health and human services policy analyst for the John Locke Foundation.