The Power of Proximity: Interview with Lynn Jennings, CEO of Alliance Underwriters and Proponent of Worksite Clinics.

The American entrepreneurial economy distinctly differs from that of socialistic European economies. American organizations must be able to make decisions based on proximity to performance, the market, technology, society, environment, and demographics. In Europe, on the other hand, distance from the market of centralized systems makes innovation and responsiveness difficult.

R. Reece, Innovation-Driven Health Care: 34 Key Concepts for Transformation, Jones and Bartlett, 2007

Background

Q: What is your position?

A: I am CEO of Alliance Underwriters. It has two subsidiaries. One is called Medwatch. The other is called WeCareTLC. Alliance Underwriters is a managing general underwriter for stop-lost insurance for self-funded employers on their health insurance. We have been in business for over 20 years. Medwatch is a utilization management company doing case management and disease management. It has been in business over 20 years. WeCareTLC is an on-site employer clinical management company, and it has been in business about three years. In these three companies, we have a total of about 100 employees, and our fee revenues are about $8 million. We are located in Orlando, Florida.

Thoughts on Health Reform

Q: I am interested in your thoughts on health reform. Personally, I believe health reform is more likely to market-driven rather than policy-driven. Do you agree with my view?

A: Yes. For the most part, I don’t think there is legislative or regulatory solution. These solutions tend to create more problems than they solve. There are a lot of tough questions you have to ask when you start talking about the uninsured,. What do you do with someone who has the wherewithal to be insured and chooses not to?

The bigger issue is: What do you do with those who want to be insured, but who have health issues that cause them to be uninsured? Some states have high risk pools that address that issue. Perhaps there ought to be a federal high risk pool. A significant number of the uninsured are uninsured by choice, and a significant number are uninsured for only a short period of time. There are probably between 5 and 10 million people who have a significant need for health insurance and can’t get it because of their medical conditions.

WeCareTLC, Inc

Q: Your company, WeCareTLC, interests me. I assume TLC stands for Tender Loving Care. Does it not?

A; Yes, but it also stands for Total Livestyle Counseling.

Q: Give us your thoughts about how that company came to be, and what your thoughts were behind it.

A: Obviously, being in the employer-based health insurance business, and looking at the rising costs and various solutions, I started following the various outside clinic programs about 6 or 7 years ago, but I didn’t think they were being as aggressive as they could be. So we opened on onsite clinic for our own employees about 3 ½ years ago. We ran that for about a year, then built the model that we use today for other employers.

Worksite clinics are one of the few things that has arisen in the last 20 or 30 years that stand of a chance of materially reducing the cost of health care.

Removing Cost Barriers

Q: Why is that?

A: Because you address the employees need for medical care by removing all the barriers for getting that care. First of all, the clinics are free so there is no financial reason not to get care. Two, they are convenient, being at the worksite. Three, they are focused on getting the employees the care they need, the tests they need, the medications they need, the life style changes they need to make to reduce downstream costs.

Q;. Perhaps at this point, you ought to describe the model.

The Worksite Model

A: Well, we put a physician-based clinic on site or near on sight. The model is very scaleable. It can be as small as several hundred employees to no limit. Most of our competitors focus on the Fortune 500 companies, but we think there is a significant opportunity in the smaller employee market.; The hours are scleable, based on size. They can be open as few as 4 hours to as much as 40 hours.

The clinics have a full electronic medical record. We have internet-based scheduling for those interested in using it. Those who use the clinic can go online to see their clinical records and lab values and medication summaries, and they can print it out and take the summaries with them.

One thing we do differently is that we work diligently to manage the referral process. Our primary doctor interacts with the specialist to coordinate care and to bring patients out of the specialist market back into the primary care market.

The other thing we do differently is to provide disease management, or lifestyle counseling. Nearly all of it is done by others telephonically. We staff a nurse in the clinic to do field-based face-to-face counseling . The data shows only face-to-face counseling has any chance of success. We have a three pronged approach: the physician, the nurse, and the patient working together to get the maximum impact.

Q: The government is slow in picking this up. A recent JAMA article indicates that all 15 Medicare demonstration projects using a remote nurse communicating by telephone failed to save money and 13 of 15 failed to reduce hospitalizations. Nurses , working telephonically, without close proximity to the doctor, had little effect. (“Effects of Care Coordination on Hospitalizations, Quality of Care, and Health Care Expenditures,” JAMA, February 11, 2009).

A: Doesn’t surprise me.

Q: My concept of the worksite clinic, working in near proximity to employees has these key elements. The worksite clinic, in a large enough setting to make it work, is run by a salaried primary care physician; dispenses free generic drugs or brand drugs if necessary; has an embedded electronic medical record containing best practice information; offers preventive and lifestyle counseling by an onsite nurse; and refers to a pre-selected network of specialists based on their performance and value.

A; That’s essentially correct, but we don’t always have the data on the specialists, so we simply try to avoid the worst, which can save you 10%.

Money Savings

Q; In your little experiment in your company, how much money did you save?

A: Roughly 50% of what the actuaries would have predicted. For most businesses, savings are in the 20% to 40% range.

Q; How many worksite clinics do you currently manage?

A: We have a dozen clinics right now.

The Mix of Worksite Clinics

Q: What is nature of organizations using these clinics. What is the mix?

A: School boards, manufacturing, unions, country governments, city governments.

Q. That's a real power of this concept. You can apply it to almost any organizations with a sufficient number of employees.

A; Yes, assuming they have enough employees in the vicinity, assuming they have health insurance, and assuming they want to save money. It is one of best things an institution can do. And the participants, the employees, really appreciate it. It’s voluntary. When it’s free and it’s convenient, the vast majority will use it.

Worksite Clinics and Dependents

Q: How does this apply to the dependents of these employees?

A: We definitely want to make the worksite clinic available to them. You can do it in a number of different ways. One way is just to fluctuate your hours, with some evening hours and weekend hours. Most of these clinics do not treat the pediatric, well-child portion. Generally speaking, we think pediatrics should be done by a pediatrician, unless there'ssome urgent problem,

The Power of Business to Cut Health Costs

Q: It is my belief business can move more decisively than government to control costs. After all, business survival and employee jobs are at stake. One of great potentials of worksite clinics in the large number of corporate sites available. I have read that there are more than 7600 sites in America with over 1000 employees, and that half of the Fortune companies will have sites working by the end of 2010.

A: I’m not sure of the numbers, but 1000 employees on site is definitely enough to support a full-time clinic working 40 hours a week. With fewer employees, you have to scale it back to fewer hours. One of the things we are doing is developing a coalition or collaborative clinics with multiple employers sharing the same clinic. The more bodies you can get into the clinic, the more hours you can be open.

Q; One word that keeps coming up is “scalable.”

A; By that we mean worksite clinics work nearly as well for businesses with 200 lives as on 1000 lives.

Desperation for Change

Q; In the businesses to whom you talk, do you sense desperation for change?

A: Yes. If costs double one more time, the whole system will collapse. The biggest challenge in Corporate America is convincing the CEO and CFO that cost of health care is really something that they can do something about. Too many have a fatalistic attitude that it is what it is, and there’s nothing I can do about it. That’s the biggest hurdle to overcome.

HSAs, High Deductibles, and Worksite Clinics

Q; Do you sense a movement towards health savings accounts and high deductible plans among your constituency?

A: I think they are moving that way. We have one among our own employees. And among our clients, about one third have them. They are not the total answer, but they are part of the solution. Having a clinic serving a high deductible plan undoubtedly makes the high deductible plan more palatable. When we put our clinic in, we went from a $300 deductible to a $2000 deductible.

Q: So it brings employees who are skeptical about high deductibles coupled with HSAs across the line?

High Costs, Lack of Transparency, Not Access, is the Big Issue

A: Yes, but the biggest problem in the health care environment that is talking about is the access issue, but the real barrier is the cost. And the cost factor, in my opinion, will never be solved until there is full transparency. If the providers had to post their prices, and you could shop based on price, now you have enough information to make a quality decision. When you don’t have the price, you don’t have the ability to make that decision.

Q: So the worksite clinic helps clarify transparency?

A; No, it doesn’t but we try to get the employer in the best specialist at the best price. But getting doctors to tell you what it is going to cost ahead of time is still a challenge. But there’s no competition when you don’t have price transparency. When I go to my local hospital about an employee who needs a hip transplant, I may go to a local hospital and finds it costs $10,000. But if I had an Internet comparative pricing site, I might find someone is Kansas City does it for $7500, or in Thailand or Costa Rico for $2200. Now I can start looking for their outcomes and results in making a value decision. Based on anecdotal evidence, when doctors are faced with the decision to compete on price, they do. If the costs started to dop significantly, a lot of the other issues would start to go away.

Small Businesses and Worksite Clinics

Q: Do think small businesses are going to coalesce to access worksite clinics?

A: Yes, I think they will, but there are challenges. If you’re a large employer you can be self-insured which saves the employer money. Small businesses can’t self-fund.

Doing Business with Brokers

Q; You’re in the health underwriting and reinsurance business, do you give presentations to employers about introducing wrok site clinics or deciding between health plans?

A; I do some of that, but generally we work through third parties about bring the message to their clients. It’s always a challenge whether the broker is a commissioned broker working for an insurance company. He is somewhat conflicted about finding ways to reduce the costs. If the costs go down, his commission goes down. I always tell the employer if you don’t pay your broker directly with a check, then he really doesn’t work for you.

Q; With regard to the future and the current state of health reform, are you a glass half full or a glass half empty man?

Corporate America Can Fix It – If Prices are Posted

A; If the regulatory and legislative environment will leave health care alone, corporate America will fix it out of desperation. If the government passed a law saying you’ve got to post your prices and charge everybody the same amount of money, that is one piece of legislation that would have the biggest impact. Price controls have never worked in any environment, and I don’t think they will work in health care.

If you had a totally free market environment with everybody posting their prices, that would work. If Florida, if you want your car fixed, they have to tell you exactly what it will cost. But in health care, they can charge you six figures, and you never have a clue. I like to use the example of the salesman. You tell him to go out and get a car, and he comes back with a Mercedes. If you tell him, here’s $400, go out and get a car, I can guarantee you he won’t come back with a Mercedes. If you don’t have cost, there is no opportunity to make a value judgment.

The Effect of Walgreens Entering the Worksite Market

Q: With Walgreens entering the worksite clinic marketplace and saying they plan to set up 500 clinics, has that changed the market for you?

A: It has given worksite clinics more visibility which is good. The more companies offering these clinics, the more diversification you get within the clinics. It makes it easier for everyone of us. If you go into an area, and nobody has ever heard of the concept, the first sale is pretty tough. But if they’ve heard of it and know somebody who has done it, you’ve overcome the hurdle of What is it? You have the opportunity of saying, here’s where my product differs.

Q: What are your growth projections for WeCareTLC?

A: In the next two or three years, we could blow it out pretty significantly and cover may be 50,000 lives Being an intra\epreneur, I’m not sure I want to direct a multibillion dollar corporation, but I wouldn’t mind building it and selling it to someone who does.