David Racer, An Agent for Health Care Agents

Agent – A person authorized by another to act on his behalf and who acts and has the power to obtain specific results.

David Racer, CEO of DRG Publications in St. Paul, Minnesota, is a friend. We go back 25 years. He helped me edit and write The Reece Report, a now defunct newsletter devoted to explaining and advancing the cause of physicians in a managed care world. And, as I write, he has collaborated with me in producing an E-book, Direct Pay Independent Practice: Medicine and Surgery, now available on Amazon.com, Nook.com, and other E-book outlets.

We share the philosophy that free independent enterprise is the best path to a superior productive health system.

This interview is about his view of independent health care agents, an overlooked and sometimes invisible force that negotiates the best of American health care plans have to offer between patients, employers, workers, and patients. He has just developed a website, http://insuranceagentexchange.net to inform agents on what is taking place in the competitive American health care marketplace and what impact ObamaCare is having on this marketplace. Dave blogs at http://racteronhealthcare.wordpress.com.

Dave Racer can be reached at 1-651-705-8583, dracer@comcast.net, or DRG Communications, Inc, 1535 Barclay St. Suite B-1, St. Paul, Mn, 55414.

Q: Dave, what is your official position?

A: I am the CEO of a small public relations company and spend a great deal of my time researching, speaking, and writing on health care and health care finance.

Q: Much of what you do is related to the work of health care agents and their relationship to ObamaCare. Is that accurate?

A: Yes. I am the agents’ advocate. I am helping agents work through the mess and chaos ObamaCare has created.

Q: What is the primary function of health care agents?

A: The primary function is to find the best, most affordable health care product. They try to match up clients with the best health plan to keep them insured.

Q: How many agents are there in the U.S.?

A: I don’t know offhand, but we do know in Minnesota there are over 24,000 domiciled agents carrying health insurance licenses. In the U.S. there are hundreds of thousands of agents.

Q: Would it be fair to say the majority of these agents resist ObamaCare?

Q: Yes, by nature many agents tend to be conservative. They prefer state regulation to federal regulation. Like doctors, they do not like losing control of their profession. They like keeping regulations close to home. They do not take the federal government taking control of health care and health care finance.

Q: I gather they do not like these health care navigators appointed by Obama. Is that on target?

A: You are correct. In many ways, agents resent the navigators taking over the tasks agents are trained to do but must be licensed to do. They look at navigators as amateurs guessing their way through a complicated field and not providing quality counsel.

Navigators are inexperienced and have little training. They are making recommendations to clients that may or may not be in their best interests. They get grants of hundreds of thousands of dollars to go out and find clients.

Q: How do agents feel about healthcare.gov?

A: They feel the primary function of healthcare.gov is to get more people subsidized by government rather than from private sources. If the exchanges have any benefit at all, they are getting more people to sign up for Medicaid and to get people on the government dole. They feel there is no reason to have exchanges. That is the way agents look at it.

Q: Agents are proponents of health savings account-based plans, which are growing faster than any other type of health plan.

A: That is true in general. Minnesota has the highest rate in the nation in individuals enrolled in consumer-oriented health plans, another name for health savings accounts. Agents have fully embraced consumerism, and they aggressively pursue HSAs and related plans.

Q: What is the premium pay differential between HSAs, PPOs, and HMOs and how much do HSAs decrease the cost for employers?

A: In the beginning, there was a 40% to 60% differential. So it was easy to sell HSAs. The differentials have shrunk. Itis probably now more like 10% to 20%.

Q; It is acknowledged that Democrats appose HSAs ideologically because it gets in the way of progress towards a single-payer system. The Obama administration has a bias against consumer-friendly plans. In ObamaCare plans, HSAs are not an option.

A: I lived in Minnesota for 25 years, and my observation was that Minnesota was liberal politically and conservative in business. How has that combination worked out in recent years?

A: Not so much now. Government looks at business as a place to get revenue. Politically government is not friendly to business, and many large corporations, like 3M and Medtronic, have moved their headquarters out of state. Minnesota is a tough place to do business when Democrats control government.

We have two Democratic Senators, a Democratic governor, 3 of 5 Democrats Representatives, and a Democratic legislature., which is why they passed MnSure, the Minnesota health exchange, which is in deep financial trouble and has been one reason for $2 billion tax increases. Ninety percent of the 250,000 who signed up for MnSure are on Medicaid or receiving subsidies or tax subsidies. Senator Franken is up for re-election. His vote was the vote who gave us ObamaCare. His lead in the polls is not that great, and he is being heavily subsidized by out of state donors. Right now the major political issues are health care, immigration, and government surveillance.

Q: Dave, you were very active in organizing two conferences for the American Association of Physicians and Surgeons on direct pay/concierge medicine and surgery. What is your read on the status of that movement?

A: It is a nascent movement. And yet there a growing number of physicians, even here in Minnesota, who are considering joining it. I often receive calls from physicians asking me, a non-physician, who do I make the switch? It’s an emerging response to more and more control and reduced reimbursements. I do everything I can do to encourage it. I think direct pay/concierge practice will be a growing phenomenon is some markets, but not in others. I do not think direct care will ever dominate the market nationally.

As we move towards Accountable Care Organizations and other huge systems, I just have to believe substantial numbers of doctors are going to resist and break out into direct pay practices. I worry about the day the federal government issues a decree that all licensed physicians must accept Medicare and Medicaid patients.

The Urgent Care Business Model

The business model is simple. Treat many patients as quickly as possible. Urgent care is a low-margin, high-volume proposition. ..most people are in and out in about 30 minutes. The national average charge runs about $155 per patient visit. Do 30 to 35 visits a day, and the money starts to add up.

Julie Creswell, “Race Is On to Profit From Rise of Urgent Care, “ New York Times, July 9, 2014

Patients being seen in America’s 5,000 to 9,000 urgent care walk-in clinics (the exact number is not known) share at least five things in common.

1. Patients are not being treated at a traditional doctor’s office or an emergency room.

2. Most urgent care centers do not accept Medicaid and turn away the uninsured unless they pay upfront.

3. Building more centers has caught the rapt attention of Wall Street Investors, big chains like McDonalds and Walmart and the big pharmaceutical chains, hospitals, , and physician owners.

4. Patients like the convenience of access (most are open 7 days a week, from 8 to 24 hours a day) and the cost ( an average of $100 per visit compared to $500 to $1000 average or more for an ER visit, depending on the nature of the visit).

5. Urgent care centers are a new consumer-friendly business model, which accounts for their rapid growth of free-standing centers, some hospital-owned, some independent, some quasi- ERs.

Welcome to a New Health Care World

Welcome to the new world of consumer-driven health care, an alternative to ObamaCare, traditional doctor offices, and emergency rooms. Welcome to a world that features a business model catering to how consumers want their health care to be delivered. Welcome to a new ambulatory world operating outside of the reach of regulators and 3rd party middlemen. Welcome to a world of non-bureaucratic, hassle-free, direct-pay care.

What Is The Tipping Point for Direct Pay Medicine and Surgery?

The critical point in a situation, process, or system beyond which a significant and sustainable effect and change takes place.

Definition, Tipping Point

At what point does independent direct pay for care without third party involvement change take place? At what point will it replace traditional or government sponsored health plans?

If you agree with Malcolm Gladwell’s The Tipping Point: How Little Things Can Make a Difference (Little Brown and Company, 2000), you would predict: this replacement will depend on a number of factors, many of which may seem small and inconsequential at first blush.

Gladwell maintains sweeping societal changes are like social epidemics.

They have three characteristics – one contagiousness, often triggered by word of mouth; two, the fact that little causes have big effects; and three, that change happens not gradually but at one dramatic moment.

The Tipping Point comes at moment of critical mass, a threshold, a boiling point, like a viral epidemic. Viral social epidemics usually follow three rules : one, the Law of the Few, meaning a few influential few connectors, mavens, and salesmen spreading the word that change is imminent; the Stickiness Factor, a message that makes an impact that you can’t get out of your head and sticks in your memory; three, the Power of Context, the conditions and circumstances of the time and the places which they occur.

Who are the connectors, mavens, and salesmen for direct pay medicine? There are mainly four -

• one, doctors who have made the switch to concierge medicine and who endorse it;

• two, patients who are dissatisfied with the status quo, who are wholly satisfied with their direct-pay experience and who spread the word,

• three, self-funded corporations and other corporate or organizational entities who suddenly realize they can save a ton of money through direct contracting with direct pay doctors and surgery centers;

• four, the local and national media who are mesmerized by social shifts.

What are the stickiness factors that stick in patients’ minds?

There may be many – immediate same day access, unlimited time with a personal doctor, transparency and predictability of price, being able to call your doctor at any time of the day or night, lack of bureaucracy, bundling of fees with worry about the price of each test, procedure or service.

And what about the Power of Context?

Context factors include- the troubles of healthcare.gov, most recently that many find they are not covered even though they have signed on and paid their first premium; the court challenges over whether the government, rather than the states, can provide subsidies; the fact that more older and sicker patients than anticipated have signed onto health exchanges, which is likely to drive premiums to unaffordable levels for the young and the older healthy; the reality that taxpayers are going to have to spend billions to bail out insurance companies because of government miscalculations.

If, because of these and other factors, the finances of ObamaCare begin to unravel and particularly if Democrats lose the Senate in November, the Tipping Point for direct pay care may have arrived.

The Tipping Point for direct pay will come secondary to a series of social outrages:

• failure to anticipate the number of older and sicker people to entering ObamaCare would cause double-digit premium increases in 2014 and beyond .

• limits of one-size-fits-all policies would create wholesale health plan cancellations .

• temporary jobs without health benefits would replace full- time jobs with benefits.

• businesses needing to increase employee contributions, replace full-time workers with part-timers and raise deductibles.

• Awareness that administrative and management costs comprise 50% or more of all health costs.

All this bad news will hit the fan in 2015, and the stage will be set for the direct pay epidemic.

On Boston, Waiting Lists, and Whistle Blowing

Whistling in the dark.

Idiom, to be confident something good will happen when it is not likely to occur

Merritt Hawkins, the big Irving, Texas, physician recruiting firm, each year publishes a survey of waiting times for physician appointments in 15 major U.S. cities. Its list of waiting times includes these specialties: dermatology, family medicine, cardiology, obstetrics/gynecology, and orthopedic.

The cities surveyed are: Boston, Minneapolis, Philadelphia, Denver, Seattle, Portland (Oregon), New York City, Detriot, Houston, Dallas-Fort Worth, Washington, Miami, Atlanta, Los Angelos, and San Diego.

I have taken the liberty of averaging the waiting times for these 5 specialties for these 15 cities.

Here they are, from the longest average waiting times to the shortest waiting times.
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1. Seattle Boston, 55.5 days

2. Denver, 23.6 days

3. Portland, 23.0 days

4. San Diego, 20.2 days

5. Philadelphia, 20.1 days

6. Minneapolis, 19.2 days

7. Washington, 17.8 days

8. Detroit, 17.6 days

9. New York City, 16.8 days

10. Seattle, 16.0 days

11. Los Angelos, 13.6 days

12. Atlanta, 14.0 days

13. Houston, 14.0 days

14. Miami, 13.6 days

15. Dallas- Fort Worth, 10.2 days

On the list, Boston stands out like a sore thumb , with nearly 2 ½ longer waits than 2nd place Denver and 5 ½ times longer waits than 15th place, Dallas-Fort Worth.

What specialties account for Boston’s long waiting times?

Boston Waiting Times, Rank, Length of Waiting Times

Dermatology, 1

Obstetrics, 1

Family practices, 1

Cardiology, 4

Orthopedics, 3

Why the longer waiting times in Boston, which many, including most Bostonians, consider the Mecca of American Medicine and the model for ObamaCare?

It is a good question, and I have no solid answer.

I know this: a common complaint among patients is long waiting times, not only to get an appointment, but while fiddling one’s thumbs ans staring at the ceiling while waiting in the reception or exam room.

And, as we all know, waiting while dying in VA facilities, is a hot issue at the moment, and VA whistle blowers, many of whom are VA physicians, blame the VA’s bureaucracy, with its bonus rewards for manipulating the data, for the waiting list problems.

Could it be because health care in Boston is bureaucratic and over-regulated, that it occurs in an overly liberal state that believes government is the solution and not the problem?

I do not know. but I know that Boston has more physicians per capita than any other state so a physician shortage is not the source of the problem. The conservative Texas cities, Houston and Dallas-Fort Worth, have doctor shortages and embrace market-based solutions, and have the first and third lowest rating times.

The answer may reside in two opposed philosophies of health care.

The Boston and the ObamaCare philosophies are : if one has enough databases and matrixes and methodologies for systematically understanding the intentions and capabilities of the limitation of the system one can improve it. That approach involves a lot of studies, data-gathering, meeting, and bureaucratic-rule making. It is above all, rational, and does not depend on intuitive decision making. But it takes time and deliberation to weigh all the variables.

The Texas approach is more market-based, seat-of-the-pants, market-based decision-making at the point of care. It involves people making sophisticated decisions at the spur of the moment. It assumes that health care is not always rational, and that indeed it may be messy, unpredictable, nonlinear, and decentralized, detached in many instances from centralized authorities with their computer arsenals.

Bostonians, by overwhelming margins, like their system, even with its long waiting times. Texans swear by their system.

These different philosophies are what make for political horse-racing, which we shall see played out in the November mid-terms.

In his book, Blink: The Power of Thinking Without Thinking (Little Brown and Company, 2005), Malcolm Gladwell reveals that the great decision makers, including those in health care, are not necessarily those who process the most information or spend the most time deliberating but those who have perfected the art of filtering the few factors that matter from too much information at the point of care.

Two Primary Care Things

You will see something new

Two Things. And I call them

Thing One and Thing Two.

Dr. Zeuss (1904-1991), The Cat in the Hat (1957)

Two Things loom on the primary care horizon.

Thing One, physician employment is documented and hot, as evidences by a 2014 Merritt Hawkins Survey. The Survey of 3158 physician searches indicates hospitals, medical groups, and other entities hire 9 of 10 primary care doctors being recruited.

Thing Two,direct pay/concierge practices, is not documented because most primary care physicians entering direct pay/concierge practices do it on their own without going through recruiters. Thing Two may or not be hot, but it seems to be on everybody’s lips as the coming thing.

Of Thing One, Travis Singleton, senior vice president of Merritt Hawkins, comments:

Travis Singleton, senior vice president at Merritt Hawkins, says Thing One results primarily from hospitals’ response to ObamaCare which emphasizes population health and value-based care, and the growing importance of market share and leverage with payers is spurring much of the trend toward physician hiring.

"Everyone has glommed on to the employment model; physicians because they are trying to mitigate risk and they are looking for financial help and they have all the issues of medicine and small business concerns," Singleton says.
"On the other side, whether you are a hospital, urgent care, concierge or some mix thereof, it enables you better to influence the behavior of your clinicians. And increasingly, in all of these delivery systems, that clinician is not just a physician. It's a team health environment… and the only clear mechanism that allows you to push all those different cultures and providers and modalities in one direction is employment."

Well, that may be. It may be the hospitals and primary care practitioners think employment is the way to go. And it may be that employment is an inevitable trend.

But it also may be that sizable numbers of primary care doctors think differently. Thing Two is very much on the minds of some 10% to 14% of primary care physicians who are thinking about making the switch. Singleton is aware of this contrary view.

A notable exception to the shift toward employed physician models is the rise in concierge practice. Merritt Hawkins conducted 32 searches last year, up from 10 searches two years ago. Singleton says his search data probably under reports the move towards concierge services because recruiters often aren't needed.

"If you are a provider who is fed up, whether it's your legal costs or compliance or the business of medicine itself, the easiest shift you could make is to become a concierge physician," he says.

"We are seeing some of the same trends in urgent care and freestanding ERs towards convenience medicine," Singleton says.

"People are coming to understand this consumer-driven, convenience care area of medicine and the push to outpatient care. Concierge is a good reflection of that. Healthcare for so long has been insulated to the consumer. They haven't had to appeal to the consumer like they do now."

In my new E-book, Direct Pay Independent Practice: Medicine and Surgery (DRG Publications, St. Paul, Minnesota), I discuss prospects for independent pay in the primary care and surgery sectors. The book is based on a keynote address I gave before the American Association of Physicians and Surgeons in May 2014 , on a series of blogs I have written on the subject, and on 12 interviews I conducted with physicians and others involved in the independent practice movement, i.e., practice devoid of third party arrangements with health plans or government programs. Several of those interviewed predicted within 5 years, 80% of primary care doctors will be in independent pay practices.

Suddenly “Employer Mandate “ is Passe

The history of our time is a history of phrases, which rise to great power and then as suddenly pass away.. suddenly the phrase disappears and is powerful no more – indeed, it is lost and forgotten and replaced by something else, very likely the exact opposite. It is terrifying.. Where, in all this is truth?

Russell Davenport, The Dignity of Man

It is amazing how the prospects of losing an election will change your phraseology and your attitudes.
Suddenly Democrats have realized that the term “employer mandate” is perceived as anti-business and may endanger their prospects in the November midterms.

Suddenly articles are popping up in the pro-Obama press suggesting that maybe the employer mandate, in view of the recent job data indicating 533,000 full-time jobs were lost and 799,000 part-time jobs, is not such a good idea when it comes to raising campaign funds from business or influencing voters to vote Democrat.

Suddenly this spring and summer, articles like these are appearing.

• Michael Hiltzak, “Should We Kill ObamaCare Mandate,” Los Angeles Times, May 12, 2014.

• Page Winfield Cunningham and Kyle Chence , “Why Liberals Are Abandoning the ObamaCare Employer Mandate, Politico, June 7, 2014

• Sandy Fitzgerald,Democrsts Abandoning ObamaCare’s Employer Mandate, Newsmax, July 6, 2014

Could this shift be because the employers mandate does not poll well?

Could it be because business refuses to contribute to Democrats as long as the mandate is in place?

Could it be because Americans prefer full-time jobs to part-time jobs?

Could it be because businesses everywhere are cutting back full-time workers to part-time to avoid ObamaCare penalties of $2000 per worker if one has over 50 full-time workers?

Regardless of the reasons for considering abandoning the employer mandate, or even the individual mandate, where penalties are lighter, it is apparent Americans do not like government mandates.

It is also apparent the IRS is going to go lightly on enforcing the penalties and collecting them. In the summer and the fall prior to November, voters thoughts turn heavily to thoughts of recrimination for a bad economy.

Finally it is apparent if the Employer and Individual Mandates and collection of revenues for them were to be chief sources of funding for ObamaCare, the law is in deep trouble . If ObamaCare has no money to support its ambitious agenda, what then? Are we thi on then on the brink of the financial unraveling of ObamaCare?