The company, Alliance Underwriters of Lake Mary, Florida, has combined a free primary care clinic at the workplace with a high-deductible health plan, and teaches employees how to bargain for deep discounts from their doctors.
Two years ago, when the company switched to a high-deductible health plan with a health savings account, executives knew such plans had two major weaknesses: People may forgo necessary medical care if they must pay for it; and it’s impossible to be a consumer in a marketplace where the price of medical care is random and opaque.
Critics of high-deductible health plans point out that the more people have to pay for medicine, the less likely they are to purchase it. This is particularly true with prescription drugs. The executive leadership at Alliance Underwriters felt it would be equally true for the company’s 80 employees when it came to doctor visits and lab tests.
Legislation governing high-deductible health plans allows patients to see doctors for care that is considered preventive, like an annual physical. But often, medicine that treats chronic illnesses, like a cholesterol-lowering drug, is not covered as preventive.
Alliance Underwriters felt that the best solution would be to create a workplace health clinic that would replicate a primary care physician’s office. The company’s executives liked the idea so much they started an on-site health clinic company, We Care TLC, and turned themselves into their first test case.
Open half a day every week, the clinic is staffed by a doctor and a nurse. Employees can sign up for a 20-minute visit—no time spent in a waiting room, no commute and minimal time away from work. Doctors can address everything from treating a common cold to managing a chronic illness. The company provides an array of commonly used generic prescription medicines.
Everything at the clinic is free, including the drugs.
Having pharmaceuticals on hand in the clinic is one way to get people to come for the treatment they need, says Alliance Underwriters CEO Lynn Jennings. “Since the clinic is not part of the plan, there’s no insurance involved, no claims involved.” And technically it’s not considered a benefit that would disqualify it under consumer-driven health plan regulations, he says.
For many employees, this is the extent of their medical care.
Before the high-deductible plans were implemented two years ago, individuals paid $800 in premiums and families paid $5,000 premiums. Now, individuals pay $300 in premiums and families pay $2,000 annually.
Deductibles went up—way up. Individuals today must pay $2,800 before their insurance kicks in, compared with $300 when the company had a low-deductible plan. Families face a $5,600 deductible. The company contributes $800 to individuals’ health savings accounts and $1,600 to families’ HSAs.
Under the new plan, those who consume the fewest medical dollars pay the least. While some may view this as unfair, Jennings does not.
“Indirectly, I think that encourages people to get healthy and stay healthy,” he says.
The free health clinic is a big part of that encouragement, he says.
Jennings also recognized that high-deductible plans force patients to act like consumers in a health care marketplace where the price tag of a medical service—if it even has one—is arbitrary. So the company taught its employees how to make a deal with their doctor.
To show that it could be done, Jennings turned to his COO, Vince Butler.
“I love to negotiate; I love to make deals,” Butler says. “But I’ve got to tell you, I would never ever have considered negotiating with a doctor or a hospital. To me it would be almost sacrilegious. That’s the mind-set I had.”
It’s a mind-set many people have. But what Butler found out is that doctors whose patients pay cash don’t have to spend time and money wrangling with insurance companies for repayment. Administrative costs are said to account for about 30 percent of the nation’s $2 trillion health care bill. That’s why some doctors no longer take health insurance.
“The key,” Butler says, “is cash.”
His daughter’s tonsillectomy gave him his first bargain-hunting opportunity. The doctor recommended an outpatient facility, which cost $6,000.
“I want to negotiate a cash deal,” he said. They came down 20 percent.
Good, but not good enough, Butler went to another facility recommended by his doctor. They told him $2,500.
“I said, ‘That’s not bad,’ ” he says. Then he asked them what would happen if he paid in advance. Their answer: the surgery would cost $1,600.
Because Alliance Underwriters is self-insured, meaning the company pays for all its health costs, individuals who save money also save money for the employer. That is why Alliance is willing to do just about anything to encourage employees to negotiate how much they pay the doctor. A human resources manager helps employees understand the basic costs of a procedure by showing how much Medicare pays, since the government usually sets the standard cost for any given medical service.
Butler has had an easier time negotiating prices with doctors than with hospitals. Administrators do not know how much a procedure will cost until after it has been performed, since each item dispensed and service rendered is billed individually.
Alliance Underwriters also recognizes that not everyone is in the financial position to pay cash. So the company advances employees the money they need, interest free.
“If you can advance the money in order to pay cash, you can get a sizable discount,” Butler says. “It’s in the interest of the company to do that.”
Educating employees about the plan’s benefits and teaching them to measure their relationship with a physician in terms of the quality of care and cost are the two biggest hurdles. Getting employees to believe in the plan requires the support of a company’s executive leadership, says CEO Jennings.
“It takes a commitment by senior management to do something, which is probably the biggest challenge today: convincing corporate America that you can do something about the cost of health care,” Jennings says. “For 20 years all they’ve done is listen to people who say, ‘Do as I do and I’ll control your health care costs.’ And every year the costs go up 10 to 15 percent. So there’s understandably some skepticism in the boardroom.”
Jennings believes that continually refining a company’s health care benefits makes employees less sensitive to change.
“My attitude is, do something different,” he says. “I don’t think you can unequivocally say, ‘This is the right thing for you.’ What I can say is, ‘If you don’t do anything different, you will get the same results.’ ”