Phil Hauck, Board President Envision Greater Green Bay

We often fail to recognize many of our options. Sometimes simply looking at a subject from a different perspective can shape a better future because more options become evident. Innovations usually don’t come from within the “system,” but from people frustrated with it. Healthcare and health insurance provide a good example. The cost of the “sick care system” has been a problem for decades, always increasing at rates well beyond average. So, development of a sick care system that actually decreases in cost will probably come from an outside perspective.

I’ve always appreciated Drew Leatherberry and his Avergent organization, dedicated to finding less expensive health care insurance for employers than the those that rely on the more expensive health systems. A small local insurance brokerage, Avergent is piecing together the elements of a system, but without the inbred bureaucracy and administrative costs that a large system has.  It already has a track record of success.

When you look at the costs of health care and insurance for middle-income folks, you get an idea why family savings are so low and the ability to better provide for the family is so difficult.  Last year, the premium for a single person averaged $7,000 and for a family of four, $22,000 – and that doesn’t include co-pays and deductibles

One of Avergent’s premises is that cost control starts with wellness and a close relationship with your primary care doctor, one who spends a lot of time with you when you meet.  Next, drugs aren’t delivered through the “system,” but skip several steps and come more directly from the manufacturers.  As you need diagnostics and specialized care, it’s provided from selected high-volume providers who have both lower costs and top quality.  

A specialty care clinic that conforms to this model is Green Bay-based OSMS, an orthopedic surgical center. It contracts with an employer to provide the supportive administration, like billing and medical card. The patient might encounter some small inconvenience, like getting meds later than same-day, or traveling to the specialist, but that’s the price we have to pay for lower cost – and sometimes better care.

Sandy Fragale, CEO of OSMS, the privately-held (by its doctors) orthopedic surgical center, advised that a patient should come directly to OSMS to avoid the Emergency Room charge for acute injuries – about $1900 vs. OSMS’ $107. Just walk in to get diagnosed, Fragale advised.  She said private surgery center rates are 30-60% lower than hospital rates, and they complete the tasks 26% faster.  Her MRI costs, for example, are said to be 30-40% of what the hospitals charge.

Wisconsin health insurance costs are the fourth highest in the nation, with average hospital system charges of more than 300% of Medicare for private payers. Iowa charges average 198% and Illinois 253%, yet the average Wisconsin hospital system can cover its costs at 138% of Medicare!

To reduce those costs, Leatherberry says, companies should focus on the high cost of catastrophic events like cancer, infections, and broken bones. Five percent of the population accounts for 80% of the costs. Leatherberry said that, within his clientele, 20% of patients drive 88% of the spending.  The key is to have a program that uses the lowest cost providers offering good quality (which is easy) and speed up recovery for major problems.

This is neither speculative nor pie-in-the-sky; it’s done in other parts of the country, and the brokerage actually operates the system in Central Wisconsin for a number of companies. In Green Bay, the barrier is getting enough volume to support its primary care infrastructure, which actually isn’t much.

Job One, Leatherberry said, is to make sure the medical people make a correct diagnosis of high-cost traumas (historically, at least 1 in 5 is misdiagnosed), and then have a “nurse concierge” coordinate the treatment by the specialists, including rehab.

In addition, going directly to pharmaceutical companies or their extensions can often save up to 80% of what pharmacies charge through Pharmacy Benefits Managers.

The Affordable Care Act (ObamaCare) actually provided an incentive for insurers to increase costs.  The Act held them to spending no more than 15% of premiums to cover their costs and profits.  So, as costs increase, they had to increase premiums, which they did.  Result: In the decade from 2009 to 2018, their stock prices surged significantly.

Avergent recently hosted an event to update people on their efforts. I attended a presentation by Ken Strmiska of startup Anovia, which operates primary care clinics using plans created by Avergent.  Anovia has clinics in the central part of the state and will open in Green Bay next January.  Prices even for primary care are significantly lower, even though average visit time is much longer.  Key, Strmiska and others said, is the conversation with the patient which will result in a more accurate diagnosis and more effective prescribing.

It’s important for the employer to provide incentives and rewards for employees to use the non-system providers, perhaps participation bonuses (like $250 for a $3,000 savings) or gift cards.

Another session at Avergent’s conference focused on risk management, citing inefficiencies of the systems due to misalignment of incentives.  An example by Tim Olejniczak involves home-based dialysis (which can be done while sleeping) that is up to 90% less costly than dialysis at outpatient centers, but only 8% of patients use them because providers don’t recommend them.

Finally, the presenters included a representative of Alternative Risk Underwriting (ARU), which operates a medical captive insurance company similar to a mutual and returns all excess money to its member shareholders.  Avergent places some of its clients with ARU, again to save money.

A nice highlight of the event involved Mark Cumicek of Onward Dream, who conducted a light, entertaining and meaningful session based on the book, The Dream Manager, by Matthew Kelly. Two passages I found particularly meaningful: “An organization can only become the best version of itself to the extent that the people who drive the organization are striving to become the best version of themselves.”  (a testimonial to leadership development) And: “If you want people to live your organizational dream, you have to help them live their personal dream.  We’re driven by our dreams!”  (Our dreams give our lives purpose.)