The Key to Private Insurance Innovation

by Tim Foley

Published February 10, 2009 @ 08:21AM PT

Defenders of the private insurance industry always point to the ability of the free market to create innovation, particularly compared to government programs.  They may soon have a new innovation to boast of.  As The New York Times reported this weekend, UnitedHealth will begin an experiment in Arizona to test out the "medical home" model of care.  But are they motivated by truly improving the quality of health care to their customers?  Or is this once again about the bottom line?

The "medical home" idea has been popular among health care policy wonks for awhile - indeed, it's the centerpiece of care for the "Sustinet" proposal for universal health care in Connecticut.   Right now, when my primary care provider gives me a referral to the specialist, I'm out of sight/out of mind until I show up in her office with a new complaint.  I'm on my own to choose that specialist or another.  There's no one making sure the records from my additional visits get back to my primary care doctor in a timely fashion (last time I saw a specialist, it took repeated prodding on my part for him to even send a report back to my PCP).  If I need to go to the emergency room, those records only get to my doctor if apply to get them myself from the hospital.  No one's really minding my store except me.

The medical home is the polar opposite.  Similar to the coordinated care systems of the Mayo Clinic and the V.A., the "medical home" means a patient is given a home base where all their care is coordinated.    My doctor would be compensated for following all aspects of my care, and paid to coordinate my treatment.  She would not just be paid by how many procedures she does or how many office visits she has.  Instead, she'd be evaluated based on overall quality of care, as well as by metrics like did I have regular, timely access to care at the medical home. If I have timely access to care such that I go to my medical home instead of the emergency room, if my trips to specialists are coordinated, and the quality of care I receive is very good, the doctors in practice at the medical home get paid more.  If there are problems with how it's operating, they get paid less.  The goal is not just a much better patient experience - although that helps - it's better outcomes through coordinated care and, ideally, less spending overall for better health.

Wonks and some docs have been dying to try this model out.  Although there's a heavy amount of skepticism among doctors, who may be reluctant to participate, other primary care doctors are enthusiastic at the idea of being freed from the fee for service grind and being compensated for all aspects of taking care of their patients.  The article quotes Dr. Jim Dearing, a family practice doctor who signed up to participate, as saying, "This gives us the opportunity to create a model to allow family physicians to practice the way we used to practice in the past."

So bully for the innovative private insurance industry, right?  Well, not exactly.  UnitedHealth is running the experiment, but they're doing so at the request demand of IBM, probably their largest account in Arizona, with $21 million spent on health care each year.  It's also worth mentioning that, like many large companies, IBM collects and pays the health care dollars for their 7,000+ employees and only uses UnitedHealth for administration - meaning they're in a much stronger position to negotiate demand changes to the services they receive.  Lastly, let's just say IBM is currently not a happy customer for UnitedHealth.  Dr. Paul Grundy of IBM summarizes their current customer satisfaction as, "What we buy is garbage."  Alrighty then!

So yes, you can make the private insurance industry be innovative in a way that could substantially improve the quality of care given to patients... but really only if there's a big profit or one seriously unhappy multimillion dollar account forcing them to do so.

(Photo credit:  Kansir on Flickr.)