This HBR article from Kaiser Permanente “Managing the Most Expensive Patients”, suggests a very clear pathway to reduce some of the unnecessary waste in the US healthcare system using “leveraged primary care”, and points to a few small primary care networks that are doing the same thing. The kind of care proposed is extremely similar to care we provided at Medical Partners NW and Lakeshore Clinic in the 90s, when we had huge patient satisfaction from our HMO patients and much lower costs than GHCPS. Why did that end, then? Simple: The local health plans nearly lost their raison d’etre when large entities like MPNW and the Cascade Health Care Alliance chose a global capitation strategy and did well. So, those plans still paying claims marketed the products for less than cost for a couple of years while dragging out the payment time for capitated “risk pools” and effectively bankrupted both organizations. In WA, the only survivors were entities that paid their own claims. Capitation became a pretty dirty word, and still is, 20 years later. Doctors have LONG memories!

Today in our region we formed a Clinical Integration Network to do nearly the same work, using the most cost effective hospitals and the most cost effective private practitioners on the Eastside of Seattle. The jury is out on that entity’s success, in part because neither the plans nor the hospitals nor the doctors want to touch the third rail of capitation. Our competitor GHCPS, is now Kaiser, so we can expect Kaiser here to do exactly what is in the article: cut waste and cut premiums by a significant fraction. Can we compete? Probably not under the current FFS system. The gross distortions locked into the RBRVS system amount to wage and price controls favoring procedures. The specialty by specialty payments to hospitals provide profits for high tech and losses for needed services like complex internal medicine and psychiatry. Payment reform would likely make a bigger impact than even the KP plan. That said, KP is on to something, and those who understand the basics as outlined here could take the FFS bull by the horns and move to a prepaid model and likely do better than KP. After all, Kaiser has been capitated for many decades and just now figured this out? What took them so long? Without answering that: a smart entrepreneurial network with adequate primary care could beat them easily, in my opinion. And THAT would save dollars spent today on illness, which is better for patients, better for payers, better for employers, better for efficient procedure providers, better for government, and not so good for those who are milking FFS for all it’s worth.


Disclaimer: The views and opinions of Dr. Paul Beuhrens are his own, and do not reflect that of his employers EH and its subsidiary EHN.


Dr. Paul Buehrens, Chief Medical Officer, Vyrty, Corp.