Physicians Practice - September 2008 - (Page 38) GETTING PAID Let’s face it: The only people who are happy with health insurance are the insurance companies themselves — and their stockholders. “Physicians often feel like they’re working for the insurance companies,” says Suzanne Madden, president and CEO of The Verden Group, a consultant who keeps a careful eye on managed-care companies. “They’re working for themselves, really, but they feel like they are at the mercy of these companies.” But while the insurance landscape is bleak, it isn’t completely hopeless. A handful of organizations across the country are trying to change the way insurance works. They want to see health plans make lives better for both patients and physicians. To say it’s not easy is an understatement, but for these dedicated individuals it’s worth the risk. THE IMPOSSIBLE DREAM? If the concept of physician-owned health insurance sounds familiar, it’s because you’ve probably heard it before. In the late 1980s and mid1990s, when everyone was looking IN SUMMARY Are physician-owned health insurance plans impossible or just very, very difficult? While many physician-owned plans have gone bankrupt, a few have survived and thrived. Some of the advantages offered by physician-owned health plans include: • Lower costs. Most physician-owned plans are nonprofit or operate at a much lower profit margin than major insurance carriers. Those savings can be passed along to both patients and providers. everyone else lays off part of their financial risk with a reinsurer. Think of it as insurance for insurance companies. • Know the business. Would you want someone to treat patients without a medical degree? Of course not. Consult with people who have an insurance and financial background. Hire them. • Physician involvement. Where major carriers make treatment decisions based on administrator recommendations, doctor-owned plans usually involve physicians when medical decisions need to be made. for innovations in healthcare insurance and HMOs were coming into their own, a number of state medical associations and other groups started their own insurance plans. The idea was simple: control costs and pay physicians better than they were currently being reimbursed through major carriers — sometimes much, much better. But by the end of the 1990s, most doctor-owned insurance plans — including Pennsylvania Physicians Care, a managed-care organization with nearly 4,000 physician-owners, and California Advantage, a plan started by the California Medical Association — were bankrupt and out of business. It seemed like a fatal blow to physician involvement with health insurance, even though a handful of nonprofit HMOs (such as DakotaCare, started by a group of South Dakota doctors) are still in operation. Today DakotaCare is the state’s largest HMO, but with only about 110,000 members it serves a very limited population. PATIENTS VS. PROFITS • Be realistic. We know doctors are paid less by everyone these days, but any insurance plan that sets too high a reimbursement schedule is doomed. Lower profit margins help you pay better, but don’t expect to pay twice as much as other companies. In fact, don’t expect your plan to reimburse more than 15 percent to 20 percent above Medicare. • Better reimbursement. Most physician-owned plans are born out of frustration with declining reimbursements. It’s not surprising that many physician-owned plans tend to have more competitive reimbursement schedules. But if you’re actually thinking of starting your own insurance company, consider a few rules for succeeding — or at least staying solvent: • Think twice. The insurance business is difficult to manage and subject to crippling regulations that vary from state to state. Consolidation has winnowed the industry to a handful of major companies, making the insurance market almost depressingly competitive. If that’s not disturbing enough, consider that nearly every physician-owned plan goes bankrupt in its first five to seven years. If you’re still passionate about the idea after thinking about all that, maybe you’re exactly who this industry needs. • Spread your risk. While it’s noble to try to extend coverage to a patient population that has traditionally been denied by other companies, it’s also a sure-fire way to go bankrupt. Even with 100,000 members, an insurance plan can find itself in trouble if only a handful of patients become seriously ill. Choose your member population carefully. • Hedge your bets. Maybe the very largest carriers don’t need it, but 38 | PHYSICIANS PRACTICE | SEPTEMBER 2008 Can a small organization like that really be the solution to physicians’ insurance woes? The Physicians Assurance Corporation, a Columbus, Ohio-based health insurance company started by seven local physicians, thinks it might be. “We believe that healthcare is local,” says cofounder Alice Epitropoulos, an ophthalmologist and vice chair of the company’s board of directors. “TPAC is locally owned and operated with the intent of improving healthcare for central Ohio customers.” As Epitropoulos describes it, TPAC was born out of local physicians’ frustration with the insurance market and conditions in central Ohio. “I think [physicians] as small business owners are getting very frustrated with double-digit increases in our [employees’] premiums and then declining reimbursements,” she says. “We have to stay in business to continue to provide for our patients.” WWW.PHYSICIANSPRACTICE.COM http://WWW.PHYSICIANSPRACTICE.COM
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