Physicians Practice - September 2008 - (Page 41) GETTING PAID It’s the same story from many physicians across the country struggling to keep their practices afloat. Epitropoulos and her fellow founders were also tired of medical decisions being made by the wrong people. “If I want to order a test, the larger insurance companies review it. If they don’t feel it is medically necessary [they don’t approve it],” explains Epitropoulos. “They’re not physicians making that decision. They’re basically practicing medicine, and that is not in our patients’ best interests.” Epitropoulos and six other physicians took inspiration from a group of Columbus OB/GYNs who had successfully started their own malpractice captive. If one type of insurance could work, why not another? After an initial feasibility study, they set to work raising capital — about $5.6 million in a six-month period. More than 200 investors purchased stock in the private company; about 95 percent are physicians. “I think that we felt the need as a medical community,” says Epitropoulos. Now fully licensed by the state of Ohio, the company began offering coverage in July 2008. But TPAC always keeps its company’s informal motto in mind: Patients before profits. “Our philosophy — and I know our physician board agrees with us — is we have to run this like a business,” says Brett Bäby, CEO of TPAC. “But it is merging a business philosophy with a physician philosophy, being more patient-centered, and being a lot more provider-friendly as well.” ADVANTAGE: TPAC PARTICIPATING IN A PHYSICIAN-OWNED PLAN Let’s say you aren’t quite ready to start your own insurance company. Maybe you’re just considering being a provider for a physician-owned health insurance plan. In that case, pediatrician Herschel R. Lessin offers this sound advice: “I hate to say this, but business is business. Whether it’s physicianfriendly, doctor-run, or investor-run, you have to sign a contract, you have to read the contract, you have to negotiate the terms. You have to watch out for your own safety.” Of course, the hope is that a physicianowned health plan will have more favorable policies that aren’t completely motivated by profit and the bottom line. There might be advantages in working with a physician-owned plan beyond just the monetary. “Maybe because they’re friendly and easy to work with, you might be willing to get paid a little bit less because they are less aggravating,” says Lessin. TPAC has thought long and hard about the advantages a physicianowned company can offer over traditional insurance companies. The first and arguably most important advantage is on overall cost. “We feel we can have an impact on the cost of health insurance premiums by providing lower margins,” says Epitropoulos. Most traditional insurance companies are publicly traded corporations that are expected to return profits to their shareholders. It’s not unusual to see major insurance carriers with profit margins of 20 percent or more. “Basically, they are skimming 15 to 20 cents off of every healthcare dollar to pay their investors,” says Lessin. The pediatrician is a board member of MVP Healthcare, a New York state insurer, and vice president and director of clinical research at The Children’s Medical Group. “There’s a difference between healthcare costs and the cost of healthcare. The cost of insurance premiums goes up and up and up, but provider payments don’t go up. Insurance company profits go up.” TPAC wants to change that dynamic. “I think we’re going to have lower margin requirements that will allow TPAC to price more aggressively and to stabilize prices for the small business owner,” says Epitropoulos. Lower profit margins and lower administrative costs are the backbone of TPAC’s strategy, allowing the company to pass the savings along to consumers. The counterpart to lower consumer prices is a competitive reimbursement schedule for participating physicians. TPAC is determined to pay providers well, but not so well that it can’t afford to stay in business. “This is not a short-term game,” says Bäby. “It’s a long-term enterprise that hopefully will pay off for our clients, for the physicians who are participating with us, as well as our shareholders.” Money is only one contributor to success, however, and TPAC knows it has to offer something else if it wants to attract participating providers. One of the key differences between TPAC and other insurance companies is physician involvement. “We’re looking at more of an inclusive model, where the local physicians have input,” explains Bäby. “We’re going to create 32 different specialty committees that will review everything from benefits and coverage to different procedures that are developed over time. We want to include the physician in this decision-making process instead of excluding them.” A former CEO of UnitedHealthcare of Ohio, Bäby knows from experience how physicians get locked out of decision making at big insurance companies. “I worked for United for 15 years, and there is not a lot of consideration given to local practice patterns and local physician input with regard to making both medical and coverage decisions,” he says. He doesn’t want TPAC to make those same mistakes. To that end, TPAC plans to be as transparent about its decision making as possible. “TPAC will publicly disclose our rating methodology,” says Epitropoulos. “There is really no other company that currently discloses its information.” Another difference in TPAC will be the emphasis on prevention. “Prevention is the key to helping SEPTEMBER 2008 | PHYSICIANS PRACTICE | WWW.PHYSICIANSPRACTICE.COM 41 http://WWW.PHYSICIANSPRACTICE.COM
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