Spokane-based Rockwood Health System has partnered with Cary, N.C.-based health care technology company Physician Care Direct to offer its Employer Health Ownership Plan (EHOP) here as an alternative to traditional third-party health insurance plans. 

Chris Shoffner, chief risk officer for Physician Care Direct, says that the plan, which launched here in late August, puts a larger focus on primary care than traditional insurance plans. 

“The easiest way to describe it is that when you buy insurance today, you’re buying coverage for everything and you’re expecting the company to help you pay for everything,” he says. “In our model, we buy primary care first and offer that basic access to care that everyone needs.” 

The primary goal of the EHOP, Shoffner says, is to enable hospitals and health systems to contract directly with area companies for their health care.  

Physician Care Direct currently is rolling out the plan in four markets simultaneously, Shoffner says: here and in Bellingham, Wash.; Dallas, Texas; and Savannah, Ga.

Dr. Michael Patmas, CEO of Rockwood Clinic, says that Physician Care Direct currently is meeting with local businesses to try and develop EHOPs for them. 

“We hope to see plans out by January,” he says. 

This type of insurance plan, Patmas claims, is a novelty in Spokane. 

“The Spokane health care market is going through a period of rapid transformation right now,” he says. “… I really think this is a whole new era. Providers will really be focused on providing a better value for patients and purchasers.”  

Rockwood Health System, which is a unit of Franklin, Tenn.-based Community Health Systems, operates Deaconess Hospital, Valley Hospital, and Rockwood Clinic PS here.

In the Spokane area, Shoffner says, employers with the plan will contract directly with Rockwood Clinic for their employees’ primary care. Hospital and specialist care also must be within the Rockwood Health System. The plan will be exclusive to Rockwood Health System, he says. 

Patmas claims the plan is more economical for employers for a few reasons. One is that it doesn’t involve a third-party insurance carrier taking a cut of the plan’s cost.  

“It reduces that middleman expense,” he says. 

All primary care within Rockwood Clinic is free of cost to patients using the EHOP, Patmas says.

“Without a strong primary-care doctor to guide them, patients end up with unnecessary care,” he says. “In this plan, the primary-care doctor becomes the guide.”

Shoffner says the software that the EHOP uses enables primary-care providers to coordinate and personalize a patient’s care throughout the entire Rockwood Health System. 

“Say you go to a primary care provider and then you also go to a specialist,” he says. “Most of the time the (primary care) provider is never going to know these other appointments happened. In our system, we are reporting back to that primary-care provider all of the care that is happening outside of their walls, so that provider can do a better job of following up on whatever happened to you.”

Patmas says Rockwood Clinic has about 100 primary-care providers, including nurse practitioners.  

“We’re confident we’ll have the capacity (to accommodate EHOP patients),” he says. 

Shoffner says that accidents, emergencies, and other catastrophic events are covered in the EHOP through the traditional form of an insurance policy through an insurance carrier. 

“In this case, the catastrophic is going to be covered by a regular insurance policy, but it’s seamless,” he says. “The employer doesn’t see it as two separate things.” 

Patmas says the plan is designed for small to medium-sized businesses, typically from 50 to about 200 employees. These businesses, he says, have seen increased health care costs because certain aspects of care are now required to be covered under the Affordable Care Act. 

“Companies with more than 50 employees are required to cover specific things or pay a large fine,” Patmas says. “Employers now have to buy plans that have things they didn’t have to before; they may not have included some of those things in the past.”

However, Shoffner says that the plan also can work for businesses outside that employee range as well. 

“It’s really for any businesses that are continuing to offer health care coverage as a benefit,” he says. 

Shoffner says that in addition to providing the coverage mandated by the Affordable Care Act, many businesses traditionally have been considered too small for self-insurance plans like the EHOP. 

Because self-insurance doesn’t involve a third-party insurance carrier, the employer sets the price of the premium and collects it from employees, and then the employer pays the covered medical costs. In a full insurance plan, the employer pays a third-party insurance company a fixed premium to cover the cost of employees’ medical care. 

 “The biggest difference between whole insurance and self-insurance is that, if you’re wholly insured, you’re sending the insurance company the same premium every month,” Shoffner says. “If it’s $100, that’s a fixed cost. No matter how much or how little of health care cost you incur, you’re paying that $100.”

Self-insurance, he says, enables companies to pay for claims as they occur. 

“So instead of that $100 being fixed, you have $35 for administration and catastrophic claims, and the other $65 is variable,” he says. “As an employer, you have the opportunity to get some of that $65 back, whereas if you’re wholly insured, you just become profitable for the insurance company.”

Many large companies can be self-insured because they have a large number of employees paying premiums, whereas small-to-medium sized businesses might have to charge their employees higher premiums to pay for the health care coverage. 

Patmas says the plan can be tailored to a specific company in terms of what the employer wishes to have covered, while still adhering to ACA requirements.

“This is a rough outline,” he says. “It’s going to be individualized (to the company).” 

Having better access to primary care allows for employers to manage their health care costs more effectively, Shoffner asserts, and therefore enables them to benefit from being self-insured. 

Patmas says that the relationship between Rockwood and Physician Care Direct came about because both entities are interested in developing this particular health care option for employers.

“I’ve been hearing about a 40 percent premium increase for small businesses,” Patmas says. “We want to be part of the solution to the problem. We met these folks from Physician Care Direct and realized we all have the same vision.”

As an example, Patmas cites the example a Spokane area employer, which he declines to identify, with about 200 employees and dependents. 

“That employer spent over $2 million on health care last year,” he says. “That’s $11,000 per enrollee. We believe that employer could save 25 to 35 percent (with the EHOP). This employer had no coordination of care in the original health care plan. A lot of money was being spent on very expensive hospital and physician care outside the area.” 

The EHOP, Patmas says, also puts a focus on overall patient health, and offers incentives for healthy habits such as quitting smoking. 

Shoffner says that Physician Care Direct, which started a little over three years ago, launched the EHOP in response to the state of health care coverage in its home state. 

“In 2008 here in the state of North Carolina, we had our own state health plan in a situation of crisis,” he says. “There were 600,000-plus lives covered, and $30 billion in unfunded liability associated with it.”

The solution, Shoffner contends, lies within Physician Care Direct’s emphasis on primary care. 

“If you’re going to fix the whole system, you have to fix primary care first,” he says. “To do that, we have to pay primary care providers efficiently and effectively to do what they need to do. Sometimes it’s fee-for-service, sometimes not. Under our system, with placing the emphasis on primary care and providing them with all the patient information, they make sure the patient is getting the right care, at the right time.”