From the New York Times: Company Thinks It Has Answer for Lower Health Costs: Customer Service. This article profiles a double analogy — could Starbucks-style scalable customer-driven services be used to improve health care — and then could this be applied also to legal services?
Virginnia Schock seemed headed for a health crisis. She was 64 years old, had poorly controlled diabetes, a wound on her foot and a cast on her broken wrist. She didn’t drive, so getting to the people who could tend to her ailments was complicated and expensive. She had stopped taking her diabetes pills months before and was reluctant to use insulin; she was afraid of needles and was worried that a friend’s son, a drug addict, might use her syringes to inject them.
She was, however, able to make a phone call. And one day in October, in the offices of Iora Primary Care in Seattle, Dr. Carroll Haymon and Lisa Barrow, a “health coach,” huddled around a speakerphone, talking to her. Ms. Schock had recently become a patient of the practice, and the three discussed her problems — personal, financial, logistical — for nearly 45 minutes. At one point, Dr. Haymon asked why Ms. Schock had stopped taking her diabetes medication. The pills, Ms. Schock said, were too big, and they stuck in her throat.
“We can talk to the pharmacist,” Dr. Haymon said, gesturing for Ms. Barrow to add that to her list of follow-up actions. Ms. Barrow did and was able to find a version of the drug in a smaller size.
That kind of small change can make a big difference in a patient’s health — what good is the perfect drug if the patient can’t swallow it? — but the extra-mile work it took to get there can be a challenge for the typical primary care practice in the United States. Harried by busy schedules and paid on piecework model, many doctors rush from visit to visit, avoid phone calls and emails that don’t generate payments, and often fail to address the complex social issues that hamper people’s health.
This misalignment of financial incentives is a huge problem for patients, who often can’t get the care they need. But it’s also a big economic problem. The United States has the costliest health care system in the world, even as many patients suffer from preventable illnesses and die younger than their peers in other countries. The system is so full of inefficiencies that Americans are often sicker even as everyone — patients, insurers, the government — ends up spending more money on care.
Iora thinks it may be able to solve both problems and make money doing so. Its business model is meant to keep patients like Ms. Schock out of the hospital by improving service while earning a dividend on the expensive care it was able to avoid.
The practice where Dr. Haymon works, in the Central District of Seattle, is one of five that Iora Health opened in just a few months last year. The company now has 140 employees in 11 practices, and it plans to open at least 10 more in 2015. It just raised $28 million in its third round of venture capital financing to help it expand. The ultimate goal is hundreds of practices across the country, a kind of Starbucks for health care. (The company recruited one executive whose last job was opening Au Bon Pain franchises.)
Dr. Rushika Fernandopulle, who is one of the company’s founders and serves as its chief executive, said: “Building one good practice is mildly interesting, because a few people have done that. But how do you scale that across the country? That’s much harder.”
There is plenty of innovation in health care delivery, and Dr. Fernandopulle is far from the only physician who thinks he has a better idea about how to keep patients healthier for less money.
But his idea is intriguing because it offers the possibility of mass replication of quality care, which might affect the way medicine is practiced beyond his company. Few health care innovators now expand beyond their original location. A team of Stanford researchers recently looked around the country to find what they considered to be the very best primary care practices: All 11 had either one location or just a handful of sites.
“Most doctors have no business skills, and they don’t understand what venture investors and private investors do,” said Dr. Arnold Milstein, a professor of medicine and an author of the study, who directs the Stanford Clinical Excellence Research Center.
Dr. Fernandopulle’s goal is to “transform health care.” And his strategy is to take something small and effective and reproduce it in office after office. But as Professor Milstein points out, running one unconventional practice and keeping it great is very different from running 100.
Patients as Customers
The Iora practice where Dr. Haymon works is housed in an old beauty school east of downtown, in a commercial plaza shared by a Red Apple grocery store, a Walgreens pharmacy, a busy Starbucks and a Taco Del Mar. When the practice opened, in October, construction was finished on only half the space. Doctors saw patients on one side of a wall, while a construction crew finished work on the other.
One morning, the Iora team gathered in a back conference room for an 8 o’clock meeting called the huddle. The meeting is an essential piece of the Iora formula. The huddle leader rotates among the staff — a gesture to emphasize that the doctors don’t run the place. (This democratic impulse sometimes goes to extremes; there is no receptionist, and all the staff members, doctors included, trade off answering the phone.) This meeting was run by Michelle Howe, a registered nurse, and everyone had a silver Apple laptop for looking at patient data.
Iora practices do not accept any patients off the street. Instead, the company teams up with either an employer that pays for its workers’ health care or a private Medicare plan. Most of Iora’s early practices were with large companies looking to save on their health care bills. Others are partnerships with the health insurance company Humana. In most of the arrangements, the company receives a flat monthly payment for each patient and, if it saves the company money on overall health spending, it takes a percentage of what is saved.
The new Seattle practice has a Medicare plan as its partner. The huddle gives the team time to talk about the patients who will be visiting that day and ones who aren’t coming in but whom the clinicians are worried about. A patient like Ms. Schock is a good example of one who would have a high Iora “worry score,” a metric that is half clinical formula and half instinct. Patients with the highest scores are talked about the most in an attempt to think about their problems before their health deteriorates.
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