Dr. Garrison Bliss is a man as interesting as his name. For decades, the Seattle internist has been at the forefront of the direct-pay health care movement.

In this interview with Holistic Primary Care’s editor Erik Goldman, Dr. Bliss lays out the practical realities of direct pay practice, his prediction about how the game’s about to change for insurers, and why primary care will experience a rebirth once the current health care bubble bursts….and it will!

GB: The image that I like is of having your own rowboat rather than being chained to an oar in someone else’s ship. In both cases, though, you’ll have to row. Direct pay is not a panacea. The financial design does offer a lot more freedom, but ultimately it’s not just about the financial design.

HPC: What do you mean?

GB: The real idea behind direct practice is to evolve a system where we as doctors make our money by providing better care, as opposed to being paid just for doing things because some coding numbers on a piece of paper tell us that’s what we are supposed to be doing. As George Halvorson of Kaiser once said: “We have thousands of diagnostic codes for diseases, but no codes for cures.” The thing that will determine whether direct pay is truly a solution is whether it can deliver on the patient care side. Better care at lower prices.

HPC: So the vision is to ensure that the financial side is serving the care side, rather than the other way around?

GB: Yes. It’s about better care. Doctors come to us desperate to make more money. They work very hard, they’re frustrated, and they rightfully want to make a better living. That’s totally understandable. But what about wanting to provide better care to your patients? THAT needs to be the primary motivation.

It can’t just be just about the doctor making more money. Because the reality is that many people who join direct-pay practices—the people for whom the monthly fee feels like a bargain—come in with complex conditions needing a lot of care. Many haven’t had access to care and they’re not in good shape. So you have to be interested and able to provide great service in excess of their expectations, because the demand is much higher.

Direct practice is not just about doctors making a better living. It’s about really connecting with a patient and asking, “What do you really need? How can I provide that? How can I make it worth it to you?” It’s about service, and proving that you’re providing better service. We need incentives for that. Qliance is focused intently on producing real, measurable results and higher patient satisfaction in a scalable design that’s reproducible on a local, regional and national level.

HPC: And that’s not really possible in insurance-based practice these days, is it? It seems that insurance plans create the wrong incentives.

GB: There was nothing intrinsically wrong about insurance when it first started out. It actually looked like a panacea. People would no longer have to worry about healthcare expenses because there were these large financial institutions that had them covered. We had no idea, at that time, what the impact would be on the medical ecosystem, especially its most vulnerable part, the coral reef part.

By that, I mean the holistic and primary care parts of health care. When that gets financed through an insurance based model, the cost of getting paid eventually exceeds the payment itself, and the patient becomes a detail on the billing report—and practically an unnecessary one! These downsides only became apparent much later after insurance plans started. Direct practice removes all the insulation and all those middle-men. For primary care, that’s a great idea.

HPC: So are you advocating a full break from insurance and a return to the pre-WWII era when pretty much all care was either direct fee for service or charity?

GB: Well, I was a big bad-mouther of insurance early on in my career, something some people have never forgotten or forgiven! But what I’ve come to realize is that ultimately it is a partnership between insurance and caregivers. Insurance is a fabulous tool. It should have a central role in health care. But it should not be the mode by which we pay for everything in health care.

Insurance is a business model. It’s just one of a plethora of business models. But we’ve made the assumption that healthcare needs to have–and should only have–ONE business model, which is the insurance model. In no other business is there only one model. And in no other arena in which insurance companies operate are they tasked with paying for any and all transactions. It’s like asking your homeowner’s insurance to pay for washing your windows.

Direct practice is simply another business design for primary care. It is more efficient financially and makes primary care both more profitable for the practitioner and more responsive to the patients. It takes a profession that is basically dying and makes it viable once again.

HPC: Direct pay has shown strong growth over the last decade, despite the stagnant economy. The most recent estimate I heard was that there are more than 5,000 physicians in direct pay or membership models, and hundreds of thousands of patients. Qliance seems to be gearing up for serious expansion. But with so many people out of work, isn’t out-of-pocket spending going to be a tough-sell?

GB: The economic downturn will definitely hit hard on one segment of the direct practice market: employed individuals with some degree of insurance coverage. They probably will not make the jump, even if they see the value and agree with the philosophy of direct practice. If they’re healthy, most of these people will choose to keep their powder dry, stick with what they’ve got, and not spend.

Where direct practice has the most potential is with businesses. We’ve been working with businesses to provide lower cost, higher value primary care for their employees. The employees have the choice to select us, and the employer covers the cost of the enrollment in Qliance. But it’s tricky. At Qliance, we are adamant that we are working for, and must continue to be working for the patients, not their employers. Contracts are between Qliance and individual employees, not between us and the employers. The employers simply agree to cover the costs.

HPC: And employers are going for this?

GB: Yes, absolutely. Employers save because the cost of Qliance plus an insurance plan with a $5K deductible is still much less than the cost of standard insurance. The employee gets high access to a doctor who’s only seeing 10 patients a day, not 30. So I think employer support is what’s going to drive a more rapid evolution of direct practice. The entire direct practice industry will probably feel a decrease in the number of new individuals coming in, but the employer-based model will fuel a lot of growth.

HPC: Washington state, where you’re located, has a very favorable regulatory climate in which direct-pay practices can negotiate directly with employers. It’s not like that in most states.

GB: The thing that made a difference here is that we went to work on the legislative front. Early on, we were confronted by insurance commissioners and existing laws that were hardly friendly. The laws on the books when we started could have easily been interpreted to mean that a doctor taking a monthly fee was an “insurance company” by definition! The insurance commissioner was actually considering whether Qliance and other direct pay practices should have to comply with insurance laws and regulations.

It took nearly10 years and passage of three laws to create a better environment that allows us to work with employers and sell to groups. A lot of the resistance and inertia simply had to do with the degree to which insurance dominates health care thinking. Insurance commissioners, understandably, have a hard time thinking about anything but insurance. It took them a while to understand that what we are doing is not analogous to an insurance plan taking risk.

HPC: The Northwest, and Washington in particular, have always been progressive and innovative on health care. What about the rest of us?

GB: The rest of the country will be highly influenced by what has happened here. If we can show that we can create a health care world where individual doctors can sell services to individual patients, and that this lowers cost and creates better care, that will influence a lot of people. It will be hard for politicians to kill.

I think there will be an increasing demand for this kind of care in other states, and people will start to push legislators to create more favorable environments for it. Here in Washington, direct practice initiatives had massive bipartisan support. Republicans love it because it’s a “free market’ solution and it doesn’t involve raising taxes. Democrats love it because it can provide great care to people who currently have nothing, and we don’t charge an arm and a leg.

HPC: That brings us to another big issue: the cost of direct pay. “Membership” practices are often portrayed as luxury options for the rich and healthy. You’re claiming this is not true.

GB: That “Wealth-care, not health-care” argument is one of the most idiotic statements I’ve ever encountered. The notion that direct-pay is only for the rich is completely unfounded. The fact is, that we can and do care for the uninsured and unemployed.  At Qliance clinics, between 5-10% of all our patients are taken care of free of charge or on a discount basis, based on need. Unlike insurance plans, we do not drop people if they lose their jobs.

We are taking care of people who come in with 15 concurrent medical problems who are tired of living in emergency rooms. The idea that we are only serving wealthy people with no medical problems is simply untrue. We have patients who are living on fumes and we have patients who can afford to buy the entire state of Washington. Our market is everybody!

HPC: The core principle of direct-pay is to eliminate the administrative costs that insurers put on medical practice, making more resources available for patient care. You claim this leads to better outcomes. That certainly makes sense, but how do you know?

GB: Qliance is committed to data-capture and outcomes analysis. What we find is that on average, Qliance patients have 62% fewer emergency room visits, 50% fewer advanced diagnostic imaging scans, 50% fewer specialist visits, and 25% fewer hospital days than comparable patients in conventional insurance plans.
But it’s not because we’re withholding care. We have no fixed protocols about diagnostic testing, scans, specialist referrals, hospital admissions. We’re open 7 days a week, and our doctors are free to recommend and refer as they see fit.

But we don’t incentivize doctors to do a lot of ‘stuff’. We create incentives to get patients in early, when conditions are much more easily treated. Earlier care usually means less time per episode of care. We don’t get paid to bring people into the office. So we look at time very differently. We want to create value!

HPC: Do you really believe that a return to “market principles” can change health care for the better?

GB: To really fix things, the customer needs to have a vote. And usually that vote is something people cast with their money. The incentives need to be aligned to reinforce better care, better pricing and better service.

Look at the hotel & motel industry. Choices keep increasing and prices keep coming down. People with special needs can find options that work for them. And anyone can find what s/he want, whether that’s no-frills budget options or high- end luxury. Why can’t health care work more like that?

We need to set up systems that give primary care doctors a professional level income and that also provides patients with great care. The only reason to do this is if it buys us better care! If all we do is increase primary care pay, while reducing specialist pay and none of it improves overall health, then it’s not worth doing. The change of economic model must provide a different way of doing primary care. But ultimately it’s not the economic model that fixes things. It’s the commitment to care that fixes things

HPC: It seems there’s a very uneasy relationship between the direct-practice world and the insurance world. Insurers haven’t really been able to kill off direct practice, but isn’t there a possibility that as systems like Qliance grow, Big Insurance will just buy you guys out? I realize it’s a theoretical concern, and I haven’t seen this happens, but it seems like a plausible scenario.

GB: It is generally true that if you have investors, as Qliance does, they want to see liquidity down the road. But that doesn’t mean that it’s about selling direct practices off to the insurance companies! The idea that insurance companies would want to buy us to get us out of their hair is plain wrong. We save them money! So they’re not trying to kill us off anymore. In fact, Group Health, a plan that used to be my nemesis, has been putting up the white flag in the legislature. They’re signaling that they actually like what we do. In fact, they’d like to replicate what we do within their own house.

Insurance companies might be interested in acquiring us or any other direct practices, but if they try to change the nature of what we do, they will destroy the value. If we do our jobs right, the insurance companies will look at us in terms of what we do for patient care and what we do for their bottom lines.

HPC: How’s that? From the outside, it would seem like you’re taking a piece of their pie.

GB: Not really. As Qliance, we are truly caregivers and our model dramatically improves their (insurers’) ability to compete. We are NOT taking their money. In fact, we enable them to reduce downstream costs. Our patients have a primary care core via Qliance, with a wrap-around of a high-deductible insurance policy. Through better primary care, Qliance can cut total costs by 20%. The insurers can reduce premium costs by 15% and still make an additional 5% while improving marketability and increasing market share. So it really can be a win-win for all.

HPC: So, the insurers are interested in reducing their premiums now? That’s a switch!

GB: Well, historically, they made money when the costs went up. They didn’t have incentive to control costs—so long as they were able to keep passing the increases on to the payors. What other industry could continue to support uncontrolled costs like the insurance system did? As long as the prices kept going up, they could increase profitability. So they actually tried to maintain the bubble, which is not unlike the housing bubble.

But the days in which insurers can just pass along the costs are over. In many parts of the country, things are already changing. The plans are desperate to get the primary care episodes out of the emergency rooms, where an alarming amount of primary care is now going on. But there are no primary care doctors to take care of the people, because reimbursement was so low that it ceased to attract people. So the insurers have painted themselves into a corner. We offer them a way out.

Like everyone else living in a bubble, the insurers—and everyone who was benefiting from insurance-based medicine–wanted to believe it would go on forever. But it will not go on forever. The bubble is about to pop, and they know it. It’s very similar to the housing and financial bubbles. The last bubble to go will be the health care bubble, and it’s going to be a big one.

HPC: And that’s good for primary care?

GB: At some point, there will be a pole reversal, where those higher prices that used to translate into more revenue for insurers, become higher costs that the hospitals and insurers will have to bear. When that happens, the incentives will change. They know this is coming. So they’re going to have big incentives to save money and cut costs. Good, comprehensive primary care can do that—keep people healthy, save money, and cut costs.

HPC: Where does the holistic/integrative medicine movement fit into the picture?

GB: Holistic care has been protected from much of the undesirable impact of insurance because by and large it hasn’t been covered by insurance. When the various holistic practitioner groups tried to seek out insurance coverage, I was very, very concerned. Having lived through what insurance did to conventional primary care, I was deeply concerned that this (insurance coverage) could be the beginning of the end of what’s best about holistic care.

Qliance definitely likes holistic health care, but we believe that this sector really needs to go through the “learn it, master it, manage it” curve for itself. We certainly refer our patients to “alternative” caregivers as part of our referral networks, but we don’t have them on salary at our clinics at this point.

The issue for us will be, simply, “Does it work, and can you prove it?” Do the doctors who do all the holistic stuff really get better outcomes? Fewer side effects? Happier patients? Qliance is nothing if not experimental, so we are open to trying a lot of things. But we are also committed to measuring outcomes to find out if what we are doing really helps people. That’s true across the board, for all kinds of care.

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