By RICHARD REECE

Background

Q:  What is your position?

A:  I am CEO of Alliance Underwriters. It has two subsidiaries. One is called Medwatch.  The other is called WeCareTLC. Alliance Underwriters
is a Managing General Underwriter for stop-lost insurance for
self-funded employers on their health insurance.  We have been in
business for over 20 years. Medwatch is a utilization management company doing case management  and disease management. It has been in business over 20 years. WeCareTLC
is an on-site employer clinical management company, and it has been in
business about three years. In these three companies, we have a total
of about 100 employees, and our fee revenues are about $8 million. We
are located in Orlando, Florida.

Thoughts on Health ReformQ:
I am interested in your thoughts on health reform.  Personally, I
believe  health reform is more likely to market-driven rather than
policy-driven.  Do you agree with my view?A:  Yes.  For the
most part, I don’t think there is legislative or regulatory solution.
These solutions tend to create more problems than they solve. There are
a lot of tough questions you have to ask when you start talking about
the uninsured. What do you do with someone who has the wherewithal to
be insured and chooses not to?

The bigger issue is: What do you
do with those who want to be insured, but who have health issues that
cause them to be uninsured? Some states have high-risk pools that
address that issue.  Perhaps there ought to be a federal high-risk
pool. A significant number of the uninsured are uninsured by choice,
and a significant number are uninsured for only a short period of time.
There are probably between 5 and 10 million people who have a
significant need for health insurance and can’t get it because of their
medical conditions.

WeCareTLC, IncQ: Your company, WeCareTLC, interests me. I assume TLC stands for Tender Loving Care. Does it not?A:  Yes, but it also stands for Total Lifestyle Counseling.

Q: Give us your thoughts about how that company came to be, and what your thoughts were behind it.A: 
Obviously, being in the employer-based health insurance business, and
looking at the rising costs and various solutions, I started following
the various outside clinic programs about 6 or 7 years ago, but I
didn’t think they were being as aggressive as they could be. So we
opened on onsite clinic for our own employees about 3½ years ago. We
ran that for about a year, then built the model that we use today for
other employers. 

Worksite clinics are one of the few
innovations of the last 20 or 30 years that stand of a chance of
materially reducing the cost of health care.Removing Cost BarriersQ: Why is that?A: 
Because you can address the employees need for medical care by removing
most of the barriers for getting that care. First of all, the clinics
are free so there is no financial reason not to get care.  Two, they
are convenient, being at the worksite.  Three, they are focused on
getting the employees the care they need, the tests they need, the
medications they need, the life style changes they need to make to
reduce downstream costs.

The Worksite ModelQ: Perhaps at this point, you could describe the model.A:
Well, we put a physician-based clinic onsite or near onsite. Our model
is very scalable.  It can be as small as several hundred employees or
unlimited in size. Most of our competitors focus on the Fortune 500
companies, but we think there is a significant opportunity in the
smaller employee market. The hours are also scalable, based on size. 
They can be open as few as 4 hours a week to as much as 52 hours.

The
clinics have a full electronic medical record, and an array of other
information technology tools and analytics. We have Internet-based
scheduling for those interested in using it.  Those who use the clinic
can go online to see their clinical records and lab values and
medication summaries, and they can print it out and take the summaries
with them.

One thing we do differently is that we work diligently
to manage the referral process.  Our primary doctor interacts with the
specialist to coordinate care and to bring patients back to primary
care from the specialists.

The other thing we do differently is
to provide onsite disease management and lifestyle counseling. Most
others do this telephonically. We staff a nurse in the clinic to do
field-based face-to-face counseling. The data show that only
face-to-face counseling has any chance of success.  We have a
three-pronged approach: the physician, the nurse, and the patient
working together to get the maximum impact.Q:  The government is slow in picking this up.  A recent JAMA article
indicates that all 15 Medicare demonstration projects using a remote
nurse communicating by telephone failed to save money and 13 of 15
failed to reduce hospitalizations. Nurses , working telephonically,
without close proximity to the doctor, had little effect.

A: Doesn’t surprise me.

Q:
My concept of the worksite clinic, working in near proximity to
employees has these key elements.  The worksite clinic, in a large
enough setting to make it work:    •    Is run by a salaried primary care physician,    •    Dispenses free generic drugs or brand drugs if necessary,    •   
Has an embedded electronic medical record containing best practice
information, offers preventive and lifestyle counseling by an onsite
nurse,  and     •    Refers to a pre-selected network of specialists based on their performance and value.A:
That’s essentially correct, but we don’t always have the data on the
specialists, so we simply try to avoid the worst, which can save you
10%.

Money SavingsQ: In your experiment in your own company, how much money did you save?A:  Roughly 50% of what the actuaries would have predicted.  For most businesses, savings are in the 20% to 40% range.

Q: How many worksite clinics do you currently manage?A:  We have a dozen clinics right now.

The Mix of Worksite ClinicsQ: What is nature of organizations using these clinics. What is the mix?A: School boards, manufacturers, unions, local governments.

Q: That's a real power of this concept. You can apply it to almost any organizations with a sufficient number of employees.A:
Yes, assuming they have enough employees in the vicinity, assuming they
have health insurance, and assuming they want to save money. It is one
of best things an institution can do.  And the participants, the
employees, really appreciate it.  It’s voluntary. When it’s free and
it’s convenient, the vast majority will use it.

Handling Dependents

Q: How does this apply to the dependents of these employees?A: 
We definitely want to make the worksite clinic available to them.  You
can do it in a number of different ways.  One way is just to extend
when the clinic is open, with some evening and weekend hours. 

Q: How do you handle kids?A:
Most of these clinics do not treat the pediatric, well-child portion. 
Generally speaking, we think pediatrics should be done by a
pediatrician, unless there's some urgent problem.The Power of Business to Cut Health CostsQ: 
It is my belief business can move more decisively than government to
control costs.  After all, business survival and employee jobs are at
stake. One of the great potentials of worksite clinics in the large
number of corporate sites available. I have read that there are more
than 7,600 sites in America with over 1,000 employees, and that half of
the Fortune companies will have sites working by the end of 2010.

A:
1,000 employees onsite is definitely enough to support a full-time
clinic. With fewer employees, you have to scale it back to fewer hours.
One of the things we are doing is developing coalitions or
collaboratives, where multiple employers share the same clinic. The
more bodies you can get into the clinic, the more hours you can be open.

Q: One word that keeps coming up is “scalable.”A: By that we mean worksite clinics work as well for businesses with 200 lives as with 1,000 lives.

Desperation for ChangeQ: In the businesses to whom you talk, do you sense desperation for change?A:
Yes. If costs double one more time, the whole system will collapse. The
biggest challenge in Corporate America is convincing the CEO and CFO
that cost of health care is really something that they can do something
about. Too many have a fatalistic attitude that it is what it is, and
there’s nothing I can do about it. That’s the biggest hurdle to
overcome.

HSAs, High Deductibles, and Worksite ClinicsQ: Do you sense a movement towards health savings accounts and high deductible plans among your constituency?A: 
I think they are moving that way. We have a high deductible plan for
our own employees. And among our clients, about one third have them.
They are not the total answer, but they are part of the solution.
Having a clinic serving a high deductible plan undoubtedly makes the
high deductible plan far more palatable and workable. When we put our
clinic in, we went from a $300 deductible to a $2000 deductible.High Costs, Lack of Transparency, Not Access, Are the Big IssuesQ: So the clinics bring employees who are skeptical about high deductibles plans across the line?A:
Yes, but the biggest problem that is talked about in health care is
access, but the real barrier is the cost. And the cost factor, in my
opinion, will never be solved until there is full transparency. If the
providers had to post their prices, and you could shop based on price,
then you would have enough information to make a quality decision. When
you don’t have the price, you don’t have the ability to make that
decision.

Q:  So the worksite clinic helps clarify transparency?A:
No, it doesn’t. But we try to get the employer into the best specialist
at the best price. But getting doctors to tell you what it is going to
cost ahead of time is still a challenge.

There is no competition
when you don’t have price transparency. When I have an employee who
needs a hip transplant, I may go to a local hospital and finds it costs
$10,000. But if I had an Internet comparative pricing site, I might
find someone is Kansas City does it for $7500, or in Thailand or Costa
Rica for $2,200.  Now I can start looking for their outcomes and
results in making a value decision. Anecdotal evidence shows that when
doctors are faced with competing on price, they do. If the costs
started to drop significantly, a lot of other issues would start to go
away as well.

Small Businesses and Worksite ClinicsQ: Do think small businesses are going to coalesce to access worksite clinics?A:
Yes, I think they will, but there are challenges. If you’re a large
employer you can be self-insured. When you’re a self-insured employer
and put in a clinic, the savings accrue to you, rather than the
insurance company. Small businesses can’t self-fund.

Doing Business with Brokers

Q:
You’re in the health underwriting and reinsurance business. Do you give
presentations to employers about introducing work site clinics or
deciding between health plans?A: I do some of that, but
generally we work through third parties to bring the message to their
clients. It’s always a challenge when brokers are commissioned by an
insurance company, because they’re conflicted. They’re often not
interested in helping to reduce employers’ costs, because if costs go
down, their commissions go down as well. I always tell the employer
that if you don’t pay your broker directly, then he really doesn’t work
for you.

Corporate America Can Fix It – If Prices are PostedQ: Are you “glass half full” or “glass half empty” about the current and future state of health reform?A:
If the regulatory and legislative environment will leave health care
alone, corporate America will fix it out of desperation. If the
government passed a law saying you’ve got to post your prices and
charge everybody the same amount of money, that piece of legislation
would have the biggest impact. Price controls have never worked in any
environment, and I don’t think they will work in health care.

If
you had a totally free market environment with everybody posting their
prices, that would work.  If Florida, if you want your car fixed, they
have to tell you exactly what it will cost.  But in health care, they
can charge you six figures, and you never have a clue.  I like to use
the example of the salesman. You tell him to go out and get a car, and
he comes back with a Mercedes. If you tell him, here’s $400, go out and
get a car, I can guarantee you he won’t come back with a Mercedes. If
you don’t have cost, there is no opportunity to make a value judgment.

The Effect of Walgreens Entering the Worksite MarketQ:
Walgreens entered the worksite clinic marketplace and said they plan to
set up 500 clinics. Has that changed the market for you?A: 
It has given worksite clinics more visibility, which is good. The more
companies offering these clinics,  the more diversification you get
within the clinics. It makes it easier for everyone of us. If you go
into an area, and nobody has ever heard of the concept, the first sale
is pretty tough. But if they’ve heard of it and know somebody who has
done it, you’ve overcome the hurdle of “What is it?” You have the
opportunity to say, “Here’s where my product differs.”

Q: What are your growth projections for WeCareTLC?A:
In the next two or three years, we could blow it out pretty
significantly and cover maybe 50,000 lives. Being an entrepreneur, I’m
not sure I want to direct a multi-billion dollar corporation, but I
wouldn’t mind building it and selling it to someone who does.