Primary Care Physicians Need To Be More Like Financial Advisors

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Man looks into the Abyss, and there’s nothin’ staring back at him. At that moment, man finds his character, and that’s what keeps him out of the Abyss. – Lou Mannheim (Hal Holbrook) in the movie “Wall Street”

We hear reform ideas all the time: primary care physicians need to work at the top of license, physicians need to work in teams, healthcare must deliver top-notch customer service, the focus needs to be on creating strong physician/patient relationships, and physicians need to be paid for delivering value.

The question then becomes: how does the healthcare industry implement such ideas?

I believe it would be smart to apply the lessons from other industries.

Specifically, the financial services industry.

My dad has spent over forty years as a financial advisor. I always looked at him as the ethical Lou Mannheim character (played by Hal Holbrook) in the 1980’s movie “Wall Street”, as opposed to the unethical Bud Fox character (played by Charlie Sheen). Throughout his career, my Dad has helped people from all walks of life achieve their financial goals.

I cannot help but notice that his role is not that different from a primary care physician. Financial advisors work with clients to overcome financial problems and achieve financial goals. Primary care physicians work with patients to overcome health problems and achieve health goals. Each profession is similar in that they focus on the whole person and the entire financial or healthcare portfolio. With both professions, the ability to achieve the stated goals is directly correlated to the strength of the relationship between the advisor and client or physician and patient.

My Dad’s profession has changed a lot during his long career, most significantly over the past 15 years. The change has largely been for the betterment of his clients as well as him as an advisor. For most of his career, he was paid on commission. He didn’t make money unless his clients made some kind of financial transaction – trade a stock or bond, invest in a mutual fund, put in place an annuity, etc. It was all about “doing stuff”, generating activity, and production. Often, his bosses would push a Deal of the Day and he and his colleagues would work the phones trying to write as many “tickets” as possible (a “ticket” is a financial industry colloquialism for a transaction). Yes, he worked on developing strong relationships with his clients and was ultimately driven to do what was best for them, but every meeting, every phone call, and every conversation was simply a means to an end. And that end was activity, commissions, and production.

If you are a primary care physician, does this sound familiar? The way our healthcare industry works today, primary care physicians do not get paid unless they generate some kind of patient activity – see a patient face-to-face, freeze a wart, biopsy a mole, etc. Yes, physicians still want the best for their patients, but they are limited in just how much they can do. For some physicians who are hospital employed or in a large practice, it is not uncommon to get a tap on the shoulder from a group leader and be told they need to get their “production” up. Our society is inundated with advertising imploring individuals to get health screenings that are not that different from my Dad’s old Deal of the Day.

As ethical as my Dad is, if a client was financially stable and happy, he largely did not get paid. In fact, if he chose to surrender to complete greed, there was more financial incentive for him to make someone unstable and generate activity.

This all changed in the past 15 years. Instead of being incentivized to “produce” and generate activity, financial advisors like my dad began to change the payment model to benefit the client. Instead of commissions, they changed to a flat fee based on a percentage of the client’s assets. Now, a financial advisor has every incentive to help the client grow as financially healthy as possible. Plus, the happier, healthier and more stable a client is, the less work it is for the financial advisor.

My dad’s role has changed from an order taker to being able to use his full breadth of expertise. In the past, any staff he had were largely in place to help him generate more activity: clerical work, order entry, etc. Now, he manages a whole team of people that enhance the client relationship. When a client simply has a quick question or an order request, they don’t need to talk to my Dad, instead, they can talk to someone on his team. Thus, freeing up my Dad’s time to focus on the most complex issues.

My dad’s relationships with his clients are stronger than ever. He can now focus on complete financial health; not just growing assets and wealth, but maintaining and protecting what his clients already have. When clients have special needs, my Dad can coordinate with other specialists, from attorneys and accountants to art experts.

Plus, financial advisors and other entrepreneurs are free to innovate in whatever way will maximize value for the client. Individuals can now trade stocks on smart phones and people have access to a multitude of new financial tools.

When is our healthcare industry going to wake up and make a similar change? Fortunately, it is already happening at a relatively small level with the Direct Primary Care movement. Physicians are being paid for delivering value. Individual physicians and some medical groups like Qliance and Iora Health realize that value is not created by activity but by freeing those on the front lines to innovate and form as strong a relationship as possible with patients.

Achieving true reform does not occur through top-down mandates. Instead, I am arguing that the solution is rather simple: we need to free primary care physicians to innovate, compete and deliver value on their own, and the key to doing that is paying primary care physicians a flat monthly fee. It has worked for financial advisors and their clients all over America. And let’s be clear, such model is not returning to the bad parts of HMOs; if patients don’t like their physician, they should be free to choose another. Patients should not be locked into a HMO-like gatekeeper structure. Make physicians compete for business. If my Dad does not deliver value for his clients, the client will simply leave and find a better advisor.

If physicians still want to pursue ACOs on top of this payment arrangement, there is nothing to stop them; the two concepts are not mutually exclusive. In fact, I could write another post comparing ACOs and Population Health to managing a financial portfolio like a mutual fund or hedge fund.

In conclusion, implementing many reform ideas does not need to be complicated. A simple change in the payment model has allowed my Dad to work at the top of his expertise, manage a great team focused on delivering great value and service to his clients, and, most importantly, has made his relationships with his clients so strong that he is often invited to weddings and other life events.

When was the last time a primary care physician was invited to a patient’s wedding?

Stick to the fundamentals. That’s how IBM and Hilton were built. Good things, sometimes, take time. – Lou Mannheim (Hal Holbrook) in the movie “Wall Street”

18 replies »

  1. Thanks for the company names. I’ve been reading up on them today.

    I’m a big proponent of having skin in the game as it makes us think more about our choices. The idea of car insurance type insurance is a good one and one which I’ve used a few times. I see no reason why it shouldn’t be that way understanding there are certain limitations to some degree.

    My understanding is that the big insurance companies pay flat fees as well, but pay a higher amount on the fee itself. Aetna pays x, BCBS pays y, etc…..That would make up lots of that difference between them and a Paladina possibly?

    We have looked at the higher deductible programs, but I’m not sure how someone on such low salaries can afford it. The cost savings from what I’ve seen do not make up for the amount of money having to come out of a persons pocket for a deductible. At least in the plans I’ve seen so far.

    Even for myself, the costs are higher or so small, that it really doesn’t benefit anyone. The higher Out of Pocket even with the higher deductible didn’t translate to a reduction in premiums that one would think. I think mine, if all goes well, was approx. $300.

    Now, it could have been the provider, but I guess that goes right back to the differences in insurance companies paying their physicians x dollars, why the other guy pays y.

  2. Direct Primary Care by individual practices and networks like Iora, Qliance and Paladina, are realigning the health care incentives. Primary Care Physicians do well financially when their patients are well. This is done through flat monthly fees for primary and preventive care (with only minor ancillary charges).

    Health insurance then becomes like car insurance (it only covers catatrophic events and specialty care).

    Change happening physicians have looked into the abyss and found their character. InLight EHR can help….

  3. >>we need to free primary care physicians to innovate, compete and deliver value on their own, and the key to doing that is paying primary care physicians a flat monthly fee. It has worked for financial advisors and their clients all over America.>>

    Ok… I’m trying to understand how that squares with this in the same paragraph.

    “Make physicians compete for business. If my Dad does not deliver value for his clients, the client will simply leave and find a better advisor.”

    Not sure this is competing in a system. He’s kinda, sorta, but we’re putting a govenor on it, competing. If a person is truly competing, he/she would set a price, deliver a good and let the chips fall where they may. In this case, what you have is basic regulation of salaries, which seems counter ‘competition’, and more like socialistic controls.

    That’s not even going into whether the market your Dad works in is a true market or whether it’s manipulated with, and by computer programming and other things.

    With P/E’s at the rates they are, they would be considered horribly risky investments.

  4. You are correct
    That is why the assumptions in the projections are so conservative and hopefully we will deliver more than we promise
    Don Levit

  5. “With those type of actuarials the savings is virtually a mathematical certainty”

    Actuaries are not risk takers, let alone independent thinks and innovators.

  6. You can relate the 80/20 rule to anything
    I think the creator of the rule is a fellow named Pareto and it is known as the Pareto Principle
    When the rule follows in the particular circumstance of NPLH and Health Matching Insurance the savings naturally occur from Milliman’s quoting engine
    As you probably know Milliman is a very well respected actuarial firm
    With those type of actuarials the savings is virtually a mathematical certainty
    Don Levit

  7. “Eighty percent of the claims come from 20 percent of the pool”

    Is that unlike the Financial Industry where 80% of investor losers pays for 20% of financial institution winners?

  8. Financial advisors and other entrepreneurs
    are free to innovate in whatever way will maximize value for the client. When isl our healthcare industry going to wake up and make a similar change
    In addition to providing care that is truly valuable I agree with the author in that we need a change in our payment method
    What has not changed much is the 80/20 rule
    Eighty percent of the claims come from 20 percent of the pool
    In self funded plans it is not unusual for large employers to assume the first $100,000 of claims per person
    Reserves are set aside and premiums are paid into these reserves
    The trick is to have fairly low reserves each year so that more dollars can be invested into the company
    Due to the liquidity needs of the reserves many employers earn about three percent on their investments
    With Health Matching Insurance virtually every person in the eighty percent each year will earn more in accrued benefits than are paid out
    From the employer’s overall perspective it matters not which individuals are in the eighty percent or which are in the twenty percent
    At a guaranteed return of 35 percent for up to five years the employer’s pot gets smaller and National Prosperity’s reserve pot for the employer gets larger
    Each year the employer’s premiums needed for reserves gets smaller
    A 1600 life group we wrote recently has an
    immediate projected savings of $2 million a year

    To learn more go to nationalprosperity.com
    Don Levit

  9. My implicit point, I guess, was just the begged question as to who the “customer” is when it comes to primary loyalty and responsibility. Hardly an original thought with me, to be sure. If the doc is running her own shop, that’s one thing. Patient satisfaction will have to be key. “Patient-centered care” sure has a nice ring to it — and I agree with the P4P concept. The FFS paradigm cannot go away fast enough for me.

  10. @Bobby There are no shortage of Wall St. jokes, that’s for sure.

    There are certainly a lot of negatives with Wall St. If only there was one street or location we could use as a healthcare placeholder. If there was, I think it would have similar negative connotations.

    Old Healthcare joke:

    “The hospital made money, the specialist made money. Two out of three ain’t bad.”