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Company Helps Physicians Leave Third-Party Payment System

November 1, 2019

A new company is helping free physicians from the “hamster wheel” of the third-party health insurance payment system.

Freedom Healthworks opened its doors in 2016 as a professional organization to help physicians open direct care practices, such as direct primary care (DPC). Since then, the company has expanded into a full-grown operation with a medical director, communications team, and vision to expand well beyond its Indianapolis, Indiana home base.

“We recognized there was a hunger among physicians, so we built a platform that would help physicians transition to the DPC model,” said Adam Habig, cofounder and president of Freedom Healthworks and a policy advisor to The Heartland Institute, which publishes Health Care News.

‘Only Appealed to Mavericks’

Habig and his brother, Christopher, who cofounded the firm, bring a personal perspective to their line of work. Their parents, physicians, retired early because of burnout caused in large part by the struggle to comply with government regulations and with rules for third-party reimbursements. The increasing bureaucracy was taking time from patients.

Instead of following in their parents’ footsteps to become doctors, the Habigs thought they could better serve the profession by becoming entrepreneurs focused on independent practice. The first thing they did was tour the country to talk with physicians.

“We found if there were 100 physicians who made the leap, so to speak, there were 100 different paths through the metaphorical weeds,” said Habig. “There was no systematic approach to finding best practices or even following them. And because that was the case, it really limited the appeal to the direct model. It only appealed to mavericks who were comfortable with a little risk, and that did not appeal to a majority of physicians.”

One-Stop Shop

With the help of Risheet Patel, M.D., the company’s medical director, the Habigs developed a system that can help physicians open up a direct care practice more quickly and cheaply. On their listening tour, the Habigs learned starting a DPC practice could cost $300,000 and take three years. Freedom Healthworks offers a program that can reduce the costs to about one tenth of that, says Habig.

“It’s equivalent to building your own house or hiring someone who knows how to do it,” said Habig.

The company also helps physicians build a patient base and market their practices. Ultimately, Freedom Healthworks hopes to create a network of independent physicians so independent practices can become even stronger.

“Doctors don’t want to feel like they’re operating on an island,” said Habig. “By linking them together under the Freedom Healthworks umbrella, we can create a community which can provide mutual support structures.”

Improving Regulatory Climate

One development that has helped increase direct care is the growing number of states with laws declaring direct primary care is not insurance. Laws exempting independent practices from insurance regulation are critical for growth, says Phil Eskew, a physician, attorney and founder of DPC Frontier.

“When states define DPC as outside of insurance, they send a signal to risk-averse physicians that this model is accepted,” said Eskew. “These same physicians benefit from lower legal start-up costs as well, since they feel less pressure to pay an attorney to read through the insurance code.”

DPC Frontier monitors the enactment of such laws and posts on its website a map showing 27 states as having favorable laws. The organization also keeps an eye on other laws that can impact direct care growth, such as allowing physicians to “opt out” of Medicare and Medicaid , to dispense pharmaceuticals , and to get more competitive prices for laboratory services, where wholesale prices can be obscured by cost-shifting.

There have been welcome reforms at the federal level too. This summer, the Trump administration approved a new rule that opens the door for more employer health insurance options through health reimbursement arrangements. Additionally, President Donald Trump issued an executive order to start the process that will allow tax-advantaged health savings accounts to pay for DPC services.

Reaching Out to Employers

Habig says he hopes as more and more direct care practices open, an increasing number of employers will offer independent care to employees.

“If you have 100 employees with dependents, you’re going to have a hard time finding a big enough practice to accommodate an entire business,” said Habig. According to DPC Frontier, there are 383 DPC practices in the country. “To offer DPC with their health benefits, employers need a network, and that doesn’t exist today,” said Habig.

Habig says DPC will save employers money because it enables doctors to spend more time with patients.

“Research shows that by actually increasing the frequency of contact at the primary level with a single doctor, not with a rotating battery of staff physicians, it will drive down the incidence of specialty visits and hospitalizations down the line.”

Breaking Barriers

A shift to more consumer-driven health care will not happen overnight, says Habig.

“There is a lot of vested interest in the current $3.5 trillion-a-year system,” said Habig. “There are so many today who are functionally uninsured who won’t get the care they need, no matter what their health insurance ‘covers.’

“A hefty deductible will compel consumers to shop smarter, but at the same time, it’s also a barrier to care,” said Habig. “We want to make sure the high deductibles are not a barrier to seeking out the ‘front-line’ care that can make a huge impact on costs down the road.”

 

AnneMarie Schieber (amschieber@heartland.orgis managing editor of Health Care News. Leo Pusateri(psycmeistr@fastmail.fmwrites from St. Cloud, Minnesota.

Article Tags
Health Care
Author
Leo Pusateri writes from St. Cloud, Minnesota.
psycmeistr@fastmail.fm
Author
AnneMarie Schieber is a research fellow at The Heartland Institute and managing editor of Health Care News, Heartland's monthly newspaper for health care reform.
amschieber@heartland.org @HCPolicy