Doing good
This is what the future of health care looks like
Free Enterprise | May 17, 2016

The health care group WellMed has done the seemingly impossible: Using significantly less money than its peers, it’s figured out how to help people live healthier, longer lives. Doctors love it. Administrators love it. Policy wonks love it. But how does it work?

The labyrinth that is U.S. health care

Navigating the U.S. health care sector is not unlike trying to find your way out of a maze. It’s a convoluted system that features layer upon layer of bureaucracy, regulations, and divisions of care. Meanwhile, health care costs have risen far faster than the rate of inflation, a trend that has only begun to slow within the past few years amid ongoing efforts to reign in out-of-control spending.

The road ahead looks just as precarious, as more and more Americans turn 65 and older, a cohort that, for a multitude of reasons, is requiring more and more care, taxing an already overtaxed system.

That’s why so many physicians and industry watchers are increasingly captivated by what the accountable care organization (ACO) WellMed has accomplished in its 25 years of existence. Now operating in both Florida and Texas, the company remains a pioneering force in medicine.

A different approach to health care

Founded by Dr. George M. Rapier, WellMed looks at health care holistically. This might not sound revolutionary. But, given the fragmented and often dysfunctional U.S. health care system, it’s revelatory.

At the center of the WellMed universe is the relationship between a patient and his or her primary care physician (PCP). This is strikingly different from how health care is typically administered in the U.S., WellMed Medical Group president Dr. Carlos Hernandez tells Free Enterprise. “The problem is today’s method in the U.S. for delivering care is called fee-for-service,” Hernandez explains.

“That means if I do something, then I get paid for it; if I don’t do anything, then I don’t get paid for it. That leaves a gaping problem in terms of coordination and communication: There is none. In the best-case scenario, specialists would communicate with the primary care physician about a particular patient. But the truth of the matter is that communication does not exist today, so people are having duplicative services and medications and redundant care. All of that can lead to adverse outcomes.”

Better outcomes, healthier patients and happier physicians

WellMed has a unique way of compensating its doctors.

Federal laws enable ACOs with at least 5,000 Medicare patients to enter into a relationship that entitles them to 60% of the health care savings they generate, according to the New Yorker. WellMed uses that money to invest in infrastructure and technology and for performance bonuses for its PCPs.

This kind of system can have a profound impact on both health care savings and physicians’ pay. For example, the New Yorker cites two Texas primary care groups that similarly adopted a PCP-centric model. After only two years, the combined practices—which treat some 14,000 patients—were able to save Medicare more than $26 million, two-thirds of which its physicians directly pocketed.

Even after investing in capital improvements, the physicians’ average yearly salary rose to nearly $800,000, Dr. Atul Gawande noted in the article, “Overkill.” That figure is more than four times the median general practitioner salary, which, according to the Association of American Medical Colleges, stands at $180,000.

Though its physician salaries don’t reach the $800,000 range, WellMed does compensate its practitioners handsomely, with many earning far more than they would at other health care providers. “These doctors earn it,” Hernandez says.

“They’re just like anybody else and earn a base salary. The incentives are based strictly on the quality of care and the outcomes the patient gets. The PCP is always striving to take the best care he or she can of a patient. And again, that’s the way it really should be. When a patient gets better care, it costs less, and we can pay those incentives back to the physician.”

More doesn’t mean better

Ordering multiple tests and other unwarranted procedures has the potential to not only harm a patient, but also drive up costs. Take CT scans, a crucial diagnostic tool whose use is recommended for specific, clinically determined conditions. Even so, many Americans undergo unnecessary scans every year, often because of simple communication problems that arise during the coordination of care.

Yet these sorts of ostensibly minor mistakes can exact a heavy cumulative toll. Consider CT scans, which release radiation—sometimes equivalent to that of 200 chest X-rays, according to Consumer Reports—that can put a person at a heightened chance for developing cancer after repeated exposure. The practice of medicine demands a careful, and continual, balancing of this sort of risk-benefit analysis.

A model that delivers better health outcomes

To empower its physicians to make the best care decisions, WellMed strategically places PCPs at the heart of an individual patient’s care. In doing so, WellMed goes against the fee-for-service paradigm, through which doctors are paid based on a quantitative—rather than qualitative—scale.

“We operate under a fee-for-value, outcome-based, primary-care-driven, gatekeeper model,” Hernandez says.

WellMed physicians do not have the same kind of nonstop schedules to which practitioners at other health care providers have become accustomed. “We’re interested in the outcomes a doctor is getting versus the number of patients he’s seeing,” Hernandez says.

Apart from helping prevent physician burnout—an endemic problem in the U.S. medical system—WellMed’s approach also delivers better outcomes. This is something that researchers have conclusively shown. According to a federally funded study published in The Journal of Ambulatory Care Management, Texas seniors who were enrolled in Medicare Advantage and treated at WellMed were significantly healthier their peers, whose mortality rate was twice as high.

Another factor that distinguishes WellMed is how its administrators and clinicians seamlessly work together. This relationship can often be strained or combative, depending on the health care organization. But Bryan Grundhoefer, the president of WellMed Medical Management, tells Free Enterprise that creating a harmonious working environment boils down to a very straightforward concept. “It’s real simple: I work for Dr. Hernandez,” he says, laughing.

“It’s about creating a mindset that the physicians are not employees. It truly is the doctors who are making the decisions, so we don’t allow other types of relationships to get in between that.” he adds. “They are patient advocates, filling a vital role in the organization. We want them to feel like that, and that’s how we try to orient it, so they feel like they are making the decisions, that they are leading the organization, and that they are truly able to fill that patient advocate role.”