Primary Care as a Platform For Full Continuum Health Care Risk Management

Abstract: Health care clinical and financial risk is a multivectored problem, requiring multivec-
tored solutions that extend beyond primary care. Worksite clinics have emerged that leverage

empowered primary care, but incorporate a range of tactics aimed at driving appropriate care
and cost by disrupting health care’s perverse incentives. This article describes some of those
approaches and shows evidence of the performance that can result. Key words: Brian Klepper,
health care clinical and financial risk, medical homes, medical management, primary care,
worksite clinics
E VERY FEW YEARS a new health care
structure emerges in response to market
vacuums or the industry’s excesses. In the

1970s, third party administrators arose to pro-
vide transactional and medical management

services for self-funded employer health plans
(Department of Labor Employee Benefits
Security Administration) newly established

under the Employer Retirement Income Se-
curity Act. The Affordable Care Act provides

funding for Consumer Oriented and Operated
Plans (James, 2013)—health plans exclusively
owned and managed by their members rather
than commercial health plans.
Worksite primary care clinics are an
increasingly popular service for mid-sized

Author Affiliations: WeCare TLC, LLC, Longwood,

Dr Klepper is a Principal and Chief Development Offi-
cer in WeCare TLC, LLC, a worksite clinic and medical

management firm with clients nationally.

The author has disclosed that he has no significant rela-
tionships with, or financial interest in, any commercial

companies pertaining to this article.
Correspondence: Brian Klepper, PhD, WeCare TLC,
LLC, Longwood, FL 32750 (Brian.Klepper@WeCareTLC
DOI: 10.1097/JAC.0b013e3182a45077

and large employers interested in promoting
better population-level health, reduced health
costs, and increased productivity. In most
current configurations, they sit in front of,
are independent from, but influence use of
the employer’s health plan.
Their financial impacts accrue through
2 broad mechanisms. Most provide lower
replacement costs for services—for example,
office visits, drugs, labs and x-rays—that
previously were provided through the health
plan network. But the bigger opportunity
is to drive appropriateness, cutting through
the current system’s perverse incentives, and
changing patients’ care and cost patterns
throughout the care continuum. Other
authors have described similar models. In
the New Yorker, Atul Gawande described

(Gawande, 2011) how Rushika Fernandop-
ulle produced better care at lower cost with

groups of high-cost chronic patients. In the
April/June issue of this journal, Jerry Reeves
and Brian Kapp wrote (Reeves & Kapp, 2013)
about their population health management
successes using strong carrots and sticks.
The most progressive vendors in this space
establish comprehensive primary care group
(and possibly occupational) health services

Copyright © 2013 Lippincott Williams & Wilkins. Unauthorized reproduction of this article is prohibited.

LWW/JACM JAC200245 August 22, 2013 15:46

Full Continuum Health Care Risk Management 281

and then enhance that footprint with a range
of management approaches that address a
wide range of health care clinical and financial
risks. This approach aligns with the interests
of the patient and purchaser rather than the
vendor and provides a fresh spin on the best
health care management lessons of the past
35 years. Vendors with this orientation are
likely to pursue two goals: (1) Facilitating

better care and health for patients and (2) Pro-
tecting the financial interests of purchasers.

A core premise here is that a tremendous

percentage of health care activity is inappro-
priate and has evolved to exploit patients and

purchasers. A 2008 PwC study (Pricewater-
houseCoopers, 2008) estimated that 54.5%

of all health care expenditures (about $1.5
trillion annually in 2013) provides zero value,
a figure that, working in the field, my firm’s
team has come to believe may be low.

After all, over decades, health care’s play-
ers have devised scores of ways to extract

large sums that they are not legitimately
entitled to. Aside from the more well-known
mechanisms—egregious unit pricing and
excessive overutilization of lucrative services
(like cardiac stenting [Stergiopoulos & Brown,
2012] and complex spinal surgeries [Deyo
et al., 2010])—there are many more subtle
and less well-appreciated devices. A few

examples: Health plans buy stakes in pharmacy ben-
efit management companies, significantly

increase the pricing on generic drugs, use
the margins as a revenue stream, and then
tell their clients they are managing their

Health systems put primary care physi-
cians into the field, but incentivize refer-
rals into the system for diagnostics and

procedures at much higher reimburse-
ments than can be obtained in ambulatory

Health plans take on responsibility for
management of high-cost cases but
devote little real energy to oversight,
enforcing higher costs.

Health plans promote the “choice” inher-
ent in yellow pages provider networks,

failing to discriminate between high and

low performing physicians and services,
as though the right to go to providers
that deliver poorer outcomes at higher
episodic cost benefits patients.

The market opportunity, then, is to estab-
lish mechanisms that disrupt the structural

supports of health care abuse and distortion.
Employers seek solutions that, over time,
improve quality and return more money than
they cost.

The mechanisms listed below are not ex-
haustive but are intended to give a sense of

changes in practice that can yield dramatic
improvements in performance.
Outside fee-for-service reimbursement

Several clinic vendors have abandoned fee-
for-service reimbursement as a way of demon-
strating to their employer clients that they

have stepped away from financial conflict in
the delivery of care.
In this approach, all operational costs—for
clinicians, medical and office supplies, drugs,
labs, insurance, utilities—are passed through
without a markup, and a per employee (or
per member) per month management fee is

charged. This means that clinicians have no fi-
nancial incentive to deliver unnecessary care

(or to deny necessary care). Clients judge per-
formance, based on measurable changes to

population health outcomes and cost, which
means that the only incentive is devising
mechanisms that drive appropriateness, not

only in the clinic, but downstream through-
out the continuum.

In other words, unlike most of health care,

in which providers are financially incen-
tivized to deliver as many products/services

as possible, these clinic vendors are paid to
manage a process. It is a profoundly liberating
and potentially disruptive innovation.
Eliminating barriers to primary
care access
If one is trying to optimize care and cost,
then access is crucial. Conventional wisdom

Copyright © 2013 Lippincott Williams & Wilkins. Unauthorized reproduction of this article is prohibited.

LWW/JACM JAC200245 August 22, 2013 15:46


notwithstanding, it makes little sense to estab-
lish barriers to primary care access.

To that end, many clinic vendors have
established clinic services that are “free” to
patients. Patients using the clinics pay nothing
for office visits, standard drugs, laboratories,
or x-rays. This encourages participation and

allows the clinic staff to engage patients, man-
age their care, and advocate for them through-
out the health system. Strong incentives can

translate to two thirds or more of employees
and dependents participating in the first year,
with rates becoming even stickier over time.
These participation levels are crucial to get
traction over larger health plan costs.
Clinical care led by physicians and
supported by nurse practitioners
Many vendors offer clinics led by nurse
practitioners, claiming that they are “cheaper
but just as good” as physicians. In fact, there
is evidence (Horrocks et al., 2002) that nurse

practitioners can provide equal or better “rou-
tine care” than doctors. But physicians, with

much deeper training, are better at identi-
fying and managing complex patients, who

typically generate the greatest costs. Some
clinic vendors are migrating to a combination
of physicians and extenders, segmenting risk
and allocating patients according to clinical
need, but with sensitivity to continuity.
Empowered primary care
Over the past 20 years, primary care’s

decreasing valuation by the American Med-
ical Association’s Relative Value Scale Up-
date Committee in Medicare (Klepper, 2013),

combined with commercial health plans’ de-
clining reimbursement, have materially al-
tered primary care practice. Physician patient

panels now routinely exceed 2500 patients,
which translates to average visit times of 12
minutes or less. Rushed visit durations have
doubled specialty referrals (Barnett, 2012)

over the past decade, almost certainly fuel-
ing unnecessary diagnostics and procedures,

with associated increases in patient risk and
purchasers cost.

Stepping outside fee-for-service allows pa-
tient panels of 1600 patients and 20 minutes,

changing this dynamic, with reductions in un-
necessary specialty visits, outpatient diagnos-
tics, and procedures. Patients are exposed to

less unnecessary risk and purchaser pay less
for improved outcomes.
Evolved health IT infrastructure

In addition to a fully-functional elec-
tronic health record, effectively managing

population-level health requires systems that
can seamlessly receive (and send) health
risk/biometric profile data, medical/surgical
claims records from health plans, medication

claims records from pharmacy benefit man-
agements, and utilization/disease manage-
ment information from medical management

vendors. Clinicians and patients can benefit
from analytical tools that identify and segment
risk levels of patients with chronic disease and
those who are at high risk for an acute event. A
host of other clinical data—for example, care
gaps, other services accessed by the patient—

can inform diagnostic and treatment plan de-
cisions. Selected information from the clinical

record should also be reflected into a personal

health record that is easily available to the pa-
tient through a Web portal.

Employers investing in clinics do not
merely seek reduced primary care costs, but
lower overall health plan costs, accompanied
by improved health status and productivity
As important as empowered primary
care is, it still is not adequate to address
many of these issues. Any meaningful effort
to address health care excesses must also
focus on the avoidance of unnecessary care,
on management of high cost cases, more
efficient acquisition of high value products
and services, development of data-driven
high performance networks, strong patient
incentives to adhere to approaches that are
proven to work, and other mechanisms.
Primary care provides the foothold, but the

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LWW/JACM JAC200245 August 22, 2013 15:46

Full Continuum Health Care Risk Management 283

activity must then be extended to a variety of
other clinical and business practices.
The following charts represent actual case
studies, representing one clinic vendor’s
financial impact. (Quality outcomes impact

will be covered in a separate article.) Employ-
ers range from 440 to 3000 employees and

have had clinics deployed between 18 and
36 months. Notes on the methodology are as
follows: The analyses show per employee per
month cost over time, including medical/
surgical claims and drug claims prior
to clinic implementation, then adding
clinic operational and drug costs post

The analyses use a 12-month rolling av-
erage of per employee per month costs.

This approach smoothes volatility in the
claims experience, but may hide some

All data are presented without catas-
trophic claims, or “shock losses.” In

this case, shocks are episodic claims
of $50,000 or more that accrue to an
individual patient over 1 year. Unless
a clinic vendor is allowed to manage
high-cost claims, it is difficult to positively
impact shocks in the first 3 years, since
trauma cannot be avoided and chronic
events have been percolating for years.
After year 4, shock losses should decline,
because of more aggressive chronic
disease/lifestyle management.
Cost data are framed against the Milliman
Medical Index (Mayne et al., 2013)
for 2010-2012, which averaged 7.2%
nationally for total health expenditures
for a family of 4, including employer
contribution, employee contribution,
and employee out-of-pocket expenses.
Case Study 1. Manufacturer–Union
Currently 1239 employees.
Clinic implemented April 2010, 37 months
of postimplementation claims data.





12 Mo Total PEPM Cost Less Shocks + Clinic + Clinic
US Trend: Milliman @ 7.2%
US Trend: 1.5x Milliman @ 11%

Case Study 2. Assembly Plant
Currently 2956 employees.
Clinic implemented August 2011, 21
months of postimplementation claims data.





12 Mo Total PEPM Cost Less Shocks + Clinic + Clinic Drugs
US Trend: Milliman @ 7.2%
US Trend: 1.5x Milliman @ 11%
Local Trend: @ 21%

Case Study 3. Manufacturer
Currently 658 employees.
Clinic implemented November 2010, 30
months of postimplementation claims data.




12 Mo Total PEPM Cost Less Shocks + Clinic
+ Clinic Drugs
US Trend: Milliman @ 7.2%
US Trend: 1.5x Milliman @ 11%

Copyright © 2013 Lippincott Williams & Wilkins. Unauthorized reproduction of this article is prohibited.

LWW/JACM JAC200245 August 22, 2013 15:46

Case Study 4. Local Government
Currently 440 employees.
Clinic implemented October 2011, 19
months of postimplementation claims data.





12 Mo Total PEPM Cost Less Shocks + Clinic + Clinic
US Trend: Milliman @ 7.2%
US Trend: 1.5x Milliman @ 11%


Note that, except for case study 3, all analy-
ses show the same curve, with costs rising

for 6 to 14 months postclinic implementa-
tion and then plummeting. This is due to a

release of pent-up demand. All client groups
have coverage with copays, so a significant
portion of each population has health needs,
but it avoids care for fear of cost. By contrast,
patients come in droves to a free clinic. Unmet

needs are diagnosed, followed by specialty vis-
its, drugs and, sometimes, procedures.

In other words, the clinic vendor walks into
a situation that has been festering for years

and must work to get control of it. After some
period of time, costs drop precipitously and
consistently move to far less than projected
using the very conservative Milliman Medical
The same medical management model was
used in all 4 cases, and it appears to work.
The cost change curves are consistent across
cases, yielding significantly lower cost. There
are also improved quality outcomes, though
those data are not shown here.

These financial impact data are the tip
of the iceberg. Health care is brimming
over with inappropriate care and cost.

The model described here has demon-
strated that cost can be lowered signifi-
cantly with associated quality improvements.

There is an opportunity to exploit these
market vacuums much further, for great

US health care cost drivers are a multi-
headed monster, driving excess and inappro-
priate care and cost. The recent emphasis on

primary care is well-founded, but not enough.
Managing risk requires broad, multivector risk

management, based in primary care, but ex-
tending out through multiple vectors. This ap-
proach can prove transformative and holds

promise in any environment in which a health
plan sponsor is at risk: for example, Medicare
Advantage, Medicaid Managed Care, Indigent

Barnett, M. L. (2012). Trends in physician referrals in
the United States, 1999-2009. Archives of Internal
Medicine, 172(2), 163–170.

US Department of Labor, Employee Benefits Security Ad-
ministration. (2013). Understanding your fiduciary

responsibilities under a group health plan. Washing-
ton, DC: Employee Benefits Security Administration.

Deyo, R. A., Mirza, S. K., Martin, B. I., Kreuter, W.,
Goodman, D. C., & Jarvik, J. G. (2010). Trends, major
medical complications, and charges associated with

surgery for lumbar spinal stenosis in older adults.
JAMA, 303(13), 1259–1265.
Gawande, A. (2011, January 24). The hot spotters. The
New Yorker, pp. 41–51.

Horrocks, S., Anderson, E., & Salisbury, C. (2002). System-
atic review of whether nurse practitioners working in

primary care can provide equivalent care to doctors.
BMJ, 324, 819.
James, J. (2013). The CO-OP Health Insurance Program.
Health Affairs Blog. Retrieved from http://www.

Copyright © 2013 Lippincott Williams & Wilkins. Unauthorized reproduction of this article is prohibited.

LWW/JACM JAC200245 August 22, 2013 15:46

Full Continuum Health Care Risk Management 285
Klepper, B. (2013, February). The RUC, health care
finance’s star chamber, remains untouchable.
The Health Affairs Blog. Retrieved from http://

Mayne, L., Girod, C. S., & Weltz, S. A. (2013, May 22).
Milliman medical index. Seattle, WA: Milliman Inc.
PricewaterhouseCoopers. (2008). The Price of Excess:

Identifying Waste in Healthcare Spending. Washing-
ton DC: PwC Health Research Institute.

Reeves, J., & Kapp, B. (2013, April/June). Im-
proved cost, health, and satisfaction with a

health home benefit plan for self-insured em-
ployers and small physician practices. Jour-
nal of Ambulatory Care Management, 36(2),

Stergiopoulos, K., & Brown, D. L. (2012, February).
Initial coronary stent implantation with medical
therapy vs medical therapy alone for stable coronary

artery disease: Meta-analysis of randomized con-
trolled trials. Archives of Internal Medicine, 172(4),


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