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Eye on the News

Paul Howard
Hello Health, Goodbye Hassle
Brooklyn’s innovative, insurance-free medical service is a model to follow.
12 January 2010

In the heart of Hipsterville, New York (that’s Williamsburg, Brooklyn) you’d expect to find microbreweries like the Brooklyn Brewery and trendy children’s clothing stores like Smoochie Baby. Within walking distance of both, however, you can also find Hello Health, a cutting-edge medical practice that doesn’t accept insurance but does offer instant messaging, email, video conferencing, and secure electronic medical records to its members.

Hello Health reflects the antiestablishment ethos that pervades Williamsburg. Dr. Sean Khozin, one of its founding doctors, explains that the practice was built on a conscious decision to drop out of the existing health-care payment system, which he believes drives up costs and strangles innovation.

“A lot of the stuff that physicians do today has nothing to do with delivering quality care,” he says. “It’s just paperwork to satisfy the needs of third parties—mainly insurers—that are outside the doctor-patient relationship. There isn’t any other profession where ‘third parties’ dictate so much what you can and cannot do. Most practicing physicians spend over 30 percent of their administrative costs just dealing with insurance companies—and that’s outside of any other costs they may have, like medical malpractice insurance.”

After graduating from medical school, Khozin quickly became discouraged by the depressing reality of day-to-day clinical practice. Primary-care physicians face low reimbursements from insurers and must navigate reams of red tape just to get paid. To compensate, they see dozens of patients every day, spending just a few minutes with each. Given the poor working conditions, many doctors opt for early retirement or more lucrative specialties, generating a national shortage of primary-care doctors. That shortage is bound to get worse, thanks to the millions of uninsured patients who will enter the system if, as seems likely, Congress passes legislation mandating that individuals buy health insurance.

Doctors aren’t the only ones feeling frustrated. It’s not uncommon for patients to wait weeks for an appointment with their physician, sit for hours in the doctor’s lobby, and then stutter out a few symptoms before the doctor disappears again, a blur in a lab coat.

Khozin turned to research and medical communications after completing his post-medical-school residency (he also has a degree in public health). He never lost his interest in helping patients or finding a better way to practice medicine. Eventually, he developed a partnership with Myca, a Canadian technology company, and launched Hello Health as a demonstration project. He aimed to create a new business model for medicine, “direct care,” that uses the Internet and social networking tools like email and instant messaging (IM) to connect doctors with patients while bypassing insurers and bureaucrats. Patients can search for doctors, find services and fees, and make appointments on the Hello Health website. Because they don’t accept insurance and use technology to streamline processes, Hello Health physicians have much lower overhead and can pass the savings on to patients. For instance, Khozin charges $35 a month for membership and $125 for office and video visits. Quick emails, texts, and IMs are free, as are some simple lab tests and up to two months’ worth of prescriptions for generic drugs. Other physicians using Hello Health can set their own patient-friendly fee schedules.

Hello Health appeals to patients who are uninsured or underinsured and need access to basic, affordable health care, or who have Health Savings Accounts coupled with a high-deductible health plan that covers catastrophic costs. HSAs allow patients to pay for routine costs out-of-pocket, encouraging them to shop for the best health-care values. Khozin is a big fan of the HSA model. “I think everyone should have catastrophic insurance, but let the market take care of routine care, which can be very cheap.”

The current system’s perverse incentives can lead to overutilization of expensive (and well-reimbursed) services that don’t lead to better outcomes and may even hurt some patients by exposing them to needless risks and side effects. “One of the main problems driving U.S. health care costs out of control is the fragmentation of care,” Khozin says. “Doctors are paid on a fee-for-service basis, not for diagnosing or managing illnesses to achieve better outcomes at lower cost.” Because Khozin and his colleagues get paid for their services in full at every session, they have no incentive to do anything more—or less—than what they think is in the best interest of their patients.

President Obama and many health-care experts like to hold up the Mayo Clinic as an example of the high-quality, low-cost, integrated-care model that the rest of the country should follow. At the Mayo Clinic, doctors work in teams and are paid in annual salaries rather than fee-for-service. But most physicians actually work in small practices (often with just two or three doctors), and it’s just too impractical and expensive to expect all of them suddenly to join large integrated practices

The Myca technology platform solves that problem by allowing primary-care physicians and specialists who don’t share the same offices to view patients’ health records in real time, discuss the patients’ history through email or IM, and ensure that care remains coordinated. “We’ve created true continuity of care,” Khozin notes, “and strengthened the doctor-patient relationship, which, at the end of the day, is what chronic care management is all about.” Technology also improves care management by putting doctors and patients in regular communication and enabling doctors to monitor their patients’ progress and make recommendations that can improve outcomes.

Will the Hello Health model survive the health-care legislation winding its way through Congress? Khozin is cautiously optimistic: “We need to find different ways of delivering care, and the direct-care model we’re developing is one of the most viable ways to fix the primary-care system.”

Regulators and policymakers have a lot to learn from what physicians like Khozin are doing. Rather than trying to dictate health-care arrangements from the top down, innovators like Hello Health are creating and bundling services that patients want and can afford. That’s about as hip as it gets, in Brooklyn or anywhere else.

Paul Howard is director of the Manhattan Institute’s Center for Medical Progress.

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