How Your Company Can Bypass The Health Insurance Companies

When it comes to providing health benefits to your employees, sometimes it pays to call the doctor instead of an insurance company.

By Karharine Grayson

That was the case for small-business owner Terry Tumulillo, who couldn’t afford to buy health insurance coverage for the six contract court reporters who work for her communications company, VoicePrint.

Instead, she contracted directly with R-Health, a Philadelphia-based startup health care provider that offers primary care services to individuals and businesses.

Tumulillo covers the cost of a $79 monthly R-Health membership for each employee. Those workers can then visit R-Health doctors without paying an additional per-visit fee, or video-chat with physicians if an in-person consultation isn’t necessary.

“It’s a way for me to provide some kind of medical benefit without paying $12,000 for traditional benefits,” Tumulillo said, adding that the R-Health membership is a great fit for her employees partly because of their ages — too old to be covered by their parents’ health plans but not old enough to have developed serious health problems.

R-Health is one of a growing number of health providers nationwide pitching direct primary care services to employers. Other players include Qliance in Seattle, Medlion in Las Vegas, and MultiCare Associates in Minneapolis.

Businesses that direct contract for primary care services don’t need health insurance, but many choose to offer employees a high-deductible health plan that can cover expenses for care associated with serious illnesses or conditions.

(For companies with more than 50 employees, just signing up for a program like R-Health won’t meet the Affordable Care Act’s insurance requirements, once those are implemented.)

While entrepreneurial groups like R-Health will contract with small employers, large health care systems are less likely to do the same. That’s largely because small employers can’t deliver health systems enough customers to gain bargaining power.

However, smaller employers can band together as a group to contract with health providers. One example is the Savannah Business Group in Savannah, Ga., which offers members access to two hospitals, a network of physicians, and a range of other services.

The group has even negotiated some unusual perks for its members. For example, one hospital it contracts with offers a free car seat to women who deliver babies there.

Mid-sized companies also can use direct contracting as an alternative to building an on-site medical clinic.

For instance, Delano, Minn.-based playground-equipment maker Landscape Structures partnered with Ridgeview Medical Center, a health system that has a clinic less than a mile from the company’s headquarters. As part of the deal, the company covers the cost of employees’ primary care visits at the nearby clinic and other Ridgeview facilities.

The arrangement gives the company the biggest perk of on-site medical clinic — easy health care access for employees — without the up-front costs of building clinic space.

In addition, Ridgeview agreed to coordinate care for patients with the goal of improving their health and lowering costs.

Employers also can direct contract with health providers for certain types of care. For instance, some large companies, including Wal-Mart Stores, contract directly with Cleveland Clinic for certain heart procedures.

Mid-sized employers that self-fund their benefits may be able to strike similar arrangements with independent specialist groups for deals on pricy procedures like knee replacements.