A new health insurance company is attempting to cure what ails the managed-care industry by marketing a health plan owned by medical professionals.
So far, Concert Health Plan has attracted more than 5,000 enrollees, less than a year after the Oak Brook-based insurer was founded by 38 physicians and two pharmacists.
Concert’s owners attribute the plan’s growth to suspicions they believe consumers have about health maintenance organizations run by business managers.
“We want to bring the values and integrity of the medical profession into the managed-care end of health insurance,” said Dr. Kianoosh Jafari, a gynecological oncologist and chief executive of Concert. “Even though this is a big undertaking, it is worth the challenge.”
Other providers of medical care have formed health insurance companies but have lacked staying power in an industry dominated by much larger players.
Two of the Chicago area’s largest providers–Advocate Health Care of Oak Brook and Rush-Presbyterian-St. Luke’s Medical Center–operated HMOs before selling out to managed-care conglomerates in recent years. Advocate and Rush now say their focus is on providing, rather than paying for, medical care.
But Concert is avoiding the HMO business in favor of less-restrictive products such as a preferred provider organization. Unlike HMOs, PPOs don’t require subscribers to receive referrals to specialists from primary-care physicians, known as gatekeepers.
Concert also plans to stay competitive with larger plans by outsourcing claims and bill-collection functions, which often add to a health plan’s administrative expenses.
“We have a model that allows choice between a PPO and a selected provider organization, which means that they can select a smaller network [of medical-care providers] and get higher benefits,” Jafari said. “They can also go to anybody they want, but they may pay a higher portion of the bill.”
Yet Concert’s somewhat smaller menu of doctors and hospital choices could be a liability to attracting large employers.
With 168 hospitals and 17,000 physicians, Concert’s network is smaller than those of the area’s giant insurers like Blue Cross and Blue Shield of Illinois’ PPO and its network of nearly 200 hospitals and more than 24,000 physicians.
But Concert executives say they are marketing to small and medium-size employers, with between two and 250 workers.
Because Concert is offering such choices, employers will find costs “12 to 14 percent” higher than HMOs that restrict doctor and hospital offerings, said Monty Eaton, Concert’s executive vice president. “We believe people are willing to pay for the selection of doctors,” Eaton said.
The company also boasts of plenty of cash to expand its products.
Jafari, 37 other physicians and two pharmacists have so far spent more than $3 million to launch Concert. “We have a verbal commitment for another $6 million and believe more physicians will join us as we show growth,” Eaton said.
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No Alternative: Alternative Health Partners, which operated a non-profit clinic in Chicago’s Uptown neighborhood for more than a decade, has pulled the plug, citing a lack of revenue and an ill-fated attempt to form a for-profit company.
Alternative Health is now negotiating with several undisclosed organizations to ensure that its more than 800 clients continue to receive treatment, said Rick Horwitz, a board member who volunteered to lead the organization after the previous executive director resigned in December.
Alternative Health had been trying to treat a broader base of patients in recent years after a long history offering alternative therapies to people with human immuno deficiency virus, which causes AIDS. Before it went beyond HIV care, the organization was called AIDS Alternative Health Project.
Yet the move away from only AIDS therapies also brought about a change in management philosophy that included the creation of a for-profit company to raise money to support the non-profit arm of the organization, Horwitz said.
But Horwitz said the creation of the for-profit entity never really took off. The organization also was strapped at a time grant money for AIDS care became scarce and donations to the organization for services had fallen off.
“We ran into a string of bad luck,” Horwitz said. “We have always been operating at very minimal margins for the last six years that I have been on the board. If we can now get an attorney to help us pro bono, we will file for bankruptcy.”
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