Lon Records' frustration with health plans reached its zenith when one of his top employees was diagnosed with a heart condition.
"He needed bypass surgery, and he was being jacked around by his HMO," recalled Records, who is president of Target Specialty Products, a Santa Fe Springs, Calif.-based distributor of agricultural chemicals. The employee, the company's creative director, finally underwent surgery after he was moved into Target's PPO, but the incident convinced Records that his employees "needed to have an ombudsman in their corner."
So more than a year ago Target hired CareCounsel to intercede on behalf of Target's 105 employees whenever they have a problem with their health plan. "It's probably one of the most appreciated benefits we've been able to provide employees," said Records, who credits CareCounsel's presence with decreasing employee turnover.
Although San Rafael, Calif.-based CareCounsel is one of the few firms in the nation that provides employer-based patient advocacy, it appears to have plugged into a growing need among employers. Although founded only three years ago, it already serves more than 20,000 workers and has snagged some large employer groups.
Among the clients are Princeton, N.J.-based pharmaceutical manufacturer Bristol-Myers Squibb Co., for which CareCounsel handles retiree benefit issues, and cargo shipping coordinator Fritz Cos. in San Francisco, where CareCounsel works with about 4,000 managed-care enrollees.
For a cost of $1.50 to $2 per enrollee per month, CareCounsel will offer advocacy services such as clarifying a patient's benefits, helping a patient obtain quicker access to a specialist and walking a patient through a health plan's denial of care.
Filling a niche. "Managed-care systems tend to be rife with access problems and poor customer service," observed CareCounsel Chief Executive Officer Lawrence Gelb, a former managed mental health benefits consultant who often witnessed patient frustrations firsthand. "At the same time, more and more employers are tired of spending more money on benefits. Hearing and handling complaints can be very time-consuming."
Gelb's analysis isn't overwrought: A survey last spring of 150,000 managed-care enrollees by Lincolnshire, Ill.-based consulting firm Hewitt Associates found that 22% of respondents were dissatisfied with their coverage, up from 17% in 1997. Thirty-four percent of employers were displeased with their health plans' problem-solving ability, compared with 29% in 1996. Hewitt associate Marc Kaiser traced the rising frustrations to the flurry of complex mergers among health plans, which often are followed by a series of cost-cutting measures. The combination leaves consumers "to deal with their health plans' operational glitches, technical problems and confusion," Kaiser said.
Although most industry experts agree that patient advocacy firms for employers are few and far between, many think that will soon change.
Steve Richter, healthcare practice leader for consulting firm Watson Wyatt Worldwide, said he believes poor servicing by health plans is opening a "whole new opportunity" for employer-based patient advocacy firms. "Many firms have moved their employees from HMOs to PPOs or point-of-service plans in order to address complaints, but at a significant cost increase," he said. "Patient advocacy programs represent a much lower cost increase, and they don't have to shuffle their employees from plan to plan."
In the case of Fritz, its $60,000 annual expense to retain CareCounsel is minuscule, compared with the productivity burden it had previously placed on its human resources department, according to John Sequeria, the company's director of risk management.
"I challenge anyone to cost out having to internally handle the 700 or 800 employee phone calls we were getting each quarter regarding healthcare," Sequeria said. "Add to that the fact that our human resource employees are not completely conversant on all the issues, and they often had to make several follow-up phone calls. But with CareCounsel, they're for the most part totally conversant, so a whole bunch of answers can be provided right on the spot."
This type of praise has already prompted a patient advocacy firm for individuals, La Crescenta, Calif.-based American Medical Consumers, to begin seeking corporate clients. AMC is in talks to represent a municipality in Washington state. AMC President Vincent Riccardi, M.D., sees a bright future on the employer side of the business.
"Increasingly, employers are choosing plans that are smaller and smaller in scope," Riccardi said. "Human resources departments may not know all of the issues, and patients are concerned about protecting their confidentiality. There is going to be a need for this type of service."
A cautious response. Health plans, not surprisingly, are cautious in their response to this new service.
"The idea is something we are obviously learning about," said Susan Pisano, spokeswoman for the American Association of Health Plans. "The human resource departments at many businesses have traditionally played a role in navigating the healthcare system for their employees, and at first read this appears to be an enhancement of that role."
Watson Wyatt's Richter believes that patient advocacy firms will have to work collaboratively with health plans to defuse potential frictions.
And Eugene Winchester, M.D., a benefits consultant with William M. Mercer human resources management consulting firm, is concerned that employers are not benefiting financially from hiring an advocate: "My own feeling is that employers are already paying for managed-care organizations to perform certain functions and maintain standards in terms of access to care, so it's a shame if they and the patients have to pay twice to get the service they need," he said.