Twenty-one months have passed since its inception, but one company's new take on managed care has yet to be shared with most healthcare providers outside of its own board room.
Vivius' vision is revamping the way patients choose and pay for their doctors. At a time when criticism of HMOs is rampant, that vision has appeal. But charting real progress could be a challenge as the company's leaders butt heads with an industry model that has been in place for almost 20 years.
At the moment, Vivius has no enrollees, either directly or through joint ventures with other insurers.
When Vivius Chairman Howard Wizig invented the concept for his new company, he said he asked himself this: "Why do we need an HMO employee sitting in a cubicle 600 miles away deciding what doctors I want?" To answer the question, Wizig said he created Vivius, which enables employees to select their own network of doctors and pay monthly fees using employer-provided vouchers. It also involves physicians doing something they have rarely done before: set their own rates for the services they provide.
From Vivius' perspective, the company is in a development mode that will accelerate with two test markets this fall. For others, the company's novel approach has the potential to rile physicians by forcing them into a new kind of competition.
Here's roughly how it will work: Employees visit a Web site to choose physicians in 22 categories of care. Since each doctor charges his or her own rate, employees' choices affect the amount of their monthly premium. If funds are left over once they've been allocated to the chosen panel of physicians, employees can place that money into a medical savings account and use it for other healthcare services.
Anytime the employees need to visit one of their chosen doctors, they do so-and pay a self-determined copayment that in turn adjusts the monthly premium. For example, paying a higher copayment will result in a lower premium, and vice-versa.
If the care necessary doesn't fit into one of the 22 preselected categories, a "wraparound" plan will cover it, but with a deductible that can be as high as $1,000.
Vivius' model "has the potential to be confusing," said Greg Scandlen, senior fellow of health policy for the Dallas-based National Center for Policy Analysis. "I don't think most people understand the difference between an optometrist, an ophthalmologist and an optician. They have to make those kinds of judgments."
Wizig says that's not a problem because Vivius will prevent confusion by providing brief, easily understood descriptions of each type of doctor. "Patients have not had the opportunity to be good consumers in the past and therefore haven't been as informed as we hope they will be in the future," he said.
Last September, Modern Healthcare featured Wizig as one of its "Up and Comers," a distinction given to young healthcare executives and pioneers.
To execute its strategy, Vivius will not offer coverage directly to employers or consumers. Instead, the company's plan is to partner with managed-care plans and persuade them to offer the Vivius option in their product portfolios. So far, one company, Coventry Health Care in Bethesda, Md., tentatively has agreed to do that.
Its partnership with Vivius, a Coventry spokesman said, is in the "very early stages" and it is unclear when and to what degree Coventry will adopt the Vivius model. He declined to comment further.
Officials said Vivius, based in St. Louis Park, Minn., is also in discussions with other sponsoring carriers but declined to name any of them. Vivius is a for-profit company owned by investors including Delphi Ventures in Menlo Park, Calif., and Acacia Venture Partners in San Francisco.
Some 2,000 physicians in Minneapolis and nearly 1,500 in Kansas City-Vivius' test markets-have signed on to participate in the plan. Those doctors are in a holding pattern as Vivius prepares for a fall rollout of its health plan in the two Midwest cities.
If Vivius' plan comes to fruition, company officials said, it will create a new pricing structure in the industry that will for the first time allow physicians to compete with each other on the basis of price.
"Doctors who do a better job and can show that to the consumer will be able to get a higher price than their peers," said Lee Newcomer, M.D., Vivius' executive vice president and chief medical officer, who left a top post at Minneapolis-based UnitedHealth Group to join the Vivius crusade. "Today if you treat your customers badly you still get paid the same as the guy who treats them pretty well."
Scandlen said such price competition may be met with some trepidation. "It's possible to imagine physicians competing on the basis of price in the not-too-distant future and that could make a lot of physicians uncomfortable," he said.
Company officials acknowledge that physicians may be skeptical about an insurance plan that involves setting rates and accepting risk. But they argue that under Vivius, physicians limit their administrative expenses and accept risk only for their own services and not those provided by other physicians in their practice.
"While providers aren't necessarily enamored with managed-care-style reimbursement and oversight, this may not be the best environment for taking on risk," said Brad Holmes, senior analyst with Forrester Research, Cambridge, Mass. Vivius, he added, "has yet to define their value proposition and certainly has yet to prove their concept."
As part of proving its concept, Vivius formed the Consumer Driven Healthcare Association in January with the goal of fostering discussion in the industry on consumer-centric approaches to proving medical coverage.
Other companies in the association include Definity Health Corp., a Minneapolis-based company that allows consumers to create personal-care accounts, and HealthMarket, a "self-directed health plan" founded by former Oxford Health Plans Chief Executive Officer Steve Wiggins.
As for Vivius' financial outlook, officials declined to discuss details but said the company "has plenty of cash." In May and June of 2000, Vivius secured $16.5 million in financing from its venture capital investors.%%