Trend of the future: Physician-run insurance?

Pennsylvania practice takes control

A group of Pennsylvania physicians is attempting to take control of its managed care plight, creating the state’s first physician-owned and -directed managed care insurer. Experts say this is part of a growing trend of physician-owned insurance groups that is sweeping the nation.

Pennsylvania Physicians Care, which expects to receive its PPO license by the end of February, has already credentialed 350 of the first 2,100 physicians who have applied to the group, and is rapidly building momentum.

Pennsylvania Physicians Care provides frustrated practitioners input and control in patient care decisions and an alternative to traditional insurers, says Richard A. Felice, chief executive office of the group’s operating subsidiaries.

"We are the only alternative to those corporate insurance practices which many physicians have seen become only stronger," he says. "Physicians feel that their individual skills and experience are not given the opportunity to be fully exercised for the patient’s benefit under the traditional system."

Pennsylvania Physicians Care, a non-gatekeeper insurer, is backed by 4,000 physician investors statewide and receives no corporate funding. "Even as CEO, I have no equity in the group because I am not a physician," Felice points out. The organization is also directed by a board of 25 physicians. Physicians have a hand in every facet of the business, from determining policy to setting rates.

Physician-designed and run

Felice says the creation of a physician-owned insurer has widespread appeal in the medical community. "We have recruited physicians in the same way that traditional insurers do — by going out and talking to them," he says. "The difference is that we can tell them that if they come with us, they will be in an environment where their opinions and experience counts for more. They also know that the standards and practices in place have been devised by their fellow physicians."

"Physician-owned insurance groups are quite the trend," says William J. DeMarco, MA, CMC, president of DeMarco and Associates, a Rockford, IL-based management consulting firm. "Some of the largest insurance providers in the country were physician-started or are physician-owned," he says, including publicly held companies such as Intermountain Health and HealthSource.

Felice says that hospitals, 10 of which have signed up already, enjoy a feeling of partnership and teamwork with the physician group, rather than the adversarial relationship they may endure with other insurance companies. "They know that we have the same priorities that they do — the best care for their clients."

However, DeMarco counters that hospitals may soon cast a wary eye on physician-owned insurers. "[Hospitals] don’t want to be in the position where physicians are paying them on a per diem basis for services. They don’t necessarily want to be on the bottom of the ladder, with physicians in control."