Turning Health Care Upside-Down

The June trip to Washington, D.C., Dr. Garrison Bliss explains in a hurried phone call from the nations capital, involved more defense than offense.

We just want to make sure [lawmakers] dont do something to damage what we want to do, Bliss says. We want them to know that insurance has been central in the destruction of primary care.

Which explains the trip, a culmination of years of efforts at the state and federal levels to ensure that the traditional health insurance industry didnt squelch the companys operations before they had properly got off the ground. But this is more than just a turf battle, because Seattles Qliance Medical Group, a subscriber-based primary care startup founded in 2007, threatens to shake the foundation of health insurance as American consumers know it.

Bliss, along with CFO Norm Wu, began Qliance on the notion that primary care never should have been the bailiwick of the insurance industry. Whats more, they maintain that the industry is directly responsible for both reducing the quality of care and radically inflating its price.

The insurance model is broken for primary care. It never should have been used for that, Bliss says. The historic problem, Bliss argues, is that the health care and insurance industries decided that primary care was worth very little and catastrophic care, or major injuries and disease, was worth a bunch.

It turned out to be a disastrous decision both for the economy and for individuals, he argues.

On how the health care system got into this miss, Bliss explains: What we did was to pervert the concept of insurance, to try to make it pay for everything in health care. And what that created was a monster that doesnt provide very good health care and provides it at enormously inflated prices.

Enter Qliance.

First opening its doors to patients in a downtown Seattle location in 2007, Qliance operates under a business model that asserts people should pay for their own primary care and use health insurance for catastrophic caremuch in the same way people manage insurance on their homes.

Bliss and Wus model? No insurance. No limit on visits. Each initial appointment lasts a minimum of 30 minutes and annual exams can last from 60-90 minutes. Patients can drop in anytime for urgent medical matters and pay an average of $56 a month in dues.

There is no screening process.

You ask to be a patient? We say yes, Bliss says.

In less than one year, Qliance has collected 2,500 patients and expects each clinic location to serve between 5,000-6,400 patients. Another clinic in Kent opened recently, and the company has raised $7.5 million in venture capital financing, including a $4-million round this spring from Seattle firm Second Avenue Partners along with New Atlantic Ventures and Clear Fir Partners.

Whats more, doctors are applying in droves. Individual patient loads average half what they are for an HMO doctor. And salaries meet the industry average.

Bliss didnt come to this arrangement by accident. He worked for the nations first subscriber-based medical service, Seattle Medical Associates. But SMA catered to a wealthier clientele. Bliss and Wu wanted Qliance to provide primary care that 70 to 80 percent of the population can afford without a government subsidy.

To get there, they turned the standard insurance model on its head. Typically, doctors find out what an insurance company will pay per service and then tailor medical care to fit within that.

Bliss and Wu did the reverse: They figured out what optimal primary care involves and then determined what must be charged to finance that. This is where the 30-minute visit comes in.

Doctors know that half an hour is the minimum time to sort out patient needs. So Bliss worked backward. How many people a day would that time frame allow? How much space do you have to leave in a day to see drop-ins? How much to charge? And how could a doctor provide care when patients want and need it and not two weeks later? as Bliss puts it.

The result is the companys Level 1 and Level 2 plans. At Level 1 ($39-79 monthly), the patient is provided comprehensive and preventive primary care. At the next level, ranging from $59-$129 monthly, hospital rounds are included for patients who regularly are hospitalized.

Obviously, the care has limits. Qliance doesnt do major surgery or provide long-term cancer treatment, for example. Serious health issues, Bliss and Wu believe, are exactly what insurance should be for. Prescriptions, too, dont come with the cost.

Again, Bliss says, the point is that we wont do everything. But what we do is 80 percent of what most people need.

It wasnt easy going at first. Initially, Qliance got involved in a legislative dispute with Group Health (among others) over the scope of mandatory care.

Lobbyists for Group Healthfounded in 1946 also as a response to overpriced, undersubscribed health carebelieved that Qliance should be regulated as an insurance company and thus, provide the whole array of services. This requirement would have killed the little company before it started.

We dont want to be an insurance company and we are not, Wu says.

Qliance won the fight in the statehouse and insurance commissioners office in 2007. Today, Group Health and undisclosed insurance companies have indicated they want to work with Qliance, possibly to provide a lower-cost blanket policy to cover what Qliances primary care doesnt.

Additionally, employers have begun subscribing as a way to provide budget health care to employees who might otherwise have none. Qliance figures that employers could save 23 percent on their benefits costs by using a combination of Qliance for primary care and high-deductible catastrophic insurance from a large provider.

Still, Washington, D.C. remained an open issue. So Bliss and Wu headed to the East Coast.

They wanted to make sure that when the Obama administration tackles what it has called a top domestic goalfixing the nations ailing health care systemit does so in a way that is benign to the innovative, 1,800-patient primary care provider.

We just dont want anyone to do anything stupid, Wu says.