Monday, September 14, 2009

Health Innovators: Another employed, capitated physician group makes headlines

Modern Physician recognizes Physician Entrepreneur of the Year George M. Rapier III, M.D. for the creation of WellMed Medical Management which provides care for 83,000 patients in 29 clinics

This is a repost of an article written by Elizabeth Gardner
of which recently announced their Physician Entrepreneur of the Year. The award went to George Rapier III, MD who founded a large group practice founded on a capitated, physician employed, centralized group practice approach. It is yet another example of the type of quality, cost, and outcome improvements that can occurs when care becomes organized, coordinated, goal directed, and incentives are aligned with good outcomes. This article foreshadows for me the many variations of "Kaiser-light" that I expect to see evolve over the coming years.

By Elizabeth Gardner on September 14, 2009

George M. Rapier III, M.D., became a gerontologist because he liked old people. And he became an entrepreneur, somewhat inadvertently, because he thought there was a better way to take care of them. After almost 20 years, his better way seems to be paying off for everyone. The medical management company he founded, WellMed Medical Management, takes care of one in five seniors in its native San Antonio, and a total of more than 83,000 patients through 24 clinics in Texas and five in Florida. About 35,000 of its patients come through the managed-care option Medicare Advantage.

WellMed provides extras such as free transportation to appointments that helps patients show up consistently, free vaccinations to keep the flu away, and help with medication copayments and deductibles that have increased WellMed patients' prescription fill rates from 17% to more than 90%.

More than 12,000 WellMed patients wear bracelets or carry key fobs with a USB device that lets providers access their electronic health records. WellMed patients with chronic conditions such as diabetes or congestive heart failure have health coaches who contact them regularly and make sure they're getting the care they need to stay as healthy as possible, through a disease-management subsidiary called HealthRight. WellMed took in more than half a billion dollars in revenue last year. While the company is privately held and doesn't release profit figures, its revenue has more than doubled in the past three years. For his central role in creating a company that takes better care of patients and makes money doing it, Rapier is the recipient of Modern Physician's Physician Entrepreneur of the Year award for 2009. He was chosen from a field of 37 nominees in the second annual competition.

Rapier, 56, saw his entrepreneurial opportunity in 1990 when the HMO PacifiCare (now part of UnitedHealth Group) came to his previous practice, the multispecialty group Diagnostic Clinic of San Antonio, with a proposal to expand the amount of primary care in the metropolitan area. “There was not enough primary care even then, and it was already apparent that you have to have a good primary-care base that's incentivized to manage care,” he says. PacifiCare was willing to put up the money for the expansion. The practice wasn't interested, but Rapier himself (who was at the time the practice's president) certainly was. “It sounded like a no-brainer to me, so off we went,” he says. The resulting joint venture, funded with $1 million in PacifiCare seed money, opened Trinity Medical Group, specializing in primary care for seniors.

That first clinic grew, fueled by a model for primary care that wasn't built on volume. WellMed prefers to operate on the basis of capitation and delegation: that is, it receives a fixed sum from the insurer for the care of each patient, has sole responsibility for figuring out how best to spend it, gets to keep what's left over, and thus benefits directly from keeping its patients as healthy as possible. Its 60 employed physicians and 20 physician assistants are paid a base salary plus a bonus based partly on profitability and partly on hitting specific quality targets that vary from year to year. WellMed also contracts with about 150 primary-care physicians.

Recruiting physicians has been one of the relatively easy parts, because patient loads are at a civilized level. “We've never focused on high volume,” Rapier says. “That's not the way we do business. Most primary-care docs have to see 35 to 40 patients a day to make a decent living. We've operated under capitated risk arrangements since day one, and have put more focus on managing patients than on volume. Those are mutually exclusive.”

Rapier bought out PacifiCare's interest in the business as soon as he was able to, and changed the company's name to WellMed Medical Management. He grew it relatively slowly, keeping its clinics within the borders of Texas until last year, when WellMed expanded into Florida. WellMed also operates Physicians Health Choice, a Medicare Advantage health plan that's offered in Austin, Harlingen, Corpus Christi and El Paso, Texas, plus Little Rock, Ark., Fort Lauderdale, Fla., and Las Cruces, N.M.

WellMed's general approach is “doing well by doing good.” For example, the company picks up patients' excess prescription costs because they're strapped for cash and other bills always get paid first. “It was driving us crazy trying to manage them,” Rapier says. The company also augments a basic vision benefit that on its own covered only half a pair of glasses a year. “That didn't do them much good,” he says. Bryan Grundhoefer started with WellMed 11 years ago as chief financial officer, coming from Anthem (now part of WellPoint) in Indiana. His last job with Anthem was a physician joint venture similar to the one WellMed had had with PacifiCare, and Grundhoefer was intrigued by the potential for better care.

When Anthem decided it no longer needed to own any physician relationships, Grundhoefer called Rapier, whom he had met when Anthem was considering contracting with WellMed. Rapier just happened to need a CFO and Grundhoefer quickly found himself in San Antonio. He also took over the role of chief operating officer within a few months, and became president of WellMed Medical Management about three years ago. Grundhoefer was attracted to WellMed's approach, and to Rapier's particularly. “Every decision I've ever seen him make, the very first thing he considers is the impact on the patient,” Grundhoefer says. “The second is the impact on the physician, especially the primary-care physician. He believes that if he takes care of the patients and the physicians, everything else will work itself out.”

Bill Connolly has been with WellMed for three years as senior vice president of shared services, an umbrella title that takes in community relations, marketing, sales and a number of back-office operations such as claims processing, credentialing and purchasing. He came from PacifiCare shortly after its acquisition by UnitedHealth Group. “I really liked the model, the vision and the messages that I saw from WellMed when I worked with PacifiCare,” Connolly says. “I was just impressed with what they were doing.”

Connolly vastly prefers WellMed's active approach, including the patient and focusing on prevention, to the reactive way that many healthcare organizations work. “It's amazing how many people in this organization understand that if you do the right thing, good things happen,” Connolly says. “Dr. Rapier has been able to create economic incentives that combine the best interests of the patient, the payer and the provider in one model.”

As part of his mission to promote preventive care, Rapier gives lavishly back to the San Antonio community, both through a personal charity, the Blake, Kymberly and George Rapier Charitable Trust, and through the WellMed Charitable Foundation. “George is quite a hero in this community, and WellMed has set high standards for what a medical group should do,” says Fernando Guerra, M.D., San Antonio's director of health for the past 22 years. “If we didn't have them, some things would go without support, and there wouldn't be such opportunities for a public-private collaboration. We would do what we had to, but it wouldn't be anything as comprehensive as what WellMed's charitable foundation and their network can do.” For example, the city has received “formidable” amounts of help from WellMed in getting adequate supplies of flu vaccine, Guerra says.

Henry Cisneros, former mayor of San Antonio and secretary of Housing and Urban Development during the Clinton administration, runs a real estate investment company in San Antonio, and also chairs an organization called BioMed SA, devoted to developing the health and biomedical sector of the city's economy. He has known Rapier for about five years. The senior health center funded by the WellMed Charitable Foundation opened earlier this year and is named after Cisneros' mother, Elvira. “I've had the good fortune to see a number of really capable entrepreneurs, and Dr. Rapier has been one of the most impressive,” Cisneros says. “WellMed is one of the larger and more successful healthcare providers in our community—it's well-respected, doing creative and innovative work, and growing, even beyond San Antonio.”

Rapier is watching the current payment reform debate with great interest—particularly when it focuses on controlling costs with Medicare cuts. While he'd never go back to pre-Medicare days, Rapier thinks the focus of the program, and of healthcare in general, needs to come closer to managing care the way WellMed does. “To run a system effectively, you have to have someone coordinating care, and other than the primary-care physician, no one's trained to do that,” he says. “And there aren't enough of them. I would have hoped the legislation would have done something meaningful about that.”

Medicare Advantage payments are currently out of whack, he adds. “I think we'll see a reduction in Medicare Advantage funding, and I'm OK with it,” Rapier says. “I'm probably the only person in the industry that will tell you that.” Rapier quit seeing patients about six years ago because the company demanded his full attention, but he misses them. “I just like old people—I like dealing with them,” he says. “They grew up in a different time, went through the Depression and World War II. Most of them are so appreciative of what you do for them and really respect it.”

Elizabeth Gardner, a former reporter at Modern Healthcare, Modern Physician's sister publication, and is a frequent contributor to the magazine. Reach her at

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