By Ashley Barker
Published Dec. 5, 2013
From the Dec. 2 print issue
When Jeff Lehrich became the CEO of Palmetto Primary Care Physicians in May, the cost of his new company’s health care plan was a shock.
Lehrich learned he’d have to pay $1,200 a month after the employer contribution for a plan that included a $3,000 deductible for him and his wife.
He was told 66% of the company’s 600 employees didn’t purchase health insurance through the plan.
Lehrich questioned his CFO, then went to the broker at their provider, Blue Cross Blue Shield of South Carolina. He said he couldn’t find a valid reason for the plan’s costs and discovered that his organization faced a 39% increase in premiums for 2014.
Palmetto Primary Care Physicians group CEO Jeff Lehrich plans to make the Palmetto Healthcare Network available to other companies in the first quarter of 2014. (Photo/Ashley Barker)
Within four weeks, Lehrich had built his own network of health care providers and named it the Palmetto Healthcare Network. Lehrich affectionately calls it “The Home Team.” He estimates 800 providers are on board, including the 110 already in the Palmetto Primary Care Physicians group.
On Nov. 1, all of his employees working 25 or more hours each week were invited to join the new network, which offered reduced premiums by more than 50% of their old plan. Lehrich said 62% of his employees are buying into the insurance program now.
Currently, Palmetto Healthcare Network is available only to Palmetto Primary Care employees. But Lehrich has plans for expansion. His goal is to make the plan available to other companies in the first quarter of 2014.
“Employers have literally called me up or saw me during meetings and asked when I’m going to go present our plan,” Lehrich said. “I don’t even have a sales force. It’s all word of mouth.”
Jim Deyling, president of private business at Blue Cross Blue Shield of South Carolina, said self-insuring and having another company manage claims administration is a common practice of large businesses.
“What remains unclear to us is how they will achieve and maintain major long-term cost savings, even employing a limited provider network. Nevertheless, we welcome competition,” Deyling said in a statement. “We know from our own years of experience in this market — and we have been at this for more than 65 years — the challenges of providing cost-effective coverage for members, achieving fair pricing with providers and moving the needle on cost reduction.”
Deyling said Blue Cross Blue Shield of South Carolina and Blue Choice offer the highest-value health coverage in the state.
Palmetto Healthcare Network has contracted with health care organizations locally and throughout the country to offer employees a comprehensive plan that includes hospitals, according to Vivian Barajas, the group’s marketing director.
While developing the plan, Lehrich said he wanted less choice in the number of providers and more control over the cost.
“There’s a trade-off. You can have less choice, still have a great network and have a more affordable plan,” he said. “I came here to run this medical group, get things going and take them to the next level. We’re a large company and, ethically, I believe we need to take better care of our employees. We have a moral obligation to do that.”
Lehrich said he’s had several employees come and thank him, some with tears in their eyes, because they weren’t able to afford health insurance before. He said one employee showed him the exact savings in the Palmetto Healthcare Network plan compared to the previous plan.
“An employee’s son was going to have a knee procedure over at Trident. It was going to cost her something like $3,800 out of pocket, which would have been pretty financially challenging, if not devastating,” he said. “Under the new plan, it was only going to cost $538. She was ecstatic.”
Figuring out how to market the plan and become a health insurance company is a work in progress, Lehrich said. It’s important, he said, because not one executive he’s run into in the Charleston area is happy with his or her company’s insurance plan.
“I liken what we’re doing here to Steve Jobs creating the first Apple computer in his garage. We created (the insurance plan) in our garage, so to speak,” he said. “At this point, it’s one step at a time.”
Adding more patients into the mix isn’t going to be a problem, Lehrich said. Palmetto Primary Care Physicians has the capacity to see more patients and to grow, which will be important when the insurance plan is marketed to other employers. He said his company has evolved into a multispecialty group and is continuing to add specialties to its base.
Patients of the group’s providers who are covered by Blue Cross Blue Shield of South Carolina may still continue to see their providers without any changes to care, he said.
S.C. Small Business Chamber of Commerce President and CEO Frank Knapp said Palmetto Primary Care Physicians’ new health insurance plan is a good idea and questioned why the group waited so long to create it.
“If they’ve got something they can pull off to provide health insurance to more people, more power to them. I hope it works out well,” he said.
To sell insurance, an entity must be granted a license by the state Department of Insurance. Ann Roberson, a public information officer with the department, said a company’s submitted application will generally need 60 to 90 days to be reviewed.
Barajas said, “We will take the necessary steps in preparation to take the plan to market for the first quarter of 2014.”
Reach Ashley Barker at 843-849-3144 or @AshleyNBarker on Twitter.