In 1997 the first Arrowhead clinic opened...
In 1997, the first Arrowhead clinic opened after Dr. David Berg and, spouse, Dr. Janice Johnson had just moved from Canada. Without much experience of the U.S. healthcare system, the first year of business lost a lot of money and even ended up treating many people for free. To find a way out, Dr. Berg and Dr. Johnston asked their own customers what they could do. So, they told us. They said they didn’t like being put on hold, parking in the back, having to wait too long to be seen, and they certainly didn’t like copays. Dan Sullivan, founder and president of The Strategic Coach, says, “The customer is your 50 percent partner” and in our case, this could not be more true.
They didn’t realize what they were doing was different than everyone else in healthcare.
After hearing feedback from customers, they decided to make significant changes. They created a 15 minute or less wait time policy, moved all customer parking to the best spots, and collected copays after the visit. They didn’t realize what we they were doing was different than everyone else in healthcare. They simply let the customers build the business for them.
Without superior people, they couldn’t sustain the quality level of customer service.
As a result, margins shot up and the customer base grew quickly, meaning they needed to hire many more people. It wasn’t until later they learned the business was built around an atypical level of customer experience, which meant teamwork, caring deeply about people, and having a team who obsessed over the mission of EASY AND TRULY AFFORDABLE HEALTHCARE for families. Without superior people, they couldn’t sustain the quality of customer service.
They had to make a fundamental mind shift to separate healthcare from health insurance.
As doctors, Dr. Berg and Dr. Johnston understood healthcare, but less about health insurance, so they had to make a fundamental mind shift to separate healthcare from health insurance and focus on three core action items. 1) Delivering care 2) getting the fair price for that care, and then 3) figuring out the most cost-effective way to pay for it. Once they figured healthcare out, it didn’t take long to have the epiphany that a self-funded insurance funding model was the only way to reap the rewards.
By offering free healthcare they were able to recruit and retain the best talent within months.
Self-funding gave them the freedom to build a plan and system for themselves that opened up the ability to manage healthcare spend, tailor the benefits to their workforce, and create an attractive health plan for their employees. They leveraged the new affordable benefits to solve their immediate business problem. By offering free healthcare they were able to recruit and retain the best talent within months. Because of what they learned, they added $1.6M to their bottom line shortly after by managing their healthcare expenses like any other large line item.
The Seven Steps:
When they separated healthcare from health insurance they continued to learn and focus on simplicity and removing waste and administration. This led to a 7-step process to deliver affordable healthcare to their own employees. Each of these steps play a critical role, but when effectively executed together the sum of the seven steps delivers exponential results.
Identifying chronic and acute disease and anticipating needs and outreach allowed them to care for the most likely people to create cost in the plan. They created programs to help keep this population healthy and out of emergency rooms and expensive treatments.
24/7 Access to care
Convenient, over the phone, medical support drastically reduced the need for in person visits – this 24/7 access to the Care Logistics team eliminated most ER visits and unnecessary trips to doctors for simple things, like prescription refills, or reviewing lab work.
In person visits
They also removed copays to help people get care without barriers, this instantly reduced the need for expensive non-routine care.
Specialists and Hospital
Managing the hospital and specialist care was also an important part of reducing costs. They learned that by having a provider-to-provider dialogue, they could not only provide excellent care, but hold other providers and facilities accountable.
They learned that places of service matter greatly, and they could get their team the care they need at a fraction of the price by guiding them to the right medical facility and asked for the fair price.
Their benefit design and knowledge of patient assistance programs allowed them to leverage alternative ways to fund healthcare beyond insurance.
By placing insurance at the end of the seven-step process, they were able to never use this healthcare funding mechanism in the last 10 years, which has resulted in low-costs and no increases.
Through this process, Dr. Berg and Dr. Johnston realized their passion for helping businesses and sharing our strategy with others.
Through this process, Dr. Berg and Dr. Johnston realized their passion for helping businesses and sharing strategy with others. So, in 2013, they created Redirect Health with a mission to make healthcare simple and truly affordable for everyone. The past few years has seen rapid growth and Redirect Health now offers care to business and individuals in all 50 states.