The insurance industry is viewed by many as a roadblock to receiving healthcare. In 2021, one survey reported that the health insurance industry received the lowest average net promoter score, which measures customer satisfaction and loyalty among all kinds of insurance. Now, there are efforts underway to cut out insurance companies from the equation altogether, whether it be through drug prescriptions, direct primary care or alternate payment options.

“We’re seeing first and foremost the continued desire to rationalize an irrational market,” said Bill Fera, principal at Deloitte. “And that second, as these digital applications and solutions evolve, we’re seeing an increased uptake. And third, this fits into patients/consumers’ mode of operating in every other aspect of their lives. These will continue to be ways that customers and patients demand and experience healthcare.”

One of these companies is DiRx, an online pharmacy. Satish Srinivasan, CEO of DiRx, worked in the pharmaceutical industry for over 25 years before he founded the startup. What he discovered in his career is that prescription drugs themselves are not expensive; it’s the middlemen like drug wholesalers that make prescriptions costly for patients at the point of sale.

“That is OK if it works for everybody, but the large numbers of uninsured and underinsured patients in the country bothered me … The system’s been built on insurance reimbursement,” Srinivasan said. “So the way it’s being priced at the point of sale or the point of care is all based on how much maximum reimbursement somebody can charge. For someone who doesn’t have adequate insurance and they have significant out of pocket costs, it becomes a very big number.”

This led Srinivasan to create East Brunswick, N.J.-based DiRx, which purchases drugs directly from manufacturers to get the lowest cost. It then ships directly to patients, who can purchase without using insurance. Its program called the Annual Savings Plan allows patients to either pay $119 annually per person for 500 products or $299 annually per person for 1,000 products. It includes shipping, 24/7 customer care and unlimited orders/refills.

Other healthcare sectors circumventing insurers include chronic disease management, care navigation and behavioral health, said Fera and Andy Davis, also a principal at Deloitte. And there are two big reasons for it: to create efficiencies and manage costs, Davis said. Companies developing products or services in these sectors are especially beneficial to mid-sized employers, who are looking for ways to save money.

“We always talk about the rising costs of healthcare,” Davis said. “The ones that probably feel this the most are those mid-market employers … because they’re trying to offer competitive benefits.”

Fera said that this new breed of companies is aiming to improve the current market, in which consumers are often removed from providers by having to go through insurers. Employers, the ones often paying for care, are also removed from the providers giving the care, he added.

“With the maturity of these digital solutions, there seems to be a renewed vigor in trying to attack that problem,” Fera said.

Not only are these companies becoming more prevalent, but they’re gaining interest from investors, Davis added. Venture investments in digital health companies reached $29 million in 2021, almost double what it was in 2020, according to a Deloitte article.

“I think there’s more interest now to invest in solutions that can be offered as a disruption,” he said.

One of those disruptors is Hint Health, which is a billing platform supporting direct primary care. Providers who join the platform can reach consumers directly. These patients pay a monthly membership of $50 to $100 for unlimited access to primary care through telemedicine and in-office visits. Some physicians will also contract directly with employers, which pay a fee on behalf of their employees. Hint Health, located in San Francisco, handles membership management, enrollment and payments and charges a software fee to physicians using the system.

Zak Holdsworth, co-founder and CEO of Hint Health, grew up in New Zealand, where he had a family doctor he could receive care from in a way that’s similar to a direct primary care model, he said. 

“When I came to the U.S., I was a little bit shocked at the system and how hard it was to get care and how expensive it was,” he said.

Holdsworth and Co-founder/CTO Graham Melcher came to the conclusion that they needed to create a business model to “redesign the system,” but different from the fee-for-service model. Additionally, they wanted to restore the integrity of primary care, Holdsworth said. 

The idea is that by investing more in primary care, people will spend less on more expensive procedures down the road, he added.

“What we’re actually proposing is, let’s spend more money on primary care,” Holdsworth said. “Let’s make sure that the money that’s being spent on primary care is efficient … Let’s really invest in all that and extend the scope of primary care. Let’s give patients more access, spend more time with them.”

While Hint Health is focusing on a direct primary care model that bypasses insurers, other companies are providing patients with different options to pay for care when they lack insurance coverage or have inadequate coverage. This includes San Francisco-based fintech company Stilt, which offers a product called Onbo, an application programming interface that allows companies to lend money to people. Through the product, companies can launch a line of credit, a personal loan product or other methods of lending. 

“Onbo is just that infrastructure product that any company can use to lend money to their customers, so they don’t have to build all the pieces of lending themselves,” said Rohit Mittal, Stilt co-founder and CEO.

The company started out lending money to immigrants coming to the U.S. Because they didn’t have credit scores, it was difficult for them to get a credit card or receive a loan. Eventually, healthcare companies began approaching Stilt to use their products for patients, Mittal said. He declined to say who Stilt’s healthcare clients are, but said they are startups that mostly serve hospitals, doctor offices or other facilities.

“I think as we built the platform and as we saw how immigrants were using our loans, we realized that the potential is much bigger,” Mittal said. “That gave us the confidence to leverage whatever we had built to offer it to other companies so that they can serve their clients.”

Patients who decide to use Onbo are often using them for elective surgeries that aren’t covered by insurance, Mittal said. In this case, companies typically offer a payment model referred to as “buy now, pay later,” where patients can pay for surgeries in four equal installments without any interest or late fees. Another instance is an unsecured personal loan instead of paying a deductible. In this case, the patient will pay the loan back over 12 to 24 months with an interest rate and then have the rest be covered by insurance.

While startups like Onbo, Hint Health and DiRx are giving patients different options that circumvent insurance, there will always be a role for payers as people look to avoid the financial risks of illness, Davis of Deloitte said. But that doesn’t mean insurers should be complacent.

“I do think these new entrants — in the conversations I’m having with health plans today — are forcing them to reevaluate how they actually bring insurance models to their members right now,” Davis said. “I think it is creating change.”

MedCity News reached out to several commercial insurers for comment, but none responded.

How insurers will change, however, is to be determined, Fera of Deloitte said.

“Will insurance companies stand up and take notice and figure out how to use these digital tools and new mechanisms to drive out that inefficiency themselves?” Fera said. “Or will … there be a time where we basically break apart insurance companies for their respective parts?”

Photo: doyata, Getty Images