Austin, Texas-based Harbor Health, a new group of primary and specialty clinics, now offers Central Texas employers a direct primary care option, providing employees with a full spectrum of primary care services on a cost-effective basis. free. Harbor co-founder Clay Johnston, Ph.D., MD, MPH, who previously served as the inaugural dean of the Dell Medical School at the University of Texas at Austin, recently spoke with Healthcare innovation about Harbor Health’s ambitious plans to redesign the health system from the ground up.
In January 2024, Harbor announced that it had received $95.5 million in a funding round led by General Catalyst, bringing the total investment at the time to more than $128 million. The practice said its ultimate mission is to redesign the health system so that doctors and the team who work with them really know the people in their care.
The direct primary care solution, called Core by Harbor Health, bypasses insurance companies and makes it easy for members to build an ongoing relationship with their health team and achieve their health goals without worrying about a fee-for-service payment structure the company said. .
Healthcare Innovation: Before we talk about the direct primary care offering, could you briefly describe the origins of Harbor Health for our readers who are not familiar with it? Where did the idea come from and how did you initially put it together?
Johnston: In part, it grew out of what we were trying to accomplish in medical school: rethinking what the healthcare system should be and building it that way. But we did it condition by condition in specialty areas. I realized that we were not going to be successful that way, that the incumbents of the healthcare system were so powerful and so strongly motivated to keep everything status quo that with just one provider organization, it just wasn’t going to work. . We couldn’t take third class. We couldn’t get contracts from the carriers. We received a lot of interest from self-insured employers and they purchased some things directly from us. That helped us, but it wasn’t enough to create a scalable system, and that’s really what I was there to do.
We realized that for this to work, we have to tear everything down and rebuild, not do a little remodel. That’s really what we’re doing at Harbor, but we’re doing it in a phased manner. The first thing that is needed if that system is to be rebuilt is a new first-contact care system to replace primary care. What does that look like? How do you create yourself so that you really care about people and their health and are motivated to keep them healthier and also reduce waste?
The first stage is to build that clinical system and then apply specialized care. Firstly, you gain a lot of knowledge about where good specialist care is offered. We have done it. We have a big data system and we use machine learning to help us identify who is doing things better. And then over time we have brought in more and more specialists, and we will continue to do so when we have problems accessing the quality that our people need. Then, apply different payment plans. Initially, you must accept all the contracts they give you. You have no influence on the market. We charge fees for the service, but that is not the reason we exist. And, in fact, we lose money in fees for the service, but it is a bridge. And then increasingly you try to make those contracts look like capitated contracts or like you’re taking all the risk on the people and over time you can layer it on your own insurance products. So Core is our first benefits product and we plan to add more products in that space over time.
HCI: Is this direct primary care model becoming more common elsewhere? Are you seeing examples of provider groups working directly with employers and bypassing insurance companies?
Johnston: Yes, there are more people doing this now and coming from different areas. Some companies create on-site clinics, groups like Clover. And then there are others who come from strong primary care groups who recognize that this gives them more freedom to care for people the way they should be cared for. And then it also comes from individual doctors, although individual doctors don’t actually necessarily sell to employers. They don’t have enough bandwidth to do that.
HCI: How many clinics does Harbor Health have now?
Johnston: We have 11 physical clinics and two mobile clinics. We move.
HCI: Are you already working with any employers in Central Texas? Or do you now have to look for employers to work with?
Johnston: Now we have to align employers with whom to work. We already have a lot of snacks, so this will happen quickly.
Some employers offer high deductible plans. The problem with this is that any resistance to receiving primary care is simply a bad idea. It just means that you are going to let things rot and get worse until they become expensive. That’s why we fit very well into those high-deductible plans because we offer the ability to receive the right care for free.
HCI: When thinking about the types of employers this would appeal to, I imagined high-tech companies that would offer this as a benefit, but maybe not. Is it also for employers with lower-paid employees?
Johnston: In reality it is both things. One of the first that has already committed is a venture capital company. They want fairly easy access for their employees. But we’ve also heard from employers like counties and school districts. This is really attractive to them because their employees are not receiving primary care due to deductible issues. Ultimately, primary care should be free, right? The best thing for everyone is that it is free. It’s silly that we made it expensive.
HCI: This is probably very attractive to doctors as a way to practice. But is some retraining required to get out of that fee-for-service hamster wheel mentality? Is it a change in the way they interact with patients?
Johnston: What we’re finding is that this becomes quite natural for people, because it’s more consistent with the way they think medicine should be practiced. They didn’t go to medical school to be on a hamster wheel. They went to medical school to really care about people, and by having the incentives aligned with that, they’re fine with that.
The other thing we’ve tried to do is take some of the hard tasks and let someone else handle them. That gives us a little more flexibility. We put prior authorizations and the things that doctors are doing today on other staff, and we put a lot of thought into how we do that, so that doctors are really working at the top of their game and doing the things that they know are valuable. and we know that they are valuable, and that obviously makes them happier too. We are not worried about insurance billing all the time.
HCI: Does that change the way you use the EHR?
Johnston: Great question. So today it is not like that. Most of our patients are still fee-for-service, where the EHR is a core component of what they touch. But, you know, what I was describing about fixing the healthcare system – you can’t do it with the current EHR, right? We’re already getting them to interact with the EHR differently, but ultimately we’ll be where the EHR won’t be relevant. We will really be the ones designing a system that matches the care model. This is a bigger push, but we have already started to get started.
HCI: Is it part of your business plan to scale this geographically beyond where you are in Texas?
Johnston: Yes. What we are trying to do is very difficult. I mean, it probably sounds ridiculously ambitious, and it would be if we tried to do it nationally at the same time.
We need this local penetration for a variety of things. It makes many things easier. One is marketing. People know us now. Word of mouth is our main source of marketing. Another is our relationships with partners such as specialty care organizations. We’re big enough in this city that people care about us. They want our references. They will partner with us in a truly collaborative way to try to improve their results. Then we will get better contracts with existing insurers because we are big enough and can meet the needs of employees throughout the metropolitan area. For all those reasons, growing and being really good in a market is important.
We will grow up in Texas. But then yes, we will grow beyond that. What we are trying to do is create the entire operating system. Currently, everything is fee-for-service, and there is the RVU system that drives physician behavior, and there are co-pays, coinsurance, and deductibles. What we’re trying to do is rebuild all of that to change the underlying incentive structures and the operating system so that it can then be more easily exportable. Therefore, we would not necessarily need to own the practices for them to practice in this different way. Ultimately, that’s what we think will allow for faster scaling. Our ambitions definitely go beyond Texas, but we won’t do anything about it until we’re pretty sure we have the right model, that it’s very successful here, and that it’s ready to scale.
HCI: What about alternative payment models focused on primary care that large insurers and CMS are experimenting with? Does that fit with what Harbor Health is doing?
Johnston: He does it perfectly. We actually participate in ACO Reach, which is a fabulous program. It allows us to do all the things I just described. We also participate in Medicare Advantage agreements with other insurers, but they are not as attractive to us. They hold on to many of the benefits that we produce in terms of improving outcomes. They hang on to that financial benefit, so it’s harder for us to do everything we can in that system, but it’s still helpful in this transition. We also have deals on commercial insurance that allow us to share some of the savings.
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