Health care isn't one of America's most dynamic entrepreneurial arenas. Try to think of the last time you saw a new hospital, health-insurance company, or HMO spring up to challenge the Blue Cross/Blue Shields and Kaiser Permanentes of the world.
To understand why America's health-care system looks like a bloated anti-entrepreneurial bureaucracy, just follow the story of Rushika Fernandopulle and Pranav Kothari, two physicians who decided in the summer of 2004 to launch a new kind of medical practice, one committed to a "better model" of primary care, in Fernandopulle's words.
DUE DILIGENCE. The two doctors approached their mission as entrepreneurs. "We decided to make it small and lean and build a prototype, and then figure out how to scale it once we got it to where we wanted it to be," Fernandopulle says. "We got some angel financing, mortgages on our houses, and decided not to pay ourselves a salary." The result was Renaissance Health in Arlington, Mass.
What the two physician-entrepreneurs didn't fully anticipate was that the big kahunas who rule the health-care industry don't necessarily welcome innovative entrepreneurs with open arms.
It wasn't as if they went into the venture completely idealistic or naive. Both had spent much time researching the health-care industry and knew its shortcomings. After receiving his medical degree in 1993 and spending a year interning in surgery, Fernandopulle opted to join a consulting firm that specialized in working with hospitals and health systems.
INNOVATION BEYOND R&D. Then in 2001, Harvard University brought Fernandopulle in to organize the Harvard Interfaculty Program for Health Systems Improvement, which serves as Harvard's eye on the health-care arena. As part of his work there, he co-wrote a book, Uninsured in America.
"I realized that health care is dominated by a few big players," primarily the insurers and hospitals, he says. "They have almost no incentive to innovate. People say there is lots of innovation in health care. There has been innovation in the technology of health care -- new drugs, devices, testing. But if you look at the actual delivery of care, it's no different than it was 100 years ago. You call the office, schlep in, the doctors look at a paper chart, write a prescription for you, and send you on your way."
Fernandopulle, 38, and Kothari, 34, decided their practice would do things differently. "Our first task was to figure out what customers want. This is completely heretical in health care," Fernandopulle says. The two traveled around the country, speaking with the few physicians and executives offering innovative approaches to medical care.
PATIENCE FOR PATIENTS. "We learned that people want a trusted adviser and good access to that adviser. They want more of a focus on wellness rather than just on treating illness," Fernandopulle says.
To provide the open access, the physicians decided to guarantee same-day or next-day appointments to their patients. They give patients their cell-phone numbers. All appointments are 30 minutes or an hour long.
On initial visits, the doctors develop an annual health-care plan. If they decide a patient needs to lose weight, for example, they'll refer him or her to a nutritionist and then track the patient's progress via e-mail.
CYBER CARE. As part of their follow-up work, the doctors encourage patients to monitor at home as many aspects of their health as possible and to e-mail the results in.
"Typically, if you have high blood pressure, you need to return in a week to be remeasured. We tell them to buy a blood-pressure kit at a pharmacy and e-mail the readings to us the next week. Then we advise them on whether or not medication is warranted," Fernandopulle says.
Renaissance has a relationship with a medical-information-software company that enables patients to view their records online. As studies come out about new guidelines for testing, say of cholesterol, the doctors will send the results to patients via the Internet.
To provide this kind of individualized care, the doctors see fewer patients -- between 600 and 800 per doctor, as opposed to the typical 1,800 to 2,400 that most primary physicians have. Renaissance compensates for its personalized approach and e-mailing by charging a membership fee of $20 for those under age 35 or $40 a month for those over 35, together with the regular insurance-mandated co-pays and reimbursements.
FEES AN OBSTACLE. A bit more than a year into their entrepreneurial venture, much is going according to plan. Patients appear to like the system, and Renaissance has grown enough to add a third doctor.
Just one fly in the ointment remains: Harvard Pilgrim, a major Boston-area insurer that provides coverage to about 900,000 people in New England, or about 20% of the local population, won't cover patients who want to use Renaissance -- even if the patients pay the membership fee themselves.
"We've been watching them with some interest," says Roberta Herman, chief medical officer and senior vice-president for health services of Harvard Pilgrim. She says she appreciates Renaissance's approach to innovating the communication process -- but doesn't like the membership fee.
NO PILGRIM'S PROGRESS. "We should not be setting our members up for unexpected costs," she says. "What you have [with Renaissance] is an on-the-side agreement with members that has nothing to do with the agreement we have with our members. It is an explicit violation of the agreement we have with our HMO members."
Moreover, Herman adds, there is a "potential for lack of fairness to other physicians" who might be providing the same kind of "upgrades" that Renaissance gives, without asking patients to bear part of the cost.
True entrepreneur that he is, Fernandopulle is working both sides of the fence. He's pushing like mad to get Harvard Pilgrim to change its mind. "We've talked with everyone there, including [CEO] Charlie Baker, but nothing doing," he says.
HEAVY HITTERS UNWILLING. In the meantime, he isn't letting the Harvard Pilgrim rejection deter him. "We're ahead of schedule," he says of Renaissance's growth to date. "And we're learning a ton of things."
While he doesn't say it, I'll bet one of those lessons is that you can't expect the big guys to welcome a newcomer to their comfortable club.