Columbia Firm Thinks It Has Cure For Rising Health Costs

Jsa Health Care Expands By Shrinking Paperwork

July 21, 1991|By Erik Nelson | Erik Nelson,Staff writer

Forms and more forms are an accepted part of health care. But one Columbia firm hopes to convince Fortune 500 companies that it can eliminate all that paper and hold the line on health costs.

JSA Health Care, which operates 10 health centers, says it can cut costs by as much as 30 percent. Where a typical health center may file hundreds, even thousands, of forms for a business client each month, JSA files only two.

With success in providing inexpensive health care -- most of it, so far, for the military -- JSA is preparing to launch similar healthcenters for large corporations.

Gary L. Damkoehler, chairman and chief executive officer of JSA, predicts the company will grow from its current $26 million in business and 500,000 patient visits a year to $100 million and 2 million visits annually by 1994.

"This is really the leading edge of where a lot of companies are going as far ashealth care is concerned," with deals between corporations and hospitals for inpatient care, said Damkoehler. JSA hopes to do the same thing, with clinics that treat everything from sore throats to sprainedankles and refer patients to outside specialists and hospitals.

Damkoehler, 51, started the business six years ago in his Wilde Lake village basement, which served as a government contracting outpost forJohn Short Associates of Salt Lake City. Within four years, his division outgrew and consumed the parent company and he had been elected president.

In 1988 he joined with other senior executives to buy the firm for a price he would not disclose. In his first year, he closed offices in Atlanta, Chicago and Austin, Texas, and moved the company's headquarters to Columbia.

"What I started here is all that's left of the company," he said with a sweeping gesture across his corner office that overlooks Town Center.

JSA, which fills the fourth floor of the American City Building in Columbia's Town Center, does about 90 percent of its business with the military and is the second-largest operator of clinics for the Army, Navy and Air Force. PHP Health Care of Alexandria, Va., is the largest.

"Not for long," promises Damkoehler, who hopes to increase his military business while expanding into the private market.

JSA recently hired its 570th employee and in December was named by Inc. magazine as one of the fastest-growing privately owned firms in the nation. About 45 employees work at the Columbia headquarters.

The company is in negotiations with about 10 large companies, Damkoehler said, although he declined to name them. JSA also hopes to sign contracts with state and local governments.

JSA's approach works this way:

Traditionally, health providers write separate paperwork for every examination, laboratory test, X-ray and prescription. Often these are handled by a third party, which adds another layer of administrative costs.

But JSA charges afixed price regardless of the number of tests, X-rays or prescriptions.

"Under our system we send out two invoices a month for 10,000 visits," Damkoehler says. Each invoice covers half of the month.

Typically, 30 percent of health care costs are administrative, and JSAhas cut that to about 1 percent, Damkoehler said.

The company charges a flat fee per visit, from $50 to $60, or a monthly charge basedon an estimated number of visits ranging from 30,000 to 150,000 a year. A typical commercial urgent-care clinic handles about 12,000 visits annually.

JSA maintains its system means health care at costs far below traditional insurance plans, health maintenance organizations or other methods in wide practice.

The clinics offer what is known in the industry as primary care, or the first contact patients have with health care. They can provide everything short of examination by a specialist or hospitalization.

JSA clinics vary in size, withstaffs of four to 20 doctors, and are open 40 to 84 hours a week. The company also runs occupational health clinics, which treat on-the-job injuries and collect drug testing specimens at industrial sites.

Damkoehler says JSA has never lost a military contract to an HMO, and several times under-bid an HMO for a military contract by 30 percent.

The military is planning to farm more of its health care out to private companies and contract for more clinics, said Maj. Paul Mouritsen, associate administrator at Walter Reed Army Medical Center inWashington.

Mouritsen, who proposed using private health care forthe military, said the move was necessary to deal with an increase in the number of dependents needing care, while the number of actual service people dropped. In the all-volunteer military, people are re-enlisting more and starting families, he said.

But with many of itsmedical teams structured for wartime duties, the military found itself short of family-practice or pediatric physicians.

Before the clinics were launched, family members of airmen, soldiers and sailors were covered by an expensive insurance program called the Civilian Health And Medical Program of the Uniformed Services, or CHAMPUS.

"CHAMPUS has gone from about a $900 million program to a $3.5 billion program, which mirrors the exploding health care costs around the country," Mouritsen said.

But the military's clinics, which are run by JSA and competitor PHP, reduce co-payments for families from 20-25 percent to zero and bring the cost of a visit from an average of $78 to$40 or $45, Mouritsen said.

Under CHAMPUS, the government pays providers separately for each office visit, prescription, lab test and X-ray.

"There's no incentive to control those ancillary costs," Damkoehler says. "Because we charge a fixed fee, there is incentive to control those ancillary costs."

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