New Health: Novello Health aims to provide cheaper, more transparent healthcare options

The United States has the most expensive healthcare system in the world. According to the Organization for Economic Cooperation and Development (OECD), the per capita health expenditure in the U.S. was $10,586 in 2018, nearly double the next country on the list – Germany, with a per capita expenditure of $5,986.

The team at Traverse City’s Novello Health believes that healthcare should be more affordable, more accessible, and more transparent, and they are using free market concepts in an effort to get there. Based in the same Copper Ridge development that houses many of the area’s medical offices, Novello is quietly staging a revolution. And as healthcare costs continue to rise, the organization is only gaining traction as a legitimate alternative to Munson and other area providers.

Novello Health is actually three different healthcare facilities, all housed side by side in the same building. One of those facilities is the Novello Imaging Center, touted as a “brand new, state-of-the-art facility” where patients can access imaging services such as MRI, X-rays, CT scans, and ultrasounds. A second facility is Novello Infusion, which provides infusion therapies to treat autoimmune diseases, gastrointestinal diseases, and other chronic conditions. Finally, there’s Novello Specialty Clinic, which is working to improve access to specialized medical treatment in northern Michigan by bringing more specialists – such as rheumatologists – to the area.

Uniting the three Novello facilities is a core belief in delivering a more personal, affordable, and patient-centered healthcare experience.

A Different Way of Doing Business

Sneed

Dr. Peter Sneed, one of the founding physicians behind the Novello brand, told the TCBN that this particular vision has been building for years. When he came to Traverse City in 1994, Sneed felt moved to “spend a little bit of my time being involved in the business of medicine, and in looking at how doctors can work together.” That impulse led him to join the Northern Physicians Organization, through which he met Dr. Robert Kuhn, another of Novello’s founders. Over the years, the two realized that they shared key beliefs about the future of medicine.

“We have always believed that physician leadership is really, really important in medicine,” Sneed said. “We have certainly seen that magnified over the last 10-15 years, as more and more control in the decision-making of medicine is going away from the patient and the physician. We’re losing that physician-patient relationship. Instead, decisions are made by insurance companies or drug companies or hospitals or government.”

Kuhn

Always a physician-led organization, the Northern Physicians Organization eventually became the Novello Physicians Organization, which spearheads all three Novello facilities. The newest of those, the Novello Imaging Center, opened last August. Across the board, Sneed said Novello is defined by its commitment to preserving the physician-patient relationship and to pursuing the healthcare concept of “Quadruple Aim,” which stresses improved patient experiences, lower costs, better healthcare outcomes for patients, and “improving the joy of practicing medicine for physicians and providers.”

Several years ago, those ideas coalesced into Novello as it exists now. “I was at a national ophthalmology conference in Chicago, and I remember walking down the street when my phone rang,” Sneed said. “It was Dr. Nathan March [another Novello co-founder] and he said, ‘Hey, do you want to build an imaging center?’”

March was moved, in particular, to do something about rising costs and ongoing troubles with pricing transparency in the healthcare world. As of January 1, 2019, federal law requires all hospitals in the U.S. to post prices for their procedures and services online. March felt that healthcare providers were largely falling short of that requirement – in spirit, if not in practice – and wanted to try out a different way of doing things. Imaging services, which are extremely common in healthcare for a long list of reasons, seemed like a good place to start.

March

“I don’t know of any other business where you don’t know what the cost is going to be prior to consuming something,” March said. “But in medicine, it’s oftentimes months later that you’re finding out the true cost of the service that was delivered. And what things insurances will or will not cover is always a surprise. So, I think people have become very unhappy with the way healthcare has matured and evolved, and with where we are in 2022. Years ago, the federal government mandated that all healthcare providers, including hospitals, need to become transparent with their pricing. They’ve all fallen short. I challenge you to go into the different hospitals around our area and try to find that list [of pricing for different services] and make sense of it. I felt like we had a responsibility to deliver true cost transparency, so that there’s no surprise in the bill when it comes later.”

For March, finding ways to lower prices in healthcare is an imperative, and not just to give Novello a competitive opportunity in the marketplace. With healthcare costs being what they are – including health insurance rates and insurance plan deductibles – he’s worried that the average American is now afraid of seeking care because it could bankrupt them.

“Just compare our MRI costs to any other hospital systems in our region,” March said. “Often, we’re talking about the same imaging modality, the same piece of equipment, the same radiologist doing the reads, and we’re doing them at 30-40 percent of the price. I think that speaks to the value proposition [of Novello], and I think it will speak to the patients at the dinner table who are really looking to see what services they can afford or not. Those people are unlikely to get those services that may be needed if they don’t even know what the starting point is for the costs.”

March isn’t exaggerating about Novello’s pricing differences. The price sheet for Novello Imaging Center lists its MRI cash price amounts between $337 and $739, depending on the part of the body being scanned, the need for contrast, and other factors. The chargemaster for Munson Medical Center (MMC), meanwhile, shows MRI prices that range from $420 on the low end to $5,082 on the high end. It’s not just MRI scans that see a significant difference, either. An abdominal CT scan with contrast carries a $376 cash price at Novello, versus the $3,360 listed on the MMC chargemaster. And an X-ray of the chest with two views is $51 at Novello Imaging Center, compared to $380 at MMC.

Cutting Costs, Not Service

So, what’s behind the (sometimes dramatic) difference in pricing? According to Brian Madison, who serves as administrator for the Novello Imaging Center, the difference comes down to operational efficiencies.

“When we look at our staffing model here, for instance, we have a lot of folks that are cross-trained,” Madison said. “When you go to some larger institutions, you have a model where they say, ‘That’s the CT department; that’s the X-ray department,’ and so on. At any given time, the CT department might be really busy, but the X-ray department is not. And then you might have a situation where the X-ray techs are just kind of sitting there doing nothing. Here, they’re all cross-trained, which means they do both and they can all help each other out. Which, in the end, what that results in is being more efficient on your labor expense, and we can then take that efficiency and pass it on to the customer.”

The efficiencies extend to the equipment. While Madison said it’s important for any imaging center to have “really good quality imaging equipment,” he also noted that it’s not essential to have the highest-end equipment on the market.

“We don’t necessarily need to get that 3T MRI the hospital has,” Madison said, referring to the three-tesla MRI machine typically viewed as the industry standard for MRI technology. A “tesla,” in this case, is a unit of measurement, indicating the strength of a magnetic field. A 3T MRI uses extremely powerful magnets to generate its magnetic field, which allows for faster, clearer images than lower-field MRI scanners can provide. While 3T is indisputably the “best” MRI machine, Madison said it isn’t necessarily essential for every scan, or even for most of them.

Elliott

“[Situations where we’d need 3T MRI], that’s about 5-6 percent of our total volumes,” Madison explained. “So we can look at our equipment cost and say, ‘Look, we’re going to have a really nice 1.5-Tesla [MRI], but we don’t need the 3T.’ We don’t need to be everything to everybody. We can do 95 percent of the [scans] in a general-type place, and that saves us a significant amount of money in equipment costs without losing us a lot of volume.”

There are other differences too. For instance, Kris Elliott, director of operations for the Novello Physicians Network, noted that all hospitals – and all hospital-owned clinics or physician’s offices – “are allowed to add a facility charge to all their bills.” As a result, Elliott said a “standalone center” like Novello will almost always cost less than a hospital or hospital-affiliated competitor.

Competitor or Collaborator?

Not that Novello’s team members like thinking of themselves as “competitors” to Munson or anyone else.

“That’s the problem [with healthcare],” Madison said. “We’re not the enemy. There’s enough opportunity here. We need to talk about collaboration.”

That collaboration is starting to happen. Madison recently worked to get Munson’s radiology team set up with instant access to Novello scan. Now, if a patient goes to the hospital after getting a CT scan at Novello Imaging, there’s no communication breakdown – and no delay of care – stemming from the fact that Novello isn’t a Munson-affiliated entity. Madison is working with the orthopedic surgery team at Munson to make sure the same access is available for Munson surgeons to pull up Novello MRI scans in the operating room.

And ultimately, whether its viewed as competition or not, Sneed thinks that Novello exists because the market demanded it. Patients, he said, are waking up to how much their medical care costs and to how much they are paying out of pocket thanks to high-deductible plans. In turn, those realizations are leading more and more people to seek out lower-cost options. “People are being more engaged in their own healthcare, which is a good thing,” he concluded.

Hooper

Marie Hooper, executive director of the Novello Physicians Organization, sees the growing patient awareness and engagement as the first step toward reforming healthcare – and to creating a future where the American medical system isn’t the most expensive one on the planet.

“I’m hoping that, the more we can engage patients in their healthcare and provide the tools and the questions for them to be asking the questions that any customer should be asking, that perhaps we can get a little more speed around fixing the problem,” Hooper said. “Because it’s way too easy for those who have been very comfortable in the current system – i.e., the major insurance companies, the major hospital systems, etc. – to just say, ‘This is all very complex; we can’t fix it.’ Well, we can fix it. We are determined to fix it. And we’re hopefully going to help make that happen by setting an example. Physicians and patients are really the two key ingredients for any healthcare, and by working together, they can set the expectation for what comes next.”

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