When a Somali refugee family moved in across the street from Dr. P.J. Parmar in Aurora, Colorado, at the start of the year, he knew they might face trouble accessing health services.
In an attempt to diversify resettlement, the state was placing newly arrived refugees in higher-income neighborhoods, some of which lacked healthcare options for low-income patients.
But the family were ideal patients for the private practice Parmar founded in Aurora in 2012. Ardas clinic is a for-profit social enterprise whose patients come entirely from the refugee community. Parmar believes he has found an alternative model to the nonprofit clinics and federally qualified health centers (FQHCs) that serve most refugees – one that is both profitable and provides the health services that refugees really need.
“I have to keep costs down and serve patients in a manner they like, or I’m going out of business,” says Parmar, who grew up in an Indian immigrant family in the Chicago area and also runs a scout troop for refugees.
Over 2,400 refugees were resettled in Colorado last year. Refugees in the U.S. are eligible for Medicaid, the government-funded healthcare assistance program for low-income families that is under fire from some Republican lawmakers.
Many private doctors don’t want to take many Medicaid patients due to low reimbursement rates, but Parmar says Ardas clinic proves Medicaid can be profitable – through innovation and eliminating inefficiencies. Ardas’ profits are then reinvested into the refugee community via Mango House, which houses the clinic and a collection of refugee support organizations.
Refugees Deeply: What problem were you trying to solve by opening Ardas clinic?
P.J. Parmar: I saw a gap in healthcare for underserved people on Medicaid and specifically refugees. I thought this could be done better [than FHQCs] in terms of the quality of services provided and more efficiently by lowering the costs through a for-profit approach.
Refugees Deeply: What health challenges do refugees face in the U.S.?
Parmar: Refugees face bigger gaps in healthcare services than other low-income people in the U.S. – there are cultural barriers, language barriers and what some call “health literacy.” Many of our newly arrived refugees don’t know how to navigate the U.S. healthcare system.
Refugees Deeply: Why did you choose a for-profit approach to Medicaid?
Parmar: The speed at which you can innovate and adapt to serve patients is much greater when you’re not tied to income sources. Nonprofits tied to funding sources may have a mission drift.
My model is based entirely on Medicaid reimbursement. FHQCs get Medicaid payments on the Prospective Payment System (PPS) while other clinics, like mine, have a different set of rules called fee for service (FFS). PPS pays almost twice what FFS pays, meaning FQHCs get almost twice what I get. Throw in that nonprofits get donations and grants, and their income can be triple mine, per visit.
But when you are doing it with a capitalistic approach, it’s your own money on the line and also your own ego. Those are really great motivators to do things better and to make sure you don’t fail. I like that whole incentive structure of being different – it speaks to me to work harder for the clients.
Refugees Deeply: What are some challenges you have faced as a for-profit enterprise?
Parmar: The FQHCs and University of Colorado are set up so that when you’re not part of their system, you can’t use their resources. And because Medicaid pays less and fewer providers take Medicaid, there are less medical specialists that take Medicaid. My office is about two miles from the state’s largest hub of healthcare providers with hundreds of doctors, but ironically it’s still a resource-limited setting. The whole system is set up against the idea of a small practice being able to innovate and serve better.
The Medicaid system and the refugee state screening process assign patients to certain locations. The patients who don’t know better stick with those systems until they can figure out their other options. Systems that originally were set in place to help folks but can become more of a barrier.
If you come in doing something drastically different, meaning you don’t have to answer to the same funding sources as others do, it can result in friction. My patient base has come from people leaving other institutions to find better services.
Another major challenge for a for-profit company is taxes. If my clinic makes an extra $100,000 in profit, that’s seen as my income and can be taxed up to 50 percent.
Refugees Deeply: Are there risks in relying on high volumes of patients in order to offset the low reimbursements rates from Medicaid?
Parmar: I have a number of innovations in place that better serve the clients. One of them is that we do all walk-in appointments. Most of our refugees appreciate this based on where they come from. And when you have less income, you can’t get to your appointment on time because you don’t have a car, you need to take care of the kids, and so forth. With walk-in appointments, your clinic has a zero no-show rate and a zero late rate.
Not only do the clients like it better, but also it works better from a business standpoint. Having no appointment times means I can spend 30 seconds with a patient or 45 minutes with a patient, depending on the complexity. We wouldn’t be able to do that if we were constrained on time. We don’t offset it by volume intentionally, but that happens as a result of providing something the patients want anyway.
But our numbers don’t work out entirely just because of the volume of patients. Our numbers work out largely because of reduced costs. There’s a lot of inefficiencies in the U.S. healthcare system – they’re on the front page of the newspapers every day. If you can tap into things that can be done way better and use the financial gains to provide social services that otherwise might be provided by the government, this is a kind of “economic arbitrage.”
Refugees Deeply: Could this model be replicated around in the U.S. or in other countries?
Parmar: In the U.S., the amount that Medicaid pays is different in each state. Colorado is in the middle of the pack. I’ve looked at other states and I could make this model work in about two-thirds of the states based on how much they get reimbursed. There are a few states called Medicaid “dead zones” that make it almost impossible for doctors to take Medicaid. Although some would say that about Colorado, I am able to make money just fine on Medicaid.
The stigma that prevents a lot of providers from taking Medicaid patients – and refugees especially – comes from people saying: They don’t speak English, they’re late for their appointment times, they don’t adhere to the advice in terms of taking their medicines in the correct way, and to be crude, they just smell and look funny.
If you can get over those concepts, and create a system actually tailored to the clients in a patient-centered system rather than tailoring it to the funding source or to the comfort of the providers, then I think you could serve patients very well pretty much anywhere in the world.
Refugees Deeply: What challenges do you see coming in the year ahead, in light of debates over the future of the Affordable Care Act?
Parmar: Healthcare policy changes potentially have a massive effect on what I do because about 90 percent of my patient visits are on Medicaid, but about 97 percent of my clinic income is Medicaid. Any change in Medicaid reimbursement rates obviously affects what we do.
But it’s more nuanced than that. If it becomes an issue of state policy, then it’s up to the state legislature what to cut. We have the only dental clinic in Colorado that serves refugees on Medicaid in Mango House – that dental benefit for Medicaid patients in Colorado was only started a couple of years ago. That could be one of the first things to go if someone was looking for a way to cut funding.
This interview has been edited for length and clarity.