BUSINESS
411111
■ 111
AARON HALABE
Special to The Jewish News
A
midst the horror
stories surrounding
the volatile health
care industry, Richard Rogel's
eight-year-old Southfield com-
pany is a rare exception.
Preferred Provider Organi-
zation of Michigan (PPOM), of
which he is chairman, recent-
ly earned the top spot in
Michigan Business
magazine's 1990 ranking of
the state's 100 fastest grow-
ing private companies. The
firm markets its health-care
plan to insurance companies,
third party payers and cor-
porate clients seeking
economical health care
coverage for their employees.
Over the past five years, it
has enjoyed a 97 percent
growth rate in revenues.
The secret, it seems, is that
Mr. Rogel studied the in-
dustry and carved out an im-
portant niche.
The PPOM network in-
cludes 58 participating
hospitals and 4,500 physi-
cians who agree to provide
medical services at dis-
counted fees. Its nearly
300,000 subscribers pay $5 or
$10 per office visit and receive
full coverage for all health
care services if they select
providers in the network.
Mr. Rogel's innovative
health care management
philosophy took shape in the
early 1980s when he owned a
struggling Livonia medical
clinic. At that time, he said,
his competitors were perform-
ing profitable but often • un-
necesary tests once done by
independent labs.
Mr. Rogel, 41, decided on a
plan that redirects the pay-
ment flow so that doctors
make more money for office
visits and less for ancillary
services. He reasoned that
doctors should feel free to
prescribe tests, but they
should have a greater finan-
cial incentive to provide basic
client care.
"We felt the methodology
for reimbursing physicians
was wrong," Mr. Rogel said.
"We control abuse not by
regulating when a doctor can
or can't perform a test, but by
taking the profit motive out of
it. What we've done is to reim-
burse them for what they
went to school for — for
cognitive reasoning and
surgical ability, for head and
hands skills."
Franklin J. Ellias, a
Southfield health care
benefits consultant, said the
PPOM approach works
Feeling Nell
Entrepreneur Richard Rogel's PPOM
health-care organization keeps growing.
because Mr. Rogel is familiar
with the financial intricacies
of the medical world. "Before
PPOM, doctors gave away of
visits to entice people in-
to their offices, then hit them
with heavy lab bills to make
up the costs. In other words,
he (Mr. Rogel) is saying that
he'll pay people to practice
medicine, not run a lab."
In forming PPOM, Mr.
Rogel consulted medical
specialists to determine a
"reasonable and fair" fee
schedule. PPOM health care
providers agree to abide by .
the ceiling on fee reim-
bursements. The result, Mr.
Rogel said, is a financial
"win-win-win" situation for
all involved, "We serve three
masters — the patient, the
provider and the payer, and
the interests of each are equal
in our minds."
Many industry analysts
lavishly praise Mr. Rogel and
his PPOM philosophy. "I
think PPOM is one of the best
preferred provider organiza-
tions in the country," said
Max Fine, a Washington, D.C.
based health care consultant.
Mr. Fine, who founded the
,American Association of
.PPOs in 1983, said that
PPOM offers managed care
that controls costs,' provides
quality doctors and offers a
system that insures that
those doctors abide by the
standards of quality care. "I
wouldn't say nearly as much
about 75 percent of the PPOs
in the country. He (Mr. Rogel)
is in that top group that
knows what they're doing,
and I admire him?'
Mr. Ellias of Southfield has
enthusiastically recommend-
ed the PPOM program to his
clients. "Some of the groups
that I've placed on PPOM are
seeing a stabilization of costs.
And we are not seeing any
reduction in the number of
doctor visits — services are
being rendered and we are
seeing some pretty nice sav-
ings. People are getting good
health, care and their
employers and insurance
companies are saving money,"
Mr. Ellias said. He estimated
that some of his clients enjoy
a 15-22 percent cost savings
using the PPOM program.
Mr. Ellias attributes most of
PPOM's success to Mr. Rogel,
whom he characterizes as
"charismatic and scrupulous-
ly honest." Mr. Ellias said Mr.
Rogel holds PPOM doctors to
high ethical standards. "They
monitor the bills," Mr. Ellias
said. "They know what the
percentage should be of a
given number of visits for a
particular illness. And if they
start to see an aberration in
the numbers, they confront
the doctors. It doesn't happen
very often, but they know
when games are being
played."
Mr. Rogel encourages his
employees to enjoy them-
selves while at work. "Our
people have fun and take a
tremendous amount of pride
in their work," he says.
"That's why they're on the
cover of that magazine
(Michigan Business) with me.
I could not be here without
them.
One way Mr. Rogel shows
his appreciation to his
employees is by funding a col-
lege reimbursement program.
The plan pays employees all
of their costs for tuition and
books if they receive A or B
grades; 50 percent for Cs.
Employees are immediately
eligible for the program once
hired and they may study any
curriculum they desire. Mr.
Rogel estimated that 20
employees will participate in
the program in the fall.
PPOM expanded statewide
with an office in Grand
Rapids and a growing
presence in the Lansing area.
Mr. Rogel said he expects the
firm to explore potential
operations in Illinois, Ohio
and northern Indiana.
His largest clients include
Northwest Airlines, the
Detroit Police Officers
Association and Michigan
Consolidated Gas Company.
Mr. Rogel attributes much
of his success to his ex-
periences as a business stu-
dent at the University of
Michigan. "The U of M was
very important. It taught me
how to get along with people
as much as anything else.
What I learned in the
business school was tremen-
dously helpful because it set
the stage for me to go into the
different jobs where I learned
everything that coalesced in-
to PPOM."
Before forming PPOM, Mr.
Rogel worked in New York for
Arthur Young and Company,
Burnham and Company and
later, in Southfield, as
treasurer of Seligman and
Associates. Rogel maintains
strong links to the Universi-
ty of Michigan. He serves on
the Presidential Society
Board of Governors and is a
member of the School of
Business Administration's
Advisory Board.
He and his wife Susan are
active with the Bar-Ilan pro-
gram and are affiliated with
Congregation Mat Shalom. ❑