For a full transcript of this episode, click here. I’ve been in a couple of meetings lately. In one case, a healthcare company came up with a strategy and deployed it; and the strategy didn’t go as planned. The other one, it did go as planned—it worked great. Of course, I’m coming in on the back end like a Monday morning quarterback here; but the plan that failed, I have to say, I wasn’t surprised. Had they asked me ahead of time, I would have told them to save their money because the plan was never gonna work, even though the strategy looked like kind of a straight line from here to there. Nor was I shocked by the success of the other plan, even though this one that triumphed had what looked like five extra steps and was slightly counterintuitive if you looked at it cold, without understanding the way the healthcare industry actually works. Here’s my point: It might feel like the healthcare industry is chaos monkey central and impossible to predict actions and reactions—and, for sure, there’s always unknowns and intersecting variables—but it’s not a complete black box. The trick is, as you know and I know, you gotta understand what other stakeholders are up to. You gotta get a bead on what they’re doing and what their incentives are because then you can better predict actions and potentially reactions. So, let me state the obvious (that’s why listeners tune in to this show as I just said, and it’s what we aim to shine a light on here at Relentless Health Value): the pushes and the pulls and the forces. What’s going on outside of the organizations or the silos that we work within day-to-day. Because if you’re looking to sell to, partner with, not be obstructed by [insert some stakeholder here], then it’s very vital to be keyed in on what they’re doing or what their customers are doing or what their customers’ vendors are doing. This show should feel like it gives you a measure of control (or at least that’s my hope) or a method to find the measure of control. And I hope you succeed. That’s why I continue to put out these shows. The RHV tribe members want the same thing I want—to fix the healthcare industry for patients and for members—so, thanks for being here and for making actionable the insights that you might find here. I have been so looking forward to doing a show with Ben Schwartz, MD, MBA, orthopedic surgeon and prolific writer of deeply thoughtful and insightful posts on LinkedIn. In this healthcare podcast, we are talking about bundled payments. And today’s your lucky day if you think you know a lot about bundles, because most people who listen to this show at least know enough to be dangerous. So, that’s our starting point, which is why I asked Dr. Schwartz to talk to me about what most people find surprising about bundles and bundled payments. There are four surprises that we go through in the show today. Listen to the show or read the transcript to find out exactly what they are. So, no spoiler alert alert. But relative to these surprises, we get into the four types of bundles that may or may not be available. And those four types of bundles are: 1. CMS bundles such as the BPCI (Bundled Payments for Care Improvement) and the CJR (Comprehensive Care for Joint Replacement) bundles, and we talk about the current state of said BPCI bundles, which are being sunsetted probably because so many efficient clinical teams are being penalized for getting too efficient. They become victims of their own success the way the program is currently designed, wherein the goalposts keep shifting. 2. Commercial bundles—ie, a bundle that is offered by a commercial carrier such as a BUCA (ie, Blue Cross Blue Shield/UnitedHealthcare/Cigna/Aetna/Anthem) carrier 3. Direct bundle—a bundle that is paid for directly by a plan sponsor such as a self-insured employer 4. Condition- or diagnosis-specific bundle. These types of bundles do not spiral around a surgical intervention at their core, which most of the current bundles do. This may describe CMS’s recently announced “Making Care Primary” initiative, but we’ll have to see about that. Speaking about the #3 kind of bundle, the employer-direct bundles, especially for musculoskeletal (MSK), let me share a post by Moby Parsons, MD, that I thought captured the entrepreneurial spirit of some of these orthopedic surgeons who are seeking employers to direct contract with and cut out the middleman, etc (which, by the way, is the main topic of an entire show upcoming with Elizabeth Mitchell from the Purchaser Business Group on Health). But Dr. Parsons wrote: “When our bundle business has sufficient growth to ensure the absolute sustainability of our practice against declining reimbursements … in a fee-for-service system, I am getting this tattoo. Don’t tell my wife. [And the tattoo is ‘Free Yourself.’]” My guest today, aforementioned, is Dr. Ben Schwartz. He’s an orthopedic surgeon in the Boston area still in full-time clinical practice. He’s grown very interested in healthcare innovation, healthcare technology, and does some advising and investing. Dr. Schwartz also writes a great Substack called Dem Dry Bones. After you listen to this show, please go back and listen to the one with Steve Schutzer, MD (EP294) talking about how to create a Center of Excellence and also the one with Rob Andrews (EP415) about how and why if you are a plan sponsor you might want to consider direct contracting with quantifiably amazing provider groups. Also, if you are an ortho or involved in MSK care, I might suggest following Karen Simonton on LinkedIn, as well as Moby Parsons, MD, and, for sure, of course, my guest today, Dr. Ben Schwartz. Also mentioned in this episode are Moby Parsons, MD; Elizabeth Mitchell; Steve Schutzer, MD; Robert Andrews; Karen Simonton; Peter Hayes; Al Lewis; and Cora Opsahl.   You can follow Dr. Schwartz on LinkedIn and read his blog on Substack.

For a full transcript of this episode, click here. On the show today, I am going to use the term TPA (third-party administrator) and ASO (administrative services only) vendor kind of interchangeably here. But these are the entities that a plan sponsor—for example, a self-insured employer is a plan sponsor—but these plan sponsors will use to administer their plan. And one of the things that TPAs and ASOs administer is this so-called weekly claims wire. Every week, self-funded employers get a weekly claims run charge so they can pay expenses related to their plan in weekly increments. The claims run usually comes with a register or an invoice. This invoice might be just kind of a total (“Hey, plan. Pay this amount.”). Or there might be a breakdown like, “Here’s your medical claims, and here’s your pharmacy claims.” Maybe there’s another level down from that of detail if the plan or their advisor is sophisticated enough and/or concerned enough about the fiduciary risk to dig in hard about what the charges are actually for. I was talking about this topic earlier with Dana Erdfarb, who happens to be executive director of HR at a large financial services organization. Dana I’m definitely gonna credit for inspiring this conversation that I’m having today with Justin Leader. Dana was the first one to really bring to my attention just the level of hidden fees that are buried (many times) in these claims wires … because when I say buried in the claims wire, I mean not charged for via an administrative invoice. These hidden fees are also not called out in the ASO finance exhibit in the contract, by the way. So, yeah … hidden. I don’t know … if you have to hide your charges, in my mind that’s a pretty big tell that your charges are worth hiding. Now the one thing I will point out is that just because the charges are worth hiding doesn’t necessarily mean that the services those charges are for are unwarranted. Some of these services are actually pretty worthwhile to do. There’s just a really big difference from a plan sponsor knowingly contracting at a known rate with a third party to do something versus paying for a service knowingly or unknowingly via fees hidden in a claims wire wherein the amount paid is not in the control of the one paying the bill. Anyway, I was talking about all of this earlier, as I mentioned, with Dana Erdfarb. That conversation was exactly the framework that I needed to snag Justin Leader, my guest today, to come on the pod and really dig into the detail level of what’s going on with this claims wire. So, in this healthcare podcast, we’re gonna talk about the five fees that tend to be tucked in to many claims wires. We also talk about one bonus—not sure if it’s a fee—one bonus way that plan sponsors give money to vendors in ways the plan sponsor might be unaware of. Here are the five hidden fees that we talk about at length in the show today, and then I’ll cover the bonus: 1. Shared Savings Fees. This is where a member of a plan goes out of network, and the TPA/ASO goes and negotiates a discount from the out-of-network provider and then shares the savings. Get it? Shared savings? This category also might include BlueCard Access fees, which we talk about in the show. But there also could be overpayment recoupment fees lumped in here. This is where the TPA messes up, overpays, and then charges the plan sponsor a percentage of the money they just got back when they corrected their own mistake. I’m just gonna pause here while everyone contemplates how we’ve all gone so wrong in life to not have figured out a way to charge others when we correct our own mistakes. Here’s a link to a great LinkedIn post by Chris Deacon and a deep dive article on this topic. 2. Prior Auth Fees. Lots to unpack with this one, which Justin does in the pod. 3. Prepayment Integrity Fees. This is evaluation of the claim before it’s being paid. Listen to the show for how this may (or may not) differ from what the TPA/ASO is supposed to be doing (ie, it’s the TPA that’s supposed to be [yeah, right] adjudicating and paying claims). 4. Pay and Chase Fees. This is where a bill was paid wrong, and it’s not immediately the TPA/ASO’s mistake. This is where something like a provider double billed or overcharged or something, and the TPA/ASO later figures this out and then chases the pay to get the money back. 5. TPA Claims Review Fees. Sort of self-explanatory but also not. Again, please listen to the show for more. When I’d been talking about all of this with Dana Erdfarb, as I mentioned earlier, just about this whole thing, she said something that Justin Leader echoes today: Many of these fees are structured as a percentage of savings. This is challenging for a plan sponsor because the savings is vendor reported and not validated. But it also means that if the savings increase annually with trend (as they, generally speaking, do), then the fees will increase with that trend as well—and that is something to keep in mind. Okay … so, here’s the bonus thing that didn’t get a number in the show today, but it is certainly a way that plan sponsors pay money to vendors. And this is medical claims spread pricing. This is buried in the claims wire and inside the dollar amounts the plan sponsor thinks they are paying a provider for a service. It turns out that it can turn out that the amount the plan sponsor is paying is more than the check that’s being written to the provider for the service being delivered. Or the amount the plan sponsor is paying the provider for a service is more than for simply that service that has been rendered, right? The plan sponsor is paying the provider for other stuff as well, as is alleged in the DOL v BCBS of Minnesota lawsuit, which Justin brings up in the show today. It drives me nuts, honestly, when there are people who tout their transparency. But then it turns out if the equation is A plus B equals C, only like one of the numbers is transparent. Sorry, functionally, that doesn’t count as transparency except in marketing copy. This is all to say—and here’s Dana Erdfarb’s actionable advice which sums up points Justin also made—when employers review their medical plan vendor contracts, they should make sure to identify, review, and document all fees being paid to their vendors and incorporate this knowledge into their renewal/RFP (request for proposal) discussions and negotiations. Jeff Hogan echoed this advice on LinkedIn the other day when he commented on this show: “Such a great opportunity for employers to have their administrative services agreements and other documents examined to discover these schemes. It’s not hard to do. Also, a great advertisement for the value of having retrospective audits performed. It is eye opening to see not only the amount of arbitrage but often how payers don’t even pay according to their contracts. Justin Leader is the perfect guest.” As mentioned a myriad of times already, my guest today is Justin Leader, who is president and CEO of BenefitsDNA. Justin works with plan sponsors, both commercial plans as well as Taft-Hartley plans, across the United States. Before we kick into the show today, I just want to thank By the 49ers for the really nice review on iTunes. By the 49ers calls Relentless Health Value a “leading voice in healthcare” and says he or she always leaves “with intrigue, a new idea or a new approach to problem solving.” Really appreciate that. That is certainly one of our goals around here. So, thank you so much. Oh, also, please subscribe to the weekly email that goes out. You can do that by going over to our Web site and signing up. There are a lot of advantages to doing so, which I’ve talked about before, so I’m not gonna do so again; but it is a great way to make sure that if you’re a member of the Relentless Health Value Tribe, you are aware of the current goings-on. Also mentioned in this episode are Dana Erdfarb, Chris Deacon, Jeffrey Hogan, BenefitsDNA, Rik Renard, Cora Opsahl, Al Lewis, Julie Selesnick, Mark Davenport, Karen Handorf, Dawn Cornelis, AJ Loiacono, and Mike Miele. You can learn more at benefitsdna.com or wefixyourhealthcare.com. You can also follow Justin on LinkedIn.

For a full transcript of this episode, click here. Here’s a great musing that I read on LinkedIn: How will alternative primary care models fare when growth mode gets balanced with profitability and VC-supported burn rate is transformed to Big Retail bottom-line expectations? Mission v. margin. I’m gonna add to this: How will alternative primary care models, or even just doing good primary care, fare when it encounters the current system rife with perverse incentives of all kinds, including, yeah, for sure, Big Retail bottom-line expectations but also Big Health System and Big Payer bottom-line expectations and current business models? This show from last year was wildly popular—maybe one of our most popular shows—and relisten to it in the current context of what’s going on right now in the primary care and MSO (Managed Services Only) space. Coming up, I’m gonna probably do a whole show on this if I can get my act together; but this encore is really relevant right now. One piece of podcast business before we get into the episode: Please sign up for our weekly email if you haven’t already, especially if you consider yourself part of the Relentless Health Tribe. I am mentioning this not only because it’s a great way to keep track of our shows because you can do an email search to remember where you heard something, since a good deal of the show intros are in the emails, but also, there’s a plan afoot to hold some Zoom meetings to talk about different topics etc—and you won’t be notified of such goings-on unless you’re subscribed. You can unsubscribe whenever you want, by the way; and I am way too busy to send more than one email a week or spam if that was a concern. On Relentless Health Value, I don’t often get into our guests’ personal histories. There are a bunch of reasons for this, which, if you buy me beer, we can talk podcast philosophy and I will tell you all about my personal, very arguable opinion here. Nevertheless, in this healthcare podcast, we are going rogue; and I am talking with Scott Conard, MD, who shares his personal story. You may ask why I decided to go this route for this particular episode, and I will tell you point-blank that Dr. Conard’s experience, his narrative, is like the perfect analogue (Is analogue the right word [allegory, composite example]?). His story just sums up in a nutshell what happens when a PCP (primary care provider) does the right thing, manages to improve patient care for real, and then at some point gets sucked into the intrigue and gambits and maneuvering that is, sadly, the business of healthcare in the United States today. Before we kick in, I just want to highlight a statement that Scott Conard makes toward the end of the show. He says: So, this isn’t about punishing or blaming aspects of care that are being overrewarded today. It’s really about what’s the path forward for corporations, for middle-class Americans, and for primary care doctors who don’t choose to be part of a big system. We have to figure out how to solve this problem. I hope people don’t hear this and think that there are horrible people at some not-for-profit hospital systems, for example. There are some great people at not-for-profit health systems, but they have some really screwed-up incentives. A few notable notes from Dr. Scott Conard’s journey and words of wisdom that I will just highlight up front here: He says that as a PCP, you actually can produce high-value care in a fee-for-service model … if you think differently and you change practice patterns. I have heard this from others as well, including most recently David Muhlestein, PhD, JD, who says this in an episode (EP393). As Dr. Scott Conard says later in this episode, healthcare organizations must embrace the art of medical leadership. So, I guess that’s a spoiler alert there. Another point that Dr. Conard makes very crisply toward the end of the show is that doctors can kinda get pushed and pulled around in this mix. You have docs just trying to provide good care, and they work for one entity that gets bought and now it’s some other entity … and what’s happening upstairs and the prices being charged or somebody somewhere deciding not to make prices transparent, or deciding to sue low-income patients for unpaid medical bills or what charity care to offer or not to offer. These are not doctors in clinics making these calls, and we need to be careful here not to homogenize what some of these health systems are choosing to do like some kind of democratic vote was taken by everybody who works there. Health systems, hospitals, are many-celled complex entities. And a third takeaway—there are a bunch of takeaways in this show, but a third one I’ll highlight here from Dr. Conard’s story—is the old fiduciary responsibility code word being used by health system administrators as a euphemism for strategies that might need a euphemistic code word because the strategy has questionable community benefit. In the case study that we talk about today, the local health system managed to raise healthcare spend in North Texas by $100 million year over year. Employers and employees in North Texas communities wound up paying $100 million more year over year in healthcare one particular year. This was prices going up. It also was removing a big systemic initiative to keep heads out of hospital beds. Reiterating here, we are not talking about doctors here particularly because, of course, the vast majority of doctors are trying to prevent avoidable hospitalizations. But suddenly in North Texas, physicians did not have the population health efforts and the team really standing behind them helping to prevent avoidable hospitalizations. That sucks for everybody trying to do the right thing, and, as has been said, burnout is moral injury in a cheap Halloween costume. Moral injury happens when you have good people, clinicians, doctors, and others who realize that what is going on, at best, is not helping the patient. Also mentioned in this episode are Benjamin Schwartz, MD, MBA; David Muhlestein, PhD, JD; Brian Klepper, PhD; Al Lewis; Robert Pearl, MD; Karen Root, MBA, CCXP; and Wendell Potter.   You can learn more by emailing Dr. Conard at scott.conard@converginghealth.com.

For a full transcript of this episode, click here. This show has implications for provider organizations of all stripes, especially those looking to succeed in value-based care or those who need patient trust and relationships for any other reason, including just patient volume. This episode also is for provider organizations who are trying to prevent clinician burnout better. It’s also for practices trying to get themselves into narrow networks where patient satisfaction is surveyed at some point in the process, and this includes Centers of Excellence networks. You know what the rate critical is that I talk about on the show today with Jerry Durham that rarely, if ever, gets talked about in any of these contexts? It’s not some fancy data artificial intelligence thing or something else the doctor needs to be clicking on or nurses need to step up and handle. Nope. I’m talking about the front desk. What an overlooked secret to success or a clinician and clinical failure point! Consider that what goes on on or about the front desk is either gonna set up the doctor or other provider for success or make it really really hard for them. This is what I talk about today with Jerry Durham in this encore episode from a couple of years ago that is still so incredibly relevant because the insights that Jerry shares are so often overlooked and they impact both patients but also doctors and other clinicians in ways we don’t often think about but, in this era of staff shortages and burnout, I’d suggest maybe we should. Here’s something I never really understood: how physicians and nurses more often than not get to be responsible for the entire patient journey, including, start to finish, patient satisfaction. But if you just take one look at any random poorly rated physician’s reviews, they’re usually littered with complaints about the front desk in the practice. Negative reviews, of course, are not limited to front desk diatribes; but there’s often a lot of front desk commentary in them. It has always seemed to me to be a common and strange phenomenon in healthcare provider practices where the front desk is like a totally separate little fiefdom with a different mission statement and goals from the healthcare providers in the same exact office. Isn’t that odd when you think about it? I mean, first, the front desk is literally physically separated from everybody else. No matter which direction you approach from, there’s at a minimum a half-wall barrier surrounding them. Sometimes, in directions most likely to receive an attack, I suppose, there’s been added a big glass barrier. Liliana Petrova pointed this out in episode 236 of the Relentless Health Value podcast, and it was really the first time that I had thought about it at all and also thought about the implicit message this sends not only to patients but also to clinicians. That whole physicality of the setup, it just screams, “We over here have nothing to do with the mission or vision of anyone else in this place. We have our own thing going on over here, and to do it, we need to be protected from you all and all of your chicanery and untoward goings-on, you doctors and nurses and patients!” So, I was really inspired the first time I heard Jerry Durham from The Client Experience Company talking. His message, as I understood it, was that a practice really on board with helping patients achieve the best patient outcomes and, nothing for nothing, erode clinician burnout includes the front desk in their thinking. Jerry has said that there’s four phases in the patient life cycle, as he calls it, which is sort of a synonym for the patient journey: 1. Marketing 2. The moment that a patient/person engages with the clinic or office 3. Provider interactions 4. The post course of care So, all of these phases—all four of them—are critical to both patient outcomes and experience but also, really, to business success. So, you kind of almost have to do well by doing good. The front desk is mostly responsible for that phase two: what happens when that person/patient engages with your office or clinic. In this healthcare podcast, as mentioned, I’m talking with Jerry Durham. He’s a former physical therapist and practice owner who has worked with a whole lot of PT (physical therapy) practices and also other MSK (musculoskeletal) specialties among other clients. His message transcends the specialty, however. In this healthcare podcast, we get into a lot of aspects in terms of how a front desk can work for or against patient experience and outcomes. One of them is how a front desk can help secure a patient’s relationship with a practice. Without a relationship and trust, patient outcomes are meh at best. But a lack of trust is a big hairy factor behind disparities in outcomes among different ethnic groups, for example, as one point to ponder. Also mentioned in this episode are Liliana Petrova and Julie Rish, PhD. You can learn more at clientexperiencecompany.com or by emailing Jerry at jerry@jerrydurhampt.com.

For a full transcript of this episode, click here. First of all, I just want to start out this pod and really thank everyone listening and for showing up for a show like this one. You do it and you are here because you care about patients/members. It’s just so easy to feel like we’ll never be able to do enough, and that’s a rough, rough feeling. Please take a moment to truly hear how grateful I am for you being here and for doing all that you do and that you try to do. I saw on the interwebs the other day a Marcus Aurelius quote. What he said was, “Be satisfied with even the smallest progress.” And I think this is really important to remember because nobody working in the healthcare industry, especially today, is ever probably gonna get anything close to a perfect solution. So instead, just aim for progress—even the smallest amount—and feel good about that, please. This show is an important one for anybody either in the business of healthcare delivery or buying healthcare delivery services. It’s an exploration of what works and what doesn’t work and how what works can easily become what doesn’t work in the face of the real world. This peril of cutting clinical “waste” perilousness all starts with the whole “Hey, let’s make some money, so we gotta scale and be efficient. We gotta do our thing at as low as possible a cost and maybe grow as fast as possible. We gotta keep our investors happy or pay off the debt we got saddled with or pay that giant management fee we’re being charged or compensate the C-suite at the level they’ve grown accustomed to.” So again, the “let’s be efficient and get everything repeatable” has entered the building. The first point my guest today, Kate Wolin, ScD, makes about all of this—and this is exactly the same point that Rik Renard made in episode 427—efficient to what endgame? Now, it turns out, surveys show, only a small, small percentage of healthcare delivery solution providers are measuring outcomes of pretty much any kind. So, how do we even know if cutting so-called waste is actually waste at all? I mean, in the absence of any actual measures—here’s a hypothetical for you—someone could look around: “Hey, I see these nurses. They’re all just sitting around chatting with patients and, I don’t know, talking about throw rugs? What is this? An episode of HGTV? Who cares if a patient with diabetic neuropathy has throw rugs in their hallway? Let’s tell these nurses chop-chop, get them on the computer using AI to be efficient, right? Let’s get rid of that clinical waste.” I just made a point in the most sarcastic way possible, but the bottom line is this: It’s actually really efficient to not engage patients in these ways, right? Patients, they talk slow, they ask questions that seem irrelevant, and they’re time-consuming. It’s very efficient to not build relationships or foster trust or, I don’t know, assess fall risks … but whatever is going on is also going to fail in that model—from a patient outcome standpoint at least. Here’s a quote from Sergei Polevikov, with some light edits. He wrote on LinkedIn: Primary care is not scalable in the same way as Scrub Daddy or Bombas Socks. That’s something not taught in MBA and CFA programs. Someone should have told Walgreens, CVS, Amazon, and Walmart. They also probably should tell a whole bunch of point solutions and payers. Also, some health system execs or pharmacy leaders might also want to get that memo. What I really liked about the conversation with Kate Wolin in this healthcare podcast is that she retains optimism in the face of all of this. She offers advice for how to navigate the balance between mission and margin in a way that’s better for patients and also sustainable financially. She talks about three points: 1. Founders and investors being in alignment and the essential nature of that 2. The importance of having clinical leadership and a team dynamic that enables innovation but in a clinically sound way 3. How you gotta measure what matters and do it in a way that inspires a mission-driven culture If we’re talking about relevant shows to listen to next after you listen to this one, please do not forget episode 331. This is where Al Lewis teaches us how to evaluate wellness vendors and health solutions, but it also teaches us how to be a good wellness vendor or health solution. Also, do come back and listen to the encore with Jerry Durham next week about front desks and the total care experience. Lots of really bad avoidable things happen if the front desk isn’t considered—and it isn’t often considered. For sure, also listen to the show with Kenny Cole, MD (EP431); that’s a must-listen. Then again, the show with Rik Renard (EP427) came up several times in this episode. The show with Jodilyn Owen (EP421) also gets brought up; that’s a great cautionary tale there to keep in mind for mission-driven entrepreneurs and investors. And then, I also recommend J. Michael Connors, MD. He writes a lot of stuff in a newsletter along these lines. Last, last, last … Please go to our Web site and subscribe to the weekly email. I am planning on doing a few invite-only sessions for email subscribers. Plus, the weekly email is a really very convenient way to get the episode transcripts and stuff. And if you don’t get it, you’re making your life less efficient. So, go fix that. Kate Wolin, my guest today, trained as a behavioral epidemiologist and has done research in chronic disease prevention and management. She launched and led a digital health start-up and sold it to Anthem. She’s been in the digital health start-up space largely at the intersection of science and product strategy ever since. Also mentioned in this episode are Rik Renard; Sergei Polevikov; Walgreens; Amazon; Walmart; Al Lewis; Jerry Durham; Kenny Cole, MD; Jodilyn Owen; J. Michael Connors, MD; Carly Eckert, MD; and Mike Pykosz. You can learn more by following Dr. Wolin on LinkedIn.

For a full transcript of this episode, click here. There’s this meme that’s going around on the interwebs with the caption, “Sometimes the shortest distance in between two places isn’t a straight line.” What? Yeah, because actually there’s three dimensions in the real world. So, when we all consider the real world, understanding the contours of reality and aligning with them is the only way to devise a winning strategy—not only if you’re timing rubber balls getting dropped off straight or curved slopes. I’m saying this because I’ve seen (and you’ve seen) a whole lot of great ideas fail because someone draws a very elegant straight line on a whiteboard, calls it the fastest and most efficient way to get from here to a desired outcome … and then the plan ultimately fails. What contours am I talking about taking into account right now? Oh, pretty much the entirety of US healthcare. If you combine the complexities and perverse incentives of the industry itself plus the art and science of medicine plus epidemiology and social determinants and I’m probably forgetting other dimensions, you have contours that are mountain ranges. Not considering the reality of those elevations and just thinking there’s some kind of straight line here to be found is really a kind of delusion. Now, investors and C-suites may like these delusions, but let’s just get real: It’s not gonna actually work out as written. One case study that I am talking about is digital health solutions or pharma companies even or pretty much anyone who thinks that the fastest way to increase sales is to talk about the product, let’s just say as one example. That’s the straight line to growth: Talk about the product. Another one is stripping away things that feel like they’re a waste of time in the name of efficiency without actually checking if you’re cutting into essential stuff. I talk about this at length with Kate Wolin, ScD, in an episode coming up. Jodilyn Owen has a thing or two to say on this point in episode 421 also. But let me be clear: I’m not talking about anyone listening to the show today making this mistake, at least wholesale. We all make it incrementally; it’s hard to avoid. But you get this. That’s why you’re here. You get that the fastest path anywhere is truly understanding the problems faced by customers. And then it’s showing how the product or whatever you’re doing helps solve those problems. No one cares how efficient or safe your thing is if it’s accomplishing something that no one cares about, no one gets paid for, and/or can figure out how to deploy or use. This is what the entire episode last week, episode 430 with Barbara Wachsman, was about. Why is all of this relevant? It’s actually what makes Relentless Health Value relevant, frankly. Many listeners—and shout-outs to Nate Walker and MaryCarol Evans—say that this is why they listen to Relentless Health Value and what Relentless Health Value helps them with: finding those contours, understanding reality so that it can be aligned with. And on the show today, Kenny Cole, MD, I gotta say, could be really impactful in this regard as well as in others. Nate Walker wrote, “[Relentless Health Value] inspires me every day to stay true to my desire to make a difference in healthcare for patients by adding transparency and helping to connect the dots within this fragmented system.” MaryCarol Evans has alluded to the same thing multiple times as well and often highlights that Relentless Health Value helps her think through and identify the small things that are possible—she says there’s plenty of them—that have a huge impact on the lives of plan members. Dr. Kenny Cole is from Ochsner Health System, and I love this conversation today because it has lessons for anybody working in a clinic or managing a clinic who wants to learn from a master. But it also is really interesting for anyone who’s trying to work with, alongside of, or sell to a clinical practice or health system that is pulling away from the status quo, that is standardizing care and working as a team, one that is earning the trust of its patients, and also one that is figuring out how to reinvent the business model of healthcare such that clinical pathways and care flows are aligned with financial viability. That’s really, obviously, the holy grail here. We talk today about how to achieve clinical and financial success, even if the financial models are all over the map. We talk about how to create a practice model or a clinical model that might appeal to clinicians and keep them from being burnt out while, at the same time, ensure that patients are getting the kind of outcomes everyone can be proud of and the place doesn’t go bankrupt either. This episode reminded me a lot of the conversation with Scott Conard, MD (EP391)—there’s lots of complementary points. The shows with David Carmouche, MD (EP316, AEE15, EP343) from when he was at Ochsner are also pretty relevant here. Some of the points that Dr. Kenny Cole makes today also align very much with what Rik Renard (EP427) was talking about a few weeks ago. But regardless of where you sit or what you’re trying to do, this show is a great one to really get a bead on the lay of the land to find the actual shortest path between here and there, which is not gonna be (most likely) an obviously straight line. Dr. Kenny Cole makes, I’m gonna say, four main points by my counting; and they are as follows: 1. Clinical teams have to deliver care wherein outcomes are measurable, and it has to be done in such a way that those clinical teams are accountable for the outcomes that are generated. 2. Clinical teams need to really see with their own two eyes and believe that a clinical goal that they’ve been given is possible. 3. Care flows are critical here, which means getting everyone on the same page about what best-practice care looks like and operationalizing how that clinical excellence will be achieved. 4. Building trust with patients and connecting with patients cannot be underestimated, and care flows need to not only standardize care so that it can be delivered quicker and easier but also facilitate patient relationships. Dr. Kenny Cole is a primary care internist. He sees patients one day a week. The other days, he serves as a system vice president for Ochsner Health, which is a large integrated delivery system. In this role, he designs and develops new care models. If I’m making recommendations for what to listen to next, I’d go with episode 412 with Robert Pearl, MD—he talks about a model to lead healthcare transformation and clinical excellence. Then episode 391 with Dr. Scott Conard gets into what happens in the real world when the financial model is misaligned with excellent care. Lastly, episode 343 with Dr. David Carmouche. Oh, two last things and new topics: First, thanks to Santos-L-Halper, Nina Lathia, and KC64789 for some really nice reviews this month. I read them. They make me happy. Thanks so much for leaving them. And lastly, heads up that Rule of Three (ro3) has an annual March Healthcare Classic that is currently ongoing. It’s pretty cool what they do. They have a very august panel that debates which trends will reign supreme in their impact on healthcare in 2024. The committee includes: ·      Dr. David Carmouche, SVP Healthcare Delivery, Walmart Health ·      Eric Gallagher, CEO, Ochsner Health Network ·      Leah Binder, CEO, The Leapfrog Group ·      Anisha Sood, Chief Financial & Strategy Officer, First Choice Health Follow along with the experts through the ro3 March Healthcare Classic at https://ro3.com/healthcare-classic/. Also mentioned in this episode are Jodilyn Owen; Barbara Wachsman; Nate Walker; MaryCarol Evans; Scott Conard, MD; David Carmouche, MD; Rik Renard; Robert Pearl, MD; Nina Lathia, RPh, MSc, PhD; Josh M. Berlin; Rule of Three, LLC; Eric Gallagher; Leah Binder; Anisha Sood; John Rodis, MD, MBA, FACHE, CPHQ; Bob Matthews; Marty Makary, MD, MPH; Sanat Dixit, MD, MBA, FACS; and Rob Andrews. You can learn more at Ochsner Health. You can also follow Dr. Cole on LinkedIn.

For a full transcript of this episode, click here. We have been spending a bunch of time here on Relentless Health Value talking about PBMs (pharmacy benefit managers) lately and pharmacy benefits, but we are moving into a new topic area. It sort of kicked off three weeks ago with the pod with Rik Renard (EP427) on the importance of care flows if you are a digital health vendor trying to get consistent outcomes. But then I actually went back to the PBM/pharmacy benefits topic to talk with Luke Slindee, PharmD (EP429) and Julie Selesnick (EP428) because, you know, the J&J lawsuit. But now we’re back on the “let’s talk about digital health and point solutions” bus. I wanted to talk today about the trend to sell to employers and advice for digital health solutions who want to sell to employers, but there’s a little bit of advice here for employers themselves. At a minimum, this conversation affords a little bit of transparency to employers about what’s going on on the other side of the table. So, as I just said, in this healthcare podcast we talk about selling to employers. Why sell to employers is probably a first question. Well, one reason Barb offers is because that’s where the money is. It’s like that Willie Sutton quote. Someone asked him why he robbed banks, and he replied, “Because that’s where the money is.” I mean, hospitals know this. Have you seen their commercial rates and their multiples over Medicare? Payers know this, too. Payers who use their ability to raise commercial rates as leverage to get lower MA (Medicare Advantage) rates for themselves … they know this. So, yeah. Why wouldn’t a point solution entrepreneur take a page out of that business model? It’s saying the quiet part out loud, but … yeah, I guess it’s good to know when you’re the numero uno healthcare industry sugar daddy (or sugar mommy, as the case may be). Every employer listening right now has already opened up their phone and started an email to me. Barb gets into four pieces of advice for entrepreneurs looking to sell to employers: 1. There has to be a market that has a need for what you are selling, and there won’t be a market with a need unless the problem you’re solving for is big enough—and right now, I am recapping things that Barb says on the show—because when she talks about whether the problem is big enough, she means as per the employer and maybe because the fallout from that big problem accrues to the employer in a way that the employer fully appreciates. As I say in the pod that follows, the ground is littered with entrepreneurs, often really smart people who oftentimes I truly admire. These are individuals who found a problem for patients (or sometimes even clinicians) and solved for it and then discovered that no one will pay them for whatever they’ve done, because we can’t forget that, in the healthcare industry, one person’s waste is somebody else’s profit. There is show after show here at Relentless Health Value that showcases the sacred honeypots where these perverse incentives lie, so if you are an entrepreneur, please follow the dollar and see where it leads before getting too far. That would be my advice. I’d recommend the show with Rob Andrews (EP415) and the one with Jodilyn Owen (EP421) as a great place to start. One comment about the whole “it’s gotta be a need that employers appreciate” point that Barb makes which caught my ear, she rhetorically asks, “Should HR purchasers be buying solutions that improve health and well-being?” And the short answer is no. Barb says none of that should be the primary driver. The primary driver, Barb mentions, should be about optimization of human capital to drive business outcomes. She says every decision a business makes should be about maximizing business outcomes. Now, I could take this a bunch of different ways; and viscerally it has, again, kind of a “quiet part out loud” vibe. But in certain ways, it also means buying decisions should be bigger than just cutting costs. First of all, no one is arguing here that cutting wasteful spending isn’t always a good thing; but neither are cost-containment strategies that undermine employee health to the extent that they can’t complete their work role or their job. Listen to the show with Nina Lathia, RPh, MSc, PhD (EP426) for more on this cost containment versus value-based purchasing, specifically in the pharmacy benefit space, but same rules apply pretty much everywhere. 2. Be truly differentiated in terms of what you’re trying to sell. Barb gives a bunch of examples of “secret sauces” she thinks are kind of compelling right now. 3. Navigate the internal politics of the employer. And this is kind of Selling 101, but find a champion and help them navigate their own organization. We talk at length about how long the sell process can take, especially in some of these jumbo employers. 4. Manage your investors as closely as you manage your possible clients. And this is an interesting point that also comes up in the conversation with Kate Wolin, ScD, that’s coming up in a few weeks. Also in this conversation, we have a sidebar about PMPM (per member per month) and performance guarantees and just some nuances about how to get paid. Oh, and one last point here: If you are an entrepreneur who is thinking about selling to brokers, employee benefit consultants, or practice leads, do listen to the show with AJ Loiacono (EP379), which I encored a couple of weeks ago. My guest today, Barbara Wachsman, has had experience in every single element of the healthcare ecosystem. She has worked in public health. She’s worked for an HMO. She’s worked for a hospital system. She’s run benefit consulting practices and also spent the last dozen or so years at Disney running strategy and benefits. Today she is a limited partner in several private equity funds at Frazier Healthcare Partners. Oh, and hey, you might want to subscribe to our weekly email, which includes this introduction transcribed as well as links to the full episode transcribed. We also sometimes send out invitations to Zoom meetups and other ways to get involved or support us in our quest to get Americans better healthcare. So, go to relentlesshealthvalue.com and get yourself on that list Also mentioned in this episode are Rik Renard; Luke Slindee, PharmD; Julie Selesnick; Rob Andrews; Jodilyn Owen; Nina Lathia, RPh, MSc, PhD; Kate Wolin; AJ Loiacono; Elizabeth Mitchell; David Claud, MD, PhD; Al Lewis; Kenny Cole, MD; and Cora Opsahl.   You can learn more at Frazier Healthcare Partners. You can also follow Barbara on LinkedIn.

For a full transcript of this episode, click here. In this healthcare podcast we’re talking about pharmacy acronyms or terms like AWP and WAC, and, not really an acronym, but we’ll also talk pharmacy list prices, rebates, discounts. We also have NADAC, but that’s slightly off to the side for reasons we’ll get to in a sec. Most of these acronyms refer to a number with a dollar sign in front of it, and it’s hell on wheels to figure out if and/or to what extent that number reflects what is going on in the real world, especially if you are a patient or a plan sponsor and all you see is the list price that Pharma puts out on one side of the storyboard, and then what the patient pays or (if you’re lucky) what the plan pays for the drug on the way other side of the whole chain of events. What’s a black box a lot of times for patients and plan sponsors is what goes on in the middle, wherein many middle people get their mitts on the transaction. Real quick here, let’s run through the Mister Rogers’ neighborhood of all of these middle people right now; and we’re gonna do this really briefly. Most of you are already going to know most of this, but I just want to remind you so that when my guest today, Luke Slindee, and I kick into the conversation about the acronyms and the terms and we try to follow the dollar … yeah, you can put a name to a face. Alright, so first we have pharma manufacturers. The pharma manufacturer—and this is largely gonna be true whether it’s a branded drug or a generic pharma manufacturer—but the manufacturer sets a list price. This list price is gonna be called an AWP or a WAC price, and we’re gonna get into the differences and what those terms actually mean in the show that follows. But Pharma decides their price point. They go to wholesalers with that price. Wholesalers say they want a discount to purchase the product. Some kind of rebate or discount is negotiated. Now the wholesalers have the drug, and they get calls from pharmacies. Pharmacies have patients who have scripts for that, so the pharmacies need to buy the drug. What price does the pharmacy now pay the wholesaler for the drug? Short answer: It’s nuts. It’s nuts how the wholesalers decide what to charge the pharmacies for the drug. We talk about that in the interview that follows, but suffice to say that now we have the list price turning into whatever price the pharmacies wound up paying to get the drug from the wholesalers for. Any way you cut it, the wholesalers are making some money. Okay … now we get to the part where we’re figuring out how much the patient or the plan sponsor will pay to pick up that drug that started at the pharma manufacturers and went to the wholesalers and now is at the pharmacy. How much are the patients gonna pay? How much are the plan sponsors gonna pay? If you spend any time in the real world (not the drug supply chain world), what you’d expect to happen next is that the patient would go into the pharmacy and the pharmacist would charge a markup and/or a dispensing fee on the price that they bought the drug from the wholesaler for. That’d be normal. And this can be the case when patients pay cash. Listen to the show with Mark Cuban (EP418, along with Ferrin Williams, PharmD, MBA), who started a pharmacy called Cost Plus Drugs. Get it? Their prices are cost plus. You have had other pharmacies for years doing similar things, like Blueberry in Pittsburgh. They get the drug. They buy it from a wholesaler or etc. But they buy the drug for some price, and then they sell it to their customers (ie, patients) at their cost plus. But most of the time in pharmacy supply chain world, things don’t work that way because many patients have insurance. When a patient walks into the pharmacy, someone has to figure out how much the patient owes and how much their insurance will cover, right? So, enter PBMs (pharmacy benefit managers). They originally started out doing this math (ie, adjudicating claims), figuring out what the out-of-pocket will be for the patient and then what the insurance will cover. Then drugs started to get really expensive and a few other developments, and then, all of a sudden, we have PBMs negotiating with Pharma for how much of a rebate the PBM is going to demand for the PBM to put the manufacturer drug on formulary. The PBM also is determining how much they will pay the pharmacy for said drug on behalf of plan sponsors, in addition to doing the math for how much the patient will pay. So, let me say that again because it kind of begs a “what now?” with eyebrows sky-high as the appropriate response to what I just said, especially if you think through the ramifications here, ramifications which I discuss at length with Vinay Patel (EP241); Benjamin Jolley, PharmD (EP422); Scott Haas (EP365); Paul Holmes (EP397); and others. So, again, the PBM is not just adjudicating claims. They are also negotiating rebates from Pharma so plan sponsors do not have to pay the full amount that the wholesalers paid Pharma and that the pharmacies paid the wholesalers, which maybe is a lot of money. The PBMs are like, “Hey, Pharma. You need to give me a piece of your action because we, the PBM, have big market power. I serve 100 million patients or something. So, if you want access to my 100 million lives, you gotta shell it out. You gotta shell me out some rebates.” So, fine, Pharma gives the PBM some amount of money in the form of a rebate. And it has to work that way, if you think about it, because the drug was originally sold to the wholesaler. You see what I’m saying? So, the pharma company has to give the PBMs a separate rebate amount. This is in addition to how much the PBM told the plan sponsor the plan sponsor owes for the drug, which is also paid to the PBM. But now, PBM is also still in charge of adjudicating the claim. So, they’re telling the pharmacy how much to charge the patient. Somehow or another also, the PBM also got itself in charge of deciding how much money the pharmacy itself would be reimbursed by that PBM. In the rest of the world, the pharmacy might tell the PBM, “Hey, this is the price.” But not in pharmacy supply chain world. In pharmacy supply chain world, the PBM tells the pharmacy how much it’s gonna pay. The end. And this, my friends, is how so often pharmacies get themselves in the pickle of having to pay the wholesaler one price to get the drug while they get reimbursed a totally different price to dispense the drug. And because independents have very little negotiating leverage on actually either side of that equation, they so very often buy high and sell low. Please listen to the shows with Benjamin Jolley (EP422) and Vinay Patel (EP241), where we get into this in a lot of detail. But I just want to emphasize this point: All of that whole drug supply chain I just went through, where the manufacturer sells to the wholesaler who sells to the pharmacy and the PBM pays the pharmacy and the patient is paying something and the plan sponsor is paying something—many of the middleman transactions in there happen under the cover of darkness a lot of times. If I’m a plan sponsor, do I have any idea how much the PBM paid the pharmacy for any particular drug? Unless you’re good at looking at the NADAC numbers (more on this coming up), no. I do not have any idea what a fair price for that drug actually is and how much people are making on the back of that drug as it goes through the supply chain. And this, my friends, is how come spread pricing can exist. Because spread pricing is when the PBM charges the plan sponsor more than they are paying the pharmacy, pocketing the difference, and then calling what they pocket a trade secret—even if it’s the plan sponsor whose butt is on the line to make sure that what the PBM is pocketing is fair and reasonable compensation. I mean, if only J&J had listened to this show (EP428). Here’s a link to the lawsuit, which is about J&J paying ridiculous amounts in spread pricing. If what I just said is really confusing, I’m gonna validate that and say, “Yeah, it is really confusing.” And to a certain extent, that might be the main point. Where there’s mystery, there’s margin and all of that. Here’s what Dawn Cornelis said on LinkedIn in response to an article about the lawsuit: “Data accessibility lies at the heart of mitigating a fiduciary lawsuit. It all begins with gaining access to your data. But let’s be clear—it’s not an easy feat. The major hurdle? Procuring accurate data from your TPA [third-party administrator]. And that’s just the first step. The subsequent challenge involves analyzing this data, a task best handled by a skilled healthcare data analyst—yet another formidable undertaking.” The one acronym in this whole stew that is not questionable at all is the NADAC. So, let’s talk about the NADAC for a moment, the National Average Drug Acquisition Cost Price Benchmark. I was really thrilled to get Luke Slindee to be my guest today—or one reason I was so thrilled—is because Luke works for the accounting firm who, on behalf of CMS (Centers for Medicare & Medicaid Services) and the federal government, administers this NADAC, the National Average Drug Acquisition Cost. (Here’s a good NADAC explainer if you’re interested.) In brief, NADAC was jointly developed by the Centers for Medicare & Medicaid Services, and it calculates the average price that pharmacies pay for prescription drugs. NADAC is based on a retail price survey. My guest today, as aforementioned, is Luke Slindee. He is a second-generation pharmacist. His family owned a pharmacy in Minnesota when he was growing up. Now he is a senior pharmacy consultant for Myers and Stauffer, which is the accounting firm that calculates the NADAC Price Benchmark on behalf of CMS and the federal government. Also mentioned in this episode are Mark Cuban; Ferrin Williams, PharmD, MBA; Blueberry Pharmacy; Vinay Patel; Benjamin Jolley, PharmD; Scott Haas; Paul Holmes; Dawn Cornelis; Capital Rx; Myers and Stauffer LC; Adam Fein; Joey Dizenhouse; Steven Quimby, MD; and Antonio Ciaccia.   For additional information, go to data.medicaid.gov. You can also follow Luke on LinkedIn.

For a full transcript of this episode, click here. This show is different, so if you’ve already listened to or read all about the gory details of the J&J and/or the DOL v BCBS lawsuits, this is not gonna be a repeat of that information. Julie Selesnick, my guest today, does cover the very, very top line about these two cases. But after that, we move on fast—because what I wanted to get to today was not the potential landslide of legal action that may or may not be confronting plan sponsors or payers or even brokers today. I did not want to really even talk about the CAA (Consolidated Appropriations Act) and its inarguable adjacency here. I just feel like there’s been a lot of talk about these topics already. What I wanted to get to, and fast, is … now what? If I’m a plan sponsor or actually, again, an EBC (employee benefit consultant) or broker, now what? What should I be doing and thinking about right now? To that end, I could not have been more thrilled to get a chance to talk to Julie Selesnick, who is an attorney deeply entrenched in helping plan sponsors and others understand and comply with fiduciary responsibilities. I want to get to this interview quickly (the conversation with Julie), so this intro is gonna be on the short side; but let me just summarize a few of the points that Julie makes during the interview that follows. First, we talk about the first step for pretty much everybody: Get your data, plan sponsors. But once you have that data, you also kinda have to use it. You can use it to ensure that you’re paying claims right, which is what most do. As a result of these two lawsuits, it’s also increasingly clear that you also have to use that data to ensure that the prices you’re paying for things (like generic specialty meds, for example) are fair and reasonable. To get the data now, you may have to renegotiate administrative services agreements; and you might need to take a closer look at the disclosure agreements you’re getting as a result of the CAA. And, by the way, it’s not just brokers or EBCs who have to complete these disclosures. It’s all covered entities that you, plan sponsors, paid more than $1000 to. Then we get into … okay, once you have the data and you’ve analyzed it, what are some in general things that could very well need to happen? And if the reason that they don’t happen is because they weren’t even considered, then plan sponsors have some risk exposure; and the brokers/EBCs who serve them might have some conflicts of interest. And it would be very interesting what would or could happen if a plan sponsor was able to back into those conflicts of interest, because if data clearly shows that something should be happening and it is not—and it is not even on the docket to be considered—if I’m a plan sponsor, I’m for sure gonna be wondering why. And maybe I’m gonna look into that and fast. Listen to the show with AJ Loiacono (EP379) from two weeks ago for more on some of the more egregious broker/EBC conflicts of interest, which could explain, potentially, the J&J lawsuit as well as definitely explains the earlier one in Osceola. And also, by the way, if you’re sitting there wondering to yourself how exactly J&J managed to pay upwards of $10,000 for a drug that can be purchased for cash for something like $50, listen to the show next week with Luke Slindee, PharmD. We run through the exact pharmacy supply chain machinations that make all of this (and more) possible. But I got off track. What I was talking about is the things that could easily wind up being called for when the data is analyzed: 1. Carving out specialty generics, especially drugs or infusions, from the larger pharmacy benefit manager 2. Your payment integrity vendor should not be the same vendor who is processing claims. Talk about a conflict of interest. I do not need to be an attorney—and I need to know absolutely nothing about anybody’s data—to tell anybody who’s listening that if you have the same vendor or two vendors with the same parent company who are both processing your claims and then auditing their own work … yeah, fix that. 3. Shut down any cross-plan offsetting. And we get to this in the show if you don’t know what cross-plan offsetting means. Lastly, we get into a bunch of stuff that plan sponsors might want to consider as they consider how to administer their plan, like, for example, setting up a health and welfare committee that has an independent fiduciary expert on said committee. I’m gonna say that’s a good idea! As I have mentioned, my guest today is Julie Selesnick. Julie is senior counsel over at Berger Montague’s Employee Benefits and ERISA group. Also mentioned in this episode are AJ Loiacono; Luke Slindee, PharmD; Justin Leader; Chris Deacon; Bridget Mulvenna; Mark Cuban; Olivia Webb; and Dawn Cornelis. You can learn more at Berger Montague. You can also follow Julie on LinkedIn.

For a full transcript of this episode, click here. Hey, Relentless Health Value Tribe, thanks so much for being here this week. I gotta say, I really appreciate all of you who write and tell me that you kick off your Thursdays by listening to this show every week. You just pop open your app and you listen to the show. Because yeah, we’re a pretty sure thing over here. If the guest was boring or if the guest was talking about stuff that I already know and probably you already know, the guest would not be on the show. So, listening to Relentless Health Value every week is a hugely easy way to just keep up with what’s going on and, at the same time, get a pretty holistic deep dive into how all of the various parts of the industry fit together and how they ultimately impact patients and anybody who is at risk to pay for their care. One thing that you’ll notice about the guests who we invite to come on Relentless Health Value, they are usually not the ones who are merely going to recite a very well-curated point of view that is fully in line with some marketing pitch. It would be easy enough, honestly—it would be so much easier—to just invite all of the bigwigs who we get pitched. I get 50 pitches a day from PR teams who want to get their executives to come on the show because they want to get their message out to you, Relentless Health Value Tribe. You, for sure, have a reputation of being industry movers and shakers. Although it would be super easy for me to phone it in and let them have their way with you, I’ve never been one to take the easy way. I want to find those individuals to be guests who are willing to share actionable insights to actually tell the truth. I’m really not into someone hijacking this platform for their own self-interest when that self-interest is not aligned with anything that I would consider a win-win for patients. You’ll probably find more actionable insights here than listening to talk tracks, even if you’re just listening to figure out what to include in your pitch to some of these industry insiders. I’m gonna tell you that repeating their marketing spin or their party line isn’t probably gonna sell much. What they will say in public and what they really want to do are so very often sadly at counterpoint. So, come here for the real story. Alright, so let’s get to the conversation that we’re gonna have today, which is about and for digital health vendors’ or virtual care providers’ point solutions (they go by many names) and also for anybody who is a customer of said solutions. If we’re taking it from the top here, let me just make a Captain Obvious point. These digital health vendors, they kind of have to perform better than the traditional community health providers. Otherwise, they have no reason to exist, really, right? Purchasers would just go with the local gang of care providers. So then, what does “perform better” actually mean? Let’s discuss. I’d say perform better means to offer better measurable patient outcomes probably, both clinically and patient reported. I’d also say it means to offer more affordability. Also, better engagement, accessibility, and maybe all of this at a better cost profile for purchasers such as employers or health plans that are taking on actual risk. So, if all things are equal, again, why the heck would an employer or other purchaser even bother? It couldn’t even be considered, honestly, a member benefit from a regular benefit perspective if the local standard of care is superior or just as good. Now, if any clinical entity is looking to actually achieve better performance in any or all of the ways that I just mentioned with any level of consistency and in a way that is profitable for them and their investors, you got to do a few things. And one of them is to design and implement care flows, care processes, pathways—again, you can pick a name and define it how you like. But bottom line, there needs to be a standardized way to deliver high-quality care that is measurable. Here’s Ali Khan, MD, MPP, who is chief medical officer over at Oak Street Health, talking about this. He says: “At Oak Street Health we think about standardization as a 70/30 split. It is important that the largest aspects of what your care team does are standardized. (...) The bulk of the work that we do is to make sure not only that we set standards, but that we also disseminate standards, coach standards, review standards, and then update and iterate those based on the things we learned. Our standards are constantly evolving and improving.” Okay, so said another way, gotta have and use care flows. This doesn’t seem like rocket science, but yeah, that is a blue’s clue for what’s coming up here. So, how are most digital health vendors doing when it comes to care flows performing better? Rik Renard and Thomas Vande Casteele from Awell have done a survey with a group called Health Tech Nerds and have dug into the usage of care flows among, specifically, digital health vendors. Given everything aforementioned, I wasn’t surprised to hear that 84% of digital health vendors use care flows in 2023 … 84%. But it was kind of shocking, to be honest, to hear that in 2023, only 16% use care flows that they feel are based on evidence and the science of medicine. If you don’t follow the latest science, then outcomes, both clinically as well as probably patient-reported outcomes, won’t be of the “perform better” variety. Oh, boy. Also, only 7% of respondents have the ingredients to build a 360-degree picture of how their flows impact finances and quality of care. And I say that because only 7% can and do measure four things. And here’s the four things: 1. Performance metrics such as patient engagement and compliance rates 2. Financial metrics such as revenue per patient/per member 3. Clinician-reported outcomes 4. Patient-reported outcomes, or PROMs Seven percent. That is less than one out of ten of these digital health vendors. There are other higher, but still pretty sad, percentages that measure combinations of the above four factors; but only 7% measure all of them. And if you don’t or can’t measure what you’re doing, then you wind up with what my guest Rik Renard calls black box care, which is another way of saying if you don’t measure it, you can’t manage it. Because think about it, if you have black box care, well, the solutions to perform better are also a black box. If you don’t know the problem, good luck finding the solution to it. A few things as we contemplate all of this. First of all, as Stacy Mays pointed out to me, if that digital health vendor is working for different payers or different purchasers, those different payers or purchasers might demand different care flows; and those different care flows might ladder up to different ultimate goals. The hard part about being a digital health vendor employed by a payer or a purchaser is that your customer is the boss of you. So, complication. The other relevant conversation I had is with David Claud, MD, PhD, who told me that many employers/customers evaluating healthcare vendors, like on-site clinics, do not have the clinical expertise to meaningfully evaluate the quality of care; so, they tend to focus more on cost and service. When this happens, you kinda wind up with a race to the bottom, where being really nice and being cheap are more important than actually delivering high-quality care that no one can measure anyway. And the last point that I’ll bring up is what Sanat Dixit, MD, MBA, FACS, brought up the other day; and I love how he put it. He said doctors don’t tend to caucus well. And coming up with care standards and best practice care flows means getting everybody to walk the same pathways. Bottom line, it’s really pretty hard to be a digital health entrepreneur these days. Coming up here, I have a conversation with Barbara Wachsman. Barbara was the managing director over at Disney. She’s worked for PE (private equity) as well as being executive director over at PBGH, the Purchaser Business Group on Health. So, that’s upcoming in a couple of weeks. But the point that Barbara makes, which I think is really apropos here, she said that, in the United States, we desperately need really talented and great digital health vendors, great entrepreneurs, ones who actually can deliver real results and do it at a fair price. So, my hope is that we get better at these care flows. Now, I say all this to say, let’s take the conversation today as an opportunity for both entrepreneurs, vendors, as well as customers like employers and other purchasers or payers. It’s an opportunity to recognize and work together where there’s room for improvement and also place value on achieving that headroom. As I mentioned earlier, in this healthcare podcast I am speaking with Rik Renard from Awell. Rik has a background in nursing and healthcare management. He joined Awell four years ago and now manages strategic accounts. For more on this topic, listen to the show with George Mathew, MD, MBA, FACP (EP253).   Also mentioned in this episode are Ali Khan, MD, MPP; Oak Street Health; Thomas Vande Casteele; Stacy Mays; David Claud, MD, PhD; Sanat Dixit, MD, MBA, FACS; Barbara Wachsman; George T. Mathew, MD, MBA, FACP; Yubin Park, PhD; Jessica H. Green, MPH; Thyme Care; Better Health; Wellinks; Bob Matthews; Emily Kagan Trenchard; Robert Pearl, MD; and J. Michael Connors, MD.   You can learn more at Awell and CareOps. You can also follow Rik on LinkedIn and X (formerly Twitter).

For a full transcript of this episode, click here. Here on Relentless Health Value, we have done a bunch of shows lately on how some weird PBM (pharmacy benefit manager) and pharmacy goings-on impact plan members, patients, and also independent pharmacies. During the conversation with Benjamin Jolley, PharmD (EP422), for example, Benjamin mentioned that he thinks some of these contract terms that really hurt independent pharmacies are signed by employers at the urging of their brokers or employee benefit consultants (EBCs). Think about this. You have these huge vertically integrated PBMs who own their own retail pharmacies and/or mail order. You have EBCs that work with employers who, a lot of times, do not understand the contracts that they are signing. This is a recipe for what AJ Loiacono talks about on the podcast encore today: just how much those EBCs and brokers are, in some cases, being compensated to get employers to sign contracts that allow PBMs to corner the market and take all the profit. Even if you listened to this encore in 2022, you might want to revisit it and consider what AJ says in the context of these recent shows with Ge Bai, PhD, CPA (EP420); Joey Dizenhouse (EP423); Mark Cuban and Ferrin Williams, PharmD, MBA (EP418); and Benjamin Jolley, PharmD (EP422), as I just mentioned. Also keep in mind the shows with Scott Haas (EP365) and Paul Holmes (EP397) from earlier … Olivia Webb (EP337) as well. This show with AJ Loiacono is different than others you may have heard with him because in this healthcare podcast, we are not talking about PBMs. We’re talking about brokers and EBCs. So, say I’m a self-insured employer. Here’s the big question: Is my broker or EBC helping me make the right decisions, or is he or she helping me make decisions that will make them the most money? While there are some amazing and totally above-board EBCs and brokers out there, unfortunately, caveat emptor is a thing. Buyer beware, that is. Too many self-serving and I’m sure very charming sharks are out there circling plan sponsors. It is currently a fact that some EBCs and brokers and even TPAs (third-party administrators) or PBMs or others take hidden kickbacks or fees or percentages. They make a lot of money, maybe the most money, in these secret ways. All this money, money paid in secret backroom deals—let’s not lose track, these dollars increase the total prices paid by plan sponsors and employees. Now, I say this to say that my guest today, AJ Loiacono, calls 2022, right now, a “magical moment” for plan sponsors—and for straight-shooting EBCs and PBMs and all the others who are actually doing the right thing by their clients also. It’s because of the Consolidated Appropriations Act (CAA), which states quite clearly that plan sponsors can ask their healthcare and benefits service providers to disclose the money that they are making off of the plan—all of the money, not just the direct fees. The CAA went into effect December 2021, and contrary to what some people have said or may believe, it is in force right now. The field memo went out on 12/31/2021. So, the CAA is the rule right now. And in fact, the CAA makes it imperative under ERISA (Employee Retirement Income Security Act) to do what I just said: Plan sponsors must disclose the monies that they are paying out on behalf of employees and ensure that those fees are reasonable and free from conflict. If you’re the fiduciary of the plan, you gotta disclose all these indirect and direct compensations of the people that you are paying or the people that you are paying who may be kicking back dollars to other people you are working with, unbeknownst to you. The Department of Labor is putting as much emphasis right now on healthcare as they put on 401(k) plans in the early 2000s, so this is a big deal—or it should be—for plan sponsors. So obviously, in order to comply with the CAA, self-insured employers should be requesting from their EBCs and brokers or others that they disclose, in writing, how much money they are making off the plan. You can see why this disclosure would be necessary if the plan sponsor is responsible to determine if those payments are reasonable and seem to be free from conflict, right? You can’t evaluate something you do not know about, and if you don’t know about it, the plan sponsor is the one at risk. Ignorance is not an excuse here. Here’s one example: What if the EBC or TPA is collecting a $40 payment per prescription from the PBM? Wait … what? Some plan sponsor is paying $40 per script in, I guess you’d call it, a commission? Yes, that is a rumored example—$40/Rx. It is basically full-on arbitrage, and if anyone disagrees, let me know why and how it’s not. Or let’s say the EBC is making, say, $6 per script payable by the PBM, and this sum should be mailed quarterly to a PO box in another state. This was a condition, by the way, for a PBM to win an RFP (request for proposal) that the EBC wrote and picked the winner of. Yeah, you as the plan sponsor really probably want to know that this is going on because it’s your butt on the line. So, in sum, the CAA is in effect right now. Penalties can be levied right now against plan sponsors. For a deep dive into the CAA, listen to the show with Christin Deacon (EP342) from 2021. So, what’s the process if I’m an employer plan sponsor? Step 1: Request in writing the dollars that your EBC or broker is making off of you. Similar to the advice that you’ll hear often on this show, ask for actual dollars, not a percentage of this or that. Ask for how much money did you (broker or EBC) make off each program that you recommended to us, and what did that total up to. Once you make that request, the EBC/broker/TPA (whoever you’re asking) has 30 or 90 days to respond, depending on who you ask. But if they do not respond, then you, the employer, should report them to the Department of Labor. Keep this in mind: Once that EBC or broker is reported for failure to comply by anybody, meaning likely some other employer, it is only a matter of time before that information becomes public. And the second that info becomes public, I guarantee you that there’s some attorney out there just waiting to file a class action lawsuit against every other self-insured employer who uses that EBC/broker because everybody else out there is now out of compliance. Right? I’m not a lawyer and I am certainly not a class action ambulance chaser, but even I can figure out that strategy. AJ Loiacono is the CEO of Capital Rx, which is a PBM 2.0, as they call it. To see how the CAA is playing out, you can read about one real-life example of a school district’s lawsuit against an insurance consultant. Also mentioned in this episode are Benjamin Jolley, PharmD; Ge Bai; Joey Dizenhouse; Mark Cuban; Ferrin Williams, PharmD, MBA; Scott Haas; Paul Holmes; Olivia Webb; and Chris Deacon. You can learn more at cap-rx.com and find resources through law firms.

For a full transcript of this episode, click here. Here’s something Randy Vogenberg, PhD, wrote the other day; and I made some light edits: Research has documented the unintended impacts of poor pharmacy benefit strategy. Examples include increasing costs of care, bankruptcies, and member satisfaction declines. And, yeah … agreed. Also, probably health problems if we’re talking about a member unable to access a drug they really need. I heard the other day about how so many patients who have had organ transplants have a hard time getting their transplant rejection meds. What?! I just can’t even with that one. On the other hand, you could have a plan that pays for all manner of drugs, cost-effective or not, appropriate or not. And now we have premiums that no one can afford, and everybody loses for the exact opposite reason. These are the downsides that happen when pharmacy purchasing gets itself into a suboptimal place. And this can happen for many reasons, but one of them is when there is not a concerted effort to buy pharmaceuticals in a value-based way. Now, here’s some reasons why employers may have a rough time paying for value (ie, paying a fair price for drugs that work). Here’s one reason: Most employers do not have the power to influence the price of a medication. So, any given employer could decide, based on some cost-effectiveness analysis, that the price of a drug is too high. But it’s not like they can march into Pharma HQ and haggle. It’s more of a take-it-or-leave-it kind of thing. Here’s a number two reason why value-based pharmacy purchasing can be tough: Pharmacy spend is siloed a lot of times from medical spend. So, the pharmacy vendor is only concerned about cost and denies access to even drugs that are proven to reduce medical spend. Why wouldn’t they do that? The PBM (pharmacy benefit manager) was hired to reduce pharmacy spend. The end. Who cares how many ER visits or disease exacerbations transpired? That’s the medical director’s problem, not theirs. Here’s the number three reason why value-based purchasing is rough: The time horizon an employee is with an employer, which is not one day—and it’s not a lifetime. Why did I say one day? I have heard more than once that the actuarial time horizon that some pharmacy plans use to determine if a drug is cost-effective is one day. If the drug doesn’t accrue any benefits in one day, well then, it’s a cost. It’s not effective. On the other hand (and also problematic in the real world), sometimes cost-effectiveness analyses are done with a timeframe of the patient’s lifetime. And, yeah … there aren’t many employers who have employees for a lifetime—like, they’re 85 years old and still on the employer’s dime—so the time horizon can’t be too short. But if it’s a really expensive med that will, at most, prevent something that’s not gonna happen anytime soon (heart failure, kidney failure, a stroke), these are things that an employer may pay for but likely is never gonna see the cost benefit of because that benefit will happen 30 years from now when the patient is on Medicare. And here’s a fourth reason why value-based purchasing is tough: The FDA is approving drugs based on evidence from one study (ie, not a ton of evidence). And these drugs are also really expensive. So, some of the above issues are solvable; some are less solvable. With this in mind, let’s tick through some advice that my guest today, Nina Lathia, suggests if you want to offer members a value-based formulary. 1. Have a stated goal. And maybe that stated goal is to meaningfully improve health of plan members while maintaining access, satisfaction, and affordability for said plan members and the plan. 2. Think holistically about healthcare spend, not just pharmacy spend. 3. Know what the value-based price of a drug has been calculated to be. I talked about this at length in the show with Anna Kaltenboeck (EP303). Also, Bryce Platt, PharmD, has written about this a lot. 4. Look into risk-based deals with Pharma and/or installment payments and/or some of these other interesting payment models that are emerging. Luke Prettol linked to one of them the other day. 5. Set good decision-making precedents that include shared decision-making with members/patients. This means communicating with employees and plan members about what you are doing to make good drug purchasing decisions and evaluate the clinical pros and cons of expensive drugs for any given patient. There are genetic tests now that can be done to determine if a drug is ever going to work for a patient, were these tests even done. I mean, from a patient standpoint, some of these drugs have horrible side effects; and they might be being prescribed by a doc who’s not an expert in that condition. If I’m a patient and there’s a genetic test I could take before I pay a ton of my own money and subject myself to what might be some pretty nasty side effects (you know, all the things that you hear about at the ends of those pharma ads on TV, right?), this could be, in the right hands, a patient benefit. This feels very different from prior auths administered by a vendor doing all kinds of stuff, where it’s hard to make any connections to clinical value or patient upside, even if you squint at it sideways and use your imagination. And, yeah … this is easy to say and really hard to do. One definition I want to chuck in here for you: If we’re talking about a cost-effectiveness analysis, cost-effectiveness analyses calculate how effective is the drug, minus side effects at diminishing the so-called burden of illness—burden of illness meaning the financial and health costs of the disease itself or its exacerbations. Nina Lathia, my guest today, is a pharmacist by training who has worked in hospital pharmacies. She earned a PhD in health economics. Currently she’s doing consulting work, helping purchasers make value-based decisions about pharmacy spend and managing formularies. Specialty Pharmacy Playlist: https://lnns.co/uNZ3moCaQMb Hit the subscribe button to add it to your podcast player. Also mentioned in this episode are Randy Vogenberg, PhD; Anna Kaltenboeck; Bryce Platt, PharmD; Luke Prettol; Olivia Webb; Pramod John, PhD; Scott Haas; Aaron Mitchell, MD, MPH; Keith Hartman, RPh; Erik Davis; Autumn Yongchu; and Berkley Accident and Health.   You can learn more by emailing Nina at nina.lathia@healthcaredecisionmaking.com. You can also connect with her on LinkedIn.

For a full transcript of this episode, click here. This show today is for physicians or other clinicians or providers who are still taking insurance—those who are going about their day being pretty normal ... but at the same time, they’re noticing one and/or two things potentially going on. Here’s thing one: They may be seeing patients struggling to afford care, especially patients with commercial insurance and huge deductibles. And/Or thing two: They may have patients actually coming in and asking to pay cash. It’s definitely becoming known in some circles that about half the time the cash price for something is actually cheaper than the “negotiated” rate with an insurance carrier. And this has really become an actionable insight for patients who haven’t yet met their deductible, and some high percentage of patients—maybe upwards of 90% of patients—won’t meet their deductible in any given plan year. So, all of this is probably some pretty obvious foreshadowing, but let’s run through two maybe quick reasons why a practice might want to contemplate ways to make it easier for patients to pay cash when it is, in fact, cheaper for that patient to pay cash than it is for them to go through their insurance. Now, a clarifying point here: We are not talking here about that patient always paying cash heretofore … like, never using their insurance ever again, even if they get hit by a bus. No. We’re talking about the patient coming in for some office visit or service, and today, they want to pay with a wad of money they take out of their wallet and hand you. That is the end of the transaction that we’re talking about here. So, here’s the first of let’s just say two reasons that a practice might want to entertain taking cash from insured (technically, at least) patients. First reason: We have a situation in this country where 48% of insured commercial patients say that they are delaying or forgoing care due to cost or fear of cost. Sometimes I say this 48% number to a clinician, and they will reply, “Well, that’s not in my practice or in my hospital; our patients show up.” To which I reply, “Yeah, because the patients abandoning care are not the patients that are coming in. They are abandoning care.” Now, the second reason a “normie” practice might want to be thinking about how to help patients get the best possible price here is maybe less intuitive, but it’s a financial motivation for the practice. I just saw Eric Vanderhoef. He wrote on a Listserv recently, and this is what he wrote: Patient no-shows and cancellations cost healthcare providers as much as $7500 per month. That’s a loss of $375 per patient. Hmmm … okay. Keep this in mind: The whole cancellations costing providers upwards of $7500 a month would help reduce this. Coincidentally, I was talking to Paula Muto, MD (she’s the founder of UBERDOC) about this exact same topic the other day—just the crazy no-show rates that many practices experience—and she made some really good points, which are exactly in line with the Tebra report Eric Vanderhoef referenced above. She said that if a patient knows exactly how much a physician visit is going to cost—because they’re paying cash and the price is set between the doctor and the patient, so the price is the price, the end—no-shows will go down, and this is especially true when the appointment is tomorrow and not six months from now when appointments are booking these days. It’s kind of not normal for anybody to know what’s gonna be happening in lives six months from now, so no wonder patients fail to show. Dr. Muto is recommending maybe having a couple of slots open every day for patients who want to pay cash. Doing this could help improve some—not all, for sure, but some—practice cash flow issues which are caused by the no-show thing or the getting paid by the insurance carrier net whatever months later after a billing fight kind of thing. And it’s also a win-win for patients with high-deductible plans, especially those patients who are coming in asking to pay cash. In the conversation today, Marshall Allen, my guest, explains how to, in a simple enough way, operationalize the ability of a practice to take cash. There’s a form that you’ll need for insured patients. You’ll actually need a cash price. It’s also a marketing opportunity. For example, you can get listed with entities that connect consumers to practices that take cash, like UBERDOC, but there’s also a growing movement of employers, especially in some parts of the country, who are looking around for providers who will do direct contracting or cash prices. In fact, I just saw a study the other day: “New polling conducted by Marist … found that 94 percent of adults agreed that hospitals, insurance companies and doctors should ‘be legally required to disclose all of their prices, including discounted prices, cash prices, and insurance negotiated rates across hospitals and across plans in an easily accessible place online.’” Alright, if I know you, you are thinking right now about all of the reasons why this won’t work. So, let me head you off at the pass. My guest today, Marshall Allen, solves for the most common issues that everybody brings up, including the big kahuna issue, the “I am contractually forbidden by a health plan to allow patients to pay cash.” You will need to listen to this podcast for the answer. Now, there are, of course, other hairballs to untangle that we do not address today. As Marshall Allen says, there are layers of dysfunction here. One bit of weirdness is something that David Schreiner, PhD, told me about the other day. David is CEO of Katherine Shaw Bethea Hospital in Dixon, Illinois; and he’s also the author of a new book entitled Be the Best Part of Their Day: Supercharging Communications With Values-driven Leadership. David said that sometimes hospital payer contracts have the payer reimbursing the hospital for a percentage of overall charges. Yes, you heard that right. The hospital totes up, using their charge master rates, the total amount of billings for the entire year; and the carriers pay a percentage of that total. So, the hospital has a big incentive to keep charge master rates as high as possible. If some patients pay lower cash amounts, then their carrier reimbursement (the hospital’s carrier reimbursement) will drop. Probably some math there, I guess, because if it’s determined that patients aren’t actually showing up for services due to cost, then they might be getting paid a percentage of zero by the carriers; but point taken still. There are, for sure, considerations to be thought through; and, for sure, having contracts like this is one of them. I was talking to Lauren McAteer the other day, and she told me when she worked for a hospital and went to meetings, sometimes she’d bring in a hospital gown and hang it over a chair in the conference room to make it harder to not consider the patient perspective and think about how decisions impacted patients. Good idea, because where there’s a will, there’s often a way. My guest today, Marshall Allen, probably needs no introduction. But I ask Marshall for the skinny on how he started Allen Health Academy, and you will hear him introduce himself. So, in the interest of eschewing redundancy, let’s do this thing. Also mentioned in this episode are Eric Vanderhoef; Paula Muto, MD; David L. Schreiner, PhD; Lauren McAteer, CCXP; Benjamin Jolley, PharmD; David Scheinker, PhD; William Shrank, MD; Jerry Durham; Leon Wisniewski; Cristin Dickerson, MD; and Dutch Rojas. You can learn more by signing up for Marshall’s newsletter at marshallallen.substack.com. You can also go to Allen Health Academy or to Marshall’s site.

For a full transcript of this episode, click here. This inbetweenisode is me geeking out, so if that’s not your thing, you’ve been warned. There’s a term I’d like to encourage anyone interested to look up. It’s the narcissism of small differences. It explains a lot. The narcissism of small differences is the idea that those who, maybe in theory, should be friends/BFFs working side by side toward the same major goal are not. We divide ourselves into these micro-camps. Why? It’s a thing to get really narcissistic about small differences. Consider vegans and vegetarians who are so often all up in each other’s business in really nasty ways. Who knew whether or not someone decides to eat cheese could create such enmity? Or there’s subreddits on Reddit dedicated to people fighting about fantasy football. You would think that everyone who plays fantasy football would be friends, except … not. There are apparently major schisms in the fantasy football world. Or consider branches of the same religion who are at war with one another. Consider people in the same political party fracturing over who is the very most whatever … pick something. So, now let’s talk about the narcissism of small differences and how it’s relevant when we’re thinking about helping patients in the United States get better healthcare for an affordable price. We have these gigantic corporate entities right now very industriously vertically integrating to control supply chains and cornering markets buying up physician practices and using every trick in the book to extract maximum profitability from patients and taxpayers and employers. Achieving some kind of tipping point where these incredibly well-orchestrated and well-funded profit machines are driven back will only happen when enough people, individuals, amass behind that tipping point. It will take more than a village. And my ardent request here is to—I don’t know—we quit it with the narcissism of small differences. Do not succumb. “When you cling to ‘my way’ you preclude your ability to synthesize, cooperate, support, or even—in [some] extreme cases—peacefully co-exist with other members of your tribe. You destroy a fundamental reason for belonging in the first place: community.” That last bit was a quote from a blog post by Frances Cole Jones. I love the community who I interact with most on LinkedIn, and there’s also some Listservs and some Slack groups that I love. Even X and Threads, for the most part, are lovely nests of great people trying to understand one another and further a common cause. I guess when you get into the kind of wonky stuff that you and I get into, there’s a finite group of us who are even reading these Tweets or posts or whatever they are. It’s a “small junior high school,” as one of my clients used to call it a long time ago. But there’s also often enough that somebody who swoops down and in the name of ... something … slams a 95% aligned cause. It’s like two people agreeing on the restaurant to go to lunch, but one wants to go there and get a rice dish or because it’s closer to their house and the other wants to go there because the restaurant serves a great tortilla—and the two of them fight over what’s the right reason to go to that restaurant or what the best item is on the menu. This is literally a metaphor that describes some of the sniping that I have seen, that you have seen amongst mostly aligned folks trying to figure out how to put patients over profits. I mean, guys, go to the restaurant. Once you’re there, you can place separate orders. Work together to just get to the restaurant. It's certainly easier to say than do, but if we’re aware of this and we focus on the points of agreement and maybe just think a little bit about whether the points of difference really even matter—in real life, not theoretical philosophy life—because a lot of times, they don’t. And then divided we fall. I think a lot about small difference narcissism-ing when someone comments derisively that a post or an article puts too much emphasis on … I don’t know, transparency or employers or mental health or … pick something. But here’s the thing: In the village, everybody is gonna have different number one priorities. That’s why it takes a village. Maybe I’m wrong, but I’m thinking it’s not a zero-sum game. Just because someone is angling hard for patient empowerment or consumerism or whatever doesn’t make it harder for anybody else to promote patient health literacy or better quality measures or integrated behavioral health. Probably it will make it easier, since both are trying to figure out how to put patients over profits. Both are pushing in the same direction, albeit one is headed northwest and the other one might be angled really far northeast. Point is, everybody will get momentum as long as we’re all roughly headed northbound. Now, caveat and sidebar: There are people emphasizing things because they’re actually working on them, and then there are people promoting things because it’s good marketing. Jeff Hogan wrote about this at the beginning of January, and I agree with him here. Here’s what he had to say, and then I’m gonna connect it back to what I think is a really important point about the narcissism of small differences. Jeff wrote: Over the course of the last month [I have] been asked no fewer than 20 times about exactly which conferences [I am attending] … this year. … All of my conference intentions are focused on one question: What will this conference do to promote a complete change in our healthcare paradigm … focused on superior [patient] access and outcomes as well as payment reform and care transformation? Said a different way, is this conference literally a honey pot for those who have screwed up the existing system and who are merely virtue signalling …? Who is speaking at this conference? Is it representatives of the same health systems and the same payors [and perpetuating] legacy moats and monopolies or is it a conference promoting change makers, risk takers and provider models and systems embracing risk and [healthcare] transformation? … What kind of change and innovation ever came out of an echo chamber? Challenging my friends and healthcare influencers to think carefully about their choices. Conferences create the opportunity to leverage great ideas and movements. We’re finally seeing first followers having expanded influence. Are you one of them? So, talking about that conference that happens at the beginning of January, I heard that a CEO of a major PBM (pharmacy benefit manager) stood up in front of that room and used the word transparency or a synonym six times in five minutes. Check out this LinkedIn post/video and this article as to why my eyebrows are sky-high on what transparency actually means for the CEO when you look at what this PBM is actually doing. If you look at quarterly reports again of some of these big entities, the cover of that annual report has lots of wonderful patient-centric words on it—while if you look at how those entities are actually making money, it is in direct conflict with those words. Now, there’s always going to be nuances here … always. And that’s what makes this very subjective and very personal. Everyone doing well by doing good is going to have a marketing statement, and it wouldn’t be a marketing statement if it didn’t sound amazing, right? The nuance or the question is: To what degree are they actually achieving that marketing statement? What’s the line that separates pure spin from an acceptable level of achievement of the marketing statement? Because we want to support the organizations that are trying here while, at the same time, make sure that we’re kind of quarantining those who are just all talk in ways that confuse the marketplace and don’t help patients get affordable quality healthcare, just like Jeff just said. I gotta say, sometimes I struggle here myself. This is why I wrote a manifesto (EP399 and EP400). And you might struggle, too. It’s probably no coincidence that sometimes the loudest individuals advocating for patients over profits are retired. And, throwing no shade here, I love the whistleblowing and the truth telling. But I think we have to be a little careful because who is actually gonna do the changing and the tipping point reaching are those who are still working for a living on or about the healthcare industry. And when I say “working for a living,” I mean we’re taking money and putting it in our pockets. We need to pay the rent and go on vacation every now and then. And we need money to pay for our family’s healthcare. If we didn’t take money, if we just volunteered, that cash might have funded more patient care or maybe made that care or premiums more affordable. Every one of us is a cost center if we think about it from the standpoint of the patient or plan member. Every one of us. If you did it for free, the money could accrue to patients, right? I also keep in my mind that there are, for sure, individuals within any of these profit-seeking, financially motivated, maybe not patient-motivated organizations; and these individuals have a job to do the good that that organization is doing. These are the ones who are actually working on pilots that actually work or doing work with social determinants of health or behavioral health that are actually (again) working. While I dislike the overall impact potentially of the one who is paying their paycheck, I gotta keep in mind that the more successful this individual is within that corporate entity, the more good that that entity is gonna wind up doing. I think about this because, again, my main concern is doing better by patients, helping the sort of insurgents within some of these entities. These entities should be held accountable, no doubt; but the people who work within them should—I don’t know—I still want to encourage them to do better. The goal is to help patients, not catch up some good people in a quest to punish their boss. So, it’s always a matter of degrees. It’s always nuances. It’s always how much value got delivered back for the dollars that we took in compensation for the work that we did. What did the work we do add up to? In my personal case—and I covered this in the manifesto (again, EP399 or EP400)—I worked really hard, by the way. I was sweating bullets when I was creating that manifesto. I was not sure whether I was gonna get skewered. It really was hard, and it took some major soul searching to create (again, EP399 and EP400). What I try to do, I usually shoot for trying to get patients better outcomes in a way that is cost neutral. The work that I do most of the time (ie, my day job) is probably not gonna lower costs. It’s not gonna lower costs. It’s just not within the parameters of what I do, and it’s not within the parameters of my expertise. Others who I count on to do their thing here, they might be working the opposite angle—the care might be the same, but costs are reduced. Again, a fine way to go. Maybe some of you have figured out how to get patients better care at lower costs. That’s the holy grail … and big kudos. But not everybody can do it. It’s just not possible a lot of times on any number of levels that we don’t have time to get into today. Again, all of this is why I wrote my manifesto for how I reconcile my own self and determine what “having personal integrity” means to me and for me and also for my company. And maybe over the years I’ve made some choices that I wouldn’t make again—but those choices ultimately have wound up funding this podcast, so maybe that’s my redemption potentially. I don’t know. We all live and learn, and we can’t start to hate ourselves because we haven’t been perfect. A lot of times, you don’t realize the ultimate impact of something until after you’ve done it. And at that point, you just gotta regroup and try again and do better this time. We all just have to contemplate patient impact. On the other hand, there are often conversations with very motivated entrepreneurs that I’ve had where the words affordability, impact on patient premiums, access, or better actual measurable health … these words don’t come up. At all. Or you talk to somebody else who works at one of these behemoth payers or hospital systems or whoever, and those words do not come up. At all. Again, tracking back to the narcissism of small differences here, are we fighting with someone who is basically 95% aligned with what we’re trying to do? Or is this somebody on the other side who’s really not in the village because they do not have the same overall intent? The point I’m making here in this inbetweenisode is simply that if we’re thinking about this from the standpoint of the patient, then every one of us who isn’t retired or independently wealthy or volunteering, we all have a great opportunity to do some amazing work. But we’re also all living in glass houses, and if somebody really wants to get all small difference narcissistic about it, they probably could very self-righteously take out most of us. This isn’t some kind of cartoon where all the good guys all look the same and everything is black-and-white and there’s no nuances. I’m belaboring these points because if we want to build a village, we cannot do so without contemplating who we choose to let in it and who we’re gonna beat up on LinkedIn or wherever. But we can be a motley bunch and still work together, as long as we accept each other for the imperfect souls that we are and what we can in the aggregate add to the common cause. There’s no “one size fits all” for what we want for ourselves and what we want our legacy to be. I wanna just track back for one sec to that earlier comment I made about people who work for a company that’s actively working to take as much money out of the system as possible and give it to their shareholders at the corporate level … because here’s an actual case study example of that, and maybe it will be helpful. The other day, I was talking to an actuary who worked for a large (again) payer. And this actuary was trying to figure out ways to create win-wins for plan members within the constraints of his job. This actuary, if he can figure out the math, given the scale of members that he’ll reach, he could have a really large positive impact even if he only changes the trajectory of his math by a fraction of a percentage point. I want this guy on my team and in my tribe. He is trying to help, and he has the power to incrementally fix some stuff that is gonna matter to potentially millions of people. I’m not gonna kick him out of my village anyway because of who pays his paycheck. Conversely, I’m gonna try to encourage him to spread his way of thinking to the other actuaries that he works with. Or I get emails all the time (all the time) from people, especially at the beginning of their careers; and they’re looking to find a job where they can make an impact. These are smart, ambitious young job searchers, and I hear from them so often I actually have a very long template response that I’ve been poking away at for years. And I always tell them some variation of many of the things that I have said on this podcast. Often enough, though, I’ll get a response back that’s something like, “Wow! Thanks so much. This was all so helpful. After much thought, I’ve decided I’ll go work in private equity (PE). I’m gonna go work for a private equity firm so I can fund start-ups who are gonna make a difference for patients.” They may go on, and they mention how they were reading the Slack channel of one of these many groups where they don’t talk about the stuff that we talk about on Relentless Health Value. They talk about the thrilling world of start-ups and health information technology and scaling and AI and repeatable whatever. Hold your judgment. I am managing to keep mine in check. I consider that Iora Health (now One Medical) and ChenMed really help a lot of patients. There are some great new companies out there. People also have made lots of money at some of them. Nuances. Choices. Also, who’s their leadership? Now, it’s inarguable that anyone that’s working for a profit-seeking missile of a publicly traded company or a PE-funded company is going to have to contend with a moral framework that is more of a money framework than a moral framework. Same thing goes for anyone working at a huge, consolidated hospital system like the ones that get written up in the New York Times for all kinds of egregious stuff. This money focus may be irrevocably misaligned with the values of someone who works there, and the person may ultimately quit because it becomes too much cognitive dissonance. And if and when they quit, great. They’re at a different place in their journey. Maybe they listened to Relentless Health Value long enough and began to realize some of their employer’s Kool-Aid might not taste quite right. For them to get to the next stage of their journey and have the impact that they may ultimately want to have, they kinda had to start out in the belly of the beast—and I won’t hold that against them, especially if they were able to alter the trajectory of the organization or help patients along the way while they were there. Here’s another example to think about as we think about the narcissism of small differences and who gets to be in the village and who we’re gonna tell to talk to the hand. I was talking to a friend of my dad’s who literally was going to die from a neuroendocrine cancer. He had weeks to live, maybe not even plural. He was given a new immunologic cancer drug. And it’s now two years later, and he’s still here and in remission. According to the package insert of this drug, he’ll probably have 47 months, almost four years, of extra life. Yeah, that drug was expensive. I opened my mouth to say something, and my dad’s friend … he kinda shushed me. He said, “Do not say anything bad about the pharma company or my doctors at the big, consolidated health system where I got my care. I am alive, and I should be dead.” This is why I started Relentless Health Value and why I continue to do this thing. It’s because almost everything in the healthcare industry along the good-for-patients curve is a matter of degrees. Tip too far in one direction, and we start to cost more than the value we put out in exchange. Tip too far in the other direction, we go out of business. Everything I talk about on Relentless Health Value is in the service of helping myself and you and anybody else I can reach. It’s in the service of us figuring out how all of these nuances work in the real world—to help figure out who gets what when and how that might impact patients caught in the crossfire. It’s to help figure out my own path forward that I can be proud of, and maybe I can help others trying to do the same. But at the end of the day, we’re all gonna make slightly different choices and evaluations. Please don’t let the narcissism of small differences prevent us from creating a village large enough to fix healthcare for patients. Also, it’s just a nicer way to exist. Also mentioned in this episode are Frances Cole Jones; Jeffrey Hogan; Eric Bricker, MD; Iora Health; and ChenMed. For more information, go to aventriahealth.com.

For a full transcript of this episode, click here. Here’s a quote from Ann M. Richardson, MBA. She wrote it on LinkedIn, and I love it: Quiet the noise that doesn’t add value. Surround yourself with intelligent and respectful people who can deliver endless opportunities. Celebrate brilliance and new beginnings. Together, we’ve got this. Thanks for this beautifully stated call to action (I wish I would have written it myself) because it is also precisely the goal of Relentless Health Value and my hope for the Relentless Health Value Tribe—those of you who have connected with each other by way of this podcast vis-à-vis LinkedIn, or maybe you’ve met each other at an online or live event. For sure, subscribe to the weekly email to get notified of such goings-on. Now, this aspirational vision doesn’t mean putting the onus on just any given individual to fix the systemic failings that get talked about on the podcast, but we can start somewhere. We can sit with ourselves; we can ask ourselves some big questions. We can decide the legacies we want to leave and what we want our life’s work to add up to. That is what this show should, I hope, help you accomplish. And, yeah … together, we’ve got this. In this healthcare podcast, I am speaking with Peter Hayes; and we talk about five realities of 2024 for hospital chains, integrated delivery networks, health systems. Now, to make one thing very clear, as I have said many times on many Relentless Health Value shows: Not all hospital chains or hospitals are the same. There are large, consolidated, extremely rich, extremely politically and economically powerful organizations who are called health systems. And then there are rural or urban institutions that are barely scraping by and serving huge vulnerable patient populations. And despite the many aforementioned names for hospital chains and their associated outpatient facilities and owned physician groups and urgent care centers, all these names for these big care delivery entities are flabbergastingly meaningless because they do not separate the consolidated rich ones from the very desperately not rich ones. Today on the show, we’re talking about the first kind of health systems: the big rich consolidated ones which are taking over every geography where there’s money to be made. These are the ones where you read about their bad behavior in the New York Times or hear about them in YouTube videos like this one. Peter Hayes talks about the five things that these behemoth entities may really need to start thinking hard about, even in the face of their fierce and often-unrelenting market power and the political hold that they have over many local communities and all the regulatory capture that goes along with that. So, here’s Peter’s list in a nutshell—the five things to get real about: 1. Health systems need to get real about the CAA (Consolidated Appropriations Act) and its implications that plan sponsors only pay “fair and reasonable” prices for medical services. Now, before I dig in on this, jargon alert: When we say plan sponsors, that means entities such as self-insured employers—sponsors of health plans, if you will (the purchasers, the ones who are actually paying the bills). Peter explains the quick version of what the Consolidated Appropriations Act is in the show that follows, so do listen. But for more info on this really, really meaningful bit of legislation that is the law as of 2021, go back and listen to the episodes with Chris Deacon (EP342 and EP408) or check out the myriad of LinkedIn posts from Jeff Hogan. Also, others like Darren Fogarty, Justin Leader, Jamie Greenleaf, and others have some great words of wisdom that you will be able to find that really explain what the point is of the CAA, the Consolidated Appropriations Act, and its sprawling implications. 2. To survive on reduced commercial reimbursements, health systems need to get real about becoming ruthlessly aggressive in driving administrative and technology efficiencies. 3. They need to get real about pivoting from fee-for-service reimbursement to episode-based care based on taking real downside risks for good clinical outcomes. They need to pivot from a mindset of maximizing patient revenue to maximizing patient health. They need to move from a sick care reimbursement model to a healthcare reimbursement model based on health. 4. They need to get real about being completely transparent and accountable in reporting how they are using the value of their tax-exempt status. Similarly, they need to account for and report how they’re using the estimated $55 billion in net margins that they’re realizing off the 340B drug program. 5. They need to get real about quality and patient safety. We still have about 46% of our hospitals that have a C or lower Leapfrog rating. And, by the way, the chance of having a fatality on an avoidable error is 90% higher at a C or lower-rated Leapfrog entity versus a Leapfrog entity that has an A or a B. Now, some of you—and by some of you, I mean practically everybody listening—are thinking of reasons why any one of these “get real about” things is arguable or how one of the above is not holding up in some market. I think Peter would tell you the same thing that I would: You’re not wrong. But trying to predict a zeitgeist or the next pet rock never works well because it’s always a confluence of right time/right place where the whole is way more than the sum of its parts. Think about Malcolm Gladwell’s The Tipping Point. It’s about how small changes can have enormous effects if the context is right. So, now contemplate these five things that Peter brings up. All these forces are pushing in the same direction. Put it all into a stew where 48% of Americans have delayed or forgone care due to cost. Listen to the show with Wayne Jenkins, MD (EP358) for more on that. Or, you have the article John Tozzi just wrote in Bloomberg. Here’s a quote: “In one California community, teachers have to pay an extra $10,000 a year to upgrade to insurance that covers the local hospitals. Teachers who can’t afford it … give birth outside the county.” Meanwhile, insurers are making record profits, along with hospital CEOs and C-suites. At the same time, you know who I think is the third-biggest group with medical debt in this country? Yeah, it’s people who work in hospitals—nurses, others. There’s this frothing lack of trust for hospitals and what goes on there: 30% of physicians do not trust the leadership of their health system. And no wonder. There are examples of healthcare executives sitting up there in their palatial offices acting more like mobsters than the nuns they took over the hospital from. So, to orient your context, you are here. Peter Hayes is the newly retired former president and CEO at the Healthcare Purchaser Alliance of Maine. He is a national presence in healthcare strategy, innovation, and a keynote speaker. For more on the wild-ass problems with hospital pricing, check out this list of shows. But, spoiler alert, some of these are hair-raising. Encore! EP249: The War on Financial Toxicity in North Carolina as a Case Study Everybody Should Be Keeping Their Eye On, With Dale Folwell, North Carolina State Treasurer EP395: Consolidated Hospital Systems and Cunning Anticompetitive Contracts, With Brennan Bilberry EP390: What Legislators Need to Know About Hospital Prices, With Gloria Sachdev, PharmD, and Chris Skisak, PhD EP389: The Clapback When Hospitals Cannot Constrain Their Own Prices, With Mike Thompson EP346: How Did Health Systems Get Addicted to the Inflated Prices They Charge Employers and Some Patients? 2021 Update, With Peter Hayes, President and CEO of the Healthcare Purchaser Alliance of Maine EP394: Spoiler Alert: It Is Counterintuitive Which Hospitals Offer the Most Charity Care, With Vikas Saini, MD, and Judith Garber, MPP Also mentioned in this episode are Ann M. Richardson, MBA; Chris Deacon; Jeffrey Hogan; Darren Fogarty; Justin Leader; Jamie Greenleaf, AIF, CBFA, C(k)P; Wayne Jenkins, MD; John Tozzi; NASHP (National Academy for State Health Policy); Gloria Sachdev, PharmD; Chris Skisak, PhD; Leon Wisniewski; Cora Opsahl; Rik Renard; John Rodis, MD; Rob Andrews; Al Lewis; Eric Bricker, MD; Vikas Saini, MD; Judith Garber, MPP; Lown Institute; RAND Corporation; Dale Folwell; Brennan Bilberry; and Mike Thompson. You can learn more by following Peter on LinkedIn.

For a full transcript of this episode, click here. For a deep dive into the way back backstory here, listen to the show with Dea Belazi, PharmD, MPH. That’s episode 293, and it’s entitled “Game Theory Gone Wild,” because gone wild is what has happened with pharma manufacturer co-pay assistance programs. Don’t forget that the original intent of the first chess move here was by pharma manufacturers to circumvent basically PBM (pharmacy benefit manager) formulary restrictions, because the leverage PBMs have is access and patient out-of-pocket costs—and let’s focus on the out-of-pocket costs right now. If a drug is on formulary, patients can get said drug for a lower relative price. Drugs not on formulary are abandoned at the pharmacy counter quite often because patients cannot afford them, and this is by design. This patient abandonment of their prescriptions is what gives the PBM leverage when negotiating with Pharma. If Pharma doesn’t play by PBM rules, they get kicked off the formulary; and then patients can no longer afford to get their meds and pharma market share tanks. So, the original intent of co-pay cards was for Pharma to say, “Ha ha, talk to the hand, you PBMs. You can not put us on formulary if you want, but I’m gonna lower the out-of-pocket costs all by meself with me co-pay cards. If you, PBM, force a $300 co-pay or whatever, which is way too high for most patients, I, Pharma, will pay $275 of that (or maybe all $300) a month on the patient’s behalf with my co-pay card program. So, patients are now left with a reasonable amount that they should be able to afford, and my pharma drug’s market share is unhindered.” I think one thing to keep in mind here as we evaluate the net impact is that not all situations are the same. Let’s say there’s two main scenarios—and keep both of these in mind during the conversation that follows with Joey Dizenhouse as you consider the impact on plan sponsors and patients vis-à-vis their premiums and also on patients/members in the short term. Scenario #1: Let’s say there’s one drug out there for a particular condition. One drug. And on some plan, that one drug has a ridiculously expensive out-of-pocket cost, say, $8000 or something like this, whatever their deductible or the max out-of-pocket is for that particular member on that particular plan. And this is $8000 every year if this is a chronic condition, which makes it different than someone hitting their deductible this year because they had a knee replacement or whatever. In this first scenario, we’re talking about patients or their kids who in perpetuity need a drug and who effectively just had their salary reduced year over year by $8000 or whatever. If they want the med, they have no other option than this huge out of pocket. That’s one situation. Scenario #2: Let’s say there’s another really expensive drug, but in this scenario, there’s a generic equivalent or there’s some other brand that costs $70 and works for most patients. So, yeah … now we have patients who get a co-pay card and are thus incented by their low or no out of pocket to get a drug that is effectively a rip-off. So, now the plan is paying something upwards of $8000 instead of $70. And it’s not like the patient got a better product. It’s upwards of 8000 wasted plan dollars that really don’t accrue any better health. And so, this is really where our story begins. A couple of definitions here: Maximizer refers to the entity running a maximizer program. It’s a noun. It’s a who. Oftentimes the maximizer is the PBM, but not always. Joey talks about two kinds of maximizer programs: One is what Joey calls a spread model, and then there’s also the transparent model. We also in the podcast that follows talk about a scheme which is often pitched to plan sponsors that I’m going to call the “the drug’s not covered” approach. At the end of the show, we come up with three bits of advice. And here they are, spoiler alert: 1. Buyer beware. If you are a self-insured employer or some other entity who is purchasing these maximizer programs, purchasing due diligence is required. If your vendor makes more money the more a drug costs, yeah, you have misaligned incentives and the chances of you (the plan sponsor) and all of your members getting screwed is on the high side. (Eric Bricker, MD, shows how this could work in this video about the Cigna “transparent” CostVantage offering.) 2. As Lauren Vela said also in episode 406, everybody always thinks that their contracts are amazing. It’s everybody else’s contracts that suck. You ask a roomful of HR folks if their PBM contracts are above average, and the whole room raises their hands. This ain’t Lake Wobegon, folks. Don’t kill the messenger. 3. Get on the ground and actually talk to plan members who are taking these drugs or who have kids taking drugs that are covered by these maximizer programs or covered by the “it’s not covered” alternative funding programs. I certainly hope no one listening is taking the word of the program sponsor on how satisfied plan members are, especially with all these class action lawsuits afoot. My guest today, as aforementioned, is Joey Dizenhouse, FSA, MAAA. He is an actuary by background. He serves as CEO of SlateRx, which is a pharmacy benefit experience provider, or a PBX, as they call it. He is also head of HealthTrust IHP. Also mentioned in this episode are Dea Belazi, PharmD, MPH; Eric Bricker, MD; Lauren Vela; Andreas Mang; and Kollet Koulianos, MBA. You can learn more at SlateRx.

For a full transcript of this episode, click here. Listen to this show as either a follow-on or a prequel to the shows with Mark Cuban and Ferrin Williams, PharmD, MBA (EP418) and Ge Bai, PhD, CPA (EP420). And if you’re interested in this “what’s going on in the world of PBMs, pharmacies, and employers” topic, also listen to the show with Joey Dizenhouse coming out on January 11, 2024. If you need the 101 on what’s going on out there for indie pharmacies in your community, I’d recommend the show with Vinay Patel (EP241). What would you do if you owned an independent pharmacy and you discovered that most of your profit was coming from dispensing 10% of prescriptions? That if you just stopped filling 90% of the drugs; fired all your staff except, like, one person; and just filled the drugs that you made money on? If you did this, you would actually make more money in the pharmacy than you’re currently making filling every single prescription. What would you do? This is the math that Benjamin Jolley, PharmD, my guest in this healthcare podcast and a multigenerational pharmacy leader and consultant to other pharmacies, discovered and wrestles with on the show today. And oh, by the way, a pharmacy is not gonna make it up in extra toilet paper sales or chewing gum sales when patients come into the pharmacy to pick up their meds. I asked Benjamin this, and he basically laughed at me. [What are the 10% of drugs that an indie pharmacy can make money on? You’re going to find this to be a shocking coincidence. It’s the same drugs that many of the consolidated PBM/pharmacies mandate are filled at their own pharmacies or mail order. And many self-insured employers maybe unwittingly sign contracts enabling this to go down, which, in effect, enables these consolidated PBM/pharmacies to essentially corner the market on profits from commercial purchasers.] So, turning our attention now to how to lose money in the pharmacy business, there’s two ways to lose money: either outright losing money because the acquisition costs of the meds are actually more than the PBM (pharmacy benefit manager) mandates the indie pharmacy can charge its insured members. So, that’s one way to lose money. A second way to lose money as an indie pharmacy is because generics are so cheap. The cost of providing the pill bottle might exceed the profits on a 47-cent generic, even if the profit margin is 100%—again, because the PBM sets the price. Now, you might be thinking the same thing I was thinking when Benjamin Jolley talked about this: Okay, well maybe … ugh! We want the patient to save money here, so … ? Here’s the really big point that Benjamin Jolley knows because he sees this every day: What the patient pays and what the pharmacy gets paid has no relationship to each other or to what an employer plan may or may not pay. So, if the patient/member pays more and the independent community pharmacy gets paid less, that doesn’t mean it will be a better deal for the employer. It doesn’t mean it will be a better deal for the patient. Why? Because there’s a PBM in the middle. Ge Bai talks about this in episode 420. For every $100 that is spent on generic drugs, $41 goes to the PBM. Seventy-nine percent of the time, if a plan member is in their deductible phase, it’s cheaper to pay cash than to use the insurance that member is paying for. As someone said on LinkedIn the other day talking about patients paying premiums and paying more for generics than if they’d just gone in and paid cash, here’s the quote: “You can pay more to pay more.” With so many deductibles as high as they are and with so many people who never reach their deductibles, as Benjmain Jolley says during the show today, we’re giving this third party a lot of control over a transaction that they literally have nothing to do with something like three out of four times that any given patient picks up their generic med. How’d we get here as a society? It’s weird. If you’ve listened to most of the shows that I’ve been doing lately largely spiraling around the whole “what’s going on with the prices that patients/members are paying for generic drugs,” you might be thinking the same thing I am: It’s such an egregious situation that it becomes an opportunity because the bar is so darn low and so many in the supply chain or the demand chain are getting royally screwed by the PBMs, not just patients. I mean, there’s a lot of possible win-win collaborations, at least situationally. Local pharmacies and local businesses, for example, would seem to have a natural alliance. I’m reminded of the collaboration from a couple of years ago that Drew Leatherberry and Dan Strause talked about in episode 313. I’m super sure that you in the Relentless Health Value Tribe has or could come up with all kinds of innovative collaborations to help patients get affordable generic drugs, and I’d be super psyched to hear about them. Benjamin Jolley is a pharmacist by training. His pharmacy consulting company is Apex Pharmacy Consulting. Also mentioned in this episode are Ge Bai, PhD, CPA; Mark Cuban; Ferrin Williams, PharmD, MBA; Joey Dizenhouse; Vinay Patel; Drew Leatherberry; Dan Strause; Kyle “Transparently Kicking PBM Ass” McCormick and his pharmacy, Blueberry Pharmacy, in Pittsburgh. Also, AJ Loiacono from Capital Rx (EP379) and CPESN Networks.   You can learn more at benjaminjolley.substack.com and through Apex Pharmacy Consulting. You can also connect with Benjamin on LinkedIn.

For a full transcript of this episode, click here. I thought I would encore this show after coming back from the 2023 NODE Conference held in the Microsoft building in New York City, which I always enjoy. NODE stands for Network of Digital Evidence. Why is evidence so important? Here’s the NODE answer to this question: It is so smart purchasing decisions can be made by consumers, health systems, and payers so devices and software that improve patient experience, provide actionable insights, and save time and money become part of care delivery so trust is built between industry and healthcare. No matter what direction you come at this from, evidence for care delivery endeavors is sorely needed. What’s always interesting to me is kind of the context of this said evidence, however the “who said” evidence is evaluated by and to what end. It was a really interesting juxtaposition, frankly, to hit up the NODE conference—which is attended mainly by digital health entrepreneurs and health system execs—right on the heels of me going to multiple events with self-insured employer types like the PBGH (Pittsburgh Business Group on Health) summit in early December, for example. What Emily Kagan Trenchard, my guest on this encore, talks about today is very much not a nice-to-have from the employer/purchaser point of view. It’s a must-have from their perspective because all of these care delivery, technological, and organizational inefficiencies that Emily alludes to … yeah, it’s all defined as expensive waste from the standpoint of the employers or other self-insured entities. These self-insured entities are the ones paying for fragmented and unsupported patient journeys with their escalating commercial rates, after all. In sum, I like how Joseph Wu, MD, PhD, who is the current president of the AHA (American Heart Association), put it at the recent AHA Scientific Sessions in Philadelphia last month, which I was honored to attend.

For a full transcript of this episode, click here. Why did I decide to encore this episode where Cora Opsahl from 32BJ spends 29 minutes talking about the importance of getting your data if you are an employer or a union health fund? Let me quote Jeff Hogan with some light edits here. Jeff wrote about the “outsized role” that employer data and intentional analytics can and will play. This is emerging and a must-have. The show with Andreas Mang (EP419) from three weeks ago, the show with Dan Mendelson (EP385), the one with Mark Cuban and Ferrin Williams (EP418) … everything that has been talked about in all of these shows and more is gonna be hard to do without having the data so you know what’s going on. But I will let Cora Opsahl explain far more succinctly than I can here. One more note before we dive in here: After you listen to this show, you might want to go back and listen to episode 373 with Cora—and that one is entitled “How to Kick a Big Hospital Out of Your Network”—because this is one of the things that 32BJ did when it got its data. 32BJ realized that if it kicked out the really expensive hospital from their network, it would (and did!) save $35 million. Kicking this one hospital out of its network enabled the union to get its biggest wage hike in however many years, and also the employers employing union members got a premium holiday and did not have to pay into the health fund for a few months. Imagine if they didn’t have this data and realized the millions and millions of dollars being siphoned out of the plan by this one hospital charging way too much. It’s just crazy how many employers or unions wind up becoming imprudent fiduciaries because they just don’t have the data to know better. But I’ll tell you who is realizing it: class action attorneys. In this healthcare podcast, I am speaking with Cora Opsahl, who directs the 32BJ Health Fund. Important to know about Cora’s background is this: In previous roles, she’s worked deep in the inner workings of the healthcare industry. So, she came to 32BJ armed with a BS meter that is finely tuned, which is, unfortunately, an essential skill for anyone trying to help the patients and members relying on them to successfully navigate the healthcare industry. This conversation gets into everything that the 32BJ Health Fund does with their data. They have lots of data. They demand it. So, besides kicking out overly expensive health systems from their network, here’s other things that 32BJ is currently doing with their data and which other employers and unions may get a few ideas from. If you have the data, you (like 32BJ) can use it to: Make smart benefit decisions that are validated, not just guesses. Before you decide to do something (add a wellness program etc), be able to model it accurately for how much it will actually cost you—which, spoiler alert, is most of the time not what the vendor will estimate. You have way more data than the vendor does, so you can certainly use it to great effect in this way.Make sure that the right members are being communicated with so that benefit designs are successful. As Ashleigh Gunter said in episode 368, success when changing benefit designs has a lot more to do with communication than many realize.Create dashboards for leadership that may show trend lines, for example, which could be very helpful to ensure that the fund doesn’t run out of money etc … little things like that.Figure out how much the fund is spending on various procedures and where. There’s all this talk right now about the crazy variability of prices for the same exact service in the same local market. At one hospital, a colonoscopy could literally cost $10,000; and in another hospital—same quality, same basically everything—that same colonoscopy will be $2000 or $3000. I mean, there’s a 500% delta or something in some of these cases.Ensure that if a vendor said they were going to do something, that they are actually doing it. This is especially meaningful for point solutions because of the whole squeezing the balloon thing. I can save money in a silo, and you won’t realize that those dollars are getting transferred elsewhere unless you are doing your own math. This is a big deal if you start thinking about how pharmacy benefits are typically siloed from medical benefits. So, if I’m a pharmacy benefit manager, I can talk about how much I’m saving by denying patients drugs without consideration of the medical downstream implications of that.Ensure you’re not paying a bill and writing a check for more than the bill was for, which is weirdly common. There’s a whole show with Dawn Cornelis (EP285) about this.32BJ has an engineering team that is creating an app to help members navigate to great doctors with fair prices. All of these things roll into basically three categories: 1.    Cutting wasteful spending and finding fraud 2.    Making smart benefit decisions 3.    Being able to see trends and forecast the future, which is really helpful for financial solvency etc As Cora Opsahl says, “I think we [all can] recognize [that] you [cannot] make smart … decisions and be a fiduciary of [a] fund without having [data].” This whole conversation has been really a big bright spot for me and will provide hope, I think, for any employer/union who is seeking ways to protect their members and patients, the ones on their plans and therefore under their aegis and whom they have a fiduciary responsibility to look out for. 32BJ represents about 200,000 members. They are mostly in residential and commercial real estate—so, for example, your doormen, your maintenance workers, your security, your cleaners, amongst others. Members are in about 11 states, but a lot of them are in the New York City metro area. These union members who are in the fund work for over 5000 different employers. The 32BJ Health Fund has zero-dollar premiums. Wowza on that point—that’s a huge benefit. Also mentioned in this episode are Jeff Hogan; Andreas Mang; Dan Mendelson; Mark Cuban; Ferrin Williams, PharmD, MBA; Ashleigh Gunter; Dawn Cornelis; and Wayne Jenkins, MD. You can learn more at 32bjhealthfundinsights.org.

For a full transcript of this episode, click here. I want to kick off this show with a clip from episode 415 with Rob Andrews, wherein he so very eloquently sets the stage here: We think that one of the core problems here is that too many intermediaries and providers in the system, their compensation is not in any way dependent on the outcome. So, let’s think about this NICU baby problem again. Looking at the hospital system—and I’m not at all implying or suggesting any hospital system tries to do this—but I think it is clear that they actually benefit commercially from more babies spending more days in the NICU. NICU’s usually a pretty good margin business. It’s expensive. Lots of money is paid, and margins run pretty well there. So, I don’t think there’s a hospital system in the country that intentionally says, “Oh, good … let’s go out and try to fill up the NICU every day.” But when it gets filled up, they benefit. On the other hand, if the hospital invests significantly in early effective intervention prenatal or even pre-pregnancy, there’s no upside to that financially. They don’t get rewarded for that. They might win an award from some magazine for best practices, but their margin suffers. Then if you look at the intermediaries, the carriers, and PBMs [pharmacy benefit managers], their outcomes are irrelevant to their performance. If an employee of a self-insured employer has a significant risk prenatal or pre-pregnancy and the carrier does a great job identifying that problem and solving it, they make the same amount of money off that patient or that consumer that they would if they did nothing. So, it’s a bit harsh to say this, but the carriers make the same amount of money if every child is born healthy and there’s not a day spent in the NICU as if they do if every child’s born with severe crises and winds up in the NICU. It's not a big mystery in the US economy that people do what you pay them to do. And if you have a system, which we do now, where the case of maternal health, diabetes management, musculoskeletal management, cholesterol and cardiac management … when you have a system where many, many players in the system, at best, make the same amount of money for bad outcomes as they do for good ones and, at worst, they prosper from the bad outcomes, that explains the problem. So, is this show about improving maternal health outcomes in the US, where it is relatively deadly to have a baby compared to other industrialized nations? Yes. But improving maternal health is also a great case study for what needs to be done to just improve health. You could apply it to primary care. You could apply it to chronic care management. It is a fairly broad-spectrum solution, as it were. I’m thinking right now about how Dave Chase, co-founder of Health Rosetta—how does he put it?—he says every big problem in healthcare already has been solved. The existing challenge is how to massively replicate proven solutions. So, yeah … keep that in mind when we talk about what Jodilyn Owen has accomplished with her team in Washington State with their birth and health center. Also, as you consider how you might replicate, keep in mind the struggles she has faced getting contracts from self-insured employers or payers to pay her clinic and a very interesting encounter she had with a VC/PE (venture capital/private equity) funded maternal health start-up. It’s just interesting where the money is flowing and where it’s not flowing. But let’s talk about Jodilyn’s clinic’s outcomes. Their zip code is one of the most diverse in the nation. There are 79 languages spoken. There is lots of social determinants of health going on. It is a medically underserved area. It is a federally designated provider shortage area. So, this community has every right to have horrible outcomes. Meanwhile, nearby, there is a wealthy community. In that zip code, they live 17 years longer than in Jodilyn’s clinic’s zip code. But if you compare the outcomes that Jodilyn’s clinic has compared to the outcomes in the hospital in that fancy neighborhood, Jodilyn’s group has far less cesarean rates, far less NICU admissions, far less incidence of gestational diabetes, far quicker access to treatment for hypertension. You might be wondering how much their birth bundle costs that they are having trouble getting most payers except one to pay for and getting no VC dollars or funding at all. They’re charging $5000 to $7000. So, let’s just say $5000 to $7000 compared to … what does one NICU admission cost? So, yeah … this is an exact example of what Rob Andrews was talking about. An EXACT example. So yeah, enjoy this episode; it’s as heartwarming and actionable as it is frustrating. And if you are a payer or self-insured employer in South Seattle, please give this clinic a contract. Not to drop a major spoiler alert here, but you know what Jodilyn’s “secret sauce” is? Nuances for sure, but bottom line, it’s about trust. It’s about relationships. It’s about listening to the patient. It’s being part of the local community. If you’re shocked right now, raise your hand. There’s gonna be no one with their hand raised. How many times do we have to figure this out? Jodilyn Owen is the clinical director of the Rainier Valley Birth & Health Center. She is a licensed midwife along with a bunch of other credentials. Also mentioned in this episode are Rob Andrews; Dave Chase; Vivek Garg, MD, MBA; and Larry Bauer.   You can learn more by emailing Jodilyn at jodilyno@myrvcc.org. You can also connect with her on LinkedIn.