Tag Archives: ceo’s guide to restoring the american dream

Open Letter to Bezos, Buffett and Dimon

I applaud your announcement of a an organization designed to tackle what we believe is the greatest immediate threat to America — our status quo healthcare system. I have sent your healthcare leaders the new edition of my book, The CEO’s Guide to Restoring the American Dream – How to Deliver World Class Health Care to Your Employees at Half the Cost. This book draws on my decades as an insider in healthcare, first as an Accenture consultant working inside dozens of hospitals, followed by founding Microsoft’s $2 billion-plus healthcare platform business and more recently as a healthtech CEO (WebMD acquired my company). Since my departure from WebMD, my life’s work has been to find real-life, practical solutions to the root causes of our healthcare system’s dysfunction. Through this, I’ve found microcosms of employers everywhere that have already tackled the most challenging problems, restoring for them and their employees the American Dream that healthcare has stolen.

The great news is that every fix to healthcare’s structural problems has been invented, proven and modestly scaled. With your large employee base and bully pulpit, you are in a unique position to massively scale these fixes.

The wisest employers have found that the best way to slash healthcare costs is to improve benefits. We’ve found no company that has a better benefits package than Rosen Hotels, which spends 55% less per capita on health benefits than a typical company despite having a challenging workforce. For example, 56% of their employees’ pregnancies are categorized as high risk. I highlighted Rosen in my TEDx talk. They’ve invested money that otherwise would have been squandered in healthcare to provide free college to their employees, employees’ children and residents of a nearby neighborhood. Crime in that neighborhood plummeted 62%, and high school graduation rates soared from 45% to nearly 100%. The CEO’s Guide provides more details on what Rosen and many other smart employers are doing. For example, Pittsburgh-area schools, with a superior benefits plan, are spending 40% less than typical schools.

See also: 3 Innovation Lessons From Jeff Bezos  

There are many options to directly improve your employees’ health benefits while slashing costs. Hundreds of us have contributed to the Health Rosetta, which provides a blueprint for how to purchase healthcare services wisely. The Health Rosetta’s foundation is a set of guiding principles that leading thinkers ranging from Esther Dyson to Bill Gates have contributed to. If I were in your shoes, I’d start in the following places:

My book can be found on Amazon or downloaded for free.

  1. Send employees to Centers of Excellence for high-cost/complexity procedures: Typically, 6% to 8% of your employees consume 80% of spending in a given year. Large employers such as Lowes, Pepsico and Walmart have found stunning levels of misdiagnosis (25% to 67%) and overtreatment at low-value centers. For example, 40% of planned organ transplants diagnosed at community hospitals were deemed medically unnecessary after a second opinion from a high-value center such as the Mayo Clinic. Starbucks and Virginia Mason found that 90% of spinal procedures didn’t help at all and that the problems would have been better addressed via physical therapy. A large tire maker put in a proper musculoskeletal program for their employees and has already created nearly 2% of positive EBITA impact. One of the foremost experts in employer benefits, Brian Klepper, estimates that 2% of the entire U.S. economy is tied up in non-evidence-based, non-value-adding musculoskeletal procedures. [See Chapter 12 for more.]
  2. Lead the employer movement to avoid opioid overuse: Every addict needs an enabler. Having deeply studied the underlying drivers of the opioid crisis, I found that employers are the key (unwitting) enabler of the opioid crisis on 11 of the 12 major drivers. The overwhelming majority of those with opioid overuse disorders followed doctors orders, and their drugs were paid for by employers. Unlike other great public health crises, the opioid crisis can’t be solved without significant employer action. You can save money and keep your employees and dependents out of harm’s way by adopting a smart benefits approach. [See Chapter 20 for more.]
  3. Root out widespread criminal fraud: The Economist has called healthcare fraud the $272 billion swindle. More than 150 million health records have been hacked and are available for sale on the dark web. At a meeting with former HHS Secretary Tommy Thompson, I heard the stunning levels of fraud. One Fortune 250 company had more than 500,000 claims that were fraudulent (e.g., claims run 25 times and multiple claims for once-in-a-lifetime procedures such as a hysterectomy). In that room, one of the risk management practice leaders from a Big Four firm called the related ERISA fiduciary risk the largest undisclosed risk he’d seen in his career. The industry hasn’t adopted modern payment integrity software/algorithms for this readily fixable problem. [See Chapter 7 and 19 for more.]
  4. Ensure employees receive the highest-value drugs: Employers such as Caterpillar have taken matters into their own hands as the pharmaceutical supply chain has become rife with hard-to-follow rebates and other tactics designed to redistribute your profits to them. Caterpillar hasn’t seen healthcare spending increases in 10 years, primarily due to getting their pharmaceutical spending under control. [See Chapter 18 for more.]
  5. Establish value-based primary care foundation: As IBM found in a worldwide analysis of their $2 billion healthcare spending, it’s not possible to have a high-performance healthcare system without a proper primary care system in place. More than 90% of what people enter the healthcare system for can be addressed in a high-performance primary care setting (rare in the U.S.). Sadly, most U.S. primary care is like milk in the back of the store to get you to other high-margin and often low-value services. Not only can proper primary care go upstream to address issues before they flare up, it can help their patients navigate complex medical conditions. In fact, Amazon just hired Dr. Marty Levine, who was my parents’ doctor in a great Medicare Advantage program. Levine and his team have been invaluable in helping us navigate my father’s Parkinson’s journey. Based on what has transpired, I am certain that Levine’s team has saved taxpayers more than $200,000 in likely medical bills. This kind of care is not only outstanding, it more than pays for itself. [See Chapter 14 for more.]

See also: The Key to Digital Innovation Success  

The title of my TEDx talk was Healthcare Stole the American Dream – Here’s How We Take it Back. It’s great to see your leadership on this critical issue. The Health Rosetta community stands ready to help your efforts.


Dave Chase

P.S. We would also encourage you to adopt the Health Rosetta Plan Sponsor Bill of Rights (https://healthrosetta.org/plan-sponsor-bill-of-rights/). In light of your respective backgrounds in financial services, you are likely to be shocked by the lack of disclosure and conflicts of interest that are standard operating procedure in the vast majority of employer health plans. [See Appendix B for more.]

How Advisers Can Save Healthcare

Of course, insurance advisers can’t save healthcare alone, but they will play a pivotal role.

We must first recognize the key players:

  • Employers (purchasers of healthcare via health insurance)
  • Employees/dependents (consumers of healthcare)
  • Physicians/hospitals/clinics (providers of healthcare)
  • Insurance carriers (financiers of healthcare)
  • Insurance brokers/advises (role varies dramatically)

To truly save healthcare will require collective change from at least four of these five groups. I’ll let you decide who may be the odd-player-out.

By now, you are, or should be, aware of a new trend in the design of benefit programs: moving away from traditional carriers/networks and toward direct-pay programs where purchasers/consumers are contracting directly with the providers of care. While this approach has been producing real results for several years in isolated situations, the trend is still in its infancy.

As you might expect, with some of the players’ self-interests at play, its eventual maturity is anything but certain, and certainly not imminent.

It is a path to maturity for which brokers/advisers need to be paving the way.

In a comment he left on one of my LinkedIn updates, where I partially reflected on the emerging trend of these direct-pay programs, Robert Nelson, MD (spokesperson for the Georgia chapter of the Free Market Medical Association) made the following request:

I would love to hear the perspective from the supply side that actually performs the care and interfaces with brokers & TPAs on price-transparent direct contracts, from a position of owner (provider of service).”

In response to Dr. Nelson, Dr. Keith Smith (medical director at Surgery Center of Oklahoma) observed:

The rate at which a physician (or facility like mine) transitions to a 100%-pure, non-insurance model will, and should, vary depending on the degree to which the local practice environment functions like a cartel. In areas of the country where large hospital systems and abusive carriers exist predominantly and work together, the speed with which a disruptor can achieve independence will be slower than in areas that are not so cartelized.

“I am aware, however, of DPC (direct primary care) practices that have successfully launched in highly cartelized environments with tremendous success, partly because the physician(s) had decided that if their venture was unsuccessful they were going to quit practicing anyway.  At the Surgery Center of Oklahoma, we worked with insurance for years but do not at this time. 

“Once a mutually beneficial arrangement with a self-funded employer (or a cash-paying individual) makes its entrance in a practice or facility, the abuses and coercion of the carriers cannot as easily be ignored or tolerated. One ‘win-win’ arrangement creates a desire for nothing but ‘win-win’ arrangements, and the journey to a pure model has begun.”

See also: High-Performance Healthcare Solutions  

Sean Kelley (president at Texas Free Market Surgery & MedSimple) then added the following observation:

“I agree with Dr. Smith about the impact of market conditions on adoption of new, non-insurance, direct pay models. The cartels have erected competitive barriers over time with just this type of disruption in mind; the opacity at every level and supported by the entire cast of characters in the healthcare value chain are testaments to this fact.

“(1) Most doctors want to see a new model emerge and will support it, some more energetically than others who fear a backlash or are at the end of their careers. DPCs have the most risk while independent specialists are able to straddle in our model and Dr. Smith’s. 

“(2) Many broker/consultants desire change, though only a select few are risking their existing accounts; they are more likely to use a new direct pay model as a wedge to gain an edge with new prospects.

“(3) Purchasers are unprepared for this type of disruption; the health plan data they get is highly summarized, making it impossible to compare what they currently pay for services to direct pay providers like Texas Free Market Surgery or Surgery Center of Oklahoma. Additionally, health plan purchase decision processes are mostly ad hoc, with multiple leaders holding tacit vetoes over direct pay contracting.

“(4) Given this landscape, it takes years to create a few ‘win-win’ arrangements with the true innovative purchasers before the rest of the market will even start to pay attention. Many of the status-quo incumbents believe that almost any new model will eventually asphyxiate and go away. I firmly believe adoption of the direct pay model is mostly constrained by the demand or purchasing side. Purchasers hold the key; if there are enough purchasers, open and willing to enter into direct pay contracts with transparent, high-quality healthcare providers, most will react to the change and flock to the new direct pay model.”

For me, this was an unbelievably insightful exchange.

Some of my key takeaways

From Dr. Smith:

In many markets, the providers of care and the insurance carriers operate in a cartel-like fashion to protect their own interest and to slow, if not outright halt, disruptive (direct-pay) innovations.

However, once a provider is able to break the stranglehold of the “cartel” and experience a win-win with the purchasers/consumers of healthcare, this new structure is addictive, and the traditional approach becomes unacceptable.

From Sean Kelley:

He agrees that this cartel-type behavior is real and all too common.

Both providers of care and brokers/advisers desire to see change take place but are afraid of its consequences on their respective practices. Many providers may only become drivers of the change as they approach the end of their careers, while many advisers will only become drivers when pursuing new business; they are not so willing to put existing client relationships at risk.

Purchasers need access to THEIR data, a key to becoming comfortable in changing the way they make their purchasing decisions.

The rate at which the direct pay trend reaches maturity is largely dictated by demand from the purchasers. With increasing demand, and the subsequent success stories sure to follow, there will soon be a tipping point at which the rest of the market will follow suit.

This is exciting stuff!

We are on the cusp (okay, that may be overly optimistic, but we can kinda, sorta see the cusp) of fixing one of the most challenging issues facing our country and our economy. But the solution requires change, sharing and collaboration at a level that I’m not sure many industries have ever experienced.

If Sean Kelley is correct, and I believe he is, the biggest key to driving this trend to maturity is demand from purchasers. And, the key to increasing that demand is education of those purchasers.

This is where brokers/advisers become the linchpin

Advisers, your job as educators for your clients about how to most effectively finance the purchase of healthcare has never been more critical. Of course, you can’t educate them until you have spent significant time studying the issues and solutions yourself.

The curriculum for your education is already being built. But, just know, as with any emerging trend, the curriculum continues to evolve. There are conversations taking place every day on LinkedIn that should be required reading for you.

There are many generously sharing their ideas and experiences online. In addition to the people already mentioned above, here are a few others to follow to help get you connected to the larger community working to drive these changes in the healthcare system:

And members of our Q4iNetwork who are deeply involved:

In addition to the daily, online conversations, you NEED to read Dave Chase’s book, “CEO’s Guide to Restoring the American Dream.”

Before we are truly prepared to educate the purchasers, there is a lot of collaboration that needs to take place within and between the groups of interested parties.

See also: Healthcare: Need for Transparency  

Providers of care need to collaborate and communicate with one another to ensure the right access to care and infrastructure are in place. Benefit advisers need to collaborate and communicate with one another to ensure there is the necessary critical mass taking this approach to their respective clients. And, the providers and advisers must collaborate and communicate with one another to help make this transformation of healthcare as smooth as possible for the purchasers.

Change is never easy, but this change comes with particularly complex challenges. Not the least of which is changing a purchasing pattern that drives one-sixth of our economy. This change can’t happen in a vacuum (one employer at a time) if it is to be sustainable and rapid. We have to ensure it scales, and scales quickly.

As my friend Josh Butler recently observed, change is only scalable through collaboration. All interested parties must come together as part of the solution or find themselves on the outside, victims of the solution.

This article originally appeared on Q4intel.com.