“Jeff Bernhard is one of the rare senior executives who has left one of the big national health insurance carriers to truly solve the issues the large carriers mainly pay lip service to. He’s running Continental Benefits that is described as a “super TPA” as they go beyond what traditional third-party administrators do and apply some of the proven Health Rosetta approaches.(Super TPA – The Purple Cow of Health Care) They are growing rapidly and are one to watch.” – Dave Chase, Forbes Contributor
Employers’ Declaration of Independence From Traditional Health Insurance
JUL 3, 2016 @ 07:49 AM 5,713 VIEWS
Dave Chase , CONTRIBUTOR
VC; Speaker; Author; Exec Producer, The Big Heist
Opinions expressed by Forbes Contributors are their own.
Employer frustration over the devastating collateral damage from a severely under-performing healthcare system is boiling over. Across America and across all types of organizations, every day there is the equivalent of Boston Tea Party. Employers are recognizing that there has been a redistribution tax from the pockets of citizens and corporations to a bloated healthcare system. The healthcare system has been as deaf to employer grievances as King George III was to colonists’ grievances.
Healthcare industry bloat has caused jobs to move to Mexico and has fueled the rise of populist presidential candidates. Meanwhile DIY health reformers in Orlando, Kirkland,Tulsa, Pittsburgh and many other locales are driving ametropolitan revolution from the ground up that is creating a land of opportunity for their community. They haven’t bought into healthcare’s biggest lie — that healthcare costs can’t be controlled. These employers have woken up as I outlined in Health Plan Industry’s Worst Nightmare: Employers Realizing They Are Actually The Insurance Company.
As I pointed out in the “worst nightmare” piece, this isn’t meant to bash my friends in the health insurance industry. They have been acting in a perfectly rational manner inside of a perfectly irrational set of circumstances. However, my smart health plan friends recognize that historical mistakes don’t entitle an organization to profit indefinitely. The smart ones are rapidly investing their war chests in new models and companies. Sadly, most are acting more like Kodak but some are acting like Fuji when faced with the existential threat posed by revolutionary change. Fuji is an example for incumbents taking decisive action — they executed over forty acquisitions to build new businesses and cut billions of costs via restructuring. With a trillion dollars of annual revenues expected to shift to the new world — new players and new models over the next decade, there will be massive winners and losers. Strong leaders will capitalize on the fact that most established incumbents are dooming their so-called innovation to failure by shackling their internal revolutionaries.
In the last two months, I have keynoted events with leaders of employers representing nearly 10 million Americans that are eager to revolutionize their health benefits purchasing. As I worked with the planners of those events, they reflected how their forward-looking members were finally scrutinizing the healthcare “tax” as they would any other major input. As James Clifton pointed out in The Coming Jobs War, companies such as IBM are moving thousands of jobs to high value healthcare centers.
What forward-looking employers are doing is assessing whether their actions help or hurt the achievement of the Quadruple Aim that is a hallmark of long-term success. With my venture fund being named the Quad Aim Fund, we see numerous investing opportunities using the quadruple aim filter. Employers describe how they assess traditional health plans achieving the quadruple aim as follows:
- Have health plans improved the care team experience? Most don’t think about this but they do understand that the top driver of doctor burnout is dealing with bureaucracy associated with insurance companies. Simple common sense would tell you a burnt out doctor isn’t going to deliver optimal care. Doctors, themselves, are declaring their independence from the status quo.
- Have health plans improved the experience their employees have with the healthcare system? Benefits leaders frequently hear about the frustration employees have with insurance companies despite both the employer and employee spending a tremendous sum of money. Their irritation is captured in some of the graphics inthis piece that show the convoluted processes that are taken for granted in healthcare.
- Have health plans improved outcomes? Employers comment that they see their employees getting progressively less healthy. In part, it’s due to the previous item — despite the good intentions of health plans, people don’t welcome random calls from their health insurer with someone they don’t know asking them questions ostensibly to help improve outcomes. As a workaround forward-looking employers recognize that health-related investments have been misallocated. In some cases, they are showing how investing in the totality of what drives health outcomes leads to a highly satisfied workforce and dramatically less healthcare spending.
- Have health plans lowered costs? That gets a laugh when that question is posed to benefits leaders. Lowering costs is against the health plans’ economic interests. If you doubt that, David Goldhill’s Catastrophic Care book does a terrific job of shedding light on that dynamic.
It has been a surprise to me how employers of all sizes have become become independent of the traditional health insurance system. It’s well known that a high percentage (83%) of larger employers are self-insured. Much less known is that captive insurance models are on the rise. By pooling smaller organizations together, they get the same liberation from under-performing health plans. A good example is Captivated Health. In their case, the “captive” consists of private educational organizations that range from private preschools to colleges that pool their healthcare risk but it could be any set of like-minded organizations.
The independent-minded employers who’ve made this move (which is about far more than simply becoming self-insured but still essentially acting as though the company is fully insured — i.e., being passive about the tricks the industry plays to extract their “tax”) have partnered with innovative benefits consultants. They recognized that stock brokers and traditional benefits brokers went or are going the way of the Dodo bird. In contrast, high value benefits advisors have a bright future and are a great ally of employers.
One or all of the following three factors is spurring employers to overhaul their approach:
- Rising personal and organizational liability from poorly managed health plans has been a huge motivator to manage health benefits with as much rigor as retirement benefits.
- The unrealized market cap from unnecessarily overspending on health benefits is an attention grabber for CFOs and CEOs. When a public company can move their EBITA 5% from just one new approach to getting their employees the best care, that’s a tremendous motivator.
- With millennials now being the biggest chunk of the workforce and finding thestatus quo healthcare system designed as a perfect polar opposite of millennials’ desires, employers are beginning to respond. The urgency is heightened as they realize millennials are destined to be indentured servants to the healthcare system if things aren’t shaken up.
I believe the individuals listed below would be some of the signers of the employers’ declaration of independence. The common thread for these individuals isn’t political philosophy. Rather, they want what is best for their fellow citizens and recognize a set of shared goals that transcend political party. Many of them directly contributed to the guiding principles for success in the new health ecosystem.
- Dr. Rajaie Batniji co-founded Collective Health in the belief they could help employees receive better care and coverage than what many experience with incumbent health plans
- Jeff Bernhard is one of the rare senior executives who has left one of the big national health insurance carriers to truly solve the issues the large carriers mainly pay lip service to. He’s running Continental Benefits that is described as a “super TPA” as they go beyond what traditional third-party administrators do and apply some of the proven Health Rosetta approaches. They are growing rapidly and are one to watch.
- Dr. Garrison Bliss was the founder of the Direct Primary Care movement and played a key role in getting DPC included in the Affordable Care Act.
- Justin Bray is the Vice President for Organizational Effectiveness and HR for Enovation Controls with responsibility for roughly 600 employees at a heavy manufacturer. With a background as a Six Sigma Master Black Belt, he had a natural tendency to eliminate wasted effort and money. They spend 30% less per capita on health benefits with a great benefits package and realize the importance of making good decisions free or near-free and bad decisions expensive. Bray and his team have done a remarkable job of getting their employees to realize they have a shared interest with their employer.
- Jessica Brooks is the CEO of the Pittsburgh Business Group on Health which has been one of the most proactive business coalitions on health. They see past typical vendor pitches to find the “real deal” players who deliver value.
- Jonathan Bush is the CEO of athenahealth that has catalyzed the #Unbreak healthcare campaign. A key plank of the campaign is the support for independent medical practices and modern technology practices. His company provides a stark contrast with other large electronic medical records companies stuck in the 80′s and 90′s in terms of pricing and data blocking practices that cost employers dearly. Bush, himself, is one of the strongest voices for fixing healthcare as outlined in his book, Where Does It Hurt.
- David Contorno has been one of America’s most innovative benefits leaders. He’s been drawing in other forward-looking benefits advisors into his consulting firm.
- Dr. Zubin Damania is the Founder/CEO of Turntable Health and also the famousZDoggMD pointing out some of the absurdities pervasive in healthcare and how things can be made better. Turntable Health has shown how next generation primary care can be optimized for millennials that are now the biggest chunk of the workforce and have very different requirements.
- Tom Emerick has run benefits for some of the largest companies in America. He is the co-author (with Al Lewis mentioned below) of Cracking Health Costs. Emerick’sEdison Health has made available the Centers of Excellence program for complex and expensive medical procedures to any self-insured company.
- Dr. Rushika Fernandopulle founded Iora Health to restore humanity to healthcare. They have proven to take on the most challenging patient populations and achieve outstanding outcomes and even take on individuals not addressed by the new health law with the support of a Nobel Prize winner.
- Mark Gaunya created a captive insurance organization called Captivated Health that is a pioneer in this emerging trend for smaller employers.
- Fred Goldstein is an industry veteran that is on the board of the Validation Instituteand is a principal in Health Value Direct. Both organizations provide a level of scrutiny and value that make them standout.
- Chad Gray and Mark Miller are contributing to the musculoskeletal (MSK) portion of the Health Rosetta. With more than 30% of the population having musculoskeletal disorders, MSK issues alone represent a big portion of overall spending. Their evidence-based approach dramatically reduces misdiagnosis and overtreatment issues that are common in orthopedics.
- Dr. Paul Grundy know as the “Godfather of the Patient Centered Medical Home” is a key figure in developing what has become the platform for transformation that is the underpinning of value base delivery and payment. As the IBM CMO for the healthcare life science industry has led IBM’s transformation in healthcare shifting their thinking from healthcare as a soft benefits item left to HR to something that is a critical supply chain cost and source of competitive advantage. Paul will receive theBarbara Starfield Primary Care Leadership Award this fall.
- Zak Holdsworth is the CEO of Hint Health. His company enables employers to cut out the middle man. That is a critical step to tapping the power of deflationary economics that is just coming to healthcare today. [Disclosure: Hint Health is a portfolio company of the Quad Aim Fund that I manage.]
- Ann Mond Johnson runs Zest Health which is a pioneer in the concierge style employee customer service that is one of the components of the Health Rosetta. They help employees navigate the complex healthcare system to ensure they realize the full value of their benefits investment.
- Dr. Clay Johnston is the Dean of the new Dell Medical School at the University of Texas in Austin that is truly pursuing a blank slate approach to the totality of health in their community. Read more at Forget SXSW – Austin’s Most Radical New Idea May Be In Medical Education. I’m looking forward to seeing how they train new doctors on all of the drivers of health outcomes — not just clinical care.
- Jan Klein, in tandem with teacher union leaders, has enabled Pittsburgh schools not get decimated by healthcare costs even though they are in a tough market. While the behemoth insurance company and academic medical center in Pittsburgh have their schoolyard fight, they have realized that kids win when teacher unions and school leaders realize they shouldn’t be on opposite sides of the table when it comes to health benefits.
- Brian Klepper previously ran the National Business Coalition on Health. Along with Dr. Paul Grundy, few have done more to raise the issue of primary care being undermined in the U.S. He is also a principal in Health Value Direct which has identified the best approaches to the biggest cost issues for employers.
- Al Lewis and Vik Khanna are co-authors of Surviving Workplace Wellness…: With Your Dignity, Finances and (Major) Organs Intact. They aren’t afraid to pick a fight with an industry that Lewis is sometimes called the father of — disease management/workplace wellness — when they tout questionable returns on investment. Lewis’ company, Quizzify, is meant as an alternative to the excesses of the workplace wellness industry.
- Jim Lopez has benefits as one of his responsibilities with the city of Kirkland, Washington. Kirkland has shown that the best way to slash healthcare costs is toimprove benefits.
- Jim Millaway created the pioneer in transparent medical markets, The Zero Card. They have solved healthcare’s most vexing problem — pricing failure. Millaway has been one of America’s most innovative benefits consultants.
- Laurel Pickering is the CEO of the Northeast Business Group on Health which represents approximately 6 million individuals in their member employers. Their annual event is one of the most important in the industry. Pickering and her team program their event to show the organizations who take their fiduciary duty very seriously and share how they can save money in challenging areas such as pharmacy benefits.
- Dr. Samir Qamar is the founder of MedLion which has been a DPC pioneer and has focused on bringing their model to smaller employers. Qamar is also the co-founder of MedWand which is meant to facilitate the 21st century house call.
- Keith Robertson is a benefits consultant who works with organizations such as the city of Kirkland and is one of America’s most innovative benefit leaders.
- Harris Rosen, Ashley Bacot and Kenneth Aldridge have created an amazing story that has shown what’s possible when don’t squander money in healthcare and turn it into amazing benefits (including health benefits) and community benefit. Who could have imagined that a health benefits strategy could lead to reducing crime by 67% and doubling high school graduation rates. If every employer did what they are doing, at least $500 billion would be saved and could be directed towards higher and better uses.
- Adam Russo’s law firm, The Phia Group, writes as many ERISA plans as any firm. More importantly, the way they write their ERISA plans protects the assets of the employees and employers in those organizations. His firm contributed the ERISA checklist portion of the Health Rosetta.
- Dr. Dave Sanders created ZoomCare and then the Kaiser of the 21st Century, ZOOM+ Performance Health Insurance. Read more at I’ve Seen The Future Of Healthcare. I Like What I See.
- Ryan Schmid is the CEO of Vera Whole Health that is a rapidly growing next generation onsite/nearsite clinic company. They power the clinic that has had a transformative effect in Kirkland, Washington. Their willingness to put fees and risk and how they are aggressively pushing for transparency sets them apart.
- Dr. Stan Schwartz saw what Dr. Keith Smith was doing and has been creating a true transparent medical market and making that available to employers — both doctors and patients are saved from excruciating amounts of bureaucracy in a very appealing economic model to both parties.
- Chris Shoffner has been a leader in applying proper fiduciary duties to employer health benefits as was outlined in Department Of Labor Awakening Could Have Greater Impact On Healthcare Than Obamacare Did. He’s now running for the state house in North Carolina as, perhaps, the most knowledgeable individual to run for state office on employer benefits. Years before most people inside of healthcare, he deeply understood the importance of value-based primary care that is a strong contrast with the undermined primary care system that has led to the under-performance of the U.S. healthcare system. It’s not hard to imagine how Shoffner’s knowledge of the Health Rosetta could be applied to a 1332 Waiver (a clause in the Affordable Care Act that gives states tremendous freedom). It could make North Carolina the most important state to watch for state-based health reform.
- Tim Thomas is the CEO of CrystalClearRx where he brings his experience having run a Pharmacy Benefits Management (PBM) company. Thomas helps employers deal with the frequent games PBMs play to extract more money from employers.
- John Torinus ran Serigraph and wrote the book The Company That Solved Health Care that shared how they did it.
- Karen van Caulil leads the Florida Health Care Coalition which represents employers covering nearly 2 million individuals. They were the first business coalition on health to organize their annual conference and focus around the Health Rosetta in order to revolutionize their approach to benefits.
[Disclosure: As I’ve disclosed many times, the Health Rosetta is a set of guiding principles for success in the new health ecosystem and an open-source reference model for how purchasers of healthcare should procure health services. In my role as managing partner of the Hf Quad Aim Fund, a seed-stage venture fund, the Health Rosetta is the foundation of our investment thesis.]
Add your comment below on the revolutionaries that have inspired you and that were overlooked. Let us know what they are doing to overachieve on the Quadruple Aim. The individuals listed have declared independence from the status quo. Their liberation is key to the revolution sweeping through health benefits. Due to the Quad Aim Fund and making The Big Heist, I’ve been fortunate to get a sneak peak behind what some very creative entrepreneurs are doing. I can assure you the transformation of healthcare has barely begun. The best way to describe what they are doing is creating their own Boston Tea Party to disrupt a bloated empire.
As CEOs hear about other employers spending 20-55% less per capita on health benefits with benefits plans that are better than what 99% of the workforce receives, benefits leaders will find that the C-suite has their back. Historically, many benefits leaders knew about problems but couldn’t push them through without the support of their CEO. The most proactive benefits leaders realize they can have a very different kind of dialog with their CEO. In the past, HR was the one department where the value proposition of the product/services an organization procured got worse every year. Today, HR/benefits leaders can share the unrealized potential in earnings improvements and gain a recruiting advantage with benefits more aligned with millennials expectations. As benefits leaders arm their CEOs, they are energized to revolutionize their approach.
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