00:00This country, the way that healthcare works, there is not a cost per procedure. There is a cost per payer. Coming from securities, there's a lot of disclosures. You need to provide a lot of information to your client. It wasn't reasonable that the same thing didn't exist in healthcare. An employer could be spending four million dollars a year on healthcare and not have any idea where that money is headed. The way that the system is designed, Every piece of the puzzle in an employer health care plan is designed to profit off of the employer's ignorance. Everything you think you know about health care is wrong. And that sounds kind of crazy. We assume, you know, we spend more money on a house or more money on a car.
00:39We're going to get a better thing. So it's a natural assumption that that would exist in health care. However, it happens to be usually totally opposite. Business leaders, whether they know it or not, can have 100% control over their health care program. You know, unfortunately, American businesses got a responsibility they never asked for, and that's fixing the American health care system. It's time to just ask some better questions.
01:22Thank you. A large benefits broker came and said, well, it looks like even though you've had three good plan years, the current provider is looking to raise rates by 15% in the coming year. And I said, help me understand that because we are performing well.
02:24The medical needs aren't skyrocketing like they are even to the extent they are today. And there was really no good answer for that. My name is Ken Fenneran. I'm currently the vice president of global human resources for eMed digital health care. Prior to that, I have experience over the last 25 plus years as a senior HR executive in multiple companies, both publicly traded as well as VC backed, especially over the last 10 years or so. Many executive teams just say it is what it is. If we get a one, two, three, 5% increase, we must be doing good because I hear it's a 10% is the norm. It baffles me because that is usually their second or third largest expense next to payroll and next to facilities. So when
03:25you think of that, it's a huge cost for any business. And yet it's one that generally is what I'm going to call neglected. Understand that I came out of free market public policy. I am a capitalist. I believe in profit. But when you see the major stakeholders in the healthcare industry making tremendous profits, but not doing their job, which is to control the cost of health care for the employers who are paying the bill and the employees who are utilizing that health care, you start to understand that there are misaligned incentives that employers aren't aware of. Certainly employees don't know. But those misaligned incentives are forcing the entire industry in a direction that's detrimental to the best interest of the employees and the employers.
04:35My name is Chris Deacon. I am the former administrator for the state of New Jersey's health plan. I'm an attorney by training. I actually practiced for several years before getting into public service. The healthcare industry or industrial complex is really no different than any other sector of our economy, right? They want to increase revenue. If they are a for-profit company, they want to increase value for their own shareholders. So if you as an employer are across the table from an insurance company or a brokerage or a point solution vendor, oftentimes if your financial incentives are not aligned, i.e. better health outcomes at a lower cost, then you're going to be working against each other or certainly not towards the same goal.
05:30because the goal on the other side of the table is to increase their revenue, to increase their market share. And if those goals are achieved by the person on the other side of that table by costs increasing, by prices increasing, or by people getting sicker, you're not working towards the same goal. In the past 15 years, CEOs and CFOs have experienced health care costs that have tripled. Not surprisingly, because premiums pay for health care, premiums have tripled in that same time period. The major insurance companies, the four big insurance companies that do health care, have had their share values explode by up to 2,600 percent. The lowest was around 1,500 percent. And that has come at the expense of the employers of this country.
06:33I don't think we were asking as many questions then because we hadn't seen the vicious upward spiral of those costs that we saw starting around 2005 to 2010, really starting where it was a 10, 12, 15 percent increase per year over a number of successive years in that being presented as the norm and what should be expected. what an employer or an employee calls premium a health insurance company calls that revenue who wakes up in the morning wanting to lower their revenues nobody so the reality of that is fundamentally the whole system is built incorrectly everybody in that food chain makes more money when costs go up. The health insurance company does. The broker does.
07:35If you make commissions, I make commissions off of premium. Premiums go up, I make more money. Hospitals need to fill beds. Doctors get paid more the more services they do, the more prescriptions they do. PBMs make more money. So the whole system's rigged against the true outcome that is trying to be desired, which is we would like to actually lower costs. Insurance companies and the brokers have been telling employers for decades, you can't control the cost of healthcare. We wish we could. We do the best we can, but don't even think about it because it's not possible.
08:12Healthcare costs are gonna go up every year. By the way, so are your premiums, so you can get used to that too, but you can't control the cost of healthcare. For those of you I have never met before, my name's Lester Morales. Now, at Willis, I grew my own $3.5 million book by the age of 30, and I ran sales for North America. I had a $350 million practice, and I'm gonna tell you some of the realities. For 14 years of my 22-year career, I did health insurance the normal way. These are your four or five carriers you could work with. They've got their products and their menus of services. You pick from that menu,
08:52And then you try to get creative. So it felt like I was an actor. I would play the same game every year. A renewal would come out. We would shop it to the other three or four, you know, cast of characters, none of which that have a vested interest to actually lower money, right? Premium equals revenue.
09:13We would do the dance. We'd increase deductibles and out-of-pockets. We'd take more out of the paycheck of the employees. and then us as the advisor and HR would go stand in front of employees, getting them super excited to pay more money for a crappier plan.
09:31Rinse and repeat, rinse and repeat, rinse and repeat. I would ask anybody that's listening, what is the number one strategy their advisor has used to lower their cost? when that answer is, not if, when, that answer is passing on more cost to the employees and their families, is that what we intended?
10:01When I first started working in health benefits with the state, I remember asking questions that seemed very basic to me. Why do we contract this way? Why do we purchase things based off a discount? versus a price. Discount's fine, but discount off what? And when they weren't able to answer that question, I was really aghast. And I said, well, we're going to change that. No one pays more attention to the quality and cost of goods purchased for a company than the CEO and the CFO of that company. And these companies are ruthless in managing the cost of goods, except when it comes to their second or third largest operating expense, which is health care. Why would these otherwise savvy executives ignore such a large expense in their company
11:00and not manage it? Health care's big lie is this. It's remarkably simple. You can't control the cost of health care. So if you did a pre-op conversation with a patient, how much smoother is that going to make their recovery? If you did a post-op conversation and you discovered they never got their prescriptions filled and I helped them overcome that, or they had an early sign or symptom of an infection, I'm like, you cannot ignore that. You've got to go get that treated. My name is Deborah Ault. I'm a registered nurse. I'm the president and founder of AIM. We are a team of nurses and doctors that come alongside patients telephonically, and we handhold them through the two most cumbersome ecosystems in the universe,
11:54that being the health care delivery system. So what care should I get? When should I get it? Where should I go to get it? And the health plan or finance system. Oh, my golly, how do I avoid bankruptcy? my family and my employer in this process.
12:16His name is . Date of birth is . Okay, and what service or procedure can I help you with? Keytruda, single agent Keytruda. Okay, so it looks like we're able to certify one round.
12:46Seriously? So the reason is because of the charge of the drugs. They're charging $75,000 for Keytruda, which the wholesale price is only like $6,000. Yeah. Okay. So you're making $70,000 off of just one drug. So that's why the group is like, that is, seems not reasonable and customary. So the patient will get stuck with that bill. Okay. The patient's plan... The patient doesn't get the drug, he'll be dead. So I really, it doesn't matter if he gets the bill or not. Okay, so we got approved for one drug. Is there an approval number? Those mother... Right? Oh, he'll be dead if he doesn't get the drug.
13:36Well, alive and bankrupt is how much better, right? I mean, charging $10,000 would be making a profit. They want to make $70,000 a dose? He's going to be getting that every three weeks for the rest of his life. The problem of price gouging and irrational price variation is absolutely rampant, and it only takes one look at a hospital price file to know that there is no logic other than revenue extraction to pricing of American healthcare. really the Wild West and oftentimes you can see in the data we will charge what the market will bear. Now the problem in healthcare is that oftentimes there is no upper ceiling to what a life can be worth to a person. So a healthcare price
14:35gouging happens on everything from aspirin all the way up to chemotherapy drugs. It happens on durable medical equipment. Common examples, you asked me for some common examples. We had a patient recently who went to a hospital to have an MRI. The billed charges $4,900. After the PPO discount, $3,900. We could have gotten the exact same MRI five miles away for less than $500. Surgeries, we had a total knee replacement patient who got billed over $60,000 for their knee replacement. After PPO discount, $35,000. Could have gotten the exact same procedure from the exact same physician at an independent ambulatory surgery center for under $15,000.
15:34It's a humerus fracture with a rotator cuff, so I think it's a bad injury. They just asked me for pricing. I think a trip to medical records in the old days, seeing that patients were being turned to collections for really outrageous amounts for reasonable procedures, that was bad. And I felt like an accessory to a crime. My name is Keith Smith. I'm an anesthesiologist, co-founder, Surgery Center of Oklahoma, co-founded by Steve Lantier, my anesthesia partner, and we've been in business since 1997. seven. You know, the first procedure we did where a patient actually called and asked how much was a breast biopsy. So by the time I put everything together, it was about $1,900 was my best guess.
16:44and when I told her that she said for what and I said well for everything that included the pathologist who would look at the specimen anesthesia the facility and the surgeon but in the discovery process with this patient she let us know that the the hospital just down the street from us had quoted her 19,000 just for the facility so this 10 to 1 ratio became pretty apparent early on and sometimes we saw eight to one in some parts of the country it was even higher even 20 to one but this 10 to one ratio was pretty predictable from the first day that we opened and we we realized we can charge a tenth of what a so-called not-for-profit hospital charges
17:35and still be profitable Look, I can do this procedure for, you know, literally 90% less than the big provider down the road. And so I sat there with him for two hours grilling him on this must be a scam. This doesn't make sense, right? This is too easy. Wait, it makes too much sense. You know, just kept kind of going all over the place. And you realize as you're having this kind of a conversation that, you know, wait a minute. this, what he's describing is not the scam. What I'm living in is the scam, right? And yeah, none of this makes sense, right? And so that's kind of what started me down the journey of
18:14we can do this a little bit better and a little bit smarter. So it relied on some strategic HR, finance, and even other C-suite executives to just say, hold on, that doesn't sound right. And to then say, who's out there challenging these assumptions, and can we be at the forefront of challenging these assumptions as well? And that's when I think some of your more strategic HR executives started giving some of that pushback and looking for vendors and broker partners to help them find ways to say, this can't be the norm. And and calling it out as this is abnormal, not the norm that we as companies should be expecting.
19:08The CEO really does want this attractive company that aligns with the best and brightest minds in the industry, in the marketplace, while the CFO wants to make sure that you're keeping costs down. And the benefits person has to balance all of that, as well as the stories that they're hearing directly from patients and their experiences. And the way the CEO is looking at healthcare is very different than even how the CFO is looking at healthcare. The fact that it's not a double-digit increase this year shouldn't be a celebratory moment. We have to get beyond that as an expectation. But we've been conditioned to look at it that way. Oh, is it just 10%? Right? Well, last year it was 15, so I think we're doing good.
19:53and recalibrate what success looks like and what measurement should be. I think that's a really big opportunity and that does take a skillset and it takes vendors and data vendors and other solutions that are partnering with you and not being just transactional.
20:15I've said for years the hardest thing about launching this site in 2009, it's hard to believe it's been 14 years, was keeping it simple. I've been told that as radical as it was to launch a website with pricing, that it was bundled and all-inclusive was perhaps even more radical. But that's one of the reasons I did it. I wanted to start a price war, and I wanted people to have to explain, For instance, none of the carriers, none of the insurance carriers want to buy from me because my prices are visible for all to see. Their skimming discount game is an opportunity for gone. And that's the way they make a lot of money is skimming off of this discount that they apply.
21:09And we can get, you know, these procedures done at such an incredible cost, right? and again with providers that we know are high quality, what I tell my employees is, look, if you're willing to go to one of these providers, I'll pay for your procedure 100%. Claim is not just a claim. You can reduce the frequency and severity of claims. You do it in every other line of your business. You look at how much a paperclip costs, but you don't pay attention to how much chemotherapy costs. You know that a paperclip costs the manufacturer manufacturer three cents to make and you're paying four cents, but you don't look at the fact that that chemotherapy drug should cost $7,000 because they're only spending $6,000 to buy it
21:55and they're charging you $75,000 for it. Now, I thought this might be helpful. I have some actual examples of language in actual contracts that were signed by employers. And I thought it would be helpful just to pull out some examples of language that is commonly in PBM contracts that employers might want to look out for and potentially take out of their contract or work with their consultant to adjust. I've been in health care for going on 30 years. I actually started off in medical school and decided I didn't want to go in and out of examining rooms for the rest of my life. I went and got an MBA and started on the hospital side of health care
22:45and then spent about eight years in the pharmaceutical industry. And that's how I got introduced to PBMs and managed care and all of that. Pharmacy benefit manager, the intention is to control the cost of drugs so that they are affordable, reasonable, and a manageable cost. Unfortunately, what's happened with pharmacy benefit managers or PBMs, because the CEO and CFO are not managing the plan and they're not providing oversight, that PBM is doing the exact opposite of what it's intended. So spread pricing is the concept whereby a PBM negotiates a contract with a pharmacy to pay them a certain price for a particular drug. actually all the drugs available, they negotiate a price. And then they will apply a markup to that
23:48and charge the plan sponsor a higher price. It's taking in, and I can give you specific examples, a $19 drug. That's what the $17 cost. $19 is what the pharmacy is paid by the patient. Comes to the pharmacy and buys the drug for $19. The health plan is charged $273.
24:15Now, what's the $273 less $19? What is that money? It's pure profit for the PBM. Most business owners in the United States, if they were making a 10% profit margin, they would say, we're doing pretty good.
24:36Hospitals and health care systems, It is not unusual for us to see them buying a drug, a prosthetic, a piece of medical equipment, and then marking the costs of that up 600%, 1,000, 2,000, 3,000%. The Delta is the spread, and it could be significant. It could be $10 a script. It could be $300 a script. It could be thousands of dollars a prescription, particularly when you're looking at some of the more expensive specialty drugs, right? In this instance, there's no correlation between the cost of the drug and what you're paying for it. Does that make any sense to anybody, right? Who would ever buy any product that way? Here's where it gets really interesting. Guess who owns the PBMs today, the big ones?
25:35the insurance companies. Or in the case of CVS Caremark, and that's CVS, the drugstore company, Caremark, the PBM, owns Aetna, the insurance company. So when the insurance company is making that extra profit because they own the PBM, or the insurance company is owned by the PBM making the extra profit. Who's guarding the in-house? Who's making sure that those drug prices are affordable? And the answer is no one.
26:12And actually what I've done is pulled out relevant parts of the contract. This is a piece of a contract, but they could be 200, 300 pages long, some of these contracts. So I thought I'd pull out some actual examples. A common PBM contract that you see out there, there's actually this language. It says the sponsor acknowledges and agrees that neither it nor the plan intends for the PBM to be a fiduciary. So they're abdicating any fiduciary role. What does that mean exactly to the average person who doesn't know what that means? What that means is that all parties are acknowledging that the PBM can have conflicts of interest. They don't have to look out for the best
26:49interests of the plan or plan participants, and they don't have to be transparent. Because those are the key components of a fiduciary and ERISA, and they're making it clear to all parties that the PBM is not held to those standards. So when you take on a fiduciary role, it is a legal term of art that will require you to act in a manner that is solely in the interest of the other party. When you have discretion over another entity's money and you have a fiduciary obligation, you have to act in a manner that is solely in the interest of that party. And so you can imagine why a large for-profit entity who has shareholders to answer to and investors to answer to,
27:38why they would be hesitant to take on a fiduciary obligation. I believe that the PBM contract is the least read contract probably in the history of contracts. right? They could be 180 pages long, 200 pages long. Your average person wouldn't have a clue what half of that means in the contract. We wouldn't ask twice about a CEO hiring a real estate attorney to review a very valuable lease agreement. We wouldn't ask twice if a CEO said, I need a transactional attorney to review this M&A agreement. Similarly, we shouldn't think twice about having somebody that is really well-versed in these things and an expert review these contracts so that they work in the benefit of the employer and the employees
28:33and not to the benefit of the carriers and the PBMs and everybody on the other side of the table that stands to benefit when you spend more money on health care. It says that the PBM and their wholly owned subsidiaries and affiliates act on their own behalf and not for the benefit of or as agents of the sponsored members or the plan. So they're recognizing that the PBM is collecting all this money for its own purpose. What it chooses to share with the client ultimately is up to the PBM. Those contracts get signed, they get put in the drawer, and there may or may not be a retrospective look back to see if anything that was promised in that contract ever came true.
29:16That is the status quo. What employers need to do is understand that the person on the other side of the table is not always their friend. And so when they come to a contract or to a negotiation, they can't simply say, I trust you to do what's best with my dollars. They have to really negotiate. and they have to look out for their bottom line. And when they are made promises, they have to, you know, trust but verify and not just take it on word that a vendor or a consultant or a carrier is going to do what's in their best financial interest. 20 years ago, the United States was spending roughly $1.3 trillion on health care.
30:0220 years later, America is spending $4.7 trillion on health care. And most of that is not additional utilization. It's inflation. Not general inflation, medical inflation. If the insurance companies have been responsible for controlling the cost of care, and there has been a tripling in the cost of care, over the last 20 years, they're either incredibly incompetent or they aren't trying.
30:41Regardless, the insurance companies have a 20-year record of abject failure when it comes to controlling the cost of health care. I think a lot of CEOs and CFOs and HR people, even though they say this is not sustainable, they're still willing to continue with the status quo, just hoping that things will get better despite decades of evidence that it's not going to. There is no silver bullet that insurance companies have that's going to change things for the better. I'm Wendell Potter. I spent 20 years inside big insurance companies, Humana and Cigna. I was in positions that gave me visibility into how health insurance really works in this country and how the big companies take our money and spend our money.
31:40I was a propagandist, and I was a part of the effort to mislead people. Misleading still goes on. And what I do now is to help employers, to help the public, help the media and politicians understand how the game is played, what they need to know, and how we can make the system better.
32:03What they tell companies, company leaders, is that all is great. We're Johnny on the spot. We're going to be managing your money appropriately. and you tell these guys that you're going to make sure you'll be focusing attention on what is best for the company, but also for the employees and their dependents. What they don't tell them is what they tell Wall Street. They're very different audiences, very different stakeholders, and the reality is that the top stakeholder is always the shareholder. I think one of the biggest misconceptions in American health care is that insurance carriers play hardball with hospitals to bring down the cost of health care. That is absolutely wrong. And whether or not you're talking about a fully insured or a self-insured employer, it is wrong for these reasons.
33:02The insurance company, by law, can only keep a percentage of the premium as profit. One of the little-known clauses in the Affordable Care Act was the medical loss ratio requirement for insurance companies. The medical loss ratio, or MLR requirement, limited the insurance company's gross profit margin to between 15% and 20%, depending on whether it was a small company or a large company that was being insured. So if you're an insurance company and you can only keep, let's say, 20% of the premiums you take in for profit, right, and overhead, how are you going to grow your bottom line? The only way to grow that number is to grow the total cost of health care because 20% of $100 is more than 20% of $10.
33:57It's just math. premiums have to go down next year which means what goes down for the insurance company their revenue and because 4.5% of a smaller number is a smaller number CEO does that a couple of years in a row he's not CEO anymore his job is not to help the employers who buy their plans his job is to improve the shareholder value for their stockholders insurance companies are incentivized to allow the cost of health care to increase they have no incentive to lower the cost of health care that responsibility lies with the employer the insurance company is not going to do it because it would be operating against their own financial interest you know I've been in rooms too with CEOs or CFOs who I've explained some of these misaligned
34:55financial incentives like the MLR or like the fact that they don't, the carriers don't really watch out for your bottom line and the ways that they do that. And the response has been, well, that's theft or that's fraud. A whole industry can't be built off of this business model. And I have to look them square in the eye and say, yes, it can. And yes, it has. And that is what exists and once I show them in the data that to be true, a lot of different looks come over their faces.
35:35So they've got to just really wake up to that understanding, that reality that keep doing the same thing is going to continue to be expensive and they're going to to continue to get hit with rate increases year after year, and they're going to have to continue to reduce the value of the health coverage for their workers. They want healthy, productive employees. Even if it's for selfish reasons, they want healthy, productive employees. And when you realize you're paying millions of dollars, in some cases hundreds of millions of dollars, for increased costs for your company, increased burden, financial burden on your people and potential harm, you then don't have a choice. And that's where I think we are today.
36:31Yeah, we're right now in Southwest Virginia. Tennessee's over there just a few miles. Kingsport, Tennessee's right on the state line. And this is Highway 23. I've often said Highway 23 was my road to Damascus because when I got to the end of this road where I was going, my life changed. I think one reason is because what we're seeing right here is so much like where I grew up. I went back to Kingsport to visit family as my job was to really promote high deductible plans, but also to try to push back on the growing call for health care reform. And I was involved in putting together all kinds of talking points and white papers
37:18about why reform wasn't all that necessary. That the reason that so many people were uninsured is that they were that way by choice. I think high deductible health plans was one of the worst inventions for our industry. Now, an average hospital who has a patient come in their doors that has a $500 expense to have to pay, right? They're deductible, they're out of pocket.
37:4778% of them cannot pay that $500. Take that number and make it 5,000. It is 92%. percent. So I flew back to Tennessee to visit family and I picked up the newspaper and I saw something about a health care expedition that was being held not too far away, actually across the state line into southwest Virginia. The story said that people would drive here from hundreds of miles away to this little place in the heart of southern Appalachia from Ohio, South Carolina, Georgia, even as far away as Florida in some cases, to get care because it was free.
38:34Here's some photographs I took that day. Here's the tent in the area where they were doing dental care. See, you just see people being examined right out in the open. When I got to Wise County, I saw something that was just absolutely something I couldn't have imagined seeing in this. country. People were standing in long lines, waiting to get care, and they were soaking wet because it had rained that morning, but they weren't about to lose their place in line. And then I noticed that a lot of those lines led to barns and animal stalls. This was the county fairground. And just some weeks earlier, cattle had been in these animal stalls. They cleaned them
39:20up as best they could, but doctors were volunteering their time treating patients in animal stalls. I didn't think that anything like that could possibly be happening in this country. When I was 15 years old, the day after Christmas, my dad had been diagnosed with multiple myeloma. So for folks that don't know, that's cancer of your bone marrow.
39:47There were times where conversations were, can we afford to even do this next treatment? as opposed to worrying about getting dad healthy, worrying about how we make the next mortgage payment was a real reality for them. Two years later, my parents had to file bankruptcy. So I didn't know this, but they were over $60,000 in debt.
40:11When I am constructing the same types of plans that made my parents file bankruptcy. Some of us knew what was going to happen down the road and we're seeing the consequences of that. But we were able to sell it to employers in particular by saying, we're going to give your employees the information and tools that they need to be prudent shoppers of health care. And it's a compelling talking point. And a lot of employers bought it hook, line sinker you know the big trend right high deductible health plans hsa consumer driven we all jumped on that that bandwagon people spend their own money separate different than they spend in blurtos that in concept makes sense but you know what different means different means they can't afford
41:10it so they don't use it. So do we want to know why consumer-driven plans lowered costs? Because people weren't going to access healthcare. Remote Area Medical holding a free pop-up clinic today through Sunday. There is no cost attached. You don't have to bring your ID or any proof of insurance.
41:40I mean, I've heard the providers here say that these folks, I hope they don't go into diabetic ketoacidosis here or have a heart attack here because they are on the brink of disaster. When you start thinking about your average, hardworking American, who the way I kind of articulate this now. You have employees that are cutting 39 cent coupons for lima beans on Sundays.
42:18So this high deductible craze, again, unintended consequence was people were delaying services because they can't pay it on a low turnover company. That means that they're just waiting for that catastrophic claim to happen in a couple of years. And what it meant for a lot of people, your average, especially in middle America, that just meant that they had an insurance program that they can't even afford to use. Is that, as an industry, what we set out to do? No way.
42:48We began to use the phrase skin of the game a lot. And I would have my CEO use those words. I would say them myself. Whenever you go out doing a media interview, you would say the problem that we have in this country is that people don't understand the real cost of health care, how much it's really costing. These managed care plans have insulated people from the real cost of care. So they're getting too much care. Classic misdirection. And it worked beautifully because you were getting everybody to believe that the problem is Americans using too much health care. I mean, how many people have you known who've used too many cancer drugs. And it's a little over 50% of our patients come in, have medical, dental, or vision insurance
43:41through whatever we, through it's a job or through state deployment of those coverages. The challenges is, is how do they get to the doctor? Are they able to afford that doctor? But they don't know they have blood sugar problems. They don't know they have high blood pressure because it's, I heard one patient this morning who had cardiac surgery 11 months ago and would like to return to work. He couldn't afford the $120 it cost to walk in the door for the follow-up care clinic. The medications that he needs are $4 to $10 at most drugstores, but he can't find that out if he can't access the care. So it's very common where we go, whether it's here in Appalachia,
44:20whether it's Southern Texas, California, Nevada, there's patients that are desperate for that care and they will sleep in their cars to be able to get it. When you realize your people are from those communities and they have lived experiences and they receive trauma, whether it's financial trauma, actual physical trauma, misdiagnosis, delayed diagnosis, and realize you're paying for that, you start to see things different. So we have to find a way, a mechanism, to hear the qualitative data, to hear the stories and experiences of the people they say they care about, and I do believe they do care about them. People think we're getting the highest quality health care in the world. That's not true. People think that we're getting good value
45:03for the dollar we're spending to procure health care. That's not true. It's remarkable what you can do with language, and if you can say it with authority, you can get people to believe all kinds of crap. The U.S. health care system is really good at convincing individual patients that they are the most unlucky person on the planet. So when there's a problem, a mistake, a challenge, a bad outcome,
45:31patients walk away feeling like somehow that is their fault. They're unlucky. In reality, when you go back and you look at objective scores for the physicians in the facilities, you often will see that particular procedure at that facility by that particular practitioner has an awful lot of unlucky people.
46:01So 26 years ago, Dr. Keith Smith and I were working in hospitals and we weren't hospital employees, but we were covering at a hospital, and part of our responsibility was to do whatever came. The problem was is that the hospitals started the price gouging while we were there. They also, in our opinion, started delivering really, really poor care. And because we worked at a hospital, I mean, we didn't have a choice. So we felt like we were adding to the problem in health care because we were really, truly doing anesthetics for surgeons that we thought were less than the best.
46:55People want two things from their health care. High quality care that they can afford. But when the doctor that they get is incompetent or dangerous or deadly, when the hospital they go to is wracked with hospital-borne infections, that's not good health care. Anytime that you're talking about health care and you divorce quality and cost, so you talk about only one and not the other, you are doing yourself a huge injustice because quality and cost in health care always travel together. The problem is that they travel inversely. High quality is low cost. Low quality is high cost. And so you can never talk about one without the other. If you talk about cost, you must also talk about quality and vice versa.
47:57There are way too many medical procedures being paid for because of misdiagnosis and other factors where the most expensive claim is the one that never should have happened. Most people are familiar with Mayo Clinic. It's one of the premier health care facilities in the country. So they did a peer-reviewed study of exactly what outcomes they saw when they did their second opinions. What percentage of original opinions did Mayo Clinic determine to be 100% wrong?
48:4121%. That means that one in five doctors completely misdiagnosed their patient. One in five. How does that make you feel about your doctor? Providers are not all created equal, and I think that doctors really want to do what's right for their patients, but at the end of the day, doctors are human beings, and providers are human beings. And they don't always know the latest drug. And they're not all probably experts in every field. So it's really about connecting patients with the right provider at the right time and certainly at the right price.
49:35Health care in America pays doctors on a fee-for-service basis. That is, the doctor gets paid for everything he does. If the doctor doesn't do, he doesn't get paid. This is why when you call the doctor about your child's swimmer's ear, that that child has had every summer for six years, the doctor's going to say, well, I can't just call in an antibiotic. We'll need you to come into the office. That's because the insurance company doesn't pay the doctor to call in a prescription, but the doctor does get paid for the office visit. Fee-for-service is set up in such a way that the lower quality providers get paid more because they do more procedures and services.
50:26American health care is the exact opposite of everything else that we as consumers think about and purchase. When we get highest quality care because of the fee-for-service system, that care inevitably at the end of the day is less expensive. So physicians who have fewer complication rates, fewer readmissions, fewer infections, etc., that care is going to be less expensive because there are fewer services that you're stacking up. That's something that's hard for the typical American consumer to understand. Hold on. We're just told to go somewhere because it's close and where they've contracted with. You're told if you're with one of the carriers, go on to their website, find out who they recommend you go to. They'll have their superstar rating because they take the insurance and they charge us less so we get to keep more.
51:26And that's how they establish their star rating. I don't want to buy a hip replacement if my patient is going to be readmitted to the hospital five times and have to get another hip replacement in two years because of poor quality. I would much rather pay a little bit more for high quality service. So, you know, when I ask about quality, when I ask where that's accounted for, I was often met with answers like, it's too complex, or it's not our job, or, you know, our members prefer to have a big, broad network with all of the providers, as many providers as they want in it, versus a high-quality provider network. I was astounded at how many political leaders, labor leaders, you know, and even those in the healthcare industry really assumed that members preferred size of network over quality of care.
52:26We're not doing the pre-cert, but the member is incentivized to call in and work with the nurse. The way that employers have traditionally picked which insurance they're going to purchase has revolved around, do you have all of the providers that all of my people want to use in your network? Right? Because people have been diluted into this, I have to go in network. Well, in network has A plus doctors, B minus doctors, F doctors, doctors who have sanctions against their license, doctors who's lost medical malpractice. Same thing for facilities. The insurance companies know that, but they don't put that information out there because they're interested in keeping that phone book of in-network providers as thick as is humanly possible because the American person, the patient, and the employer have been deluded into thinking that having a thick book means you can go anywhere you want.
53:26But you shouldn't just be going anywhere you want. You should be going to the one who's the best at doing what you need. There's a history of security, the best network, the best discounts. No one's going to be left out. They'll have what they need no matter where they go in the country. Right? That feels good. That's what you want to buy. You want to buy security. The reality is, though, a lot of people are being harmed in the status quo. A lot of people are being harmed by the fact that these larger institutions haven't had to move the needle and innovate in a way that actually serves their clients and the patients in the way that they deserve and desire to be served.
54:08I remember asking, you know, I understand the theory that you don't want people to have to find, you know, new providers and be completely disruptive to a population. But if the providers and the hospitals that I'm losing from the network in a disruption analysis are of poor quality, right, or aren't producing good outcomes for our patients, wouldn't I want them removed from the network? and I remember the consultant coming back and saying, well that's not how we do it. And I said, well where do you account for quality? Where do you account for patient experience? And it didn't come into the equation. And I couldn't believe that this is how we were purchasing healthcare for over 800,000 public sector employees
54:57and their families in the state of New Jersey. The system is set up to cost the healthcare plan does the employer more money. The doctor has to charge more to make more, he has to do more to make more. Doctors don't get paid to keep a patient healthy. If the patient doesn't come into the office because they're totally healthy, they're not a very profitable patient. So the system needs to be addressed where doctors are actually paid to keep patients healthy instead of getting paid to treat patients who are sick. America does not have a health care system. It has a sick care system. So what we have to do in the meantime is we have to look at the objective outcomes
55:46from different physicians and different facilities. So we can look at morbidity, mortality, infection rates, never events, sanctions against their license, medical malpractice, losses and settlements. There's a variety of different objective data points that we can tap into to get a good preponderance of the evidence that this doctor is at the top of his game, this doctor not so much. Is it foolproof? No, absolutely it's not. There are all kinds of mathematical algorithms and all kinds of arguments against you can't grade a doctor. Well, we can't perfectly grade a doctor, but we can certainly stack the deck in the patient's favor by getting them somebody that we can see compared to their peers, case mix adjusted and severity risk indexed,
56:42that they have better outcomes than their typical colleagues. When you begin to understand how to control the cost of health care, then the question arises, why isn't the system? already controlling the cost of health care. You have massive, massive companies in the form of health care insurance companies. You've got large national health care brokerages, insurance brokerages, and they are supposed to be working together to control the quality and cost of care.
57:21But it's not happening, which is why there's a need for the private sector to pick up the baton and actually begin controlling the cost and quality of care. When you see the existing system not doing what it's supposed to, you realize it's not working on behalf of the people it's supposed to be serving. Self-funded employers need to realize that their interests and that of the big insurance carrier that is administrative services only, administering their plan, their interests are not mutually aligned. Their interests are diametrically opposed. Finally, I sat down with this stack of bills and started going through them. I found where I had been double billed on some things. I found where they had listed that maybe these treatments,
58:19these therapies have taken place. I, you know, some of these things never happen. So I reached out to the insurance provider and said, hey, look, I need to dispute this. I almost got the sense and the feeling of, well, hey, you've already hit your out of pocket. Your plan is paying for this, you know, just kind of almost a let it go conversation, which I, at that time, was the plan administrator, right? So I knew that having this very large bill hit my plan, I know that that at some point would come back on the employees of, you know, someone's going to have to pick this bill up. When it's not their money, when it's a self-insured employer's money, they're more than happy to pay an inflated rate.
59:01And this is one of the reasons why you'll see in some of the data that when a carrier is paying with somebody else's money, they often pay a lot more. and when a carrier is paying with somebody else's money, they're much, much less cautious with making errors and overpayments and double billing and the like. Your original question, why should employees care what health care costs? Well, there's a variety of reasons that they should care what it costs. They share in the cost.
59:32Every time that insurance costs go up, it's that much less of a take-home paycheck that they're getting to bring home to their family. So the American worker across the board over the last 20 plus years, they've been getting pay increases. It's just not showing up in their bank account because it's going to pay for the insurance.
59:58Employers do not have to play the rig game anymore. There really are options and it's going to be really incumbent upon them to seek those options out, options out to become aware that they don't have to keep going on the status quo. They don't have to consider just Cigna or United or Retina or Humana for their for their employees benefits and they're going to have to pay more attention to it because it's now more of a legal requirement through the consolidated appropriations act and provisions that really give them or make them be as prudent in their approach to people's money for health benefits as a few years ago for pension benefits. CEOs and CFOs, as the fiduciary leaders of the company, have a fiduciary
1:00:51responsibility to their employees to ensure that the cost of health care that those employees are paying, whether it's in terms of the premium that they're paying or the actual cost of care is reasonable. But there have been no consequences. Employers are facing the very, very real and likely possibility that they are going to be hit with lawsuits by their employees for breach of fiduciary duty. We can already see in many cases, plaintiffs firms are class shopping, if you will, for classes of employees to sue their employers for breach of fiduciary duty for their health benefits plan. This is already played out in the 401k space. The same thing is happening in health benefits and employers need to know that they are legally
1:01:51liable. They can be sued, and that's not a good thing. That should give them the motivation to begin to look to see what the alternatives are. I have been just really blown away by what I am seeing in the private sector with, I call them enlightened agents and brokers and others who have been involved in health care for some time, in some way saw what I saw and said, this is not for me. I've got to get out and try to fix what I see is wrong. That's happening. And it's really exciting to see that. Former brokers who were transactional agents who really worked for the insurance companies for all intents and purposes, who have evolved into transitioned into consultative advisors.
1:02:39These advisors are out there in the market. They are the antithesis of the traditional broker whose goal is simply to put you into an insurance company plan, so everybody can make some money at the expense of the CEO and CFO and their company. The PBM was charging $47,000 to deliver this solution to this kid a year. We called up the house and said, can this kid take pills? And the mother said, sure. So we switched to the pill form and saved the plan $47,000 a year.
1:03:12Who approved that solution? The PBM. And who was dispensing it? That's all you need to know. This is not rocket science. They don't have dumb people. They're just not looking. Or they have no incentive. Working with broker and advisors that are looking to the future, that are sensitive to the Consolidation Appropriations Act, that are bringing together solutions that are perhaps a little different from what has occurred in the past, but eliminates a lot of the waste that has existed in the past, is proving out to produce better results. In our experience, when you eliminate the conflicts of interest, you're only looking out for the best interest of the plan, the plan participants. You're focusing on good clinical care. You're focusing on fiscal responsibility.
1:04:05everything is aligned, you can eliminate 30, 40, 50 percent of the spend overnight practically, certainly in the first year, without changing the quality of care whatsoever. And again, I would argue that quality of care is better when you don't have a lot of nonsense that's in the system. So direct buying just takes all of the middlemen out of the picture. And whenever you disintermediate any kind of process, the price falls because all of the inefficiencies go away. So, yeah, I mean, if you're an employer, you know, would you rather pay the entire price and waive the patient's copay and deductible and pay for their travel and save the difference between that and the real number, which in a lot of places is seven, eight, ten times what we have listed
1:04:58online. So that's a much more savvy play to just sweep all of the bloodsuckers aside that are taking money off the table and really are rendering no value or service whatsoever. These advisors are leveraging the company's checkbook. The CEO and CFO control the purse, And it's this checkbook that allows the CEO and the CFO to take control because they're paying the bills. And that's how we need to be thinking about it. What are the outcomes that we want? If you want to improve access to health care, you want to incentivize people to actually use the access that they do have and feel safe and secure in it, You need to curate relationships and providers and administrators around you and point solutions
1:05:51that will actually help you do that versus just throwing everything in the kitchen sink at them. When an individual has a true patient advocate to help them navigate both the health delivery and the health finance side of the equation, the patient wins. Of course, they get healthier faster, right? Many plan designs will make that less expensive for the patient. So if that patient goes and gets the best care from the best providers, they will have lower personal out-of-pocket expense. The employer, who's the one whose pocketbook is actually funding that care, wins. But somebody that people don't ever think about as a winner in that scenario, the hospital, the healthcare system, and the physician win as well.
1:06:39because they have somebody who's coming alongside, double-checking as they're doing things, that yes, this meets the gold standard. Yes, this is going to be coverable by the plan. So they're not going to get stuck chasing a patient for money that they're never going to see because Americans don't have money for that kind of stuff. So it really is a win-win-win situation when a patient has an unbiased, objective advocate to help them navigate these systems. I think there's every reason to be optimistic, partly because the current system is untenable and cannot last. It is unstable. The other reason to be optimistic is this alternate path is not going to clean or cleanse or sanitize the current cesspool.
1:07:33But this alternate path is becoming more vibrant. this alternate path that embraces the same market discipline that CEOs of any company that makes widgets or anything else must endure, more and more are selecting the alternate path. And so it's becoming more difficult for the mainstreamers to continue to sell really a poisoned wealth. and employers increasingly are not drinking from it as willingly as they did before.
1:08:12We've got to change the system because people are hurting. That's not good for productivity. It's not good for job satisfaction. It's not good for them, too, because they're paying so much that they don't need to pay because of a system. And a lot of the money that they're sending to insurance companies, that's money they cannot give their workers and raises.
1:08:36They need to understand that. And they need to understand that they've been taken to the cleaners for years and years, that they're wasting money. So much of what we spend on health care does not go to improve somebody's health or get someone well.
1:08:58At the very least, my hope is that this documentary has encouraged you to just ask the right questions. Ask different questions. Instead of, why is our premium going up? Ask, what are we doing about the cost of these claims? It seems like a daunting task, but it can be taken on slowly. and the biggest part to doing that is having the data to make an informed decision. Don't wake up another day and let the current state of affairs in healthcare remain the same. Now that you have this information, the next question is simply, what are you going to do with it?
1:09:53Thank you. Thank you. Thank you.
