Transcribed from the recording and lightly corrected. It may contain errors; the recording is the record.
00:03Donovan Ryckis: The Business of Benefits is your no bs, no sales guide to real solutions. No gimmicks, just the truth about how to take control, transform your benefits, and care for your most valuable asset, your people. If you're tired of the same old sales pitch and you're ready to rethink your benefits, this podcast is for you. The truth is out there. Are you ready to hear it?
00:25Donovan Ryckis: Hey, everybody. Welcome back to the Business of Benefits podcast. On today's episode we had on Chris Deacon. Chris is a healthcare reform advocate, an attorney, and a former public official who used to lead up the state of New Jersey's health care plan. We talked about some of her past experience working in public sector, how we kind of see those cases, kind of current events with legislation and also litigation in health care reform. And most importantly, we talked about her new book, which is the Great American Health Care Heist, which I would highly recommend for anybody listening. So without further ado, Chris Deacon.
01:01Chelsea Ryckis: Hi, everybody. Welcome to another episode of the Business of Benefits podcast. We have somebody really special today. If you are even remotely involved in the insurance or benefits industry, you definitely know who this powerhouse of a woman is. This is Chris Deacon with VerSan Consulting. I'm not. I could not do Chris's intro justice. She has just done so much. So we'll let her introduce herself. But guys, today this is going to be a really special episode. We're really going to be defining the scope of the problem through the lens of Chris's new book, which is really exciting. Her book is called the Great American Healthcare Heist, why We're Paying More and Getting Less. We're going to dive really deep into that one today. But yeah, enough from me.
01:43Chelsea Ryckis: Chris, why don't you introduce yourself and just tell our listeners who you are and what you're doing with your business today.
01:48Chris Deacon: Great, thanks. And thanks for having me. I'm excited about the conversation. So I'm an attorney by training. I practiced in private practice for several years, actually in the bankruptcy and restructuring world before getting into public service. I joined the state as a deputy Attorney General in New Jersey after private practice. And from there I went to the governor's office and then treasurer's office. Sort of worked my way through different government agencies. And it was at the treasurer's office where I was asked to become the director of the state health benefits program. And I immediately put my hand up and said, absolutely. I don't think I appreciated at the time just the size and scope of the plan. I think it's probably the third Largest public sector health plan in the country, or something near that. It was an honor of a lifetime.
02:43Chris Deacon: And I still consider it an honor of a lifetime to have served the people of New Jersey and those that serve us. I left in September of 2021. I think that there was a point at which I could no longer live with myself and my conscience if I were to take the path of sort of looking the other way on some behavior that I couldn't condone. And so I left and I've been independent ever since, consulting with large employers and nonprofits, testifying on the Hill, testifying in state legislators offices, you know, to try and spread the message. And, you know, that's full circle. That's where the book sort of fits in.
03:28Donovan Ryckis: Yeah, I found that story really interesting. You know, I knew about your past and the history coming from working on the state of New Jersey's plan, but I didn't kind of know the whole scope of it. And it very much rings true, I think with any advisor that's ever tried to work or does work in public sector, which is personally why we just don't do it. I wish we could, I wish we could bring kind of the work we do and the best strategies that we do to the public sector. But I think you even said something similar. But I've always said like in public sector they have a formalized process for making bad decisions because these RFPs are just created year after year.
04:16Donovan Ryckis: Every time the kind of RFP process comes around, it's really created by the carriers, the hospitals and the largest broker in town. Can you kind of give us a little highlight of kind of what happened, like what kind of conflicts you are seeing that made you ultimately decide that you couldn't look the other way?
04:37Chris Deacon: Yeah. I mean, just to go back to your broader point, the way that the public sector's procurement process works, it's just so beneficial to legacy status quo incumbents. Right. And so we know what those organizations are. So it makes it really difficult to be innovative. And going back to New Jersey, they were no exception. I think that one of the biggest challenges was our division of purchase and property that actually does the procurement sort of all of the technical part on our behalf. Their measure of success internally was how few protests they got right, so how they didn't want to have to go to court, fight a protest from a bidder, when in fact, if you want to push the envelope and be a little bit innovative, you have to accept that.
05:35Chris Deacon: Yeah, Blue Cross, Blue Shield, Optum, whoever, they're going to protest because they just lost a whale of a client potentially. So that can't be your measure of success. But it certainly is for a lot of procurement bureaus out there for public sector entities.
05:52Donovan Ryckis: That makes a lot of sense. I mean it's counterintuitive to think, but you're exactly right. Like if a public sector municipality, like whoever it is, wants to be successful in reducing health care costs, that's going to go contrary to the interest of the big hospital in town, the big insurance carrier, the legacy broker. Like you're actually going to be, you know, kind of a little combative in those negotiations rather than friendly because if they're making more money, it's coming out of, you know, the people's pocket and it's just kind of counterintuitive. And any of that friction in public sector, that's been kind of my experience as well. I didn't know about, you know, those kind of internal metrics, but like that's been my experience. If there is friction, it's like, well, no, this must be bad because the hospital doesn't like it.
06:49Donovan Ryckis: It's like, no, the hospital likes as much of your money as possible. That's why they don't like this.
06:55Chris Deacon: Right. Well, I always say that we had various initiatives, whether it's reference based pricing or just reforms on out of network spend. I could have saved the state half a billion dollars. The problem with saving the state half a billion dollars is that is a half a billion dollars in hospital revenue that they aren't getting. Right. And who does the hospital association support? Our elected leaders who have a really big influence on state purchasing and procurement. Right. You know, I think a great example of the kind of dynamic Donovan that you're explaining is. I'm not sure if you saw my recent post about [company removed]. They have like over 755,000 members on their plan and they are fully insured. Now this came about because they have employees suing to stop this, the city from moving to a self insured model. Right.
07:55Chris Deacon: They have become convinced that any change is bad. Right. Even when that change is going to literally save you billions of dollars. I mean the crime there is that they weren't already self insured and that they're just giving away profit margin. But it's just. Yeah, it's such a strange world in public sector with a lot of moving parts.
08:19Donovan Ryckis: Do they take the award for the largest fully insured case in the country? Like that's wild.
08:25Chris Deacon: Well, the only other Plan that I would say rivals in size and similar dysfunction would be the [company removed]. So they have a hybrid model where it is self insured to a point. So you know, the carriers will sort of predict what they are going to need and draw down in a line of credit, but they then they get profit margin based on the spend. So I'll leave that one in here. Right. The more we spend, the more we make. I mean, I think we all know how that one works.
09:04Donovan Ryckis: To be fair, I was reading that post on [company removed] and I, I didn't realize all of it. I think I kind of caught it as I was going through some other things in my day.
09:13Chelsea Ryckis: I did.
09:13Donovan Ryckis: I don't think I understood that were talking about [company removed] being fully insured. Wild. Sorry, Chelsea, go ahead.
09:23Chelsea Ryckis: Well, you guys are talking about public sector and Donovan and I have taken a pretty strong stance that like, you know, that's just not business that we participate in because over and over we've just seen this process unfold. Right. But what I found really interesting is as we've moved up market, you know, 5, 10,000 plus employees, I'm also seeing internal procurement teams of private corporations making similar interesting decisions or having interesting criteria. So for example, in the last couple years I've seen, you know, a procurement team choosing a legacy brokerage because they wanted 200 plus years of being in business. And it's like our health care problem is 20, 30 years old at best. Right. And also, you know, market leverage. That's bullshit. We all know what that actually means.
10:08Chelsea Ryckis: So it's just interesting because I think, yes, it's definitely very rampant in public sector. But I think the same argument can be made unfortunately for even larger companies on the private side.
10:19Chris Deacon: I completely agree. I mean the bigger you get, the more bureaucratic you get, the more sort of like check the box things. That, and healthcare is one of those areas where it's, you know, it's such a unique purchasing process. Right. Because sometimes like the more you spend, the worse you're doing. Right. But you know, whether it's members thinking that broad, big bad PPOs like we have to have a cross and a shield on our card is like that's the good benefit. Like that misconception. And then you have the, you know, disruption as a negative word. You know, we should really think about disruption. We think about disruption in a positive way.
11:01Chris Deacon: But yeah, you know, again, sort of going back to the book and like all of the various ways that we don't fully comprehend and Understand, like just how misaligned purchasing, you know, those vendors that we purchase from, like how misaligned they can be.
11:19Chelsea Ryckis: So we, Donovan and I, obviously being advisors, we focus a lot on the misaligned incentives in that part of the conversation. But with your expertise, you have like such a wealth of knowledge on hospital systems and carrier insights and contract complexity and nonprofit hospitals. Can you talk to some of that? Because I think a lot of the times our audience doesn't really realize how big the problem is. Right. It's mostly focused on kind of that advisor relationship as opposed to what you talk about in the book. So can you dive into nonprofit hospitals specifically to start.
11:52Chris Deacon: Yeah, and one of the reasons we have to talk about nonprofit hospitals is because of the spend, the percentage of the spend that is taken up for your clients in hospitals, and whether that's at inpatient level or increasingly outpatient and ambulatory surgery centers. You know, these nonprofit hospitals very much act like for profit entities. And unfortunately there's an assumption that nonprofit equals, mission driven, charitable, etc. You know, because you see their names on the 5K shirt or you know, perhaps cutting a ribbon at a youth center. But the fact remains that, you know, if you put a million dollars back into the community from which you have deprived of $20 million in tax revenue and also extracted margin from all of their insured lives, including their public sector lives, like, that is a really bad deal.
12:52Chris Deacon: So not only are these, you know, I kind of, it's kind of the crane test. If you look at any major city and you look at those cranes, I guarantee you 50% of them are going to be building some sort of hospital or healthcare facility. And so this growth mentality that all of these nonprofits have, like, we're not necessarily getting healthier, building a bigger footprint print doesn't help, you know, from a population health perspective, but that's where all they're all going and they have to pay for it. Right. And so as they get bigger, the prices have to go up. And there's just this mismatch in what communities need and what hospitals have an incentive to build and sell. This is why you see labor and delivery units going away at nonprofit hospitals. It's not because we don't have babies.
13:44Chris Deacon: It's because labor and delivery is not a profitable center. You actually have to labor. You could labor for 24 hours. Right? It's not. And, and it's, it's not expensive. It's not profitable. Right. But it is expensive proposition. So It's a loss for the hospital. So those are closing, but you're gonna, you're seeing a lot of really high tech cardiac centers being built. Right. Because they are profitable. So I think, you know, it's time to have a really honest discussion with the hospitals. We need our hospitals, we want our hospitals to be financially viable and healthy, but we don't need our hospitals to have 600 piece art collections. And [company removed], who is complaining about a cost growth benchmark in California and how financially devastating growth caps are on hospital prices.
14:40Chris Deacon: And then you look at architectural magazines and you see the pristine glass castles and Zen gardens and again, 600 piece art collection from around the world. Like this is where your money is going. And this is not only where your money is going, but that's foregone tax revenue. Communities who need to fund schools and, you know, vital services, they can't tax that land and they're losing out on it and they have to pay to sustain it.
15:11Donovan Ryckis: Yeah, the scope of that you kind of defined in the book was pretty astonishing, if you want to talk about that. Basically the foregone tax revenue, either through the real estate or the actual hospital services in comparison to the Medicare budget, that was pretty stunning.
15:32Chris Deacon: Yeah, I mean, I don't have the numbers off the top of my head, but if you think about all of the ways that the American taxpayer is losing, it is pretty astounding. You know, again, hospitals lost revenue, and not just lost revenue in terms of taxes, but your tax dollars going to fund some of these nonprofit institutions. Research labs. Right. If they're an academic medical center, they're getting a ton of resources from the federal government. They're then taking those assets. Right. They're building those assets with your tax dollars in their research labs and then they are spinning them off in their venture capital arms and selling them at a profit. [company removed], [company removed], [company removed], they all operate like financial institutions. They have multiple venture capital arms that are responsible for the monetization of the other lines of business.
16:32Chris Deacon: They call it diversification so that they can protect in case of an emergency like Covid, which by the way, we are still paying hospitals millions of dollars in Covid money. I think it was, I don't want to get the name wrong, it was [company removed] or [company removed]. This year their financials disclosed that they're getting close to half a billion dollars in Covid money because Covid money was approved for capital projects like climate resistance. And, you know, I mean, you could take that money and do a lot of building with it, and they Have.
17:06Donovan Ryckis: All right, so part two of the book is a little bit on insurance carriers and kind of the common thought process that we hear from plan sponsors or they believe is that, you know, the insurance carrier wants to negotiate these hospital bills really tough and make sure they pay the least, which isn't necessarily the case. Do you want to kind of talk about the relationship with the insurance carriers and hospital systems and that provides process of negotiation?
17:37Chris Deacon: Yeah, I, I think one of the most educational and illuminating conversations I was ever a part of was listening to a network contractor for a large carrier describe that negotiation process. And for whatever reason she was very candid in how the process worked. And it went something like this. We look at what our members spent at that facility last year. For example, if it was 3,5 billion, we would take that 5 billion number and we would add a few points and then negotiate rates back from that. Like that's how these things work. And so we wonder why there's no pressure on cost growth or price growth. Because there's no pressure on price growth. Because the people we've outsourced that job to, number one, they don't necessarily have a financial incentive to do that, especially for their self funded employers.
18:36Chris Deacon: But even with fully insured, you know, if you are capped at your profit margin on a book of business at 20%, you know, 20% of a bigger number is always going to be a bigger number. So we have a system where we've sort of put all of our trust and power into the hands of a middleman that to negotiate prices on our behalf and that middleman has no incentive to do so. And we've also. Not only that, but we've agreed that we don't get to see the black box. Like I don't get to see the provider contract. I don't get, I don't even get to talk to the provider. Right. If I called up and I did this, I remember I once called [company removed]'s financial office because I wanted to validate the amount paid on a claim.
19:23Chris Deacon: And they said they were contractually prohibited from speaking to me. I would have to go through the carrier because there was a gag clause in there for them. So yeah, it's, I guarantee you could spend just a few minutes on turquoise pulling up cash price and your negotiated rate, using your insurance on any number of services and you will find that the negotiated rate is often higher than the cash rate.
19:51Donovan Ryckis: Oh for sure. I mean we do a lot of network replacement or reference based pricing and when you see the stuff that comes through, you know, the billed amounts that these hospitals are attempting to receive compared to where we end up settling, it's just absurd. And then it's hard to ever go back. Like, there's no putting that back in the box and being like, oh, yeah, we can do PPO plans. Right. Like, right. You just, you have to have full transparency.
20:19Chris Deacon: Well, and worse than paying full billed is situations where your carrier has agreed to pay over the billed amount. Right. That, that happens. I don't know if you saw. There's a Bloomberg article maybe three years ago where actually brought this to light on that [company removed] claim. The claim was billed at around $678,000. The. The claim was paid at over 2 million.
20:48Chelsea Ryckis: Oh, I did see that.
20:49Chris Deacon: And when I asked this can't be right. Like, what's going on here? It looks like, you know, you might have gotten your fields mixed up. So. No, that's. Right. That's what we agreed to pay them. Said so. So in many cases, you are actually paying over the sticker price, which is already pretty high, as I think we all know.
21:08Chelsea Ryckis: So in that situation, right. Like when you have the conversation of how and why, like, what types of responses are you getting? Because to me, it's just like. So I. And I also think for the employers listening, they'd be like, well, what would I do in that situation? Right. Like, you would assume it's an over, it's an error, and it's because 80% of bills have errors or whatever. If it's not, like, what did that situation look like and how do they fix it?
21:33Chris Deacon: Yeah. So to them, it wasn't an error. Right. Their responses, we have. Sometimes we negotiate with a hospital and the deal is we will always pay them this rate, this negotiated rate, regardless of the bill. And so that's one response you get. And then when you push back and say, well, that doesn't financially work for me. There's that. No, no. It all works out in the end because there's a lot of cases where we pay less than the billed amount. So it's a wash. That's a very common response. Another response is the bill isn't accurate. Right. I definitely hear this one because their position is they know they're getting $2.1 million. They have no, they have no reason to bill it appropriately. So the codes probably aren't correct. And they didn't code everything because they knew what they were going to get.
22:26Chris Deacon: And so the bill's not accurate. You can't rely on it. And I'm like, you just said that out loud, right? Like, that's not okay.
22:33Donovan Ryckis: Yeah.
22:34Chelsea Ryckis: Wow.
22:35Chris Deacon: But those are the most common responses. And in terms of pushing back, I mean, from an employer perspective, you know, there are certain things you can do, like demand lesser of language in your contracts, meaning, you know, I'm not going to pay above the billed amount because I for one, think that hospital bills should be accurate and. Yeah, right. And ultimately, you have to be willing to exercise your leverage, and if they don't bite, you have to be willing to walk, because if not, they hold all the power.
23:13Chelsea Ryckis: Well, and that's where we continue to see, and this is true in 250 life companies all the way up to 10,000 plus and larger. There's just this gap between like, and. I think I sent it to you in my email earlier. Intent in action, right? And it's like, you can do all this education to employers and to people in our industry about transparency and all these things we're talking about, right? Like doing things a certain way. And then when it comes time, like, rubber hits the road and it's like, all right, make a choice, like, do you want to continue being in this shitty situation that you've allowed yourself to be in contractually for years? Right, where there's not good health outcomes, there's not good financial outcomes.
23:50Chelsea Ryckis: I always am just so fixated on, like, everybody wants to learn about it, but walking the walk is a totally different ballgame. And how do we bridge that gap? You know, and maybe that is something we talk about towards the end of the episode, but that's always where with your expertise, I'm interested to know, like, what do you see being the. The catalyst that actually makes people move from, yes, we understand we're getting absolutely screwed to doing something about it, I think.
24:16Chris Deacon: Well, like you said, awareness that there is an alternative, but I certainly don't think awareness that there's an alternative is like the panacea, because I think increasingly we all know something's messed up, we're getting screwed, and there's another way out there. But it's like, what is that thing that's going to move everyone? I think three years ago I would have told you that a deluge of lawsuits was coming and the fiduciary angle and push because you don't want to find yourself on the receiving end of a lawsuit was going to be the impetus. I was wrong. More than willing to say I was wrong. I think that was largely A bust. Some predict that onslaught is still coming. I don't think it is.
24:58Chris Deacon: And, and actually, I think that scaring people into action isn't really the right approach because when we scare people into action, they're going to become sort of meek and anti litigious versus, you know, opportunistic and taking on the challenge for the right reason. And I think that matters. I do think that matters. And that's one of the reasons I wrote the book was I think one of the big misses is you can convince an attendee at a conference or a webinar or a listener to the podcast that they need to do something different. The question is, can that person convince their CFO and their CEO that their wife's cancer treatment is going to continue or that the card that they carry in their wallet, it might look different, but the care is going to better? That is a huge area of improvement.
25:54Chris Deacon: And again, that's the tool that I hope I tried to create in this book, in the content that accompanies it, because that helps that internal dialogue. We need that internal. And storytelling is one of the ways you do it. Enraging stories about Nonprofit hospitals and 340B exploitation and all the rest of it, that's what grabs people. And so I hope I'm handing those tools to the internal communicators because that's a big area of weakness I think we have.
26:27Donovan Ryckis: So going back to the idea of bill review, so this is something we been fighting quite hard this year and a little bit of last year, which is just independent bill review above, let's say a 25k threshold on PPO plans just for ineligible and duplicate charges. So not negotiating. Right. But just simply saying, hey, we got over a $25,000 bill, we need to review that for accuracy. In which case we almost always find there's a lot of duplicate stuff they built for the DRG and then individually and just stuff that's not eligible. And in the inevitable pushback that comes from being able to do that on a prepayment basis with any ppo, even with an independent tpa, what have you seen?
27:23Chris Deacon: Well, definitely in line with that. And I've seen the pushback become, you know, what would have been the pushback three years ago versus now, it's like they are doubling down. It's as if they view this push towards external reviews, whether it's prepayment, post payment at all thresholds, as like an existential threat. That's what it feels like based on the way that they're responding. I mean just yesterday I got off the phone with a client who had a claim review company in place for two years, found substantial amounts of money that was returned to the plan and saved for the plan. Again, an external review company.
28:02Chris Deacon: And they have just been asked or told that in order to continue with that process they need to engage the carriers direct to consumer payment integrity program as a first measurement and that it would cost $800 per claim and $2,500 per flag for per provider flag if they wanted to use an external vendor. So I mean, and a $75,000 fee to engage in the direct to consumer program. So I mean the blocks are just coming up and you know, you can say I'm a fiduciary, I have to look at these things. You could. But they just come back and they say, well you know, our provider contracts say that we are, you know, they can't be subject to prepayment review. Our provider contracts say X, Y and Z.
28:59Chris Deacon: And so and then you've signed a contract employer that says you agree to our negotiated rates and our provider contracts, ipso facto you have agreed to that. I mean, and the problem with that is I don't know what's in that contract because you won't show it to me. Right? That's contracts 101. Like I can't agree to something I don't know or I can't see. But that's their argument. And you know, complain to the Department of Labor, file a lawsuit like employers don't want to do that. They want to provide benefits to their employees.
29:32Donovan Ryckis: It's a wild concept because you're right. Like sure, a PPO is a pre negotiated set of rates for any procedure you can get done. I think we can all understand and get down with that. But the problem is when it's the healthcare plan will blindly cut checks for any bill that any hospital within that PPO network gives us without care. That that part is wild. And you know, we've done it with independent TPAs and you know, we'll kind of go back, you know, we do our first three bills, all of them, we find errors, you know, got like 100k plus and ineligible in the first three bills. And you know, we're doing this with them. They're like, oh we already did that. It's like, well obviously you did not.
30:14Chris Deacon: Right.
30:15Donovan Ryckis: So let's get this going. So like it's been all pushed to post payment which is then a six month to a year nightmare. Of trying to get money back from the hospital.
30:26Chris Deacon: Well, and it goes to, again, I think a sort of intro with this theme of, you know, you're either pro pharma or pro pbm, like, you know, you're either hospital or carrier because there's this assumption that they're like, you know, sort of going at each other as hard as they can in these negotiations. And the truth of the matter is they all benefit when the price goes up and when costs go up. Right. And so in like the situation you just said where the PPO says, you know, we're not going to look at that, like we know that like [company removed] says, if you want us in your network, you don't look at anything, you just pay. And they are a network that everybody, or I'm sorry, a provider that everybody thinks is a must have, right. So they can dictate those terms.
31:16Chris Deacon: The bigger they are, the more must have they are. And the carriers are sort of all too well, that's a lot less work they have to do. Right. And they just get to sort of rest on the excuse of, you know, it's in the provider contracts and if you want them in your network, this is the price you pay.
31:34Chelsea Ryckis: Have you seen like any CAA 2021, specifically like gag clause attestations, have you seen any of that kind of come to fruition in a positive way for employers with some of these contracts?
31:48Chris Deacon: No, I would say 99% of the, you know, so instances I've seen the, that asserted the CAA language on gag clauses and I've seen it not be a successful argument. There have been a couple one offs where it's pushed maybe the envelope, but no, and I think that's why Congress is going back and trying to improve upon it because I don't know how often you filed the attestations or how many you've seen, but you know, I've seen them from all the major carriers and they basically it's worthless, it's not worth the paper it's written on. And, and what do you do about it? Right? So I go to DOL and I say this is all my carrier, like nothing's happening.
32:37Chris Deacon: So there is a big push to get DOL to be more active in issuing policy and guidance to help employers and then also at the legislative level to actually, you know, clarify what is a covered service provider, what kind of, you know, when we talk about data, you know, all financial and claims data, like I, you know, I helped with the Marshall Hickenlooper bill, like we specifying the data specifications and the format and the timing, like all that's really important. So hopefully we get some traction, you know, if the government ever reopens.
33:13Chelsea Ryckis: Actually, that's A good point.
33:15Donovan Ryckis: So a not insignificant part of the problem as well. Pharma and PBMs, what are kind of the biggest things plan sponsors need to know or be aware of in that conversation or really what I always say is even having a conversation on PBMs is usually something most plan sponsors don't even do. It just gets bundled in. This is what we're doing.
33:39Chris Deacon: Yeah, I think it's true with PBMs and I think it's true with oftentimes sort of like the typical broker or the typical carrier is, you know, the employer knows that something's amiss and something's wrong. It's, you know, it's the congressman problem. We know that Congress is broken, but my congressman, they would never do that to me. Right. Like, my congressman's good. My PBM is not. They're honest with me. Right. They showed me the reports. I think what employers need to know is like, when you come to the table, understand that their financial incentives are not aligned with yours. Like, don't stick your head in the sand and say, well, you know, Joe's a really nice guy and I really don't think he would lie about what rebates are. No, like, just know that they have a financial incentive.
34:32Chris Deacon: They're a private for profit entity that has a fiduciary duty to make returns to shareholders, which means that when [company removed] announces that they're moving away from rebates, please don't be stupid enough to think, oh my gosh, that's going to be, we're going to save so much money because we're going to get all that money back and they're not going to do rebate pricing anymore. Like, please don't. They're moving it upstream. They're calling it something different. It is a not so brilliant marketing ploy. So again, I'm not, I'm not. You know, I think there's some behavior that goes a little beyond the pale. But corporations are going to corporate. Right? Understand that. Go to the table knowing that and try to get a deal that recognizes your interests as opposed to their interests. Right.
35:23Chris Deacon: I think that's got to be like step number one from an employer perspective. And we have to, you know, again, PhRMA wants to blame PBMS wants to blame pharma. But as we all watch that battle play out in senate hearings and you know, lawsuits. The only real losers are the American people and the winners are these entities and their lawyers because it behooves them to keep sort of the eyes one or the other because then we're not looking at the structural problem with the system that we have.
36:04Donovan Ryckis: Awesome. You know, we see this a lot. Let's, you know, we'll touch a little on the advisor side. I don't, you know, I know you work with a lot of advisors and you're helping companies out. So you probably see all the same silliness, we'll call it absurdity of advising and conflicts of interest that we see. I've certainly seen that a lot with PBMs recently on the much larger companies into like the 10,000 range where they're asking their advisor year after year to get out of the big three PBMs and they just kind of block it only to find out they're getting a PMPM for everybody. In the plan there's a giant flat.
36:52Chelsea Ryckis: Fee to be a part of a collective, a PBM collective. That's the same shit you'd get if you went.
36:56Chris Deacon: It's the same thing.
36:57Chelsea Ryckis: Yeah, right.
36:58Chris Deacon: Again, take your blinders off. Just know that they're not going to voluntarily give you money back. You know, it's. That's not how the world works.
37:07Chelsea Ryckis: I feel like sometimes Donovan and I and like the way that our business model is literally built the exact opposite way. Right. Like founded on fiduciary principles, fee based. Only as transparent as I think we could possibly be. When we're the ones saying it's like, it's like the congressman thing that you just said. It's like, yeah, but I really like that guy. And you're also a salesperson, right? Like you could be a fiduciary. You could have. We literally have fiduciary insurance. We sign on as co fiduciary. Like we're doing it and we're walking the walk. And it's still there's like this mistrust just because of the role that we play in the equation. So that's why I find like people like you are so powerful because you are completely removed in a lot of ways. Right.
37:50Chelsea Ryckis: To kind of further elaborate on Donovan's question, like what practices are you seeing? Either really good from the advisor community or maybe not so good like some of the ones he mentioned.
38:00Chris Deacon: Yeah, so I definitely continue to see the big houses, you know, the big box consultants not change their behavior. They Might, you know, again, put some nice dressing on it and say that we're. Oh, you know, we hear you, we're gonna present this rebate free model or whatnot, but it doesn't change the backroom dynamics. Again, you know that big box consulting firm, they have a revenue line they need to hit and if they were to say like, oh, you know, [company removed], we're not going to take that PBM or that pmpm, it's contrary to their interests and they're not going to do it. Right. And I am seeing more consultants like yourselves.
38:47Chris Deacon: But going back to the way that we have structured our procurement processes and how we sort of go through this process, you're kind of trying to fit a square peg in a round hole sometimes because that process doesn't always lead to the right decision. Example. Right. With the state, it was so difficult to get them to understand that from a consulting perspective, if I pay more upfront, like a flat fee and I'm getting a tremendous amount of value, they're going to steer me in the right direction when it comes to like claim review or you know, whatever the right thing. You know, transparent PBMs and moving away from the crooked coalitions. Right. But they're going to cost me a half a million dollars versus this other consultant who comes in and they're like, 75, right, 75 grand.
39:47Chris Deacon: To a procurement person that only sees that fee, like it does not make sense to them that you would ever go with a price that is five, six, seven times higher. But you know, the return on that investment is going to be in the millions. Right. Like, so how do we create a procurement and evaluation process that is going to bring that to light so that we are selecting the right vendors? And you know, unfortunately, doing the right thing isn't something like you can sell. And I always say that like, that's why, you know, that's why conferences are all, you know, they're sort of, usually these big conferences are sponsored by like the things and the gadgets. Like doing the right thing isn't for sale. It's not a thing you can buy. It's not an app. It's hard work. You know, it's not sexy.
40:40Chelsea Ryckis: No one cares.
40:40Chris Deacon: But that's where rubber hits the road.
40:43Donovan Ryckis: Yeah, that's such a true kind of take on procurement. We had that happen this past year and that's very pretty much what happened. Right.
40:54Chelsea Ryckis: Literally the exact situation you just said.
40:57Donovan Ryckis: Yeah, yeah. And, and you're exactly. Right. And the funny thing is, so I, you know, I, I used to be a securities advisor. I've done a lot of different, sold a lot of different products within financial services and securities. And what is universally true in this business is that the better a product is for the end consumer, the less to no commission they need to pay to get it to market. Right. So when you're talking about like yeah, you know, Express Scripts is going to pay a pmpm. Right. And why would the agency not take it? The agency doesn't take it. It's not going to change the pricing for the, for the plan sponsor. Right. But that's how those revenue models are built. Right.
41:38Donovan Ryckis: Like so, yeah, their upfront is going to look like a fraction because you have no idea for what reasons or why or when they're getting paid more for offering you certain things.
41:51Chris Deacon: Right? Yeah. And I think, you know, when you found yourself in that situation where you know, the, it's like, yeah, your fee is more but like the investment is so much, you know, so much worth it. I, I would imagine, I would guess, I'd be willing to guess, maybe put some money on it that what broke down there, you know, if you were able to convince the folks that you pitch to. But what breaks down is when I take it into a CFO office who's used to crunching numbers for scrap metal or crane lift operating or whatever and doesn't, he doesn't get health care and why should he? And you put two numbers in front of him, like you expect him to say, oh no, I get it right. Like how many years has it taken us to get where we are?
42:39Chris Deacon: And again, so that's the hope is, you know, when I have these conversations with CFOs, I see the light bulb go on. I see that they're like, oh my God, we've been getting, tell me like is there a book? And so I could only have so many of those conversations a day, a week, a month and okay, so let's write it down again. I don't know who's going to read it, but if enough like start, you know, CFOs and folks start to read it and I think we will have more light bulb moments because again that breakdown in communication is often internal. We have to get the right champions.
43:17Donovan Ryckis: The way I explain it often to CFOs when we're kind of discussing that is the idea of like their accounts payable. Because if we think of healthcare and all the insured members, there is almost certainly not a Larger division of accounts payable in their entire business. This just goes completely unchecked. So like when we measure our claims, we see something between like 15 and 18 claims per insured employee. Right. Because they have dependents and spouses. And then we kind of multiply that out. We're looking at that. It's like this is how many, you know, invoices essentially you get in your healthcare plan and they are completely unchecked. And guess what? If you wanted to check it out before you paid it, you can't do that. And if you want to know how much you paid for it, you can't find that.
44:08Donovan Ryckis: Like it's a, it's a wild thing. And then going back to the advisor thing. So, you know, I think, you know, I look at the parallels between like 401ks and health care plans, right. Obviously they're both by ERISA. Now we're seeing litigation. I think that has to continue just because the prices are just going to continue to go up. We'll see in what way. But one of the kind of differences with 401k or any retirement product is there's not the same saturation in the market that gets to control states and regions in the country. I think it's a difficult proposition for the brokerage community to ever move away from this commission type model where they're not really working for the plan sponsor. Like, how does that transition even, you know, ever start?
45:11Donovan Ryckis: Because you know, plan sponsors think that they're the client, but they're not because they're not. They're not the one paying the broker. Right. Any thoughts on a better path or a way forward or I guess what would be important for the broker consultant community?
45:32Chris Deacon: Yeah, I think it's a great question and it's a great idea because you know, you're that. And I often think that when folks parallel the 401k world and the healthcare world and like we just have to do the same thing. You have to set up in a committee and you have to document X and you have to, it's like, no, it's not the same thing. Like it's kind of like, okay, like driving a car versus driving a boat. If you've ever done the boat, you can't just turn right. You have to take into account all of the different things in the wind and so many more variables to driving that boat. Quality and regional and member specific. And it's so much more complex. So I think it oversimplifies to say, well, we just have to use the 401k model.
46:20Chris Deacon: Certainly there are elements, you know, I think that it has to be a demand side remodel, if you will. Like the employers have to demand it and they have to put it in contracts and they have to put it in places where the, you know, in terms of like limiting commissions, et cetera. You know, I think there's not one place it's going to come from. I think there needs to be demand side pressure on that market. I need, I think there needs to be, you know, sort of market pressure on the actual healthcare providers in terms of like transparency and anti competitive, you know, conduct and whether that's breaking up or whatever. And then transparency on claims. I mean that's going to be massive if that ever happens again.
47:09Chris Deacon: I mean, I think that's an existential threat because what you are unpeeling is the absolute lack of value of some of these many middlemen that are just, you know, ripping everybody off.
47:22Donovan Ryckis: Yeah, last kind of thought I have on that. So what we've been seeing more recently in kind of an attempt to do compensation disclosures is really what they address and they show is all the ways they are conflicted without any actual financial numbers behind it.
47:41Chris Deacon: So they can't take.
47:42Donovan Ryckis: Yeah, we couldn't calculate, right. So whether that's market service revenue or enhanced carrier compensation or My favorite, some of my favorites is getting loans and lines of credit from the carriers they represent or we own equity interests in the insurance carriers we represent. So like I've gone through 16, 18 page compensation statements for groups and I cannot figure out if they're paying for 50,000 or $1.5 million because it's just devoid of anything that could be calculated.
48:20Chris Deacon: Right.
48:20Donovan Ryckis: And it's. So like imagine taking that to procurement.
48:24Chelsea Ryckis: Right, right.
48:26Chris Deacon: But for some reason in healthcare they probably are like, wow, that's really complicated. It's okay, it's fine. I'm sure they're doing a good job. It's, it's. I've seen those where they say it's impossible to calculate. And in those situations, or at least one that I was just a part of, I would have asked if the client really wanted to go there, that they are on a monthly basis coming clean with what they then can realize. Okay, maybe you can't predict it today, but on January 31st you probably have a good idea of what you got this month. So put that in writing, put it in an email, make your CFO sign it and send it to me. And attest to it. You know, I think that employers can get creative, but it's how, how willing the employers are to push.
49:19Chelsea Ryckis: Well, and even more than that, I think it's how willing a lot of them aren't. Right. Just for so many reasons. And a lot of the times the biggest thing I hear is competing priorities. Right? Like, it's just not a big enough of a priority right now. So in our experience, like, a lot of this push for transparency, it's actually coming from us. So if you're working with a consultant, that isn't driving that conversation. It just takes so much longer for these companies to realize, to your point, that there is actually a better way to do all of this. I know we're getting to the end of our time here. So, Donovan, did you have any last final thoughts or questions for Chris before we wrap up?
49:55Donovan Ryckis: No, I just want to see if we missed anything or I guess any messages to plan sponsors directly on finding that motivation or bridging the gap. Obviously, read the book. It will infuriate you, motivate you. Very similar to Chris Deacon was obviously heavily featured in It's Not Personal, It's Just Healthcare. If you didn't watch that, you can still get it on our website. But Chris was very heavily interviewed for her experience in that. And this book is much like the documentary in that it was. Will anger you and motivate you and make you want to change.
50:31Chris Deacon: No, I appreciate that and thank you so much. The only sort of parting word of advice, and it's sort of like practical and goes back to that internal communication and championing gap that I think will elevate and sort of make your groups like your growth more rapid. And for employers, it will only benefit them. How do we improve that internal championing? And what I have suggested and found to be useful, and I've heard success stories here, is figure out what that C suite leader, what their concern is. A lot of people, pharma is their focus because they have a loved one who can't afford their medication or some who have just been through a hospital event and they're fighting a bill that they haven't been able to resolve for two years. Years.
51:23Chris Deacon: Mark the page where that chapter begins and say, I want you to read this, right? And I guarantee you they're going to read the rest of it and you will have somebody internally, you know, that will champion your cause. You know, I think that's one useful way that you can use this tool. Again, it's a tool. It's something I wanted when I was in those meetings. And so now I hope that's what it's used for. And I will just say, stay tuned. There's some, you know, big stuff coming up in the new year that I'm sure everybody will hear about and it's exciting. So sure it'll happen by the time this podcast airs. Yep.
52:07Chelsea Ryckis: What where can our guests find you, follow you, engage with you?
52:11Chris Deacon: LinkedIn is definitely the best way to follow me. And then if you shoot me a message, I answer all my. All my. Unless you're trying to sell me something, I will answer your message and. And we can converse there. I'm very accessible.
52:26Chelsea Ryckis: Awesome. One thing I love about your LinkedIn is that it's never AI content. It's actually you writing your posts. And I really appreciate that.
52:33Chris Deacon: Yes. Errors and all. And if you see a typo. I do not. I love when you write me and say, you know, great post, but I think you meant to say X or, you know, typo here. This is a community. We're all helping each other. So thank you to all of my editors out there.
52:50Donovan Ryckis: Well, you know, they read the whole thing carefully, so that's great.
52:53Chris Deacon: Yeah.
52:54Chelsea Ryckis: Well, thank you so much, Chris, for being our guest on the business of benefits. Guys, don't forget all of our listeners share, like, subscribe. And definitely hit that follow button on LinkedIn for Chris Deacon and go get her book. Can they get it on Amazon?
53:07Chris Deacon: Yeah, Amazon. All. All major booksellers.
53:10Chelsea Ryckis: Perfect. Yeah, go get it.
53:11Donovan Ryckis: Is there a Kindle version coming out by chance?
53:13Chris Deacon: There is a Kindle version that's out. Audible is being recorded. And if you want, there's definitely a Black Friday deal coming up and a Cyber Monday if you were planning on ordering, you know, a few.
53:25Chelsea Ryckis: Awesome. Thanks so much, Chris.
