So, couple of things you'd probably be interested in, we read Atul Gawande's, Cost Conundrum. Yes. We read Steven Brill's, Bitter Pill. Great. That's a great read. So, great articles to help punctuate what's going on. So, the solutions that you just wave your magic wand over sounded to me at least to be very consumer focused, basically saying to the consumer and the purchaser, take charge of what you're spending. Right. Can't dispute that at all. There is another, I think slow, but steady drumbeat on the side of how we pay for health care. Sure. There's real desire to move off of the fee for service payment model and move into some new things. So, through this course, we've talked about shared savings models with ACOs, bundled payments, medical homes, et cetera. What's your thinking about attacking the problem, perhaps simultaneously on the payer side? Sure. I think, again, transparency is a good start in that direction, but I don't think bundled payment makes sense. I think that reference-based pricing is something we're very passionate about. So, what does that mean? People like Mark what is RDP, that's the acronym because we're really good at acronyms in this business. Reference-based pricing essentially looks at Medicare. Medicare is the benchmark. People always comment and Medicare negotiates the best deals. My refrain to that is they don't negotiate anything. They tell Dr. Verdi's, "I'll give you 61 cents for that dollar of healthcare. I need a dollar, sorry it's 61 cents." So, my point is, that's the benchmark for the country no matter what market you live in. So, reference-based pricing says, if you're in a market where a hospital, or a physician, or any types of services are charging 400, 500, 600, 700, 1,000 percent more than Medicare. We're going to bring that down and we're going to make it more reasonable. We're going to bring it down to a 150 to 200 percent of Medicare. Now, from a big hospital system, I don't like that. So, how do I make the argument to those hospital systems that, yeah you should? How I do that is I actually talked to the CFO and direct contract, and say we'll pay you in seven days instead of making you wait 30, 60, 90 days to be paid. So, in exchange for a lower rate of reimbursement, there's a faster turnaround time with regard to reimbursement. So, all reference-based pricing does, if you look at medical trend, and by the way I'm always fascinated by this. We have CPI for everything else that we have our own inflation factor for health care. It's made up of three components; unit cost, unit utilization, and provider max. Unit cost is 50 percent of trend, how much something actually costs. The problem is there's a wide variation in the actual unit cost is the example I gave you before the blue card and the red card, same service, but there's 1,000 percent difference in the price. There shouldn't be. So, all reference-based pricing does is, it looks at that and says, "We want to have a common platform to measure off of and then we're going to pay you a reasonable increase over that." Now, you might say, why does commercial insurance cost more than Medicare or Medicaid? Probably the single best kept secret in our entire discussion, that there's a huge cost shift from the federal government to the private market. On average, Medicare and Medicaid pays 61 cents for a dollar of healthcare. In turn, those providers hospitals, doctors, they all have to charge a $39 to make up for the 39 cent shortfall. That's happening because of the federal government. You'll never hear that talked about, but that's the reality of it. Now, we can look at the providers and say, "Well, why don't we have a conversation about being more efficient about the way you're delivering care?" So, that's where we get into bundled pricing. I actually don't think fee for services the evil dealer, I think it can be if it's not visible, because then you're just submitting a lot of bills for a lot of different things. But when I go get my car worked on as an example, and they have a whole bunch of work to do. I actually see, they'll give me an estimate. "Mark, this is what it's going to cost for me to do what you're asking me to do on your car." That's all fee for service. It's like giving me a bundled price. However, I've also gone on vacations is an example where I want the all end bundled price. Give me the airfare, give me the rental car, give me the hotel. When I get to the resort, I want to just put my stuff in the safe and I pay one fee. That's a good example of a bundled price, and sometimes that makes a lot of sense. Other times, I might want to be a little bit more judicious and say, "You know what? I think I get a better deal in my rental car, I get a better deal on my hotel." I'm not suggesting our healthcare's like buying a car or going on vacation, but the same economic principles apply. Bundled pricing gives us a way of saying, if I'm going to have a hip replacement done, I don't need to know all the pieces and parts, I don't. How much is it going to cost for the entire experience all in? That's what bundled pricing is attempting to do, is to package all those disparate fees for service, push them together into one price for an episodic. Situation of care. That's all bundled pricing means to me. I don't know if you share the same view but that's what it means to me. I do. But I guess the question I would have for you is, are you seeing employers pushing these payment models or are you seeing employers just buying into their insurance company saying we think of this there's a new model out there let's give it a shot and see what happens. So, if you're in the fully insured market you're not thinking like this. No. Because you don't have control, the insurer has control, and insurer is the one who's pushing these different types of value-based payments. Yeah. Because they're trying to manage the cost for the insurance company. If you're self funded, you're thinking a lot about this because you're the one who's actually paying the claims of the people that you're recovering. So, I would say that initially when an employer moves from fully insured into self-insured, we educate them on the concept, but they're not yet ready to move that drastically. It's a big change from how the insurer do everything for you, you pay a premium bill once a month and settle up at the end of the year to now every week you're paying claims for your people that are exposed, you're buying stop-loss insurance, you're buying administrative service there are a lot of moving parts and pieces. So, employers when they get into the self-insured space begin to understand I'm never going to be able to bend my health care trend unless I can attack unit costs. Right. If unit cost is 50 percent of my problem, if I ignore 50 per cent of my problem where am I left? While I've got 35 percent of utilization. So, consumer-driven health plans, which you know I'm a big believer in, and that helps address utilization and provide a makes it just depends on what your healthcare condition is. Sometimes it makes sense to go to the most expensive place to get the care done because you've got a really rare disease that needs that treatment. But as an example, you don't need to go to a specialized hospital for a normal delivery of a baby. I think the statistic I just read last year is 30 years ago, 25 years ago, the cost of a delivery was about $4,000, today it's $18,000. Now, I didn't deliver a baby but I have three of them, and I can tell you that it didn't look any different 20 years ago than it does today. Right, because you paid your deductible and you are done. You're done and it doesn't work that way. Yeah. So, I guess go back to your question. The long and short of it is an employer's open their minds to these types of tools when they are taking the risk. Right. When they're taking the risk and they understand that that risk needs to be managed, they start to look for creative ways to make sure that they're still offering a great benefit plan to their employees, but they're really attacking the cost, the inefficiency of the system, and that's really what we're talking about. There's no reason why one service by blue should be covered at a $100 and by red it's a $100 for the exact same thing. It frustrates people, and once they find out they're like wait a minute. That being like you and me getting on an airplane today and we don't know the price of the airplane ticket until we get off the plane. We got off the plane in they say "Mrs Verdi give us $100." "Wow, I went from Boston to Florida for a 100 bucks, that's a great deal." "Mr. Gandhi give us a $1,000." "What's, why I mean I bought my ticket the same day? "Yeah, but you use MasterCard she used her Discover card and so that's why the price difference" Right. That really frustrates people's. It is frustrating. Yeah. So, Mark you described a lot of willingness on the part of employers especially when they're self-insured, and on the hook for every dollar that the health care costs, that are being incurred, but what about employees? How do they respond to changes that the employer is initiating, that may be very different than what they're used to in terms of getting their health care. So, I think the first thing I would say is people don't really want to think about health care until they have to. I mean, I really don't want to think about my health care, I want to wake up tomorrow feel the same way I did today, but then I don't. Then I'm like okay, what do I do. Then I go to see my doctor, and he tells me I have something I really didn't want to hear that I have, and so what's the first thing I do. I go to Dr. Google. I scare the heck out of myself, then I go to my wife and I tell her and then I scare her, and then I scare my children before you all know it, we're in the dining room and we're all scared that I'm going to die. Yeah. This is what people do every day for the most important thing they have, and no one knows where to go. Right. So, I think the first thing to do is to understand what we tried to do is we use a three-part formula. It's first engage you to understand that we need your help. So, the employer has to ask the employee look I can't continue to pay 10, 15, 20 percent more every year, it's not sustainable. I can't continue to raise your deductible, a thousand, two thousand, three thousand every year because you can't afford it. So, the only way we're going to fix this is to work together. So, first is engage, the second is educate, and the third is empower. So, how do we do that? So, the first step is engage you in understanding the problem. Health insurance is expensive because healthcare is expensive. So, we first need you to understand that. So, the choices that you make, right? Another thing we'll share with employees is today's claims are tomorrow's premium. So, you may say, ''Well, I already maxed out my out of pocket for the year and my deductible, so I'm just going to buy this.'' Well, you're going to end up seeing that in your premiums next year. So, let's try something different. How about if we provide you with tools and resources and financial incentives to make a different choice? So, in our construct, what we do is we actually create financial incentives, the employer will say to the employee. Rena if your doctor tells you to go have an MRI, you probably don't know that your doctor may refer you to a facility that's very expensive because it's connected to his or her practice. You could go to a freestanding outpatient facility and pay one-eighth of the cost or 1 tenth of the cost you would have paid to go to this facility where your doctor recommended. So, what we have is a situation or incentive based rules say to the employee the employer will say to the employee. If you call a concierge service, and you tell a nurse I was told that he go get an MRI here's where I was told to go, and the nurse will say, ''Well, how far are you willing on your drive,'' and the employee says, ''25 miles'' and that person says well did you know you could go to this freestanding outpatient facility and it's $500 as opposed to $4,000 over here? Well it must be a special machine over here. No, it's not. It's the same machine administered by a different person with the same level of education is just the contract that was different. All right. ''We'll give you a financial incentive Rina, we're going to actually reduce the cost for you by giving you a financial reward.'' Okay. So, I would really like to go to the $500 place as opposed to the $4,000. How do I do that? ''Well, I'm a nurse, I'm going to call and cancel your appointment over here, I'm going to make your new appointment over here, and I'm going to call you back and confirm that. It's sound like a good idea?'' Like well ''Yeah, that sounds right, you'll do that for me? Sure.'' Your employer is going to give $200 as your health savings account if you make this choice. So, wait as opposed to spending $4,000 my deductible is $2,000, so I wipe out my whole deductible and my HSA. I'm actually going to only spend 500, but I'm really only going to spend 300 because my employer is giving me back 200. Yes Rina, that's correct. Well why wouldn't I do this? I don't know why when you do this. Got you. So, another example, prescription drugs. Many people don't know that chronic medications are produced in two or one English-speaking countries, and by the time they come over here, go through the FDA toll booth, that's what I call it there eight to ten times more expensive than they actually need to be about 75 per cent on average, more expensive. Do you know that there's actually opportunities for people to go to places like the Cayman Islands and get their drugs there? They're injectable drugs at a fraction of the cost. Same drug, just doesn't have the label on it from one of our well-known pharmacies that you might have in this country, and the employer says to the member, ''If you do this, I'll wave your cost-share because instead of me paying as an example Tech for Darrow's or drug used to treat multiple sclerosis the average annual costs in this country is about $70,000. It's produced in, I won't say the name of the country but it's a true English-speaking country over near the UK. It's $17,000 over there. So the employer will say, Rina, if you're willing to get the drug from where it's produced, right so it's the same drug just doesn't have the label on it. And the FDA will allow you as a consumer to import that through mail-order. I can't require as an employer but I can provide an incentive for you. To do that, I'll waive your cost share on that prescription drug. You would? Why? Well, because then you get your medication, you don't pay anything for it and the company pays $17,000 as opposed to the balance of $67,000 which is the difference of the $69,000 versus your $2,000 deductible. But what you're describing sounds almost radical. It is radical. In terms of, I'm trying to temper my enthusiasm, but is the employer also providing resources to the employees on how to import those drugs and do all of that? Because the average consumer is not going to know how to do any of that sort of thing. They're not. They're actually would have no clue and we wouldn't ask them to do that. So the wonderful thing about our healthcare industry, it's a $3.2 trillion industry. There are all kinds of entrepreneurs and every nook and cranny of healthcare and many of them most of them pick their lane inside. So you have specialists on diabetes, you have specialists in medication, you have specialists in orthopedics, whatever it might be. So they develop these tools and resources to help those employees. So there's organizations that actually have contracts with those manufacturers that then facilitate the exchange. It's obviously coordinated with your physician, you don't just go do this on your own. Of course, I am. It's coordinated with the physician there, it's coordinated with a physician where the medication is dispensed. There's all kinds of clinical protocols that go on. So it's not willy-nilly open a catalog and order. It's not how it works. But the employer will provide resources to that employee to actually help them effectuate that strategy I just put. Again, this is more radical. This is more an advanced concept but you're asking me, "How are employers talking to employees and how are they getting to the change behavior?" They're doing it through education and financial incentives and bringing them into the equation saying, "I need you to partner with me to solve this problem. I want you to get the best possible quality healthcare you can get but I'd like you to get it at a more reasonable price." And you can't do that if I don't help you understand first that the system is set up in a way that you don't know what that is up front but I'm going to give you the tools and resources to understand the quality and the price so you can make an informed educated decision. And I'm not asking you Rina to choose the least expensive because I don't know about you, but healthcare, I choose what's most appropriate. If it's more expensive, I'm going to do it because that's what I need. But if I don't have the information and incentives and the help, how can I make that happen? Now you talked about what are we doing inside employers in terms of bringing more medical care to them. There was a big momentum right now being created with what's called direct primary care. There are 99,000 primary care physicians in this country, 2,000 of them have now moved into this space. So what does it mean? Right now a lot of physicians work for big hospitals and they get away from the actual practicing of medicine to really billing and collecting. And seeing they have paneled, patient panels or 4,000 or 5,000 people. So you get to see your doctor for two or three minutes and they're gone, if you get that. Or you get a nurse practitioner or you get a physician's assistant but you're not spending time with the physician. Doctors, and I have a few of them who are friends of mine got into medicine to help people. Many of them are leaving now corporate practice of medicine and now they're going into what's called direct primary care. So what does that mean? They don't accept insurance. So people think that's concierge medicine. Concierge medicine is they accept insurance and they charge you a fee so that you can be prioritized in their patient panel. I'm not talking about that. What I'm talking about is these doctors actually charge a monthly membership fee on average $80 a month. So for $960 a year you have unlimited access to your primary care physician, you can call them on, you can text them, you can call them. They have any lab work or x-rays or like pennies on the dollar because of the way they've set up their practices and they only have 500 to 700 patients in their panel as opposed to 4,000 or 5,000. So what does that mean? I actually call this and I'm dating myself by saying this so your students might laugh, it's a return to Marcus Welby medicine. When we actually used to have a relationship with our physician, the doctor would actually say, "Hey Mark, how are you? How's Debbie? How's grace? And how's Kelly? How's Brooke?" They actually know me as a person as opposed to flying by and not even really having a conversation with me because the structure of the existing environment doesn't allow them to do that. So that's a big thing onsite clinics where you might have a direct primary care physician, the employer is not big enough to have enough patient population to help that primary care doc but they might actually serve three or four organizations in a community. So they'll have office hours, if you will, where they can set up shop and once a week or twice a week be available for people when they come in with lumps and bumps and aches and pains and instead of going to the emergency room, instead of going off campus of the employer, they're actually able to get that care right there on site. Telemedicine or telehealth is another thing, using the Internet and Skype. We provide a service inside our operation that allows you to get three levels of telehealth. We have primary care, we have behavioral health and we have nutrition. So I actually think in the whole area behavioral health, I don't think we do enough in that area and that really frustrates me. But telehealth I think is going to be a very big help in that area. Because the problem with behavioral health is that number one, there's not enough people to help the people and number two, folks don't go because we're afraid of who they might run into in the parking lot in the waiting room. Because there's a stigma associated with, there shouldn't be but there is. So telehealth allows people to actually have access to a behavioral health provider from the comfort of their own home so they can get the care that they need. Again, it's delivered through Skype but it's still care, it's still a conversation that you're able to have with that provider. So I think the time we're living in now is so exciting because of the advent of technology. It's allowing us to bring care to people in a very personal way. Wonderful. So, I'm reading a lot lately about employers doing a couple of things. Again, the average person is not medically knowledgeable and if they're sick, they're not in the frame of mind of wanting to like sit down and do a bunch of research. And so I've been reading a bunch of articles about companies either having in-house medical clinics or in-house or dedicated health coaches and things like that. Are you seeing that sort of thing happening as well? Absolutely. In fact, I see most employers really approaching it from a cultural aspect so when we work with them, we've actually moved away or evolve away from wellness to well-being. Well-being's holistic right? So we're looking at your physical health and well-being, we're looking at your financial well-being, we're looking at your workplace well-being, your community well-being and then your mind and spirit. So it's the whole person. So really attacking it from a cultural perspective in saying to employees, we want to take care of all of you and we want to create a culture that actually embraces taking care of all of you. And it's that notion and that mind shift that actually creates the incentive for everyone in the company to start thinking that way. Because you're right most people really don't want to. And if you look at our country, I think Kaiser issued a survey last year, we have a 14 percent healthcare literacy rate in this country. I think it's probably a half as much. Do you really think about 9 out of 10 people have no idea the language we talk every day. In fact, you have to kind of decode it. And it's been built that way on purpose I think, it's confusing on purpose. Folks always say to me, "Well, Mark you know healthcare is too complicated. We can't solve it." And I'm like "Yeah I don't really agree." And here's why, I'll give you another example. If we can fly a rocket from Cape Canaveral Florida, we can land a rover on the planet of Mars and we can drive a remote control from Cape Canaveral, I think we can solve healthcare. The question is do we really want to? Do the rule-making entities that created our system, the government, big hospitals, Big Pharma and health insurance companies, are they all working together to help us or are they working together to manage the system? So when you said in the beginning of our conversation, "Mark it sounds like a lot of your comments are coming from, how does it impact the consumer?" Because that's where it should start. Healthcare should be about you and me not about the system that it feeds and once we understand that and we accept that then we can start to make real fundamental change by educating people, engaging them and then giving them the tools and resources to make better decisions. Because who doesn't want to do that with healthcare? If I get sick I want to make sure I'm getting the right care, at the right place, at the right time by the right provider. Right. Yeah. So in a minute or less, what would you like to leave our students with? In your thoughts about what can be in the future that will help our society continue to be able to be healthy and afford the healthcare that we want and need. So I would say, let's start with the end-user in mind. You and me. Can we just make healthcare about the people? I really do mean that every day I wake up and I don't think about how can I sell this insurance product and how can I make this money, it's not about that. So telling to your students come at it from a perspective of heart, how do I help people? Make healthcare easier and more affordable because I think that's what we all want. And if we start with, if I were a member of this health plan would I want that? And that's what I asked my team every day. If I were a member of this health plan would I want that? That's a great place to start and then we find out. And then we start going from there saying, okay now that we've asked that question what types of tools and resources and service providers can we plug in to make it about you? Because you're the one paying the premium. It's your health. So I think to encourage your students to pick a lane, you know the great thing, I talk to my kids about this all the time. Two of them want to be in the healthcare space. I tell them find a lane, Healthcare is a three plus trillion dollar industry. There are so many opportunities for you to add value. Find your lane, pick your lane and then don't take the status quo. There's one saying that I have adopted from somebody who I respect greatly his name's Peter Diamandis and he wrote the book Abundance. And he talks about disrupt or be disrupted. So if I can employ your students, don't settle for adjusting existing algorithms, disrupt the current model in a reasonable and intelligent and friendly way, but disrupt it on behalf of the people. Then you're going to find the right answer and you're gonna create a tremendous amount of value for people. Wonderful. Mark, I can't thank you enough. Thank you Rina. I really appreciate the opportunity
