“**"In the current system, users and purchasers of healthcare are left to navigate the siloed and uncoordinated healthcare system on their own. This purpose-built confusion perpetuates the lack of transparency and counts on customers to “screw up” or just “give up.” An example: a patient “thinks” they broke their toe, and heads to the hospital, requiring hours of waiting time to spend thousands of dollars on an ER visit, x-rays, etc. Alternatively, they could have received orders from their virtual primary care doctor over the phone, gotten a $30 x-ray at the freestanding imaging center across the street from the hospital, all with just 30–45 minutes of wait time"**”
- Patient Stewardship
Thank you so much for doing this with us! Can you tell us a story about what brought you to this specific career path?
I’ve had a very diverse career in multiple industries. I’ve owned several European motorcycle dealerships in Scottsdale, Arizona; been in the wine storage and woodworking industry; consumer electronics, medical devices, and health insurance. While most were super fun and interesting, I’ve always wanted more — not only out of my career, but also the ability to contribute to the greater good.
I met Dr. Berg, Co-Founder of Redirect Health, about 3 ½ years ago when I was working for a pharmacy discount card start-up. I was trying to get Dr. Berg to use our discount card to help people save on prescription drugs. The funny thing? He was selling me on the mission of Redirect Health — bringing easy and affordable healthcare to everyone — as much as I was trying to sell him this pharmacy program. I left the meeting so inspired by the story, that I knew instantly that this was the next step in my career, and that I’d join the cause of solving our country’s healthcare crisis.
Can you share the most interesting story that happened to you since you began at Redirect?
Wow, most interesting? I’ll share the most inspiring… about a year ago, around this time, I had the opportunity to conduct an open enrollment meeting at a large dry-cleaning business in Brooklyn, New York. It was tucked in the back of several industrial buildings. I was greeted by the back door of this business by the Operations Director. Upon entering the building, I was met with an unexpected level of unique smells, heat, steam and sounds — like nothing I’ve experienced before. I followed my contact though what seemed like a mile of racks, machines, puffs of steam and clothes to a small break room with a table, some chairs, small fridge and microwave. Now I knew this company had over 100 employees and I wondered how I was going to talk to all of them in this small room maybe 10x10 in size. The Operations Director explained to me how she was going to bring groups of 10–15 people into the room for me to explain the new healthcare plan. I said OK, and the first group of employees filed into the room. I started my presentation on the plan — like I’ve done a thousand times before.
I shared they now had a medical team whose entire mission was to take care of them 24/7. I explained how they will receive preventative care with no-out-of-pocket. I reviewed how we would help make a primary care visit for their kids if they were sick and they would have a $0 copay and no-deductible … and about five minutes into my presentation, a young lady standing near the door directly opposite of me started crying.
I thought to myself, oh man, what did I say, what did I do? I asked this young lady, ‘What’s wrong?’ Through her tears, she explained that she had a 3-year-old boy and a little girl who was a year and a half, and that she had struggled to provide them with the medical care they needed even for just little things like a cold. She said she felt like a bad mom, taking them to the emergency room and exposing them to all the people there. She went on to share her relief that she was going to be able to have the confidence to take care of her kids — she was getting access to medical care that she had never had before.
Being able to help people who have been left out of the system is absolutely the most rewarding part of what I do every day. The best part is I can imagine countless more stories as we continue to help employers, individuals, and families achieve real, meaningful, access to care.
Can you tell our readers a bit about why you are an authority in the healthcare field?
Frankly, I don’t care to think of myself as an authority, but rather as transformational leader in the healthcare industry. A transformational leader inspires others to change expectations, perceptions, and motivations in order to work towards a common goal. Every day, I’m committed to inspiring individuals, advisers, employers and healthcare professionals to think about healthcare in a different way.
What makes Redirect stand out? Can you share a story?
Redirect Health started as a way to help our legacy business — Arrowhead Health Centers — solve a staffing challenge. Arrowhead Health Centers is an Arizona-based multi-disciplinary (primary care, chiropractic, pain management, and physical therapy) clinic business with multiple locations and more than 20 years in the provider space.
About twelve years ago, we were struggling with the rising cost of health insurance for our own organization. As our premiums continued to rise annually, we’d have to raise the deductibles to our employees to counterbalance the rising costs. First $500, then $1000, then $1500 — the impact to our workforce was dramatic. You see 85 percent of the folks that work for us make $15 or less per hour, no different that most businesses in this country. When you make an average wage, a $1500 deductible (or higher) healthcare plan doesn’t work. Our people — even our best people — started to leave to find better benefits elsewhere. They left us to work at the local hospital system, national retailers, large call centers. We couldn’t retain our team and we couldn’t compete with the market to attract new employees. Any business owner knows that your business can’t run if you don’t have the right people. It was grim, and we came very close to closing our doors.
This led us to three important realizations:
- The current structure and system of health insurance didn’t work for us, so we had to remove ourselves from a game we could never win, and start a new one that we could win. We determined that we could use the ERISA laws (a self-funded insurance structure) to design a custom healthcare plan that actually worked FOR our employees.
- We realized we had a unique ability as a healthcare insider to restructure the timing, location, quality, cost and leveraging in different ways to pay for healthcare.
- Our own employees were terrible healthcare consumers. Despite efforts to educate, it was way easier and more cost effective for us to do the work for our employees so they could receive the healthcare that they needed at a fair price.
We built our own plans, our own processes and systems to deliver meaningful access to healthcare for our own employees. It was hard, but it worked! We took our own healthcare spending from 2.2 million dollars a year to just under $550,000. These massive savings allowed us to deliver FREE healthcare not only to our employees but their families as well! By reducing costs and increasing access to affordable healthcare to all of our employees, we turned healthcare into a huge recruiting and retention advantage for our business.
Can you share with our readers about the innovations that Redirect is bringing to and/or what you see in the healthcare industry? How do you envision that this might disrupt the status quo? Which “pain point” is this trying to address?
Redirect Health puts businesses, CEOs, and entrepreneurs in control of their healthcare plans. Most benefits continue to couple healthcare and health insurance. Redirect Health separated healthcare and health insurance so that employers can deliver affordable medical care to everyone in their organization, and give employees the opportunity to purchase the right amount of catastrophic care for themselves and their family. We knew we were onto something big.
I get asked all the time, “David, how do you do this?” It took a lot of hard work and learning. The healthcare system is always evolving and changing. We took the strategy, systems and processes we developed for our own business and built the same end-to-end health plan as solutions for small, medium, and large businesses.
Our “secret sauce” is using data, processes and advanced algorithms developed over the last 12 years to anticipate our members’ needs. We’ve been able to significantly lower costs by reducing in-office visits and/or helping members receive necessary in-office care at the appropriate time and location, and at a fair price rather than overusing high-cost services like hospitals and specialists.
Is Redirect working on any exciting new projects now? How do you think that will help people?
Over the last several years, we’ve been approached by contractors, consultants, individuals and families, even workers in the emerging “gig economy.” They’ve seen the results and benefits of our group employer-based solution, and want to benefit from the same increased access to care and affordable costs. We just introduced a new national health plan solution based on the association model. It delivers easy and truly affordable healthcare to individuals and families who are members of associations, direct selling organizations, realtor groups and the gig economy. We’ve seamlessly integrated first dollar benefits for wellness and medical care with high-dollar catastrophic care at a cost that’s 20–40 percent less than what’s available to these folks today. For people currently left out of the system, they can now afford a plan and afford to USE it. For those who are considering dropping their current healthcare plan because they can’t afford it or use it, Redirect Health is a lifeline.
What are your “5 Things I Wish Someone Told Me Before I Started” and why. (Please share a story or example for each.)
I’m not sure that anyone could have prepared me for this part of my career or the mission I’m on. As I’ve continued along this path, I’ve found comfort, support and camaraderie in others that are mission aligned. We all have similar stories of realization. I’ve been meeting more and more transformational healthcare leaders, so I see the momentum of this movement gaining speed exponentially. To say we’re at a tipping point would be an understatement.
Let’s jump to the main focus of our interview. According to this study cited by Newsweek, the US healthcare system is ranked as the worst among high income nations. This seems shocking. Can you share with us 3–5 reasons why you think the US is ranked so poorly?
1) An underperforming primary care system: Lack of Primary Care Doctors, disorganization and barriers to access for low-cost basic services (high cost, long wait times, plan design/high deductibles, etc). Compounding the problem? Hospital systems have found that funneling customers into high cost medical procedures is a way to monopolize the market and maximize their profits. In fact, many hospital systems have aligned with insurance companies or even started insurance companies to drive costs even higher! Their strategy is to control the market and ensure they capture higher cost services. How? They’re buying up independent physician offices and urgent care facilities — the feeder system to higher cost services. Hospitals and insurance companies like Humana and United Healthcare are actively buying up practices, paying between $170,000 — $300,000 for each physician who joins. The physician must then sign contracts to exclusively refer all of their patients into the hospital owned or insurance company owned facilities — which means higher costs for the patient, and higher profits for the owners.
2) Competing Financial Interest: Fundamentally, our healthcare system has a competing financial interest with the people it serves. We’ve allowed the best interests of doctors, insurance companies, pharmacy benefit managers, advisers, and PPO networks to trump the consumers’ best interests. It’s unsustainable.
A) Brokers and Agents: Over half of the 320 million people in the United States receive healthcare plans through their employer — around 150 million people. Employers are typically represented by a broker or agent whose traditional business model is based on commissions from the insurance carriers and plans they recommend. So if you’re purchasing health insurance from a broker earning commission, rising premiums reward THEM. A bad broker or agent can put an employer into a death spiral. A good adviser can deliver exceptional value by turning a healthcare plan (often the 2nd largest line item on a P&L) into a HUGE business advantage.
B) Providers: This is the supply side of the healthcare business, and it’s typically a fee-for-service business model — the more you come in, the more a provider makes. Doctors won’t fill a prescription over the phone. Instead, they make you come in for an office visit. You go for your yearly physical, your doctor orders labs, then has you come back in to discuss lab results even when there is nothing to report. Every time you visit with that provider, he or she is able to extract more money, even if those services could be delivered via phone, text or email. Providers are good people and in most cases, they’ve dedicated their lives to serving others. However, the fee-for-service business model is not aligned to the best interests of the people they’re meant to serve.
C) Insurance Companies! The Affordable Care Act created a huge competing interest between the users and purchasers of healthcare (customers) and suppliers and distributors. It’s called the medical loss ratio, or MLR. It requires insurance companies to spend between 80–85 percent of premiums collected through a health insurance plan to actually be spent on medical services. The remainder is allocated for operations and profit. In order to make more profit an insurance company must raise rates, and in turn, spend more on healthcare. An example: if this year’s rate was $1,000 a month for a fully insured ACA compliant major medical plan, $850 must go towards the cost of healthcare, and $150 towards operations and profit. If an insurance company wants to earn more money next year, they raise the premium to $1,200. They must spend $1,020 on healthcare, retaining $180 for operation and profit.
You are a “healthcare insider”. If you had the power to make a change, can you share 5 changes that need to be made to improve the overall US healthcare system? Please share a story or example for each.
Today, we know how to fix the system. The challenge is scaling those fixes. I belong to a community of mission-aligned healthcare leaders called The Health Rosetta. It identifies seven key components focused on the employer market. I’m going to focus on three that apply to both individuals and employers.
Transparent Open Networks — In the current system, pricing for services and provider quality is completely opaque. People see providers without any knowledge as to what the costs are, or how the provider ranks for quality.
The Fix: Fair, fully transparent pricing to employers and individuals at high quality centers who readily accept quality reporting systems. Providers can set a price that works for them, while avoiding claims, coding errors, and collection hassles associated with the current insurance-based system.
Patient Stewardship — In the current system, users and purchasers of healthcare are left to navigate the siloed and uncoordinated healthcare system on their own. This purpose-built confusion perpetuates the lack of transparency and counts on customers to “screw up” or just “give up.” An example: a patient “thinks” they broke their toe, and heads to the hospital, requiring hours of waiting time to spend thousands of dollars on an ER visit, x-rays, etc. Alternatively, they could have received orders from their virtual primary care doctor over the phone, gotten a $30 x-ray at the freestanding imaging center across the street from the hospital, all with just 30–45 minutes of wait time.
The fix: Users and purchasers of healthcare must have the tools to navigate or an active navigator like Redirect Health to effectively move through the healthcare system. Customers should have complete understanding of their benefits, quality of providers, choice of providers, the associated costs, and potential risks and outcomes.
Value Based Primary Care — In the current system, the flawed business model has turned primary care into a loss leader, like placing milk in the back of the grocery store (low margin items designed to draw people into high margin items). Turning primary care into a loss leader, created a shortage of supply of primary care doctors, leading to long wait times to see a provider, and short appointments because doctors must see as many patients in a day as possible. Often customers don’t seek care at all, so small medical issues turn into big ones.
The fix: Eliminate all barriers to primary care (think time, money and transportation), like initial access via phone or text, same day / next day appointments for acute care. Add capabilities for proactive care management and coordination of those with chronic disease (diabetes, hypertension, etc). Change the business model from fee-for-service to a membership-based model, removing the financial pressure from the primary care system and allowing doctors to spend the appropriate amount of time with patients. Redirect Health delivers this solution to more than 900 employers nationwide and thousands of members.
Thank you! It’s great to suggest changes, but what specific steps would need to be taken to implement your ideas? What can individuals, corporations, communities and leaders do to help?
To break free of the status quo system, individuals, corporations, communities and leaders must engage with suppliers (advisers, insurance companies, medical cost shares, administrators and providers) whose business model aligns with theirs. Demand transparency! Don’t be afraid to ask your current healthcare suppliers, “if I spend less on healthcare how does that affect how you get paid?” If they can’t answer that question don’t walk away, RUN!
Research! Be open to the multitude of different solutions that innovators are bringing to the market today. If you’re working with an adviser, demand to see ALL options. While traditional insurance options might be a good choice for some, there’s a new breed of healthcare solutions that deliver high-value at a fraction of the cost compared to the status quo.
An emerging organization that we’ve partnered with is Sedera, a medical cost-share community that shares high-dollar healthcare needs of their members. While medical-cost sharing has been around for more than 30 years — mainly in ministry-based organizations — Sedera has taken this solution mainstream. We’re seeing tremendous success by delivering an end-to-end solution to individuals and families as well as employers and their employees.
Treat healthcare just like any other service or product you are buying. Research. Look at all of your options. Demand transparency. Ask for a cash discount! People invest more time and due diligence into the purchase of a big-screen TV than a healthcare plan or health service.
Specifically to CEOs and business leaders. Healthcare is not a box that you check once a year and move on. For many businesses it’s the 2nd largest line item on P&L statements. Your strategy should be long-term and focused on (3) things.
1. Reducing costs. 2. Increasing meaningful access to medical care for EVERYONE from the $10/hr team members to highly compensated management. 3. Use real, meaningful benefits to attract and retain the best employees for your business.
What are your favorite books, podcasts, or resources that inspire you to be a better healthcare pro? Can you explain why you like them?
Dave Chase, co-founder of The Health Rosetta, has written two books — The CEO’s Guide to Restoring the American Dream and The Opioid Crisis Wake-Up Call — that really capture the problems and the solutions for fixing our healthcare system.
Redirect Health Co-Founder, President David Berg and CEO Paul Johnson (my bosses) have several podcasts and a fantastic book called The Business Owner’s Guide to Fighting Healthcare.
Dr. Zubin Damania, “ZDogg MD” gives fantastic insight to the provider side of healthcare and has founded a movement Health 3.0. His videos are not only hilarious, they expose the challenges in the status quo healthcare system.
I also follow the social media feeds of several transformational healthcare leaders that are scaling the fixes to healthcare: David Contorno, Dutch Rojas, James Millaway, Al Lewis and Marilyn Bartlett.
How can our readers follow you on social media?
Thank you so much for these insights! This was so inspiring!