tv American Enterprise Institute Health Care Discussion CSPAN November 26, 2018 9:49am-12:11pm EST
mrs. pink in florida tweeted student cam 2019. we are asking middle and high school students to produce a five to six minute documentary asking the question what does it mean to be american? we are awarding $100,000 in total cash prizes including a grand prize of $5,000. the deadline for entries is january 20. for more information go to studentcam.org. the american enterprise institute hosted a panel discussion in washington, d.c. about health care policy. doctors and health insurance ceos talked about the structure of the u.s. health care system and discussed ways to improve service and treatment. this is two hours and 20 minutes.
good morning, everyone. good morning. let's go ahead and get started. welcome to the american enterprise institute and greetings as well to those who are watching the event online. my name is jim capretta. i'm a resident fellow here at aei. my colleague joe antos and i are pleased to host a distinguished group of speakers today on the topic of positive disruption in health care, what will it take. i will introduce each of them in just a few moments, and they'll each take a turn up here at the podium making some remarks. our purpose is to explore the ability of the private sector to transform the health sector for the better.
there's certainly plenty of room for improvement. while medical care in the u.s. is often excellent and world class, it is all too often wasteful and of low quality. credible estimates put the amount of waste at about 1/3 of all spending. medical errors and mistakes are rampant as has been documented in numerous studies, and fraud is prevalent. from a consumer's perspective, and this is a main focus of our discussion this morning, the system is essentially maddening. insurance is opaque and so complex that very few people really understand what gets covered and what doesn't. there's no price transparency for services and very few people can make sense of their bills. the paperwork is endless and redundant and seems designed, really, to legitimize the massive administrative bureaucracy that has been built up around the system and drives up costs for everyone.
most patients like their doctors, but the system's fragmentation and lack of coordination is often harmful to their care. too many patients get duplicative tests and the wrong diagnosis. because of poor communication among providers. the fee for service encourages too many procedures that are unnecessary and not enough low-cost interventions that could keep people healthy. and the system is notoriously difficult to change. in large part because the regulatory structure protects incumbents and makes it difficult for new entrants to get traction. the information technology revolution has transformed american industry after industry and not just in america but globally. but not really the health sector. which operates largely as it did two and three decades ago. it remains common, even after billions of dollars in
investments in information technology and a host of platforms, for patients to have no idea and no accessible record of exactly what services they received from their providers. most patients have no way of double checking key information such as immunization records. they have to ask their physicians for paper copies of critical medical information. the lack of price transparency leads to waste. neither those providing the services nor those consuming them have a firm grasp of the prices they are actually paying for the services they receive. consumers regularly overpay for their care because they have no easy way of knowing that they could get something less expensive from an alternative source. in short, despite all the good that is done for many patients, the health system, such as it is, because it really isn't a system, is suffering and has been for many decades from a basic level of dysfunction, and anyone who's a student of it and
has observed it and worked in it comes to that conclusion pretty quickly. it underperforms in all reasonable expectations for a system that is so important to the well being of the country, and it, you know, the bottom line is it produces far too little of value for what is spent on it. so, it needs to do much better. the basic question has always been, how? the government is trying to help with an agenda that is focused on producing higher value care, mainly through changes in payment incentives for providers. some of these changes have real potential, but the jury remains out on whether the overall effort will bear some real fruit. but what about the private sector and other sectors of our economy, entrepreneurs look at waste and inefficiency and see a major opportunity. they see the possibility of moving into a market, doing it better, delivering better value, and they know if they do so, they will attract consumers and
become profitable as a result. that's exactly what is needed in health care if we can get it. with the right incentives, can entrepreneurs with good ideas also heal the health system on their own and without the need for further change in public policy? that's one of the main questions i think we want to try to explore. and we need to do so with our eyes wide open. one can go back in time to the 1980s and 1990s and there were conferences not so different from the one we are holding today, and at those conferences, there was a great deal of optimism that managed care or consumer driven health plans or some other version of more or less the same themes was on the cusp of really bringing about a revolution in american health care. and of course, nothing really has happened yet to transform the basic dynamics of a dominant
fee for service insurance system paid for through third party insurance where the consumers are very uninvolved, providers have great power, and the system remains inefficient. that was the case in the '80s and '90s and sad to say, basically still true today, despite some signs of progress. so, we need to be properly wary of just how hard this task is. still, there are many promising things happening, and we want to explore what are the possibilities and obstacles with some of the people who are testing new ways of providing coverage and care to patients. each of our speakers is involved in the private sector in some different ways to bring about better value to patients. we are grateful to them for their willingness to come and share what they are seeing on the front lines, so to speak, of the private sector efforts to deliver better value to patients. let me now introduce each of them briefly.
after doing so, each of them will come up to the podium and share their individual experiences. after we've had a chance to hear from all of them, my colleague, joe antos, will help moderate a continued discussion amongst them and will conclude the day or the morning with some time for audience questions. so, let's get started. let me talk a little bit about each of them and then we'll have the first speaker come up. our first speaker is mario schlosser, the ceo and cofounder of oscar health, a health insurance start-up that uses technology, design and data to humanize and simplify health care. previously he cofounded the largest social gaming company in latin america where he led the company's analytics and game design practices. he has great experience in a number of different venues. he holds a degree in computer science with highest distinction from the university of hanover in germany and an mba from harvard business school. our second speaker is hill ferguson, the ceo of doctor on
demand. he has nearly two decades of experience in mobile technology. mr. hill led companies at all stages of growth from being a founder to being senior executive at paypal before joining doctor on demand, mr. ferguson helped transform paypal into a more customer focused technology company and eventually serving as the company's chief product officer. he's got a lot of experience in the tech world in a number of different venues. he holds a b.a. and an mba from vanderbilt university. dr. clint flanagan is a board certified family medicine practitioner with over 14 years experience as an emergency room physician and certified -- and maintains certificates in advanced cardiac and advanced trauma life support. he graduated from the university of nebraska medical center and then completed his residency at st. mary's family medicine program in grand junction, colorado.
he is the founding member and currently servining as the steering committee to the district primary care coalition in washington and is a leading advocate for district primary care across the board. he is here representing his company, which is nexterra primary care. hassan azar serves as the senior vice president of total rewards at u.s. foods. he is responsible for the strategic direction and management of u.s. foods employee compensation and benefit programs and employee service center, human resources information systems, executive compensation and stock programs, and he has long experience in the employee benefit realm, managing that portfolio for a number of different companies over the years. he has been a director of the national business group on health since june 2017. he has an mba and a master's in health services administration, a b.a. from the university of michigan. he also has a law degree from the university of detroit mercy
school of law. finally, our last speaker will be bob kocher. he serves on the board of devoted health, verta health, aladade health and premier blue cross. he's a physician and he's an adjunct professor at stanford university school of medicine and senior fellow and advisory board member at the university of southern california center for health policy and economics. i've gotten to know bob. we served together on an advisory board together, and he's got terrific knowledge from his time working in the obama administration on health policy so he has both direct governmental experience and now, for many years, direct experience as an observer and an investor in various initiatives in the private sector. so, with that, let's turn it over to mario and get the conversation started. thank you. >> thank you. okay. it's great to be here.
thank you for the invitation, jim, and to the aei. i'm the cofounder and ceo of oscar insurance. about six years ago, we started the company and at the time, i had a computer science background, i was going through pregnancy with our first kids, my wife and i, and just all this complexity and the costliness of health care really hit us and what otherwise should be a positive experience, delivering a baby, and i really thought that the insurance company in particular was fairly useless in helping me navigate the complexities of the health care system, even though it sits at an interesting point in the system. it should see all the data running through the system. it should have its hand on the dollars flowing throughout the system and yet it didn't seem very consumer oriented so we thought if we could start an insurance company that becomes an entry point to the health care system for our members, we could have a fairly good leverage on the system overall, and i brought a few -- here we go. brought a few slides to explain that a little bit. the font's a little off. please excuse that.
at a high level, we thought we have to become really a direct to consumer health insurer where members will join us from the very beginning, want our help in navigating health care. that's -- we got to earn that trust, of course, but that's the basic premise. we have a lot more, if you will, influence over whether or not you have a good experience navigating health care if you come to us with issues you have in the system. for that, we need to be a full stack company. again, my background is computer science. i thought about this originally as, you know, you build a software project, you get a bunch of apis, some cloud vendors, put them together. that's not the way health care really works. there isn't much in the way of good functioning technology pipes between various vendors and various actors in the system and i'll talk a bit about the value of health care information and how the players don't really seem to value it that much a little bit later on. so first that means we build everything in-house from claims to underwriting to even some of
the care delivery services as well. and what that should get us is higher engagement, members actually coming to us when they have issues, and enabling that bit of technology to then become the entry point to higher value health care at a high level. it seems to be working quite well. we have 250,000 members now. it's about $1.2 billion in revenue in 2018, open enrollment is opening again for next year, so we'll hopefully grow quite a bit there again. we generally focus on the individual markets, aka obamacare markets, and then also the small employer markets, and we're going to go into the medicare advantage markets in 2020. those markets share one characteristic, which is that they are the closest to being individualized. individuals have more choice in the kind of plans they want to buy, the benefits they want to buy and the networks they want to buy into and we feel that's very important and i'll talk about why that's the case. you know, i actually very much
believe in the fact that there ought to be a consumer-driven market in health care, and i do think that as the insurance company, we have a very good position to kind of make that happen or enable that. i think that right now, we've got the worst of both worlds in the health care system in the u.s. we've got sort of like a thing that is sort of a free market. everybody can put, you know, a shingle on their door and call themselves an emergency room in certain states and get the reimbursement for that, but we don't really have any of the market forces at force, let's say, quality, neither the transparency nor the ability to choose on the part of the members and issues like that. i brought a few data points that we see internally that i think highlight this. the discussion starter is i don't have the perfect system in my mind that we should design, but there are starters for the discussion we're going to have for you later on. i want to remind you first of all, health care pricing is insane. this is a good example for that. this shows what happens when members who have an abdominal pain episode, we take all of our claims and drugs and bundle them into episodes of care from
beginning of an episode to the end of an episode, when you're healthy again, if you will, and we subselect those who are experienced by members who otherwise are healthy. and we get internal classifications that help us figure this out and you see here what happens when a member with an abdominal pain episode goes to a primary care physician or goes to the emergency room. the reimbursement rates are way higher in emergency rooms. the probability of getting something like a c.a.t. scan is way higher. there's no pcp in any one of the abdominal pain episodes we've had that has thought i got to get you a c.a.t. scan but about 40% of that happens when you go to the e.r. so right there, that is not something members typically will know, necessarily. that's, i think, becoming more of a talking point, but that can still happen to you very, very easily. you think you're covered and you suddenly get a big bill, particularly with a deductible in the plan as well. and that is the case, because there aren't really any market forces on costs and on quality
in my view. and again, this is a picture from inside of oscar. so this is our new york physician network and this is actually all the primary care physicians, including ob/gyns and pediatricians as well. what we ranked them here is based on kind of the x here, doctors with better cost outcomes to the left, so more efficiency and lower cost, obviously. doctors with worse cost outcomes to the right. and this is, again, on an all episode basis so anything that this physician would recommend you do within an episode of care, including referrals to the e.r. and hospitals, things like that. you can see there's a wide spectrum. if you go all the way to the left there and compare this all the way to the right, there's a factor of three or four in the cost a physician will drive in terms of everything that will happen all in. on the other axis here -- so each doctor is a physician, by the way. on the other axis here is one version of outcomes. we can quibble about definition of clinical outcomes or outcomes generally.
this is one we picked in this case, which is just do they make people happy, these doctors. and we get that by asking them about a couple questions about the care that they received that isn't highly correlated with clinical outcomes, frankly, but the picture looks similar when you run versions of clinical outcomes as well. and what you see here is that there's no correlation between those two things and that's a fairly well-established fact in health care. it's just interesting for us to reproduce this on a physician by physician basis. what we can do as a result is say, let's go to the doctors in the top left and put them into a more integrated partner program. we call this the partner program or the top doctor program. we put them in a mobile app on our website and among our customer service team at a high level of ranking. we get -- we try to connect to their electronic medical records system so we can schedule directly into their practice management systems and those blue dots here will generally go and see about four or five oscar patients than a doctor who's not
in the top doctor program. so we can steer some of that care. for first-time physician visits of all oscar members, about 40% of those we can kind of show when we get the claim, where those members found the doctor through one of the oscar tools, whether it's the app, the website, or talking to our teams so we can keep that in the family and make sure you go to the right doctor there. so that's -- why is there no market for us on this? in my view, it has a lot to do with the fact that most of the players in the health care system have had incentive to build broad networks. every hospital and every physician basically has to be in. if you're an employer in new york city with 10,000 employees, there will be every doctor in the city will be seen by one of your employees. it's hard to then go in and say, all of you 10,000 people now only get access to half of the doctors in the city, even though that half could very well be in that top left quadrant there and you don't need the other half. and so that's a difficult thing to build, again, if you sort of
like pool too many members from a decision-making point of view and i think one version of the health care system in the future would have to be to give individuals more choice as to what kind of networks they want to buy, what kind of all-in health care they really want to buy and pay for. and i talked about this a little bit here. this just tracks, over time, what is the consequence of the fact that we are able to take 40% of members who are looking for a physician and recommending that right physician to them. you see that both the average cost driven by the doctor or members in the picking goes down by about 11%, and the average happiness member experience so goes up. it's a weird industry if you can get both lower cost and better outcomes at the same time. again, shows the absence of market forces in the system. a word of caution, i think, as well, is that i do think that the existing tools that we have at our disposal right now are a little too blunt.
in the past ten years alone, i think about 51% of american workers who get employer coverage even have seen the deductibles go from, you know, close to zero to now over $1,000, over 50% of people in the u.s. have deductibles over $1,000, and that is, to some degree, a good idea. to some degree, it limits or it sort of, like, morphs utilization. not always useful ways. this is now, again, a slice of our membership base and the utilization in 2017 and 2018. we're looking here at 40 to 50-odd members who are categorized by us as healthy, meaning we haven't seen any lab tests or self-reported data or drugs that indicate they have a chronic condition, anything like that, and they have a risk score between 0.2 and 0.4. that's the government definition for how sick members are, how many chronic conditions they have and things like that. so they are relatively healthy members. you see two different
utilization factors here. one is in the blue bar here, for members with low deductibles on the left, members with high deductibles on the right, how much telemedicine they're using on a pmpm basis, per member per month. ignore the y axis. compare the height of the blue bars there. if you have a low deductible or no deductible, in the left part of the chart there, you know, you have -- don't have that much sort of encouragement to use telemedicine, perhaps, even though it is a convenient way to solve many issues, you may be tempted to go to an urgent care clinic around the corner. you may have a low co-pay there and just walk in there and get your care there. if your deductible goes up and you will face more out of pocket costs as a result, you will start looking for lower cost venues of care and by the way, you'll also start liking it. telemedicine will, i'm sure, with the next speaker well, is obviously fantastic solution for many, many issues in the health care system so that's a good thing overall, that people are
actively seeking out if the incentives change, different venues of care. the gray bar, though, i think shows the flip side of that. that is any kind of minor surgery, and for all these members who are pretty comparable but picked two different types of plans with deductibles, that also moves the utilization round on minor surgery. there is some indication that some members sort of hold off from having minor surgeries that they maybe should be having just because they now fear the cost impact from being under deductible. and again, that to me means we have to think harder, i think, about, like, the blunt tool of deductibles and see what kind of pre-deductible benefits can we load into plans, should there be sort of like until a thousand dollars, you're covered, above that, you then pay out of the pocket and then you're covered again, something like that. those are all things we are thinking about experimenting with, but that run at times into regulatory issues. so, we don't have, you know, complete control of a plan design. again, i think that's generally
a reasonable thing. we don't want everybody to run all over across the spectrum of plan design possibilities. but some more freedom is needed. and final point, i think it's a very subtle thing, but i came -- i sort of thought about this the other day. and it's -- reflects a notion that i think is happening in the markets right now. the health care markets don't really seem to value the value of information. on the left side there, you see the average market order execution speed in seconds of the new york stock exchange. so if you go ten years back or 15 years back or so, 20, 30 seconds to execute on order. and that then came down over the next 15 years and then around 2008, 2009, you start seeing the advent of high frequency trading and since then, it's come down even more. and sort of what happens there is on the one hand, of course, exchanges in marketplace are competing to get you the quickest execution speeds. you know, that's like a nice thing to execute your order ten
seconds early or whatever else, but the more important thing that's happening and the market players who drive that change realize there's value to the information you get by being first, by seeing what's happening in the markets so they want to get the information earlier and therefore, they built the systems and put the incentives in to get the information earlier. you're paying for market execution flow and things like that. and so on the right side is the average time that it takes insurance companies to pay claims between the time when they get the claim to when they pay it. about 14 days or so. from all i can tell, it hasn't changed very much in the past couple of years. this is only the last 18 months here, but still, it's about that level. and the gray bar is -- the gray chart is us. we've been building a bunch of internal software that enables us to pay claims more quickly and the biggest motivation for that is that we want to make the hospitals and physicians happier by paying faster but we want to get the information faster. we want to see the claims early on because that gives us a
better idea of who is getting sick, who's in the process of going into a potentially chronic disease, and where do we have to engage earlier on. again, the signals we get from telemedicine are a fantastic example for that. we flag telemedicine phone calls if someone's at risk of going to the e.r. or urgent care and follow up with the nurse giving you a phone call because we think we can move some of that care around. and again, the fact that in finance, marketplace have realized the value of information, these come down but in health care, it really hasn't, to me means that most players in the health care system don't have a financial incentive to value more clinical information to be distributed more quickly to be able to react to it and do something with it. and it goes back to the fact that the existing system we have isn't particularly competitive from a cost and quality perspective. there isn't enough sort of, like, forces -- competitive forces on the supply chain, in
particular, because individuals can't really put -- exert that pressure on the supply chain. i can't quit my insurance company if i'm an employer coverage. i can't, you know, even oftentimes quit my hospital if they've sort of hold my records captive. i can't quit my, i don't know, pbm, for example, the ones that negotiate my drug prices and as a result, that competitive pressure really is lacking and i think we got to get more of that into the system. and so i do finally think that, you know, this is another chart here. what happens when the final -- so, in the seven days leading up to an e.r. visits, we at oscar see about 80% of members have interaction with us. i'm running out of time. so, final point is that i do think we have been chipping away at this at a good clip over the past couple of years at oscar. you should sign up as well if you want to. open enrollment is launching again now.
the importance is, i do think, that one way i think about the system is if you were able to allow employers to take the pretax dollars that they give to the employees and give the employees more choice and what they want to buy, that could unleash a whole bunch of interesting innovation across the system and i'm looking forward to the discussion coming out of this. thank you. >> thank you, mario. i feel a little bit like luke skywalker here in "star wars" iii getting to the podium. good morning, everyone. thank you, jim, and aei for inviting me here to speak, and welcome all of you here. i'm looking forward to giving you a brief introduction to doctor on demand. i can pull up my slides here. so how many of you remember this item. until recently, this was the best product the financial services industry could serve up
to consumers for sending money to anyone. we all know how this change happened. they were forced by innovation in the market, small company 15 years ago called paypal, came out with a better way to transfer money digitally to anybody anywhere in the world. more recently, more industries have come in and offered consumers better choices and better ways to spend their time and money when they travel. one of the examples that i love is more in the transportation industry. companies like uber and lyft have taken this idea of a very scarce resource, a personal driver, a chauffeur that was once relegated to the rich and fancy in the world and made it available to anyone. health care is really no different. you can look at these other industries and say, yeah, but health care is different. well, these are regulated industries, entrenched
incumbents, lots of laws to protect and keep people in power. we're all familiar with this scene today, the waiting room filled with sick people and many germs. companies like doctor on demand are coming in and trying to lead with a consumer-driven mindset to make this experience delightful. i believe that a doctor visit should be delightful and it can be delightful. so i wanted to share with you a little bit about why we think this is an important problem to solve. you all recognize this as the triple health care. until recently you could have two but not three. now with technology you can have all three together and don't have to trade anything off. it's important because it comes at a time when we're at a record level of shortages for physicians. we estimate that in 10, 20 years there could be a shortage up to 100,000 physicians in the u.s. right now anywhere from 20,000 to 30,000 depending on how you count it. that's a massive problem and
it's just getting worse. you see that show up in a few things. the first is the average time to see a primary care physician in this country is 18 days. the cost at around $150. banker's hours, 9:00 to 5:00 monday through friday. it's no surprise that only 30% of americans who are adults have a primary care physician. why do you need one? a more recent study came out last week from the kaiser foundation that found that half of all millenials to have a primary care doctor, so the trending is definitely moving away from this model. and what we do is we come in and try to solve this on all dimensions. so we take an 18-day wait time and reduce it to four minutes. we make our service open to all with or without a primary care physician relationship, with or without insurance, reducing the cost to $50 and then making it open all night, 24/7/365, christmas day, weekends, holidays, whenever. you can see a doctor in four
minutes on our service. if you haven't used it before, it's quite simple. you can download our app, go to our website. you can go through and look at any one of our doctors, look at their background. we're a national employed practice of providers. most seek to do an on-demand visit. sometimes you'll wanting to go and schedule an appointment with a provider that you like, maybe a female provider or psychologist. we'll run a real-time eligibility check on your insurance coverage. offer you a price for the co-pay that is the final price. it's not just an estimate and you go straight into having your virtual doctor consultation. our doctors have on average 15 years clinical experience, all board certified. they're primarily primary care doctors but we also employ psychiatrists and psychologists for our mental health practice.
more recently in the last few years, we have been getting a lot of traction in the enterprise, which means we have been selling into large self-insured employers and health plans who now offer doctor on demand as a covered benefit to about 31 million americans. this has driven a lot of growth in our business. we have always had a very strong attention to quality, so there have been previous studies that have come out on telemedicine saying the quality is not as good, doctors overprescribe, it's additive to the cost of care. last year we got results from a national health plan who had been monitoring our service and did a study two years running, looked at data from patients that -- cases that we treated and compared it to cases that were treated in office in their physician network. what they founding w was quite surprising to them and less so than us. our practice prescribes antibiotics at 2 percentage points lower than in-office network and the most important thing they found was that the
14-day readmission rate, come measures the rate people go back into the health care system after having seen a doctor was on par with their in-office physician network. we all knew costs would be lower. the blended cost average of $250 per incident, that's weighted across emergency room, urgent care and in-office visit compared to our care. so that's the opportunity we have with telemedicine specifically the way we're practicing it. just quickly, we're a 5-year-old company. we launched in 2014 with a cash pay service for urgent care. then pushing into the enterprise, making our service compatible with health insurance plans as well as self-insured employers, doing things like hl-7 instategrationsintegration eligibility checks. a couple of years ago we opened our mental health practice. we think this is an opportunity
part -- important part of the opportunity in front of us, enabling our physicians to share information and treat co-morb co-morbiditie co-morbidities. last year we spent most of our time and energy laying foundations to treat chronically ill patients. we now allow all of our doctors to order lab tests so we can treat acute conditions as well as the chronics. this year we've been growing really, really quickly. we surpassed a million video visits in the first half of this year in just under four and a half years of being live and look forward to the panel discussion. thank you. hello, my name is dr. clint flanagan. i've been a family physician and
emergency medicine physician for 12 years now. thanks to the direct primary care coalition for the opportunity as well. a little on our story, on the uber story as well as airbnb, we're kind of netflix. patients pay a fixed monthly fee and/or their employer and we take care of them. in-office visits, face-to-face visits, virtual visits. that model is called direct primary care. so maybe just a show of hands. how many in the crowd have heard of direct primary care before i just said it? that is awesome. years ago it was zero. so we started down this pathway in colorado. as a family medicine doctor and also as an e.r. doctor many years ago, the differences between those two malodels of health care are black and white. in family medicine we want
relationships, we want to build trust and take care of our patients for years. in e.r., patients should not be our friends. we shouldn't be seeing you again and again. if we are, that's a big problem. as you see us as an e.r. doc, we're real expensive. as a family medicine doc, we can be very affordable. your primary care doctor, internist, pediatrician, et cetera, can take care of most things for patients. 80% to 90% of health care needs can be taken care of by your primary care physician. how many of you in the room have a primary care physician? how many can e-mail your doctor and have a good response same day? a couple. i know one of them that raised their hand has a direct primary care doctor. so we're paying all this money,
right? yet we don't have the airbnb, the netflix, the uber capabilities in health care to see our primary care physician. that's a catastrophe. for the amount of money, we should have that, we should have that level of service. the challenge or one of the many challenges is the malodel that' set us which is this insurance card model. we hope that's going to get us entry into the gym. the problem is it can get you entry, but as hill pointed out, that entry may take 30 days to see your primary care doctor. so what do you do? you go to urgent care or an emergency room. we shouldn't have urgent cares. the reason we do is because it's hard to see your primary care doctor. we should have emergency rooms but they should be for an emergency. the challenge is when somebody comes to the e.r. and sees me for an earache, it's going to cost $1,000 or something and
when you see your primary care doctor that cost can be zero for that transaction. what has happened over time is patients have to use this card to get in to see their primary care provider, that insurance card. that is the equivalent of you taking your auto insurance card and filling your car up with gas or taking your auto insurance card and washing your car or rotating your tires or doing maintenance and prevention on your car. insurance is not made for that. insurance is made for when a house burns down. insurance is made for when your car gets totaled. insurance is made for when you need a stent in your heart or you need a total knee. using insurance to pay for low cost primary care doesn't make a lot of sense. in that model, patients are unfortunately kind of seen as transactions. every time your primary care doc, pediatrician, family medicine doctor see the patient, they bill for that. as they bill for that, they
realize that, gosh, in order to bring revenue into the door, i need to see more patients. so most family medicine doctors, primary care physicians, can see 25 to 35 patients per day. the average visit time is 7 to 10 minutes. it's one thing if you're diagnose strep but what if you're dealing with diabetes and hyperthyroidism all in one visit. so the existing model which they didn't tell us in med school or residency, we studied for many, many years and came out. it took me all of about, unfortunately, five years after residency to figure out that this business model is really, really, really challenging for primary care. so we said why don't we do this. let's go to our patients, let's go to employers and let's take care of them. provide primary care and urgent care services and do so in a way
where we're not going to use the insurance card for that, we're going to ask our patients or ask the employer to pay us directly. so we started down that pathway. at the time we didn't know what direct primary care was. we just called it monthly membership medicine. and then we found a few others in the country that were calling themselves direct primary care, like dr. garrison bliss out in seattle. and along that pathway, you know, we kind of banded together and one vehicle for that was the direct primary care coalition that we started exchanging ideas of what we were each doing in our own zip codes. our mission very early on at nexterra health care, and it was the next era, that was my wife we could thank for that because we weren't happy with the existing era so we wanted something different. initially we thought revolutionary health care and there were some details which i'll tell you later. so we started down the pathway and we had a focus and mission
to help our patients get to optimal health. help our patients get to optimal health. we wanted to make sure they had a meaningful experience. so we didn't want to be just sick care doctors. that's a lot of what our health care system is these days, right? if you get sick, you go in. how many of you are excited to go to the doctor? how many are looking forward to that when you wake up? so we wanted a bit of a paradigm shift there where a big part of our focus is what can we do to get you healthier, what can we do to be proactive and preventative and make it be a meaningful experience, and what can we do on that front in an affordable way. so our average per member per month that our members pay us for their gym membership is around $60 to $70 per member per month. per a recent article in sherm, an employer is paying around $15,000 a year per employee for coverage, right?
so for a small percentage of that amount, you can actually have your primary care doctor. that primary care doctor can be essentially on speed dial with hipaa secure apps that we have and you start to have a relationship. most americans don't have that right now and we realized that in 2009. we said, hey, we need to have something that allows for primary care physicians to maintain their practice and continue to own it. in our opinion and maybe my opinion particularly, there's hardly anything better than small business in america. what i saw at the time was a lot of private primary care practices closing or selling out to large systems. because they couldn't afford to keep the doors open and pay their nurses and buy electronic medical records and do all the things that the models at that time said we should be doing. so owning my own private primary care practice, i said we just need to have a different business model to help support that. hill brought up the triple aim,
which we completely agree with. how can we take care of people, do it in an affordable manner and move that ball forward. so how can we do all of what hill mentioned in that slide put out by the institute, ihi, institute of health, i think, but also have a model that doctors want to work in. let's not forget that. we've been designing a lot over the years with a lot of acronyms and in the end doctors don't want to work in these things and get burned out. if they're burned out, they're not going to be doctor they could be. so the direct primary care movement was created by physicians for patients, first and foremost, so we can have that trust and relationship. it was also created by us because we saw problems we had hoped that the affordable care act would create some solutions. i think there were some solutions created but what also happened is you saw these premiums just continuing to go up, right?
which kind of indirectly said maybe i should only use my insurance for what it should be used, for cancer, heart attacks, strokes, but gosh, i can't use that insurance for my primary care doc because my insurance only gives me one preventative visit a year and i'm out of pocket until i meet by $5,000 or $10,000 deductible. indirectly the aca helped us in the direct primary care movement and got people to really be advocates of how they're spending their dollar and got employers thinking about that and if anything is moving the dial, it's employers in this country. they're moving the dial on innovation and health care. so our target was our patients, families and employer groups. so we started with around two or three clinics in the boulder, colorado, longmont area, and we have a little over 40 clinics across the country. about 90% to 92% of our membership is employers. we take care of electricians, plumbers, carpet layer, really
cool craft beer companies, we take care of municipalities, school districts, satellite companies, rocket scientists. the list goes on. and the way that that works essentially is the employer pays the monthly fee. they pay the netflix membership for the employee and/or in some cases the family. so they're paying that and that's their care, right? and they have coverage. most nextera patients have coverage. they have a high deductible hsa type plan or a ppo type plan. so again most of them have coverage, but we want people to start thinking about that like fire insurance for your home. you don't walk into lowe's or home depot with your insurance card buying painting. you hopefully don't have to use your fire insurance. however, you do want to take care of your house just as you should want to take care of yourself. we see our mission to say, hey, we want to be that partner for you and help you navigate because it is a very dysfunctional, crazy, expensive
e. ecosystem in health care. we don't do that by just having one visit a year. typically patients are having, four, five, six, seven times more visits per year than the primary care setting. so our patients are visiting us more. they're starting to get trust back in their doctor. that trust and relationship happens. the next thing you know, what do we see? we start to see improvements in obesity, improvements in diabetes, improvements in cholesterol, they start to get their depression treated, et cetera, et cetera, et cetera. we start to see with employer groups, decreased e.r. visits by 40% to 50%. 40% to 50%. that's replicated not only with a school district we take care of but also with a satellite company that we take care of. we see -- we make impacts on absenteeism, presenteeism, hiring, retention.
this is one of the best benefits that we like to pitch to incoming employees. they can come out of their cube cal, over to see the doctor for their depression, their obesity, their diabetes, and go back to their cubical. the existing system in the denver area is it takes 26 to 30 days to get in to see a primary care doctor. he's going to see you maybe five to ten minutes and then you're likely going to get a bill for that, especially if you have a high deductible, unless it was a preventative chieckup. so there will be all kinds of solutions. my gosh, we need innovation solutions. what's happening right now is bankrupting especially middle class america. so we need some innovation, we need some solutions. i really appreciate the opportunity to talk about what
we're doing. it's making an impact in our patients' lives, it's making an impact for employers, and our communities. and it's also making a tremendous impact for physicians. so you now have doctors that rather than retiring because they're kind of fed up with the existing insurance model, they're staying on and working another five or ten years. you have residents coming out doing direct primary care. so this solution that, again, we had no clue what direct primary care was, we just knew we had to do something different, that was back in 2009. fast forward to 2018, it's working. the cool thing is patients like it, doctors like it, employers like it. i appreciate the opportunity and am happy to talk more as we move forward.
>> thank you, everyone. i'm happy to be here representing the purchasers and the employers in the country. i want to talk a little bit about innovation and how we view innovation as helping the american business, especially innovation in health care delivery. for background, again, hassan azar is my name. i work at u.s. foods. we have a large food distributor, about 25,000 employees spread across the united states. like every other employer in this country, regardless of the size, it's essential for us to have healthy employees actually deliver on our strategy. so one of my goals at u.s. foods is to ensure that all of our employees have access to effective tools to help them manage their health and to help their families. every day our employees are interacting with the health care system and more and more are choosing to use an innovative service we made available to
them. for example, some of our employees today will probably use a connected device to share their blood glucose levels with the diabetes coach. some will talk to a health a advocate to receive guidance about their health plan and some will call our second opinion vendor to make sense of a recent diagnosis. some of our employees will perform physical therapy in their own home tonight using a connected device and talking to a remote therapist. so a few years ago none of these types of services were available or on my radar, but today they have become part of our benefits ecosystem and these programs are highly valued by our employees. they appreciate the convenience, the personalized treatment, the guidance and the experience. employers are seeing rampant adoption of new ways of care programs and are anxious to share with our employees. today i'm going to provide some examples of how our employees
are experiencing the most recent innovations in health care and benefits delivery and i'm going to wrap up with a wish list of some other forms of innovation and disruption that employers may find useful in the future. let me outline the goals most employers have with their health care programs. it's commonly known as the triple aim. over ten years ago the institute for health care improvement developed this triple aim framework and this has become the mantra for many employers as we develop our health benefit programs. as you can see on the screen, it's aspirations are clear, to improve health, improve the health care experience and manage costs. they are as important today as they were ten years ago. these goals remain important partially because health care costs continue to rise. as the costs increase, employers search for new -- search for and test new ways to manage their costs. it's probable that health care costs will continue to rise for
the foreseeable future, we'll continue to seek innovation to help. but american businesses can't do it alone, which is why we're always partnering with a wide range of innovators such as the ones we've heard today to help us meet our goals. employers have become actively involved in working with key stakeholders in the health care industry to address a variety of health care issues. we're working to influence the design and delivery of health care by piloting new programs that helps us meet the triple aim. employers every day are considering new solutions to help them manage their health care programs. so for decades, business leaders have long embraced the solutions that help our employees become healthy, manage their illness or chronic condition and improve access to a health care system. over the past few years, the pace of innovation, helping us manage benefit plans has grown dramatically so today i'll point
out a few that are showing promising results. i've bucketed these newer solutions for conversation but many of the things i'll describe actually belong in multiple categories. starting with health delivery, we've looked at how our employees receive health care services. today we have access to new programs to ensure our employees get the right care at the right time and place and that includes expert opinion services, known as second opinion services adds i mentioned. these are helping our employees understand their treatment options and make medical decisions. they can call a vendor who will get a nationally renowned expert to review their medical records and confirm or adjust the diagnosis or treatment. telemedicine. as we heard from hill about his company, doctor on demand, telemedicine has incorporated into the strategies of companies of all sizes over the past few years and will continue to grow and be important. we're helping our employees manage their health. over the past few years employers have been increasingly
interested in arming our employees with support to help them achieve optimal health. we're doing this through such programs such as disease management by which we utilize a third-party vendor to give guidance, decision support and education for individuals who are living with a chronic disease. these services provide coaching and needed direction using digital communications to engage our employees in the treatment of their own condition and their effective in improving the health of employees and families. at-home treatment. services conducted outside of the typical medical facility have been rarely accepted by employers over the past few years. realtime monitoring of clinical data for a number of conditions is showing promise as patients are increasingly willing to utilize these services. our employees and their families are quickly adopting new types of remote and virtual services.
we're seeing adoption of remote services in the field of diabetes treatment, as i mentioned earlier, where an employee can work with a diabetes coach. physical therapy, where an employee can perform treatment at home in the convenience of their own setting and on their own time. behavioral health offered through an app or video. cardiovascular health through a connected blood pressure cuff, maternity care, sleep management and weight loss. we're even seeing employees reversing the effects of diabetes through home monitored nutritional program. and patient engagement. we're focused on ensuring that employees are informed and involved in their health care journey and they receive guidance whenever and wherever they need it. we want to make sure our employees get the help they need to manage their health. health care is complicated and confusing. patients are asked to make a lot of decisions and digest a lot of information. they need to know what to do, where to go, what questions to
ask their providers and what to expect next. and to better equip our employees, we've begun advocacy programs. they help employees manage and navigate their care and helps employees understand their treatment options, navigate the health care system and handle administrative issues that may arise such as trying to understand a hospital bill. as one of my employees said, it's like the concierge in a hotel, they'll help you figure out where to go, what to do, arrange everything for you and it's really making a difference. so i'll turn to wellness briefly. for many years employers have been investing in wellness programs and bringing health promotion to the workplace. in the past couple of years, the wellness providers have become more sophisticated and effective in how they engage individuals, using mobile technology and personalized outreach. we're using social networks, game fiction apps and mobile
platforms to make a person's wellness journey more engaging. lastly, provider partnerships. in an increasing number of opportunities to work with medical providers to meet the triple aim, some employers are partnering -- such as ours are using centers of excellence approach with a bundled surgery payment to improve health -- who's created a network of high quality surgeons and facilities across the country. our employees who need certain surgeries can access this network of centers of excellence voluntarily and with an increased benefit level in another form of concierge treatment and will help the employee and their family through this process. this gives a summary of a few of the innovative things employers are offering their employees. as more employers embrace this
first wave of recent innovation, we'll seek more impactful changes that can disrupt only while allowing the triple aim to be met. so employers have a continued -- many employers romaine fow reman the three aims. as i just mentioned, there is much more happening to disrupt the traditional delivery of medical care. what will this look like? let's look at a healthy population, our first goal. as we've heard today, employers are paying attention to the new models of primary care delivery that are improving the health of our population. we hope that disrupting the primary care system will drive improvements in prevention, coordination of care and health outcomes. startups and provider groups are
creating next gen primary care centers that allow more time with patients, allow for same-day appointments, are integrated with other types of services and helping manage chronic diseases. employers will be increasingly partnering with primary care groups and vendors and deliver better service through data, technology, nurses and midlevel practitioners. in behavioral health, this has become increasingly important for american businesses. many americans deal with untreated mental health and substance abuse disorders and employers are looking for solutions to help provide better mental health for our employees. these unchecked issues can have a significant impact on physical health and productivity, so we're evaluating a wide range of tools and programs to help those in need of care. some new forms will utilize telephonetic or video therapy. whatever the form is, employers are very interested in bringing
these new solutions to the workforce. connected devices. as i mentioned a few times now, technology is playing a big role in the health care programs we offer our taking a big change. they are treating patients by collecting data, providing realtime communication and providing remote monitoring. we're excited to see what other types of services will emerge in the future. so turning to our next goal and approved experience in the health care system. as i mentioned earlier, employers are using add coke assy or navigator programs to guide employees and i imagine there is a continued innovation in this space. employers are interested in ensure that patients who need medical care are going to the most appropriate provider. it is not enough to recommend a treatment option for a patient. we'll want to see the individual's medical needs are matched to a high quality
specific provider. by using data-driven approaches to recommend patients match up with the right provider treatment we'll see improved outcomes in cost. which brings me back to controlling costs. employers and many others are eagerly anticipating the arrival of new market entrance. a survey of about 170 large employers this summer by the national business group of health shows employers are very optimistic about the new entrants coming to the market. employers have watched and partners with new entrances over the recent past and i expect that to continue. whether it is the amazon, berkshire hathaway or j.p. morgan venture or some other start-up yet to surface, employers could kick the tires of disruption. it is possible we'll see some other large intermediary that
creates a disruption and it is probable in the pharmacy supply chain or in the design of structure of health care plans themselves we'll see some other disruption. and recent approved mergers of two sets of health plans at pharmacy managers has the possibility to bring more disruption innovative experience into the delivery of health care. it is too early to say how the new arrangements will impact the future but rest assured employers will be very interested. next generation health care plans. so most large employers have changed through collaboration or direct encourage. i see that expanding in the near future as new models of medical insurance and disruption will occur as employers work with health plans to test out new payment mechanisms with health and improving value. moving beyond unit cost to tieing payments to quality metrics and efficiency measures will be an important model that
employers will flock to. whether it is called valley based care or something else, employers will be instrumental in improved cost and better quality and outcomes. and lastly, just a few comments about data. the amount of data in health care is growing but it doesn't mean we have better patient outcomes or experiences. this is due in part to the fragmentation of the data itself. useful health care data is spread out by location, format and structure and continues to be siloed. this is difficult for providers and health plans to use data in meaningful ways so we'll see what happened when wide sets of data combine for next generation an analytics and artificial intelligence and we're optimistic with this information can be aggregated and shared. there are so many health care workers holding on to health care data we need all data to fully meet the triple aim. and in close, along with the
rise in ovation comes with employers creating the best solutions for businesses while we seek to optimize the health of employees and their families, we'll continue to seek out and encourage innovation and disruption and employers will be part of the solution. we're looking for employees and employees find valuable and drive satisfaction and are measurable in improving outcomes and having a positive financial impact for our organization. thank you. [ applause ] >> good morning. i'm bob kocher. it is a pleasure to be here. thank you very much aei for convening us and joe antos for a great panel and an engaging discussion and i'm proud to be here. i come here as the most optimistic person you'll hear today. over the last eight years we've
had, i believe, a renaissance in creativity and imagination applied to health care. and the fact that mario and hill are sitting here, they came from gaming. they were engaging in phones to play candy crush and they gave that up to apply their skills to make health care suck less and that is a great thing. coupled with that, we've seen for each of the last five years more venture capital or private equities created in health care than ever before. health care venture capital on the venture side was like siberia before the aei because there was nothing to do and we didn't have computers and nothing was happening. and now we have a myriad of people attacking this from every different angle and adopting it and showing it could work. so those conditions are ripe. and there is a combination of talent and capital, coupled to changes to innocent in -- to in
to pay and that is the rocket fuel driving this ford. so it is going to be okay. it will take longer than you think. so here is the story. for the last eight years, there has been more charge than most people have ser peeved happening in american health care. access has improved. more people have access and demand for services have grown and companies derivative of that like as core and derivative health serving those people. costs, while they are a massive problem, they are less bad than they were before. it is growing slower so some of the stuff is leading to some change. and on quality, while it is very hard to measure, the way we measure it makes us think it is getting somewhat better. and so i would say there is a lot of bright spots. it is not an unsolved problem for how you could lower premiums in america and i'll talk about what you could do. we could fund reinsurance on high risk pools to pull out the most costic people to make the average premium lower and we could do maskti-- do more marke
and reexplore mandates and auto enrollment and states will be great laboratories for this and think about how to make the market work. we heard from mario about the challenges he faces when patients are getting engulfed by the system and what the cost differences are and we talked about the employer perspective of what they do to make hospital market power and most americans live by a hospital and that is where they go and that hospital has a lot of power. [ technical difficulties ] we could keep doing down the imagine of new payment models but this is different than medical inflation or you won't save any money. we could tackle drug costs but i'm not sure this posting prices that nobody pays will be the solution. end of life care is inartfully
done and cost too much and doesn't honor the patient wishes ort dig nitd of anybody taking part in the care. the problem is our current models don't reward because you are only in a health plan for a year or two. here we care about your costs only this year. that is the benchmark. care for a three-year period but we don't care about long-term health. we have no way to pay for that. whether that is preventative care or things like curing hepatitis c., we have a hard time dealing with any cost spread out for more than a year and the medical malpractice is what doctors ask me after i talk about the defense of practice of medicine a giant problem and how we could debate how big of a problem it is, and if we could reform it we'll take one step forward to make the system act more rationally. so with that as the back drop, let me talk about what is happening now. the view from the venture capital west coast. the first thing i would say is the problem is health care costs are the same as a toyota corolla
every year for a american family. it is insane to quote mario schlosser from this morning. even worse you pay $19,000 and you arrive with a $1,000 or $2,000 deductible and you can't afford it. it will crowd out everything else in the budget. things we care about. whether it is education or prisons or roads or offense or everything else. it also crowds out the consumer economy and drives america and the source of much of our productivity. the other hitch is that it is the job creator. we've had this horrible recession and prolonged recovery. the white bars are bls employment data of health care jobs. we've employed new people in the health care sector since bos kept the data. the economy shed 8 million jobs in the recession and we never stopped hiring in health care. you recall we didn't expand coverage until 2010 and we hired
but the most troubling part is that hospital demand in this period has been flat. not like there was a much more happening that you needed more people, we just added people. when you go down further and unpack the people, more than half of them have been administrative. this is the only sector in the economy that managed to add more nonpr nonproductive labor and we have to apply technology to get that productivity back and some of those jobs will go away and that is going to be really, really hard. what is going to drive that? it is the new payment models. thankfully payment model is something democrats and republicans agree about. congress passed the macro regulation which got rid of the sgr program, 92-8. seema verma is pushing forward on new payment models, wl it is revamping or the innovation has
promulgated new models for m.a. and primary care and they made the incentives for doctors very strong. if you are a doctor in 2019 you could get a 5% bonus just for signing up for a new payment model which means you will. 5% bonus in health care are hard to find. as we do that, that unleashes the imagination to care in the ways that clint talked b. there are concerns that we feed to think about with the payment model. one is the zero sum. so that money comes from somewhere. that money usually comes from a hospital. so hospitals as you could imagine are concerned, terrified, uncertain about what will happen when these roll out. they lead to fewer special visits as mario showed when there is payment model changes on the demand and supply side, downstream consumption is different and direct primary care is an awesome way to engage patients. they send people to specialists and that is good because i could treat more people in my office and there is fewer specialists or different drug choices.
so much were cast to make sure we're not sniffing on care and despite many of the pains that come with them is it allows you to extract data and information to figure out, are patients getting better care and not just cheaper care? i worry about undertreatment and excited that doctors will be much more empowered and better off with these models. but when you step back, you could cut health care by -- it costs too much because there are too many people but think about it the sick people we have cost us a lot of money. only 10% of americans with medicare data are about 60% of the cost and so as much as we would like to make it more delightful like netflix and uber for you and i, it is the people that are dreadfully sick that we have to change the health care because they spend the money every year. it is not just the year they die. the year you die it is very expensive, but if you are a chronic patient, you have years that are expensive for decades and it is how we change care for
that american that will have the greatest impact on our federal health care dollars. when you take apart the pricing of medicare data, most of the costs are in the hospital and think being how to redesign care to the comb or in the primary care office or anywhere else is a way to save money because after the hospital, the hospital makes you so sick then you go to another hospital called a sniff where they try to make you better. so there is a lot that you have to do to redesign the system so people spend less time in a hospital. hospital discoordinate care and lead to delirium and it is very, very unsafe. so the question is who is better at lowering hospital costs? the hospitals and the health systems we've seen bulking up and buying doctors and calling themselves systems or is it something else? and the data is quite clear. it is primary care physicians are the solution here. and we heard about this from clint. very interestingly we are going back towards a world more like this. in the last five years there has
been a flurry of companies that are actually doing house calls again. sending doctors to your home and it could be very cost effective if the patient is quite sick. it is extraordinary how often a house call of both identifying new problems that we weren't aware of when we came to the office as well as is able to administer medicines to keep you from going to the e.r. or hospital and you can't go to the hospital without e.r. and a house call could avert many of those visits. this is data from the recent regulation that medicare put out and it showed really, really confirmatory data which is what medicare called will revenue and which is physician at aco or high revenue hospital at aco, the doctors save more money than the hospitals. interestingly, the small business groups and independent actors save even more money than the next gen work large cap data providers. and this is great news because creating more low revenue for aco is not hard. we have a lot of groups that could adopt this and there is now more than 1100 aco's in the
country and 30 million medicare beneficiaries in the program and could you see it work when the doctors are in charge. looking forward, the reason i'm optimistic is that i have no doubt the technology and information that we're liberating today will strip out enormous cost. pcp will grow in pour and that is good for patients. we've heard from clint. could you do a lot if you start with the pcp. the rationalization of our infrastructure is going to be painful and political. hospitals are the largest employer and virtually every town in the country including san francisco. and they've been adding jobs. we have more beds than we need. no matter how you play forward the demographic models in the country, the rate that we're taking out of hospital through better payment care and now technology and medicine is faster than the rate at which we're aging. so demand is not going to go up and hospitals are only 55% full today in america. as this happens, care will get better and more personalized and
remember, it will -- all of the same things that made every other part of our economy that acknowledge this make it easier to access and had will get betner health care and an amazing opportunity to untangle the administrative costs than go between the faxes being passed forth between 14 days presebetw payers and providers. how do we attack wasteful spending. there is a ton of it. and we're asking how could we get the money out quickly. so we look for 12 month investment for companies serving up new innovations into health care because if you are paying for health care, you can't afford to wait. you're paying so much. and the other hitch is new health care despite the trillion dollars, no one but the pharma companies have margins so you have to pay right away. we like the full stacked take full risk approach and it is better to control the entire experience as opposed to giving someone a dashboard or tool that
hopefully inspires differently. delivering the service is very important. and software and ai will take out costs but first on the admin side before we take out the -- transform the clinical side. with that i want to thank you and i look forward to a great discussion. [ applause ] >> so i'm joe antos with aei and i want to thank our speakers for interesting presentations. as fares a could tell, only one person was actually trying to get people to sign up. but i'm pretty sure everybody already their coverage here. i think you're probably addressing the internet
audience. the sort of variations here that we heard, mario represents what i would consider to be a full service insurer. but not operating like the typical insurance company or so he claims. all insurance claims they use data, it remains to be seen how they use data, and whether the use of data actually leads to financial results. obviously we also care about the health of the patient. that really matters. but when you get right down to it, what drives innovation in this country, it is the possibility of profit. if you can't make a profit, then
you're not going to have the innovation that you want. and that really raises a big question. because jim starting this off pointed out that we have 30% or some people claim that we have 30% waste in our health system. and, yes, that is an opportunity, but that 30% waste also represents the incomes of a lot of people. we are -- our health system is really locked into and has made a big investment in wasteful provision of health care services. and there are more of them than regrettably than there are of you and people like yourselves. so breaking through that barrier is going to be i think very, very difficult and i think part of the discussion i hope we have is how do you do that? what were those barriers? what are the barriers that you
still face and that sort of thing? so maybe we ought to start off -- i like to get people to raise questions among themselves about what works and doesn't work. but this panel may not be that amenable to that issue. so maybe the other approach would be to talk about this question about the different roles of actors in the health system. so we heard from hassan a little bit about the role of employers. and we see plenty of examples. hassan mentioned an example outside of his personal company. but also the specific business group on health partnered with us to do an event a couple of months ago where we heard from mostly very large employers about things they were doing to
try to chip away at the costs they are facing and that is really what is driving them. it is the cost that they are facing that is a real problem. i guess one question is do we really expect employers to take an active role in that given that most employers are in the x-business, whatever that is and the hr director are not health experts either. they're probably more comfortable talking about pension plans than health plans. so to what extent do we believe employers will take a leap here. let's start with anybody that wants to address that. >> mr. employer. >> so you're right. not every employer wants to get involved in modifying and shifting the health care system.
we are not health care providers. we're food distributor, i have to remind myself every day but we spend a lot of money on health care and health care impacts our employees every day. employers work in coalition and will combine and address common issues regionally and nationally and there are a number of employer contributions working together so whether it is a small employer that doesn't have health care expertise and join a coalition and there are some here in washington and i'm in chicago and we have a very prominent one working side-by-side with other employers and it is effective and useful way to get the message out. >> well the question is, is the better strategy to go to an employer and say here is the solution that might work as opposed to thinking that employers are going to take the
lead? >> i'm happy to chime in there. do you need me to take the microphone? so we do go to employers and whether it is a company of ten or a company of 5,000, we target employers and we look at the existing system as we really should encourage a re-design of the current benefit offering. often times the health care benefit spend is the second highest cost outside of payroll for employers. they're spending a lot of money. so if you think about it, they should have a fiduciary responsibility for the amount of money, especially the employer's money and their money being spent. so when you see double-digit increases year after year in the amount of spend yet the care is not getting better, we look at that as an opportunity for maybe we could residesign that. but you have players.
the h.r. team and the suite and the owners and the brokers and so we're coming in as essentially physicians and saying we think we have a solution for your self funded or federally insured plan and the solution is to front your company with direct primary care. some of our companies have zero benefit for employees and others have robust benefit and especially if you are in a self funded plan, there is a significant amount of spend that is happening and in a lot of times it is like giving your employee a credit card to spend without hard any any direction so who better to provide that direction than your primary care doctor, number one, and as physicians we take an oath, this hippocratic oath to do no harm and what we do in direct primary care we like to take that a step further so we should try and do no financial harm. every time a physician writes an order there is a cost associated with that. who better to help and know
those costs than your doctor. so if i could write for a medicine that will cost you $2 per month for your blood pressure concerns and they'll keep your appreciate down versus a medicine that will cost $200 a month, those kind of details and intricacies are oftentimes best known by the physician whose interest isn't so much how will i pay my stockholders but how best to take care of my patient. so we realize in america a lot of people are getting their benefit from their employer or coverage these days and so we make it a point to target the employers directly and oftentimes they are quite sophisticated but sometimes not. >> okay, so bob -- mario and then bob. >> from my point of view, i'm not sure we should be the ones deciding that question. we should simply give the freedom into the market to own that question and employer by employer. there are some employers who i'm sure are very engaged in the employee's health care and play that role and others who think i
run a different business and i shouldn't be in the business of being a health insurance company and right now the situation is we have lux employers not having that choice. they can't take the pretax dollars and give them to employees and say you go buy your own individual or market plans or whatever plan they could get. and there is rule making among the feds that might lead to that and i'm hoping that will come to the forefront and work out but that is a step we ought to be taking. a couple of issues to point out with the collective option problem. if employers bundle large pools of risk, one is the question of networks. many of the issues in the u.s. health care system do come back to the fact that unit costs are way too high because there isn't much competition on the value train as i pointed out. and so if we for example saw in new york city we had a broad network that we rented in 2016 and switched to a custom build
more selected design in 2017. what happened there? our unit costs came up by 30%, so now 30% lower hospital care for example and half of the spend into medical loss ratio in any given year, but in about two-thirds stuck around. the other third had a physician with the hospital leaving the network. that's a good trade to make for a lot of members. again, two-thirds of the people in a given year are okay with switch -- having a physician that is in that work with a lower cost and some people who want to choose another network. that is a difficult logic for an employer that can be build iffa lou for more individual choice. and the other issue is the lack of portability, like health care journey individual, people are dropping in and out of employer and out of the individual market and we have average of two or three years of membership base. if we knew we were able to
invest in somebody over a period of 10, 20, 30 years we would sequence everybody's genome and predict your cardiovascular disease risk if ten years from now and to invest today to mitigate the risk down the line. right now no ensurer could completely fully do that. i think we could all do more than they are doing now but you can't do that until we are at a point where i can have my insurance and i could port my data between the various sort of stations in life that i have. in some shape or form we have to get to that point and i think that is -- amazon, if i may connect to that, they will face the same issue. they have 45,000 employees in seattle and that is not a lot for risk-sharing deals and one fee as big as seattle. so you just won't get everything coming from kind of that point of view. we need more portability or
freedom for the employers as well. >> the reason why employers are interesting is that every employee when they walk into a provider is like a -- a billionaire walking into neiman marcus. so employers are paying 30%, 40%, 50% higher prices for the same exact service as medicare and 80% more in some cases than medicaid. and as i mentioned, the hospitals and the doctors and the pharmacy and -- they have low margins. they make 3-5% and they are thrilled if they could make 8%. almost all of the margin comes from the tiny number or a third of the patients from employers. and so if just a few employees and large employers choose to not walk into one health care system or another and it decimates them and makes them response. so employers have power if they choose to use it. it is hard for a couple of reasons. one is that health plans have
not served them well by offering super broad network. everybody is in it. if everybody is in it, there is not a lot of negotiation going on. most employees will be healthy and so amazon will be disappointed to negotiate in seattle because they have 45,000 people that are 30-year-olds and they only have newborn delivery and they don't have a lot to negotiate with with healthy populations and health care has the churn and they don't bother to think about seven years from now. part of the reason medicare advantage is so exciting and seeing many any entrants is the people stay in the plan for seven, eight, nine years and you could do things to prevent care and flu shots that are cost effective when you give it to those populations. >> so -- this question of disruption i think is an interesting one. and i guess i don't see a lot of disruption in big bold capital letters. i see adjustments to the system
that we now have. mario for example, oscar health had the distinct advantage of entering a market along with other firms of course. but entering a market of people who virtually by definition didn't have a personal physician. so you are creating a network, a more efficient network but nonetheless it is easier because you were going into a niche in the market that had either been overlooked by traditional insurers or lower income people who -- maybe healthier people as well who just weren't tied to the health sector like most of the people in this room. so that is a disruption. but it is -- what is part of the market that was already in essence disrupted compared to the other 75% of the market.
similarly, with networks, i see the other two gentlemen who -- doctors in demand and x-terra, they are talking about recreating networks in one way or another. and that makes a lot of sense if you can get the consumers to go along with that. but if there are already locked into a frame of mind that hasn't already been disrupted, then it is hard to do. so the disruption might in fact have been moving to a high deductible insurance and you stepped into that space. just as oscar stepped into the space because suddenly there was funding for coverage for people who previously didn't have it. bob is very enthusiastic about aco's. >> as are you? >> yeah, i really am. but the medicare program in fact
has been as much a problem as any program in terms of having the short-term view point. it is beginning to change a little bit. but that is more talk than it is action. after all, the only way you could leave medicare is the inevitable way. so it is a potentially that medicare has a program to look at people from a 20 or 30-year perspective. >> for sure we need a longer -- the arbitrage of the net works in america are unbelievable. so mario shows the cost and no matter how you cut that there is always a flaw that could you always find better health care for a lower cost and that is also true within the expensive hospitals. so there are times want to use the high priced medical center but i work at stanford and we have a bunch of doctors. every one is insanely expensive but some of them are good. and so you want to actually have
information about how to route within that. because when you buy access to a health system you unfortunately have to buy all of it. and you can't today -- they don't win the negotiations. some other secret way to help you figure out which doctor you need to go to inside of that thing and that arbitrage is enormous, both in the outcome that you get and the total cost that they pay even though the units are expensive and what oscar has done and what did ma'aman does and what next era does is they have people who are expert, help you, no, no, at this place this is the person for that. and they do that. and that information now is available through h.r. and claims. and you need an intermediary to do that process. patients in my experience are less anxious and delighted when you could say this is the right person and not choose from the big broad list. and so what is great there is an enormous arbitrage in how you
access the network and then could you have a broad network like medicare as long as you use the good parts of it and that is where the innovation is happening and gives me optimism. aco is one way and mma and these guys do it well for employers. it is not subtle. it is not like health care goes away. we use the network very differently. >> so one of the things that hill said that really struck with me whether the percentage is really correct, but 80% of health problems could be handled by a primary care doc and in particular many of those problems could be handled indeed not face-to-face. in many cases, what the patient needs to know is what do i do next? you don't necessarily need a prescription. you need to know what do i do next? i think most of the people in this room, anybody who has kids have experienced that. and it is very hard to get that information. >> that's right. >> and that is also true for the
older population as well. and medicare is lagging way behind. so we'll be looking forward to these innovations being introduced to the medicare program sometime. >> just to get on that point, so much of what hassan was talking about, the point solutions and he contracted with as an employer from the second opinions to the chronic decease management program and telemedicine. they all exist for one problem is there is not enough of these guys around. there is not enough access to primary care. and so in some ways we're trying to solve that problem and in very different ways. we're trying to use technology to scale the model to effectively scale a doctor so that anyone, no matter where you live, has access to that primary care physician and i think if you do that well, so much of the rest of it takes care of itself downstream. >> and i have a question about payment as well. everybody knows that the fee for service is evil. but everybody also knows if they
think about it that essentially all health operations operate at some level at a fee for service level. so how do you get the incentives to get all of the way down to the physician who other than a salaried position, which doesn't happen very often, most physicians in fact are rewarded for production. so how do you see that changing and how would you apply that to federal programs? >> i'm happy to speak a bit on that. so having lived in the fee for service primary care world for many years as an employee and employee of a large health system and owning primary care practices, the disruption as you mentioned earlier, where is the mi disruption and years ago we said we're not going to pay primary care doctors based on the visit with the patient. so currently, that is the way things happen. united, anthem and primary blue
cross pay the doctor for visit and that is why doctors see 25, 35 patients per day in direct primary care the doctor is paid monthly. so they are paid per member per month. when a patient selects their doctor, they are paid, the netflix or the gym membership, less overhead, and so whether the doctor takes care of that patient face-to-face in the high overhead office, or whether the doctor uses technology, 21st century technology to do a virtual visit, the doctors pay the same amount and so there is no incentive to bring the patient in. so now you are removing that barrier of you have to take off work to go into the doctors. [ technical difficulties ] not a month from now or getting questions and concerns answered now and in 50% to 70% of primary
care and urgent care could be done virtually. reason the fee for service we don't do for the most part is because we don't get paid for it. so we've now disrupted and removed the payment piece of fee for service. fee for service should pay for your stent but not for primary care and we tried that experiment for decades and it didn't work. so we need to get to a place in this country where like other countries where we have about two-thirds primary care and about one-third specialty care. we're not there. other countries that are there have closed hospitals and got rid of administrators and shrunk budgets and those type of things so it is a process. and again you had to -- we didn't try to add bricks to an existing building that was crumbling, we built a new building and that new building is direct primary care. it is not the only solution, there are many physicians in the country that think it is and at a time when we start doing this, there is about a few of us across the country now, about every state in the country has
direct primary care physicians. >> just want to point out that i'm from an 18,000 person town in germany and that is exactly how the doctors there get paid. so my physician in ga-- germ an spends his day on the bicycle so they are not waiting in the waiting room. so this disruption we're looking for to some degree goes back to the roots with the technology. one additional point, as sort of a physician system is shifting, we're noticing as well is when we look at certain metrics, cancer screening rates or hemoglobin, tracking how well doctors are doing with the patients, we could see from a bird's eye view because we have the claims and things like that. we see a dispersion like this around physician -- physician by physician basis and then like this on a practice by practice basis, what that implies is that
the work flows and technologies and data systems that you need to become better at this kind of customer relationship management in terms of keeping track of the patient's risk and how they are doing and what they have do next and so on, they take investments. so in a sense at the moment in the worst of both worlds, if you have primary, you are gobbled up by a hospital and which means you become a referral feeder in the worst case or you are totally on your own in which case you can't invest enough in building the technology to make sure you keep track of your patients in a great way and so again the model is like that -- they are in the middle where you bundle physicians go more direct and get different reimbursement from the insurance company and i think that is what is needed and powerful. >> that and feedback. >> and what you need for that as well. >> and everyone wants to improve what they do. and if they know that they're lagging behind which is hard to figure out at this point, it's
possible to find a way. jim. >> thanks. i just, as i've heard the discussion, it is very interesting to think about what your reactions and maybe this might put hassan on the spot but i want to hear from all of you, a lot of the dollars are locked up in big institutional programs where the consumer doesn't play a very big role. so you have the employer-based system where the employer is making big decisions on the behalf of the employees and the medicare program separate from the medicare advantage component, most of the beneficiaries are enrolled in the still traditional fee for service program where there isn't -- and they often vary have wrap around insurance associated with it. they are fairly passive when they are in that environment in terms of being an active seeker of disruptive innovation so to speak. so i guess i want to hear from the group. is one of the keys to
accelerating disruption and innovation and being able to tailer all of the different kinds of services that might make costs go down and quality go up, would it help to unlock the money and allow the consumer to control it more? bob may have a little different take on this. i'm not sure what your takes would be on this, because health care is different. there is always going to be regulations protecting consumers, but isn't one of the big things holding all of this back the fact that the consumer doesn't control most of the money? >> i can -- that is exactly what i believe. i think if the employer was given the choice to say i'm taking the money i'm giving you now and giving it to a health plan or third party administrator and said to the employee, you take that money and go plan, the exchange or a plan elsewhere, it would at least open the avenue for the pressure to start building in the system. again not every employer could do that and some employers may
be great at managing health care but there are plenty that would say, great, i'm in a geography where there are great choices and i'll have more choice by doing this and this should happen -- -- i keep telling amazon, they should build where they want to build. let them do that. it is nice to see innovation but they should go to cms and say, give me the chance to do this, open up my employees to take money and invest in individual plans and let them buy that. and let's see who likes what and over a period of three years you watch who buys which plan and how they stick with it and what the retention rates are and the scores are and you see where we land and my thesis would be that is like what unseated the blackberry versus the iphone. the blackberry was sold to corporations and sold to cio and companies and when the iphone came around it was a great
experience and the pressure started building and toppled the way the system used to look. again, health care, you can't leave everything up to the consumer in health care. otherwise we have to erase the bottom from the benefits point of view. we need health benefits built into plans. i'm a big believer of that but around that there is more freedom we could create. >> i think we should implement the cadillac tax and work to create less of a giant incentive from the employers to be the aggregator and purchaser. but i think that much more impact will come on the payment reform on the supply side because of the information being asymmetry. and health care spending, so% are expensive and they are spending $70,000 a year. no americans bank account can absorb that sort of empowerment that you give them because they don't have the way to pay for this. the drugs that they're using are going to cost $20,000 growing at
10% a year. the hospital bed days that we have -- we have good metrics about avoidable bed days. but when you are in the patient in the bed you can't avoid that day. and so the people that i think have the most leverage information is the primary care doctor who incentivized to think about cost of care, we've heard from clint and think about all of the things he does differently. so i think the payment reform on the supply side is more important because of the asymmetric information, patients have multiple diseases and we are actually having a manifestation of your disease you are not capable to shop as logically as on any other day and it is regressive. because we could debate like how much lifestyle affects disease but your genetics is an important component and if you tell somebody with rheumatoid arthritis, you are empowered every year you have to manage that $20,000 bill that you had and they have nothing they could
do. the medication is too expensive and the doctors have too much information. so i think you need to have more demand side incentive. the fact that mario showed a picture that choose to go to high cost doctors and don't make them happy and don't fire them. that is a problem. you would like to let people know you are getting a bad experience. there is a better choice. but every time we tried in medicare and commercial service to do transparency it hasn't led to that market share shift. what is led to the shift is the primary care repayment form side and you see much quicker changes in consumption with a doctor. they suddenly learn how to treat a-fib and they open up on saturday and use telemedicine and so you have to couple the two. it is great for people to have more data. and when you give them more data through a navigator or second opinion service, they do change their doctor. nobody wants to go to the doctor that will treat you badly and not be quality. but the system itself relies too
much on somebody figuring that out and we as clinicians will do a great job. because we've reported metrics only in latin and only report on a few diseases. we make the data 18 months behind and medicare said it is not different from the average unless you are in the bottom 5% so we haven't made it easier either. >> i like the word of use data as opposed to information. information would be nice to get. >> yeah. >> you mentioned hsa and so buckets of in this case pretax money. so the irs defined hsa before direct primary care was around. so we asked the direct primary care coalition, the irs, to update the language and i think the short answer was no. and so as things move forward, the bipartisan bill in the house that would update this language and that passed and think it is in the senate. so with an american has an hsa
account and hundreds of americans do -- [ technical difficulties ] save money to pay for your primary care direct doctor and that membership. so that is very useful and i believe that bill is in the senate right now to kind of clean up some language that will allow the american to use their hsa account to pay for direct primary care which would be a tremendous return on investment in any front. >> so let me make sure because i'm not sure the audience, especially the television audience may not be familiar with this. the key issue with hsa if you can't come up with a receipt for a specific service or a specific medical product, your hsa can't pay for it. and what clint is talking about is the ability to contract for a suite of potential services, but not on a fee for service basis. that is a huge distinction.
and once again, we have locked ourselves into this archaic way of thinking and archaic way of acting. >> had you talked earlier, just about employee choice and defined contribution and a number of employers over the past ten years have been experimenting with creating private exchanges. so think about obamacare exchange or for groups of employers with mixed results and we've given -- not our company but employees are given a defined amount of money to spend per year and they purchase a health plan through this exchange instead of being told here are your exact benefits. so the jury is still out is if this is driving better behavior and creating market dynamics where they are shifting demand and saving money. so it is to be determined. but it is a very slow option by employers. >> so in the end the age old
question is what can the government do to either prevent disruption or maybe get out of the way of a lot of disruption to occur. so i think we would all be curious to know if you could pick out a couple of major issues that you either experience or you see ahead that could be resolve and lead to some progress in getting consumers more involved with better decisions in their health care. >> i'll start by saying more telemedicine parody laws or reimbursement or care that could be delivered virtually. change the behavior of doctors and patients. pay them for consulting remotely, that is where it makes sense. a great place to start. >> yeah. could you do telemedicine in a fee for service setting? >> we do today. >> but you have to get paid for it. you have to negotiate one off contracts with everyone. >> yeah.
>> doctors have been doing telemedicine for decades and decades. we all -- we used to wear old school pager and the challenge is in the fee for service world, you don't get paid for those visits. state of colorado has passed legislation to change that recently. so that is a -- you'll spend your whole day on the phone and then you can't pay your nurses and your staff so you have to set up a business model that allows for that. >> i think we have to work on the prices. so health systems have amazing power for a couple of reasons. one is in the medicare advantage program and in the aca programs. insurance companies have to have adequate networks in every county they sell insurance in and now that hospitals have employed many of the specialists if you are going to be network adequate you have to have the hospitals and when they negotiate, they negotiate for the entire thing. even though it is urology where they have a monopoly, you have to take everything at whatever
price they set it at and like the $6,000 average price cost we pay today and it is crazy. so we need to create a playing field. if oscar wants to offer insurance or devoted or any other company, in many counties you have to get a physician to say yes and if they don't say yes, you don't operate. and i've seen examples where they don't offer coverage because the hospital said no and they employee all of the doctors. above a specific leverage, you have to offer a price that medicare could say is a% of medicare. maybe it is an all payers could get the same price of a certainly market share to have competition but there is something -- we need to do something about that hospital market power. the second thing we have to think about is drug prices. they're growing even faster than hospital prices and we don't have a way today to sort of negotiate because often there is only one drug in a class or
there is variations in patients that i can't switch you all to one drug because it doesn't work for everybody and we're learning more about personalization in medicine as we get more data on how to personalize data, we'll use more medicines and not fewer and that is problematic in terms of negotiating them. and the third thing we need to do is, i think, change the malpractice system. so that we can get doctors to stop sort of claiming that a bench of their care is -- which i would say is wasteful and they would say is defensive and go to something different. and whether that is pointing to everyone that you are following or a care plan, or other systems, i think we could do a lot to make that a better process for everybody. >> when it goes -- well to bob's point on unit costs and pricing power of facilities in particular, it is just -- it bears repeating that there is some surge in the system right now where employers in particular and commercial health
insurance pay about upwards of 150% medicare, oftentimes north of 200% for facilities in particular. and what that effectively means is that health care might be the only place or the only industry where the government is a more efficient negotiator of service than the private sector. and that is really just sort of like a bizarre out come and then if you are a smaller insurance company going into a market to fight your way in there and really try to -- try to find a health system that wants to work with you because that system in the end if they do something that would start lowering perhaps the reimbursement rates at a higher level, that would not be good for them in the medium long-term. i do think personally that we are encountering two types of hospital in these discussions. there is a ceo that said we tried these in the 1990s and this didn't work and jim talked about that, this is a real talking point.
the hmo in the '90s and they were a.c. old types and different names but in existence and they say they didn't work and thereafter we don't think about network designing ever again. and they are broad and get out of my office or our in-patients are for and that is another classic and when you hear somebody say that that is a classic of saying i'll charge you for medicare and you could leave. but there is another type of hospital that we're encountering that is saying i feel the pinch i'm in the market that i'm in, that i'm getting cut out of networks and i realize i'll have to start kpeetding on value and unit costs and if you build with me i'll give you loyal unit costs and we could build and make sure there is a great member experience at a lower cost and that is really something that -- that is something -- the strategy we've been driving. we will make a network feel great and look great, from quality and access point of view, if the health system is willing to give us a discount
and build a different model with us. with the cleveland clinic, for example, i'm sure you're familiar with, top system in the country, we build cobra insurance plan called the cleveland clink oscar insurance plan and they share risk 50/50 and so not everyone goes to the main campus with high service rates and if you get to the flu you to go a community hospital where even there reimbursement rates are lower and more efficient for them to deliver the care there. so that is one big block and area we'll work on. the second one is again from the front lines, there are all kinds of regulations across the country where i do think progress is slowed down at least. i really do think that all of the regulatory bodies that we deal what and i think i counted them, we have 25 different regulators, adobe, cms and cio and across the country, all of them are one good policy. they all want to protect the member and none of them likes
the current health care system or the current health care cost bases and things like that, so they are good people to work with. but there are rules written a while ago that we don't revisit quickly enough. simple example is in tennessee where we offer adds in nashville as a small group and individual, we can't in the small group markets offer free telemedicine that we offer everywhere and in the high deductible plans because there is some bizarre regulation that allows for no first alert coverage of any kind until you've -- you've hit the deductible. >> that's a big problem because there is a bunch of things like preventative care that is -- that you could do. whether that is mental health screening or diving prevention or telemedicine, if you could take away the $1,000 co-pay people would do it and it is this year -- >> we internally for example know that even if half of the
alltel medicine visits that we have were excess in command and you were on the couch and have the flu and now you are pushing a button and talking to a doctor, if half of those were exits, we would still take costs out by making this totally free and for some reason in some states you still can't do it. [ technical difficulties ] we have to make sure we keep pushing on that and put the data out there to show it works. >> two things that medicare proposed and may not succeed in implementation is payments and coding and so it is silly when the hospital buys my practice, i'm not at the practice, i'm sitting where i was before yesterday and my prices go up 25% and they could pay me more and so they could induce me to sell and for a patient who doesn't need better or different and now you have a letter mailed
letter from a billing agent you don't know. so that is silly. get rid of this asymmetry that we pay for the same stupid thing at a different site. it is terrible. the second thing that is really frustrating is the medical says we're going to pay one price for a new patient and one price for a follow-up visit and it's going to be fine. as a doctor that's been reminded about chart reading, i need to know your history to get paid more, it's silly. there are 18 pages all for coding. medicare says, let's get rid of that. what happened? the doctors didn't say hallelujah because they hate the coding time, they said, no, no, keep it like it is because we're making more money by coding. so we have to have a code that
makes it simpler for a visit. it's a terrible thing because it makes me write down every diagnosis that you might have had and diseases that really aren't your main problem because everything i write down makes you pay more money and it's mining charts, faxing requests to me say, please, doctor, send me a chart. medicare gets 80% or so from every chart from every member of year and they send them to people or machines to go find something every time there's something i didn't record to make me write it down so i get paid more. we need to get rid of the system that says we paid out $8 million to people just doing that. when i look at health care administration in america, mario is right. 22 regulators and they all have kind of good intentions but we need a lot less of the m
administrative stuff. we spend $18 billion on administrative costs. we can get rid of the fax machines. but every time we try, the system says, no, no, no, keep it. and we need to sort of break through that. >> so to bob's point, and a lot of patients don't necessarily realize this when they're getting their care. there is coding, so there is the international classification of disease states icd-9 which i memorized a lot of those codes younger in my career. all of a sudden those 10,000 codes went to about 70,000 codes with icd-10. now when you slip and fall, it's not just slip and fall one code, it's slip and fall left leg, slip and fall off a curb, slip and fall -- the list goes on, right? so i'm paid by the way i code. that is nuts. that he is crazy and i'm not a data entry specialist. i want to take care of my patients but i have to figure out, wait a minute, did she fall off a roller coaster or did she
fall off a curb? it's a shorter visit, so do i bill 9923 or 9924? i get paid more with 9924? that's 30 to 50% of a primary care doctor's day in the fee for service world, and they don't like that. they just want to take care of patients. so we take care of patients and remove that mess, and now you go from seeing 30 patients a day and trying to get through this crazy behavior of how am i going to code and bill, having dinner with your kids and spending another hour or two at night coding and wibilling. you remove that and you spend 30 to 60 minutes of time with your patient and it creates this relationship. by the way, your patient isn't going to come back a month or two later after they get this bill and say, doctor, you coded wrong. so there are pieces set up and you hear the word data and the
word analytics. there are a lot of people that work in that data analytics system, and it is an archaic, ancient system. just get the bulldozer out and clean that up. >> what's funny is you're a doctor saying what you said, which most doctors say, but every single doctor association came out against the coding changes. so that's a problem. >> so there are perverse cynics in this system so people want to keep the same system because they make a lot of money off coding, et cetera, et cetera. i'm not saying we have the perfect system, but what i'm saying is that, in the doctor's day, is tremendously frustrating. it takes up way too much time that takes up patient care. so we need to stop packing for payment. >> this is with respect to what we talked about earlier, the
long-term expectations of the patient's health, the reimbursement settlements that happen between the insurance companies or the governments happen between 12-month periods. there again, insurers don't really have, and sometimes doctors who do the coding and get paid for the coding, don't have incentive to really invest in long-term health. truvada and prep is a great example of that. when you take intravenous drugs nowadays, and it stops the spread of hiv, one problem is it costs 2500 bucks a year for us to pay for someone because it was one of those murky drug company kind of things. the other thing is, the coded people are taking a $2500 drug to keep from getting sick. for the co-pays there are no
reimbursements for that risk that mitigate us. if we were able to get a coding system in place that says to the doctor and insurance company, whatever you did this year and whatever conditions to the patient's health was like a 10-year time period or so, you can start earning return of that essentially even if the patient starts moving on through the system, and that would, i think, again, make actors in the health care system want to invest in your longer term health in much more of a different way and get attention in place than is the case today. >> right. we need to go to the audience. i would just point out that's not a coding issue. that's a fundamental issue of the financial arrangements in the health system. you look like you want to say something. >> going back to the demand side, i spent a lot of time with employees to make them go to the right place to get their physicals and so forth. you talked about the headwinds
that the health care we're paying is tremendous, and their suppliers are health insurance companies. so we're looking to them to help us go out and purchase better health care. >> unfortunately, it's for someone else to say it's their job. why don't we go to the audience, and there is a microphone -- why don't we start here and work our way around the room. please identify yourself and try to make it a brief question. >> i will try to be brief. lou gagliono, coalition to transform advanced care. i agree with bob, this is an exciting time and things are changing, and i want to talk about two things that i think are important, the acl model and value-based contracting. the reason i think they're important is they both aim at keeping -- delivering effective health care longer term in the acl model, shorter term to where
more effective clinically approved care is going. i would like everybody's perspective of how that's changed how you're doing your business. >> very simply we try to seek out physician groups that are organizing differently and try to work with those in a different capacity. for example, i would love to find a way to start reimbursing health care practices from a technology perspective. we're seeking out those people who are transforming their practices this way and i think it's a great trend. >> we're trying to invest in more groups like that. one of our groups is called alidade, and they go to one, two, three, or four doctor groups in the segment, and they say join us in the administrative stuff. we'll collect the data, we'll give you the analytics. you can't do it as one doctor. it will help them mitigate their
risk by putting them in bigger pools, and we've seen amazing growth. we now have about 2,000 doctors in 37 states and 7,000 medicare patients. they like it better because when you tell the doctor your job is not to figure out the most optimal way to code, in fact, coding in the native way is actually better for us. your job is to think about all the things you can do to help that patient not need anything downstream, and patients in those practices are happier because they tend to not need to change doctors as often, so you can do things to prevent care. we're finding things like that to help which is an insurance company. and we're not alone. there is a tremendous amount of capital and interest going into actually creating a new supply that actually benefits from these changes and incentives and
information. >> it's a source of demand for telemedicine. with that type of payment model, physicians van incentive to keep patients at home and treat them to telemedicine if they can. in some cases they might not have a psychiatrist. so they'll work with us to fill in the gap if they don't have one on-site, so it's definitely a good thing for our type of business. >> kaiser, who is like the old version of this idea, they do more than half their visits now over telemedicine, and you have similar data that says two-thirds of your members do that. >> you mentioned acl, so how do you improve upon that? how is that acl set up from a business structure? and i would say if it's a position-led acl, it's probably going to do better, and if it's a dpc-aco-led one, that's
probably even better. >> they're working with acos to make sure they're actually driving value for us. >> i think we're going to be able to get another question in. >> my name is bonnie wachtel. i approach the subject matter as an investor and consumer. i was very struck maybe as a person who is getting to an age where cancer is more of a risk being told that if the health provider can invest in you for ten years, they can analyze your genes and work from that for better care. is it an innovation worth fighting for to allow patients to sign up for multi-year contracts directly incented led by things like we're going to analyze your genum, and while
you're thinking about that, does it make sense for a relatively healthy 60-year-old person to pay themselves to have their genum analyzed and attached to their health record, and by the way, how much does it cost to have your genum analyzed? >> from the doctoring there, we don't need to analyze your genum. if you have a primary care doctor, it will make a difference on your morbidity and more althoughty. if you have a primary care doctor, it impacts your morbidity, mortality and spend over a lifetime. if you make that your primary care doctor, you just upped the ante a little bit. i need a relationship, time and trust so you can allow me to do proactive preventive care, and all the talking we'll have and the time we'll spend, there is no icd-10 code for healthy.
we have 75 codes and i can't tell you all the time i'm going to spend with you to talk about proactive health screenings, right? we do gene analysis in health care, but we don't need that to make a difference on things like diabetes, heart attacks, strokes, et cetera, et cetera. should you be able to use your aco money to pay for g urkgenum analysis? we have patients who do that. i hope it's legal. should you have funds for your primary care doctor? sure. whether it's your own money, your insurance money, we definitely encourage you to do that. >> there are many other things that your pc can do for you to make sure you're healthy. but for anyone out there who analyzes your genum, they can do it for about $100.
it would cost them about 10 to $15 for the actual sequencing. there is a doctor who is looking at things like polygenum. they can look at the risk of developing cardiovascular disease. if you're in the top 20%, you can start taking certain drugs. these are care pathways, but they started coming out in the last two or three years, so it's rather novel, but you'll start to see that along those lines, i think. we've got it working pretty good with this that i think is worth watching. >> it's kind of entertaining and might be very useful. it's $100 so you can afford it. i would say, though, your idea of a multi-year insurance benefit is a very interesting
and coordinated study. the state of valencia, spain is the best example of this in the world. there is a 25-year conduct with a group called bupa. when you have that horizon, do you a bunch of different things. you invest in sidewalks, in farmers markets, in primary care, in making flu shots everywhere. you make a lot of medicines free without a co-pay. one year is probably all you need, but you can imagine if you had a five or ten-year plan, it would make you healthier. it would be advantageous to everybody if we had you longer. if somebody bought the wrong thing or moved away, you have to have some way to get out, so there are some thoughts on how you design it, but it would be very helpful. >> the state of nebraska for its employees for the next four
years, i believe, are investing in primary care. the company is strada health care, and they have a contract with the state of nebraska to provide direct primary care to employees for the next four years, i believe. the state of new jersey through, i believe, ourhealth and pasadena health is doing that. you need two, three, four years, right? it doesn't happen in three to six months. you see states across country saying, we see this as a solution and we're willing to take our funds that pay for care or coverage and invest in primary care for our state employees. >> okay. well, all i can say is if you think you might have a criminal in your gene sequence somewhere, you probably don't want to do it unless you really don't like the guy. yes? wait for the microphone. >> katie capps with health share
resources. i have a question as it relates to what the market did maybe 20 years ago. there are lots of commercial health management and disease type management firms because the primary care system was not satisfactory to many employers as it relates to chronic conditions skmuand multiple chr conditions. it led to health management firms and then population health management firms. so i'm interested in your perspective of what you're seeing the market do today in terms -- and a limitation of that, of course, was it did not integrate into the medical model. since it didn't integrate into the medical model, you didn't have downstream risks managed, necessarily, appropriately. i'm interested in hearing from an employer's standpoint if you're seeing a difference in what you have access to today, and from the rest of you, how
those activities have merged into what we call more the medical model which has also expanded. >> i'll start. we have access to dozens and dozens of companies, probably hundreds, actually, who are willing to help us manage the risk of our employees. disease companies are more important for self-insured employers like ourselves and we bear the risk. the health plans said, you're self-insured, you take care of it. so employers are out looking for and curating solutions like disease management. i have a number of them for our employees right now and they are working. but the point you brought up earlier, they are sitting siloed. they have no risk. they are trying to work between pbm officials, acos. i don't have everyone at the table at the same time, so it's more directed toward the
consumer. it's helping in their health, it's not exactly helping on the supply side. >> okay. why don't we wrap this up. i would make kind of a final comment, which is the market is changing, not just the health care market, the employer market. to some extent the problems we see now will be replaced by other problems 20 years from now, but it is absolutely a fact that many of the things that our panelists talked about today are reflecting a change in -- i think it's perspectives about how they want to get their health care, how they want to pay for the health care, and what they expect from their health care. the old model is phasing out. there is a new model coming. i think we see some examples here. but certainly the idea -- i like the slide that showed the waiting room. the idea of sitting in a waiting room for 45 minutes to pick up
somebody else's disease, young people don't like that, but us old people don't like it, either. so with that, please thank our panel for a great discussion. [ applause ] congress returns tomorrow for its lame duck session. some of the issues members need to work on, funding some federal agencies past december 7, a compromise to the revised farm bill, farm subsidies and crop insurance. the sub sidy of $5 million to py for a border wall. you can find live coverage on c-span and the senate on