by Dave Chase
CEO’S GUIDE TO RESTORING THE AMERICAN DREAM: HOW TO DELIVER WORLD
CLASS HEALTH CARE TO YOUR EMPLOYEES AT HALF THE COST
www.healthrosetta.org
Copyright © 2017 by Dave Chase. All Rights Reserved.
Published by Health Rosetta Media, Seattle, WA
No portion of this book may be reproduced or transmitted by any means, electronic or mechanical—including photocopying, faxing, recording, or by any information storage and retrieval system, e.g., Internet website or academic eReserves—without explicit permission from the publisher. Reviewers are welcome to quote passages under the rules of Fair Use.
Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations of warranties with respect to the accuracy or completeness of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor the author shall be liable for damages arising herefrom.
ISBN:
978-0-9992343-1-0 (Softcover)
978-0-9992343-2-7 (Hardcover)
978-0-9992343-0-3 (ebook)
Printed primarily in the United States of America
Publisher’s Cataloging-in-Publication Data
CEO’s Guide to Restoring the American Dream:
How to deliver world class healthcare to your employees at half the cost
Chase, Dave
1. Health insurance—United States—Costs.
2. Business & Economics—Insurance—Health.
3. Employee—Medical Care—United States—Cost Control.
4. Employer Health Care Benefits.
5. Business & Economics—Management.
Dedicated to the nurses, physicians, clinicians, citizens, and nonprofessional caregivers advancing the Health 3.0 movement.
You’re creating a new health ecosystem we can all be proud of. Thank you.
Table of Contents
Acknowledgments & Author’s Note
Foreword
A Note From A Fellow Traveler
Introduction
Part I: The Current Situation
Chapter 1
America Has Gone to War for Far Less
Case Study
Pittsburgh (Allegheny County) Schools
Chapter 2
Health Care Prices: Hyperinflation or Flat?
Chapter 3
What You Don’t Know about the Pressures and Constraints Facing Insurance Executives Costs You Dearly
Chapter 4
Millennials Will Revolutionize Health Benefits
Case Study
Rosen Hotels & Resorts
Part II: How and Why Employers Are Getting Fleeced
Chapter 5
7 Tricks Used to Redistribute Profits From Your Organization to the Health Care Industry
Chapter 6
PPO Networks Deliver Value—and Other Flawed Assumptions That Crush Your Bottom Line
Case Study
City of Milwaukee
Chapter 7
Criminal Fraud Is Much Bigger Than You Think
Chapter 8
Are Workplace Wellness Programs Hazardous to Your Health?
Part III: Doing It Right
Chapter 9
You Run a Health Care Business Whether You Like It or Not.
Chapter 10
How to Pick a Benefits Consultant
Case Study
Langdale Industries
Chapter 11
The 7 Habits of Highly Effective Benefits Professionals
Chapter 12
Centers of Excellence Offer a Golden Opportunity
Chapter 13
Independent Claims Administrators vs. Insurance Company Claims Administrators–The Trade-offs
Part IV: Health Rosetta
Chapter 14
Value-based Primary Care
Chapter 15
Transparent Medical Markets
Case Study
Enovation Controls
Chapter 16
Concierge-Style Employee Customer Service
Chapter 17
High-Value, Transparent TPA
Chapter 18
Transparent Pharmacy Benefits
Chapter 19
“ERISA Fiduciary Risk Is the Largest Undisclosed Risk I’ve Seen in My Career”
Chapter 20
The Opioid Crisis: Employers Have the Antidote
Conclusion
Appendix A
Detailed Case Studies on the Failures of Workplace Wellness Programs
Appendix B
Client Notice, Plan Sponsor Bill of Rights, and Code of Conduct
Appendix C
Sample Compensation Disclosure Form
Appendix D
Health Rosetta Principles
Appendix E
Health 3.0 Vision
Appendix F
Health 3.0 Vision: Implications for Providers, Government, and Startups
Author Bio
Bibliography & Endnotes
Acknowledgments &
Author’s Note
Stop! Don’t Skip This!
We all skip the acknowledgments, but I encourage you to read or skim for two reasons:
1. This book wouldn’t be possible without insight from the pioneering individuals here and throughout the book.
2. What you’ve been told about fixing health care just isn’t true. It’s already happening from the ground up. Any benefits purchaser can follow, no matter what excuse you hear from the status quo. Each of the more than 100 individuals and organizations in this book is doing it every day and each knows many others doing the same. Following the people below and the suggestions in this book can lead the way.
First, I want to acknowledge the employers, unions, their stellar benefits advisors, and others who have provided the substance for this book. I highlight five employers and unions, but healthrosetta.org has many other case studies. The common thread is that these leaders are problem solvers who ignore the partisan and status quo orthodoxies. They care more about enabling the American Dream.
Self-described progressives have implemented programs that many would call conservative and self-described conservatives have implemented programs that many would call progressive. Seeing this has been a breath of fresh air from the partisan bickering that dominates the health care reform conversation.
Not long ago, I knew next to nothing about health benefits. I just wanted to find (and fix) the root cause of our wildly underperforming health care system. How could we have so many smart and passionate doctors, nurses, clinicians of all types, and other professionals—and spend far more than other countries—yet have largely abysmal health outcomes? The root cause I found is that we purchase health care incredibly ineffectively. Medicare, Medicaid, private & public employers. Everywhere.
I decided to focus on employers and unions for practical reasons.
1. The overwhelming majority of non-poor, non-elderly get their benefits through their job. There’s no real evidence of this changing anytime soon.
2. As a general rule, employers and unions—including public sector employers—are especially ineffective at purchasing high value health benefits.
3. Wise public employers and unions are already showing how to dramatically increase health care investment value. This simplifies spreading the best solutions to public programs like Medicaid and Medicare.
4. Employers and unions can innovate independently without an act of congress or top-down master plan. The best solutions can be broadly replicated, creating a self-reinforcing dynamic to get us out of this mess.
The people below have both realized this and work tirelessly to fix our health care system from the ground up. I want to highlight just a few of the people driving this grassroots movement that have most inspired me.
Benefits Experts
Forward-leaning benefits experts are the vanguard that is worth its weight in gold. They’ve left behind wasteful, obsolete approaches that plague most employers. They’re the architects and first members of the Health Rosetta Institute. I can’t thank them enough. They take what Margaret Mead once said to heart.
Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it’s the only thing that ever has.
They’ve taught me virtually everything I’ve learned about health benefits:
Ashley Bacot, David Balinski, Jeff Bernhard, David Contorno, Heidi Cottle, Mike Dendy, Tom Emerick, Fred Goldstein, Scott Haas, Larry Hightower, Brian Klepper, Eric Krieg, Craig Lack, Lee Lewis, Jim Millaway, Steve Miller, Andy Neary, Ron Peck, Keith Robertson, Adam Russo, Bill Rusteberg, Edward Smith, and Woody Waters.
I also want to acknowledge the first group of forward-leaning benefits advisors that we’ve accepted into the Health Rosetta Benefits Certification Programs:
Robson Baker, Gary Becker, Adam Berkowitz, Thomas Carey, David Contorno, Megan Cook, Dan DaCosta, Thomas DiLiegro, Eric Dreyfus, Cary Goss, John Harvey, John Humkey, Joshua Jeffries, Adam Karalius, Lee Lewis, Donnie Marcontell, Tracy McConnell, Keith McNeil, Jared Meays, Jim Millaway, Kalli Ortega, John Sbrocco, Carl Schuessler, Jr., Craig Scurato, Edward Smith, Tommy Taylor, Antione Turner, Brian Uhlig, Chris Van Buren, and Mark Weber.
Delivery System Innovators
These individuals give me hope. They’re just a sampling of those I’ve been honored to learn from. The common thread is they’re believers and doers on my favorite quote by Buckminster Fuller:
You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.
The path to success is bumpy. Each of these individuals has faced many setbacks and keeps bouncing back:
Drs. Erika & Garrison Bliss, Jeff Butler, Dr. Natasha Burgert, Dr. Christopher Crow, Dr. Rushika Fernandopulle, Jon Hernandez, Dr. Howard Luks, Dr. Sachin Jain, Dr. Jay Parkinson, Dr. Jerry Reeves, Mason Reiner, Ryan Schmid, Dr. Jordan Shlain, Dr. Prabhjot Singh, Dr. Wendy Sue Swanson, Dr. Craig Tanio, Dr. Bill Thomas, Dr. Bryan Vartabedian, Dr. Sue Woods, Dr.Sheldon Zinberg, and the late Dr. Tom Ferguson.
The Health Innovation Ecosystem
I greatly appreciate the individuals who have invited me to their events and podcasts that advance my thinking and help spread this book’s message of hope:
Steve Ambrose, Tom Banning, Jessica Brooks, Mike Ferguson, Gautam Gulati, Fard Johnmar, Vidar Jorgensen, Laurel Pickering, Stacey Richter, and Karen van Caulil.
Other health innovations have greatly helped shape my thinking for the book:
Mark Blum, Chris Brookfield, Shannon Brownlee, Jonathan Bush, Dave deBronkart, Esther Dyson, Dr. Vivek Garipalli, Mark Gaunya, Dr. Venu Julapalli, Dr. Vinay Julapalli, Leonard Kish, Jan Oldenburg, Marc Pierson, Josh Luke, Kat Quinn, Dr. Vikas Saini, Bassam Saliba, Dr. Danny Sands, Dr. Martin Sepulveda, Chris Shoffner, Holly Spring, Melissa Taylor, and Tim Thomas.
Inspirational Authors
I’d also like to thank the authors of some great books that shaped my thinking:
Tom Emerick & Al Lewis (Cracking Health Costs), Dr. Atul Gawande (Being Mortal), David Goldhill (Catastrophic Care), Dr. Marty Makary (Unaccountable), Dr. Robert Pearl (Mistreated), Sam Quinones (Dreamland), Cathryn Jakobson Ramin (Crooked), Elisabeth Rosenthal (An American Sickness), Paul Shoemaker (Can’t Not Do), Nassim Taleb (Antifragile), John Torinus (The Company that Solved Healthcare), and many others.
I’m thankful for those I follow on Twitter—twitter.com/chasedave/following. I constantly weed and feed that list with a self-imposed 100 follow limit. This makes it my most useful tool for keeping up with the industry.
Policy & Politics
Leaders in the policy and political arena are included in the list of people I follow on Twitter, but there are others worth calling out by name:
Michael Cannon, Peter Grant, Nick Hanauer, Dr. Farzad Mostashari, and Governor Tommy Thompson. Also noteworthy are politicians such as Governor Jay Inslee, Senator Bill Cassidy, and others who have worked across party lines on initiatives such as making Direct Primary Care more available.
The Book Team
Lauren Phillips led the book’s editing effort. Her depth in health care didn’t hamper her ability to make the book readable for people outside of health care. She was a delight to work with.
I also want to specially thank my partner in the Health Rosetta, Sean Schantzen. Without him, there’s no way I could advance the Health Rosetta ecosystem like we are. He’s an unofficial editor and has added critical depth to the book, uses his legal background to keep me out of hot water, oversees our investing, is launching the Health Rosetta Institute’s first certification program, and has been key to executing our strategy to grow the Health Rosetta ecosystem. Perhaps most importantly, he’s fundamentally driven by a similar mission as I am. Scaling broad adoption of simple, proven, non-partisan fixes to our health care system has become the thing he can’t not do.
The Fuel to My Fire
I wouldn’t be fully candid if I didn’t mention the nearly daily fuel I receive from the stories of organizations and individuals acting with impunity to protect their interests at great expense to society. Here are just two examples.
1. Executives at one of the largest tax-exempt, faith-based hospitals systems in the country threatening electoral retaliation against the mayor of a city. Why? The mayor wanted to provide far better primary care to employees than the hospital system was providing. This would have allowed the city to balance its budget and provide better services to citizens.
2. An executive at one of the largest insurance companies in the country knowingly turning a blind eye to literally billions of fraud (see Chapter 7 for details) being perpetrated against the employees and employers they process claims for. One of the impacted companies (a heartland manufacturer) laid off 10,000 workers—many of which could have been saved if not for the $100s of millions of clearly fraudulent claims paid by the company.
The Best Part of My Life
Last, but certainly not least—my family. Almost everything I write goes past Coleen for review. If something I write isn’t comprehensible, it’s usually because I didn’t run it by her. Our kids, Abby & Cam, warn people to not bring up health care with me unless they have hours of available discussion time.
They have heard more about health care than anyone should have to, yet still have the sense of humor to give me grief about it. They may not know it, but a core reason I’m maniacal about building a much improved health ecosystem is that I want to do my part to leave them with a much better health ecosystem than when I arrived. God has blessed me with a great family and great kids. I’m on a mission to ensure everyone has the same opportunities for full health that we have.
Foreword
Brian Klepper
One of American health care’s deep mysteries has been employers’ and unions’ reluctance to challenge the health care industry’s excesses that deeply threaten their finances, our lives, and our country. At least some people and organizations in every health care sector—drug and device companies, care provider organizations, insurers and health plan administrators, health IT firms—extract far more money than the value they create. This is even though many, if not most, individuals in the health care industry are good people working within an enormously broken, yet immensely powerful, system.
Health care’s lobbying grip on national and local policy, and its imm
ense market strength make it seem all but unstoppable. In 2009, the health care industry spent $1.2 billion to influence the Affordable Care Act.1 Even as health care costs have soared, the public and private employers that pay most of the tab for 150 million Americans have largely accepted this as unavoidable. This book shows that tackling costs while improving care isn’t just unavoidable, but simpler to do than you think.
Back in 1980, the editor of the New England Journal of Medicine, Arnold Relman, warned of a medical industrial complex that now dwarfs the military industrial complex that President Eisenhower feared.2 Almost 40 years later, it is astonishing to appreciate how serious the impacts of this are throughout our society.
• Wasteful health care spending consumes 79 percent of household income growth, leaving just 21 percent for everything else.3 This, more than nearly anything, is destroying the American dream.
• Musculoskeletal disorders consume 4 to 4.5 percent of the entire U.S. GDP.4 We perform about double the musculoskeletal treatments of other industrialized countries, yet get no better health outcomes.5 This means ~2 percent of our entire economy is wastefully consumed by just one sliver of our health care system. Benefits purchasers that have tackled this one area have reduced their total spending by 4 to 11 percent.
• A 2015 study found that two-thirds of cancer drugs approved by the FDA from 2008 to 2012 have no evidence that they actually work.6 “Our results show that most cancer drug approvals have not been shown to, or do not, improve clinically relevant endpoints,” the study’s authors wrote, which is researcher-speak for “most cancer drugs don’t work.”
• U.S. companies are at a 9 percent cost disadvantage in international markets compared to countries like Germany, Australia, and Korea as a result of our higher spending
U.S. health care is complicated, powerful, and doing everything possible to maintain the status quo. That said, meaningful change generally finds its genesis in small, seemingly insignificant acts. When Dave Chase’s columns first appeared on the Forbes website, his breezy, attention-grabbing style and shockingly indisputable facts about health care’s outrages and solutions resonated with employer, benefits, insurer, and care provider communities looking for what’s possible.