The Value-Based Healthcare Podcast: David Chase

In Episode 9 of  The Value-Based Healthcare Podcast our guest is David Chase, co-founder of Health Rosetta a company that helps public and private employers and unions reduce their health benefits spending while improving the quality of care for plan members.

Mr. Chase talks with us about how employers can make better coverage decisions for their employees, make better financial decisions, and how collaborating with brokers can make a difference for the entire insurance marketplace. 

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Podcast transcription: 

Jay Ackerman:
Hi and good day. I'm Jay Ackerman, CEO of Reveleer. A software and services company committed to providing health plans with innovative technologies, to maximize their return from quality risk adjustment and compliance initiatives. This is a must in the value-based care world we operate in. I'm back again with another installment of our podcast series, The Value Based Healthcare Podcast. This is truly one of my job highlights as I have a regular opportunity to engage with thought-leaders, visionaries working across the healthcare ecosystem. And through our podcast, we aim to widen the visibility and voice of people working to change how healthcare is provided and the impact it has on all those who participate in the care delivery chain.

And I'm thrilled today to be joined by Dave Chase. Dave is the creator of Health Rosetta and cofounder of the Health Rosetta ecosystem. His TED talk entitled Healthcare Stole the American Dream, Here's How We Take it Back, sums up healthcare's devastation of the middle class and the redemption coming via bottom up movement. He was named one of the most influential people in digital health due to his entrepreneurial success, speaking and writing. Dave was the CEO and cofounder of Avado, acquired by and integrated into WebMD and Medscape. He is a father of two children, a husband and an oxygen fueled mountain athlete. Welcome, Dave.

Dave Chase:
Thanks Jay. Looking forward to our chat.

Jay Ackerman:
Same here. Why don't we just dive right in and why don't you tell our listeners a little bit about yourself and the journey you've been on.

Dave Chase:
Yeah, I mean you gave a little bit of the background and just to add a bit more, where I started my career was implementing health IT systems inside of hospitals, working for what's now Accenture. And then went on to start Microsoft's health partner ecosystem about 20 years ago, and that's proven to be a very good business for them. They've got about 28,000 partners just in healthcare and that generates a lot of success for them.

And then I was actually out of healthcare for a while, working on digital media and internet-based businesses. And then reentered about 10 years ago and saw that things had to move finally to a value and outcomes-based model and said, "Okay, it's time to reenter". And you look for a market gap, which we found. And the way we did that was studying the organizations that maybe against their own economic interest in the short term, they were really tackling healthcare and achieving the quadruple aim. And it was kind of common sense ultimately where they realize if they improve the care team experience, which has been undermined in a lot of healthcare provider organizations, that naturally led to a better patient experience. In turn, that created that partnership that would lead to a better outcome and in the right model, lower costs. And it was really through that process that I found that as we say, both we believe true and aspirationally, on our website healthcare's fixed, we're just replicating the fixes.

And what you found was all the gnarly problems that are out there. Somebody in some organization has already developed a solution, proven it out and now are replicating it. And our goal and our movement is to massively replicate those successes. And so that's really where our focus is now.

Jay Ackerman:
You know, you're tackling a pretty ambitious agenda or objective. So, with that, how do you set in the near-term measurable objectives that can tell you that you're on track? So maybe you can share what you're focused on, objective-wise over the next 12 to 18 months.

Dave Chase:
Yeah, I mean it's a good question because it certainly is a long-term ambitious goal and we're well aware this is a 10 to 20 year journey and the system change model that we're following is one that lifted tens of millions of people out of poverty in India and is remaking a key part of the food system in the US. And the essence of that is you find microcosms of success and then understand what's the essence of that from a business and kind of metrics perspective. And then apply technology and capital to replicate that. And so one of the key objectives and sort of where our focus is, we launched this initiative basically around Labor Day of 2017.

And the tip of the spear for us are the benefits brokers, benefits consultants. We think that's the single most underestimated role in the entire healthcare system. Because if you look at it, if you're not low income or elderly, overwhelmingly you get your benefits through your job. And these are the people who for better for worse, make the decisions, by and large, that companies they work with adopt. And so, we said we're going to find the ones who are worth their weight in gold. Unfortunately, most of the benefits brokers are pitching themselves as buyer's agents essentially, but paid like seller’s agents so you ended up having a lot of conflicts of interest and lack of aligned objectives.

And so, the metric that we look at is the number of lives that these great benefits advisors manage. And so, in a year's time while being self-funded and bootstrapped, we've onboarded these advisors that manage 3.7 million lives. And so that's… then the objective is, how do you essentially put these lives into high performing plans? And so, the metrics end up revolving around that. The onboarding of the advisors and then transitioning their base of business, which of course they're all trying to grow that business into these high-performance plans that achieve the quadruple aim. And the great news in this is the best way to slash healthcare costs is to improve benefits. And so, you're seeing organizations literally spending 20, 40% and even more, less per capita with very superior benefits to the status quo, which unfortunately doesn't perform well.

Jay Ackerman:
So with the career path that you've been on, I'm sure you find yourself bumping into company CEOs on a regular basis and hear from them the challenge that they have with healthcare costs. So, when you tell them what you're up to in your aim and focus, what's the general reaction you get from them?

Dave Chase:
Well, they're happy that somebody tackling it, because much of what you find with them is they look at this problem and they'd look at it sort of like trying to solve Middle East peace. Like they'd like that solved too. But it seems kind of hopeless and out of their control. And so that's what we debunk and say "no, it actually is something that you can tackle depending on your circumstance".

You might tackle one tactic before another, but ultimately, in fact, I have on my LinkedIn profile now, cause I heard it so many times was, I think I have something like ‘hope merchant’ and that's basically, we give people hope. This is actually something you can solve. It is being solved. If you don't believe it can be solved. You're right. But it's absolutely being solved. Every corner of the country, large employers, small employers, rural, urban, public, private. We haven't found a place you can't do it. But you have to sort of let go of the tyranny of low expectations that it can't be solved. Which it's just odd to me that here we are, we have an amazing country, we're spending 50 to 100 percent more than other countries. I haven't found a country with more passionate and talented and gratification delaying clinicians than the US. So why on earth would we have low expectations? I don't know. And so, when you actually do that reset, then people put on that problem-solving hat and say, "Let's make it happen". And that's exactly what is happening.

Jay Ackerman:
I love it. Hope merchant. It's a great way to term what you're doing. And I can tell you that as a leader of a midsize business, it is one of our biggest challenges year on year, the price increase we see in benefits. And not just the cost increase, but also making sure that the offering that's there for our employees continues to improve. And so, they tend to be moving in the opposite directions.

Dave Chase:
Yeah, you hit on a key word in this, and I actually have a chapter in my last book about this, that the prices indeed have gone up. The thing that as you demystify this for people, you ask them, "Are doctors getting paid way more than they did 10, 20 years ago? Are nurses getting paid way more than they did 10 years ago? Are the underlying costs of healthcare, things like medical supplies, are they far different"? With the exception of some specialty drugs, the costs are actually flat in healthcare for the last 5 or 10 years. It's the prices that have gone up. And that's the thing that people go, "Whoa, tell me more". And so, we break that down. You get rid of all the junk that actually isn't helping people restore their health or maintain their health.

I mean, I heard a story just this week where one of the advisors in our program, basically they were talking about this organization that they didn't even actually go off of the existing carrier who is administrating their plan. They just got rid of all these kind of band aid programs that were supposed to address healthcare costs, like wellness programs and transparency tools and all these other things. And the next year their claims went down 30%. Because actually a lot of those so-called wellness programs trigger unnecessary and non evidence-based tests and procedures and all of that. And so, when you strip away that stuff and you put in things like proper primary care, that's when you get the big payback.

Jay Ackerman:
That's a good segue. So, let's talk about health and healthcare in the United States. What industry trends is Health Rosetta watching most closely in healthcare?

Dave Chase:
That's a good question. I would say probably the biggest one is around hospital spending. That's where the biggest chunk of the dollars have gone. And I think hospitals have historically kind of gotten a pass because the majority of them are tax exempt. I tend to avoid using the word nonprofit. 7 out of the 10 most profitable hospitals are so called nonprofits, they're just tax exempt. And there are a few true charitable hospitals out there. But sadly where I started my career working in a lot of these hospitals, I'm afraid many of them have lost their way and are just going crazy on private commercial insurance in particular, because there hasn't been the oversight.

And so, you see the recognition that PPOs, you know these preferred provider organization networks seem like a good idea and I think we're at one time. But now even if you're self-insured, you rent these networks and you pay for the privilege of wildly overpaying for things. And so, you see a trend away from PPO networks towards networks that are plans that have no networks. And they go off of reference-based pricing or you see successors to PPO networks, what we call transparent open networks. And actually, the hospitals as they awakened to that, they see a real opportunity there.

And so that's an interesting trend that is happening faster in some areas than others. Just like we were talking about lead earlier in the built environment, you saw certain geographies like in that case Portland, Austin, Boulder, they were early adopters. The same thing's happening here where direct contracting and some of these other things are taking off in particular geographies more than others.

Jay Ackerman:
So just using your lead example, can you share kind of what market or markets you see moving faster and more successfully?

Dave Chase:
Yeah. We really end up starting with a focus on primary care. There is no well-functioning healthcare system in the world that I've ever seen that is not built on the foundation of proper primary care. And we've absolutely devastated primary care over the last 20, 30 years. And so, it's being rebuilt brick by brick. So, there's some locales like, it ranges from bigger cities like Denver and Seattle, increasingly Phoenix and then smaller locales like Tyler, Texas where value-based primary care can be had anywhere in those metro areas. And that becomes a very foundational piece that when you have that, then one of the areas where there's a tremendous amount of wasted spend is people going to the ER because they can't get into their primary care doc because we so badly undermined it. And so, half of the people going to the ER don't need to be there. They just are there because they can't get into proper primary care. And so you avoid a lot of unnecessary ER visits and a lot of unnecessary treatments.

And when you actually have time to talk to a doctor about the options available versus the kind of hamster wheel milk in the back of the store, primary care where it's just there to refer to high margin stuff, then that's when you see, oh, 90% of the spinal procedures that Starbucks was doing when they did their studies didn't add any value, they just added a lot of costs. And it turns out there's very strong evidence for things like physical therapy for lower back pain. That's the second most common reason people go to the doctor after cold and flu is lower back pain. And sadly, it's the number one reason for disability and the number one driver of opioid prescriptions, even though there's no evidence that other than the short-term masking of pain that it does any good there. So those types of things can really make a dramatic, immediate impact, but are also the important long-term foundation for a proper healthcare system.

Jay Ackerman:
Dave thanks for highlighting those markets and those examples. What do you see as the greatest barriers or challenges that are affecting patient improvement in today's environment?

Dave Chase:
Really, it's a mental barrier. I mean, it's interesting even though there's the lowest Net Promoter Score of any industry when you talk about the health insurance. I means it's lower than even cable companies and airlines, which is unfortunate because I think they're reflective of the misaligned structure that we have.

Yet at the same time, there's sort of a Stockholm syndrome where if you change things, people, even though they're not happy with what they're spending and maybe the consumer experience, they're concerned. And so that's probably the biggest barrier. And so that can be overcome. But I would say that by far is the biggest barrier that we've seen. Not that you can do these things or not, it's just are people willing to embark on that and sort of suspend some disbelief, that you can fix healthcare. And then once you build some of that success, then that virtuous cycle kicks in.

Jay Ackerman:
Would you mind sharing an example or two of how you think people are overcoming the mindset issue?

Dave Chase:
Yeah. I've mentioned Tyler, Texas for example. I was there not long ago because I was hearing such great things about what's going on there. And what they did at a bunch of employers around that community was they put in value-based primary care. And one of the things they did was they started with a smaller group of employees, some of whom were high utilizers and said "Hey give this a shot. And by the way, this is what our executives are using". And unfortunately, the healthcare system is kind of so out of control, that you can actually make a big dent right away.

I mean there was one patient that she was costing the employer $12,000 a month because about every six weeks she was going into the hospital due to complications from a bariatric procedure. And once she got access to proper primary care, rather than kind of bouncing around in this out of control system, other than the cost of that direct primary care doc, literally her claims went to zero, because she was well managed. And boy that got the attention. Certainly, the employer and it got the attention of her coworkers like, "Whoa, what's that all about" and "Gosh, you can actually text your doctor and they respond" and "I'm not forced to go into the doctor"; the two thirds of the time you really don't need to go in there. But historically because of the distortions on payments you had to go in there. And so, when suddenly the doctor is available and they have time to speak with you and if you need maybe a health coach or something like that, they're available. Those type of things. Are those one-on-one, kind of, personal stories that then spread like wildfire around a company.

Jay Ackerman:
Yeah, you talked about texting as a way to engage with a doctor, or a primary care physician. Can you share your thoughts and what you see as the most interesting technology kind of unfolding that you think can really change the experience between provider and patient and provider and member?

Dave Chase:
Yeah, I mean, one of the things I've said is the most important medical instrument is communication. And that's where one dimension of that is texting and it's just literally having easy access to your care team. When you need it, it is amazingly impactful, very simple but really impactful. So, in that case, they have an application that's got secure messaging, HIPAA compliant, all that. But then it has some health coaching tools built into it. It's really pretty straight forward at the basic level. Now as you get into some specific condition areas, there's some technologies that are very useful for doing remote monitoring, but candidly, a lot of it's pretty basic to begin with.

Jay Ackerman:
That's great. I'm about kind of staying with the public. What recommendations would you have for the public regarding their empowerment and the ownership of their own healthcare?

Dave Chase:
Yeah, I mean it's really raising this issue from, again, most people are getting their healthcare through their job if they're not elderly or low income. And so, it's starting to, if their executives or their HR department are taking the initiative, making them aware of... I mean it's one of the reasons we made my book available for free and have the TED Talk, is people have this awakening like, "Wow, I could actually solve this. Are you kidding me? That's not what I've been hearing". And so, when they raise that, they do have clout. Because particularly in a tight labor market, people do care about retaining and attracting employees. And so, that's where people historically have thought, "Oh, you have to spend a lot of money to have great benefits".

But unfortunately, we have a reality today that the plans we have, the math is tough. You've got 60% of the workforce makes $20 an hour or less. The family of four premiums are over $20,000. Over half of American households have less than a $1,000 in savings, and over half the workforce has over $1,000 deductible. And so, you're a bad stubbed toe away from financial ruin. And what we see is putting in plans that get rid of all the barriers to good care. Remove the deductibles, remove barriers to primary care, remove copays. And I'd sum up the plan design as make good decisions free, make bad decisions expensive. And that's how you can spend 20, 40% less per capita with superior outcomes.

Jay Ackerman:
I love that. Yeah, make good decisions free, make bad decisions expensive. Good words to live by. Let's flip to the healthcare exec. What advice might you have for healthcare executives in navigating our industry during these rapidly changing times?

Dave Chase:
Yeah, I mean it's one of those things where it's a once in a career type of transformative shift that's happening. And anytime you see these massive shifts there's big winners and losers. And so, you see, fortunately there is time, because healthcare does tend to move fairly slow. But at the same time there are folks who are leaning into this. I mean like in the area that you serve. Some of these great Medicare Advantage plans like the Iora's and CareMore's and some of that. These folks are growing like gang busters. They have no problem recruiting because there's a lot of dissatisfaction at the clinician level. And so, lean into that and recognize that you need some blank slate thinking there. And there's tremendous opportunity in the organizations that lean into that, will win. And there's quite a few parallels that I've seen with another sort of local oligopoly, monopoly type of industry, the newspaper industry. And sadly, a lot of the incumbents in healthcare, they are literally saying the same words that I heard out of newspaper execs in the late nineties and we know how that story turned out.

There were a few who were aggressive and have survived and thrived through that transition. But there was a lot of sense of entitlement that those organizations had that I'm hearing from a lot of the incumbent organizations. Versus the ones who say, "Okay, we're going to certainly kind of milk the old revenue streams, but we're gonna, rather than sort of play 95% defense, 5% offense, we're going to play 70% offense, 30% defense", and there's every opportunity to do that. But your position in the market is not guaranteed. I can assure you.

Jay Ackerman:
The newspaper industry, when you said, that it was kind of the first time I've heard somebody point to them as an example of how healthcare companies could evolve or those that kind of stick to their old way of doing it could end up. But as I listened to you talk, I mean that just kind of rang true to me so I think it's a great example to point out.

Dave Chase:
Yeah, I mean the printing press is like hospitals. It is a barrier to entry and a source of competitive advantage that turned into a boat anchor. As hospital's shift from revenue center to cost center, and we have 40% over capacity. They can try to look at that as doom and gloom or they can say, "Maybe this is sort of like the base closings". Also, in that time frame where the smart communities like Philadelphia said, "Okay, the Naval Yard is closed", but guess where the most vital part of their community is right now, the former Naval Yard. There's all kinds of activity there. And so there's a lot of opportunity in this, what I call economic development 3.0 plan, the health card, to maybe repurpose some of that overcapacity in the hospitals and get efficient there where historically you built it and you could just bill more.

But there's frankly a bubble, in terms of hospital capacity in a lot of markets and that's going to be a painful transition. But if you get proactive you can see the opportunity and other uses for that investment.

Jay Ackerman:
So let's kind of shift away from the players in healthcare to those that are setting regulations. So, what regulatory changes would you like to most see come from CMS in the next couple of years? Any thoughts on that?

Dave Chase:
Yeah, I've actually been drafting up something because we're generally, A, we're a fiercely nonpartisan group, but we have seen some things where right meets left, which is our vantage point is unique that way. In fact, the irony is ideas that you would call progressive are being implemented by conservatives and vice versa. And so, we have this vantage point. So, there's a couple of things, there's probably 5 or 10 things, but I'll just highlight a couple that I think are notable.

One is ERISA. ERISA is the regulatory framework that oversees retirement benefits and health benefits. And historically you probably have experienced this as an executive, companies take it very seriously, their retirement benefits. They know that if they were to put employee's money into Uncle Bubba's investment fund that had terrible returns and high fees and kickbacks to the broker who is selling it, you would get your butt sued. And there's been cases have gone all the way to the Supreme Court class action, unanimous in favor of the plaintiffs there, and so it self-polices quite well. Unfortunately, that hasn't been applied in the same way in health benefits. Main reason being, it was viewed historically as, oh the employer is picking up the premium. Therefore, the fiduciary duty, you know where you're stewarding somebody's money doesn't apply.

I debate that point because a dollar's a dollar and clearly, it's caused 20 years of wage stagnation and decline, but let's say that's water under the bridge. Today it's a 70, 30 split in terms of the premium spend, you know I already shared about the deductibles. Clearly, it's the employee's money that the health trust that's in a self-insured employer is managing in two thirds of employees. Basically 100 million employees are in self-insured plans. And so, the beauty of this is let's have it the same self-policing that's going on in retirement benefits hasn't gone on here. There's lots of evidence around that. So, let's just apply that same fiduciary duty and that will be a game changer. So that's a big ripple effect. Again, go back to a newspaper analogy. The employer markets like the classifieds business was for newspapers, responsible for about half the revenue and the significant majority of profits. But it was very easy to ignore until it wasn't. And as that changed, the whole industry underpinnings changed. And so, that's a big lever.

The other one that I would highlight is ending discriminatory pricing. One of the ways you can obfuscate what's going on is have a gazillion different prices for the same thing. You see it already in Maryland with an all payer rate setting. So that's a more aggressive stance. A less aggressive stance would say, "Hey, healthcare providers can charge what they want, but they just have one price" and then it should be communicated as a multiple of Medicare rates. And so, if you think it's okay that they're charging 500% or 300% of Medicare rates and that's worth it, that's okay. It's a free country, but they shouldn't have a hundred different prices. And that's one of the core problems that we have in our healthcare systems is the discriminatory pricing. And the people least able to negotiate, people like self-pay and people in the individual market really have a disadvantage. And so that's something that has already been done in some states, could be done more aggressively.

Jay Ackerman:
Those are great thoughts to share on the regulatory front. I appreciate that. Hey Dave, you've been a great guest. Let's start to kind of wind down our podcast. I'd love to move into my rapid fire. So, we're going to kind of bring it to a close with a handful of lighter questions, top of mind, real quick. So, you're outdoorsman, you're active. What was your favorite run or race that you've completed?

Dave Chase:
I would say it was the Boulder Mountain Tour in Sun Valley, Idaho. It's a Nordic ski marathon and it's the second largest race after the Birkebeiner in Wisconsin and it's just so beautiful. It's in the Boulder Mountains in the broader Rocky's range. It's a heck of a workout. There's just incredible people in this and it's just this festival atmosphere, and it puts you at your physical limits, but it's a very rewarding experience.

Jay Ackerman:
Sounds fun and amazing. What was the last truly great book you've read?

Dave Chase:
Gosh, there's a lot. Depends on whether it's a light reading or not. In the healthcare realm, Unaccountable by Dr. Marty Makary is the one that I recommend the most. I just finished The First Conspiracy around the plot to assassinate George Washington. It's an amazing story that most people don't know about and so that's top of mind right now because it's pretty recent. But it's right up there with Undaunted Courage, which is about the Lewis and Clark journey that I loved as well. So those are a few off the top of my head.

Jay Ackerman:
Those are great, so I've said they were light, but this one's a little heavier. If you could redo one decision in your life, what would it be and why?

Dave Chase:
Well, I guess I'd preface it with, I'm a windshield guy more than a rear-view mirror kind of guy, but I try not to have a lot of regrets. But if there would be one, it's not being bolder sooner. I mean even what we're working on right now, I mean it's, some would say it borders on the delusional, but because we're getting so much traction, it seemed so audacious and almost hubristic to think that you could actually change the healthcare system. But it's been incredibly inspiring that there's a view that; - birds need two wings and in this case its form and fire. And so, what we found is we've given people a framework for how to actually get out of this mess. And then the fire comes in this ecosystem that we've built that has been growing rapidly. And it's really fun just to... there's so many great people in healthcare and who felt historically almost powerless to do anything about it. And so, that's been the thing. I wish I dived into that even before I did.

Jay Ackerman:
Fantastic. What's your favorite app on your mobile device?

Dave Chase:
Well, I'd say the one I look forward to the most, it's apropos to this conversation is the Podcast app. I mean, I hear so many incredible insights both in our field but outside of the field. And then the one that I get the most utility out of is Evernote, to be more practical.

Jay Ackerman:
Yeah. Actually, it's interesting, I'm an iPhone guy and now with my weekly summary of where I'm spending my time, I do see my podcast quotient continuing to rise. So much great content out there. So easy to consume.

Dave Chase:
Yep, definitely.

Jay Ackerman:
How do you invest in yourself?

Dave Chase:
Well, I mean a few things. One of the things that I, boy I resisted forever, was kind of how I start my day because I'm a morning person, so I pretty much wake up at full throttle and would just try to dive into work right away. But now every day, basically I start my day with essentially an hour of prayer and yoga and it's like a superpower in terms of the rest of the day and focusing it. And so that'd be number one. Number two is, no day is complete without some exercise. I probably only miss a day or two a year if I'm sick or something. And that's a big part of it. And three, sort of a psychic reward is about an hour from now I'll be doing some volunteer coaching at the high school track team where my son's on the team. And that's just really fun to do that. And I consider that an investment in myself just because it's a whole different realm that I operate in every day.

Jay Ackerman:
Yeah, no, that's great. I share that similar passion. I have two boys, and my younger one, I've coached both of them. So, my older one I've turned him over to more professional hands and my younger one, I'm enjoying the journey with him and his 11 other baseball teammates. So that is a bit of an investment each week.

Dave Chase:
Yeah, just fun you get to… I've always enjoyed a range of different generations and when I lived out in Sun Valley, Idaho, it was almost like the fountain of youth out there. I had, I remember having lunch with famed cardiologist, he is the inventor of the artificial heart valve. This guy's 89 he was still full on hitting it hard. And then younger people, boy, they have different insights and I just love interacting with people in all generations.

Jay Ackerman:
So bringing our rapid-fire round to a close. What's your favorite quote?

Dave Chase:
My favorite quote I would say is what I have as my pinned tweet on Twitter, which is by Buckminster Fuller and he says, "You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete". I love that quote.

Jay Ackerman:
That's a perfect way to bring this one to a close. Dave, you've been a fantastic guest. I've enjoyed your thoughts and your insights on the healthcare industry and all the change that's unfolding. And I'm sure our listeners will enjoy it as well. So, thanks for your time. This will bring our Value-Based Healthcare Podcast to a close. Please follow Reveleer on LinkedIn or you may also follow me on Twitter @AckermanJay. Over and out.