The Blueprint to Fix Our Broken Health Care System Already Exists: A Jellyvision Q&A with Dave Chase

Mark Rader Benefits Communication, Industry Insights

Recently, we had the pleasure of talking with Dave Chase, author of The CEO’s Guide to Restoring the American Dream: How to Deliver World-Class Healthcare to Your Employees at Half the Cost and one of the keynote speakers at our inaugural Jellyvision Big Ideas Summit. Founder of Health Rosetta, a company devoted to helping employers make more cost-effective health care buying decisions, Dave is committed to finding practical ways to curb (or even reverse) the ongoing rise in the cost of health care for American employers. Here are some highlights from our conversation:

Jellyvision:

Hi Dave. Thanks so much for talking with us. For those who aren’t familiar with your work, what do you feel are the biggest problems with our healthcare system right now?

Dave Chase:

Broadly speaking, the biggest problem is that health care has stolen 20 years of wage increases from the working and middle class. It’s created what is an economic depression for the working and middle class. One definition of economic depression is two or more years of wage stagnation or decline. Let’s be clear, it’s not because employers are stingy. They’re spending far more money on employees than they were 20 years ago and it’s all gone to health care. If we’d seen our lifespans increase 50% during that time, I’d say that was money well spent. But that’s not the case. We spend far more on health care and we have the worst health outcomes in the developed world. So, high level, those are the big problems we’re trying to tackle.

Jellyvision:

With the costs of health care continuing to rise, what advice would you give HR professionals looking to both reduce costs and improve care for their employees? Where should they start?

Dave Chase:

First, the way I look at it is in terms of what a plan needs to be successful and what it needs is to be built on a foundation of proper primary care. I’ll tell you why. There’s no well-functioning health care system in the world not built on proper primary care. However, we’ve basically destroyed it over the last twenty-plus years. So, the wise benefits purchasers recognize to invest there.

The second facet of it is, you need to be working with an aligned benefits consultant. Take a look at wise U.S. health care purchasers like Pacific Steel: they’re spending 40 – 50% less per capita on benefits without cost shifting or without getting lucky. It’s really quite simple: they pay less on a unit cost basis whether it’s for hospitalization or a drug and there are many proven tactics for how you do that. Working with an aligned benefits consultant is a proven tactic on how to get this done. This establishes a good foundation.

Also, what’s happening right now is benefits brokers are pitching themselves as buyer’s agents, but they’re being paid like seller’s agent. This creates all kinds of conflict of interests and lack of disclosures. So, it’s not because they’re bad people, but when your foundation is set up with this structure, it’s pretty hard to do the rest of it.

Jellyvision:

You bring up a great point about potential conflict of interests and lack of disclosure. Can you speak more on how transparency plays into the big picture? How important is it that there is transparency in pricing and, also, transparency in seeing how people are compensated?

Dave Chase:

It starts with transparency of how your benefits consultant is compensated. In the Health Rosetta program we’ve established, we have a code of conduct for benefits advisors and a disclosure form. If there’s any pushback on our code of conduct or disclosure form, we know it’s an issue. There are legally mandated things you have to report, but we found out there’s 17 undisclosed revenue streams that the client was unaware of. So, that’s the first level of transparency. The irony is you hear benefits brokers say, “providers should be transparent” but then when you say, “OK, but transparency should start at home, with you,” you might get some pushback.

When you start to talk about transparency in the benefits context, cost transparency is one element of that and that can be incredibly easy to gain. The way I look at it is, if I buy a car, drive it off the lot, deal’s done. So, if a month later I get a new bill for the transmission in the car, I would say, the dealership wasn’t transparent with me about the price of the car. This wouldn’t be a good deal. One would assume the price of the transmission would have already been bundled in the original price of the car. As it should be, as it needs to be. The same rules should apply with medical costs.

There are more layers to transparency, as well. For example, there’s what I call a fair-trade transparency. This is where you have access to the data you need to properly consider the environment, the safety culture, the treatment of staff at hospitals.

For example, if there’s data reported on a facility, but it’s being internally suppressed, that’s a transparency issue. If you were to ask a clinician or a nurse if they would have a loved one receive care from a facility, the answer can be illuminating. If the facility is an environment where safety data isn’t being disclosed, then you have a problem. Just as your company wouldn’t allow putting an employee in an airplane where they were suppressing safety records, this should be the same with where their employees receive medical treatments. But it happens all the time. It’s 47 times safer to jump out of a plane with a parachute than it is to be admitted to a hospital, in terms of a preventable medical mistake.

This is a level of transparency that’s needed.

Or, say, you know a hospital is a safe facility, but the staff is treated poorly. We have data that shows how the staff is treated effects health outcomes. So, this would be another level of transparency. And then, let’s add another layer: So you have all those things, a safe facility and well-treated staff, but the care you receive isn’t evidence-based and not a necessary treatment for your condition. Could be the most well-done procedure in the world, but you didn’t need it. That’s another level of transparency that could have helped an employer make more financially sound decisions about where to direct their employees.

So, to sum up, transparency should be a bundled price that includes a safe environment, a good safety culture and access to data. That’s the way I look at it.

Jellyvision:

One of things you hear a lot about is the importance of making employees themselves savvier health care consumers. But then you run into studies like the one recently put out by the Kaiser Family Foundation that basically says these efforts aren’t working that well. According to that particular study, only 17% of employees said they did shop around and many aren’t putting money in their HSAs even though they’re made available. So, my question is, what would you say to those who may feel cynical or pessimistic about trying to change employee behavior in the effort to cut costs and improve care?

Dave Chase:

I would say that most of the efforts to, quote, fix health care, have been more blaming the victim type of approaches, rather than get at the underlying issue, while we just pay too much for the same services.

Blunt instrument high deductible plans have shown that people delay care when they shouldn’t have and things blow up. When you have half the workforce, where their life savings are less than their deductible, they’re functionally uninsured. So it doesn’t solve the problem. The so-called transparency efforts give you the best information on the best bad deal that you might get, they’re just not useful.

Employers who are spending 20, 40, 50% less with superior benefits, they’re not putting Band-Aids on issues or blaming the victim. They get at unit cost and primary care. And that approach has proven time and time to work. So you have to just rethink things from the ground up. A lot of the so-called innovation is putting recycling bins in a polluted building and calling it green. It’s just not going to get the job done, it’s not going to get the problem solved.

Jellyvision:

Sounds like it’s the difference between focusing on a few headline-grabbing silver bullets versus the less sexy, but more effective approach that you’re describing. Making smart fundamental adjustments across the board.

Dave Chase:

I would say that half of the things that have been added into health plans in the last decade or a little more have been a Band-Aid on a broken primary care system, whether it’s telehealth or urgent care clinics or nurse care coordinators, the list goes on. If you have proper primary care, then 92% of the issues people come into the health care system can be fully addressed. This isn’t what most Americans are getting. Fortunately, it’s getting rebuilt, brick by brick. But all these little Band-Aids did nothing other than add cost to the plans.

Jellyvision:

Let’s pivot a bit now and talk about benefits communication. Here at Jellyvision, our way of helping employers curb costs is to provide tools that will not only better educate their employees but help them make smarter choices about the health plan they’re going to choose or how use their HSA and 401(k)s. Ideally, not only do the employees save money, but their employers also save money. How do you see effective benefit education and decision support fitting into the bigger picture of fighting the overall problem with rising costs?

Dave Chase:

I look at it as kind of two sides of the same coin. On the one side, you need to have plans designed well. We’ve been talking about the importance of that, but you could have the best designed plan in the world, but if it’s not well communicated, if the work force is not educated about it, it’s still going to fall on its face.

So you have to have that kind of hand-to-glove fit. Great plan design, great communication and insert that into fitting into a broader strategic framework of change management. How many times have we all heard “employees are our most valuable asset”? Yet, as I alluded to earlier, I would argue that if you take something like health benefits, where it’s the second biggest cost for most employers, “employees are our most valuable asset,”, but you’re putting people into harm’s way, both medically and financially, you’re not walking the walk of “employees our most valuable asset.” So, to me, those things all kind of tie together. You need to walk the walk and talk the talk. Have a great plan design and be able to communicate very effectively on an ongoing basis.

Jellyvision:

Digging a little more into that, what do a lot of companies get wrong about how they try to educate or communicate benefits? As you say, a lot of it is trying to get people comfortable with something relatively new and scary, a choice they have to make. What differentiates effective benefits education from ineffective education?

Dave Chase:

One approach that comes to mind for me that doesn’t work is the kind of one and done model. You have the open enrollment meeting and you barf a bunch of information at your employees and then you think you’re done. Versus the organizations that walk the walk and talk the talk and believe employees are the most valuable asset and are truly concerned about their well-being. This is great for the individual and it’s also great for the business when people are happier and present. I’ve got a case example in my book about IBM. They realized they were going to compete in a very competitive environment with an increasing competition with Indian-based service companies that may have a lower cost structure. The way IBM was going to win was to have a high performing workforce and communicating with them and having proper primary care and mental health services. Knowing how to communicate in a very appropriate and consistent way is a key part of how they got embraced and put themselves on a different trajectory than most corporations out there. This allowed them to compete much more effectively than they have otherwise.

Jellyvision:

They created a better benefits user experience for their employees, in other words.

Dave Chase:

That’s right.

Jellyvision:

You talked a little bit about the way benefits brokers and consultants are compensated up front. Can you share some of the ideas that are built into Health Rosetta that would change the status quo on that front?

Dave Chase:

I think there’s a parallel with what’s going on with benefits brokers now and what happened around 20 – 30 years ago in financial services, where the stockbrokers didn’t have aligned interest and didn’t have proper disclosure. The smart ones reinvented themselves as financial and wealth advisors and the ones who weren’t as smart clung to the old ways. The ones who leaned in—they, of course, did very well and grabbed market share.

If I sued you and paid for your attorney, it wouldn’t make any sense, but health care has been working that way for a long time. So, you want to truly work for your client and the benefits advisors who are doing that are having a fantastic time. They love working very explicitly for their client instead of being sales agents for the vendors and the carriers. It’s a once-in-a-career transformation and any times you have those kinds of transformations, there are big winners and big losers. That’s sort of how I look at it.

Jellyvision:

What kind of reception have you gotten from brokers and consultants when you talk about this new model? Are there any stories of this sort of career transformation you can share?

Dave Chase:

First, for many brokers, it’s just kind of the oxygen they breathe. They haven’t thought about it; it’s always been that way. They often pause, like, “Okay, well, how’s that work?” And, of course, we’re not asking anybody to take a vow of poverty. They want to understand how it works, and how can they make a strong, solid living doing that. We have lots of education, and people who have already made that shift are very open about how they go about doing that. And so, yeah, I that’s been the main reaction, maybe a little bit of puzzlement, then that makes sense and they ask, “How does that work?” Then, you know, we plow ahead at the point.

Jellyvision:

You have hundreds of consultants buying into your Health Rosetta program and the philosophy behind it. What are you doing to keep that momentum growing?

Dave Chase:

Initially, we were kind of blown away with the response. We had more responses in the first month when we launched the program than we thought we’d have after two years. It was a good problem to have, but it took us a while to dig out of that. So we just accepted in about 8% of the folks, because we didn’t want to just accept people in and do a terrible job delivering. Through the last 18 months, we’ve listened and learned. We’ve essentially created kind of a progression, so we can meet people where they are. Some just want to get initial exposure. Some are like, “I need to know how to do it.” While others have been doing it better but are relatively new and want a peer-to-peer interaction, they want some tools to do it more effectively. Then, there’s a small subset that were really at the elite level, where we just modeled the program around them as the like sort of the benchmark.

So, we’ve created accreditation and courses and education for each of those levels. Ultimately, we don’t have to turn anybody away, wherever they are in that journey. We can meet them where they are and show them the path. We’re rolling out the second half this year. You know, we hadn’t accepted new applicants for a year and now we’re reviewing tons of applicants right now. We’re figuring out where do we slot them in and make it very meritocratic. They can show us where they’re at, what they have done with plans, what their knowledge level is. We’ve done a big education course and they can slide in where they’re the best fit. The main thing is we’re not focused on hyper-growth. At this point, we’re getting really strong demand and we want to make sure we deliver. Then, like any market development this may take a few years. Hopefully, we’re all collectively ready to do the kind of mass scale up, but it’s still relatively early days.

Jellyvision:

You’ve probably run into HR teams and brokers who say they hate the status quo or recognize that they’re living the status quo, but still find it hard to make a change. What would be your main advice to them to nudge them to try something new?

Dave Chase:

I think there are a few things to say. It depends on who you’re talking to, but one level is just pure financial bottom line. Like where we talked about Pacific Steel, they’re a $200 million a year company and their margins are around 5%, so to see the kind of reduction that they had in healthcare spending—they went from spending $8 million to $3.5million—a company like them probably would have had to had to increase sales between 20 to 40% to have that same impact. So, that dimension of it gets people’s attention.

I already talked about the fact that we’ve got, essentially, half of the workforce in a 20-year-long economic depression. A lot of the bizarre things you see in society and in the electoral world, if you unpack it, it’s overwhelmingly related to this issue of our broken health care system. It’s not been well understood and that’s what my book is really about; connecting those dots. Finally, the other thing that I talk about in my new book, The Opioid Crisis Wake-Up Call, is that I found that government and media were greatly oversimplifying the opioid addiction problem. There are 12 major drivers of the opioid crisis. Unfortunately, employers are the key unwitting enabler on 11 of the 12 major drivers.

Think about who are impacted by the opioid crisis. Overwhelmingly, it’s working-age people and their dependents. Basically, if you’re not elderly or low income, overwhelmingly, you get your benefits from your job and, so sadly, our benefits have been paying for the largest public health crisis in a hundred years. So this is another thing that gets people to say, “Okay, enough, we’ve got to do something about it.”

Jellyvision:

Last question. When we asked you what you might like your “walk-up music” to be for your talk at our Big Ideas Summit, you chose “Break on Through” by The Doors, which I thought was a cool choice. Why did you land on that, do you think?

Dave Chase:

The keyboardist is from Chicago, so I was looking for a Chicago musician. It seemed like it was aligned with the theme of the event. I thought “break on through,” and we’re talking about breaking through the status quo. I thought it was just a good fit. I’ve listened to The Doors many, many times. It just felt appropriate.

Jellyvision:

That’s awesome. That’s all I’ve got. Appreciate your time. Thank you.

Dave Chase:

No problem! Thank you.