EP 541 When CFOs Treat Healthcare As Any Other Cost - with Carl Schuessler, Jr.

Speaker A: What if the real opportunity for benefit advisors over the next decade isn't just helping employers buy insurance, but helping them fundamentally manage health care risk the way they manage any other business cost? We'll find out on, uh, this episode of shiftshapers.

Speaker B: Change either energizes or paralyzes. The choice is yours. This is the Shift Shapers podcast, bringing the employee benefits industry interviews with individuals and companies who are shaping the industry shifts. And now here's your host, David Saltman.

Speaker A: And ah, to help us answer that question, we've invited Carl Schuessler, who is managing principal at, uh, Mitigate Partners. Carl works with employers and advisors who are looking for more advanced ways to understand and manage healthcare risk. They help organizations go beyond traditional methods and think more strategically about cost drivers, risk exposure and long term sustainability. His focus is on assisting advisors and employers in using better data, smarter risk strategies, and more innovative structures to increase transparency and control their healthcare spend. Welcome back to the podcast, Carl.

Speaker C: Hey, Dave, it's great to be here. Appreciate you having me.

Speaker A: Uh, it's always our pleasure. We always have great conversations. So let's start at the big picture, as they say. How is the role of benefit advisors changing as employers demand more accountability for healthcare spending?

Speaker C: I think they have to be more knowledgeable, David. I think they have got to delve into what we call employer built health plans. And those are plans built for the employer that are actively managed, uh, with the advisor and the employer together and trying to build more efficient plans that improve clinical outcomes and financial outcomes for everyone. Uh, I think that's probably, to me the biggest difference. And they're obviously having to act more as a fiduciary and which we've been doing for a long time. That's nothing new for us.

Speaker A: So let's talk about the employers for a second. A lot of employers feel obviously like healthcare costs are uncontrollable. And you know, that leads to a lot, especially for CFOs, that leads to a lot of worry about margin compression and such. They'd like more predictability. What's the first mindset shift that an advisor has to do to encourage a company if they want to start managing their healthcare more strategically, as we've been talking about?

Speaker C: Well, that's a, um, interesting question, David. I can tell you for many years I made the mistake of assuming that saving money was their number one objective. And as you like to say, I was obviously on mute some of those meetings that I would come in and show up and throw up and get all excited about how much Money we could save them. And that really wasn't what they cared about. And so we really started talking about a health plan mission. Um, like they have a mission statement for their company. What is your health plan mission? And they generally look at you with a blank stare and then work through that together to really come up and formulate a mission statement and then kind of tailor our message around that. And um, I think the EBITDA discussion, as you know what that is, that's a good discussion. But again, you really have to know who you're speaking to and making sure you're pulling the right strings that you know will get them excited and concerned to maybe make a change.

Speaker A: You know, we hear oftentimes the phrase data driven benefits. So in practical terms, what kinds of data should advisors be paying attention to? And more importantly maybe what do you think they're overlooking today?

Speaker C: Well, you can look at the cost drivers and a health plan cost. And I would tell you that, you know, you look at things like musculoskeletal, so when you reference or ask about data sources and things to focus on data driven analytics, I would tell you that musculoskeletal is a pretty easy low hanging fruit. It's 20% of a spend. So you kind of look at what's going on there, isolate those claims out. We have some partners that we work with to help us do that that are cost, uh, containment partners. You know, you've got the pharmacy spend, you can look at the efficacy of some of these medications. Many times things are on the formulary that really have no efficacy and no, no real success. But people keep them on there because no one's paying attention. And then I think, you know, again, I could go to imaging which is 10% of a plan cost, you know, I could break it down and accordingly with you, so forth. And then you're looking at 60% or 70% of a plan spent is at facilities, you know, and, and so those are the particular areas that we will try and drill down as much as we can. And there's other little areas that you know, make up a part and it just really depends, but uh, that's probably one of the biggest. And then of course the, the medical billing errors that are prevalent. And so many of these self funded plans with the cartel, you know, as I like to call it, the Blue United, Cigna, Aetna and um, also with, with the other particular independent TPAs, you just have to really look at that.

Speaker A: Have you started talking with your clients about stuff like precision medicine and pharmacogenomic testing or are we a little bit ahead of the game there?

Speaker C: You know, if I was being honest with you. You want me to be honest today?

Speaker A: We appreciate honesty.

Speaker C: I hope I'm, um, viewed as honest, but we have not done a ton with that. Um, we have done a little bit of that. When we end up with a cancer diagnosis, for example, a breast cancer, we might do the oncotype DX test, which will show whether radiation and chemo is going to have a good. A, uh, positive or negative effect on a person. And so that can save the employer a lot of money, but more importantly, it can save that employee's life where they can actually not taste metal the rest of their life. So, you know, it's $2,500 test generally, so we've done those. So that type, if I kind of consider pharmacogenomics, but we don't. I, uh, w. We are not doing as much as we could in that area, and the cost has come down, David. It's just so many, uh. There's so many things we're looking at. And I think that's something, as you get established with an employer, I think that's something that definitely we need to spend more time.

Speaker A: You know, I was talking with, um, Lena chahorski from Alpha 10 the other day, and she knows kind of all of this stuff, and she's a great resource. And she said something that shocked me. She said, most of those tests have now come down to 300 bucks.

Speaker D: Right.

Speaker A: So do you think that price on those tests was kind of a barrier for employers and maybe once they, once they're out of the stratosphere, that more folks will do them as a matter

Speaker C: of course, I do, and I think it the biggest part of that. And I know Lena as well, and we've talked before, she and I've been on stage together before, and I think, uh, with what she's doing is phenomenal that what they're doing at Alpha 10. I believe that we've got to make it easier for the employers to get their employees engaged in it and the legalities around those components and how you do that. So I think the ease of that and how easy you make it is really the most critical thing. I think the dollar. You know, David, you're looking at, if you got 300 employees, that could be a good bit of money, but what's the downstream effect? And it's the ability of the advisor, in my opinion, that has to be forthright and convicted in that recommendation and to really stand their ground because a lot of people will present it as kind of hey, we could do this but it's going to cost you that. And immediately the employer says no. So I think we have to talk about the importance of it and be able to give examples like Lena can of where someone took a medication they should have never taken and spent all this money and it had no effect on, on the out um, on their outcome of whatever they were being treated for.

Speaker A: I think we'll start seeing more of it as time goes on. So question where do you see the biggest blind spots in how employers are currently purchasing or managing their healthcare benefits?

Speaker C: Uh, that one's pretty easy I think. So many of them are relying on the cartel for their plans as we said Blue United, Cigna, Aetna and they're relying on them to manage their plans. And that's what we look at as we call passively managed because they're letting the insurance company manage their risk. Those are insurer bill plans. So that's the biggest blind spot I think is that as you know we've had many discussions in the past, I bet 9.9 out of 10 people you meet employers are working with a cartel, ah, insurer bill plan.

Speaker A: Is, is, is there still that fear of self funding that you know, I mean a lot of brokers have been selling against self funding so long and now it's kind of a whole different ball game. Is that something that they're trying to overcome? We're seeing a lot more play in self funding. Even groups that would you and I would never have imagined 15 years ago. You know, small groups are self funding. Is that the barrier?

Speaker C: I think the barrier more than anything is the advisor to uh I think that's the biggest issue at hand. What we try to do Dave and I think is important when you do present self funding is you have to show the employer their worst case scenario and then talk about maybe a best case. But know this is what you're going to be on the hook for in the worst case scenario and you have to be able to show that and then compare it to could be a fully insured or uh, compared to others and then show hey if you decide instead of crawling and walking and you really want to fly and pull the rip the band aid off and do a uh, truly employer built plan like our fare cost health plan we use a lot whatever any of those high performance plans that advisors are putting together, you show them what that looks like and when they look at fly in and they look at the dollars and Then you have to also be honest and talk about the, the challenges that you're going to face because none of this stuff is easy. And we always say healthcare is a mess. I've been on many calls with other advisors and helping them with a prospect and they'll always text me, why are you trying to talk to the employer out of doing this? And I said I'm not. I want them to know how difficult it is. And we had one client that did revert back, um, to a traditional level funded plan with a carrier and they said the one thing you told us is you were honest, you never lied and you said it was going to be very difficult. And we really appreciated that. So I think that's what you have to, I think you have to show the upside on the financial side and the downside here. And not every company is ready and that's okay. Then you build a strategy, crawl, walk, run, fly from that point forward.

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Speaker A: So Carl, if a broker wants to move from being seen as just a vendor to being seen as a strategic advisor, what capabilities or conversations need to change?

Speaker C: They need to be able to talk. An advisor needs to be able to talk to an employer about the different strategies in tackling these rising healthcare costs. David, I think they have to be able to have the discussion across all fronts. Traditional insurer bill plans, uh, to what employer health plans look like. And they just have to be able to have a discussion and objectively discuss it and try to meet the employer where they are.

Speaker A: I mean, I Love that title employer built healthcare plans. Can you expand on that a little bit? And how you approach a client when you first start talking about that and the benefits of it?

Speaker C: Sure. And I'll ask you this question too. I know we talk, we're always trying to simplify our message. And uh, a good friend of mine, uh, Barry Broom, uh, down in South Georgia is really the one who we form Mitigate partners that had sort of kind of coin that phrase, employer built health plans. How do we call what we've built and done to make it simple as compared to an insurer built plan? So what it is is a plan built for the employer where they can have health insurance on their terms, their way versus an insurance company delivering it. And they're just buying whatever's given to them. We truly architect this from the ground up and helping them build their plan, the components, the cost contain solutions. You mentioned pharmacogenomics, Whatever it is, think about a health plan like a house. And each brick in the house is a cost containment, risk mitigation solution to improve clinical outcomes and uh, financial outcomes for everyone.

Speaker A: So when you start talking to an employer who's been with one of the Bucas, one of the cartel, as you call them, um, and it was nice that Humana dropped out because it's still pronounced Buca. So there you go. Um, but when you start talking to them, do you take kind of an approach like the same way you get in a swimming pool, right? Toes go in first. Do you try to start like small and then over a couple of years have a strategy that you build on or do you just go full tilt boogie with a complete plan?

Speaker C: Well, you know me well enough, uh, I think I've been over this a bunch of times and we get amongst our mitigate partners in our Zoom bi weekly Zoom meetings and I've, and there've been many a times where an advisor has shared, always have a success period. And they share a success, hey, I just won this 300 life case. Well, let's talk about what did you do? And oftentimes, well, we kept them with Blue Cross because that's what they wanted to do. And I uh, often say, did you ever show them what an employer built health plan looks like, what flying looks like, and then let them make that decision? And oftentimes, well, it just wasn't right for them. And I've always said, how did you get, you know, called to play God here? I mean, our job is to be an advisor and lead. Our job is to show them their options. And show them again the good and the bad with what a uh, ripping the band aid off as you said, jumping into the pool head first with cinder blocks on. You know, we have to show them that and I think that's our job to show it. And I think a lot of people, if they win the deal or however they win it, they get a buyer in pain who's going to fire their broker anyway. I don't think they are willing to do that and show that. But every time we have shown that, every time that I can recall that employer has jumped in the deep end with cinder blocks on knowing the risk, the difficulty and so forth.

Speaker A: There's a bunch of brokers that I know who have worried over the years that self funding is too complicated, that it's extremely time consuming. How can they start approaching this method of solving their clients problems without it eating their time alive?

Speaker C: I think education sessions with uh, the employer and getting them to agree to go through a series of education sessions with you. And if they won't then they're not a prospect for this. But they have to understand David. And there's, you know, David, maybe I'm sure you've got a way as good as you are with your work words. You can't eat an elephant in one sitting. At least I can't. And I talk too dead gum slow as it is. So no one can sit through that. So I think 30 minute digestible bites is a way to educate them. But they have to be willing to understand that. And they also have to be willing to understand that the way a fully insured plan works or insure a built plan works, it's the same as a self funded plan. The difference is you have a little bit of risk but when you have stop loss and everything else and you put in cost contained payment solutions. If they know they're going to spend this much in a fully insured plan and they're going to spend this much here, I don't know what the risk is. Um, because you have them reserve appropriately, you help them actuarially on how to do that. And so I don't think it's that difficult. But you have to have that discussion. They have to understand that it is different. I mean it's certainly different.

Speaker A: Well, you know, it's interesting because all the same elements are there. I'm talking like an old TPA which is, you know, what I used to be. But all the elements are the same. You've still got a network, you've still got somebody paying claims you've still got this, that the next thing, all the, all those pieces, you're just kind of deconstructing it so that they can see all the critters that are running in between those little layers. And all those critters are taking a little slice of money. And by the time you add all that up, it's a big slice of money. And it's tough. I mean it's just so, uh, I think you're right. It's a long term conversation and you have to start teeing clients up. Do you find with some of your clients that it's a. Okay, well we want to do this, but we want to learn more. We don't want to do it this year, so let's build a ramp so that we can do it at next renewal.

Speaker C: Yes, uh, I think that's a great strategy. And we had one not too long ago that, that's what we did. We got started. David got hired too late in the process, could have pulled it off because we've been able to build. We built this, you know, sustainable, fair cost health plan. That's what we were looking at for them. And the savings was astronomical, about $3 million over a five year period for 177 lives. And uh, we just decided, knowing the client that you know, again, hey, we got started too late. This is here. Let's look at this next year. But let's start in the first quarter putting in a solution that we can bolt on like a nurse navigation concierge service maybe in quarter two, look at some pharmacy strategies. And they were with Cigna and Express Scripts. So we put in some alternative pharma strategies that went outside the plan. So the employer had to reimburse outside of Cigna because you know, that wouldn't work with Express Scripts in that game. And we put in a couple solutions like that. And then we had some cert like a uh, uh, you know, Dr. Keith Smith surgery center of Oklahoma option in this part of the country that we also put out there at a zero cost for the member to go there and have a procedure. So we did do that um, over the course of that year. And then come October, November went and got new stop loss numbers, got all the financials and the savings now is like four and a half million over five years. And for 177 people, David, it's truly unbelievable the fat that's in that current system. And so we were able to do that and start it, you know, uh, one one of 26 is when we started on that.

Speaker A: I mean, plus, you get a chance to start aligning incentives. You get a chance to do actually more for your employees than you've maybe been able to do, and you get that predictability. So it's kind of like. I like your approach. It's kind of like giving them a learner's permit for the first year and they kind of get used to driving the car and, you know, they don't. They don't get so herky jerky with it. And by the time that next renewal comes around, they're pretty competent and they're confident as well. And it must make the transition a lot easier.

Speaker C: I think so. And I think one of the things you made a great point when you said earlier about, hey, the self fund is the same as fully insured or an insurable plan with the cartel, it is the components. I think I know a term you've used before, and I have as well, is this like a bundled plan versus an unbundled plan. We're just unbundling the components where you can actually see what they cost and then building it from there. And I think the other part that's really important, David, and it's happened in all these cases, if you get any of our clients and ask them, because we've been on stage with them numerous times over the years, and they go, carl, what do you want us to say? I said, I want you to be honest. Don't say anything. I'm not putting words in your mouth. I want you to tell the truth. And they'll always say the first six months is tough, and it's going to be tough. And when you pull that Bukavail back and you see what goes on in an episode of Care and the way we do it on our integrated coordinated care board, where all the cost containment partners communicate to take care of the member, it's unbelievable. And I think most employers just have no idea because they've got that, you know, blue Cross logo in their wallet, and that's all that matters. But behind the scenes, there's a lot going on that the employees, the member, the patient, whatever you want to call them, the employee don't know. So I think talking about pulling that Bukaville back and revealing it and then letting them know that it's going to be a rough six months. Think about going down your driveway, David, with a speed bump 1cm apart. I mean, it's going to be bumpy. But the one question that's been asked of many of our clients, if you had it to do over Again, what would you do differently? And the overwhelming response is always, we wish we had done this years ago. But it's going to be hard and you've got to be honest with the employers and you cannot, you can't try to be some smooth talking salesperson and pull the wool out. You've got to let them know how hard it's going to be because it's going to be difficult and it's going to be difficult for those members. But the other part, David, I uh, do think important, sorry, is if the employer will let you talk in advance before they ever make changes to any of the people in any of the employees in key decision making roles. Most of them are going to buy in all day long if they know their premiums are not going to keep going up, their benefits are not going to keep getting worse and they're going to have richer benefits for half the cost. They generally are all about it. So you got to get that buy in altogether in that process, I guess is people. The buzzword is change management.

Speaker A: Well, and you know people, people like change, they just don't like to be changed. And that's an uh, awful lot of what's been going on with fully insured plans is they end up settling for what my friend Mark calls the least worst renewal and they don't have any control. So a couple last questions for advisors who maybe want to evolve their practice. What's one step they could take this year to begin building a more strategic role with their clients?

Speaker C: If they're just walk kind of crawling or just in the crib at this moment, they should look at some of the different advisor groups out there that I think are doing a really good job in that realm. You know, you've got um, you know, Health Rosetta, you've got uh, Mitigate Partners, which you know, I'm co founder of, and, and, and, and you've got I guess NextGen Q4I. There's, there's others. I'm leaving off. No disrespect to anybody, but I think those organizations, David, have got a lot of brain power and they can share, you know how to do this. I think they have to look at that or talk to someone that they can get mentored by or learn from. And I will tell you the other thing that I think is the biggest thing, the brokers in general. As my friend Rich Haney, mitigate partner in Austin, Texas says, a broker makes you broker. You don't want to be a broker, you want to be an advisor. And I think it's really important that so many of these brokers mentality, uh, and I've been involved before where you help one of them win a client and then they ask me if I can reduce my fee and I just sit there and scratch my head, you know. So most of them are fairly greedy, unfortunately, and it's all about how much revenue am I going to get. But the best tuition for learning, David, is to do joint work or joint venture with an advisor that's been there. You will learn so much with your feet in the fire versus trying to be a student. You will learn a, uh, ton. And at least the way I work, I will give you everything. I will educate you every step of the way. You want to be involved in the whole process, we will help. And I think that's what we do a really good job at Mitigate Partners of there's so many good advisors that can mentor and help many advisors.

Speaker A: So, last question, looking ahead five years, what do you think most successful benefits advisors will be doing differently than the average broker is doing today?

Speaker C: They'll have to be a part, uh, viewed as a part of the executive team of the employer. They have to be a strategic partner and they have to be involved in the financial discussions. That has to be done at the CFO level. In my opinion, this falls under the cfo. It's a risk management financial decision. So I think they have to be willing and have to be able to have financial discussions as much as anything, because that's what this is. It's not insurance, it's risk management and financial discussions.

Speaker A: And that's a great place to end our conversation for today. Carl Schuessler, managing principal at Mitigate Partners. Carl, it's always a pleasure to have you on the podcast. Come back soon.

Speaker C: David, thanks so much for your time. Enjoyed it and appreciate you having us on.

Speaker B: The Shift Shapers podcast is a production of shiftshaper strategies and may not be reproduced or quoted in whole or in part without our express written permission. Copyright 2020. All rights reserved.