May 16, 2023 • 24 mins
Fred Turner is the Chief Executive Officer of Curative, a healthcare start-up that made a splash scaling COVID-19 testing and vaccinations during the pandemic. In this episode, join Fred and host Jeff Gourdji as they discuss Curative’s journey and some of the biggest issues in healthcare that “Curative 2.0” aims to address.
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Anna (00:07):
Hello and welcome to Prophets Healthcare Changemakers podcast, where we'll
be talking to leaders in healthcare who are focused on
transforming their organizations to drive the next level of growth
for their business and for healthcare at profit. We believe
that the organizations that thrive in healthcare are those that
dare to change the game, striving to improve human health,
create better experiences and make the best of care and
(00:27):
enduring and sustainable reality for all. Those that will transform
health care are the changemakers. And for this podcast we
want to focus on them. Our podcast dials into and
recognizes the people behind the transformation and their journeys and
changing the game one story at a time. Are you
ready to dive in?
Jeff (00:47):
This is Jeff Gorgie. I'm happy to host this episode
of the Health Care Changemakers podcast. With us today, we
have Fred Turner, the chief executive officer of Curative. Fred, welcome.
Fred (01:00):
Thanks for having me.
Jeff (01:01):
So, Fred, if you could tell us about yourself.
Fred (01:04):
Well, I'm originally British. I grew up in the UK
and moved to the US when I was 20, now
based in in Austin, Texas, and actually originally started off
my first foray into health care was on the lab side.
My first company was working on agricultural genomics. So basically
sequencing dairy cows to predict milk yield. And we raised
(01:29):
a bit of money from Andreessen Horowitz and some other
investors and basically realized that the market for testing cows
is not big enough to make it a venture scale business.
And so we took the underlying tech that we built
and found applications for it in the human diagnostics space.
Jeff (01:47):
So, Fred, tell us about the founding and the initial
scaling of curative through Covid and the journey that led
curative to try to bring about change and how health
care is paid for?
Fred (02:00):
Yeah, absolutely. So when curative was first founded back in
January of 2020, we actually weren't thinking about Covid at all.
The entire focus of the company was actually improving sepsis outcomes.
And it came from looking at this analysis of sepsis
diagnostics and community hospitals versus academic centers. And it seems
(02:21):
if you bring out a new diagnostic and an academic center,
you can get better outcomes. But then when you try
and apply those diagnostics in a community hospital, you don't
improve outcomes at all. And so what we were trying
to do is more of a kind of knowledge transfer,
take the learnings out of the academic centers and allow
community hospitals to be able to get better outcomes for
their sepsis patients. So that was the initial pitch and
(02:42):
we were going to basically take risk on sepsis. Patients
take full risk from the hospital and manage them better.
And so we set up our first clinical trial where
the hospital in January of 2020, and then we got
a phone call in February from this collaborator who we'd
worked with a ton before. Very responsive, super nice guy,
easy to work with. And we got a call from
(03:04):
his assistant saying that he couldn't meet with us until
July because the hospital was busy getting ready for this
little thing called Covid. And at the time being in
the news a little bit, but we hadn't really heard
much about it and we were totally crap. What do
we do now? We'd raised $1 million of seed money
by this point, and there were expectations from investors that
(03:25):
we would get this trial going in order to be
able to raise more money and get the first customers
on board. And so we as a founding team, it
was myself, Isaac and Vlad had a background in lab
testing and running diagnostic labs. We'd all built a lab
together before, and so we thought maybe we can help
with this Covid testing thing for a couple of weeks
(03:47):
until Covid blows over and then we can go back
to working on sepsis. Obviously, it lasted a little bit
longer than in a few weeks. We ended up moving
the company from the Bay Area down to LA. We
acquired a lab in LA that we built a lot
of this around and scaled up pretty rapidly. The city
of LA was the first major customer and so that
(04:08):
scaled from running one drive thru site to the Dodger
Stadium testing site, which was the largest drive through testing
site anywhere in the world. At its peak, it's having
about 10,000 people a day go through that single testing site.
Jeff (04:21):
You saw that on the news, The national news.
Fred (04:24):
Yep, yep. It was some great drone footage of it
from above. I think it's seven lanes of traffic flowing through.
It was open from 7 a.m. to 7 p.m.. Yeah,
it was. It was quite an operational feat. And so
we scaled up from now went from about 7 to
7000 employees in the first year. I think we did
(04:45):
testing in every state apart from Hawaii and over 36
million tests in total and then over 2 million vaccinations
as well. So really scaled up very rapidly.
Jeff (04:59):
So tell us about the managing it down and the
transition to the business you're now in.
Fred (05:04):
Yeah, the managing it down is obviously a very difficult
decision to close down testing entirely at the end of
last year. But I think we we came in to
serve a need that the community had for rapid, high,
fast turnaround testing that was accessible in the community. And
that need is now passed. People can get rapid tests.
(05:25):
Most people are vaccinated. There just isn't that need for
drive through testing sites anymore. But for about the past
two years now in the background, we've been working on
what we call curative 2.0. So trying to figure out
what comes next after after Covid testing, because obviously it's
not a long term business model to continue testing for Covid.
(05:46):
And so we did a breadth first search. Looking at
where do we want to go next? And really what
we're trying to find is what's something that we can
work on that's actually going to move the needle on
US Healthcare. We don't want to work on some esoteric
corner of this system where you spend ten years working
really hard and by the time you've done and you've
impacted a small percentage, really small percentage of patients in
(06:09):
a small way, we wanted to actually do something that
could drive meaningful change in the system. And so we
looked at a number of things that might have been
more obvious pivots in the lab space. We looked with
looks at competing with Quest and LabCorp, and we briefly
looked at acquiring a hospital, which was certainly an interesting
exercise to go through. I'm glad we didn't do it,
(06:29):
but then we'd had a lot of experiences working with
payers because doing Covid testing across almost every state we
had worked with, every single payer, I think we recognize
about 12,000 different health plans across the US that we've
worked with every Medicaid, MCO, every Medicare Advantage plan, every large,
(06:52):
self-funded group. 36 million tests, more than 10% of the US.
We've got sort of coverage and representation seen and interacted
with every corner of the payer system. And I think
we saw a lot of the cracks in that system.
A lot of the issues large national payers who two
years into the pandemic were still trying to charge people
co-pays for a Covid test and debiting it from their
(07:14):
HSA account automatically. And we're having to go in and
deal with these issues still two years in because they
can't get their systems up to date or payer is
sending out explanation of benefits that say that a member
is going to owe $100 for their Covid test just
because they haven't updated their system. Under federal law, there's
no balance billing for Covid testing, so they don't owe
(07:36):
anything but sending out these jobs that scare members and
then the member doesn't go and get another test because
now they're scared they might have to pay. So we're
seeing a lot of these issues with the system. And
it was getting to the point where we're spending a
lot of time dealing with payer issues, made sense to
look at. Okay, is the real problem with the US
health care system and why we're not able to drive
(07:58):
meaningful change? Is that on the payer side? And would
it make more sense to actually look at building a
payer that can drive preventative care, can drive long term
outcomes and actually bring in and engage with new technology
and use it to drive better outcomes rather than being
trying to avoid anything new at all costs because it
(08:19):
might increase spending that may be building on the payer
side is what makes sense. And then obviously there's been
a lot of movement on the payer side over the
last 5 or 10 years of being a lot of
new startups in that space, Oscar Bright Clover. And so
we were very targeted about we don't want to be
(08:39):
on the exchange, we don't want to be a Medicare
Advantage plan. We don't want to be doing Medicaid. We
really think the untapped space where there hasn't been really
any innovation for decades is the employer market, which is
how 50% of Americans get their health care.
Jeff (08:54):
Yeah, change makers come in different flavors from the insurgents
and the revolutionaries to what your team has told us
you prefer to be is the pragmatic innovators. Why does
that fit what you're trying to do? It sounds like
what you're trying to do to me is pretty new.
You've built the premise of the challenge you're trying to
address around this idea of the deferral of care. Why
is the deferral of care right? Care is expensive. Why
(09:18):
is that bad?
Fred (09:20):
Yeah, it comes from this observation that the US has
kind of run a natural experiment over the past 10
to 15 years with high deductible health plans. You know,
15 years ago we were at about 10% of plans.
Meet the ACA definition of high deductible and today were
closer to 60% of plans. Meet the high deductible health
plan definition. And so there's a lot of data out
(09:43):
there on whether that has worked. Has passing the cost
onto the consumer and funding their HSA account and letting
them shop and letting consumerism drive health care. Has that worked?
And when you dive into the data, the answer is
a resounding no. Don't shop. You can drive down the
street and there'll be two gas stations selling gas at
(10:04):
different prices and they'll both have customers at them. We're
not actually great at price shopping, and people don't make
rational decisions, particularly when it comes to emotional subjects such
as health and their finances. People generally make fairly simplistic
visions about where they go and seek care and and
(10:26):
they really don't price shop. The other effect that is
is really substantial when you increase the patient cost sharing
is this deferral like you mentioned. So there's a great study.
The National Bureau of Economic Research looking at a group
going from almost, almost no deductible to a high deductible plan,
and it's following them for three years and seeing what happens.
And in the first year of increasing patient cost sharing,
(10:50):
you get about a 12% reduction in spend. So it
looks like, oh, great, we this is working. We've reduced
health care spend. The problem is when you dig into
what is actually happening there, it's people putting off primary
care visits, putting off checkups, putting off screening tests, even
though in that plan, design, colonoscopies were actually covered at
$0 out of pocket. In that first year of the plan,
(11:14):
the rate of colonoscopies went down 32%. So even though
it was still free for people to go get the colonoscopy,
it went down 32%. And those are indicated colonoscopies where
you can tie that to a meaningful increase in the
colon cancer rate in that population. And so what you're
seeing is the care that gets put off is this
(11:35):
lower acuity preventative care. It isn't the high acuity expensive items.
So your $5,000 deductible doesn't stop you going to the hospital.
If you have a heart attack, you're still going to
go to the hospital. You're going to pay the $5,000
and your health plan is going to pay the other
$495,000 at that point. Right. Right. It doesn't prevent the
(11:56):
actual expense of spend. And for a health plan, about 50%
of your spend is 2% of your members who are
in those very expensive inpatient stays. What it does do
is it prevents you from getting the checkup that might
have avoided that hospitalization. So the fact that you have
to pay out of pocket to go get that wellness
(12:17):
check or that preventative exam that drives people to put
it off and oh, I'll do it next year. Oh,
I feel healthy. I'm fine. I don't need to see
a doctor. And so I think the way that we're
trying to look at it is approaching preventative care differently
in terms of the value that we assign to it.
So the typical way that an insurance plan looks at
loss or medical loss right now is every dollar spent
(12:39):
is a dollar. You spend a dollar on preventative care,
you spend a dollar in the hospital. It's still just
a dollar. Right. And the way that we look at
it is that dollar spent on a preventative visit that
could avoid inpatient stays, emergency room visits, specialty drug use,
that preventative care that actually keeps people that's a dollar
significantly better spent than a dollar on a preventable hospital stay.
(13:02):
So we really want to make that investment up front,
get people to engage in the care early and see
that payoff downstream with lower E.R. use lower hospital use,
lower specialty drug use.
Jeff (13:14):
So ten years, ten plus years in this natural experiment,
as you described, there's some data, right? You cited first
year we rack up the deductible spend goes down 12%.
If you're a if you're a plan sponsor. Right. Do
we what does the data tell us or does the
data yet tell us how long before that reduction 12%
goes the other direction? Or alternatively, by investing in that
(13:37):
preventative care? How long till you actually see because a
lot of a lot of plan sponsors have to be
short term focused, right? Yeah.
Fred (13:43):
Yeah. So you're basically back at baseline by the second
year and you're actually above where you would have been
by the third year. So if you're optimizing on a
12 month cycle, you're pretty quickly shooting yourself in the
foot because this is not going to pay off by
the second year and by the third year, you're in
a worse situation where it's costing you more money and
now you have a less healthy population that you're trying
(14:03):
to manage and you're still trying to drive your cost down. Unfortunately,
then what often happens is people say, Well, what do
we do? Last time our health care costs increased. We
put up the deductibles and it worked last time. So
we should do that again and put them up further.
And that just makes the problem worse. And you get
sort of stuck in the cycle of deferred care. And
so what we're trying to do is really just flip
the script on that and say, if we can make
(14:25):
it really easy for people to engage up front, make
the cost sharing zero so $0 out of pocket cost,
no co-pays, no deductibles to go and access care, we
will have a higher spend in that first year because
people will go and actually do the care that they need.
But in the second year we'll get back to baseline
(14:45):
and by the third year we'll actually be saving money
because there's population will be healthier.
Jeff (14:49):
So so you started to get there. Tell us the
curative proposition. You have this problem, preventative care, short term thinking,
people making the short term choice that hurts them longer term.
What is the curative proposition?
Fred (15:01):
Yeah, so the curative plans designed to be very simple.
As long as you engage with us in a preventative
health visit, which we call the baseline within the first
120 days of signing up for the plan and you
will have $0 out of pocket cost for any care,
any in network care. So $0 copays, $0 deductibles, 0% coinsurance.
(15:24):
This also includes preferred drugs. So you need to see
your doctor $0. You need to go to the hospital.
You have a baby or even heaven forbid, you get cancer,
$0 out of pocket cost as long as you engage
on this one preventative visit per year, there's no out-of-pocket
cost for our members for any care. And the thing.
(15:45):
Thing is, if you want people to actually understand where
they stand with their care and what it's going to
cost them to actually go and engage with care, you
have to make it really simple. And the only way
to make it so simple that people really understand what
is it actually going to cost me to go see
this particular provider for this particular service is to make
(16:06):
it zeros across the board. Something we learned from from
Covid testing is you can build a lot of trust
with the community by being able to guarantee them that
they're not going to have an ad pocket cost. With
Covid testing, it was mandated by the Cares Act that
Covid tests you can't bounce, bill, there'll be no associated fees.
And we were able to build a lot of goodwill
(16:27):
with communities by guaranteeing that we would never build them
for those tests. So there's this fear that's been created
in people that any engagement in care is bad because
I might get a bill for it and we really
have to fight that. And we think the only way
to to reset and actually build that trust where people
go see a doctor if they're sick or in a
(16:49):
preventative manner to avoid becoming sick is to build that
trust that it's not going to cost them to go
do that. Yeah, so.
Jeff (16:56):
Affordability is a critical kind of plank, if you will,
in this story. But as you and I have talked before,
this engagement, simplicity are also critical elements about that.
Fred (17:06):
So the engagement piece is really key and this is
where we use that baseline visit. So it's the pact
we're making with our members is we will guarantee that
you will never have to pay out of pocket for care,
but you need to show up once a year for
preventative visit. That's the deal that we're making. If you
don't show up for this baseline visit, then you'll have
a $5,000 deductible and a 20 care insurance. So it's
(17:29):
a kind of $5,000 carrot and stick to drive that
one single engagement. We're getting an hour of your time
and we really try and use that to to do
two things. One is education. So people meet with their
care navigator who is available to them. They can text, phone, email,
24 seven to help them navigate through the system, help
(17:49):
them make appointments, help them access providers, do follow up
and really be their advocate for getting the care that
they need. And they meet with their navigator and they
explain what is a copay, what is a deductible? What
does it mean that you actually don't have any now,
what does in-network mean and how do you actually figure
out which doctors are and on in network, how do
(18:10):
you use the curative pharmacy? How do you access the
free 24 over seven telemedicine? When should you and shouldn't
you go to the emergency room? Basic health literacy that
really should be taught in high school and isn't. And
most health plans don't sit you down and on board
you and it also really kicks off the relationship with
the member in the right way because we're sitting them
(18:30):
down and saying, Hey, we want you to access the
care that you need. Here's how to do it, and
we're here to help you. And so instead of this
sort of adversarial relationship that members often have with their
health plan, where it's, oh, my insurance company doesn't want
to cover whatever it is I want to do, we're
sitting them down and saying, No, we really want to
engage you in getting the care early and getting you
the care you need, and we're here to support you
(18:51):
in that. And I think that kicks off the relationship
in a fundamentally different way and drives a much higher
degree of engagement with the member. So we follow up
this educational first 30 minutes of education with a 30
minute visit with a clinician where we're really looking for
gaps in care. And what we're really targeting here is
people who haven't been to see a doctor for five
(19:13):
plus years may have multiple undiagnosed conditions or unmanaged conditions,
and trying to close those gaps in care, get them
into a primary care physician and make sure that those
conditions are being identified early and managed early. Because if
we have a prediabetic patient, we want to get them
into a primary care physician who's going to manage that
(19:33):
diabetes or even reverse it rather than letting that continue
to fall on type two diabetes where if it's unmanaged,
that patient is going to be showing up in the
emergency room potentially with sores, with amputation, where the retinopathy is,
and stage renal disease, a ton of very expensive downstream
things that are bad for the health plan and bad
for the member. So we use it as an opportunity
(19:57):
to drive that engagement and look for people that just
haven't engaged in the system for whatever reason. For a
number of.
Jeff (20:03):
Years I've had a chance to see some of your
kind of in-market copy and to use the the no co-pays,
no deductibles, no really, right. I think that know really
piece speaks to some of the potential skepticism like can
they really like how does this work? I'm curious to
get you to address what the consumer skepticism is, but
probably more interestingly, what skepticism you may have heard from
(20:23):
the employers, the brokers, in terms of can they really
do this? And how do you address the skepticism?
Fred (20:30):
Again, as part of that building trust on the consumer
side is there are other plans out there that sort
of tout o $0 primary care, but then you've got
co-pays and deductibles if you're going into the hospital or
if you need any drugs or if the doctor. Prescribes
any tests. And so it's kind of where is the Asterix?
Is it really zero for everything? And I think we
(20:51):
really have to. Usually show people the table of all
the services they can access and the zero against each
one in the table that it is actually $0 to
go and get any of these types of care. And
that just takes a bit of reinforcement and kind of
trust building with people in terms of brokers and employers,
I think a lot of the pushback is mostly that
we're new. We've been around for a little under a year,
(21:14):
but we're definitely new to the space and they want
to make sure that we're here for the long term.
And alongside that, we announced another 100 million of capital
infusion into the health plan to continue to support the growth.
Jeff (21:27):
So year one, the cost of care will go up, right?
That's what the model and the task of the test
tells you. But you're absorbing that, right, because you're offering
competitive rates year two, year, even year three. So when
does the employer benefit? Eventually you have to lower the
rates for employers, right? Or otherwise, they might as well
stick with the BUPA plans. Well, even if they stick.
Fred (21:46):
With the Buca plans, they're offering their employees effectively a
3 to $5000 raise. Even if you don't build in
any price improvement, you're basically for the same price you
currently say you're offering your employees pick between a $3,000
and a $5,000 deductible plan for the same price. You
could be offering them a $0. So that's particularly in
(22:09):
the current financial climate. You're offering them a raise without
having to actually spend any more money. In the longer term,
we expect to be able to keep rates closer to
flat by managing this care over the long term rather
than the typical 10% increases you're going to get from
a bucket carrier every year.
Jeff (22:28):
So what is it so fascinating and very powerful? What
is the curative plan for what will happen over the
next three years?
Fred (22:35):
Yes, we're in the process of scaling across the rest
of Texas, say within three years, probably be aiming to
be in five plus states.
Jeff (22:43):
Very cool. Fred, let's end on an optimistic note. If
you were speaking to to the change makers out there,
what advice would you give them?
Fred (22:52):
I think there's a lot of people really passionate about
actually solving these problems is probably what gives me optimism.
You know, I I'm part of this great Slack group
called Health Tech Nerds, and that's all these startup guys
running around building things, building solutions. And so I think
(23:13):
although the problems are obviously immense, there are a ton
of really smart, really passionate people just throwing themselves at
solving every one of these problems may sometimes seem like
the moving the the boulder of the American health care
system is is impossible. But I think with a lot
of dedicated, smart people chipping away at it piece by piece,
(23:34):
we really can make substantial change.
Jeff (23:37):
That's great. All right. We'll leave it there. Fred Turner,
the CEO of Curative, thank you for your time.
Fred (23:43):
Thanks for having me on.
Anna (23:52):
Thanks for listening to Prophets Healthcare Transformers Podcast. This podcast
is produced by Jared Johnson and his wonderful team at
Shift Forward Health and a big thank you to our
hosts Priya Nasir, Lindsey Mosby, Paul Shrimp and Jeff Gordy.
If you like today's episode, you can find more great
content like this at profit slash thinking. I'm Anna Kuno,
(24:13):
the senior editor of this podcast. Thank you for listening.
Hello and welcome to Prophets Healthcare Changemakers podcast, where we'll
be talking to leaders in healthcare who are focused on
transforming their organizations to drive the next level of growth
for their business and for healthcare at profit. We believe
that the organizations that thrive in healthcare are those that
dare to change the game, striving to improve human health,
create better experiences and make the best of care and
(00:27):
enduring and sustainable reality for all. Those that will transform
health care are the changemakers. And for this podcast we
want to focus on them. Our podcast dials into and
recognizes the people behind the transformation and their journeys and
changing the game one story at a time. Are you
ready to dive in?
Jeff (00:47):
This is Jeff Gorgie. I'm happy to host this episode
of the Health Care Changemakers podcast. With us today, we
have Fred Turner, the chief executive officer of Curative. Fred, welcome.
Fred (01:00):
Thanks for having me.
Jeff (01:01):
So, Fred, if you could tell us about yourself.
Fred (01:04):
Well, I'm originally British. I grew up in the UK
and moved to the US when I was 20, now
based in in Austin, Texas, and actually originally started off
my first foray into health care was on the lab side.
My first company was working on agricultural genomics. So basically
sequencing dairy cows to predict milk yield. And we raised
(01:29):
a bit of money from Andreessen Horowitz and some other
investors and basically realized that the market for testing cows
is not big enough to make it a venture scale business.
And so we took the underlying tech that we built
and found applications for it in the human diagnostics space.
Jeff (01:47):
So, Fred, tell us about the founding and the initial
scaling of curative through Covid and the journey that led
curative to try to bring about change and how health
care is paid for?
Fred (02:00):
Yeah, absolutely. So when curative was first founded back in
January of 2020, we actually weren't thinking about Covid at all.
The entire focus of the company was actually improving sepsis outcomes.
And it came from looking at this analysis of sepsis
diagnostics and community hospitals versus academic centers. And it seems
(02:21):
if you bring out a new diagnostic and an academic center,
you can get better outcomes. But then when you try
and apply those diagnostics in a community hospital, you don't
improve outcomes at all. And so what we were trying
to do is more of a kind of knowledge transfer,
take the learnings out of the academic centers and allow
community hospitals to be able to get better outcomes for
their sepsis patients. So that was the initial pitch and
(02:42):
we were going to basically take risk on sepsis. Patients
take full risk from the hospital and manage them better.
And so we set up our first clinical trial where
the hospital in January of 2020, and then we got
a phone call in February from this collaborator who we'd
worked with a ton before. Very responsive, super nice guy,
easy to work with. And we got a call from
(03:04):
his assistant saying that he couldn't meet with us until
July because the hospital was busy getting ready for this
little thing called Covid. And at the time being in
the news a little bit, but we hadn't really heard
much about it and we were totally crap. What do
we do now? We'd raised $1 million of seed money
by this point, and there were expectations from investors that
(03:25):
we would get this trial going in order to be
able to raise more money and get the first customers
on board. And so we as a founding team, it
was myself, Isaac and Vlad had a background in lab
testing and running diagnostic labs. We'd all built a lab
together before, and so we thought maybe we can help
with this Covid testing thing for a couple of weeks
(03:47):
until Covid blows over and then we can go back
to working on sepsis. Obviously, it lasted a little bit
longer than in a few weeks. We ended up moving
the company from the Bay Area down to LA. We
acquired a lab in LA that we built a lot
of this around and scaled up pretty rapidly. The city
of LA was the first major customer and so that
(04:08):
scaled from running one drive thru site to the Dodger
Stadium testing site, which was the largest drive through testing
site anywhere in the world. At its peak, it's having
about 10,000 people a day go through that single testing site.
Jeff (04:21):
You saw that on the news, The national news.
Fred (04:24):
Yep, yep. It was some great drone footage of it
from above. I think it's seven lanes of traffic flowing through.
It was open from 7 a.m. to 7 p.m.. Yeah,
it was. It was quite an operational feat. And so
we scaled up from now went from about 7 to
7000 employees in the first year. I think we did
(04:45):
testing in every state apart from Hawaii and over 36
million tests in total and then over 2 million vaccinations
as well. So really scaled up very rapidly.
Jeff (04:59):
So tell us about the managing it down and the
transition to the business you're now in.
Fred (05:04):
Yeah, the managing it down is obviously a very difficult
decision to close down testing entirely at the end of
last year. But I think we we came in to
serve a need that the community had for rapid, high,
fast turnaround testing that was accessible in the community. And
that need is now passed. People can get rapid tests.
(05:25):
Most people are vaccinated. There just isn't that need for
drive through testing sites anymore. But for about the past
two years now in the background, we've been working on
what we call curative 2.0. So trying to figure out
what comes next after after Covid testing, because obviously it's
not a long term business model to continue testing for Covid.
(05:46):
And so we did a breadth first search. Looking at
where do we want to go next? And really what
we're trying to find is what's something that we can
work on that's actually going to move the needle on
US Healthcare. We don't want to work on some esoteric
corner of this system where you spend ten years working
really hard and by the time you've done and you've
impacted a small percentage, really small percentage of patients in
(06:09):
a small way, we wanted to actually do something that
could drive meaningful change in the system. And so we
looked at a number of things that might have been
more obvious pivots in the lab space. We looked with
looks at competing with Quest and LabCorp, and we briefly
looked at acquiring a hospital, which was certainly an interesting
exercise to go through. I'm glad we didn't do it,
(06:29):
but then we'd had a lot of experiences working with
payers because doing Covid testing across almost every state we
had worked with, every single payer, I think we recognize
about 12,000 different health plans across the US that we've
worked with every Medicaid, MCO, every Medicare Advantage plan, every large,
(06:52):
self-funded group. 36 million tests, more than 10% of the US.
We've got sort of coverage and representation seen and interacted
with every corner of the payer system. And I think
we saw a lot of the cracks in that system.
A lot of the issues large national payers who two
years into the pandemic were still trying to charge people
co-pays for a Covid test and debiting it from their
(07:14):
HSA account automatically. And we're having to go in and
deal with these issues still two years in because they
can't get their systems up to date or payer is
sending out explanation of benefits that say that a member
is going to owe $100 for their Covid test just
because they haven't updated their system. Under federal law, there's
no balance billing for Covid testing, so they don't owe
(07:36):
anything but sending out these jobs that scare members and
then the member doesn't go and get another test because
now they're scared they might have to pay. So we're
seeing a lot of these issues with the system. And
it was getting to the point where we're spending a
lot of time dealing with payer issues, made sense to
look at. Okay, is the real problem with the US
health care system and why we're not able to drive
(07:58):
meaningful change? Is that on the payer side? And would
it make more sense to actually look at building a
payer that can drive preventative care, can drive long term
outcomes and actually bring in and engage with new technology
and use it to drive better outcomes rather than being
trying to avoid anything new at all costs because it
(08:19):
might increase spending that may be building on the payer
side is what makes sense. And then obviously there's been
a lot of movement on the payer side over the
last 5 or 10 years of being a lot of
new startups in that space, Oscar Bright Clover. And so
we were very targeted about we don't want to be
(08:39):
on the exchange, we don't want to be a Medicare
Advantage plan. We don't want to be doing Medicaid. We
really think the untapped space where there hasn't been really
any innovation for decades is the employer market, which is
how 50% of Americans get their health care.
Jeff (08:54):
Yeah, change makers come in different flavors from the insurgents
and the revolutionaries to what your team has told us
you prefer to be is the pragmatic innovators. Why does
that fit what you're trying to do? It sounds like
what you're trying to do to me is pretty new.
You've built the premise of the challenge you're trying to
address around this idea of the deferral of care. Why
is the deferral of care right? Care is expensive. Why
(09:18):
is that bad?
Fred (09:20):
Yeah, it comes from this observation that the US has
kind of run a natural experiment over the past 10
to 15 years with high deductible health plans. You know,
15 years ago we were at about 10% of plans.
Meet the ACA definition of high deductible and today were
closer to 60% of plans. Meet the high deductible health
plan definition. And so there's a lot of data out
(09:43):
there on whether that has worked. Has passing the cost
onto the consumer and funding their HSA account and letting
them shop and letting consumerism drive health care. Has that worked?
And when you dive into the data, the answer is
a resounding no. Don't shop. You can drive down the
street and there'll be two gas stations selling gas at
(10:04):
different prices and they'll both have customers at them. We're
not actually great at price shopping, and people don't make
rational decisions, particularly when it comes to emotional subjects such
as health and their finances. People generally make fairly simplistic
visions about where they go and seek care and and
(10:26):
they really don't price shop. The other effect that is
is really substantial when you increase the patient cost sharing
is this deferral like you mentioned. So there's a great study.
The National Bureau of Economic Research looking at a group
going from almost, almost no deductible to a high deductible plan,
and it's following them for three years and seeing what happens.
And in the first year of increasing patient cost sharing,
(10:50):
you get about a 12% reduction in spend. So it
looks like, oh, great, we this is working. We've reduced
health care spend. The problem is when you dig into
what is actually happening there, it's people putting off primary
care visits, putting off checkups, putting off screening tests, even
though in that plan, design, colonoscopies were actually covered at
$0 out of pocket. In that first year of the plan,
(11:14):
the rate of colonoscopies went down 32%. So even though
it was still free for people to go get the colonoscopy,
it went down 32%. And those are indicated colonoscopies where
you can tie that to a meaningful increase in the
colon cancer rate in that population. And so what you're
seeing is the care that gets put off is this
(11:35):
lower acuity preventative care. It isn't the high acuity expensive items.
So your $5,000 deductible doesn't stop you going to the hospital.
If you have a heart attack, you're still going to
go to the hospital. You're going to pay the $5,000
and your health plan is going to pay the other
$495,000 at that point. Right. Right. It doesn't prevent the
(11:56):
actual expense of spend. And for a health plan, about 50%
of your spend is 2% of your members who are
in those very expensive inpatient stays. What it does do
is it prevents you from getting the checkup that might
have avoided that hospitalization. So the fact that you have
to pay out of pocket to go get that wellness
(12:17):
check or that preventative exam that drives people to put
it off and oh, I'll do it next year. Oh,
I feel healthy. I'm fine. I don't need to see
a doctor. And so I think the way that we're
trying to look at it is approaching preventative care differently
in terms of the value that we assign to it.
So the typical way that an insurance plan looks at
loss or medical loss right now is every dollar spent
(12:39):
is a dollar. You spend a dollar on preventative care,
you spend a dollar in the hospital. It's still just
a dollar. Right. And the way that we look at
it is that dollar spent on a preventative visit that
could avoid inpatient stays, emergency room visits, specialty drug use,
that preventative care that actually keeps people that's a dollar
significantly better spent than a dollar on a preventable hospital stay.
(13:02):
So we really want to make that investment up front,
get people to engage in the care early and see
that payoff downstream with lower E.R. use lower hospital use,
lower specialty drug use.
Jeff (13:14):
So ten years, ten plus years in this natural experiment,
as you described, there's some data, right? You cited first
year we rack up the deductible spend goes down 12%.
If you're a if you're a plan sponsor. Right. Do
we what does the data tell us or does the
data yet tell us how long before that reduction 12%
goes the other direction? Or alternatively, by investing in that
(13:37):
preventative care? How long till you actually see because a
lot of a lot of plan sponsors have to be
short term focused, right? Yeah.
Fred (13:43):
Yeah. So you're basically back at baseline by the second
year and you're actually above where you would have been
by the third year. So if you're optimizing on a
12 month cycle, you're pretty quickly shooting yourself in the
foot because this is not going to pay off by
the second year and by the third year, you're in
a worse situation where it's costing you more money and
now you have a less healthy population that you're trying
(14:03):
to manage and you're still trying to drive your cost down. Unfortunately,
then what often happens is people say, Well, what do
we do? Last time our health care costs increased. We
put up the deductibles and it worked last time. So
we should do that again and put them up further.
And that just makes the problem worse. And you get
sort of stuck in the cycle of deferred care. And
so what we're trying to do is really just flip
the script on that and say, if we can make
(14:25):
it really easy for people to engage up front, make
the cost sharing zero so $0 out of pocket cost,
no co-pays, no deductibles to go and access care, we
will have a higher spend in that first year because
people will go and actually do the care that they need.
But in the second year we'll get back to baseline
(14:45):
and by the third year we'll actually be saving money
because there's population will be healthier.
Jeff (14:49):
So so you started to get there. Tell us the
curative proposition. You have this problem, preventative care, short term thinking,
people making the short term choice that hurts them longer term.
What is the curative proposition?
Fred (15:01):
Yeah, so the curative plans designed to be very simple.
As long as you engage with us in a preventative
health visit, which we call the baseline within the first
120 days of signing up for the plan and you
will have $0 out of pocket cost for any care,
any in network care. So $0 copays, $0 deductibles, 0% coinsurance.
(15:24):
This also includes preferred drugs. So you need to see
your doctor $0. You need to go to the hospital.
You have a baby or even heaven forbid, you get cancer,
$0 out of pocket cost as long as you engage
on this one preventative visit per year, there's no out-of-pocket
cost for our members for any care. And the thing.
(15:45):
Thing is, if you want people to actually understand where
they stand with their care and what it's going to
cost them to actually go and engage with care, you
have to make it really simple. And the only way
to make it so simple that people really understand what
is it actually going to cost me to go see
this particular provider for this particular service is to make
(16:06):
it zeros across the board. Something we learned from from
Covid testing is you can build a lot of trust
with the community by being able to guarantee them that
they're not going to have an ad pocket cost. With
Covid testing, it was mandated by the Cares Act that
Covid tests you can't bounce, bill, there'll be no associated fees.
And we were able to build a lot of goodwill
(16:27):
with communities by guaranteeing that we would never build them
for those tests. So there's this fear that's been created
in people that any engagement in care is bad because
I might get a bill for it and we really
have to fight that. And we think the only way
to to reset and actually build that trust where people
go see a doctor if they're sick or in a
(16:49):
preventative manner to avoid becoming sick is to build that
trust that it's not going to cost them to go
do that. Yeah, so.
Jeff (16:56):
Affordability is a critical kind of plank, if you will,
in this story. But as you and I have talked before,
this engagement, simplicity are also critical elements about that.
Fred (17:06):
So the engagement piece is really key and this is
where we use that baseline visit. So it's the pact
we're making with our members is we will guarantee that
you will never have to pay out of pocket for care,
but you need to show up once a year for
preventative visit. That's the deal that we're making. If you
don't show up for this baseline visit, then you'll have
a $5,000 deductible and a 20 care insurance. So it's
(17:29):
a kind of $5,000 carrot and stick to drive that
one single engagement. We're getting an hour of your time
and we really try and use that to to do
two things. One is education. So people meet with their
care navigator who is available to them. They can text, phone, email,
24 seven to help them navigate through the system, help
(17:49):
them make appointments, help them access providers, do follow up
and really be their advocate for getting the care that
they need. And they meet with their navigator and they
explain what is a copay, what is a deductible? What
does it mean that you actually don't have any now,
what does in-network mean and how do you actually figure
out which doctors are and on in network, how do
(18:10):
you use the curative pharmacy? How do you access the
free 24 over seven telemedicine? When should you and shouldn't
you go to the emergency room? Basic health literacy that
really should be taught in high school and isn't. And
most health plans don't sit you down and on board
you and it also really kicks off the relationship with
the member in the right way because we're sitting them
(18:30):
down and saying, Hey, we want you to access the
care that you need. Here's how to do it, and
we're here to help you. And so instead of this
sort of adversarial relationship that members often have with their
health plan, where it's, oh, my insurance company doesn't want
to cover whatever it is I want to do, we're
sitting them down and saying, No, we really want to
engage you in getting the care early and getting you
the care you need, and we're here to support you
(18:51):
in that. And I think that kicks off the relationship
in a fundamentally different way and drives a much higher
degree of engagement with the member. So we follow up
this educational first 30 minutes of education with a 30
minute visit with a clinician where we're really looking for
gaps in care. And what we're really targeting here is
people who haven't been to see a doctor for five
(19:13):
plus years may have multiple undiagnosed conditions or unmanaged conditions,
and trying to close those gaps in care, get them
into a primary care physician and make sure that those
conditions are being identified early and managed early. Because if
we have a prediabetic patient, we want to get them
into a primary care physician who's going to manage that
(19:33):
diabetes or even reverse it rather than letting that continue
to fall on type two diabetes where if it's unmanaged,
that patient is going to be showing up in the
emergency room potentially with sores, with amputation, where the retinopathy is,
and stage renal disease, a ton of very expensive downstream
things that are bad for the health plan and bad
for the member. So we use it as an opportunity
(19:57):
to drive that engagement and look for people that just
haven't engaged in the system for whatever reason. For a
number of.
Jeff (20:03):
Years I've had a chance to see some of your
kind of in-market copy and to use the the no co-pays,
no deductibles, no really, right. I think that know really
piece speaks to some of the potential skepticism like can
they really like how does this work? I'm curious to
get you to address what the consumer skepticism is, but
probably more interestingly, what skepticism you may have heard from
(20:23):
the employers, the brokers, in terms of can they really
do this? And how do you address the skepticism?
Fred (20:30):
Again, as part of that building trust on the consumer
side is there are other plans out there that sort
of tout o $0 primary care, but then you've got
co-pays and deductibles if you're going into the hospital or
if you need any drugs or if the doctor. Prescribes
any tests. And so it's kind of where is the Asterix?
Is it really zero for everything? And I think we
(20:51):
really have to. Usually show people the table of all
the services they can access and the zero against each
one in the table that it is actually $0 to
go and get any of these types of care. And
that just takes a bit of reinforcement and kind of
trust building with people in terms of brokers and employers,
I think a lot of the pushback is mostly that
we're new. We've been around for a little under a year,
(21:14):
but we're definitely new to the space and they want
to make sure that we're here for the long term.
And alongside that, we announced another 100 million of capital
infusion into the health plan to continue to support the growth.
Jeff (21:27):
So year one, the cost of care will go up, right?
That's what the model and the task of the test
tells you. But you're absorbing that, right, because you're offering
competitive rates year two, year, even year three. So when
does the employer benefit? Eventually you have to lower the
rates for employers, right? Or otherwise, they might as well
stick with the BUPA plans. Well, even if they stick.
Fred (21:46):
With the Buca plans, they're offering their employees effectively a
3 to $5000 raise. Even if you don't build in
any price improvement, you're basically for the same price you
currently say you're offering your employees pick between a $3,000
and a $5,000 deductible plan for the same price. You
could be offering them a $0. So that's particularly in
(22:09):
the current financial climate. You're offering them a raise without
having to actually spend any more money. In the longer term,
we expect to be able to keep rates closer to
flat by managing this care over the long term rather
than the typical 10% increases you're going to get from
a bucket carrier every year.
Jeff (22:28):
So what is it so fascinating and very powerful? What
is the curative plan for what will happen over the
next three years?
Fred (22:35):
Yes, we're in the process of scaling across the rest
of Texas, say within three years, probably be aiming to
be in five plus states.
Jeff (22:43):
Very cool. Fred, let's end on an optimistic note. If
you were speaking to to the change makers out there,
what advice would you give them?
Fred (22:52):
I think there's a lot of people really passionate about
actually solving these problems is probably what gives me optimism.
You know, I I'm part of this great Slack group
called Health Tech Nerds, and that's all these startup guys
running around building things, building solutions. And so I think
(23:13):
although the problems are obviously immense, there are a ton
of really smart, really passionate people just throwing themselves at
solving every one of these problems may sometimes seem like
the moving the the boulder of the American health care
system is is impossible. But I think with a lot
of dedicated, smart people chipping away at it piece by piece,
(23:34):
we really can make substantial change.
Jeff (23:37):
That's great. All right. We'll leave it there. Fred Turner,
the CEO of Curative, thank you for your time.
Fred (23:43):
Thanks for having me on.
Anna (23:52):
Thanks for listening to Prophets Healthcare Transformers Podcast. This podcast
is produced by Jared Johnson and his wonderful team at
Shift Forward Health and a big thank you to our
hosts Priya Nasir, Lindsey Mosby, Paul Shrimp and Jeff Gordy.
If you like today's episode, you can find more great
content like this at profit slash thinking. I'm Anna Kuno,
(24:13):
the senior editor of this podcast. Thank you for listening.
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