Wayne sits down with Sean Kelley and Javier Lira from Texas Medical Management to unpack how they’re revolutionizing the surgical experience with bundled pricing, direct contracting, and a no-nonsense approach to quality. From selecting only top-tier surgeons to bypassing bloated healthcare bureaucracy, this episode is a must-listen for anyone curious about how real healthcare reform can happen—one patient at a time.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Wayne LowryI'm gonna be flying up to San Antonio on Saturday. I was gonna see if you guys can pick me up from the airport.
(00:03):
Javier LiraSure. Yeah, yeah. Yeah, sure.
Wayne LowryOhh I'll be there at like 8:30.
Wayne LowrySo if you can just pull up, you know?
Javier LiraMorning?
Wayne Lowry8:30 in the morning. Yeah, I'll just text you when I land. Just sit there and wait.
Javier LiraYes.
Wayne LowryFor me, that'd be great.
Javier LiraYeah, sure, I'll have a sign and my little hat.
Sean KelleyYou can find me on uber.com.
Wayne Lowryuber.com? Is that your personal e-mail address, sean@uber.com?
(00:40):
Wayne LowryHello and welcome to the Best DPC podcast, the world's #1 show, covering all things direct primary care. I'm your host, Wayne Lowry, and today I am honored to have two special guests from Texas Medical Management.
Wayne LowrySean Kelly, the co-founder and managing partner who has spent 30 years launching ventures that tackle cost, quality and transparency in U.S. healthcare. Also today I'm joined by Javier Lira, who is the VP of Clinical Operations and Air Force trained OR leader and 25 years in trauma centers who now designs and oversees Texas Medical Management surgical bundles.
(01:19):
Wayne LowryTogether, they're rethinking how surgery gets paid for and delivered so that doctors, patients and employers all in. So let's dive in. Javier, Sean, welcome.
Sean KelleyThank you. Thank you for having us, Wayne.
Javier LiraNice to meet you.
Wayne LowryAwesome. Well, so you guys are based in Austin, TX. Tell me a little bit about Austin. What do you like to do in Austin?
(01:44):
Sean KelleyJavier, you go first.
Javier LiraWell, it's whatever my wife tells us and the family to do, you know? So I wake up in the morning and I see the agenda. And I say, you know, Home Depot, groceries, whatever. And then the kids want to hang out and want to go here, want to go there. And then that's what we do.
Wayne LowrySo basically the same thing you would do in any town is what you're telling me.
(02:06):
Javier LiraPretty much.
Sean KelleyJust different zip.
Wayne LowryYeah. So, Sean, you got into medicine over 30 years ago and doing different ventures. What kind of brought you and inspired you to get into that industry?
Sean KelleyWell, so I was the only one in my family who went to undergrad as a pre-Med, but I also failed out of college twice and ended up taking seven years to get my undergrad. So obviously I didn't go to Med school.
(02:39):
Sean KelleyMy brother and sister both did go to Med school. My brother's a surgeon and a co-founder of this company, but my sister is a pediatrician at Texas Children's in Houston. So we had a lot of doctors in the family. I also owe a debt of gratitude to healthcare because when I was 10 years old, I was diagnosed with acute lymphocytic leukemia treated at Texas Children's, 3 1/2 years. And I'm, you know, been good.
(03:05):
Sean KelleySo, I wanted to be in healthcare to be a pediatric oncologist. A long story short is I ended up going into a bunch of different business careers and then ended up coming into Austin to get into healthcare. When my brother finished his training.
Sean KelleyHis training was so extensive in surgery that he finished when he was 38 years old, so we came to Austin. All three of us had done our undergrad here, my parents, grandparents, everybody had done it at UT Austin, so it wasn't too much of a stretch. We came here.
(03:36):
Sean KelleyGot involved in healthcare. I didn't realize we were going to get involved with the big hospital system, big giant bureaucracy, but that's where we landed and then it is really…
Sean KelleyI needed to learn the business of healthcare and the underlying economics and what was driving everything whether you want to say it drives it sideways, backwards, upside down, whatever. But whatever was driving it. And so I spent nearly a decade working for a big hospital system, and I managed service lines on the adult pediatric side, neuroscience principally and…
(04:14):
Sean KelleyI learned a lot, learned I didn't want to work in big bureaucracy. I learned that I also do more work in big, giant healthcare. But I also learned a whole lot that…
Sean KelleySo, as in most things, the people are trapped in models that they don't really want to be involved in.
Sean KelleyBut it's the way they're able to do their art. So Javier, for instance, as a nurse, he takes care of people. My brothers. The surgery takes care of people. My sister's a pediatrician, takes care of people.
(04:46):
Sean KelleyWhat I really noticed in my first ten years of health care was the fact that the people that wanted to help people, that as people delivering care, were trapped in this horrible model that tortured them to the degree that most of them wanted out.
Sean KelleyBut we're so far down their career path that they just basically said I'm in, I'm going to stay in.
(05:10):
Sean KelleyAnd so what I wanted to do was take some of the knowledge I had from developing innovative business models and other industries and bring it to healthcare and that is to say, strip out the bad stuff, take away the unnecessary cost, improve the quality and service and build something completely new and that's what we started when we started this company.
(05:35):
Sean KelleyYou know, I told my brother from day one, I don't want to be involved in developing anything in healthcare that continues the same model. So there are lots of ways to be involved in healthcare and lots of ways to make money in healthcare. And if you're just perpetuating the model, then you're not really contributing anything I don't believe.
Sean KelleyAnd I just believe also that there's a huge opportunity.
(05:59):
Sean KelleyIf the service is as bad as we all know it is, we're all patients and then the costs we all know are crazy and out of control and then the quality is unknowable. It just seemed like a good opportunity to change those things and do something different and in the process liberate the providers in a way that they can go back to building relationships with patients, which is fundamental to getting any kind of good outcome.
(06:27):
Sean KelleyLet's connect.
Wayne LowryYou know, as you were pointing out the importance and the value of relationships. You know, Javier, you..
Wayne LowryYou work more directly day-to-day, right? Within their health plan or not with the health plan, but with their surgeries and with the patients themselves. Can you speak a little bit about that? First off, tell us a little bit about yourself.
(06:48):
Javier LiraWell, I was a military trained surgical technologist, and did that for about 15 years. And like Sean said, I worked with his brother over at the University Hospital here in our local hospital here in Austin, went to nursing school, became a nurse, worked with him there too. And then…
Javier LiraYou know, they kind of plucked me out a little bit sooner than I—normally you go instead of doing all the charge nursing and the off off shifts and doing all that kind of stuff. Normally you go supervisor, manager, director, that kind of stuff and they kind of pulled me out sooner a lot sooner than I expected to do more of an administrative and coordinating. So right now, you know.
(07:27):
Javier LiraAt that time I was doing all this trauma surgery and doing all the big cases, and then I went to this outpatient and you know, a lot of these cases are, you know, same day surgery. So it wasn't, you know, we're not doing a full whipple on somebody we're doing ACL’s and total knees and total hips and the normal normal stuff we do.
Javier LiraAnd then you know Sean is really good about, you know? I didn't know the cost at that time, right? And he's always like, “Now, I have all this knowledge of learning and that cost that much. That's this. And then I also have OR knowledge.” When you start adding CPT codes and certain stuff that they do, they start gouging a lot and I get very frustrated and I get on myself box and I start yelling and screaming.
(08:06):
Javier Lira“Guys, you know, what are you doing? You know,that knee scope just because you took out some synovia and you shouldn't add $1000 to that. That took 5 seconds to do. Like, why are you adding this CPT code?” There's a lot of gaming because as you know, the coding is really, really good at their job.
Javier LiraThey were very good about trying to extract money and that's why they like the athenas and all kinds of stuff.
(08:27):
Javier LiraTry to generate that.
Javier LiraSo I've learned a lot on that part.
Wayne LowrySo speaking about that, I mean that's an issue of transparency and it seems to me that that's part of what, where y'all have found synergy as far as the shared vision. Could you speak a little bit about transparency and why that's such a driving force to what you're doing?
Sean KelleyYeah, I'll tell you what.
(08:49):
Sean KelleyOne of the first things I noticed in healthcare was the lack of transparency, not only on the price, it was just a shell game of what we charge $1000. We know our contracts at 300, we usually collect 250. We're happy with that, you know.
Sean KelleyThat kind of wonky finance or accounting, and I was like, “That just seems weird,” but they didn't want anybody to know what you're actually collecting from any one pair. And so it's all proprietary slash confidential. And then on top of that, there was just this opacity when it came to understanding the underlying cost. So what I mean by that is not only were the cost to the purchasers unknowable,
(09:44):
Sean KelleyBut the actual healthcare systems didn't really pay attention to the discrete cost that they incurred in delivering a service. So in most businesses and simple model, you know you're making a widget, you have materials, you have labor, you have administration, etcetera, and you bundle all that up you say here's my cost, you're going to add a margin that's just the bottom up pricing model.
(10:05):
Sean KelleyWhen healthcare wasn't like that, when I went to talk to the CEO at the big hospital system I worked for here in Austin and I said, “Look, I've done a lot of what's called activity based costing,” which is a type of cost accounting. And I've done it to other industries and I said, “Hey, look, I think this industry would be perfect for it because the lion share the cost are in people. So it's a labor issue which is perfect for TDABC.”
(10:35):
Sean KelleyAnd so what I did is I went to him and said, “Oh yeah, we've got a cost kind apartment right in the hall. So he was like, “Really? I never heard…” so I went down there.
Sean KelleyAnd turns out after about an hour and a half, with the cost accounting department, it really isn't about how do you manage the resources to produce higher levels of outputs at lower cost like traditional business, but it was actually establishing the cost report for Medicare and that is the big hospital systems have to supply this cost report to Medicare to explain why they're asked for and cost $42.00.
(11:11):
Sean KelleyWhy their surgery costs $10,000 and so there's just a patina on everything in healthcare about like, this is not important to know. What's really important is revenue. We manage costs by, you know, and then they would do these budget things.
Sean KelleyAnd be like “Hey, we’re over budget. Our bond ratings are not doing so well. So you know we've got some difficulties,” and so they would just say, “verybody's got to cut 7% of their budget 5%.”
(11:43):
Sean KelleyHere I was growing a brand new children's hospital out of the ground and I was like, “No, no, no, no. You need to pour money into this. We're making tons of margin over here. You need to take some of the areas that aren't working well and—”
Wayne LowryProducing.
Sean KelleyYeah, trim them so it functions like a government almost like everybody's got to cut. Everybody gets an increase in budget, everybody and and it doesn't function like a real business and…
(12:10):
Wayne LowryAnd it and it doesn't and the value doesn't flow down to the consumers.
Sean KelleyNo, no. Even if they were able to cut costs in a meaningful way, they wouldn't adjust their pricing.
Wayne LowryWell, speaking to that, Javier, for just a minute.
Wayne LowrySpeaking to the cost component to that, if you don't mind.
Javier LiraWell, you know they use the yardstick of Medicare, right and who knows how those figures are ever made. You have reps when the implant is needed.
(12:39):
Javier LiraYou know, overcharging for a screw that you can get for $100, they're charging $10,000 or whatever it is, depending on the, you know, body part they're doing. And it's just when you talk about costs. In addition, there's these, I think the GPO's right, you know like, oh, like, you're only a part of this part. And I have to. I have to charge it this much. And that's all BS. As we all know.
(13:00):
Javier LiraIt's like, you know what your costs are. Give it to me at a decent rate.
Javier LiraI don't care about GPOs. They don't really matter. What kind of margin are you trying to get? And it looks like you're trying to gouge me because we all know how much that cost. Because I saw—I know how much you know this other facility is paying for it. I know how much you're paying. What are we doing here? And the reps try to play like they're not involved.
(13:22):
Javier LiraAnd I have nothing to do with it. And then when you talk to the administrator, they're like, “Oh, I can't do that. It's up to the GPS.” It just goes back and forth and ‘round and ‘round and they all just try to get their money, their pound of flesh.
Wayne LowryOf course, until there's none left.
Wayne LowryAnd then and then, I mean at the end of the day it's about the consumer and the patient both getting the quality of care that they need. And sometimes people think that cost equals quality. The more you pay the better quality. But as you just already mentioned, there's often times where there are all these hidden costs that really don't need to be there.
(14:00):
Wayne LowryOther than someone in New York City's, you know, Playbook says this is the rate for this item that really shouldn't be that and it's the consumer that's affected. And at the end of the day mostly the taxpayers that are affected.
Wayne LowrySo we've talked a little bit about transparency. We talked a little bit about cost. Let's talk about quality. When it comes to your ideal scenario for healthcare, where can we have the most effective, highest quality care and how does that relate to cost?
(14:41):
Sean KelleyWell, I'll go back to when my brother and I decided to on a white board at a lawyer friend's office in Westlake in Austin.
Sean KelleyWe came up with the idea of doing this and we felt like our surgical expertise, his as a surgeon, me as a business person who built big surgical practices and service lines, we felt like we could really very easily turn the dime on on cost. We also thought that if you just added a layer of concierge level type of service. You could really knock it out of the park compared to where traditional practices are today.
(15:21):
Sean KelleyAnd so the part that I said that I refused to be involved going forward if we weren't going to focus on this was quality.
Sean KelleyAnd my brothers, what? What's called? They called plastic surgeons. He's a pediatric plastic surgeon. But in reality, a better name for him is a reconstructive microsurgeon. And…
(15:42):
Sean KelleyMost people know Javier knows this and people that are familiar with surgery that a plastic surgeon in a hospital setting, it's called a surgeon-surgeon. So it's somebody who he's called in when there's a big problem with the case, somebody goes, case goes sideways, they call it a plastic surgery because they connect things and microsurgery and they can revascularized, etcetera.
Sean KelleySo in that context, my brother had done a lot of co-cases with other surgeons. So an orthopedic surgeon was doing a resection of a femur that was diseased or damaged, and he would come in and rebuild it with bone and cartilage and tissue from other parts of the body.
(16:21):
Sean KelleyAnd so he had a good idea of who the really good surgeons were in town. Not all of them, but the ones he had worked with. And he also knew the ones they would never send his, you know, dog to. And so we started there and we said, we know that the surgeon has an outsized impact on the quality of the outcome in surgery.
(16:42):
Sean KelleyWe didn't know at the time how much it was, but we knew it was the strongest, you know, causality in terms of outcome. So we started there and he said, “Well, I know this really good foot and ankle guy, Brandon Smith, he's fantastic. I've worked with them a couple of times. Michael Young, phenomenal ENT. We've done both cases together.”
Sean KelleySo we went through the different specialties and we picked the surgeon. This is based on his personal knowledge, so we started off in the best scenario possible, well, what we knew though is that if we controlled for the surgeon.
(17:18):
Sean KelleyAnd then we knew we couldn't always get into the surgeon's preferred facility because it may be owned by the Evil empire, and they may just be comfortable working there because it's good for them, right? No problem.
Sean KelleyBut what we said was we needed to find independent facilities that had the capabilities necessary for the surgeons to accomplish their outcomes the way they do. So when we bring in a surgeon, let's say we brought in this foot and ankle surgeon, we told them, “Hey, we're going to operate this independent facility over here that is going to give us some good, no nonsense pricing.”
(17:53):
Sean KelleyAnd we're going to bring our implants and things like that so we can trim the cost there. And he said, “Let me go check it out.” And so he went over and checked it out and said, “Yeah, they got good equipment. They got some pretty good people. This is going to work out. OK.” But then there were other specialties who went over and checked it out and said, “No, this is not going to work for me and they don't have the right people. They don't have the right equipment, etcetera.”
Sean KelleyBut we always left it up to the surgeons making that judgment call.
(18:17):
Sean KelleySo if you control for the quality at the surgeon level, you're going to raise the level of patient outcomes, period. Now that's not always true in every area of medicine. Sometimes there are team sports. Javier mentioned Whipples a few minutes ago. Those are the kind of cases like my brother does these craniofacial cases? They require a whole team, not just a surgical team. And it's multi-specialty, but it's a whole pre-care, nursing therapy, dentistry, etcetera, etcetera.
(18:48):
Sean KelleyWhipples are something like that. They're just very complex procedures and they require a team that works together. Think of open heart surgery or heart transplants. They require teams of people who are very attuned to the patient and they know exactly what to do when things go right or when they go wrong.
Sean KelleySo we're doing very simple procedures. We're doing the kind of procedures that have been around for 130 and 140 years like inguinal hernias. So we've reduced the risk of us needing the team. So what we're looking at is the kind of surgeries that most of these surgeons, like a general surgeon learns in their first year of surgery for hernia.
(19:30):
Sean KelleyIt's the most simple, basic, low risk, low cost procedure to do for general surgeons. By the same token, fractures or any of these things. So we work in a space that's from the office to the ASC. We sometimes go into the hospital. It really has to do more with what facilities we have available at a market and then the surgeon's ability to get the case done at that facility.
(20:04):
Sean KelleySo again, we leave it up to the surgeon whether or not they can operate in more of the facilities that we're contracted with and that's our way to control for doing things off script. We want to make sure the surgeon is always in charge of that. We don't want the surgeon to ever feel like, “Hey, I felt like I needed to do you guys a favor.”
Sean KelleyNo, no, no. Just say no.
(20:26):
Wayne LowryYou got to make sure it's—yeah, that the quality is there.
Sean KelleyYeah, and I'll hand it over to Javier because Javier…so my knowledge inside surgery I knew that this was possible.
Sean KelleyBut if you talk to people outside, they're like, “No, you can't know quality.” And when I went to work at the hospital system, when they told me what quality was, it was infection rate, wrong site surgery rate, you know, readmissions. It was all these what I call failure rates.
(21:00):
Sean KelleyThat's not a quality outcome. That's the absence of quality. So the absence of quality does not infer equality. It just means that you didn't have a bad thing happen. Now I'll hand this to Javier. Javier, as a surgical nurse and previously a tech, has eyes on surgeon and they, inside the perioperative environment, they can all tell you who the good surgeons are.
(21:28):
Javier LiraYeah, we know. Oh, you're going to that guy. There's couple of names. I can't say on this podcast that I'll get in trouble for.
Wayne LowryOhh, don't worry, we'll bleep it. Just just go ahead and say it and then I'll just cut it out. I'll. I'll cut it out, put it in the vault, save it for later. Don’t worry.
Javier LiraYeah. Yeah, doctor…
Javier LiraRight, right. We know because you know they have bad technique. They take forever.
(21:50):
Javier LiraYou know, there's a skill set because they forget and they don't know. Each doctor, they work in their own right. They think they're the best. All the doctors think the best. They don't realize that the staff around them work with all doctors that do that same case. All these different types and see all different ways and styles and you’re high maintenance. Nobody likes working with you. You yell at the staff.
(22:11):
Javier LiraYou know, your bedside manner sucks. Whatever it is, we do have some that don't have good bedside manner that are great surgeons, but that happens too.
Wayne LowryThat's the one you want to make sure that the patients are already knocked out. Is that what you're saying? And the surgeon leaves and the surgeon leaves before they wake up. OK.
Javier LiraYes. Yeah. Before they talk. Yeah. Yeah.
Javier LiraThey need to have a PA standing next to them and be the interpreter for the doctor. What he's trying to tell you is he really cares about you and he wants you to, you know, that kind of stuff.
Wayne LowryYeah.
(22:34):
Wayne LowryYeah, yeah. He just thinks your face is ugly. I mean, what? You know what can you do?
Sean KelleyThat can be fixed.
Wayne LowryI want to take a quick break to talk about bestdpc.com.
Wayne LowryAre you a doctor looking to break free from the headaches of insurance and take control of your practice? Or maybe you're an employer searching for an affordable healthcare solution that actually works. At bestdpc.com, we cut through the noise and connect you with the country's best direct primary care clinics. Whether you're a patient tired of surprise medical bills or a physician ready to build a thriving membership based practice. We've got the tools and resources you need.
(23:13):
Wayne LowryFind the best DPC doctors near you, get expert advice and take the first step towards better healthcare. Visit bestdpc.com today and see why direct primary care is the future of medicine. That's bestdpc.com because great healthcare should be simple, affordable and built around you.
Sean KelleyWayne, there's an interesting parallel that happened to us on this journey. Javier's been with us…7-8 years.
(23:42):
Sean KelleyAnd he is my brother's first case when he came to Austin in 2005, Javier was the scrub tech. So our relationship with Javier goes way back.
Sean KelleyI didn't get to meet Javier until he actually joined us, but we met along the way on this journey. A Doctor who's now the head of the FDA, Marty Mccarry.
(24:07):
Sean KelleyAnd we became friends with him and he actually has a place in Austin. He comes into town every once in a while we go to dinner. He's a great, great doctor and a phenomenal researcher. His very first book was called “Unaccountable”. And in it, he took the medical industry, especially the training industry and the professional side, meeting the surgeons to task about the lack of quality and how everybody circles the wagons around bad doctors.
(24:35):
Sean KelleyAnd so in that book he talked about Hodad's hands of death and destruction, which was a terrible surgeon. But he's a really good looking guy, very nice, congenial. Everybody loved him. Everybody raved about his bedside manner. But he was a…
Wayne LowryOh, we're talking about Doctor Strange, right? I saw that movie.
Sean KelleyAnd so then there was this other doctor, they called Shrek, who was like, horrible bedside manner. But technique was the best surgeon around.
(24:58):
Sean KelleySo juxtapose that and at the end of the book, because Marty's quest in the book is, how do you determine who's a good surgeon and who's going to be able to give you a good outcome?
Sean KelleyAnd in the book, he basically gets to the end and says the only way to do that is to ask the nurses and techs that routinely work with these surgeons and potentially anesthesiologists, and ask them, would you be operated on by this surgeon? And for this procedure in this facility?
(25:26):
Sean KelleyAnd funny enough, when we met Marty, we had already been doing it for three years.
Sean KelleyOr 2 1/2 and so the point was we told him and he was like, “I love your model. This is so awesome,” and he still to this day, he loves Javier, but he has this nervous tick. I think with the way he says his name, he calls him Javi-ay.
(25:49):
Wayne LowryJavi-ay? Sean Kelley Like a French. Ohh and so…
Wayne LowryOh well, this whole time I just assumed he was French. So I mean, I can see where there can be some confusion born in San Antonio, you know, definitely French.
Javier LiraFrench. Yes, a lot of French with barbacoa. A lot.
Wayne LowryYeah, lots of it. So let's transition over to Texas Medical Management because there's a couple of questions that I think it's important for our listeners. First off, when you're talking about your organization…
(26:20):
Wayne LowryTell me about the facility. So, do you have one facility that you primarily operate out of, your doctors, your multiple facilities kind of talk through that? And Javier, what's your experience in that and from your position?
Sean KelleyWell, I'll start. I'll start so you know when we first landed on this, the obvious person who first started this was Doctor Keith Smith at Surgery Center of Oklahoma. So my brother and I cold-called him and said, “Hey, we're thinking about starting this company and doing this thing similar to your company, but in Austin, could we come up and meet you?” He said, “Come on up, I'm going to teach you everything I know because I'm really surprised this model hasn't spread.” So we went up, we met him, everything.
(27:04):
Sean KelleyAnd the difference between our model and his model is he owns a surgery center with his partner. He's an anesthesiologist and his partner, Stan Peltier. They own it, lock, stock and barrel. And they invite the surgeons in. OK. And they have no insurance contracts. They're all cash. And he's a phenomenal human being. He's a great man.
Sean KelleyAnd has done a lot to create this space. What we told him we were going to do is my brother, being a surgeon, wanted to build the surgery center. So of course, you know, we spent some money on some plans and development and everything because I guess somewhere in surgery, training school, they'll tell them if you own the facility, you make all the money.
(27:43):
Sean KelleyAnd so I was against that because I just felt like sinking in a bunch of money like that. We'd be paying a mortgage the rest of our lives. And, you know, if it goes South, then it goes South. I thought there was an easier or better way to do it. And that is to take advantage of a lot of the spare capacity that's in the market.
Sean KelleyAnd so Keith told us the same thing. He said, “Look, go around and meet some independent facilities. You're going to find a bunch that are around their good facilities. They've just got spare capacity. Maybe they haven't gotten insurance contracts. They're really hungry.” So great. That's what we did. We started off with an independent surgery center.
(28:16):
Sean KelleyAnd now I would say we have 1 2 3 4—we have 4 surgery centers in Austin under contract and a Surgical Hospital.
Sean KelleyIn Houston, we probably have a similar number of facilities now. I think we don't have a—we do have one surgical hospital, but it's just for gynecological surgery. And in Dallas, we have a surgical hospital and in Fort Worth and ASC.
(28:41):
Sean KelleyAnd so.
Sean KelleyThe way we do it is we are a medical practice. We're licensed under the Texas Medical Board.
Sean KelleyMy brother's the CEO. We have practicing surgeons that are our Board of Directors and the reason we chose to go that route because we could have gone a different route is I wanted us to stay focused on being a clinically focused medicine focused type of organization.
(29:08):
Sean KelleyAnd so therefore we, you know, in another model, we didn't need a Javier, we could have just tried to do it with business people. I think you lose a lot because I think the most important aspect of our work is that we know how to take care of patients and we know how to facilitate getting patients to surgeons.
Sean KelleyAnd making it easier. So we solved the puzzle for patients. We solved the puzzle for employers, and we solved the puzzle for the surgeons as well.
(29:39):
Sean KelleyFacilities are obviously taking a haircut with our model when you factor in the fact that they pay 30 to 35% of their revenue and billing collections and bad debt.
Sean KelleyThen a whole dollar from us actually has a lot more value, but we also help them manage their costs. Javier's created sourcing, implants and sterile supplies outside the market so that they don't have to pay these, you know, GPO prices.
(30:08):
Sean KelleyBut I'll let Javier kick in and talk about the model in terms of the flexibility and what it means as a nurse.
Javier LiraYeah. When I go into negotiations with some of these places. They don't really understand their pricing, like what their revenue is, right, they don't even know what their costs are.
(30:31):
Javier LiraThey think they do. They kind of don't. And in talking with them and kind of getting them off the hamster wheel of “I got to charge you this much”. It's sometimes very difficult because they don't get it. You know, I've had people tell me “I'm losing money”.
Javier LiraI'm like, no, you're not. You're just not making what your best contract is or there's, like, “I can't give you less than this other contract I have”, you know, which doesn't make any sense. Are you still making money?
(30:55):
Javier LiraThat kind of stuff. So it's been a struggle you have to get forward thinking, you know, directors to kind of get the landscape because it's going to come this way eventually. They're going to have to, you know, change their ways.
Javier LiraThey're not going to be able to do this forever. It's going to catch up to them pretty quick. And I'm also able to, you know. There's a lot of avenues, you know, buying the wrong equipment is a problem. Sometimes they don't know what they mean and what they want.
(31:21):
Javier LiraSo having the knowledge of you know just for a quick example, cysto and hysteroscopy, they're two separate scopes that go in to kind of take a look in, but they have one that can do both. Why would you buy them separately? These equipments I can have—
Wayne LowryYeah, that's news to me. I thought I thought they were. Yeah. I mean, that's news to me.
Javier LiraYeah, yeah, they have. They have them, they connect and can do both. There's no reason. Inflow. Outflow. That's all you need. Scope. Boom. Javier Lira You're gone so little things like that as you catch up, you know, they have this disposable item when they're closing an abdomen for laparoscopy, right? There's plastic, it's $250 a pop and they do it on every single case. Javier Lira Why don't you use the non-disposable that you can sterilize? That's two grand it pays for itself in a year. You know, that kind of stuff. And getting these people to get off. The “why do I want to buy stuff and throw it away?” all that kind of stuff, so I try not to help them out in that.
(32:13):
Sean KelleyYeah, and Wayne?
Wayne LowryNo. So y'all are currently in the you said, Dallas, Houston, Austin. Where else did you say y'all are at currently?
Sean KelleyWell, we currently have an ophthalmologist in San Antonio, we have an ASC outside of Fort Worth.
Sean KelleyWe have, we have ongoing negotiations with the group out of the valley.
(32:41):
Sean KelleyThat may be the most disappointing/difficult and not surprising to you I'm sure. And our business partners kind of shake their heads because they're all South Texas and they say, oh, yeah, yeah, it'll take a while, but—
Wayne LowryYeah.
Wayne LowryYeah, yeah, nothing moves fast since I'll takes, like, a day that right now.
Sean KelleyExactly. But if I could just go back a hair. One of the things that Javier also does is when we're vetting out a surgeon, now we'll find out about their reputation. We'll find out, you know, that they have this practice focus, narrow practice, focus. They do the same procedures a lot.
(33:18):
Sean KelleyAnd that infers that they get good quality outcomes, or at least they're getting better all the time. And then one of the things he does is he gets on the phone and talks to him and starts working through the bundles.
Sean KelleyWell, we call it the fastidious surgeon. And if they start saying like, “Oh well, I need three of these for every case. And I need, you know, this special piece of equipment. I need a robot to do this”
(33:42):
Sean KelleyJavier will call me and go “This is not a good fit.” So what we're looking for is we're looking for the surgeons who are trying to get great outcomes at everyday types of surgery.
Sean KelleyIf the specialized piece of equipment is needed, we'll absolutely include it, but oftentimes it's a buzzword type of thing. It's like the, you know, the new thing and it ends up costing a ton of money.
(34:12):
Sean KelleyWe had a surgeon one time tell us that, you know, I want to use the robot on these cases. And he said, look, I've got these academic papers that show that the robot only costs like, $250 a case.
Sean KelleyJavier's like, look, here's a facility fee for your case without the robot. It's like 1500 bucks. And here's one with it. And it's like 10,000. And he's like, really, they shouldn't charge you that much. It's like, well, who the hell pays for the $1,000,000 robot?
(34:35):
Sean KelleySo Javier does a great job of, like—I don't want to say busting their balls, but he does a really good job of like finding the doctors who are going to be good stewards of the resources that we're providing them to take care of patients and not going overboard.
Sean KelleyOur surgeon now, when he comes to us with a robot, we know he's serious about it because it's the kind of case that he can only do with the robot.
(35:05):
Wayne LowryYeah.
Wayne LowryTake a quick break to talk about scalebyseo.com
(35:51):
Wayne LowrySo I mean, it's exciting to hear that you all are expanding and growing and the opportunities that you all have and the talent you're able to bring to the table, how does that translate for health plans?
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Wayne LowrySo you know a lot of these self funded health plans, obviously they're trying to figure out how can they maximize their value and how does that relate to what you offer?
(36:19):
Sean KelleyYes. So I think that people get caught up in trying to maximize too much. The biggest maximization that the health ban can do is set up a set of services within the health plan to drive the utilization. So that's where DPC is absolutely bar none the best.
Wayne LowryWith the right SEO strategy, your practice becomes the obvious choice when people are looking for better healthcare options. If you're not showing up where they're searching, you're missing out. Be visible. Get found. Grow your practice. Don't leave growth to chance. Visit scalebyseo.com today, and let's get your clinic in front of the right people.
(36:41):
Sean KelleyLast layer of primary care and then they're always going to be looking to refer to a direct contractor provider like Texas Medical Management. There's a lot of them who come to me and they're like, well, but you don't have somebody in Granbury, you don't have somebody in El Paso, we got 5 employees there. I'm like, OK well.
Sean KelleyYou know, look, this is a crawl, walk, run. You have 0 utilization, so you're saving $0.00 today. Why don't we go ahead and start where you have massive employees and we'll start there and people get tripped up by trying to do everything or nothing.
(37:16):
Sean KelleyAnd I think the best thing they can do is number 1, put in DPC or on site some type of primary care that is fully aligned with the risk of the plan and also directly connected into the direct contract to providers like us and then put in place the types of incentives both in terms of cost reduction to the member.
(37:41):
Sean KelleyBut I think also cash to the Member. We've witnessed several of our health plan partners go from 60% utilization to 85% utilization by adding nothing more than $1000 cash to each time they choose.
Sean KelleyIt's counterintuitive. You're thinking like God, that's crazy. We're going to spend all this money. You don't realize how much money you save. And so I think the other thing is, well, I'll let Javier add.
(38:12):
Javier LiraWell, what also happens is, you know, deductibles are a problem, right? And people are also scared when you offer this. Sean always says in the first year you get the biggest bump, right?
Javier LiraBecause, you know, we had, we just did 3 hysterectomies on Tuesday. These women have had it for 20 years and they were massive. I mean, we're talking multiple fibroids. We're just pulling stuff.
(38:34):
Javier LiraIt was crazy what we, you know how long they've lived with this pain and they finally get this benefit for themselves. And you know, we're actually able to help them. So they're going to be very appreciative. It was at no cost to them.
Javier LiraThey went through their plan and it's just it's, you know that employees can stay there longer that employees going to work and all that kind of stuff and you know their teachers, they're doing it in the summer when they actually pull it off, so this is a big bump for us in the summer because they're trying to get their stuff.
(39:03):
Wayne LowryRight, yeah.
Sean KelleyYeah, I think so probably the worst asymmetry and information in terms of a purchaser and a vendor that exists in the economy in this country, probably in the world, is an employer buying healthcare services.
(39:31):
Sean KelleyThey have no information and they don't know what they're buying and there's no information on quality, just infection rates. And then on top of it, they have all these other middle men in between who are trying to guide them into solutions that benefit them and not the plan.
Sean KelleyAnd there's so much uncertainty and no data to validate whether or not you've made a great decision or not.
(39:53):
Sean KelleyAnd so that's why I think the whole DPC movement, especially as a benefit to the planned members, is so important because you're collecting all the data that shows you how serious someone is about saving money when they're going to go ahead and make the investment
Sean Kelleybecause I've seen lots of health plans and brokers stumble on the way to getting DPC, they'll say “well, but we spend on average, you know, what is it? 30 bucks PPY on primary care. And this is going to be like, you know, whatever 6800 bucks PPM.”
(40:30):
Sean KelleyAnd it's like, well, but right now your people are going whichever way the wind blows, especially going to the big, expensive hospitals for things and you're spending your money there. You're wondering why is it happening?
Sean KelleyWell, it's because you don't have the care providers taking care of the patients and making sure that they don't need to go to a hospital. Like Javier's point, Javier, these women had this condition for the last 20 years. What kind of case would that have been if they had been diagnosed 10 years ago?
(41:03):
Javier LiraRight.
Sean KelleyIn terms of it would have been a lot less. They probably wouldn't have missed as much work or had as much difficulty in life. They can cause problems with fertility and so on.
Sean KelleySo there's a lot of impacts that are felt by the planned members as a result of the cost being so high and then the cost sharing being so high. And I think one of the joys in our work and we get to talk about it every week on our operations call is just how many people come to us and are so excited.
(41:38):
Sean KelleyBecause they didn't have $5000, they're a teacher. They're a sheriff. They're a bus driver or a truck driver. And they didn't have the $5000 to get the total knee or the total hip. And then they come to us and it's like they think it's fantastic.
Sean KelleySo it's the combination, but I think employers or probably brokers more, overthink sometimes the maximization formula. I think the probably the best advice I could give is get started now and crawl, walk, run.
(42:14):
Sean KelleyYou'll see where the holes are as you develop it. But there's it. There's a lot of variables to work on. You've got to get the incentives right. You've got to make sure that you have good primary care. You got to make sure that the members are attuned into it.
Sean KelleyWe have clients that are in the same industry and they may be even in the same city and one's got 5% utilization, meaning 5% of the people who get a surgery that fits within our model, go through the program a year and then on the same city there's getting 80%. And the savings are millions of dollars different and the one that would be here only invest.
(42:50):
Wayne LowrySo. So what? So, yeah, So what would be? I mean obviously it's going to be case by case. But generally speaking, what are you looking as far as what the bundled surgery cost versus a traditional go check yourself into the emergency room and hope for the best surgery?
Sean KelleyWell, if it's done at a hospital, we're probably about 70% less than the network. If you're talking about ASC's or like scheduled hospital outpatient HOPD hospital outpatient department type surgery were between 40 and 50% less.
(43:27):
Sean KelleyAnd for all the reasons we mentioned, you know we manage the surgeons, you know supply, utilization and so on and so forth and we negotiate better prices. But I think that and the other thing is you know when we work with clients. There has never been an instance where we haven't been paid. So my bad debt is 0.
(43:51):
Wayne LowryOh how nice. I got something I can send to you. Would you like some or you got some? If you're feeling left out?
Sean KelleyAnd the first one—
Sean KelleyNo. I'm not talking about personal, I'm talking about business.
Wayne LowryYeah, I got some of that too.
Wayne LowryNo, but so it sounds to me like this is a no brainer when it comes to scheduled surgeries, especially if you can have the steerage or I don't know if that's the right word. But if you can have the referrals coming your way. And so you mentioned right primary care course, Best DPC podcast, obviously a little bias.
(44:27):
Wayne LowryTo what we can bring to the DPC space and the information that DPC providers might be looking for. So take a direct primary care doctor based in, you know, Houston, who's seeing, you know, has a patient panel of 200 people. How are they going to integrate what they're doing and know about you guys and connect those referrals your way. What's the best way to connect A to C? What's the B here that I'm missing?
(44:59):
Sean KelleyWell, so for surgery, there's two aspects of this and I'll let Javier explain the clinical angle, how they connect to us, but I'll talk about the business.
Sean KelleySo if it's a DPC that actually has 200 lives from a contract with an employer, that's easy, that would just be TMM would establish a direct contract with the employer or their TPA or both, and then the DPC would say OK, I'll refer all surgeries that fit within their scope of services directly to TMM.
(45:38):
Sean KelleyIf it's an independent DPC, so my family and I have had that DPC for 12 years so you know we went to independent DPCs back when it was not anything cool. And it was a lot cheaper.
Sean KelleyBut you know, it was they were trying to build a business model and in that case, you're talking about a DPC with a panel of 200 patients and they could be anything from health shares to, you know, $50,000 deductible, people who basically just stop loss in healthcare.
(46:03):
Sean KelleyYou could be anywhere from like I've got, you know, one of the metal plans or I've got a corporate plan, you know, an employee sponsor plan in those instances I think it comes down to talking to the DPC and saying which of your clients responsible parties, meaning the whether it's the health share or whether it's their self-funded themselves?
(46:26):
Sean KelleyI mean, if they're high deductible, who could connect with us? So if they're looking for cash price procedures it's typically because they're on the hook for them, or they know that their payer is looking for that and so they don't have a network by default to go to. I think those—
(46:48):
Sean KelleyWe have a group of DPC in Austin that we work with on a pretty regular basis and they send us patients, they'll say, “OK, this is a health share patient. I'm going to send them to you.” And we already know the health shares. We already have contracts with them. We set up to do that.
Sean KelleySometimes they'll hit us with like they've got some new plan that's out of New York City and stuff, and we'll connect with them and we'll walk them through the process and get so that we can get paid.
(47:18):
Sean KelleyBut I think the more and more we're seeing DPC are getting their panels built with self-funded employer plans and those are where we are, I think a great option because we can we can supply you know basically we can connect and there's we'll let Javier talk about how we connect clinically with the DPC.
(47:43):
Wayne LowryYeah, go ahead, Javier.
Javier LiraYeah, they, you know, we actually have quite a few couple in Waco, couple in Houston. We consistently work with and we're always their option for a lot of their patients and they are the more independent ones that we kind of talk to and you know where their valves…
Javier LiraSo “hey I think this patient needs an ENT surgeon, can you guys help me out?”, and they just call our number and we quickly get him in our pipeline to our preferred provider. I've had a couple call me directly.
(48:16):
Javier Lira“Hey, what do you think about this? What would be the best you know position to see this type of patient, depending on the symptoms”, we got to talk, you know, talk it over. So it's a really Direct Line to the DPC. We love them. We think you know, they know what the patient needs, they know the patient very well and us having it within our group,
Javier LiraYou can tell the value that they give and we wish more people were following DPC plans and then, you know, we're trying to stop them from going—You know, how much does it cost to go to the ER all the time? You know that companies don't talk about that part. We missed that part earlier. It's like the ER and urgent care turn into their primary care not DPC.
(48:52):
Javier LiraAnd that we're trying to limit that and get them on the right track. And you know we get, you know, we have a pretty high percentage of non surgical events like you know, our doctors don't cut on everybody you know. And we pride ourselves on that that our surgeons are of high quality and not going to just cut on every single person that comes in.
(49:13):
Sean KelleyYeah. In fact, our numbers go something like this for every 100 referrals that come in at 82, get a consult, but only 55 get a surgery or procedure.
Wayne LowryOh wow.
Sean KelleyAnd so our hypothesis was that if you contracted with and partnered with really good surgeons, they would also have very good ethics and wouldn't cut on people. But let me add something. Recently we've been noticing a corporatization of DPC and it's a very, very exciting thing for us.
(49:48):
Sean KelleySo we signed the contract a couple years ago with the group out of the valley called Frontier and Phenomenal. We just didn't have lives in the same place. But recently they've expanded into Austin, Houston and Dallas.
Sean KelleyAnd so we're working with them and in fact our head of client services had a good long call with their care and navigation team yesterday and everything's going great. We're helping them with some of the big school districts and municipalities that they're signing up. Sean Kelley And I think we're very complementary, we don't leak into their space. They don't leak into our space and I manage primary care practices of pediatricians for a number of years, and I know that when things get a little bit outside the scope of a primary care doctor. They want to very quickly send to a referral. Will oftentimes run it through Javier.
(50:45):
Sean KelleyJavier will do what's called a review and recommend. Send it to our surgeon and say, “hey, take a look at this. Tell us if you really think this is need of a consult.” If it doesn't, then we'll just schedule a virtual consult just to tell them, you know, no, actually, or that we'll have our surgeon talk directly to the DPC and let them know this is what I would do.
Sean KelleySo we're, if you think about it, we're almost building like a virtual integrated healthcare system. We're just two blocks connected primary care and surgical care, there's more and that's exciting that we're we're we're building this because people's hearts are in the right place. We're trying to get better outcomes. Our goal is to improve service.
(51:25):
Sean KelleyIn fact, we think so much about service and quality that we started collecting patient reported outcomes in 2018. We've collected on all our patients. We collected a net promoter score. Our historical net promoter score is 87, our proms look fantastic. We're making great reductions in paying, great improvements in functionality, and great improvements in life’s stress.
(51:48):
Sean KelleyAnd so we feel like that if you're going to make claims like that, you need to back it up with data. And that I think what primary care is going to love. Primary care is going to love just, I mean, they get the feedback when the patient comes back to them says,
Sean Kelley“Thanks so much for sending me that Dr Smith, Javier was great. I talked to the team. They're fantastic. Everything went great.” But I think more importantly, showing them what the data actually showed, what the patient actually got out of it.
(52:20):
Wayne LowrySo let me ask before we wrap up, I do want to ask, you know, Texas is a big state, trust me, I know I'm all over it, but it's a big country and there's a lot of DPC providers that may be looking at this as a possible solution.
Wayne LowryTell me like, how would this look for a DPC in Nebraska or DPC in Georgia engaging with you guys? Do you have any DPC's that have a plan and you know send them on a plane? I mean, I can, you know, I live in South Texas.
(52:57):
Wayne LowryIt wasn't long ago where it was well known that companies would send people to Monterey, Mexico, to get surgery. I'm a bigger fan of the model that you're producing, but you know that concept of ‘hey, flying someone for a much more affordable price over.’
Wayne LowryWell, how does that look? Have y'all had some conversations going or, you know, to mention who? But is that something that you all are exploring or have some reach out to you?
(53:27):
Sean KelleyYeah. So we have traditionally had like a group captive where they would have companies in Florida, Georgia, Alabama, Mississippi all over the country and they would send us a lot of patients.
Sean KelleyThe longer this has gone on, the more people want to be close to home. It's not like the big brokers that say “you got to have one on every corner like an access model”. It's not like that.
(53:57):
Sean KelleyThey're willing to fly. And so they have what we call a travel benefit, which means they pay for the flight, hotel, etcetera. And for them and another person to come with them. But I think more importantly is the model that we have is actually spreading now.
Sean KelleyThe model we have in particular of having a practice that's exclusively focused on non network direct contracts, bundle price transparent, there's not many of those, but you'll find the local ASC will team up with a couple of their surgeons and post some of their prices.
(54:34):
Sean KelleySometimes they don't even post them, they just put it on the website we have bundle prices, you know, cash pay price.
Sean KelleyThose people are not very good at getting out and selling what they have. They don't know how to talk to health plans. They don't know how to talk to brokers. They just want to, like, put a stake in the ground and say, “Hey, we have bundle surgeries,” and think everybody's going to come to ‘em.
Sean KelleyThat doesn't work very well. There's organizations like the free market.
(54:55):
Wayne LowryNot no, not when the incentives are—Yeah, not not when the incentives are corrupted
Sean KelleyThat's correct. And so there's organizations like the Free Market Medical Association, Health Rosetta, the local business groups, business coalitions on health in each city. There are places where I think you can go that you can find these local providers.
(55:18):
Sean KelleyIt is not like Google. You can't just Google and say you know Athens, GA bundled surgery. You're not typically going to find something.
Sean KelleyBut one of the things that we did about two years ago, because we had quite a few clients asking us to expand outside of Texas.
(55:45):
Sean KelleyBut it's very expensive for us to do that as a practice.
Sean KelleyAnd so we're going to take it slow.
Wayne LowryWell, hold on a second. Hold on a second. I see Texas roadhouses all over the nation. I don't know why you couldn't have a Texas Medical Management or however you would describe it over there. But Texas medical management location in Vermont. I mean, if I can go to a Texas Roadhouse. I should be able to go get my surgery too.
(56:11):
Sean KelleyWe could. It cost me $50,000 to get a license as a provider in Florida and about 50,000 in Louisiana and I still don't have any business there. And then it cost me about $15,000 a year in fees and government regulations and stuff. The filings that I have to do. So there are some costs. I'm not saying we won't do it.
Sean KelleyI'm just saying it will be a measured approach, but one of the things we did though is we know so many people in this space because we've been in it for 10 years.
(56:42):
Sean KelleyWe know a lot of places that are offering bundle surgery, go to a lot of conferences, and meet a lot of people. So, one of the things we did was we created a database on that, we call it “Repair Healthcare”. And I think that if we could repair healthcare, that means repairing the relationship between the doctor and the patient by removing all the bad middle men out of the way.
Sean KelleyAnd so that would restore healthcare. So, what we did is we built this database and we have our first client that's taking on this starting July 1st. And so more to be told on this story, but we have providers in 40 states who have said that they want—
(57:22):
Sean KelleyThey already have bundles and they already have surgeons and we've already taken the time to vet the surgeons according to our criteria for quality and we built this database and how the air is going to be point man on that. He's going to be the one when the client says I got a member in Poughkeepsie.
Sean KelleyYou know he's going to be the one on, you know, looking in the database saying, “OK, there's Poughkeepsie, ASC, they got a doctor, you know the Doctor Strangeglove, and he's a great orthopedist, and he passed all our—I'm going to call him up. I'm going to try to, you know, refer the patient over to him.” And then there's a lot of, you know, missing links. But we know how the business works, so we can probably…
(57:59):
Sean KelleyMake it work better and we're not going to take a we're not going to bundle because we can't as a provider be in that bundle. But we're just going to add an admin fee to it instead.
Wayne LowryWell, this was a very fascinating conversation. We're towards the end of the program, but I do want to say before we sign off today, where can people find you?
(58:28):
Sean KelleyTexasmedicalmanagement.com.
Wayne LowryA website, awesome. What about LinkedIn? Are you all on LinkedIn? Are y'all contributing on LinkedIn? Twitter? Tiktok? You look like a TikTok kind of guy, Sean.
Sean KelleyI wish we were more on LinkedIn, I just have this phobia. But we're on Instagram. We're on Facebook, we just hired a new group of people who are taking that on, that probably—So, we believe in relationship.
(58:57):
Sean KelleyAnd we believe that's fundamental to delivery of healthcare. And so that's why our model is so focused on hiring people with their experience at scheduling surgery to be the first point of contact. So that's…we always encourage people to call.
Sean KelleyNow, younger generations, you want to use technology and everything. That's great, but a lot of surgery happens to people our age, 40 and above. And so we believe that picking up the phone, talking to Amy, talking to Cassie, talking to Patrina, eventually talking to Javier is going to help you through your journey.
(59:34):
Wayne LowryThat's awesome. Alright, so that's a wrap for today's episode of the Best DPC podcast. I want to say a huge thank you to Sean and Javier for joining us and sharing how Texas medical management is revolutionizing surgical care through transparent, all inclusive bundles and direct contracting. Make sure you check out their website.
Wayne Lowrytexasmedicalmanagement.com and for more insight on high value healthcare, head to bestdpc.com.
(01:00:02):
Wayne LowryRemember to follow us on social media, subscribe to our YouTube channel and download us on any podcast platform that you desire. Until next time your health matters, so demand the best with the best direct primary care. Bye bye.
Wayne LowryI'm gonna be flying up to San Antonio on Saturday. I was gonna see if you guys can pick me up from the airport.
(00:03):
Javier LiraSure. Yeah, yeah. Yeah, sure.
Wayne LowryOhh I'll be there at like 8:30.
Wayne LowrySo if you can just pull up, you know?
Javier LiraMorning?
Wayne Lowry8:30 in the morning. Yeah, I'll just text you when I land. Just sit there and wait.
Javier LiraYes.
Wayne LowryFor me, that'd be great.
Javier LiraYeah, sure, I'll have a sign and my little hat.
Sean KelleyYou can find me on uber.com.
Wayne Lowryuber.com? Is that your personal e-mail address, sean@uber.com?
(00:40):
Wayne LowryHello and welcome to the Best DPC podcast, the world's #1 show, covering all things direct primary care. I'm your host, Wayne Lowry, and today I am honored to have two special guests from Texas Medical Management.
Wayne LowrySean Kelly, the co-founder and managing partner who has spent 30 years launching ventures that tackle cost, quality and transparency in U.S. healthcare. Also today I'm joined by Javier Lira, who is the VP of Clinical Operations and Air Force trained OR leader and 25 years in trauma centers who now designs and oversees Texas Medical Management surgical bundles.
(01:19):
Wayne LowryTogether, they're rethinking how surgery gets paid for and delivered so that doctors, patients and employers all in. So let's dive in. Javier, Sean, welcome.
Sean KelleyThank you. Thank you for having us, Wayne.
Javier LiraNice to meet you.
Wayne LowryAwesome. Well, so you guys are based in Austin, TX. Tell me a little bit about Austin. What do you like to do in Austin?
(01:44):
Sean KelleyJavier, you go first.
Javier LiraWell, it's whatever my wife tells us and the family to do, you know? So I wake up in the morning and I see the agenda. And I say, you know, Home Depot, groceries, whatever. And then the kids want to hang out and want to go here, want to go there. And then that's what we do.
Wayne LowrySo basically the same thing you would do in any town is what you're telling me.
(02:06):
Javier LiraPretty much.
Sean KelleyJust different zip.
Wayne LowryYeah. So, Sean, you got into medicine over 30 years ago and doing different ventures. What kind of brought you and inspired you to get into that industry?
Sean KelleyWell, so I was the only one in my family who went to undergrad as a pre-Med, but I also failed out of college twice and ended up taking seven years to get my undergrad. So obviously I didn't go to Med school.
(02:39):
Sean KelleyMy brother and sister both did go to Med school. My brother's a surgeon and a co-founder of this company, but my sister is a pediatrician at Texas Children's in Houston. So we had a lot of doctors in the family. I also owe a debt of gratitude to healthcare because when I was 10 years old, I was diagnosed with acute lymphocytic leukemia treated at Texas Children's, 3 1/2 years. And I'm, you know, been good.
(03:05):
Sean KelleySo, I wanted to be in healthcare to be a pediatric oncologist. A long story short is I ended up going into a bunch of different business careers and then ended up coming into Austin to get into healthcare. When my brother finished his training.
Sean KelleyHis training was so extensive in surgery that he finished when he was 38 years old, so we came to Austin. All three of us had done our undergrad here, my parents, grandparents, everybody had done it at UT Austin, so it wasn't too much of a stretch. We came here.
(03:36):
Sean KelleyGot involved in healthcare. I didn't realize we were going to get involved with the big hospital system, big giant bureaucracy, but that's where we landed and then it is really…
Sean KelleyI needed to learn the business of healthcare and the underlying economics and what was driving everything whether you want to say it drives it sideways, backwards, upside down, whatever. But whatever was driving it. And so I spent nearly a decade working for a big hospital system, and I managed service lines on the adult pediatric side, neuroscience principally and…
(04:14):
Sean KelleyI learned a lot, learned I didn't want to work in big bureaucracy. I learned that I also do more work in big, giant healthcare. But I also learned a whole lot that…
Sean KelleySo, as in most things, the people are trapped in models that they don't really want to be involved in.
Sean KelleyBut it's the way they're able to do their art. So Javier, for instance, as a nurse, he takes care of people. My brothers. The surgery takes care of people. My sister's a pediatrician, takes care of people.
(04:46):
Sean KelleyWhat I really noticed in my first ten years of health care was the fact that the people that wanted to help people, that as people delivering care, were trapped in this horrible model that tortured them to the degree that most of them wanted out.
Sean KelleyBut we're so far down their career path that they just basically said I'm in, I'm going to stay in.
(05:10):
Sean KelleyAnd so what I wanted to do was take some of the knowledge I had from developing innovative business models and other industries and bring it to healthcare and that is to say, strip out the bad stuff, take away the unnecessary cost, improve the quality and service and build something completely new and that's what we started when we started this company.
(05:35):
Sean KelleyYou know, I told my brother from day one, I don't want to be involved in developing anything in healthcare that continues the same model. So there are lots of ways to be involved in healthcare and lots of ways to make money in healthcare. And if you're just perpetuating the model, then you're not really contributing anything I don't believe.
Sean KelleyAnd I just believe also that there's a huge opportunity.
(05:59):
Sean KelleyIf the service is as bad as we all know it is, we're all patients and then the costs we all know are crazy and out of control and then the quality is unknowable. It just seemed like a good opportunity to change those things and do something different and in the process liberate the providers in a way that they can go back to building relationships with patients, which is fundamental to getting any kind of good outcome.
(06:27):
Sean KelleyLet's connect.
Wayne LowryYou know, as you were pointing out the importance and the value of relationships. You know, Javier, you..
Wayne LowryYou work more directly day-to-day, right? Within their health plan or not with the health plan, but with their surgeries and with the patients themselves. Can you speak a little bit about that? First off, tell us a little bit about yourself.
(06:48):
Javier LiraWell, I was a military trained surgical technologist, and did that for about 15 years. And like Sean said, I worked with his brother over at the University Hospital here in our local hospital here in Austin, went to nursing school, became a nurse, worked with him there too. And then…
Javier LiraYou know, they kind of plucked me out a little bit sooner than I—normally you go instead of doing all the charge nursing and the off off shifts and doing all that kind of stuff. Normally you go supervisor, manager, director, that kind of stuff and they kind of pulled me out sooner a lot sooner than I expected to do more of an administrative and coordinating. So right now, you know.
(07:27):
Javier LiraAt that time I was doing all this trauma surgery and doing all the big cases, and then I went to this outpatient and you know, a lot of these cases are, you know, same day surgery. So it wasn't, you know, we're not doing a full whipple on somebody we're doing ACL’s and total knees and total hips and the normal normal stuff we do.
Javier LiraAnd then you know Sean is really good about, you know? I didn't know the cost at that time, right? And he's always like, “Now, I have all this knowledge of learning and that cost that much. That's this. And then I also have OR knowledge.” When you start adding CPT codes and certain stuff that they do, they start gouging a lot and I get very frustrated and I get on myself box and I start yelling and screaming.
(08:06):
Javier Lira“Guys, you know, what are you doing? You know,that knee scope just because you took out some synovia and you shouldn't add $1000 to that. That took 5 seconds to do. Like, why are you adding this CPT code?” There's a lot of gaming because as you know, the coding is really, really good at their job.
Javier LiraThey were very good about trying to extract money and that's why they like the athenas and all kinds of stuff.
(08:27):
Javier LiraTry to generate that.
Javier LiraSo I've learned a lot on that part.
Wayne LowrySo speaking about that, I mean that's an issue of transparency and it seems to me that that's part of what, where y'all have found synergy as far as the shared vision. Could you speak a little bit about transparency and why that's such a driving force to what you're doing?
Sean KelleyYeah, I'll tell you what.
(08:49):
Sean KelleyOne of the first things I noticed in healthcare was the lack of transparency, not only on the price, it was just a shell game of what we charge $1000. We know our contracts at 300, we usually collect 250. We're happy with that, you know.
Sean KelleyThat kind of wonky finance or accounting, and I was like, “That just seems weird,” but they didn't want anybody to know what you're actually collecting from any one pair. And so it's all proprietary slash confidential. And then on top of that, there was just this opacity when it came to understanding the underlying cost. So what I mean by that is not only were the cost to the purchasers unknowable,
(09:44):
Sean KelleyBut the actual healthcare systems didn't really pay attention to the discrete cost that they incurred in delivering a service. So in most businesses and simple model, you know you're making a widget, you have materials, you have labor, you have administration, etcetera, and you bundle all that up you say here's my cost, you're going to add a margin that's just the bottom up pricing model.
(10:05):
Sean KelleyWhen healthcare wasn't like that, when I went to talk to the CEO at the big hospital system I worked for here in Austin and I said, “Look, I've done a lot of what's called activity based costing,” which is a type of cost accounting. And I've done it to other industries and I said, “Hey, look, I think this industry would be perfect for it because the lion share the cost are in people. So it's a labor issue which is perfect for TDABC.”
(10:35):
Sean KelleyAnd so what I did is I went to him and said, “Oh yeah, we've got a cost kind apartment right in the hall. So he was like, “Really? I never heard…” so I went down there.
Sean KelleyAnd turns out after about an hour and a half, with the cost accounting department, it really isn't about how do you manage the resources to produce higher levels of outputs at lower cost like traditional business, but it was actually establishing the cost report for Medicare and that is the big hospital systems have to supply this cost report to Medicare to explain why they're asked for and cost $42.00.
(11:11):
Sean KelleyWhy their surgery costs $10,000 and so there's just a patina on everything in healthcare about like, this is not important to know. What's really important is revenue. We manage costs by, you know, and then they would do these budget things.
Sean KelleyAnd be like “Hey, we’re over budget. Our bond ratings are not doing so well. So you know we've got some difficulties,” and so they would just say, “verybody's got to cut 7% of their budget 5%.”
(11:43):
Sean KelleyHere I was growing a brand new children's hospital out of the ground and I was like, “No, no, no, no. You need to pour money into this. We're making tons of margin over here. You need to take some of the areas that aren't working well and—”
Wayne LowryProducing.
Sean KelleyYeah, trim them so it functions like a government almost like everybody's got to cut. Everybody gets an increase in budget, everybody and and it doesn't function like a real business and…
(12:10):
Wayne LowryAnd it and it doesn't and the value doesn't flow down to the consumers.
Sean KelleyNo, no. Even if they were able to cut costs in a meaningful way, they wouldn't adjust their pricing.
Wayne LowryWell, speaking to that, Javier, for just a minute.
Wayne LowrySpeaking to the cost component to that, if you don't mind.
Javier LiraWell, you know they use the yardstick of Medicare, right and who knows how those figures are ever made. You have reps when the implant is needed.
(12:39):
Javier LiraYou know, overcharging for a screw that you can get for $100, they're charging $10,000 or whatever it is, depending on the, you know, body part they're doing. And it's just when you talk about costs. In addition, there's these, I think the GPO's right, you know like, oh, like, you're only a part of this part. And I have to. I have to charge it this much. And that's all BS. As we all know.
(13:00):
Javier LiraIt's like, you know what your costs are. Give it to me at a decent rate.
Javier LiraI don't care about GPOs. They don't really matter. What kind of margin are you trying to get? And it looks like you're trying to gouge me because we all know how much that cost. Because I saw—I know how much you know this other facility is paying for it. I know how much you're paying. What are we doing here? And the reps try to play like they're not involved.
(13:22):
Javier LiraAnd I have nothing to do with it. And then when you talk to the administrator, they're like, “Oh, I can't do that. It's up to the GPS.” It just goes back and forth and ‘round and ‘round and they all just try to get their money, their pound of flesh.
Wayne LowryOf course, until there's none left.
Wayne LowryAnd then and then, I mean at the end of the day it's about the consumer and the patient both getting the quality of care that they need. And sometimes people think that cost equals quality. The more you pay the better quality. But as you just already mentioned, there's often times where there are all these hidden costs that really don't need to be there.
(14:00):
Wayne LowryOther than someone in New York City's, you know, Playbook says this is the rate for this item that really shouldn't be that and it's the consumer that's affected. And at the end of the day mostly the taxpayers that are affected.
Wayne LowrySo we've talked a little bit about transparency. We talked a little bit about cost. Let's talk about quality. When it comes to your ideal scenario for healthcare, where can we have the most effective, highest quality care and how does that relate to cost?
(14:41):
Sean KelleyWell, I'll go back to when my brother and I decided to on a white board at a lawyer friend's office in Westlake in Austin.
Sean KelleyWe came up with the idea of doing this and we felt like our surgical expertise, his as a surgeon, me as a business person who built big surgical practices and service lines, we felt like we could really very easily turn the dime on on cost. We also thought that if you just added a layer of concierge level type of service. You could really knock it out of the park compared to where traditional practices are today.
(15:21):
Sean KelleyAnd so the part that I said that I refused to be involved going forward if we weren't going to focus on this was quality.
Sean KelleyAnd my brothers, what? What's called? They called plastic surgeons. He's a pediatric plastic surgeon. But in reality, a better name for him is a reconstructive microsurgeon. And…
(15:42):
Sean KelleyMost people know Javier knows this and people that are familiar with surgery that a plastic surgeon in a hospital setting, it's called a surgeon-surgeon. So it's somebody who he's called in when there's a big problem with the case, somebody goes, case goes sideways, they call it a plastic surgery because they connect things and microsurgery and they can revascularized, etcetera.
Sean KelleySo in that context, my brother had done a lot of co-cases with other surgeons. So an orthopedic surgeon was doing a resection of a femur that was diseased or damaged, and he would come in and rebuild it with bone and cartilage and tissue from other parts of the body.
(16:21):
Sean KelleyAnd so he had a good idea of who the really good surgeons were in town. Not all of them, but the ones he had worked with. And he also knew the ones they would never send his, you know, dog to. And so we started there and we said, we know that the surgeon has an outsized impact on the quality of the outcome in surgery.
(16:42):
Sean KelleyWe didn't know at the time how much it was, but we knew it was the strongest, you know, causality in terms of outcome. So we started there and he said, “Well, I know this really good foot and ankle guy, Brandon Smith, he's fantastic. I've worked with them a couple of times. Michael Young, phenomenal ENT. We've done both cases together.”
Sean KelleySo we went through the different specialties and we picked the surgeon. This is based on his personal knowledge, so we started off in the best scenario possible, well, what we knew though is that if we controlled for the surgeon.
(17:18):
Sean KelleyAnd then we knew we couldn't always get into the surgeon's preferred facility because it may be owned by the Evil empire, and they may just be comfortable working there because it's good for them, right? No problem.
Sean KelleyBut what we said was we needed to find independent facilities that had the capabilities necessary for the surgeons to accomplish their outcomes the way they do. So when we bring in a surgeon, let's say we brought in this foot and ankle surgeon, we told them, “Hey, we're going to operate this independent facility over here that is going to give us some good, no nonsense pricing.”
(17:53):
Sean KelleyAnd we're going to bring our implants and things like that so we can trim the cost there. And he said, “Let me go check it out.” And so he went over and checked it out and said, “Yeah, they got good equipment. They got some pretty good people. This is going to work out. OK.” But then there were other specialties who went over and checked it out and said, “No, this is not going to work for me and they don't have the right people. They don't have the right equipment, etcetera.”
Sean KelleyBut we always left it up to the surgeons making that judgment call.
(18:17):
Sean KelleySo if you control for the quality at the surgeon level, you're going to raise the level of patient outcomes, period. Now that's not always true in every area of medicine. Sometimes there are team sports. Javier mentioned Whipples a few minutes ago. Those are the kind of cases like my brother does these craniofacial cases? They require a whole team, not just a surgical team. And it's multi-specialty, but it's a whole pre-care, nursing therapy, dentistry, etcetera, etcetera.
(18:48):
Sean KelleyWhipples are something like that. They're just very complex procedures and they require a team that works together. Think of open heart surgery or heart transplants. They require teams of people who are very attuned to the patient and they know exactly what to do when things go right or when they go wrong.
Sean KelleySo we're doing very simple procedures. We're doing the kind of procedures that have been around for 130 and 140 years like inguinal hernias. So we've reduced the risk of us needing the team. So what we're looking at is the kind of surgeries that most of these surgeons, like a general surgeon learns in their first year of surgery for hernia.
(19:30):
Sean KelleyIt's the most simple, basic, low risk, low cost procedure to do for general surgeons. By the same token, fractures or any of these things. So we work in a space that's from the office to the ASC. We sometimes go into the hospital. It really has to do more with what facilities we have available at a market and then the surgeon's ability to get the case done at that facility.
(20:04):
Sean KelleySo again, we leave it up to the surgeon whether or not they can operate in more of the facilities that we're contracted with and that's our way to control for doing things off script. We want to make sure the surgeon is always in charge of that. We don't want the surgeon to ever feel like, “Hey, I felt like I needed to do you guys a favor.”
Sean KelleyNo, no, no. Just say no.
(20:26):
Wayne LowryYou got to make sure it's—yeah, that the quality is there.
Sean KelleyYeah, and I'll hand it over to Javier because Javier…so my knowledge inside surgery I knew that this was possible.
Sean KelleyBut if you talk to people outside, they're like, “No, you can't know quality.” And when I went to work at the hospital system, when they told me what quality was, it was infection rate, wrong site surgery rate, you know, readmissions. It was all these what I call failure rates.
(21:00):
Sean KelleyThat's not a quality outcome. That's the absence of quality. So the absence of quality does not infer equality. It just means that you didn't have a bad thing happen. Now I'll hand this to Javier. Javier, as a surgical nurse and previously a tech, has eyes on surgeon and they, inside the perioperative environment, they can all tell you who the good surgeons are.
(21:28):
Javier LiraYeah, we know. Oh, you're going to that guy. There's couple of names. I can't say on this podcast that I'll get in trouble for.
Wayne LowryOhh, don't worry, we'll bleep it. Just just go ahead and say it and then I'll just cut it out. I'll. I'll cut it out, put it in the vault, save it for later. Don’t worry.
Javier LiraYeah. Yeah, doctor…
Javier LiraRight, right. We know because you know they have bad technique. They take forever.
(21:50):
Javier LiraYou know, there's a skill set because they forget and they don't know. Each doctor, they work in their own right. They think they're the best. All the doctors think the best. They don't realize that the staff around them work with all doctors that do that same case. All these different types and see all different ways and styles and you’re high maintenance. Nobody likes working with you. You yell at the staff.
(22:11):
Javier LiraYou know, your bedside manner sucks. Whatever it is, we do have some that don't have good bedside manner that are great surgeons, but that happens too.
Wayne LowryThat's the one you want to make sure that the patients are already knocked out. Is that what you're saying? And the surgeon leaves and the surgeon leaves before they wake up. OK.
Javier LiraYes. Yeah. Before they talk. Yeah. Yeah.
Javier LiraThey need to have a PA standing next to them and be the interpreter for the doctor. What he's trying to tell you is he really cares about you and he wants you to, you know, that kind of stuff.
Wayne LowryYeah.
(22:34):
Wayne LowryYeah, yeah. He just thinks your face is ugly. I mean, what? You know what can you do?
Sean KelleyThat can be fixed.
Wayne LowryI want to take a quick break to talk about bestdpc.com.
Wayne LowryAre you a doctor looking to break free from the headaches of insurance and take control of your practice? Or maybe you're an employer searching for an affordable healthcare solution that actually works. At bestdpc.com, we cut through the noise and connect you with the country's best direct primary care clinics. Whether you're a patient tired of surprise medical bills or a physician ready to build a thriving membership based practice. We've got the tools and resources you need.
(23:13):
Wayne LowryFind the best DPC doctors near you, get expert advice and take the first step towards better healthcare. Visit bestdpc.com today and see why direct primary care is the future of medicine. That's bestdpc.com because great healthcare should be simple, affordable and built around you.
Sean KelleyWayne, there's an interesting parallel that happened to us on this journey. Javier's been with us…7-8 years.
(23:42):
Sean KelleyAnd he is my brother's first case when he came to Austin in 2005, Javier was the scrub tech. So our relationship with Javier goes way back.
Sean KelleyI didn't get to meet Javier until he actually joined us, but we met along the way on this journey. A Doctor who's now the head of the FDA, Marty Mccarry.
(24:07):
Sean KelleyAnd we became friends with him and he actually has a place in Austin. He comes into town every once in a while we go to dinner. He's a great, great doctor and a phenomenal researcher. His very first book was called “Unaccountable”. And in it, he took the medical industry, especially the training industry and the professional side, meeting the surgeons to task about the lack of quality and how everybody circles the wagons around bad doctors.
(24:35):
Sean KelleyAnd so in that book he talked about Hodad's hands of death and destruction, which was a terrible surgeon. But he's a really good looking guy, very nice, congenial. Everybody loved him. Everybody raved about his bedside manner. But he was a…
Wayne LowryOh, we're talking about Doctor Strange, right? I saw that movie.
Sean KelleyAnd so then there was this other doctor, they called Shrek, who was like, horrible bedside manner. But technique was the best surgeon around.
(24:58):
Sean KelleySo juxtapose that and at the end of the book, because Marty's quest in the book is, how do you determine who's a good surgeon and who's going to be able to give you a good outcome?
Sean KelleyAnd in the book, he basically gets to the end and says the only way to do that is to ask the nurses and techs that routinely work with these surgeons and potentially anesthesiologists, and ask them, would you be operated on by this surgeon? And for this procedure in this facility?
(25:26):
Sean KelleyAnd funny enough, when we met Marty, we had already been doing it for three years.
Sean KelleyOr 2 1/2 and so the point was we told him and he was like, “I love your model. This is so awesome,” and he still to this day, he loves Javier, but he has this nervous tick. I think with the way he says his name, he calls him Javi-ay.
(25:49):
Wayne LowryJavi-ay? Sean Kelley Like a French. Ohh and so…
Wayne LowryOh well, this whole time I just assumed he was French. So I mean, I can see where there can be some confusion born in San Antonio, you know, definitely French.
Javier LiraFrench. Yes, a lot of French with barbacoa. A lot.
Wayne LowryYeah, lots of it. So let's transition over to Texas Medical Management because there's a couple of questions that I think it's important for our listeners. First off, when you're talking about your organization…
(26:20):
Wayne LowryTell me about the facility. So, do you have one facility that you primarily operate out of, your doctors, your multiple facilities kind of talk through that? And Javier, what's your experience in that and from your position?
Sean KelleyWell, I'll start. I'll start so you know when we first landed on this, the obvious person who first started this was Doctor Keith Smith at Surgery Center of Oklahoma. So my brother and I cold-called him and said, “Hey, we're thinking about starting this company and doing this thing similar to your company, but in Austin, could we come up and meet you?” He said, “Come on up, I'm going to teach you everything I know because I'm really surprised this model hasn't spread.” So we went up, we met him, everything.
(27:04):
Sean KelleyAnd the difference between our model and his model is he owns a surgery center with his partner. He's an anesthesiologist and his partner, Stan Peltier. They own it, lock, stock and barrel. And they invite the surgeons in. OK. And they have no insurance contracts. They're all cash. And he's a phenomenal human being. He's a great man.
Sean KelleyAnd has done a lot to create this space. What we told him we were going to do is my brother, being a surgeon, wanted to build the surgery center. So of course, you know, we spent some money on some plans and development and everything because I guess somewhere in surgery, training school, they'll tell them if you own the facility, you make all the money.
(27:43):
Sean KelleyAnd so I was against that because I just felt like sinking in a bunch of money like that. We'd be paying a mortgage the rest of our lives. And, you know, if it goes South, then it goes South. I thought there was an easier or better way to do it. And that is to take advantage of a lot of the spare capacity that's in the market.
Sean KelleyAnd so Keith told us the same thing. He said, “Look, go around and meet some independent facilities. You're going to find a bunch that are around their good facilities. They've just got spare capacity. Maybe they haven't gotten insurance contracts. They're really hungry.” So great. That's what we did. We started off with an independent surgery center.
(28:16):
Sean KelleyAnd now I would say we have 1 2 3 4—we have 4 surgery centers in Austin under contract and a Surgical Hospital.
Sean KelleyIn Houston, we probably have a similar number of facilities now. I think we don't have a—we do have one surgical hospital, but it's just for gynecological surgery. And in Dallas, we have a surgical hospital and in Fort Worth and ASC.
(28:41):
Sean KelleyAnd so.
Sean KelleyThe way we do it is we are a medical practice. We're licensed under the Texas Medical Board.
Sean KelleyMy brother's the CEO. We have practicing surgeons that are our Board of Directors and the reason we chose to go that route because we could have gone a different route is I wanted us to stay focused on being a clinically focused medicine focused type of organization.
(29:08):
Sean KelleyAnd so therefore we, you know, in another model, we didn't need a Javier, we could have just tried to do it with business people. I think you lose a lot because I think the most important aspect of our work is that we know how to take care of patients and we know how to facilitate getting patients to surgeons.
Sean KelleyAnd making it easier. So we solved the puzzle for patients. We solved the puzzle for employers, and we solved the puzzle for the surgeons as well.
(29:39):
Sean KelleyFacilities are obviously taking a haircut with our model when you factor in the fact that they pay 30 to 35% of their revenue and billing collections and bad debt.
Sean KelleyThen a whole dollar from us actually has a lot more value, but we also help them manage their costs. Javier's created sourcing, implants and sterile supplies outside the market so that they don't have to pay these, you know, GPO prices.
(30:08):
Sean KelleyBut I'll let Javier kick in and talk about the model in terms of the flexibility and what it means as a nurse.
Javier LiraYeah. When I go into negotiations with some of these places. They don't really understand their pricing, like what their revenue is, right, they don't even know what their costs are.
(30:31):
Javier LiraThey think they do. They kind of don't. And in talking with them and kind of getting them off the hamster wheel of “I got to charge you this much”. It's sometimes very difficult because they don't get it. You know, I've had people tell me “I'm losing money”.
Javier LiraI'm like, no, you're not. You're just not making what your best contract is or there's, like, “I can't give you less than this other contract I have”, you know, which doesn't make any sense. Are you still making money?
(30:55):
Javier LiraThat kind of stuff. So it's been a struggle you have to get forward thinking, you know, directors to kind of get the landscape because it's going to come this way eventually. They're going to have to, you know, change their ways.
Javier LiraThey're not going to be able to do this forever. It's going to catch up to them pretty quick. And I'm also able to, you know. There's a lot of avenues, you know, buying the wrong equipment is a problem. Sometimes they don't know what they mean and what they want.
(31:21):
Javier LiraSo having the knowledge of you know just for a quick example, cysto and hysteroscopy, they're two separate scopes that go in to kind of take a look in, but they have one that can do both. Why would you buy them separately? These equipments I can have—
Wayne LowryYeah, that's news to me. I thought I thought they were. Yeah. I mean, that's news to me.
Javier LiraYeah, yeah, they have. They have them, they connect and can do both. There's no reason. Inflow. Outflow. That's all you need. Scope. Boom. Javier Lira You're gone so little things like that as you catch up, you know, they have this disposable item when they're closing an abdomen for laparoscopy, right? There's plastic, it's $250 a pop and they do it on every single case. Javier Lira Why don't you use the non-disposable that you can sterilize? That's two grand it pays for itself in a year. You know, that kind of stuff. And getting these people to get off. The “why do I want to buy stuff and throw it away?” all that kind of stuff, so I try not to help them out in that.
(32:13):
Sean KelleyYeah, and Wayne?
Wayne LowryNo. So y'all are currently in the you said, Dallas, Houston, Austin. Where else did you say y'all are at currently?
Sean KelleyWell, we currently have an ophthalmologist in San Antonio, we have an ASC outside of Fort Worth.
Sean KelleyWe have, we have ongoing negotiations with the group out of the valley.
(32:41):
Sean KelleyThat may be the most disappointing/difficult and not surprising to you I'm sure. And our business partners kind of shake their heads because they're all South Texas and they say, oh, yeah, yeah, it'll take a while, but—
Wayne LowryYeah.
Wayne LowryYeah, yeah, nothing moves fast since I'll takes, like, a day that right now.
Sean KelleyExactly. But if I could just go back a hair. One of the things that Javier also does is when we're vetting out a surgeon, now we'll find out about their reputation. We'll find out, you know, that they have this practice focus, narrow practice, focus. They do the same procedures a lot.
(33:18):
Sean KelleyAnd that infers that they get good quality outcomes, or at least they're getting better all the time. And then one of the things he does is he gets on the phone and talks to him and starts working through the bundles.
Sean KelleyWell, we call it the fastidious surgeon. And if they start saying like, “Oh well, I need three of these for every case. And I need, you know, this special piece of equipment. I need a robot to do this”
(33:42):
Sean KelleyJavier will call me and go “This is not a good fit.” So what we're looking for is we're looking for the surgeons who are trying to get great outcomes at everyday types of surgery.
Sean KelleyIf the specialized piece of equipment is needed, we'll absolutely include it, but oftentimes it's a buzzword type of thing. It's like the, you know, the new thing and it ends up costing a ton of money.
(34:12):
Sean KelleyWe had a surgeon one time tell us that, you know, I want to use the robot on these cases. And he said, look, I've got these academic papers that show that the robot only costs like, $250 a case.
Sean KelleyJavier's like, look, here's a facility fee for your case without the robot. It's like 1500 bucks. And here's one with it. And it's like 10,000. And he's like, really, they shouldn't charge you that much. It's like, well, who the hell pays for the $1,000,000 robot?
(34:35):
Sean KelleySo Javier does a great job of, like—I don't want to say busting their balls, but he does a really good job of like finding the doctors who are going to be good stewards of the resources that we're providing them to take care of patients and not going overboard.
Sean KelleyOur surgeon now, when he comes to us with a robot, we know he's serious about it because it's the kind of case that he can only do with the robot.
(35:05):
Wayne LowryYeah.
Wayne LowryTake a quick break to talk about scalebyseo.com
(35:51):
Wayne LowrySo I mean, it's exciting to hear that you all are expanding and growing and the opportunities that you all have and the talent you're able to bring to the table, how does that translate for health plans?
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Wayne LowrySo you know a lot of these self funded health plans, obviously they're trying to figure out how can they maximize their value and how does that relate to what you offer?
(36:19):
Sean KelleyYes. So I think that people get caught up in trying to maximize too much. The biggest maximization that the health ban can do is set up a set of services within the health plan to drive the utilization. So that's where DPC is absolutely bar none the best.
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(36:41):
Sean KelleyLast layer of primary care and then they're always going to be looking to refer to a direct contractor provider like Texas Medical Management. There's a lot of them who come to me and they're like, well, but you don't have somebody in Granbury, you don't have somebody in El Paso, we got 5 employees there. I'm like, OK well.
Sean KelleyYou know, look, this is a crawl, walk, run. You have 0 utilization, so you're saving $0.00 today. Why don't we go ahead and start where you have massive employees and we'll start there and people get tripped up by trying to do everything or nothing.
(37:16):
Sean KelleyAnd I think the best thing they can do is number 1, put in DPC or on site some type of primary care that is fully aligned with the risk of the plan and also directly connected into the direct contract to providers like us and then put in place the types of incentives both in terms of cost reduction to the member.
(37:41):
Sean KelleyBut I think also cash to the Member. We've witnessed several of our health plan partners go from 60% utilization to 85% utilization by adding nothing more than $1000 cash to each time they choose.
Sean KelleyIt's counterintuitive. You're thinking like God, that's crazy. We're going to spend all this money. You don't realize how much money you save. And so I think the other thing is, well, I'll let Javier add.
(38:12):
Javier LiraWell, what also happens is, you know, deductibles are a problem, right? And people are also scared when you offer this. Sean always says in the first year you get the biggest bump, right?
Javier LiraBecause, you know, we had, we just did 3 hysterectomies on Tuesday. These women have had it for 20 years and they were massive. I mean, we're talking multiple fibroids. We're just pulling stuff.
(38:34):
Javier LiraIt was crazy what we, you know how long they've lived with this pain and they finally get this benefit for themselves. And you know, we're actually able to help them. So they're going to be very appreciative. It was at no cost to them.
Javier LiraThey went through their plan and it's just it's, you know that employees can stay there longer that employees going to work and all that kind of stuff and you know their teachers, they're doing it in the summer when they actually pull it off, so this is a big bump for us in the summer because they're trying to get their stuff.
(39:03):
Wayne LowryRight, yeah.
Sean KelleyYeah, I think so probably the worst asymmetry and information in terms of a purchaser and a vendor that exists in the economy in this country, probably in the world, is an employer buying healthcare services.
(39:31):
Sean KelleyThey have no information and they don't know what they're buying and there's no information on quality, just infection rates. And then on top of it, they have all these other middle men in between who are trying to guide them into solutions that benefit them and not the plan.
Sean KelleyAnd there's so much uncertainty and no data to validate whether or not you've made a great decision or not.
(39:53):
Sean KelleyAnd so that's why I think the whole DPC movement, especially as a benefit to the planned members, is so important because you're collecting all the data that shows you how serious someone is about saving money when they're going to go ahead and make the investment
Sean Kelleybecause I've seen lots of health plans and brokers stumble on the way to getting DPC, they'll say “well, but we spend on average, you know, what is it? 30 bucks PPY on primary care. And this is going to be like, you know, whatever 6800 bucks PPM.”
(40:30):
Sean KelleyAnd it's like, well, but right now your people are going whichever way the wind blows, especially going to the big, expensive hospitals for things and you're spending your money there. You're wondering why is it happening?
Sean KelleyWell, it's because you don't have the care providers taking care of the patients and making sure that they don't need to go to a hospital. Like Javier's point, Javier, these women had this condition for the last 20 years. What kind of case would that have been if they had been diagnosed 10 years ago?
(41:03):
Javier LiraRight.
Sean KelleyIn terms of it would have been a lot less. They probably wouldn't have missed as much work or had as much difficulty in life. They can cause problems with fertility and so on.
Sean KelleySo there's a lot of impacts that are felt by the planned members as a result of the cost being so high and then the cost sharing being so high. And I think one of the joys in our work and we get to talk about it every week on our operations call is just how many people come to us and are so excited.
(41:38):
Sean KelleyBecause they didn't have $5000, they're a teacher. They're a sheriff. They're a bus driver or a truck driver. And they didn't have the $5000 to get the total knee or the total hip. And then they come to us and it's like they think it's fantastic.
Sean KelleySo it's the combination, but I think employers or probably brokers more, overthink sometimes the maximization formula. I think the probably the best advice I could give is get started now and crawl, walk, run.
(42:14):
Sean KelleyYou'll see where the holes are as you develop it. But there's it. There's a lot of variables to work on. You've got to get the incentives right. You've got to make sure that you have good primary care. You got to make sure that the members are attuned into it.
Sean KelleyWe have clients that are in the same industry and they may be even in the same city and one's got 5% utilization, meaning 5% of the people who get a surgery that fits within our model, go through the program a year and then on the same city there's getting 80%. And the savings are millions of dollars different and the one that would be here only invest.
(42:50):
Wayne LowrySo. So what? So, yeah, So what would be? I mean obviously it's going to be case by case. But generally speaking, what are you looking as far as what the bundled surgery cost versus a traditional go check yourself into the emergency room and hope for the best surgery?
Sean KelleyWell, if it's done at a hospital, we're probably about 70% less than the network. If you're talking about ASC's or like scheduled hospital outpatient HOPD hospital outpatient department type surgery were between 40 and 50% less.
(43:27):
Sean KelleyAnd for all the reasons we mentioned, you know we manage the surgeons, you know supply, utilization and so on and so forth and we negotiate better prices. But I think that and the other thing is you know when we work with clients. There has never been an instance where we haven't been paid. So my bad debt is 0.
(43:51):
Wayne LowryOh how nice. I got something I can send to you. Would you like some or you got some? If you're feeling left out?
Sean KelleyAnd the first one—
Sean KelleyNo. I'm not talking about personal, I'm talking about business.
Wayne LowryYeah, I got some of that too.
Wayne LowryNo, but so it sounds to me like this is a no brainer when it comes to scheduled surgeries, especially if you can have the steerage or I don't know if that's the right word. But if you can have the referrals coming your way. And so you mentioned right primary care course, Best DPC podcast, obviously a little bias.
(44:27):
Wayne LowryTo what we can bring to the DPC space and the information that DPC providers might be looking for. So take a direct primary care doctor based in, you know, Houston, who's seeing, you know, has a patient panel of 200 people. How are they going to integrate what they're doing and know about you guys and connect those referrals your way. What's the best way to connect A to C? What's the B here that I'm missing?
(44:59):
Sean KelleyWell, so for surgery, there's two aspects of this and I'll let Javier explain the clinical angle, how they connect to us, but I'll talk about the business.
Sean KelleySo if it's a DPC that actually has 200 lives from a contract with an employer, that's easy, that would just be TMM would establish a direct contract with the employer or their TPA or both, and then the DPC would say OK, I'll refer all surgeries that fit within their scope of services directly to TMM.
(45:38):
Sean KelleyIf it's an independent DPC, so my family and I have had that DPC for 12 years so you know we went to independent DPCs back when it was not anything cool. And it was a lot cheaper.
Sean KelleyBut you know, it was they were trying to build a business model and in that case, you're talking about a DPC with a panel of 200 patients and they could be anything from health shares to, you know, $50,000 deductible, people who basically just stop loss in healthcare.
(46:03):
Sean KelleyYou could be anywhere from like I've got, you know, one of the metal plans or I've got a corporate plan, you know, an employee sponsor plan in those instances I think it comes down to talking to the DPC and saying which of your clients responsible parties, meaning the whether it's the health share or whether it's their self-funded themselves?
(46:26):
Sean KelleyI mean, if they're high deductible, who could connect with us? So if they're looking for cash price procedures it's typically because they're on the hook for them, or they know that their payer is looking for that and so they don't have a network by default to go to. I think those—
(46:48):
Sean KelleyWe have a group of DPC in Austin that we work with on a pretty regular basis and they send us patients, they'll say, “OK, this is a health share patient. I'm going to send them to you.” And we already know the health shares. We already have contracts with them. We set up to do that.
Sean KelleySometimes they'll hit us with like they've got some new plan that's out of New York City and stuff, and we'll connect with them and we'll walk them through the process and get so that we can get paid.
(47:18):
Sean KelleyBut I think the more and more we're seeing DPC are getting their panels built with self-funded employer plans and those are where we are, I think a great option because we can we can supply you know basically we can connect and there's we'll let Javier talk about how we connect clinically with the DPC.
(47:43):
Wayne LowryYeah, go ahead, Javier.
Javier LiraYeah, they, you know, we actually have quite a few couple in Waco, couple in Houston. We consistently work with and we're always their option for a lot of their patients and they are the more independent ones that we kind of talk to and you know where their valves…
Javier LiraSo “hey I think this patient needs an ENT surgeon, can you guys help me out?”, and they just call our number and we quickly get him in our pipeline to our preferred provider. I've had a couple call me directly.
(48:16):
Javier Lira“Hey, what do you think about this? What would be the best you know position to see this type of patient, depending on the symptoms”, we got to talk, you know, talk it over. So it's a really Direct Line to the DPC. We love them. We think you know, they know what the patient needs, they know the patient very well and us having it within our group,
Javier LiraYou can tell the value that they give and we wish more people were following DPC plans and then, you know, we're trying to stop them from going—You know, how much does it cost to go to the ER all the time? You know that companies don't talk about that part. We missed that part earlier. It's like the ER and urgent care turn into their primary care not DPC.
(48:52):
Javier LiraAnd that we're trying to limit that and get them on the right track. And you know we get, you know, we have a pretty high percentage of non surgical events like you know, our doctors don't cut on everybody you know. And we pride ourselves on that that our surgeons are of high quality and not going to just cut on every single person that comes in.
(49:13):
Sean KelleyYeah. In fact, our numbers go something like this for every 100 referrals that come in at 82, get a consult, but only 55 get a surgery or procedure.
Wayne LowryOh wow.
Sean KelleyAnd so our hypothesis was that if you contracted with and partnered with really good surgeons, they would also have very good ethics and wouldn't cut on people. But let me add something. Recently we've been noticing a corporatization of DPC and it's a very, very exciting thing for us.
(49:48):
Sean KelleySo we signed the contract a couple years ago with the group out of the valley called Frontier and Phenomenal. We just didn't have lives in the same place. But recently they've expanded into Austin, Houston and Dallas.
Sean KelleyAnd so we're working with them and in fact our head of client services had a good long call with their care and navigation team yesterday and everything's going great. We're helping them with some of the big school districts and municipalities that they're signing up. Sean Kelley And I think we're very complementary, we don't leak into their space. They don't leak into our space and I manage primary care practices of pediatricians for a number of years, and I know that when things get a little bit outside the scope of a primary care doctor. They want to very quickly send to a referral. Will oftentimes run it through Javier.
(50:45):
Sean KelleyJavier will do what's called a review and recommend. Send it to our surgeon and say, “hey, take a look at this. Tell us if you really think this is need of a consult.” If it doesn't, then we'll just schedule a virtual consult just to tell them, you know, no, actually, or that we'll have our surgeon talk directly to the DPC and let them know this is what I would do.
Sean KelleySo we're, if you think about it, we're almost building like a virtual integrated healthcare system. We're just two blocks connected primary care and surgical care, there's more and that's exciting that we're we're we're building this because people's hearts are in the right place. We're trying to get better outcomes. Our goal is to improve service.
(51:25):
Sean KelleyIn fact, we think so much about service and quality that we started collecting patient reported outcomes in 2018. We've collected on all our patients. We collected a net promoter score. Our historical net promoter score is 87, our proms look fantastic. We're making great reductions in paying, great improvements in functionality, and great improvements in life’s stress.
(51:48):
Sean KelleyAnd so we feel like that if you're going to make claims like that, you need to back it up with data. And that I think what primary care is going to love. Primary care is going to love just, I mean, they get the feedback when the patient comes back to them says,
Sean Kelley“Thanks so much for sending me that Dr Smith, Javier was great. I talked to the team. They're fantastic. Everything went great.” But I think more importantly, showing them what the data actually showed, what the patient actually got out of it.
(52:20):
Wayne LowrySo let me ask before we wrap up, I do want to ask, you know, Texas is a big state, trust me, I know I'm all over it, but it's a big country and there's a lot of DPC providers that may be looking at this as a possible solution.
Wayne LowryTell me like, how would this look for a DPC in Nebraska or DPC in Georgia engaging with you guys? Do you have any DPC's that have a plan and you know send them on a plane? I mean, I can, you know, I live in South Texas.
(52:57):
Wayne LowryIt wasn't long ago where it was well known that companies would send people to Monterey, Mexico, to get surgery. I'm a bigger fan of the model that you're producing, but you know that concept of ‘hey, flying someone for a much more affordable price over.’
Wayne LowryWell, how does that look? Have y'all had some conversations going or, you know, to mention who? But is that something that you all are exploring or have some reach out to you?
(53:27):
Sean KelleyYeah. So we have traditionally had like a group captive where they would have companies in Florida, Georgia, Alabama, Mississippi all over the country and they would send us a lot of patients.
Sean KelleyThe longer this has gone on, the more people want to be close to home. It's not like the big brokers that say “you got to have one on every corner like an access model”. It's not like that.
(53:57):
Sean KelleyThey're willing to fly. And so they have what we call a travel benefit, which means they pay for the flight, hotel, etcetera. And for them and another person to come with them. But I think more importantly is the model that we have is actually spreading now.
Sean KelleyThe model we have in particular of having a practice that's exclusively focused on non network direct contracts, bundle price transparent, there's not many of those, but you'll find the local ASC will team up with a couple of their surgeons and post some of their prices.
(54:34):
Sean KelleySometimes they don't even post them, they just put it on the website we have bundle prices, you know, cash pay price.
Sean KelleyThose people are not very good at getting out and selling what they have. They don't know how to talk to health plans. They don't know how to talk to brokers. They just want to, like, put a stake in the ground and say, “Hey, we have bundle surgeries,” and think everybody's going to come to ‘em.
Sean KelleyThat doesn't work very well. There's organizations like the free market.
(54:55):
Wayne LowryNot no, not when the incentives are—Yeah, not not when the incentives are corrupted
Sean KelleyThat's correct. And so there's organizations like the Free Market Medical Association, Health Rosetta, the local business groups, business coalitions on health in each city. There are places where I think you can go that you can find these local providers.
(55:18):
Sean KelleyIt is not like Google. You can't just Google and say you know Athens, GA bundled surgery. You're not typically going to find something.
Sean KelleyBut one of the things that we did about two years ago, because we had quite a few clients asking us to expand outside of Texas.
(55:45):
Sean KelleyBut it's very expensive for us to do that as a practice.
Sean KelleyAnd so we're going to take it slow.
Wayne LowryWell, hold on a second. Hold on a second. I see Texas roadhouses all over the nation. I don't know why you couldn't have a Texas Medical Management or however you would describe it over there. But Texas medical management location in Vermont. I mean, if I can go to a Texas Roadhouse. I should be able to go get my surgery too.
(56:11):
Sean KelleyWe could. It cost me $50,000 to get a license as a provider in Florida and about 50,000 in Louisiana and I still don't have any business there. And then it cost me about $15,000 a year in fees and government regulations and stuff. The filings that I have to do. So there are some costs. I'm not saying we won't do it.
Sean KelleyI'm just saying it will be a measured approach, but one of the things we did though is we know so many people in this space because we've been in it for 10 years.
(56:42):
Sean KelleyWe know a lot of places that are offering bundle surgery, go to a lot of conferences, and meet a lot of people. So, one of the things we did was we created a database on that, we call it “Repair Healthcare”. And I think that if we could repair healthcare, that means repairing the relationship between the doctor and the patient by removing all the bad middle men out of the way.
Sean KelleyAnd so that would restore healthcare. So, what we did is we built this database and we have our first client that's taking on this starting July 1st. And so more to be told on this story, but we have providers in 40 states who have said that they want—
(57:22):
Sean KelleyThey already have bundles and they already have surgeons and we've already taken the time to vet the surgeons according to our criteria for quality and we built this database and how the air is going to be point man on that. He's going to be the one when the client says I got a member in Poughkeepsie.
Sean KelleyYou know he's going to be the one on, you know, looking in the database saying, “OK, there's Poughkeepsie, ASC, they got a doctor, you know the Doctor Strangeglove, and he's a great orthopedist, and he passed all our—I'm going to call him up. I'm going to try to, you know, refer the patient over to him.” And then there's a lot of, you know, missing links. But we know how the business works, so we can probably…
(57:59):
Sean KelleyMake it work better and we're not going to take a we're not going to bundle because we can't as a provider be in that bundle. But we're just going to add an admin fee to it instead.
Wayne LowryWell, this was a very fascinating conversation. We're towards the end of the program, but I do want to say before we sign off today, where can people find you?
(58:28):
Sean KelleyTexasmedicalmanagement.com.
Wayne LowryA website, awesome. What about LinkedIn? Are you all on LinkedIn? Are y'all contributing on LinkedIn? Twitter? Tiktok? You look like a TikTok kind of guy, Sean.
Sean KelleyI wish we were more on LinkedIn, I just have this phobia. But we're on Instagram. We're on Facebook, we just hired a new group of people who are taking that on, that probably—So, we believe in relationship.
(58:57):
Sean KelleyAnd we believe that's fundamental to delivery of healthcare. And so that's why our model is so focused on hiring people with their experience at scheduling surgery to be the first point of contact. So that's…we always encourage people to call.
Sean KelleyNow, younger generations, you want to use technology and everything. That's great, but a lot of surgery happens to people our age, 40 and above. And so we believe that picking up the phone, talking to Amy, talking to Cassie, talking to Patrina, eventually talking to Javier is going to help you through your journey.
(59:34):
Wayne LowryThat's awesome. Alright, so that's a wrap for today's episode of the Best DPC podcast. I want to say a huge thank you to Sean and Javier for joining us and sharing how Texas medical management is revolutionizing surgical care through transparent, all inclusive bundles and direct contracting. Make sure you check out their website.
Wayne Lowrytexasmedicalmanagement.com and for more insight on high value healthcare, head to bestdpc.com.
(01:00:02):
Wayne LowryRemember to follow us on social media, subscribe to our YouTube channel and download us on any podcast platform that you desire. Until next time your health matters, so demand the best with the best direct primary care. Bye bye.
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