EP486: The Secrets to Operationalizing Direct Contracting From an OG, With Stan Schwartz, MD

Episode Transcript
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Stacey Richter (00:00):
Episode 486.
"The Secrets to OperationalizingDirect Contracting From an OG."
Today I speak with Dr. Stan Schwartz.

Tom Nash (00:20):
American Healthcare Entrepreneurs and Executives
You Want to Know, Talking.
Relentlessly Seeking Value.

Let us begin with something.
Dr. Ramy Khalil wrote onLinkedIn the other day.
He wrote, "Is it just me or Isthe world of healthcare claims
designed to make people feeldumb asking for, well, myself".
You and me, both my friend.
You and me both.
And then Ann Lewandowski, she wrote,"David Bolduc and I sat down this morning.

(00:52):
The clear message we need to bedelivering to self-funded plans is that
you are not purchasing health insurance.
Full stop.
End of story.
You are not offloadingrisk to their risk pull.
You simply purchase theiradministrative services to manage
your healthcare finance dollars".
And right?
We're telling employees to go getscreened, to go get a wellness

(01:13):
exam, go get a knee replacement,go see your cardiologist.
In general, some prettypredictable things.
And then every week we're gonna reactivelylet a third party tally up the volume.
And after it's all over, tell us howmuch it costs, vis-a-vis the so-called
"Mystery of the Weekly Claims Wire".
Listen to the show with Justin Leader.
This feels very, I don't know, submissive.

(01:33):
Kind of chaotic.
It also feels very expensive, andit is of course very expensive.
I've heard multiple times from multipleguests, Cynthia Fisher, amongst others,
that medical spread, some TPAs, not allfor sure, but some TPAs are scraping off
the top 30% plan total spend times .3.
That's a lot of money.

(01:55):
And add to that, and Leon Wisenowskihas posted plenty on this topic, how
common it is for prices for any givenhealthcare service to vary wildly in the
same geographic region, link in the shownotes to one service where you go one
place in a local geography, and it willcost 10 times more than some other place.
10 times more expensive.

(02:15):
And what do these two factors, thespread pricing and also some entities
in any given market, charging lotsand lots of money, what do they all
add up to if you're a plan sponsor?
Well, big renewals.
Lots of effort needing to beplaced into trying to figure
out how to balance the budget.
So now what if you're a plan sponsor?

(02:37):
Well, a very common gambit hereis to cost shift to employees.
For example, raise deductibles.
But one, there are many, but justone point to ponder as a downstream
consequence of this, raise thedeductibles strategy, the higher
the deductible, the more clinicalorganizations become subprime lenders.

(02:59):
Mark Cuban wrote this to me theother day in massive spoiler alert.
He's coming back on the pod todiscuss this topic with Cora Opsahl,
and I could not be more excited.
But yeah, if I was in a mood, I couldeasily argue that when deductibles
start to sky, clinical organizationstake on more risk for self-insured
employers than carriers who literallytake on no risk in actuality when the

(03:23):
employer is, as I said, self-insured.
I've heard way more than once aboutindie practices, and this really
matters because obviously indiepractices tend to charge a whole lot
less than consolidated health systems.
So if you're a plan sponsor,you sort of wanna make sure that
you've got options in your market.
And I have heard way more than once aboutindie practices who simply cannot stay

(03:47):
in business because they don't have theinfrastructure or the capital reserves.
To basically be a bank.
And not just any bank, but one reallybad at vetting who they give loans
to because yeah, they actually aren'table to vet who they give loans to.
That would be in violation of their TPAcontracts and or network agreements.
If you're in network and a patient hasan insurance card, you gotta follow

(04:09):
the financial terms as per the card.

Tom Nash (04:12):
Hi, this is Tom Nash, editor and producer of the
Relentless Health Value Podcast.
I bet you're wondering, how canI help Relentless Health Value?
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Have you signed up for the newsletter?
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(04:32):
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(04:55):
Okay, so you've done allthose things already.
That's great.
Another thing you could do, you could headover to our website and donate to the tip
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In many ways, RelentlessHealth runs like an unofficial
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So anything that you givewould help us pay the bills.
Thanks so much for listening.

Dr. Cristin Dickerson said something in the interview
from last week, in the episodefrom last week that stuck with me.
We had to cut it for time, butmaybe I'll put it in a bonus
show sometime in the future.
She said sometimes some kind of slickclinical organizations when it comes
to ordering imaging, they will try toschedule a high deductible patient's

(05:35):
image for as late in the year aspossible in the hopes that by that
time the patient will have met theirdeductible and some other schmo healthcare
organization will be the one on the hookto have to collect the patient portion.
Nothing like, not at all timely followup, depending on when this happens.
I hope I just didn'tgive somebody some ideas.
Nah, that type wouldn'tbe listening to the show.

(05:57):
So all this being said, listen tothe show with Preston Alexander.
Listen to the show with Vivian Ho.
Listen to the two flywheelshows with Jonathan Baran.
And all of the deep heavy topics Ijust glossed over here are deeply
raked over the coals in thoseearlier episodes I just mentioned.
But in all cases, you know, one.

(06:17):
Solution to all of the above.
Yeah, direct contracting.
Now this Relentless Health Valuedirect contracting as a solution
trifecta, of course, began withElizabeth Mitchell talking about it
in the Take Two from two weeks ago.
Last week I discussed the upsides andalso three barriers to doing direct
contracting for imaging with theincredibly wise and articulate Dr.

(06:37):
Cristin Dickerson from Green Imaging.
Dr. Dickerson gave a bunch ofproven suggestions to overcome,
said three barriers by the way,she did not leave you hanging.
And now this week we're talkingmostly about how to think about
and operationalize a directcontract with an OG of direct
contracting, Dr. Stan Schwartz.
What an honor to get Dr. Schwartz on thepod, and I am doubly thankful because he

(07:02):
stepped up and offered to help supportRelentless Health Value financially as
well as spending his time with me and you.
So thanks to everyone over at ZERO.healthfor being part of the kind of folks
who support shows like this one.
Dr. Stan Schwartz isco-founder over at ZERO.health.
Zero gets members access to high qualityproviders for $0 out of pocket leveraging

(07:24):
bundled payments and direct contracting.
This episode, as I just said, issponsored by ZERO.health with an
assist from Aventria Health Group,and my name is Stacey Richter.
Dr. Stan Schwartz, welcometo Relentless Health Value.

Dr. Stan Schwartz (07:38):
I am so happy to be here.
It's one of the things I'vereally looked forward to.

As have I. So, talk to me about the origin story of ZERO Health.
I know you started it aftersupposedly retiring in 2014.
And your partner is Jim Millaway, whowas working at that time at a brokerage.

We got a group of employers together here in Tulsa.
We got a group of providers together andstarted offering bundled payments, and
it was really an interesting proposition.
Quick example, you know, if an employerhad a member that needed their gallbladder
removal, we have examined enough claimsto know that they probably pay about eight
to $10,000 for that gallbladder surgery.

(08:18):
So we had a hospital here in Tulsa.
It's a five star hospital, Medicarefive star hospital, a very good place.
They were doing bundle paymentsfor an outpatient gallbladder
surgery for $5,641 complete.
And that was everything.
That was anesthesia, the surgeon,the hospital, the recovery room.
And the employers like that.

(08:39):
But the only hitch was the employers hadto cover a hundred percent of the costs
so that the employee would pay zero.
There was never a hesitation to, I'll justtry to hang out this gallbladder problem
and hope I don't wind up in the emergencyroom needing it done on Saturday night at
12 o'clock and the employer saved money.

(09:00):
The providers liked it becausethey were getting a fixed price.
They knew just what they were gonna get.
They didn't have to collectfrom the patient, they didn't
have to hot box patients.
So they got patients thatwere already for surgery.
The employers were saving moneyeven though they covered the
employee's copay and deductible.

You created this bundle payment program specifically
to address a known problem andyou knew how to solve for it.
This is kind of a very different wayto go about things than a lot of when
air quotes startups or point solutions.
Oftentimes, some of the timesit's somebody with a lot
less real world experience.
There are almost even hypothesizingwhat the problem is, and sure, you

(09:40):
can get in there and then pivot 600times, but it seems like you knew that
if you did this well, and you knewhow to operationalize it, which do not
underestimate that, but if you could doit well, you knew that as you had said
that patients were getting hot boxed.
And that's even, this was a whileago, but that's even more true now.
I was just came back from aconference, there was three sessions

(10:01):
on trying to figure out how toget the copay out of patients.
And it's just, it's a thing, especiallywith the rise of high deductible health
plans and the increase in hospitalcharges, let's all recognize that if
you're paying a percentage of anything,that those numbers are getting real big.
So patients are gonna be happy about this.
Employers not only is it lessexpensive, but it's also predictable.

(10:21):
You know what the price is.
We just had Kimberly Carleson onthe pod just talking about all the
different ways that things cannot costwhat you think they're gonna cost.
Even if you get an in airquotes estimate upfront, right?
So just so much that could be saidfor doing something the market

(10:42):
demands because someone is intimatelyfamiliar enough with that market
to know what the market demands.

I think one thing that some people who want to change
healthcare lack is the emotionalenergy from really understanding how
the problem affects individual people.
And my epiphany, Stacey, wasreviewing claims for a local
roofing company here in Tulsa.
They were self-insured, had acouple hundred employees and

(11:09):
we were consulting with them.
You know, how could we save money?
So I'm going through thisand one thing caught my eye.
It was a 23-year-old covered member.
He was the subscriber, soI'm sure he was the employee.
And at the age of 23, in a roofingcompany, you're much more likely
to be a laborer than a CEO.
And there was an item on his, ona bill, $125 for a comprehensive

(11:34):
metabolic profile, which everybodyknows is a blood chem, one of
the most commonly ordered tests.
And his copay on this test was $125.
I think the total amount was 175,but he hadn't met his deductible yet.
He paid $125 a roofing laborer.
For a test that's available for $6and 52 cents if you buy it directly.

(12:00):
And to me, this just isn't rightbecause this kid wasn't given the
opportunity to shop around for that test.
Somebody directed him.
Just have you go down the hall, uh, geta blood chem test and we'll be fine.
And we really set about notjust to improve the cost of high
cost items, major surgeries.

(12:21):
But we realized, you know, you canprobably arrange direct contracting
for anything that you can schedule,and that became kind of our mantra.
If you can schedule it,you can put a price on it.
We realized from that, and westarted looking at all kinds of
low cost claims, urinalysis, chestx-rays, blood counts, and so forth.

(12:41):
And as we looked at where employerscould save money, this is the drip,
drip drip of healthcare waste.
So much of what we call expense inmedicine is simply pricing failure.
Something that should be $7 you'repaying a hundred dollars for, and
that's why we started looking at howcan we provide everything, even if it's

(13:03):
a cheap urinalysis or if it's a majorcardiovascular surgery at a bundled price.

I'm sure this 23-year-old roofing worker had other things that he
or she would have liked to have spent thea $1 19 on then overpaying for a exam.
It sounds like what you thoughtat that moment in time was these
metabolic exams are really common.
As you just said.
If you get a wellness exam, every memberof your plan is gonna get one once a year.

(13:33):
So why are we kind ofleaving it up to chance?
Like if we were thinking about a purchaserat a company purchasing anything else,
and you knew you were gonna purchaseone times the total population of your
plan on an annual basis, you wouldn't bejust like, oh, just go get it wherever.

That's, that's exactly the point.
I mean, you know, you'regonna buy these things.
The only unknown in healthcareis not whether someone's
gonna need a blood chemistry.
It's who's gonna need it.
As we started looking at claims, wedeveloped an algorithm that would
take raw claims, line item claims,put 'em in the hopper out the other

(14:11):
end, it bundled up those claims tomatch exactly what ZERO could provide.
So we could show a companythe savings that they would
have on any particular test.
And I remember this, we were pitchingto this one company and we showed
them their hair was on fire becauseof high cost claimants, which
for that company was anybody over$50,000, just the blood chemistry

(14:33):
was a high cost claimant for them.
We could have saved them over$50,000 by just getting the same
test done in a different place.
And don't tell me that thatblood chemistry test is better
because you paid $125 for it.
It isn't better.
We had it done at $6 and 52 cents bya very highly respected national firm.

As you just said, what's up for grabs is
anything that can be scheduled.
If you can schedule it, you canfigure out how to buy it better.
And I'm thinking about a number of thingsand then spoiler alert, I'm gonna wind
up with a disruption word, which I knowsomeone is gonna be thinking of right now.
A couple of thoughts are coming to mind.

(15:14):
One of them is this whole idea, and we hadGe Bai on a bit ago, and she was talking
about generic drugs, but I think sameroles apply here where she's saying, think
about it, this generic drug costs $2.
If we pay for that generic drug usinginsurance, then what is the insurer in

(15:34):
air quotes is gonna do is take that $2,spread it over the entire risk pool.
This is what's going on behind the scenes.
They're taking that $2, they're spreadingthe $2 across the entire risk pool.
And then recalculating what thatindividual should pay as a percentage
of the risk pool for that $2 claim.
And you just start thinking about that.

(15:54):
And I am disregarding a lot of thingslike the patient's ability to pay.
Not talking about that right now,just talking about the operational
logistics of that endeavor.
Adding so much bureaucracy to a $2claim, and I think we've just done
three or more shows mentioning thehazards of employers buying discounts
instead of just buying the healthcareservices, which is kind of a different

(16:15):
flavor of this exact same idea.
Why are we adding so muchlegwork and bureaucracy and
making this just so complicated?
I think the point that you're making ismaybe a plan sponsor shouldn't be paying
a third party administrator, a TPA tospread every expense over a risk pool,
which can cost around 30% of spend.

(16:35):
A just wildly, unexpectedly highnumber, but one I have heard multiple
times now as an estimate most recentlyfrom Dan Ross and Mark Flores.
But also from Elizabeth Mitchell fromPBGH based on their data, and this was
a point that she mentioned in the encorethat was aired a couple of weeks ago.
So in cases where, as you said,the question isn't if a healthcare

(17:00):
service is going to need to bepurchased in any given plan year, the
question is merely who will need it.
Then maybe you should just go buystuff is, is what I'm hearing.
And that's what, in other words,a direct contract is where you
are figuring out how to purchasethings using purchasing discipline.

Insurance basically is you pay somebody
money to transfer risk to them.
So what we're doing now is, we are usingan insurance mechanism to have somebody
else process claims and take care ofthings that we know are gonna happen.
You've heard of my light bulb analogy.
We've used this so many times.
We go into a factory to talk to anemployer and we point to the ceiling.

(17:43):
You know you've got what I see about7,000 light bulbs in this plant.
I mean, do you insure every one of thoselight bulbs and file a claim and wait
till you reimburse to get them fixed?
No.
You just go out and buy light bulbsat a good price and you figure out how
to get them installed at a good price.
Because you know they're gonna burn out.
All thing you don't know iswhich one's gonna burn out.

(18:03):
End of story.

Which is a great analogy.
Lemme ask you the disruption questionbecause if you are trying to make sure
that every member of your plan whoneeds a comprehensive metabolic panel
in any given plan year, that testgets sent to the preferred vendor.
I'm thinking to myself, clinicianshave to be on board for this ride.

(18:29):
The patient probably needsto know what's going on.
If we're just thinking about the amountof logistical effort such that all of
these tests got sent to the right place.
My mind's kind of exploding right now.
How do you handle that?

We make the system so easy and so understandable that it
becomes the path of least resistance.
So when someone works for a companythat has ZERO program in place,
it's always a voluntary program.
We will never let it become mandatorybecause as soon as someone has
to do something, their attitudetoward it is totally different.
The plan becomes a bolt-on to theirunderlying health insurance plan.

(19:06):
They still have to have their usualBlue Cross or Aetna, or UHC, whatever,
but we make it the easiest way to go.
And we have personal healthassistants, for example.
We help educate the members that ifyou call the personal health assistant
whenever you're told by a doctor youneed to get something done outside the
office, they will help you find a placethat you can get it done at no cost.

You mean the second that a clinician says, Hey, I think you
need labs, I think you need imaging.
The patient needs to be like,oh, I need to make a call.

We don't try to educate people on the complexity of it.
What they understand is, if I call thisnumber or I text or I chat with this
number, and they pay nothing for it.
That is totally understandable.
And if they do that, they wind upwith a, an actual stateside human that
arranges for where they need to go.
They go to a, like for thelab, they'll go to the lab.

(20:01):
They don't have to make acopay, a deductible or anything.
Everything has been arranged for them.
If they go into another specialistoffice, everything is arranged for them.

I'm tracking back to the episode with Peter Hayes right
now where he was talking about threevectors of change in healthcare,
and one of 'em was transparency.
Another one was legislation, but thenthe third one was public outrage.
This public awareness of, and maybe thisis also folded in with transparency,

(20:34):
just public awareness of how easy it isto bankrupt yourself if you go get care.
And we've got, I've heard varyingnumbers, but a majority of Americans
think real hard about seeking care,and you alluded to this at the top of
the conversation, who think real hardabout seeking care because they're
like, at any moment now I could windup with a bankrupting size bill.

(20:57):
They're aware of the fact if they gofor imaging or if they go for blood
work or they go to a specialist whoturns out is in a hospital, didn't
look like they were in a hospital,but turns out they're in a hospital.
So now they get this facility fee or justthe rates go way up and they're paying
co. Like just any of these various things.
I think the public is becomingmuch more aware of the fact that

(21:18):
these are fraught endeavors here.
There could be certainly peace ofmind knowing that if you call this
number, you are not putting yourselfand your family at financial risk.

One thing that motivates people to get things
done and to be sensible shoppersis to be able to think clearly.
And not have the privitiveto brain take over.
I will tell you from personal experiencewith patients, and any doctor will
tell you this, when you're sitting infront of a patient and they've come in
because they have a cough or somethingfunny was found on the chest x-ray,

(21:55):
and you tell them, I don't think it'sanything but just to be sure it's not
cancer I want you to get this done,then I want you to get that done.
At that point, you are no longer ashopper 'cause you are no longer able
to think about, well, I want to gohome and I want to think about my plan.
I wanna look up who's thespecialist, where will I save money?
The simplest thing is to suggest gowith the flow at that point, because

(22:17):
the doctor says, you get all thisdone down the hall, you're gonna
want to get that done down the hall.
If somebody knows that, yeah, I can getit done quickly, I can get the same things
done, but I can get it done at no cost.
All I have to do is call one number.
Then they can regain some of thatsensibility of being a shopper.

So this is why you said this program is never mandatory.
They were empowered to make thisdecision and they chose to go the
route that you're talking abouthere and now it's not disruptive
if they need to text this number.
It's actually part of, it's a feature.
It's not a bug.

We don't make it mandatory as soon as it's mandatory.
It smells like to people thatthey're being forced to do something.

I'm gonna ask you three questions now because I
know every plan sponsor listeningis thinking three things.
So I'm gonna tell you what the threequestions are and our listening
audience, again, spoiler alert, thisis where we're going here because
everybody's thinking the samethings that I'm thinking right now.
So let's just level set.
The three questions everybody'sthinking now are, number one, direct
contracting increases utilization,at least in the short term.

(23:19):
That's gonna be the firstquestion I'm gonna ask you.
The second question I'm gonna ask youis how do you operationalize this and
not just what you're talking about now,like, oh, we give everybody an app.
I mean, on the backend, because we'veall heard the stories where somebody
goes to a directly contracted providerand then the plan sponsor gets the
bill from the provider, but then theyalso get the insurance bill, like

(23:42):
whoever the carrier is also sends abill just like that whole mishegoss.
And then the third question is,how do you make sure that plan
members actually use the service?
Because it's one thing to telleverybody something on an enrollment
day or open enrollment day, and thenanother thing for them to remember
this in the heat of the moment in June.
So how do you ensure that costsdon't inadvertently go up?

(24:04):
We did talk about the, the win-winshere, that the doctors don't have to
hot box patients, but oftentimes anotheradvantage that is touted for why a
provider organization should directcontract is that there's no pre-auth
or prior auths that's often put in themix, and so you can see that if you get
rid of all the pre-auth and prior auths,that utilization, that costs go up.

That's a great question, and it's a question we
get asked virtually every timewe talk with a potential client.
The first is the questionis being asked wrong.
It's how do I know that I won'thave excessive utilization?
The answer is, how do you know right nowyou're having insufficient utilization.
And good studies have shown that allimpediments that you make to getting

(24:51):
things done for people through priorauth, whatever, impede necessary care more
often than they impede unnecessary care.
Often with devastating consequences asanybody who's reading medical news now
knows, and we've just seen the majorhealth plans now begin to pledge that
they're gonna be reducing the burdenof prior authorization and so forth.

(25:13):
The fact is that yes, there will beinitially some increased utilization.
Why?
Because when you announce to yourcompany that in January you're going to
be able to get so many things that youwould normally have to pay a copay for,
you're gonna get them at a zero cost.
People will delay getting things done.
We see that all the time.
But whether or not theyget excessive care.

(25:34):
I don't think it reallychanges doctor's behavior.
It reduces the burden of trying to provethat somebody really needs something.
And I think if you work with gooddoctors who follow or established
guidelines that you're not goingto have excessive utilization.
Your biggest fear in a companyis people not getting done
what they should get done.

Something that you had told me before is that conservative
care sometimes costs more than surgery.
So the zero copay isn't just relevant tosurgery because if a patient has money
in their decision making criteria for howto proceed, the cheapest route, weirdly,
again, is sometimes surgery instead ofdoing the physical therapy or et cetera.

(26:15):
Okay, so all of this being said, itis often said that when you reduce
patient out of pocket, you increaseutilization because now it's free and
people just just go and get lots of care.
I did a show, the Throughline Show aboutmoral hazard that I would recommend if
somebody wants the 15 minute diatribeon the site, go back and listen to that.
I do feel like though, this is alittle bit different, if someone

(26:37):
hits their deductible in November,they feel like they've gotta do
everything possible to do by the endof December while it's still free.
So you like, you kind of compress andexacerbate the moral hazard problem there.
Or the patient's feeling likenow the clock is ticking.
But anyone listening, I'm sureyou're kind of going through the same
mental gymnastics I am right now.

I'm just gonna say there's two things that most
prior auths will wind up beingoverridden when the doctors send
in the necessary documentation.
So yeah, you may just delay it gettingdone and it may show up on next
month's books, not this month's books.
But the second is that we know clearlythat any impediments to necessary care,

(27:17):
whether they're social impediments,moral impediments, financial
impediments, will reduce necessary care.
And that's why if you're going tooffer health benefits, your plan,
by golly, needs to benefit health.

That's something that maybe we should all
reflect on every now and then.
Like what are we doing here?
Are we checking a box or are weactually trying to improve health.
All right.
Here's the next question for you,which I know is everyone's thinking.
How do you actually operationalize this?
How do you actually make sure thatpeople aren't getting double charged by
the carrier, that it doesn't turn intototal chaos trying to administer this?

Actually double charging turns out
to be a very minor problem.
For one very special reason isthe patients, the members know
that their services are at ZERO.
If they get a bill for their service,that means it was double billed,
and that's very easy to, to rectify.
How to operationalize it?
It's really simple to operationalizesomething that's easy to understand.

(28:15):
At ZERO, we've got a plan where itjust takes a few hours of HRs time
or whoever who's ever gonna do it.
But we make it simple.
You know, we do all the promo work, wedo all the graphics, we do all the email,
and everything is tailored to the company.
You know, we have a company here inTulsa that has a large Spanish speaking

(28:35):
population, manufacturing company.
Everything is bilingualthat we send to them.

And what you're talking about right now is how
do you recruit for the plan?
How do you explain what the plan is?
How do you train the employees what to do?
How do you get everybody on thesame page relative to what to do?
And then remind them across the course ofthe year the plan that they signed up for.
So that sounds like one aspectof operationalizing the plan.
The other one though is, okay,so, patient walks in the door

(29:03):
of a clinical organization.
Hi, I'm here to check in for my surgery.
What happens now?

Everything has been arranged so far so that when a patient
goes to a particular provider likeour surgical hospital here in Tulsa,
everything has been done at that point.

The one thing that you hear over and over again is
that the front desk is baffled.
So it sounds like not only is theretraining that needs to go on at the
member level, but also any providerthat signs up, there's some kind of full
office training that needs to happenthere so that when the patient walks in
and flashes some card or their identityor whatever, they're not like, I don't,

(29:44):
I've never seen this card before.
So question mark.

Yeah.
We have a provider experience teamthat does that to educate people.

These are all pre-scheduled things.
You have a, as you said, somebodygot navigated over there.
So the navigator now knows that apatient is going over to whatever place.
Paperwork gets done on the backend,and then the doctor just simply sends
the bill to the right place becausethey have a very vested interest in
sending the bill to the right place.
So they know that even though thispatient's umbrella, carrier basic plan

(30:16):
is pick a BUCA or pick a differentTPA that this particular service the
bill should get sent directly to.
And it sounds like most providerorganizations have a sophisticated
enough billing department thatthey can do that if/then equation.

Yeah, we make it really simple.
I mean, they could send a regular claimfrom their electronic health system.
They can send us an invoice, theycan send us, fax us something
on the back of a clean napkin.
I mean, it really does matterbecause we make this the simplest
way to go for the provider, forthe employer, and for the member.
It's all about simplicity.

Isn't that a concept?
Keep it simple, stupid, right?

Everything is so simplified that we're moving all the
friction and additional expense ofgoing through an insurance mechanism,
makes the money more readily availablewithout threat of claw back or denial.
They know what they're gonna getand when they're gonna get it.
I think it was expressed best byone of our very first providers,
surgery Center of Oklahoma.

And this is, this is Dr. Keith Smith, who I know is very active
on the, on LinkedIn and elsewhere.

But the testimonial he gave us could stand by itself
in advertising to providers.
He said, ZERO patients cometo me, they are pre-qualified,
well-informed, and ready for care.
I was talking to Dr. Smith the otherday and I asked him, what is your
clinical to administrative staff ratio?
And his is about 10 to one.

(31:41):
And I said, well, theindustry is like two to one.
And he said, I can't believe that becausehe does virtually all bundled care now.
He doesn't have a departmentto do collections.
He doesn't have to send letters out.

So the point that you're making from, this is another
provider advantage that if youjust look across the industry, most
people have one administrator forevery two clinicians, which is nuts.
If you start thinking about it.
Like we start talking about administrativebloat, administrative overhead, like whoa.
And in Dr. Smith's practice, he's got10 clinicians for every one biller,

(32:13):
just because it's so much simpler toadminister a bundle in this way than to
try to figure out how to get through thecoding gauntlet of some of the carriers.

Yeah, and there's no accounts receivable.
You know, every physician's dread is tohave a hundred Stacey RIchters, who each
owe them $15, but want to pay $5 a month.
I mean, it just isn'tworth it at that point.

As a lot, discover, the more employers that do that, the more that
we're protecting our indie practices also.

Yes, and that is one of the prime motivations for me.
I think that the physician alwaysneeds to be responsible to the patient.
And should not be making fiduciarydecisions for their employer.

So the last question I promised to ask you, which I think
you already answered largely, but I'mjust gonna ask it just in case you have
anything else to add, is how to ensureplan members actually use the service.

Actually there, there's a couple of things there,
but it's service after the salethat makes a huge difference.
Let me explain.
We go through the education of theemployers, it's all customized to the way
the employees and their family membersare used to receiving information.
We say, let's put this off open enrollmentso that this program, which is extremely

(33:27):
important, doesn't get sandwiched betweendental benefits and vision benefits.
We'll do it off cycle can be done anytime.
The second is we will customize theeducation for your employees so they
understand it and make people available.
We'll go on site.
We'll do whatever we need to do to besure people how to know how to use it.
Here's the secret, though, isafter the program starts, we

(33:49):
will continually review claims.
PPO claims, typical insurance claimsfrom a company, and we will match
those to what ZERO could have done.
And we call those missed opportunities,and we expect in the first year
of the program, we'll get about30% of the things that the ZERO
program could have done under ZERO.

(34:10):
But by the end of the second or thirdyear, we expect that to go way up.
And some of our best performingcompanies, we'll get about 70% of
ZERO eligible services actuallydone under the ZERO program.
And you know, we think that'swhere they really start to see
both the savings and money.
But importantly, it's a huge retentionand attraction for hiring new talent.

(34:34):
You know, we've seen over and over again,a school systems in Colorado, for example,
where we have a number people committed.
One of the benefits they askfor is, do you have ZERO?
Because you know, that'swhere I wanna work.

We can't underestimate the zeitgeist that we're in.
Americans are hyper awarethat healthcare costs a lot.
Not to this level.
I feel like, have weever seen this before?
You know, we've got a familyof four, it costs 35,000.
You get somebody who's making 85,000.
Okay, that sounds like a lot ofmoney, except you start subtracting

(35:07):
out the amount of healthcaredollars that are in there.
Dave Chase has talked about the stagnationof the middle class wages and like this
is why, so you, you offer something likethis, it not only do they start thinking,
wow, there's cost savings here, butalso just uncertainty breeds anxiety.
So you are like, okay, well I'm doingsomething really good for my family
here where I am making sure that wedon't, in the casino of healthcare

(35:30):
accidentally bankrupt ourselves.
But the other thing I just wannapoint out, which I think is it takes
a level of sophistication to figurethis out, that we're not creating
this binary scenario where it's either0% direct contracting or a hundred
percent for this plan population.
As you said, you can tick the needleup, so if everything goes well, you can

(35:51):
get 70% or more, which is indicativeto me exactly what you're saying, that
this is a pool not a push, and whateverpercentage you get, is a percentage of
everybody getting the advantages thatyou're talking about, but that can tick
up naturally over time and organically,so that disruption is minimized because

(36:13):
when the service is taken advantageof, it's done very consciously and
everybody knows what the drill is.

Yeah, if you're a company that has direct contracting
for advanced primary care and thenthey have ZERO for direct secondary
care, you can provide much betterhealthcare, save money, and save money
for your employees and their families.
And we give advanced primary carethe opportunity to save money for the
things they can't do in the office.

Dr. Stan Schwartz, is there anything I neglected to ask you?

Just that our program is not revolutionary.
It is a simplificationof what takes place now.
We make things easier for your members.
We make things easier for your bottomline, and we make things easier
for the doctors to work with us.
It is pure simplification.
And it's removing all the excessesin trying to give routine healthcare

(37:06):
through an insurance mechanism thatwas never meant to take care of
things that you expect to happen.

So keep it simple.
Dr. Stan Schwartz.
If someone is interested in learning moreabout ZERO, where would you direct them?

I'm on LinkedIn, Stanley Schwartz, MD. My co-founder
Jim Millaway is on LinkedIn, JamesG. Millway, or you can go to our
website, ZERO.health, or you cansend us an email at info@zero.health.

Dr. Stan Schwartz.
Thank you so much for being onRelentless Health by you today.

Thank you, Stacey.
Hi, I am Dr. StanSchwartz from Zero Health.
Relentless Health Value has been a realsource of insight and inspiration for me.
Every episode feels like a thoughtful,informed conversation that really gets to
the heart of what matters in healthcare.
If you're committed to moving theneedle in this space like I am, I
strongly recommend subscribing toRelentless Health Value Newsletter.

(37:57):
For me, it's the best way to keep upwith new episodes and stay connected.
Thanks for listening.

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