October 16, 2025 • 26 mins
In Episode 489 Part 2 of 'Relentlessly Seeking Value,' Stacey Richter continues the series on 'Mission Margin' by focusing on the financial sustainability aspect with guest Dan Greenleaf, CEO of Duly, a multi-specialty group. The episode dives into the balance between maintaining mission-driven healthcare, which includes affordability, accessibility, and quality, and achieving financial margins.
Dan discusses practical strategies like reducing network leakage, negotiating effectively with payers, and leveraging technologies to lower operational costs. The conversation also highlights the significance of clinician involvement in leadership and the value of having aligned incentives across the organization.
Additionally, the episode addresses the role of capital partners in sustaining such healthcare models and ensuring they are effective and sustainable.
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09:56 How does Dan achieve his mission given the realities of margin?
14:49 How Duly Health’s approach and incentives differ from other health systems.
16:04 EP466 with Vivian Ho, PhD.
16:28 EP462 with Scott Conard, MD.
16:31 Summer Shorts episode with Stan Schwartz, MD.
17:27 EP460 with Rushika Fernandopulle, MD.
17:29 EP445 with Tom X. Lee, MD.
17:30 EP407 with Vivek Garg, MD, MBA.
18:50 How having physicians on the hospital board greatly improves margin and mission.
20:04 How Dan explains his approach to his capital partners.
22:23 Fee for service vs. institutional care.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Stacey Richter (00:00):
Episode 489, The Margin Part.
This episode is about marginthat Creates a path to mission
at a multi-specialty group".
Today I speak with Dan Greenleaf.
Tom Nash (00:20):
American Healthcare Entrepreneurs and Executives
You Want to Know, Talking.
Relentlessly Seeking Value.
Stacey Richter (00:28):
Dr. Ben Schwartz wrote an article recently, and yeah,
he makes a really compelling point.
Dr. Schwartz wrote, "Ultimately, the mostsuccessful care models are those that
create value Inherently. The goal isn'tsimply cost arbitrage, it's creating
a sustainable system that makes valueattainable. Care delivery innovation is
(00:49):
about more than optimizing for VC returnsor maximizing operational efficiency".
That mention of value and how toachieve it for real, like actually
create a care model that deliversvalue inherently is a great segue
to introduce the show this week.
It's a continuation of our missionmargin theme, and this week we're
talking about the margin part ofthe no margin, no mission cliche.
(01:13):
So taking this from the top last week andgo back and listen to that show if you
have not yet, and you can listen to bothof these parts in no particular order.
You do you.
But last week we talked mission.
That part about value and creating valueinherently the tie in here to mission
and margin could be a value equation,really like mission divided by margin is
(01:34):
how you calculate the value delivered.
Less carrier spread, but that'sa whole other show with Cynthia
Fisher link in the show notes.
So let me introduce my guest thisweek, who was also my guest last week,
Dan Greenleaf, CEO of Duly, which isa multi-specialty group in Chicago.
So last week Dan and I talked mission,as I said, but today we're talking
(01:55):
margin, which is again gonna be thedenominator of so many value equations.
Last week in that mission show,quick review or spoiler alert,
depending on the order in which youmay be listening to these shows.
But last week, Dan Greenleafbroke mission, Duly's
mission into four quadrants.
The four quadrants of missionbeing; affordability, access,
(02:18):
consumer experience and quality.
In this conversation today, theMargin conversation, Dan Greenleaf
emphasizes that achieving these fourquadrants reduces friction for patients
and clinicians, that leads to notonly better care outcomes, but also,
financial sustainability, i.e. margin.
Margin can therefore bea function of mission.
(02:40):
And again, as Dr. Ben Schwartz put it,ultimately the most successful care models
are those that create value inherently.
So here we go.
To be noted with one big fat fluorescenthighlighter marker, a big part of
this mission that comes up over andover again last week, it's about making
prices reasonable and predictableand transparent for patients.
(03:01):
Financial toxicity is a thing.
Financial toxicity, not only isclinical toxicity when so many
people are delaying needed care.
And look, I don't often quoteMarjorie Taylor Greene, but last week
she was in the New York Times andwas quoted as saying, "The cost of
healthcare is killing people. Thisis what we should be focusing on".
I just read the other day that one thirdof adults in this country are currently
(03:23):
delaying or foregoing care due to cost.
One third, not one third of lowincome or something like that.
One third of adults in thiscountry are delaying or foregoing
care due to fear of cost.
In today's world, affordability andprice transparency is part of what
customer experience means, not justlike lemon water in the waiting room.
This is what struck me the most aboutthe conversation from last week.
(03:46):
But wait.
Does affordable for patientsspell trouble when it comes to
the margin part of the operation?
Will an affordability missionwreck havoc on margin?
Is this business model doomed?
Is there even a successfulcare model that creates value
inherently that is sustainable?
Such a good question, which is why I askit to Dan Greenleaf right out of the gate.
Dr. Cristin Dickerson (04:09):
This is Dr. Cristin Dickerson.
Stacey, not only unearths and distillsthe problems with the existing healthcare
system, she also offers hope fora better future for healthcare and
for restoring trust in the system.
If you rely on this podcast asmuch as I do, follow the Relentless
Health Value page on LinkedInand join the conversation.
Stacey Richter (04:32):
So just to sum this all up in the conversation that
follows, Dan Greenleaf gets into thechallenges and the strategies and
involved in balancing mission-drivenhealthcare with financial realities.
Duly's approach to being fiscally solidincludes, well, I'm just gonna say many
of the same types of efficiency things tomaintain and retain margin that other more
(04:56):
mainstream health systems might deploy.
But I'd say there's a really strikingdifference in the why and the how.
And the impact of this why andhow is striking when you look
at Duly's prices and the impactit has on its overall community.
So even though it's using similar typesof strategies, maybe as big consolidated
(05:18):
health systems or other organizations,the impact and what it all adds up
to is, again, very, very different.
This is what I mean.
At health systems, and maybe my headis just lost in a couple of anecdotal
bits of evidence right now, but Ijust had two conversations in the
past two days with physician leadersat big health systems, different
(05:39):
ones, but both of these individualssaid variations of the same theme.
And if you wanna picture the scene,picture the saddest expressions, and
one of them had a martini and theother one had a big boy glass of wine.
And both of them said, Look, myorganization has lost sight of patient
care, but also my organization haslost sight of like financial goals
(06:02):
in most parts of the organization.
All I seem to do all day is playpolitics with a whole lot of middle
managers or even senior leaders jockeyingfor position and having turf wars
within these sprawling bureaucracies.
These are just great people who are tryingso hard to do the right thing and are
just struggling to find the foothold todo so within their own organizations.
(06:24):
So let's just say it was refreshing tohear Dan Greenleaf talk about an alignment
of incentives and hook the margin upwith the mission train in a really tight
way throughout the entire organization.
And to do this really well achieve thatmission slash margin alignment across the
whole entire organization, Dan underscoresthe value of clinician involvement in
(06:45):
leadership and having, as I just said,aligned incentives with clinical teams.
Keep in mind, this is the margin showwhere clinical leadership came up
and the number of doctors on theirboard and the level of physician
ownership in the organization.
I'm highlighting that this is the marginshow here because usually so-called
dyad leadership with physiciansin leadership roles, only comes up
(07:06):
in mission conversations, right?
Like in situations where somebody wantsthe doctor to be the defender of mission
and the battle to keep the MBAs in check.
And I say this as the comicbook stereotype, obviously, but
yeah, it's true often enough.
But then we have Dan, who is thinkingabout clinicians who have, again,
aligned incentives across theorganization so you don't have your
(07:28):
physician leaders day drinking whileI'm sitting across from them finding
myself quoting Sun Tzu the Art of War,and helping them craft the perfect
PowerPoint slide to weaponize a reorg.
Honestly, in my experience, there's nobetter way to waste metric ass-loads
of money than in an organizationwhere personal power grabs start to
supersede anything that smells vaguelylike an organizational imperative.
(07:51):
And again, these just big bureaucraciesat many health systems, yeah, too big not
to fail at this is often the way of it.
Then lastly, I grilled Dan Greenleafabout capital partners and how to
manage to achieve private equityfunding, where there's support for a
model that delivers inherent value.
A model that benefits both patientsand providers as well as investors.
(08:15):
And I'm saying this, keeping allof the things that Dr. Yashaswini
Singh said in that episode aboutprivate equity a few weeks ago.
Go back and listen to that.
And by the way, Dan Greenleaf and thisshow has roughly the same ideas as
Dr. Tom X Lee, founder of One Medicaland Galileo told me, and also Dr.
Rushika Fernandopulle, founder of Iora.
(08:36):
Great minds think alike.
So should figuring out how to workwith PE be a topic of interest.
There you go.
Listen to my conversation today withDan Greenleaf, and then go back and
listen to those other two shows,links in the show notes as always
or find them in the newsletter.
If you subscribe and got itin your email this morning.
That was a subliminal messageto subscribe to our email
(08:58):
newsletter if you missed that.
Dan Greenleaf, CEO of Duly,my guest today, has been
in healthcare for 30 years.
He's a six time CEO.
Three public companies and has alsorun three companies backed by private
equity and thus very aware of themany different funding mechanisms
that exist in the marketplace.
My name is Stacey Richter.
(09:18):
This podcast is sponsoredby Aventria Health Group.
But I do just wanna mention thatDuly offered Relentless Health
Value, some financial support,which we truly appreciate.
So call this episode not onlysponsored by Aventria, but also Duly.
And with that, here is myconversation with Dan Greenleaf.
Dan Greenleaf, welcome toRelentless Health Value.
Dan Greenleaf (09:37):
Thank you, Stacey, for having me.
Super excited to be talking to you todayand I think you do an unbelievable job.
Your podcasts are just incredible.
So thank you for everything you're doing.
Stacey Richter (09:47):
Well, I very much appreciate you saying that, those
kind words, and I also very muchappreciate the opportunity to
speak with you today, my friend.
So I wanna pivot now to margin.
I wanna tee this up ina very specific way.
By underlining a couple of thingsyou said, which make me curious.
The first thing you said, you weretalking about some of your outbound
(10:09):
patient activation and you said, we don'tget paid for it, not that it matters.
And now I'm thinking about that indirect contrast to that Charlie Munger
quote that everyone loves to repeat,which is "Show me in an incentive
and I'll show you an outcome".
Those two things are in direct contrast.
Additionally, you know, nomargin, no mission, right?
(10:30):
So we have to have some margin here.
How are we reconciling these thingsin the current IRL payment reality
where we've got fee for service?
So obviously volume is incentive.
We've got these value-based contracts,which sure, but they sometimes have just
as many of the equal and opposite problem.
(10:51):
So how are you achieving thisvery well-defined mission that you
have given the margin realities.
Dan Greenleaf (11:00):
So just as a setup for this, like, just so everybody
knows, we have 1800 clinicians.
We have 190 locations.
We're adding another 150clinicians this year.
We have a scaled fee for service business.
We have a scaled ancillarybusiness, and we have a scaled
value-based care business as well.
(11:21):
And I'd also say, you know, just becauseI feel like saying it, is that we're
a hedge for the payers related to thehospital consolidation that's occurred.
So how, how do we do it?
I would say number one is that wedo keep patients in our network.
We do a really good job of that.
We have 300 primary care physiciansand about 65% of all referrals that
(11:45):
we have, stay within the Duly network.
So in other words, they go to one of ourspecialists if a specialist is needed.
From a specialist to ambulatory surgerycenter, we capture about 76% of that.
And there's a lot of value add to that.
There's value add because wedo have labs, as you know.
(12:07):
We have 30 lab sites and sixambulatory surgery centers
and 16 imaging centers, and.
11 immediate care centers.
So like you said, ER lite and then40 physical therapy, locations,
and a hundred infusion chairs.
So keeping those patients in ournetwork is really valuable to us.
(12:29):
That's kind of number one.
Number two is that, you know, we haveto be tough negotiators with the payers.
I mean, you, like I said, physiciancomp over the last 25 years,
adjusted for inflation is down 36%.
And so, you know, we use in someshape or form, is best we can,
(12:51):
our scope, scale, and size to makesure that we're getting fair rates.
The other thing we're doing is becausewe have a scaled business, we're able
to keep our contact center costs lower.
We're able to keep our revenuecycle management costs lower.
We're also able to do a muchbetter job on the purchasing side.
(13:12):
So think procurement.
And I think you also know thatwe've got 600 physicians that
are shareholders, and 40% of ourcompany is owned by our physicians.
So there's a high degreeof aligned incentives.
When the company wins, we all win.
And I think from a psychologicalstandpoint, that really matters.
(13:33):
And I also would say that we continue toinvest in technologies, and I just look at
a few of the ones that we've done that Ido believe really benefit our clinicians.
Ambient.ai.
It's fascinating what we've seen thereis that they're spending four and a
half hours per physician, less on aweekly basis, is a result of Ambient.ai.
(13:56):
We've also seen a five percentage pointimprovement in the patient experience.
Because the patient's able to talkto the physician more directly.
We've also invested in tap to access.
When I got to the company, we were, ourphysicians were logging in 40 times a day.
We just use a card now, andso that makes a difference.
(14:18):
We use AI for scheduling, so we'd madeit easier for the patient to schedule.
That makes a difference for the patient.
It makes a difference for the physician.
We're also using these inbox, AIinbox, because I don't know if you
know much about the way MyChartworks, but patients could get in
touch with the physicians constantly.
(14:39):
And many of the questionsthey're asking are things that
can be done by an auto-response.
And we're using AI alsoto ascertain those.
The point is, is like, we'realways looking for ways that we
can do things more effectively.
We're looking for ways to lowerthe cost to serve that patient.
(14:59):
That's part of it as well.
And because we've got scope, scale, andsize, we're able to do much of that.
Stacey Richter (15:06):
If I was gonna distill down what you just said
there, and this is meaningful.
Many of the, you know, in air quotes,"tactics" that I'm hearing are not
that dissimilar from the way that a bigconsolidated system might think about it.
For example, let's make sure that we'relimiting network leakage or make sure
(15:30):
that we're optimizing referrals andthat we've got the scale and the scope.
And that we have the efficiencies thatcan be derived from economies of scale.
So in and of itself, if you justlook at this from a tactical
perspective, it's kind of a, Sure.
This though, i'm gonna makeexactly the same point that I
(15:51):
made from a mission standpoint.
That what is fundamentallydifferent here is to what end.
And if you roll everything that you justsaid and say, why are we doing this?
And then you had mentioned Dr. VivianHo, and I'm gonna mention her as well.
One of the things that she said relativeto consolidated health systems, if
(16:11):
you look at, how their C-suites areincented or what the objectives are or
the kickers for them to get their bonus.
A lot of times it's, add more bedsto this hospital, for example.
And you start thinking about thedownstream implications of that, add more
beds, like first of all, you wind up withstuff like Dr. Scott Conard talked about.
You wind up with stuff likeDr. Stan Schwartz talked about.
(16:35):
I'm not gonna repeat those stories, goback and listen, but these very perverse
incentives where it's justifying,let's not prevent heart failure
readmissions because we need to getthese heads in beds because we need
to have more beds because somebody'scomp depends on having more beds.
That drives consolidation,acquisition in a really big way.
It also, you know, youthink about more beds.
What does that mean?
(16:55):
More brick and mortar.
What does that mean?
More buildings.
What does that mean?
Less community tax revenue.
Higher operational costs, right?
Like there's a lot of downstream impactsto the C-suite of an organization having
an incentives that may not necessarilybe in line with the healthier community.
What I'm hearing you say is,Sure we are doing similar things.
(17:17):
But because we have 600 physicianowners, what that implies to me
is you've got kind of implicit orexplicit dyad leadership, which we
have talked about in multiple shows.
Dr. Rushika Fernandopulle mentioned it.
Dr. Tom Lee mentioned it, VivekGarg talked about it at length.
The importance of making sure thatthere are clinicians who are able, in
a very fundamental, real way, weighinginto the direction of the organization.
(17:42):
Which is even amplified moreby the fact that you have
quantified what the mission is.
And you talked about the healthiercommunity also a as the piece of this.
But the interesting thing also Ibelieve relative to having the 600
physician leaders in this kind of dyadleadership is that, to a large degree,
the quality of the organization or howwell the organization functions depends
(18:05):
on what's up with the clinicians.
So if you've got these individuals inleadership roles, then you not only can
make their jobs nicer, just you talkedabout Ambient scribes, you talked about
all the different things that justlike, let's just make this efficient.
But also from a moral injury perspectiveby having that mission front and center
and quantified in the way that youdo, I could easily see the ability to
(18:28):
attract and retain the really good docswho wanna work for a place that is more
aligned with the values that they have.
So I'm definitely seeing, in thisparticular case, the mission margin, I see
what you're saying, if you really doubledown on mission, you can amplify margin
(18:48):
or these two things can work hand in hand.
Dan Greenleaf (18:50):
Yeah.
I remember one of your conversationsyou had around hospital systems
not having physicians on the board.
Five of 11 of our boardmembers are physicians.
There isn't another healthcare companyout there like that, I promise you.
And that also says a lot, that we'reputting our money where our mouth is.
(19:10):
I would also say to you.
. I wake up every morning thinkingabout how can I reduce friction
for our patients and how can Ireduce friction for our clinicians?
And if we do those thingsreally well, good things happen.
I'm not naive to think we don't needto drive operational improvements and,
(19:31):
and look for best practices and driveout waste, right, reduce variation.
We all buy into that.
But at the end of the day, thisis about caring for patients
and caring for our clinicians.
I'll also say we have people whoare dedicated in our company, two
physicians, whose job is, to workwith physicians who are struggling.
(19:53):
We're struggling potentially emotionally.
Who are struggling with the job.
And so we've had a dedicated groupof clinicians who are doing that.
So I, I think, again,that stuff is in our DNA.
Stacey Richter (20:04):
How do you explain this to, you know, in
our quotes, professional capital?
Because generally speaking, shareholders,not all that interested in, let's just
say the mission part of the equation.
Not all, you know, there's someexceptions here, but, and you, you start
talking to the hedge fund folks, andI have rarely heard the word patient
(20:27):
come up in many of those boardrooms.
But that's, you know, obviouslyyou have capital partners here.
How do you explain this to them?
Dan Greenleaf (20:36):
One of the fortunate aspects of my career is this is the
third time I've done something withAres, who's our capital partner.
I was working with themas an operating partner.
They asked me to come run this company.
They know what I'm capable of doingand driving, you know, the right
mission with the right rewards,with the right performance, and
(20:59):
I just have a lot of credibility.
I gotta be honest with you,I'm not, and I'm also not
going to them asking for money.
I'm, I mean, they are a capitalpartner and I need a capital partner.
Think about, I'm competingagainst Northwestern who has $10
billion on their balance sheet.
Or Advocate who has $20 billion,or Endeavor, who has $6 billion.
(21:21):
Or HCSC who has $24 billion.
These are all tax exempt organizations,for the record, just so we're,
we're clarifying what they are.
And, uh, I wouldn'tdescribe 'em as nonprofit.
But I would also say that physiciangroups in general need capital partners.
The key is performance, you know,it's like anything else is like
(21:43):
you perform well, you get rewarded,it's pretty straightforward.
And given the balance ofperspectives on our board.
We have five clinicians.
We don't lose sight ofphysician experience.
We don't lose sight of patient experience.
And again, I don't believe underany circumstances are they mutually
(22:03):
exclusive to our margin performance.
Because I want to have, not only do Iwant to have a company that has the best
patient experience, the best clinicalexperience, but I want the one with
the best financial performance too.
And I want to, frankly, I want to kickass in all areas, and I don't think any
of those things are mutually exclusive.
(22:23):
I'll also say that when wedrive fee-for-service business,
we're saving the community 30%.
So this idea that VBC isgood and fee-for-service
isn't, is to me, is nonsense.
What the problem is,is institutional care.
Where they're charging 9, 10, 12times more than what we charge.
(22:46):
So every time we keep, and this is mymessage to our physicians, every time we
keep a patient in our network, it's moreaffordable, it's easier to access, it's a
better consumer experience, and they getbetter outcomes from a quality standpoint.
It is a win, win win.
Stacey Richter (23:05):
Let me ask you something and then we're gonna land
this plane, what you just said.
So you named Ares, you talked aboutthe hospital systems, et cetera.
Is that on the record, we'reobviously recording this.
Is there anything that you just saidthere that you wouldn't want aired?
Dan Greenleaf (23:20):
No, I, I mean, the only thing I would say is Ares they're a
great capital partner, but I wouldn'tbe partnering with a third time unless
that relationship was really special.
Stacey Richter (23:29):
So what I'm, what I'm hearing you say, just kind of in sum,
you walked in the door with credibility.
They trust you.
At the same time, you trust them.
And they trust, therefore, when youtell them achieving this mission is very
important for them to, in a sustainableway, achieve the margin they're looking
(23:51):
for, you have the credibility, and theoperational, the track record to back
that statement, and therefore you canwork together very collaboratively.
That is an important takeaway hereas we contemplate the first thing
that you said, which is, physicianorganizations need a capital partner.
(24:16):
That doesn't have to be a rock in ahard place situation, as long as all
of the things you said are true, whichnot everyone, just again pointing
out, has the opportunity, right?
Like it takes a whileto get to that place.
Dan Greenleaf, if someone isinterested in learning more about
(24:38):
Duly, if they are in the Chicago area,especially if they're a plan sponsor.
If I'm picking up what you're puttingdown correctly, where would you
direct them for more information?
Dan Greenleaf (24:50):
Yeah, I think you can go to our website, duly.com.
You can go to my LinkedIn page.
We publish a lot of things about theorganization and what we're doing.
And if people wanna reachout to me, it's dan.
greenleaf@duly.com.
I'd be happy to talk withpeople who are involved here.
I've done something very similar.
I've shared with you, I've reachedout to a few people who I've heard
(25:13):
on the podcast, so I certainly wannaextend that invitation as well.
Stacey Richter (25:18):
That is very kind of you and one of the reasons why I appreciate
and love the Relentless Health Valuetribe and the community of really smart,
really giving individuals that are here.
The willingness to shareand learn from each other.
Dan Greenleaf, thank you so much forbeing on Relentless Health Value today.
Dan Greenleaf (25:37):
Thank you.
Dave Chase (25:38):
Hi, this is Dave Chase, CEO, and co-founder of Health Rosetta.
What I love about Relentless HealthValue is that it brings to life William
Gibson's quote, "The future's alreadyhere. It's just unevenly distributed".
Rather than simply critiquing what'sbroken, stacey highlights the communities
and leaders who are building new modelsthat make the old system obsolete.
(25:59):
It's like getting a time travelers reportfrom healthcare transformation that's
happening right now all over the country.
If you care about transforminghealthcare, I encourage you to
subscribe to Stacey's newsletter.
It's the easiest way to stay connectedand keep up with new episodes.
Episode 489, The Margin Part.
This episode is about marginthat Creates a path to mission
at a multi-specialty group".
Today I speak with Dan Greenleaf.
Tom Nash (00:20):
American Healthcare Entrepreneurs and Executives
You Want to Know, Talking.
Relentlessly Seeking Value.
Stacey Richter (00:28):
Dr. Ben Schwartz wrote an article recently, and yeah,
he makes a really compelling point.
Dr. Schwartz wrote, "Ultimately, the mostsuccessful care models are those that
create value Inherently. The goal isn'tsimply cost arbitrage, it's creating
a sustainable system that makes valueattainable. Care delivery innovation is
(00:49):
about more than optimizing for VC returnsor maximizing operational efficiency".
That mention of value and how toachieve it for real, like actually
create a care model that deliversvalue inherently is a great segue
to introduce the show this week.
It's a continuation of our missionmargin theme, and this week we're
talking about the margin part ofthe no margin, no mission cliche.
(01:13):
So taking this from the top last week andgo back and listen to that show if you
have not yet, and you can listen to bothof these parts in no particular order.
You do you.
But last week we talked mission.
That part about value and creating valueinherently the tie in here to mission
and margin could be a value equation,really like mission divided by margin is
(01:34):
how you calculate the value delivered.
Less carrier spread, but that'sa whole other show with Cynthia
Fisher link in the show notes.
So let me introduce my guest thisweek, who was also my guest last week,
Dan Greenleaf, CEO of Duly, which isa multi-specialty group in Chicago.
So last week Dan and I talked mission,as I said, but today we're talking
(01:55):
margin, which is again gonna be thedenominator of so many value equations.
Last week in that mission show,quick review or spoiler alert,
depending on the order in which youmay be listening to these shows.
But last week, Dan Greenleafbroke mission, Duly's
mission into four quadrants.
The four quadrants of missionbeing; affordability, access,
(02:18):
consumer experience and quality.
In this conversation today, theMargin conversation, Dan Greenleaf
emphasizes that achieving these fourquadrants reduces friction for patients
and clinicians, that leads to notonly better care outcomes, but also,
financial sustainability, i.e. margin.
Margin can therefore bea function of mission.
(02:40):
And again, as Dr. Ben Schwartz put it,ultimately the most successful care models
are those that create value inherently.
So here we go.
To be noted with one big fat fluorescenthighlighter marker, a big part of
this mission that comes up over andover again last week, it's about making
prices reasonable and predictableand transparent for patients.
(03:01):
Financial toxicity is a thing.
Financial toxicity, not only isclinical toxicity when so many
people are delaying needed care.
And look, I don't often quoteMarjorie Taylor Greene, but last week
she was in the New York Times andwas quoted as saying, "The cost of
healthcare is killing people. Thisis what we should be focusing on".
I just read the other day that one thirdof adults in this country are currently
(03:23):
delaying or foregoing care due to cost.
One third, not one third of lowincome or something like that.
One third of adults in thiscountry are delaying or foregoing
care due to fear of cost.
In today's world, affordability andprice transparency is part of what
customer experience means, not justlike lemon water in the waiting room.
This is what struck me the most aboutthe conversation from last week.
(03:46):
But wait.
Does affordable for patientsspell trouble when it comes to
the margin part of the operation?
Will an affordability missionwreck havoc on margin?
Is this business model doomed?
Is there even a successfulcare model that creates value
inherently that is sustainable?
Such a good question, which is why I askit to Dan Greenleaf right out of the gate.
Dr. Cristin Dickerson (04:09):
This is Dr. Cristin Dickerson.
Stacey, not only unearths and distillsthe problems with the existing healthcare
system, she also offers hope fora better future for healthcare and
for restoring trust in the system.
If you rely on this podcast asmuch as I do, follow the Relentless
Health Value page on LinkedInand join the conversation.
Stacey Richter (04:32):
So just to sum this all up in the conversation that
follows, Dan Greenleaf gets into thechallenges and the strategies and
involved in balancing mission-drivenhealthcare with financial realities.
Duly's approach to being fiscally solidincludes, well, I'm just gonna say many
of the same types of efficiency things tomaintain and retain margin that other more
(04:56):
mainstream health systems might deploy.
But I'd say there's a really strikingdifference in the why and the how.
And the impact of this why andhow is striking when you look
at Duly's prices and the impactit has on its overall community.
So even though it's using similar typesof strategies, maybe as big consolidated
(05:18):
health systems or other organizations,the impact and what it all adds up
to is, again, very, very different.
This is what I mean.
At health systems, and maybe my headis just lost in a couple of anecdotal
bits of evidence right now, but Ijust had two conversations in the
past two days with physician leadersat big health systems, different
(05:39):
ones, but both of these individualssaid variations of the same theme.
And if you wanna picture the scene,picture the saddest expressions, and
one of them had a martini and theother one had a big boy glass of wine.
And both of them said, Look, myorganization has lost sight of patient
care, but also my organization haslost sight of like financial goals
(06:02):
in most parts of the organization.
All I seem to do all day is playpolitics with a whole lot of middle
managers or even senior leaders jockeyingfor position and having turf wars
within these sprawling bureaucracies.
These are just great people who are tryingso hard to do the right thing and are
just struggling to find the foothold todo so within their own organizations.
(06:24):
So let's just say it was refreshing tohear Dan Greenleaf talk about an alignment
of incentives and hook the margin upwith the mission train in a really tight
way throughout the entire organization.
And to do this really well achieve thatmission slash margin alignment across the
whole entire organization, Dan underscoresthe value of clinician involvement in
(06:45):
leadership and having, as I just said,aligned incentives with clinical teams.
Keep in mind, this is the margin showwhere clinical leadership came up
and the number of doctors on theirboard and the level of physician
ownership in the organization.
I'm highlighting that this is the marginshow here because usually so-called
dyad leadership with physiciansin leadership roles, only comes up
(07:06):
in mission conversations, right?
Like in situations where somebody wantsthe doctor to be the defender of mission
and the battle to keep the MBAs in check.
And I say this as the comicbook stereotype, obviously, but
yeah, it's true often enough.
But then we have Dan, who is thinkingabout clinicians who have, again,
aligned incentives across theorganization so you don't have your
(07:28):
physician leaders day drinking whileI'm sitting across from them finding
myself quoting Sun Tzu the Art of War,and helping them craft the perfect
PowerPoint slide to weaponize a reorg.
Honestly, in my experience, there's nobetter way to waste metric ass-loads
of money than in an organizationwhere personal power grabs start to
supersede anything that smells vaguelylike an organizational imperative.
(07:51):
And again, these just big bureaucraciesat many health systems, yeah, too big not
to fail at this is often the way of it.
Then lastly, I grilled Dan Greenleafabout capital partners and how to
manage to achieve private equityfunding, where there's support for a
model that delivers inherent value.
A model that benefits both patientsand providers as well as investors.
(08:15):
And I'm saying this, keeping allof the things that Dr. Yashaswini
Singh said in that episode aboutprivate equity a few weeks ago.
Go back and listen to that.
And by the way, Dan Greenleaf and thisshow has roughly the same ideas as
Dr. Tom X Lee, founder of One Medicaland Galileo told me, and also Dr.
Rushika Fernandopulle, founder of Iora.
(08:36):
Great minds think alike.
So should figuring out how to workwith PE be a topic of interest.
There you go.
Listen to my conversation today withDan Greenleaf, and then go back and
listen to those other two shows,links in the show notes as always
or find them in the newsletter.
If you subscribe and got itin your email this morning.
That was a subliminal messageto subscribe to our email
(08:58):
newsletter if you missed that.
Dan Greenleaf, CEO of Duly,my guest today, has been
in healthcare for 30 years.
He's a six time CEO.
Three public companies and has alsorun three companies backed by private
equity and thus very aware of themany different funding mechanisms
that exist in the marketplace.
My name is Stacey Richter.
(09:18):
This podcast is sponsoredby Aventria Health Group.
But I do just wanna mention thatDuly offered Relentless Health
Value, some financial support,which we truly appreciate.
So call this episode not onlysponsored by Aventria, but also Duly.
And with that, here is myconversation with Dan Greenleaf.
Dan Greenleaf, welcome toRelentless Health Value.
Dan Greenleaf (09:37):
Thank you, Stacey, for having me.
Super excited to be talking to you todayand I think you do an unbelievable job.
Your podcasts are just incredible.
So thank you for everything you're doing.
Stacey Richter (09:47):
Well, I very much appreciate you saying that, those
kind words, and I also very muchappreciate the opportunity to
speak with you today, my friend.
So I wanna pivot now to margin.
I wanna tee this up ina very specific way.
By underlining a couple of thingsyou said, which make me curious.
The first thing you said, you weretalking about some of your outbound
(10:09):
patient activation and you said, we don'tget paid for it, not that it matters.
And now I'm thinking about that indirect contrast to that Charlie Munger
quote that everyone loves to repeat,which is "Show me in an incentive
and I'll show you an outcome".
Those two things are in direct contrast.
Additionally, you know, nomargin, no mission, right?
(10:30):
So we have to have some margin here.
How are we reconciling these thingsin the current IRL payment reality
where we've got fee for service?
So obviously volume is incentive.
We've got these value-based contracts,which sure, but they sometimes have just
as many of the equal and opposite problem.
(10:51):
So how are you achieving thisvery well-defined mission that you
have given the margin realities.
Dan Greenleaf (11:00):
So just as a setup for this, like, just so everybody
knows, we have 1800 clinicians.
We have 190 locations.
We're adding another 150clinicians this year.
We have a scaled fee for service business.
We have a scaled ancillarybusiness, and we have a scaled
value-based care business as well.
(11:21):
And I'd also say, you know, just becauseI feel like saying it, is that we're
a hedge for the payers related to thehospital consolidation that's occurred.
So how, how do we do it?
I would say number one is that wedo keep patients in our network.
We do a really good job of that.
We have 300 primary care physiciansand about 65% of all referrals that
(11:45):
we have, stay within the Duly network.
So in other words, they go to one of ourspecialists if a specialist is needed.
From a specialist to ambulatory surgerycenter, we capture about 76% of that.
And there's a lot of value add to that.
There's value add because wedo have labs, as you know.
(12:07):
We have 30 lab sites and sixambulatory surgery centers
and 16 imaging centers, and.
11 immediate care centers.
So like you said, ER lite and then40 physical therapy, locations,
and a hundred infusion chairs.
So keeping those patients in ournetwork is really valuable to us.
(12:29):
That's kind of number one.
Number two is that, you know, we haveto be tough negotiators with the payers.
I mean, you, like I said, physiciancomp over the last 25 years,
adjusted for inflation is down 36%.
And so, you know, we use in someshape or form, is best we can,
(12:51):
our scope, scale, and size to makesure that we're getting fair rates.
The other thing we're doing is becausewe have a scaled business, we're able
to keep our contact center costs lower.
We're able to keep our revenuecycle management costs lower.
We're also able to do a muchbetter job on the purchasing side.
(13:12):
So think procurement.
And I think you also know thatwe've got 600 physicians that
are shareholders, and 40% of ourcompany is owned by our physicians.
So there's a high degreeof aligned incentives.
When the company wins, we all win.
And I think from a psychologicalstandpoint, that really matters.
(13:33):
And I also would say that we continue toinvest in technologies, and I just look at
a few of the ones that we've done that Ido believe really benefit our clinicians.
Ambient.ai.
It's fascinating what we've seen thereis that they're spending four and a
half hours per physician, less on aweekly basis, is a result of Ambient.ai.
(13:56):
We've also seen a five percentage pointimprovement in the patient experience.
Because the patient's able to talkto the physician more directly.
We've also invested in tap to access.
When I got to the company, we were, ourphysicians were logging in 40 times a day.
We just use a card now, andso that makes a difference.
(14:18):
We use AI for scheduling, so we'd madeit easier for the patient to schedule.
That makes a difference for the patient.
It makes a difference for the physician.
We're also using these inbox, AIinbox, because I don't know if you
know much about the way MyChartworks, but patients could get in
touch with the physicians constantly.
(14:39):
And many of the questionsthey're asking are things that
can be done by an auto-response.
And we're using AI alsoto ascertain those.
The point is, is like, we'realways looking for ways that we
can do things more effectively.
We're looking for ways to lowerthe cost to serve that patient.
(14:59):
That's part of it as well.
And because we've got scope, scale, andsize, we're able to do much of that.
Stacey Richter (15:06):
If I was gonna distill down what you just said
there, and this is meaningful.
Many of the, you know, in air quotes,"tactics" that I'm hearing are not
that dissimilar from the way that a bigconsolidated system might think about it.
For example, let's make sure that we'relimiting network leakage or make sure
(15:30):
that we're optimizing referrals andthat we've got the scale and the scope.
And that we have the efficiencies thatcan be derived from economies of scale.
So in and of itself, if you justlook at this from a tactical
perspective, it's kind of a, Sure.
This though, i'm gonna makeexactly the same point that I
(15:51):
made from a mission standpoint.
That what is fundamentallydifferent here is to what end.
And if you roll everything that you justsaid and say, why are we doing this?
And then you had mentioned Dr. VivianHo, and I'm gonna mention her as well.
One of the things that she said relativeto consolidated health systems, if
(16:11):
you look at, how their C-suites areincented or what the objectives are or
the kickers for them to get their bonus.
A lot of times it's, add more bedsto this hospital, for example.
And you start thinking about thedownstream implications of that, add more
beds, like first of all, you wind up withstuff like Dr. Scott Conard talked about.
You wind up with stuff likeDr. Stan Schwartz talked about.
(16:35):
I'm not gonna repeat those stories, goback and listen, but these very perverse
incentives where it's justifying,let's not prevent heart failure
readmissions because we need to getthese heads in beds because we need
to have more beds because somebody'scomp depends on having more beds.
That drives consolidation,acquisition in a really big way.
It also, you know, youthink about more beds.
What does that mean?
(16:55):
More brick and mortar.
What does that mean?
More buildings.
What does that mean?
Less community tax revenue.
Higher operational costs, right?
Like there's a lot of downstream impactsto the C-suite of an organization having
an incentives that may not necessarilybe in line with the healthier community.
What I'm hearing you say is,Sure we are doing similar things.
(17:17):
But because we have 600 physicianowners, what that implies to me
is you've got kind of implicit orexplicit dyad leadership, which we
have talked about in multiple shows.
Dr. Rushika Fernandopulle mentioned it.
Dr. Tom Lee mentioned it, VivekGarg talked about it at length.
The importance of making sure thatthere are clinicians who are able, in
a very fundamental, real way, weighinginto the direction of the organization.
(17:42):
Which is even amplified moreby the fact that you have
quantified what the mission is.
And you talked about the healthiercommunity also a as the piece of this.
But the interesting thing also Ibelieve relative to having the 600
physician leaders in this kind of dyadleadership is that, to a large degree,
the quality of the organization or howwell the organization functions depends
(18:05):
on what's up with the clinicians.
So if you've got these individuals inleadership roles, then you not only can
make their jobs nicer, just you talkedabout Ambient scribes, you talked about
all the different things that justlike, let's just make this efficient.
But also from a moral injury perspectiveby having that mission front and center
and quantified in the way that youdo, I could easily see the ability to
(18:28):
attract and retain the really good docswho wanna work for a place that is more
aligned with the values that they have.
So I'm definitely seeing, in thisparticular case, the mission margin, I see
what you're saying, if you really doubledown on mission, you can amplify margin
(18:48):
or these two things can work hand in hand.
Dan Greenleaf (18:50):
Yeah.
I remember one of your conversationsyou had around hospital systems
not having physicians on the board.
Five of 11 of our boardmembers are physicians.
There isn't another healthcare companyout there like that, I promise you.
And that also says a lot, that we'reputting our money where our mouth is.
(19:10):
I would also say to you.
. I wake up every morning thinkingabout how can I reduce friction
for our patients and how can Ireduce friction for our clinicians?
And if we do those thingsreally well, good things happen.
I'm not naive to think we don't needto drive operational improvements and,
(19:31):
and look for best practices and driveout waste, right, reduce variation.
We all buy into that.
But at the end of the day, thisis about caring for patients
and caring for our clinicians.
I'll also say we have people whoare dedicated in our company, two
physicians, whose job is, to workwith physicians who are struggling.
(19:53):
We're struggling potentially emotionally.
Who are struggling with the job.
And so we've had a dedicated groupof clinicians who are doing that.
So I, I think, again,that stuff is in our DNA.
Stacey Richter (20:04):
How do you explain this to, you know, in
our quotes, professional capital?
Because generally speaking, shareholders,not all that interested in, let's just
say the mission part of the equation.
Not all, you know, there's someexceptions here, but, and you, you start
talking to the hedge fund folks, andI have rarely heard the word patient
(20:27):
come up in many of those boardrooms.
But that's, you know, obviouslyyou have capital partners here.
How do you explain this to them?
Dan Greenleaf (20:36):
One of the fortunate aspects of my career is this is the
third time I've done something withAres, who's our capital partner.
I was working with themas an operating partner.
They asked me to come run this company.
They know what I'm capable of doingand driving, you know, the right
mission with the right rewards,with the right performance, and
(20:59):
I just have a lot of credibility.
I gotta be honest with you,I'm not, and I'm also not
going to them asking for money.
I'm, I mean, they are a capitalpartner and I need a capital partner.
Think about, I'm competingagainst Northwestern who has $10
billion on their balance sheet.
Or Advocate who has $20 billion,or Endeavor, who has $6 billion.
(21:21):
Or HCSC who has $24 billion.
These are all tax exempt organizations,for the record, just so we're,
we're clarifying what they are.
And, uh, I wouldn'tdescribe 'em as nonprofit.
But I would also say that physiciangroups in general need capital partners.
The key is performance, you know,it's like anything else is like
(21:43):
you perform well, you get rewarded,it's pretty straightforward.
And given the balance ofperspectives on our board.
We have five clinicians.
We don't lose sight ofphysician experience.
We don't lose sight of patient experience.
And again, I don't believe underany circumstances are they mutually
(22:03):
exclusive to our margin performance.
Because I want to have, not only do Iwant to have a company that has the best
patient experience, the best clinicalexperience, but I want the one with
the best financial performance too.
And I want to, frankly, I want to kickass in all areas, and I don't think any
of those things are mutually exclusive.
(22:23):
I'll also say that when wedrive fee-for-service business,
we're saving the community 30%.
So this idea that VBC isgood and fee-for-service
isn't, is to me, is nonsense.
What the problem is,is institutional care.
Where they're charging 9, 10, 12times more than what we charge.
(22:46):
So every time we keep, and this is mymessage to our physicians, every time we
keep a patient in our network, it's moreaffordable, it's easier to access, it's a
better consumer experience, and they getbetter outcomes from a quality standpoint.
It is a win, win win.
Stacey Richter (23:05):
Let me ask you something and then we're gonna land
this plane, what you just said.
So you named Ares, you talked aboutthe hospital systems, et cetera.
Is that on the record, we'reobviously recording this.
Is there anything that you just saidthere that you wouldn't want aired?
Dan Greenleaf (23:20):
No, I, I mean, the only thing I would say is Ares they're a
great capital partner, but I wouldn'tbe partnering with a third time unless
that relationship was really special.
Stacey Richter (23:29):
So what I'm, what I'm hearing you say, just kind of in sum,
you walked in the door with credibility.
They trust you.
At the same time, you trust them.
And they trust, therefore, when youtell them achieving this mission is very
important for them to, in a sustainableway, achieve the margin they're looking
(23:51):
for, you have the credibility, and theoperational, the track record to back
that statement, and therefore you canwork together very collaboratively.
That is an important takeaway hereas we contemplate the first thing
that you said, which is, physicianorganizations need a capital partner.
(24:16):
That doesn't have to be a rock in ahard place situation, as long as all
of the things you said are true, whichnot everyone, just again pointing
out, has the opportunity, right?
Like it takes a whileto get to that place.
Dan Greenleaf, if someone isinterested in learning more about
(24:38):
Duly, if they are in the Chicago area,especially if they're a plan sponsor.
If I'm picking up what you're puttingdown correctly, where would you
direct them for more information?
Dan Greenleaf (24:50):
Yeah, I think you can go to our website, duly.com.
You can go to my LinkedIn page.
We publish a lot of things about theorganization and what we're doing.
And if people wanna reachout to me, it's dan.
greenleaf@duly.com.
I'd be happy to talk withpeople who are involved here.
I've done something very similar.
I've shared with you, I've reachedout to a few people who I've heard
(25:13):
on the podcast, so I certainly wannaextend that invitation as well.
Stacey Richter (25:18):
That is very kind of you and one of the reasons why I appreciate
and love the Relentless Health Valuetribe and the community of really smart,
really giving individuals that are here.
The willingness to shareand learn from each other.
Dan Greenleaf, thank you so much forbeing on Relentless Health Value today.
Dan Greenleaf (25:37):
Thank you.
Dave Chase (25:38):
Hi, this is Dave Chase, CEO, and co-founder of Health Rosetta.
What I love about Relentless HealthValue is that it brings to life William
Gibson's quote, "The future's alreadyhere. It's just unevenly distributed".
Rather than simply critiquing what'sbroken, stacey highlights the communities
and leaders who are building new modelsthat make the old system obsolete.
(25:59):
It's like getting a time travelers reportfrom healthcare transformation that's
happening right now all over the country.
If you care about transforminghealthcare, I encourage you to
subscribe to Stacey's newsletter.
It's the easiest way to stay connectedand keep up with new episodes.
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