Speaker 1: 0:00

Health Rosetta was founded in 2016 to create a framework and an ecosystem aimed at transforming the US healthcare system. What's happened since then is amazing, but what's next for the group? We'll find out on this episode of Shift Shapers.

Speaker 2: 0:17

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

Speaker 1: 0:38

And to help us answer that question, we invited Dave Chase, a prominent voice on healthcare reform and co-founder of Health Rosetta. Welcome, Dave.

Speaker 3: 0:48

Thanks so much for having me on. I listen to every one of your episodes, and so it's a real honor to finally be on.

Speaker 1: 0:54

Well, thank you, that's very kind of you. We're here to talk about Health Rosetta and all the cool things that have happened and all the cool things that are happening. So let's go in the Wayback Machine for a few minutes and let's talk about what the impetus was for founding Health Rosetta.

Speaker 3: 1:10

How did you get there? Yeah, it's really started with a personal deal where I was in health care from a health tech standpoint, but it was basically a system failure, is the shorthand, for what happened to a friend of mine Wasn't a bad doctor, wasn't bad people, it was a system failure and it was something that was brutal to watch. She was destroyed physically, mentally, financially, leaving behind a 10-year-old daughter, and I'm one who tries to find meaning in sad situations. Why this was why we're all. I certainly was aware of some perverse incentives in healthcare, and when I did that, it became very clear that there's no accident that all these things that we tend to complain about they're sitting in the most boring thing you could imagine health plan contracts and health plans really govern everything in healthcare contracts and health plans really govern everything in healthcare. And so it was with that of, okay, that's important to know what do you do about it. And so I ended up basically studying social movements and revolutions and big new product category things like smartphones to pull out lessons that we could draw in, and probably the one I used the most was with the US Green Building Council LEED standards, because the built environment to me is kind of like healthcare. It's this very local, very entrenched thing. It's not like there was some day where all the old polluting, inefficient, bad air buildings got raised and the next day they're all magically green, built and better efficiency and all that kind of thing. And while no analogy is perfect, there was some lessons to be learned there. They trained professionals like architects to design buildings with this new framework and then they certified buildings and created a market demand. And I thought there was some really good analogies and put my head together with some other folks and said healthcare goes through major shifts every 50 to 70 years. It's overdue. And we've certainly said for a long time this isn't sustainable. And it was kind of funny.

Speaker 3: 3:16

I had written about direct primary care. I actually wrote the seminal paper on direct primary care before this and some people ran with it and I'd met a bunch of doctors like oh, I left my fee-for-service hellscape and went into direct primary care because your article was like cool and I thought that's what would happen with Health, rosetta, I just write about this concept and people would go do it. And then they're like no, you should do it. I'm like no, you should do it.

Speaker 3: 3:43

And eventually it's like okay, actually, the things that it would take to pull off something this audacious right. What we're trying to do is pretty audacious. Maybe we'll prove to be delusional, but somebody's got to give it a shot and we actually have some of the skills in our team to do that. And the old saying the two most important days of your life are the day you're born, the day you figure out why it really became my, why and as I understood the extent of the damage, but the amazing things that could happen when you got it right. And that is what keeps me going every day.

Speaker 1: 4:24

So, from 10,000 feet as you started to build this organization, what were the things, the more tangible things that you focused on? What came first? Chicken, egg, chicken and egg Colonel.

Speaker 3: 4:34

Sanders.

Speaker 1: 4:35

What was the progression like?

Speaker 3: 4:36

Yeah, I'm trying to remember when I wrote it, but it was probably 2013, 2014. I had written a piece in Forbes when I was doing writing for them. It was called this. The headline was this job could save America. I was talking about benefit consultants, benefit brokers, and it was like these people are the most underestimated people in the entire health care system probably the entire economy and when they're at their best, they're incredibly impactful. Incredibly impactful and I realized the in air quotes.

Speaker 3: 5:07

The architects of health plans are these benefit brokers, these benefit professionals, and I looked at how do you do this? And certainly people are problem solvers everywhere. Somebody's cracked the code and that's when I found Rose and Hotels. I found people like Scott Haas who'd been doing it. There were people, maybe against their own economic interests, who were doing amazing things.

Speaker 3: 5:26

That kind of became this template, actually wrote about David Contorno and sort of started getting enmeshed in that benefit consultant community which I, frankly, barely even knew existed for a while, and said, if we take the best of the best and train other people on it and then make it easier to actually do what they're doing, we'd be onto something, because the difference between what's happening in many of the health plans in America, where they're really not getting the job done. Given the amount of money that we're spending, versus the ones like a Rosen. It's like practically dystopia versus utopia. Right? This is just a marketing problem, right? Who wouldn't want that? Of course, it's a tough marketing challenge. So, yeah, we thought the tip of the spear has got to be the benefit consultant, benefit, advisor, whatever moniker you want to put on it. They have the trusted relationships with the biggest category of how people get healthcare in America employers and unions and so I've been writing about some of this stuff, and there's this concept of lean startup where, like, just put out ideas, maybe you run Google ads and see if anybody responds to it, even maybe before you built anything.

Speaker 3: 6:43

And so we're well, I'm coming out with this book, and that was like Labor Day 2017. Let's see if anybody would actually want to do this, sign up for this advisor program and, happily, within two months, we had more people raise their hand than we thought we'd get in maybe two years. And we're like, oh boy, we better build this thing. And so we started diving in. And then one thing led to another and it became're like, oh boy, we better build this thing.

Speaker 3: 7:05

And so we started diving in and then one thing led to another and it became clear that, oh, if you're going to basically say an entirely new industry supply chain needs to emerge, like that's a big statement, of course there's no technology infrastructure for that. No software startup guy would ever build for a market of five employers or whatever it was at the time. But being very mission oriented, like, okay, we're going to build that because, while these plans are very impactful, it's too much work to do that it's. It will be the year 3000 before everybody gets to these things.

Speaker 3: 7:45

And so that sort of was the really third kind of leg of the table. Like it was like, okay, framework, ecosystem platform to lower that burden, and then we'll talk about the fourth leg to that table, I'm sure, later. But that got us, got us pretty far and happily, where there were five successes that that had sustained themselves for a long period of time. So you couldn't get lucky if you've been doing it 10 or 20 years. We have thousands now and so it's pretty hard to get lucky over many years all over the country, thousands of times. And so then we felt like, okay, we're at the kind of next inflection point on what needs to happen in the industry.

Speaker 1: 8:28

They often say that you can tell who the pioneers are because they're the ones with the arrows sticking out of them. Did you guys get any pushback?

Speaker 3: 8:35

Oh my gosh. Yeah, I mean, and it's just. There's pushback for sure, but it's just hard work, let's just face it. This is hard, but it's just hard work, let's just face it. This is hard, hard work, and we get kicked in the teeth all the time.

Speaker 3: 8:48

And there's a very insightful woman in the tech industry named Esther Dyson, and she has a quote that I like always make new mistakes and we made plenty of mistakes. Our communities made plenty of mistakes. We tend not to repeat them, and if you just get a little less stupid every day, you get mildly smart over time, and the bar is pretty low. Somebody said the bar is so low a snake could jump over in terms of some of the current behaviors. And one thing led to another.

Speaker 3: 9:23

We launched with this idea of of we should be like financial services, where there's full disclosure of direct and indirect compensation, like that's what a professional industry does, and it's the same regulatory environment in terms of retirement part of it, and a bunch of people signed up for that, and then it became the template for the Consolidated Appropriations Act, which is a real, and there's a few other things that are really important in that that, as we did get to the next level because we really went in with a beginner's mind we were in healthcare but not health plans.

Speaker 3: 9:57

Fortunately, we've aligned ourselves with a lot of really bright people who've really done it well, and we've never claimed to have invented anything. I mean, I joked, I'm an archaeologist. I could just go dig around for healthcare's Rosetta Stone to decode this indecipherable system and if we make sense out of that, make it easy. It's basically repeatability and verifiability is what we do, like how do we make it a lot easier to repeat these things and then verifying that it's actually working, and so that's been a real game changer in terms of accelerating the whole movement.

Speaker 1: 10:33

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Speaker 1: 12:08

And now back to our conversation. You know, I wonder if we aren't about to come upon another tipping point, another huge inflection point. Arguably. The system's been broken for a long time, although jokingly, I always tell people it's not broken. It's working exactly the way it was designed. That's the problem.

Speaker 1: 12:29

But Obamacare broke a lot of stuff that needed to be broken.

Speaker 1: 12:33

It caused a complete turnaround in the self-funded market. I mean, when I was a TPA, if you told me that we were going to self-fund a group of 14, I would have thrown you out the window, and if I didn't do it, the stop-loss carriers would have done it. And now it's kind of a pretty much fair game. But I'm watching all of the conversation going on around HB1 and some of the changes that it's going to make, assuming that they get through the reconciliation process. As we record this, that stuff looks like it's a few days away and kind of coupled that with a second wheel that's running, which is this malarkey? That people are starting to fight against carriers that are dropping commissions. And I've wondered for a long time, why would you want to be part of a system that pays by commission? It just seems kind of like you're not in control and I think I wonder do you think that these things are all starting to come together so that we're maybe about to take a kind of another big step.

Speaker 3: 13:24

Yeah, absolutely, and I couldn't agree more. When I learned there was people where their earnings maybe 30, 40% of their earnings could get ripped away in 30 days by a carrier if they weren't happy, it's like, oh my God, I could never work in that, have that sort of damocles sort of hanging over, and so yes, and then I would also say maybe an underestimated. Another driver of that inflection point is look at the makeup of the workforce. Look at the makeup of the workforce.

Speaker 3: 13:54

Today it's about 70% are millennials and Gen Z, 70% right. And you know, to my earlier point, like we're overdue for a big shift. I mean, the current health plans are really just descendants of what was built for the greatest generation and boomers. Guess what Things change? They evolve. We have different challenges. That was more acute condition focused. This is now more about chronic disease and mental health.

Speaker 3: 14:22

And you look at the oldest millennials they're mid-40s now. They're in decision-making authority and guess what Generations have different expectations. And the oldest millennials, they're kind of in that sandwich generation. They have kids, most likely, undoubtedly have elderly parents that are aging, and so they're now paying attention to factor. That's this there's. And the lawsuits, right, the lawsuits that have come out against J&J and JP Morgan. If you look in the retirement space, there's up to 200 suits a year on the retirement space and so, love it or hate it, it definitely has changed the dynamic for employers on the 401k, 403b side and I think that that is like the first waves are just starting to crash, but it is a tsunami that's going to have a huge ripple effect.

Speaker 1: 15:24

And yet it started in 1975 because that was ostensibly the reason for ERISA in the first place. But now we've got so many people, so many health plans that are subject to ERISA that it's a target rich environment. And I read someplace that the firm that is doing most of the early suing is the same firm that started doing all the suing with the tobacco legislation. It's just scary. It's also scary absent. Maybe you know your cohort and a couple of others around the country. Advisors aren't talking about fiduciary responsibility and how you manage that, and I think that's also, you know, going to heat up. But it is an interesting new universe and things are definitely changing. Things are changing with Health, rosetta, too, and I know there's some new stuff on the horizon and you've been nice enough to share that with me. Would you share it kind of with the audience, what's happening?

Speaker 3: 16:17

Yeah, I mean the idea really from day one was if we could prove this is actually better and as I studied different industry ecosystem shifts some I'd been a part of it really is. There's three things that are really critical. One you got to have proof your thing is better, ideally 10x better than the status quo. Number two and this is where we're really getting into now is you got to have standards to lower the barriers to adopt the tool. And then three, you got to educate the market on it. And so the idea was if we could prove that with that whole repeatability verify, then as much as we want to have success, we are a for-profit company, we're a public benefit corporation, so that means you can have a social purpose and a shareholder purpose. But the idea is, even if we're 10x our wildest dreams, we'll be far from 100% of the market. Our wildest dreams will be far from 100% of the market If you want to pull off something like an entirely new industry supply chain and new norms and again, you don't have to like dream this stuff up. It's happened in other industries, certainly saw a lot in tech, but really in financial services, like interest swaps, the transaction costs have gone down 97.5% because of established industry standards. So we said what we learned was the secret sauce to repeatability was this virtuous cycle. The right procurement methodologies will lead to number two the best contracts to codify that. Number three prove it in data rinse and repeat. I mean you might have a good contract but whether it's an honest mistake or malfeasance doesn't mean they're going to adhere to it. And on the data use so we have basically taken what we've learned through there's about 10,000 employers collectively stewarded by the Health Reset Advisors. There's 400 that we've worked directly with. It's our performance lab. So our Q4 is just as hellacious as any other benefits professional because we're in the trenches with them and it gives us a we don't want to be ivory tower. We're in the trenches, we're getting kicked around and all the difficult things that we're actually pretty confident. It's always hard, never take things for granted, but if we can then make that secret sauce available and the technology and the data use that we actually learned, we came up with this concept of a plan creator and we found the 40 most important questions to be predictive of high-performance health plan, because much of what healthcare does to me is driving down the road looking at the river, mirror claims. They're important and we really do believe claims are important. But there's things that those of us who've been in the industry know that the high cost claimants drive the vast majority of spend. It's a small number and it's always almost always different people every year, right. So knowing who had cancer last year or who had a heart attack last year isn't going to necessarily be that predictive going forward. Tufts University did a study of the. Now we have 2,000, 3,000 plan grades.

Speaker 3: 19:40

The most predictive thing of a high-performance plan is full, unfettered access to claim data. That's actually codified in the Consolidated Appropriations Act as a no-gag clause is the phraseology Okay, great, and what we saw was okay. This is not just about how some data analytics and create some pretty reports. You need to have unfettered access to the data. We could go into why that is, but that is really critical.

Speaker 3: 20:04

And what we saw over and over was different. It might be an employer, but usually it might be a benefits consulting firm, but most commonly like point solutionspas that to do it well, to get in that claims data, clean it up, transform it, make it available to other systems. You easily would be into it for two to three million dollars, because it's this combination of tech knowledge, tech capability, with domain knowledge, and that layer wasn't what some diabetes solution was differentiating on, but they were in it. If they did it well, two to three million dollars. So we're like, hey, we need it. We actually partnered with another organization. We're going to build this thing for ourselves, but then we're going to make it available to everybody and then they don't have to build in that price for making that big investment.

Speaker 3: 20:56

And so that's the tech piece of Nautilus Health Institute is we call it METL for medical ETL. Etl is a term in kind of data land, of extract transform load, so our acronym is METL without the A. And so we've open sourced that tech and so we now have seven companies. We launched that at our last Rosetta Fest back in September. We launched that. We have seven companies in production and this limited beta, another 20 in evaluation, given the resources we have. But we're changing that, we are going to, we're raising some nonprofit dollars to support that level of infrastructure.

Speaker 3: 21:41

But it's really really critical. And then you can have predictability and these things become budgetable, that we're sort of out of control spend. So again, you had to if you go into, say, our TPA field guide and you would just get used and go to our, the nautilushelporg website, fill out a little form. It's going to send you. I tell people, look at the tpa field guide and you will see the level of detail one needs to sweat to win here. None of its rocket science, but it's a lot. This is like it starts with like a 64 page document, links to like eight or 10 other spreadsheets or documents, contract language, procurement methodologies, how to negotiate these things, dah, dah, dah, that know-how, and so it's about $4 million of investment between the technology and basically legal experts, essentially assembling the dream team of risk attorneys and contracting attorneys.

Speaker 3: 22:35

And you know, we battle, tested it with the 400 employers and we're saying here it is, take it and run with it. Now, health Reset Advisors you know they had a five-year headstart. It's the stuff we've been training on but we had to prove it worked. You know we weren't going to open source it five years ago but now we're quite confident. So we're starting to. You know, come out in the PBM field, and so we're starting to. You know we're coming out with a PBM field guide at the next Rosetta fence. So that's a big body of work. Of course that's you. We have other fellow travelers like Mark Cuban he's been vocal about. He's an employer too. They're going to open source the direct contracts they're doing also in August, and so we've spent quite a bit of time with Mark's team. They actually got a early look at the TPA field guide when they were going out to RFP, when they kind of changed who they were working with. So we're really excited about it.

Speaker 3: 23:43

And it's pretty shocking to people who've been in the industry because, like, wait a second, you have this big information demand. You made all this investment. Why are you giving that away? Well, there's plenty of commercial opportunity beyond that. It's not like, okay, who's going to verify those contracts? Who's going to do the data warehouse? There's plenty of ways we can still make money in a good, ethical way, but if we're going to level up the industry, you can't do it without establishing new standards, and that's one of the things that you can see in financial services and technology, and so it's just overdue. Healthcare is this weird $5 trillion cottage industry the way it's operated, and so we're trying to change that.

Speaker 1: 24:18

Yeah, it is a big, big lift. Now. You alluded to Rosetta Fest a little while ago. That's typically been members only it was until like 2022.

Speaker 3: 24:32

We were in Denver, we had a little over 200 people. It just was our community, and so that was basically benefit advisors and then some of the solutions that we work closely with. But then ultimately like, hey, this is a team sport, we can't do it without clinical leaders. We need the employers and unions, yes, we need the advisors and we need the solution and tech company. And it was something where we realized, yeah, I call it connective tissue, sean my co-founder calls it grout, like the gaps between the companies really matter and you can go to an event with a bunch of orthopedic surgeons or PTs or health tech people or benefits professionals, but having it all together. So then we opened it up and said all of that. So if you look at, like last year, we it was pretty evenly split. We had about 250 employers and unions, about 250 benefits advisors and consultants, including non-health Rosetta ones were like hey, check us out. Right, there's different myths, different gaps in knowledge. Get a little taste of what we're about. If it's your cup of tea, awesome. If not, you'll get an eye out of the conference. And then we had the clinical leaders.

Speaker 3: 25:39

This year, the biggest DPC event has been the Hint Summit. Hint Summit's actually part of Rosetta Fest. We have a ton of DPC docs we had a bunch last year and as well as the direct specialty care because they're really key those surgery centers and imaging centers and all that and then the solutions and tech companies. Right, we can't do it without TPS, we can't do it without PBMs we can't, and so on, and so it's all those folks together. So last year I think we had a little over a thousand folks. We'll probably have a similar number. We're not trying to turn it into a hundred thousand people, but we really wanted to walk the talk in terms of being more open for saying walk the talk, in terms of being more open for saying, hey, we need out of these open source standards. How could you claim that and not invite other people?

Speaker 1: 26:20

Well, and we'll be sure to put a link in the show notes so that folks who are interested in checking out the meeting and learning what you all are up to and all the new stuff. There's a tide in the affairs of men which, taken at the crest, leads on to victory. Shakespeare said it a long time ago. I think that we're kind of at that inflection point. I may be out singing by myself and looking like a lunatic, but I think there's lots of my friends who have finally figured out that status quo just isn't going to keep working, that it's just not literally.

Speaker 1: 26:48

We've been saying it's not sustainable for a long time, but it's kind of in a tagline Now. It's really not sustainable any longer and we've got you've got chronic conditions, and the good news on that is that what used to kill us doesn't. You know all kinds of different things, and predictive modeling will start coming into its own as well. So instead of, as you pointed out, looking into that rearview mirror all the time, we'll be able to look out the windshield. Dave, a fascinating conversation. Thank you so much for sharing this with us. We look forward to touching base with you again soon and kind of hearing how this all rolls out.

Speaker 3: 27:20

Yeah, well, really again appreciate being on your show, love it. It's a real honor and appreciate you taking the time to talk with me today.

Speaker 1: 27:28

Thank you very much, dave Chase. Co-founder of Health. Rosetta, dave, we'll see you, maybe in Denver. Awesome, in Denver, awesome. I want to give a quick shout out to our sponsor and our producer, hatcher Media. Hey, if you need podcast production or professional graphic design, josh Hatcher is the expert to contact For more information.

Speaker 2: 27:56

Visit him at hatchermedianet, that's H-A-T-C-H-E-R media dot net. This Shift Shapers podcast is copyrighted content and may not be reproduced in whole or in part without the express written permission of Shift Shapers Solutions LLC. Copyright 2024.