David: 0:02

Hi friends, David Saltzman here. As we slide into the end of the year, we're serving up a few encore episodes. These are conversations our listeners love the most, or at least didn't complain about, so they earned a replay. It's a great chance to revisit some big ideas, get a spark of inspiration, or finally catch that episode you meant to listen to before the fourth quarter turned into a holiday-themed obstacle course. We'll be back on January 6th with brand new interviews and insights. Until then, I hope you get a little time to rest, recharge, and please hang out with people who don't ask you for benefits advice over dessert. Thanks so much for being a part of the Shift Shapers community, and here's to a healthy, happy start to the new year. We all know about PPO networks, but there's a new kind of network in town, and it may just be a better fit for some plans. What is a nationally curated high-performance network, and why would a client want to use one? We'll find out on this episode of Shift Shapers.

Announcer: 1:03

Change either energizes or 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.

David: 1:25

And to help us answer that question, we have invited Scott Smith, founder and CEO of Logro Network, to the podcast. Welcome, Scott. Great to be here. Thank you. It's our pleasure. Thank you for being here, and thank you for helping us understand what this newfangled, you know, thing is that you're dealing with. So let's, but let's start, you know, kind of a level set question. Most people didn't, you know, wake up one morning in seventh grade and say, I want to be in the insurance business or I want to be in the network business. How'd you get to be doing what you're doing? That's a great question.

Scott: 1:56

I was uh recruited by a good friend to become a CEO of his national PPL network. And so I've been at this for, you know, 10 plus years and have learned a lot about the industry, about what works well and what doesn't. And so that's why we're here building a new network called Low Grow Network.

David: 2:15

All right. So let's let's go back in the Wayback Machine and let's just level set. How did networks come to be in the first place? Because you and I have both been at this long enough to remember when there were these things called indemnity plans, and you went wherever you wanted, and the doctor sent them a bill and they got paid and life was good. How did networks happen and why did they happen?

Scott: 2:36

Networks arose in the 80s as insurance companies were building out provider organizations which they wanted to have members go to. And so they negotiated discounts and rates that those provider organizations would accept, and from which they were then able to put a directory together and you and I would go and you know see that Dr. Joe is in that directory and here's his address, and I make an appointment to go see Dr. Joe. Was it just a cost play? It turns out all these years it has been a cost play. It has always been on the unit cost of negotiating provider discounts. And how cheap can I have the provider provide those services to me? And so you see this arise, and um it's been you know problematic because over the years, providers have been, you know, back and forth getting asked to have more and more discounts. And you know, that's the only game that PPOs bring to the marketplace.

David: 3:41

Was the notion to drive profits or to be more competitive so that you could then drive product more profits to different sides of the same coin? Aaron Powell I'd say it's it is different sides of the same coin.

Scott: 3:53

It's well said. It is all about economics and profit. And therefore, the the insurer was able to get more margin and also then perhaps bring a top product to the marketplace that was priced a little bit less expensively. And so all these years it's been focused on one dimension of of that decision-making process, which is cost.

David: 4:20

And the reason the providers played along was the networks were going to drive business to their practices.

Scott: 4:27

Allegedly, that's right. And so it's a volume play. How much volume of patients can I receive and am I willing to accept at that discounted rate? And today we're finding providers are raising their hands and saying, I'm out. I am not able or willing to continue to service those patients at the rates that you're asking me to, you know, kind of be paid for.

David: 4:51

So I mean, we've talked an awful lot on the podcast recently about cash pay. And, you know, that seems to be more attractive to a lot of docs for that very reason. They've, you know, the the how low can you go question? I guess we've some of them have hit have hit bottom. So let's talk a little bit about traditional networks. What were the challenges? What were the problems other than the fact that obviously we've driven down cost to the bottom? What were the challenges and what were the problems of traditional networks? Yeah.

Scott: 5:21

Traditional networks like such as the Bukas, Blues United, Signal Netney, uh certainly were only looking at the unit cost. And secondly, they were making no differentiation in the providers and how well the providers performed. And so all providers were equal as long as they were on a roster that was part of that organization that they were contracting with. And so that as a member, we had no insights as to whether Dr. Joe or Dr. Susie was better than one or the other for my particular treatment.

unknown: 5:56

Trevor Burrus, Jr.

David: 5:56

And that kind of belies another question, which is okay, the the initial cost is X, but if you go to a doctor who's not as proficient as maybe another doctor is or another provider is, you have post-surgical infections, you have readmit rates, you have all that kind of stuff. So is it the case with traditional networks that sometimes the cheapest isn't the cheapest?

Scott: 6:17

100% correct. Yeah. Many times if you look at the total cost of care, those things that you just spoke about readmissions and or uh the place of service that those services are rendered, i.e. hospitals versus or just you know, uh hurt other facilities, uh whether they're only the brand name pharmaceuticals, uh the amount of the utilization of radiology and are there is there waste in other uh you know procedures that that particular doctor uses uh has all sorts of consequences in the total cost of care. And so uh cheap at the unit cost level does not necessarily mean better value and and or ultimately lower total cost of care. So plans have been chasing ghosts? I think I think they have been one-dimensionally chasing you know what they believe is the lowest dollar. And then at the end of the day, you when you add up all of the other aim procedures that are are provided to a patient and their care path, it's uh it turns out to be more expensive. I talked to a gentleman just recently and he said, Scott, we could save $15 on a unit cost charge, but end up incurring another $100,000 in additional services that were either unnecessary or were poor performance in the services that the doctor provided. So you have to be, as a consumer, uh more in tune with the entire spectrum of what is being rendered by that provider.

David: 7:51

And how is is that what nationally curated high performance networks do?

Scott: 7:58

Well, there's an interesting question. What I've uncovered in my my process here is that what is known as high performance networks largely means a narrow network, meaning, once again, they're after the unit cost discount. And they're achieving that by limiting uh the provider organizations that a patient can see. You know, clearly I'll use Dallas as an example. Uh one HPN only has Baylor Scott White and their facilities and doctors as the in-network provider. They've excluded all the other market providers that now become out of network. So the member is forced, if they're going to be an in-network and have the better uh at least cost, they're forced to go to the Baylor Scott White. And so we're changing what we think is high-performing networks with low-row network.

David: 8:50

Well, and and beyond those folks who have just summarily said we're only going to allow this particular group of physicians and providers, markets have changed. There used to be, I remember years ago I was working for a division of Medical Mutual of Ohio. And in Cleveland, there were at the time, I don't know, seven or eight major health systems. And today I think there's two. So the the menu has gotten smaller and there's less choice to start with. Is that is that part of the problem that you're trying to solve? Absolutely.

Scott: 9:21

As I've talked with uh consultants and self-insured employers, they're finding that the abrasion of forcing a member to make a change with whom they have been seeing as a provider is uh coming up with greater resistance. And it is something that you know giving choice is important to have what we would call a broad network uh as opposed to the narrow network. And therefore, depending on your location and the type of service of treatment you're seeking, uh we want to make sure that members have choice and have information to make better choices.

David: 10:00

Well, I mean, we even years ago when I was running a TPA, we did disruption analysis, but it was largely the C-suite people who were the ones stroking the checks. It wasn't necessarily for the members. Are are members now part of that cadre where the they they don't want the friction and their plans don't want it for them? I'd say the answer is yes.

Scott: 10:21

That the members are really faced with some difficult choices and are not equipped with all the information. And you mentioned the disruption file, again, you're going at unit cost. You're going at what's the cheapest that I can get those services.

David: 10:39

So when you set out to start building a nationally curated high-performance PPO network and you're in you're including quality metrics and whatnot, how do you go about doing that? What's that like? Because it's a different process, I suspect, than just finding doctors and getting them to sign up for XYZ price. Aaron Powell Yeah, that's correct.

Scott: 10:58

We have uh we have built a peep national network out of the gates based on competitive contracting so that the unit cost is on par with the other BUCAS. However, what we're bringing is quality and outcome data at the individual provider NPI. And we have accumulated over 50 billion claims from a variety of sources, which includes uh the Medicare, Medicaid, and 20 different commercial data sets. We have over 300 million patient anonymized patient records that we've uh look been able to look at, and several million of the providers. And then we have scored those providers to come up with an overall score and then also scores on their effectiveness, on their cost, and appropriateness. So those three big dimensions are the what produces an overall quality score for an individual provider compared to their peers in their particular head area.

David: 12:10

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Scott: 14:05

Yeah. I think what we're pitching in the TPA or broker's pitching is that the Low Grow Network is going to bring a better choice for information and be transparent so that a member can be informed on which providers they should be choosing for their particular treatment.

David: 14:41

It sounds like it's an easy decision from a fiduciary perspective. Yes. What does it look like from a member's perspective? How do you message that to members when all of a sudden they hear the dreaded words new network? Aaron Powell Sure.

Scott: 14:54

Well, I think there are a couple of things that go into that. One, we've been careful to have our d both our provider directory have that information on using the traditional stars, but we also include the stars relating to those other dimensions of appropriateness, effectiveness, and cost. And then secondly, uh we include this summary. We've used some AI technology for the LLM is what they call it to summarize those 300 metrics on a given provider into a simple-to-read paragraph that allows a member to better understand why is Dr. Joe indeed a high quality doctor for this particular carrier suiting. And so they'll have the information at their fingertips. Secondly, it will be involved and embedded in various uh apps, applications, the mobile apps, so that a member can have it conveniently where they go to look for their planned decisions. And third, any kind of care navigator or uh coordinator will also be equipped with this data and helping to guide a member in making those choices. What is the employee education component of this look like? Well, I think it's to share about the importance of you can now can find the quality and outcome information at your fingertips. We know that 75% of patients go to Google to search for their provider. And all they're getting is the anecdotal reviews, and you know, maybe there's some sort of stars, but it's not based on any cynical data or performance data. But now we are educated and saying this data is now available. No different than if you're going to go buy a car or a refrigerator, so that you can make a better informed choice why Dr. A is better than Dr.

David: 16:41

B. But I mean, it it is different than buying a car in one respect. And I wonder if you come across this challenge and if you do how you solve it, or how the TPAs and brokers who work with you solve it. And that is that if if I go out and I drop the money for a Lamborghini, I'm getting a very different beast than I am if I'm getting a Toyota Corolla. In medical care, it's often a really inverse relationship that a lot of times you'll find more quality at a lower cost point. Does that freak people out? And do we have to educate folks about that?

Scott: 17:12

I think we do, and you're absolutely correct. The the studies that we have come across and support what you just said. That you know, high quality does not necessarily equal high cost. In fact, the inverse is plowed that you can get a knee replacement with a high quality, some of the best performing docs had you know it and they are the lowest cost. Why? Because they eliminate the unnecessary procedures. They uh are not going directly to the most expensive procedure when they could have other treatment paths, uh, and their place of service could be different than the most expensive place of surgery, for example. And so, you know, we can find uh countless examples where, you know, in healthcare, you know, the best providers are not uh the most expensive.

David: 18:01

You know, uh the part of the reason that I I I raised the question is, you know, we every once in a while we'll touch base with our friend Keith Smith out at the Oklahoma Surgery Center, and he's been doing this kind of stuff for a long time. Um I guess they're the closest equivalent in recent times to a specialty facility. Um, and he's still fighting the battle and they're still having those conversations. Even, I mean, Keith's been at it 15 years or maybe even longer. Yes. Um does it take a while for this to kind of sink in for with folks?

Scott: 18:30

I think it has been an education process for this to become more uh commonly understood. But there's momentum today that this is indeed becoming better uh available to understand. There are more companies that are seeking to similar value props. And then some of the consulting uh firms, the Mercers and the Willis Towers Watsons, have published some great studies that show the uh importance of quality and the benefits, whether it be related to their COE decisions, centers of excellence, or whether it be some of these other specialty network folks that we know in the industry. Uh but contrasting that we're bringing something similar in the sense of the value prop of high quality and lower cost, but we're bringing it across the entire spectrum of care, not just a few procedure types or condition types.

David: 19:20

Well, you know, it's also interesting. I touched on this earlier, but there's a lot of with all these lawsuits that are floating around now, there's a lot of focus on fiduciary duties and plan committees and whatnot and making sure that they're doing this kind of work. It seems this is a kind of a prudent conversation for them to have, wouldn't you think?

Scott: 19:37

Aaron Powell Absolutely. You know, if you're a plan sponsor uh and you've only been looking at cost and you have uh omitting kind of the the better value choice, uh it's it's your responsibility really to look at um how do we drive overall total value, which is total cost of care, and better outcomes for my members that are my ultimate uh stakeholders in the in the plan.

David: 20:03

Now, is is this a play for for self-funded plans only or for TPAs, self-funded plans? I mean, where do you guys fit? Doug.

Scott: 20:11

We're we're addressing the TPA market here in 2025, and we have a number of TPAs that have uh started their contracting process to bring our product to market for this particular benefit year for enrollment and fall of 25. But in parallel, we have about 600 of the Fortune 1000 benefit leaders that we've been in communication with over our years, and they're very excited about having an alternative to the traditional PPO choices that they have been using year over year.

David: 20:42

Is is this kind of not getting into too much of your business model, but is is this kind of a rental network, kind of it's a PEPM or some kind of digestible way to pay for this?

Scott: 20:52

Aaron Powell It is a definitely it's a PEPM, which is the common way for these primary networks to be contracted. And we've priced it in a manner that is below the BUCA PEPM, so you get more value. You're gonna get a lower cost out of the gates, and you're gonna have the quality built into the network so you'll accrue the benefit of the additional uh reduction in total cost of care. And we're not gonna participate in the shared savings uh scheme that some of the other organizations do, because uh it's too difficult to combat and attribute who who created what dollars of savings and you know, can I have my 50 percent, please? So we just want to charge a fair PEPM and deliver greater value. Aaron Powell Yeah.

David: 21:35

I mean that also creates some other challenges that you're that we're all aware of. So um I can certainly understand that. Where do you see this growing? I mean, I one of the things that I asked you before we we came online was um are you national? Because I remember uh years ago back in in my TPA days, we'd we'd go and talk to networks and they weren't national. And we had national clients, and you know, we we were more of a Taft Hartley shop, so we had folks all over the place between where they were located to where the locals were and travelers. Um are you a national network and do you have coverage every place?

Scott: 22:12

We are a national network. So out of the gates, we have uh built out a national footprint that can service the 50 states. Uh some markets will be more dense and have more uh coverage. Others we are continuing to build out and optimize, but we do have the ability to service uh clients and their groups uh throughout the 50 states.

David: 22:35

Aaron Ross Powell Beyond the quality issues, which you know certainly I think most employers are still somewhat paternalistic and want to make sure that their employees have the best possible care and get well sooner, uh both for the employees and for the employer's own selfish reasons. Um I guess the the the question is what kind of a delta might somebody expect in in price and over what period of time? When will they start seeing differentials that they can actually quantify?

Scott: 23:06

It usually in the first year, or you complete the first year. And again, industry shows that uh you know, one CFO reported that he saw his renewal rates drop from a 40% the prior year to zero, and that his medical loss ratio went from 120 down to 40, and that he had 80 percent of his participants, his members, participate in choosing high-quality providers. So there's an immediate financial benefit to the plan as well as the benefits to the to the member. Because often the plan design will uh uh that most TPA are bringing is that they'll uh waive the member costs, out-of-pocket costs, uh, by choosing one of these high-quality providers. Uh but all the while, you know, in our uh model, if you still have a long-term provider that you're comfortable with and they're not the high quality, we're including that person in our network. So it may have a plan design that has some member responsibility for that provider. But overall, we want to incend members to make better informed choices.

David: 24:10

Where do you see this going in the next three to five years?

Scott: 24:13

Yeah. Our goal is to be a complete uh BUCA alternative that's independent. And so that we will be head-to-head with the major uh insurers and ASOs so that people will have a choice that they can say, gee, Logro Network is national. It has all the different provider types that my members need, and also can provide, you know, the better value. And so uh we're we're a David and Goliath story that's in the making.

David: 24:43

Well, and I love David stories, so I'm right there with you. That's a great place to end our conversation for today. Scott Smith, founder and CEO of Logro Network. Scott, thanks for sharing your expertise with us. You're most welcome. Thank you, David. 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, visit him at hatchermedia.net. That's h at chermedia.net.

Announcer: 25:19

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