Stacey Richter: Episode 486.

"The Secrets to Operationalizing Direct Contracting From an OG." Today I speak with Dr.

Stan Schwartz.

Tom Nash: American Healthcare Entrepreneurs and Executives You Want to Know, Talking.

Relentlessly Seeking Value.

Stacey Richter: Let us begin with something.

Dr.

Ramy Khalil wrote on LinkedIn the other day.

He wrote, "Is it just me or Is the world of healthcare claims designed to make people feel dumb asking for, well, myself".

You and me, both my friend.

You and me both.

And then Ann Lewandowski, she wrote, "David Bolduc and I sat down this morning.

The clear message we need to be delivering to self-funded plans is that you are not purchasing health insurance.

Full stop.

End of story.

You are not offloading risk to their risk pull.

You simply purchase their administrative services to manage your healthcare finance dollars".

And right?

We're telling employees to go get screened, to go get a wellness exam, go get a knee replacement, go see your cardiologist.

In general, some pretty predictable things.

And then every week we're gonna reactively let a third party tally up the volume.

And after it's all over, tell us how much it costs, vis-a-vis the so-called "Mystery of the Weekly Claims Wire".

Listen to the show with Justin Leader.

This feels very, I don't know, submissive.

Kind of chaotic.

It also feels very expensive, and it is of course very expensive.

I've heard multiple times from multiple guests, Cynthia Fisher, amongst others, that medical spread, some TPAs, not all for sure, but some TPAs are scraping off the top 30% plan total spend times .3.

That's a lot of money.

And add to that, and Leon Wisenowski has posted plenty on this topic, how common it is for prices for any given healthcare service to vary wildly in the same geographic region, link in the show notes to one service where you go one place in a local geography, and it will cost 10 times more than some other place.

10 times more expensive.

And what do these two factors, the spread pricing and also some entities in any given market, charging lots and lots of money, what do they all add up to if you're a plan sponsor?

Well, big renewals.

Lots of effort needing to be placed into trying to figure out how to balance the budget.

So now what if you're a plan sponsor?

Well, a very common gambit here is to cost shift to employees.

For example, raise deductibles.

But one, there are many, but just one point to ponder as a downstream consequence of this, raise the deductibles strategy, the higher the deductible, the more clinical organizations become subprime lenders.

Mark Cuban wrote this to me the other day in massive spoiler alert.

He's coming back on the pod to discuss this topic with Cora Opsahl, and I could not be more excited.

But yeah, if I was in a mood, I could easily argue that when deductibles start to sky, clinical organizations take on more risk for self-insured employers than carriers who literally take on no risk in actuality when the employer is, as I said, self-insured.

I've heard way more than once about indie practices, and this really matters because obviously indie practices tend to charge a whole lot less than consolidated health systems.

So if you're a plan sponsor, you sort of wanna make sure that you've got options in your market.

And I have heard way more than once about indie practices who simply cannot stay in business because they don't have the infrastructure or the capital reserves.

To basically be a bank.

And not just any bank, but one really bad at vetting who they give loans to because yeah, they actually aren't able to vet who they give loans to.

That would be in violation of their TPA contracts and or network agreements.

If you're in network and a patient has an insurance card, you gotta follow the financial terms as per the card.

Tom Nash: Hi, this is Tom Nash, editor and producer of the Relentless Health Value Podcast.

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Thanks so much for listening.

Stacey Richter: Dr.

Cristin Dickerson said something in the interview from last week, in the episode from last week that stuck with me.

We had to cut it for time, but maybe I'll put it in a bonus show sometime in the future.

She said sometimes some kind of slick clinical organizations when it comes to ordering imaging, they will try to schedule a high deductible patient's image for as late in the year as possible in the hopes that by that time the patient will have met their deductible and some other schmo healthcare organization will be the one on the hook to have to collect the patient portion.

Nothing like, not at all timely follow up, depending on when this happens.

I hope I just didn't give somebody some ideas.

Nah, that type wouldn't be listening to the show.

So all this being said, listen to the show with Preston Alexander.

Listen to the show with Vivian Ho.

Listen to the two flywheel shows with Jonathan Baran.

And all of the deep heavy topics I just glossed over here are deeply raked over the coals in those earlier episodes I just mentioned.

But in all cases, you know, one.

Solution to all of the above.

Yeah, direct contracting.

Now this Relentless Health Value direct contracting as a solution trifecta, of course, began with Elizabeth Mitchell talking about it in the Take Two from two weeks ago.

Last week I discussed the upsides and also three barriers to doing direct contracting for imaging with the incredibly wise and articulate Dr.

Cristin Dickerson from Green Imaging.

Dr.

Dickerson gave a bunch of proven suggestions to overcome, said three barriers by the way, she did not leave you hanging.

And now this week we're talking mostly about how to think about and operationalize a direct contract with an OG of direct contracting, Dr.

Stan Schwartz.

What an honor to get Dr.

Schwartz on the pod, and I am doubly thankful because he stepped up and offered to help support Relentless Health Value financially as well as spending his time with me and you.

So thanks to everyone over at ZERO.health for being part of the kind of folks who support shows like this one.

Dr.

Stan Schwartz is co-founder over at ZERO.health.

Zero gets members access to high quality providers for $0 out of pocket leveraging bundled payments and direct contracting.

This episode, as I just said, is sponsored by ZERO.health with an assist from Aventria Health Group, and my name is Stacey Richter.

Dr.

Stan Schwartz, welcome to Relentless Health Value.

Dr.

Stan Schwartz: I am so happy to be here.

It's one of the things I've really looked forward to.

Stacey Richter: As have I.

So, talk to me about the origin story of ZERO Health.

I know you started it after supposedly retiring in 2014.

And your partner is Jim Millaway, who was working at that time at a brokerage.

Dr.

Stan Schwartz: We got a group of employers together here in Tulsa.

We got a group of providers together and started offering bundled payments, and it was really an interesting proposition.

Quick example, you know, if an employer had a member that needed their gallbladder removal, we have examined enough claims to know that they probably pay about eight to $10,000 for that gallbladder surgery.

So we had a hospital here in Tulsa.

It's a five star hospital, Medicare five star hospital, a very good place.

They were doing bundle payments for an outpatient gallbladder surgery for $5,641 complete.

And that was everything.

That was anesthesia, the surgeon, the hospital, the recovery room.

And the employers like that.

But the only hitch was the employers had to cover a hundred percent of the costs so that the employee would pay zero.

There was never a hesitation to, I'll just try to hang out this gallbladder problem and hope I don't wind up in the emergency room needing it done on Saturday night at 12 o'clock and the employer saved money.

The providers liked it because they were getting a fixed price.

They knew just what they were gonna get.

They didn't have to collect from the patient, they didn't have to hot box patients.

So they got patients that were already for surgery.

The employers were saving money even though they covered the employee's copay and deductible.

Stacey Richter: You created this bundle payment program specifically to address a known problem and you knew how to solve for it.

This is kind of a very different way to go about things than a lot of when air quotes startups or point solutions.

Oftentimes, some of the times it's somebody with a lot less real world experience.

There are almost even hypothesizing what the problem is, and sure, you can get in there and then pivot 600 times, but it seems like you knew that if you did this well, and you knew how to operationalize it, which do not underestimate that, but if you could do it well, you knew that as you had said that patients were getting hot boxed.

And that's even, this was a while ago, but that's even more true now.

I was just came back from a conference, there was three sessions on trying to figure out how to get the copay out of patients.

And it's just, it's a thing, especially with the rise of high deductible health plans and the increase in hospital charges, let's all recognize that if you're paying a percentage of anything, that those numbers are getting real big.

So patients are gonna be happy about this.

Employers not only is it less expensive, but it's also predictable.

You know what the price is.

We just had Kimberly Carleson on the pod just talking about all the different ways that things cannot cost what you think they're gonna cost.

Even if you get an in air quotes estimate upfront, right?

So just so much that could be said for doing something the market demands because someone is intimately familiar enough with that market to know what the market demands.

Dr.

Stan Schwartz: I think one thing that some people who want to change healthcare lack is the emotional energy from really understanding how the problem affects individual people.

And my epiphany, Stacey, was reviewing claims for a local roofing company here in Tulsa.

They were self-insured, had a couple hundred employees and we were consulting with them.

You know, how could we save money?

So I'm going through this and one thing caught my eye.

It was a 23-year-old covered member.

He was the subscriber, so I'm sure he was the employee.

And at the age of 23, in a roofing company, you're much more likely to be a laborer than a CEO.

And there was an item on his, on a bill, $125 for a comprehensive metabolic profile, which everybody knows is a blood chem, one of the most commonly ordered tests.

And his copay on this test was $125.

I think the total amount was 175, but he hadn't met his deductible yet.

He paid $125 a roofing laborer.

For a test that's available for $6 and 52 cents if you buy it directly.

And to me, this just isn't right because this kid wasn't given the opportunity to shop around for that test.

Somebody directed him.

Just have you go down the hall, uh, get a blood chem test and we'll be fine.

And we really set about not just to improve the cost of high cost items, major surgeries.

But we realized, you know, you can probably arrange direct contracting for anything that you can schedule, and that became kind of our mantra.

If you can schedule it, you can put a price on it.

We realized from that, and we started looking at all kinds of low cost claims, urinalysis, chest x-rays, blood counts, and so forth.

And as we looked at where employers could save money, this is the drip, drip drip of healthcare waste.

So much of what we call expense in medicine is simply pricing failure.

Something that should be $7 you're paying a hundred dollars for, and that's why we started looking at how can we provide everything, even if it's a cheap urinalysis or if it's a major cardiovascular surgery at a bundled price.

Stacey Richter: I'm sure this 23-year-old roofing worker had other things that he or she would have liked to have spent the a $1 19 on then overpaying for a exam.

It sounds like what you thought at that moment in time was these metabolic exams are really common.

As you just said.

If you get a wellness exam, every member of your plan is gonna get one once a year.

So why are we kind of leaving it up to chance?

Like if we were thinking about a purchaser at a company purchasing anything else, and you knew you were gonna purchase one times the total population of your plan on an annual basis, you wouldn't be just like, oh, just go get it wherever.

Dr.

Stan Schwartz: That's, that's exactly the point.

I mean, you know, you're gonna buy these things.

The only unknown in healthcare is not whether someone's gonna need a blood chemistry.

It's who's gonna need it.

As we started looking at claims, we developed an algorithm that would take raw claims, line item claims, put 'em in the hopper out the other end, it bundled up those claims to match exactly what ZERO could provide.

So we could show a company the savings that they would have on any particular test.

And I remember this, we were pitching to this one company and we showed them their hair was on fire because of high cost claimants, which for that company was anybody over $50,000, just the blood chemistry was a high cost claimant for them.

We could have saved them over $50,000 by just getting the same test done in a different place.

And don't tell me that that blood chemistry test is better because you paid $125 for it.

It isn't better.

We had it done at $6 and 52 cents by a very highly respected national firm.

Stacey Richter: As you just said, what's up for grabs is anything that can be scheduled.

If you can schedule it, you can figure out how to buy it better.

And I'm thinking about a number of things and then spoiler alert, I'm gonna wind up with a disruption word, which I know someone is gonna be thinking of right now.

A couple of thoughts are coming to mind.

One of them is this whole idea, and we had Ge Bai on a bit ago, and she was talking about generic drugs, but I think same roles apply here where she's saying, think about it, this generic drug costs $2.

If we pay for that generic drug using insurance, then what is the insurer in air quotes is gonna do is take that $2, spread it over the entire risk pool.

This is what's going on behind the scenes.

They're taking that $2, they're spreading the $2 across the entire risk pool.

And then recalculating what that individual should pay as a percentage of the risk pool for that $2 claim.

And you just start thinking about that.

And I am disregarding a lot of things like the patient's ability to pay.

Not talking about that right now, just talking about the operational logistics of that endeavor.

Adding so much bureaucracy to a $2 claim, and I think we've just done three or more shows mentioning the hazards of employers buying discounts instead of just buying the healthcare services, which is kind of a different flavor of this exact same idea.

Why are we adding so much legwork and bureaucracy and making this just so complicated?

I think the point that you're making is maybe a plan sponsor shouldn't be paying a third party administrator, a TPA to spread every expense over a risk pool, which can cost around 30% of spend.

A just wildly, unexpectedly high number, but one I have heard multiple times now as an estimate most recently from Dan Ross and Mark Flores.

But also from Elizabeth Mitchell from PBGH based on their data, and this was a point that she mentioned in the encore that was aired a couple of weeks ago.

So in cases where, as you said, the question isn't if a healthcare service is going to need to be purchased in any given plan year, the question is merely who will need it.

Then maybe you should just go buy stuff is, is what I'm hearing.

And that's what, in other words, a direct contract is where you are figuring out how to purchase things using purchasing discipline.

Dr.

Stan Schwartz: Insurance basically is you pay somebody money to transfer risk to them.

So what we're doing now is, we are using an insurance mechanism to have somebody else process claims and take care of things that we know are gonna happen.

You've heard of my light bulb analogy.

We've used this so many times.

We go into a factory to talk to an employer and we point to the ceiling.

You know you've got what I see about 7,000 light bulbs in this plant.

I mean, do you insure every one of those light bulbs and file a claim and wait till you reimburse to get them fixed?

No.

You just go out and buy light bulbs at a good price and you figure out how to get them installed at a good price.

Because you know they're gonna burn out.

All thing you don't know is which one's gonna burn out.

End of story.

Stacey Richter: Which is a great analogy.

Lemme ask you the disruption question because if you are trying to make sure that every member of your plan who needs a comprehensive metabolic panel in any given plan year, that test gets sent to the preferred vendor.

I'm thinking to myself, clinicians have to be on board for this ride.

The patient probably needs to know what's going on.

If we're just thinking about the amount of logistical effort such that all of these tests got sent to the right place.

My mind's kind of exploding right now.

How do you handle that?

Dr.

Stan Schwartz: We make the system so easy and so understandable that it becomes the path of least resistance.

So when someone works for a company that has ZERO program in place, it's always a voluntary program.

We will never let it become mandatory because as soon as someone has to do something, their attitude toward it is totally different.

The plan becomes a bolt-on to their underlying health insurance plan.

They still have to have their usual Blue Cross or Aetna, or UHC, whatever, but we make it the easiest way to go.

And we have personal health assistants, for example.

We help educate the members that if you call the personal health assistant whenever you're told by a doctor you need to get something done outside the office, they will help you find a place that you can get it done at no cost.

Stacey Richter: You mean the second that a clinician says, Hey, I think you need labs, I think you need imaging.

The patient needs to be like, oh, I need to make a call.

Dr.

Stan Schwartz: We don't try to educate people on the complexity of it.

What they understand is, if I call this number or I text or I chat with this number, and they pay nothing for it.

That is totally understandable.

And if they do that, they wind up with a, an actual stateside human that arranges for where they need to go.

They go to a, like for the lab, they'll go to the lab.

They don't have to make a copay, a deductible or anything.

Everything has been arranged for them.

If they go into another specialist office, everything is arranged for them.

Stacey Richter: I'm tracking back to the episode with Peter Hayes right now where he was talking about three vectors of change in healthcare, and one of 'em was transparency.

Another one was legislation, but then the third one was public outrage.

This public awareness of, and maybe this is also folded in with transparency, just public awareness of how easy it is to bankrupt yourself if you go get care.

And we've got, I've heard varying numbers, but a majority of Americans think real hard about seeking care, and you alluded to this at the top of the conversation, who think real hard about seeking care because they're like, at any moment now I could wind up with a bankrupting size bill.

They're aware of the fact if they go for imaging or if they go for blood work or they go to a specialist who turns out is in a hospital, didn't look like they were in a hospital, but turns out they're in a hospital.

So now they get this facility fee or just the rates go way up and they're paying co.

Like just any of these various things.

I think the public is becoming much more aware of the fact that these are fraught endeavors here.

There could be certainly peace of mind knowing that if you call this number, you are not putting yourself and your family at financial risk.

Dr.

Stan Schwartz: One thing that motivates people to get things done and to be sensible shoppers is to be able to think clearly.

And not have the privitive to brain take over.

I will tell you from personal experience with patients, and any doctor will tell you this, when you're sitting in front of a patient and they've come in because they have a cough or something funny was found on the chest x-ray, and you tell them, I don't think it's anything but just to be sure it's not cancer I want you to get this done, then I want you to get that done.

At that point, you are no longer a shopper 'cause you are no longer able to think about, well, I want to go home and I want to think about my plan.

I wanna look up who's the specialist, where will I save money?

The simplest thing is to suggest go with the flow at that point, because the doctor says, you get all this done down the hall, you're gonna want to get that done down the hall.

If somebody knows that, yeah, I can get it done quickly, I can get the same things done, but I can get it done at no cost.

All I have to do is call one number.

Then they can regain some of that sensibility of being a shopper.

Stacey Richter: So this is why you said this program is never mandatory.

They were empowered to make this decision and they chose to go the route that you're talking about here and now it's not disruptive if they need to text this number.

It's actually part of, it's a feature.

It's not a bug.

Dr.

Stan Schwartz: We don't make it mandatory as soon as it's mandatory.

It smells like to people that they're being forced to do something.

Stacey Richter: I'm gonna ask you three questions now because I know every plan sponsor listening is thinking three things.

So I'm gonna tell you what the three questions are and our listening audience, again, spoiler alert, this is where we're going here because everybody's thinking the same things that I'm thinking right now.

So let's just level set.

The three questions everybody's thinking now are, number one, direct contracting increases utilization, at least in the short term.

That's gonna be the first question I'm gonna ask you.

The second question I'm gonna ask you is how do you operationalize this and not just what you're talking about now, like, oh, we give everybody an app.

I mean, on the backend, because we've all heard the stories where somebody goes to a directly contracted provider and then the plan sponsor gets the bill from the provider, but then they also get the insurance bill, like whoever the carrier is also sends a bill just like that whole mishegoss.

And then the third question is, how do you make sure that plan members actually use the service?

Because it's one thing to tell everybody something on an enrollment day or open enrollment day, and then another thing for them to remember this in the heat of the moment in June.

So how do you ensure that costs don't inadvertently go up?

We did talk about the, the win-wins here, that the doctors don't have to hot box patients, but oftentimes another advantage that is touted for why a provider organization should direct contract is that there's no pre-auth or prior auths that's often put in the mix, and so you can see that if you get rid of all the pre-auth and prior auths, that utilization, that costs go up.

Dr.

Stan Schwartz: That's a great question, and it's a question we get asked virtually every time we talk with a potential client.

The first is the question is being asked wrong.

It's how do I know that I won't have excessive utilization?

The answer is, how do you know right now you're having insufficient utilization.

And good studies have shown that all impediments that you make to getting things done for people through prior auth, whatever, impede necessary care more often than they impede unnecessary care.

Often with devastating consequences as anybody who's reading medical news now knows, and we've just seen the major health plans now begin to pledge that they're gonna be reducing the burden of prior authorization and so forth.

The fact is that yes, there will be initially some increased utilization.

Why?

Because when you announce to your company that in January you're going to be able to get so many things that you would normally have to pay a copay for, you're gonna get them at a zero cost.

People will delay getting things done.

We see that all the time.

But whether or not they get excessive care.

I don't think it really changes doctor's behavior.

It reduces the burden of trying to prove that somebody really needs something.

And I think if you work with good doctors who follow or established guidelines that you're not going to have excessive utilization.

Your biggest fear in a company is people not getting done what they should get done.

Stacey Richter: Something that you had told me before is that conservative care sometimes costs more than surgery.

So the zero copay isn't just relevant to surgery because if a patient has money in their decision making criteria for how to proceed, the cheapest route, weirdly, again, is sometimes surgery instead of doing the physical therapy or et cetera.

Okay, so all of this being said, it is often said that when you reduce patient out of pocket, you increase utilization because now it's free and people just just go and get lots of care.

I did a show, the Throughline Show about moral hazard that I would recommend if somebody wants the 15 minute diatribe on the site, go back and listen to that.

I do feel like though, this is a little bit different, if someone hits their deductible in November, they feel like they've gotta do everything possible to do by the end of December while it's still free.

So you like, you kind of compress and exacerbate the moral hazard problem there.

Or the patient's feeling like now the clock is ticking.

But anyone listening, I'm sure you're kind of going through the same mental gymnastics I am right now.

Dr.

Stan Schwartz: I'm just gonna say there's two things that most prior auths will wind up being overridden when the doctors send in the necessary documentation.

So yeah, you may just delay it getting done and it may show up on next month's books, not this month's books.

But the second is that we know clearly that any impediments to necessary care, whether they're social impediments, moral impediments, financial impediments, will reduce necessary care.

And that's why if you're going to offer health benefits, your plan, by golly, needs to benefit health.

Stacey Richter: That's something that maybe we should all reflect on every now and then.

Like what are we doing here?

Are we checking a box or are we actually trying to improve health.

All right.

Here's the next question for you, which I know is everyone's thinking.

How do you actually operationalize this?

How do you actually make sure that people aren't getting double charged by the carrier, that it doesn't turn into total chaos trying to administer this?

Dr.

Stan Schwartz: Actually double charging turns out to be a very minor problem.

For one very special reason is the patients, the members know that their services are at ZERO.

If they get a bill for their service, that means it was double billed, and that's very easy to, to rectify.

How to operationalize it?

It's really simple to operationalize something that's easy to understand.

At ZERO, we've got a plan where it just takes a few hours of HRs time or whoever who's ever gonna do it.

But we make it simple.

You know, we do all the promo work, we do all the graphics, we do all the email, and everything is tailored to the company.

You know, we have a company here in Tulsa that has a large Spanish speaking population, manufacturing company.

Everything is bilingual that we send to them.

Stacey Richter: And what you're talking about right now is how do you recruit for the plan?

How do you explain what the plan is?

How do you train the employees what to do?

How do you get everybody on the same page relative to what to do?

And then remind them across the course of the year the plan that they signed up for.

So that sounds like one aspect of operationalizing the plan.

The other one though is, okay, so, patient walks in the door of a clinical organization.

Hi, I'm here to check in for my surgery.

What happens now?

Dr.

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

Stacey Richter: The one thing that you hear over and over again is that the front desk is baffled.

So it sounds like not only is there training that needs to go on at the member level, but also any provider that signs up, there's some kind of full office training that needs to happen there so that when the patient walks in and flashes some card or their identity or whatever, they're not like, I don't, I've never seen this card before.

So question mark.

Dr.

Stan Schwartz: Yeah.

We have a provider experience team that does that to educate people.

Stacey Richter: These are all pre-scheduled things.

You have a, as you said, somebody got navigated over there.

So the navigator now knows that a patient is going over to whatever place.

Paperwork gets done on the backend, and then the doctor just simply sends the bill to the right place because they have a very vested interest in sending the bill to the right place.

So they know that even though this patient's umbrella, carrier basic plan is pick a BUCA or pick a different TPA that this particular service the bill should get sent directly to.

And it sounds like most provider organizations have a sophisticated enough billing department that they can do that if/then equation.

Dr.

Stan Schwartz: Yeah, we make it really simple.

I mean, they could send a regular claim from their electronic health system.

They can send us an invoice, they can send us, fax us something on the back of a clean napkin.

I mean, it really does matter because we make this the simplest way to go for the provider, for the employer, and for the member.

It's all about simplicity.

Stacey Richter: Isn't that a concept?

Keep it simple, stupid, right?

Dr.

Stan Schwartz: Everything is so simplified that we're moving all the friction and additional expense of going through an insurance mechanism, makes the money more readily available without threat of claw back or denial.

They know what they're gonna get and when they're gonna get it.

I think it was expressed best by one of our very first providers, surgery Center of Oklahoma.

Stacey Richter: And this is, this is Dr.

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

Dr.

Stan Schwartz: But the testimonial he gave us could stand by itself in advertising to providers.

He said, ZERO patients come to me, they are pre-qualified, well-informed, and ready for care.

I was talking to Dr.

Smith the other day and I asked him, what is your clinical to administrative staff ratio?

And his is about 10 to one.

And I said, well, the industry is like two to one.

And he said, I can't believe that because he does virtually all bundled care now.

He doesn't have a department to do collections.

He doesn't have to send letters out.

Stacey Richter: So the point that you're making from, this is another provider advantage that if you just look across the industry, most people have one administrator for every two clinicians, which is nuts.

If you start thinking about it.

Like we start talking about administrative bloat, administrative overhead, like whoa.

And in Dr.

Smith's practice, he's got 10 clinicians for every one biller, just because it's so much simpler to administer a bundle in this way than to try to figure out how to get through the coding gauntlet of some of the carriers.

Dr.

Stan Schwartz: Yeah, and there's no accounts receivable.

You know, every physician's dread is to have a hundred Stacey RIchters, who each owe them $15, but want to pay $5 a month.

I mean, it just isn't worth it at that point.

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

Dr.

Stan Schwartz: Yes, and that is one of the prime motivations for me.

I think that the physician always needs to be responsible to the patient.

And should not be making fiduciary decisions for their employer.

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

Dr.

Stan Schwartz: Actually there, there's a couple of things there, but it's service after the sale that makes a huge difference.

Let me explain.

We go through the education of the employers, it's all customized to the way the employees and their family members are used to receiving information.

We say, let's put this off open enrollment so that this program, which is extremely important, doesn't get sandwiched between dental benefits and vision benefits.

We'll do it off cycle can be done anytime.

The second is we will customize the education for your employees so they understand it and make people available.

We'll go on site.

We'll do whatever we need to do to be sure people how to know how to use it.

Here's the secret, though, is after the program starts, we will continually review claims.

PPO claims, typical insurance claims from a company, and we will match those to what ZERO could have done.

And we call those missed opportunities, and we expect in the first year of the program, we'll get about 30% of the things that the ZERO program could have done under ZERO.

But by the end of the second or third year, we expect that to go way up.

And some of our best performing companies, we'll get about 70% of ZERO eligible services actually done under the ZERO program.

And you know, we think that's where they really start to see both the savings and money.

But importantly, it's a huge retention and attraction for hiring new talent.

You know, we've seen over and over again, a school systems in Colorado, for example, where we have a number people committed.

One of the benefits they ask for is, do you have ZERO?

Because you know, that's where I wanna work.

Stacey Richter: We can't underestimate the zeitgeist that we're in.

Americans are hyper aware that healthcare costs a lot.

Not to this level.

I feel like, have we ever seen this before?

You know, we've got a family of four, it costs 35,000.

You get somebody who's making 85,000.

Okay, that sounds like a lot of money, except you start subtracting out the amount of healthcare dollars that are in there.

Dave Chase has talked about the stagnation of the middle class wages and like this is why, so you, you offer something like this, it not only do they start thinking, wow, there's cost savings here, but also just uncertainty breeds anxiety.

So you are like, okay, well I'm doing something really good for my family here where I am making sure that we don't, in the casino of healthcare accidentally bankrupt ourselves.

But the other thing I just wanna point out, which I think is it takes a level of sophistication to figure this out, that we're not creating this binary scenario where it's either 0% direct contracting or a hundred percent for this plan population.

As you said, you can tick the needle up, so if everything goes well, you can get 70% or more, which is indicative to me exactly what you're saying, that this is a pool not a push, and whatever percentage you get, is a percentage of everybody getting the advantages that you're talking about, but that can tick up naturally over time and organically, so that disruption is minimized because when the service is taken advantage of, it's done very consciously and everybody knows what the drill is.

Dr.

Stan Schwartz: Yeah, if you're a company that has direct contracting for advanced primary care and then they have ZERO for direct secondary care, you can provide much better healthcare, save money, and save money for your employees and their families.

And we give advanced primary care the opportunity to save money for the things they can't do in the office.

Stacey Richter: Dr.

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

Dr.

Stan Schwartz: Just that our program is not revolutionary.

It is a simplification of what takes place now.

We make things easier for your members.

We make things easier for your bottom line, and we make things easier for the doctors to work with us.

It is pure simplification.

And it's removing all the excesses in trying to give routine healthcare through an insurance mechanism that was never meant to take care of things that you expect to happen.

Stacey Richter: So keep it simple.

Dr.

Stan Schwartz.

If someone is interested in learning more about ZERO, where would you direct them?

Dr.

Stan Schwartz: I'm on LinkedIn, Stanley Schwartz, MD.

My co-founder Jim Millaway is on LinkedIn, James G.

Millway, or you can go to our website, ZERO.health, or you can send us an email at info@zero.health.

Stacey Richter: Dr.

Stan Schwartz.

Thank you so much for being on Relentless Health by you today.

Dr.

Stan Schwartz: Thank you, Stacey.

Hi, I am Dr.

Stan Schwartz from Zero Health.

Relentless Health Value has been a real source of insight and inspiration for me.

Every episode feels like a thoughtful, informed conversation that really gets to the heart of what matters in healthcare.

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For me, it's the best way to keep up with new episodes and stay connected.

Thanks for listening.