CLEARly Beneficial Podcast

[S2E19] Healthcare Big Ideas

• Vincent Catalano • Season 2 • Episode 19

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We Already Have a Framework That Could Fix Healthcare

Everyone complains about the healthcare system. Fewer people are willing to name what needs to change and how. This episode does both.

Vincent Catalano sits down with Peter Hayes, recently retired president and CEO of the Healthcare Purchaser Alliance of Maine and former Director of Associate Health and Wellness at Hannaford Supermarkets, and Lawrence Thompson, founder and CEO of Benefit Systems Inc. and a nearly five-decade veteran of the payer, TPA, and self-insurance industries, for a wide-ranging conversation on what it would actually take to fix American healthcare -- on the insurance side, the provider side, and the financing side.

The three cover a lot of ground: national licensing, association health plans, a Medicare-based national PPO, banning carrier ownership of providers, equal-nation drug pricing, hospital rate caps, the 340B federal drug program, broker compensation reform, and the administrative cost burden crushing physicians and hospitals alike. Larry drops data on what happens when providers are paid faster -- and how that alone could drive 30 to 35 percent discounts from physicians and similar reductions from hospitals. Peter shares a real story from his days managing Hannaford's self-insured plan that turned a million-dollar failure into a Wall Street Journal feature -- and sparked a national conversation on quality-driven benefit design.

And when Vincent asks about brokers, Larry doesn't pull the punch. Thirty-eight years after writing a paper on it, he makes the case again: healthcare brokers should be paid like every other professional advisor -- flat fee, full stop.

The framework exists. The question is whether anyone has the will to use it.


About Our Guests

Peter Hayes recently retired as president and CEO of the Healthcare Purchaser Alliance of Maine, and is formerly a principal of Healthcare Solutions and Director of Associate Health and Wellness at Hannaford Supermarkets. Recognized as a national thought leader in strategic benefit design for more than 25 years, he has been appointed by two different Maine governors to serve on healthcare reform commissions and is a co-founder of the Maine Health Management Coalition. He has served on advisory boards for Express Scripts, DFINITY Health, and others, and has been involved in national organizations including the Center for Health Innovation, Care Focused Purchasing, and Leapfrog.

Lawrence Thompson is the founder and CEO of Benefit Systems Inc., a healthcare consulting and solutions firm he launched in 2002. With nearly five decades in the industry, his career spans payer, TPA, reinsurance, stop-loss, and consulting -- including serving as President of Pomco, Inc., one of the largest independent TPAs in the US (which he sold to UnitedHealth in 2017), Chief Commercial Officer of HealthNow New York overseeing $2.8 billion in annual P&L, and Chief Strategy and Revenue Officer at Advanced Medical Pricing Solutions. He founded and grew his own TPA in California and Arizona to 120,000 members before selling it in 2001, and has been a licensed broker since 1978. He is a past Chairman of the Self Insurance Institute of America and spent more than 20 years lobbying on Capitol Hill for the self-insurance industry.


About Your Host

Vincent Catalano is the CEO and Founder of CLEAR Healthcare Solutions and host of the CLEARly Beneficial Podcast. With more than 23 years of experience in employee benefits and healthcare consulting, Vincent has worked for two of the top 10 international brokerages, served clients ranging from 2 to 7,500 employees, served on insurance carrier advisory councils, and built relationships across health systems, health insurers, medical groups, TPAs, and brokerages. In recent years he has become a dedicated student of healthcare system reform, point solution integration, alternative funding models, and medical and pharmacy cost transparency. He holds an MBA from the UC Davis Graduate School of Management and a BA from Skidmore College. He launched the CLEARly Beneficial Podcast to bring the expertise of his network to brokers, HR professionals, employer decision-makers, and anyone navigating a system that too often works against the people it is supposed to serve.


Disclaimer: This podcast reflects the personal views of the host and guests, not their employers or sponsors.


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Welcome to the Clearly Beneficial Podcast, the show where we rip off the band-aid and explore the future of healthcare, benefits, and the people driving innovation in the industry. Clearly Beneficial Podcast. I'm Vincent Catalano, your host. And you know, the topic today is going to be one which uh guests and I feel has been sort of tossed aside. Everybody wants to complain about healthcare, but uh we're here to talk about solutions. My guest is uh my guests are uh the CEO of of uh healthcare solutions, Peter Hayes, and the CEO of ecosystems, Lawrence Thompson, the gentleman who are a long time. Peter and I have only recently gotten acquainted, but um both uh do share their thoughts on on LinkedIn quite a bit, and that's how I met Peter and Larry and I have context. But uh let's just start with a very brief introduction. Peter, why don't you go ahead? Yeah, good, good morning or good afternoon, everybody, depending on where you are. Yeah, I'm as you can see, I'm a senior. I'm happily retired, but my background was I spent about half my career in public accounting. The other half of my career, I did merger and acquisition work for a large supermarket chain in the Northeast. And then the last part of my career for about 20 years, I managed their health care plan. We've had about $60 million spent at the time. I've been appointed by two different state governors to serve on reform commissions. I'm in Maine. Maine has had some pretty progressive attempts to try to read in the cost of healthcare. I've also served on client advisory boards of Express Scripts at Divinity Health and some others. So I'm I'm delighted to be part of this conversation. The other part of my hat is I had formed with some others a healthcare purchaser alliance in Maine that has about half the population, which had the state, the all the municipalities, all the teachers. And we actually were able to do some things collectively that ended up not only improving quality but bending the cost curve. So it takes a village, it can be done, and hopefully we get into some of that conversation today. We will. Thanks, Peter. Larry. Hi, everyone. Um, I'm I'm glad to be part of this discussion. I've been excited about it for a while. My background is unlike uh Peter, I am not retired. I'm still fighting the fight after 48 years and more excited about it than I've ever been. Uh, my background is um heavily in the payer side, although I have been consulting for the provider side for the past 13 years. Um, I'm a past chairman of the self-insurance institute. I've served on a whole bunch of different boards on the payer side, the insurance side. I started an insurance company from scratch in another country, which is now its second largest. Um, a lot of work in the reinsurance and stop loss space, a lot of work in the TPA space, bought and sold eight of them. I've run three of them in my career. I've been a licensed broker since 1978. Um, and I spent 22 years lobbying on the hill for the self-insurance uh side of the fence. So I know the political and regulatory landscape pretty well. So I'm really excited to talk about solutions today. Excellent, Larry. Well, thank you to thanks to you both. Um let's start uh, you know, where we kind of all are in a sense. You know, so I I just turned, I'll be turning 65 next month. And so therefore, Medicare kicked in for me on May 1st. And um, you know, once I really had a chance to sit down and take a look at the plan designs and and uh, you know, traditional Medicare plus a supplement, you know, I went from a plan that I was paying through my wife's business, you know, well over $1,200 a month for me as an individual, you know, for the privilege of having an additional $8,000 deductible, right? The second you turn 65, this magic wand gets gets waived. And now I'm paying less than half the price of what I was paying. And I think I have the best health plan in the world. So, and and and as we talked before we started uh uh you know recording this episode, you know, both of you are in the same boat. So, you know, where I want to take this conversation today is really around, you know, big solutions. You know, there are big solutions that are out there, there are a lot of small solutions that may not necessarily work. But uh the first question, you know, I want to start with is sort of the big question. You know, if you could wave your magic wand and create something that is a big thinking solution for changing how, and and I want to be very specific. I don't want to talk about health care because health care and delivery is one topic, right? But health insurance and how healthcare is financed is the other thing. So let's talk first about the insurance and payer side of the equation. So let's start with you, Larry. If if you had to wave your magic wand and change that thing, how would you go about? Well, to start, it's all about cost. Um, the cost for what we buy with insurance is too expensive. And we don't need to go into it. All of us have seen our costs are higher than any other uh nation in the country, our outcomes are terrible. We pay too much for healthcare, period. And therefore, our insurance prices are too expensive. But within the payer side of the equation, there are a lot of things that we can do that should be done to drive down costs. I mean, for example, we should allow for national licensing. The concept of healthcare carriers having to deal with 50 different insurance departments, ridiculous, not necessary. We should pass association health plan regulations. It's been around forever so that small groups can come together in purchasing groups and drive down the cost of what they're paying for. We need to create a national PPO. It's called Medicare. We already have it. Give carriers five years to get themselves to the point where everything is priced based on Medicare. Now, granted, geo-adjusted, I get all that. We have to have exceptions. And by the way, we have to bring in Medicaid with adjustments because Medicare does not cover children's hospitals and OBGYN. But we can do it. And that Medicare model is easy, it's there. Everybody knows how to do it. Ban all insurance carriers from owning any providers. It's a conflict of interest. You're having the Fox watch the hen house. It makes no sense. It's ridiculous. Allow doctors to buy and to run hospitals. They should. Um, force insurance carriers to provide lower premiums when we bring these savings from Medicare and PPO. Don't just pocket the money, which is what they've done for the last 30 years. Dollar for dollar pass on savings. Um create a national safety net coverage. Uh pick how you want to do it. It can be backed by the government or backed by a syndicate of large carriers, but everybody gets to purchase a plan that's let's just say major medical. I'm going back in time. Pick a number, 10,000, 15,000, 25,000. Anything above that is covered by that major medical plan. So drive us to start looking at financing care below that envelope. Um, and then eliminate a lot of the cost factors that are involved. Things like pre-authorization. Look, you said it, Vinny. We have provider AI and insurer AI now fighting each other. All that's changed is we're using non-humans to do what we were using humans to do before. The outcome is going to be exactly the same. It's just driving costs, and we are not getting anywhere. We're not moving the needle. Ban all prescription drug advertising in the United States. We spent $23 billion on DTC in 2024. That money can drop directly into the pockets of consumers for the cost of drugs. There's only two countries in the world that allow for that ridiculous process: New Zealand and the US. Every other world country bans advertising. Ask doctors, ask PBMs, ask anybody. It makes no sense. So those are just a few little for you to think about. But I would also add to that that we need to have um equal nation drug pricing. Um, and we've started that process, but we need to make it complete. Um, you know, people talk about let's do international sourcing. You don't need to do that if you do equal nation pricing. I didn't say favored nation. Please note, I'm not trying to say America should have better pricing than the rest of the world, just equal nation. So if you can buy a moxicillin in Canada for three cents a tab, that should be the price that we pay here in the United States, not 52. It's ridiculous. We're financing the rest of the world. So those are a few biggies to chew on. Peter, I'll shut up now. No, no, great. Thanks for that. That's a great warm-up, uh, Larry. So, Peter, it's just take us from there. You're muted. Yeah, thank you. I'll probably take a little different tact. And in one is you told a great story about Medicare, because yeah, I'm part of the club as well. But I tell you, it was a shocker for me. I always thought Medicare was going to be free. And then I realized Medicare, you're it's also indexed to your income. So I'm paying several hundred bucks, but it's still, I agree with you, a great deal. But the other side of the coin you just talked about, last year when we had the Obama era credits, I still have a wife that's not a Medicare and still a young son. We were getting our health care on the exchange in a anthem policy, blue cross policy, costing us about $700 a month for both of them. Those credits went away. That same policy now is costing me about $23,000 a year, which is just unsustainable. I mean, that's just, and there's a record number of people in Maine that have fallen, they're not insured at all because they can't afford the insurance, which is just a despile to train. But the different direction I was going to take is I actually served on two health care reform commissions appointed by the governor of Maine, and we had a task. The first one we had a task of come up, complete legislation for a single-payer system like Medicare, come up with how we could, you know, have a multipayer system and how to do incremental reform. I was naive. I was in business and thought, oh, the market can solve this. I have come to the conclusion that it's just we have allowed so much integration to occur in vertical integration, that it's too big to fail. Market forces now will not work in the marketplace because there was a statistic recently saying 90% of markets, health system markets, are highly concentrated. They're no longer competitive markets, they own the market. So I will focus more on what I think might be possible given that construct. I don't think markets will work. I think the only way we can get to the other side of this, it has to be some type of legislative regulatory intervention, like we have with monopolies or utility. But I think there are some things that are very doable. The first and foremost is there are about eight or nine states that have actually implemented growth caps, just saying you can hospitals cannot raise their rates more than a certain amount. And if they do, for instance, I served on a panel in Oregon where they put those rate caps in place. And if hospitals come in with a higher request, they have to document and put in place a performance improvement plan where they actually get to the market. So I think eight states have done it. It's something that can be done by state legislators. And actually, I think Washington is so corrupt when you look at the political contributions that have gone into most of our leading candidates, they aren't going to create change. It's going to happen at state level. Eight states are already leading the way. So I think that's one. I think two, really promote through the states some type of population-based health payment. So you're not paying for widgets of service, and you're not paying for sickness. You're actually paying for producing health. So I think, you know, through those state legislations, we can change the whole reimbursement model. That includes caps on not only hospitals, but also providers. Um, I think we absolutely, this kind of dovetails to, I think we should absolutely now preclude really aggressively, no more vertical integrations, no more of these mergers and acquisitions and other things. I mean, United Healthcare, which makes $99 million a day off of their integrated system. $99 million a day, because they have the lar they own the largest provider network in the country now of physicians. That's just a that's just a real conflict of interest. Um so we really need to prevent this provider consolidation. I think we also look at when two-thirds of all the health care dollars in our health systems are not going to direct care. Two-thirds of the dollars are going to administrative burden overhead. There is a huge opportunity, and I think by growth caps, you can get to the point where you force hospitals to be effective. And I go back, the American Hospital Association claims hospitals don't make money on Medicare. That is not true. The more efficient hospitals do have a margin on Medicare. We should start demanding that how do we get there? How do we put the right payments in form so hospitals ruthlessly get rid of a lot of that administrative burden that didn't be prior office is one of them. Now the compensation of hospital CEOs are raising multiples of CPI. So I think those are low-hanging fruit that we can go after. It's achievable, but it's gonna have to take our legislators to do that. And I was actually shocked. My son, who's 23, when the UH United Health Care executive was shot, uh, I asked him what his colleagues of friends thought about it. And they are so angry, they actually thought it was justified, which I think we're at this tipping point where the abuses are just so large, and real people are being impacted by not having access to care. You talked about the cost of care. I think access to care is just as big of an issue as that. And then the last thing I would add is we need to do a much better job of the behavioral health side of this. We need to go way downstream before these young males and young adults are ended up shooting people because they're so frustrated. So I think those are things that are fundamental changes. And I think the country is gonna demand, I bet the next election cycle, healthcare is going to be a defining issue. No, I I think that that's that's those are all incredibly well taken. Um, because you know, you look back in back in the 2010s when the ACA was passed, the ACA fundamentally, in my mind, changed the fabric of how everyone behaved, right? You know, when Nancy Pelosi said, well, we got to pass it to know what's in it, you know, that started the problem, right? So they cast it, and then all of a sudden it took us, you know, all of us several years to to parse the thing, to understand what was in it. And then at the same time, everyone else, whether on the insurance broker side, on the provider side, on the PBM side, everybody didn't know what was in it. So everybody had to figure out how to circle their own wagons once they knew what the rules were. And and but that but it drove the point that it took federal legislation to change it. States, on the other hand, I mean, California, we have to to your point, Peter, we have the California Office of Healthcare Affordability, right? It's under the Department of Department of Health and Human Services, right? So now they're being sued by the California Hospital Association because of the caps they're putting in place, right? Oh, those caps aren't high enough. You know, the insurers, I talked to someone at a large insurer not long ago, they love the idea of the California Office of Healthcare for it helps them keep things in check. But the hospitals don't want it. So to your point, Larry, and to your point, Peter, it starts at the root cause of, in a sense, the cost of insurance does start with the cost of care. But how do you get providers on board to want to play ball, to re-engineer themselves to play? Because if if you told no one's ever, I rarely ever see this posted on LinkedIn or anywhere else. If you told employers that, oh, by the way, do you know you're paying two and a half times what Medicare pays for the same procedure on behalf of your employers? I employees, most employers don't know that. Most CFOs and CEOs don't know that. And so if you get the truth out there, you know, you got to pressure the largest pressure point to me is the providers. Larry, what's your thoughts on that? I I agree, and I think there are two things that can be done. And by the way, Peter, let me just circle back and say I agree with a lot of the things you've said, and I agree that there are a lot of things that can be done. I am not a big fan of putting pricing caps on hospitals because, and let me explain why. I I think we have to go backward, not forward. So if you cap where they are today, we're we're in big trouble and we're going to fail. We need to get them down, not up. Now, I agree. Once we get them down, put the caps in. So let me be clear. But I think uh, Vinny, the the answer is this. So, providers today spend a fortune administratively on getting their money. We have to change the way the payment system works. I said in my opening that I built an insurance company in another country. In that country today, over a million people get and take their insurance, just like we have, and the providers get paid on average. Now I'm going to break it into two pieces. Physicians get paid in about eight and a half seconds from the time the patient leaves the office. Hospitals get paid within seven working days. Think about that, guys, for a moment. I have interviewed 14 major, major um uh practices in five states. And I asked them, if we could pay you in pick a number, 24 to 48 hours, how much would you discount the cost of your care? And they basically all told me 30 to 35 percent. Hospitals, same conversation. I have six now that I'm working with, and they've all said, if you could pay us in seven days, we're our average real-time turn on receivables is 93 days. I I spoke to one hospital that told me they have 101 people in a department that do nothing but fight appeals, go after billing, and try and collect money. It's it's insane. So I think the first step is change the payer mechanism, pay them faster, and force them then to drop their fees. Once those fees are done and they're lower, we then have to go to the actual carriers and say, you don't get to pocket this money, because I agree with your 23-year-old son. We cannot continue to see these vertically integrated monsters just piling up cash. So we have to have a mechanism to say, okay, your 250% of Medicare average contract with a hospital is now going to drop down to pick a number, 150. You don't get to pocket that profit. You can't. That profit has to go back to the member and patient. So I think there's a mechanism to force the providers, and I've talked to them, to look. Lower their pricing, but only if we change the payer system. Now, that brings in the argument, Peter, about quality. And I know you know a lot about this. Alongside that, we have got to implement certain quality requirements. If you're going to do away with pre-authorization, which by the way, is the number one member complaint, number one provider complaint. I spoke with a very large orthopaedic surgical group with 80-something orthopedic surgeons, and their office senior vice president told me that today they're spending 28 cents of every dollar they collect on appeals. And it's ridiculous. When you look at the actual science, Vinny, carriers are saving 4 to 6% by pre-authorizing. If you get a doctor to give you a 30% discount, why do you need the 4-6% hassle? And then you take away the administrative costs associated with it. Then let's put it back to the patient. If you're a patient, my wife just went through this trying to get a simple MRI. A simple MRI. Three appeals to get it approved. It's crazy. We don't need that anymore. And so I think those are where we start. Where we start is finding a way to make the cost of moving money lower. And then everybody can lower their cost. Part B, I think Peter, you're right on target. Hospitals need to be given a dictum. You talk about putting pricing caps. No, they need state by state or federal, I prefer federal, five years to get to the point where you are break-even at Medicare costs. It needs to be a national referendum. Why? Look at what we just talked about. Three old guys that know that we can get Medicare and we can live at reasonable pricing. And I agree, Peter, the pricing ain't cheap, but it's fair. It's not unfair. And just to add to what you did, what you said, Peter, my wife, like yours, is younger and she is not eligible for Medicare yet. We were paying on the um healthcare.gov about $800 a month for her policy. The subsidies went away. We're now paying $1,800 a month for the exact same carrier, exact same care. Now we all know that the price of the care hasn't changed. It didn't change. This is all about the financing of it. This is all about the way it works. Let's add in one other thing, Vinny, because you asked about this. And that's drugs. I mean, the cost of prescription drugs has become basically um ridiculous. And it's not because the drugs are so high priced, although they are, it is because of the way we again pay for them and how we do it. It makes no sense. So those two big reforms, I think, are the starting point. So let me let me stop stop you there because it makes, I mean, I love a lot of this, all of this, really. Um because to your point, Larry, about how people go about paying for things. I mean, I'm seeing a lot of trending on LinkedIn with people talking about um cash pay. Cash pay, you know, direct, you know, direct contracting, you know, direct, you know, you know, more cash pay for. I mean, Mark Cuban is all over this, and he's gonna be coming out with this thing, cost plus wellness, which I think is an a concept that basically cash pay for all these things, and we got some stop loss over here that's gonna back you, and and and you're off to the races. Because he's, I think, trying, and I believe it. I mean, I believe in in flipping the conversation because what I envision, Larry, is a hybrid of what you were saying is this notion of you know, let let it let me find my own stop loss number. And it's means tested. So if I have no money, I have a low stop loss because I'm I'm gonna be on Medicare or Medicaid some way. And then, you know, we we it ratches it ratches up until I decide if I want to self-insure the first 20,000 a year or whatever the number is, I can choose to do that. And everything else is gonna be cash pay. You know, that is a small revolution that I'm almost seeing could happen, you know, in concert with some of the other things you're talking about. Peter, I want to bring you into the conversation. You know, what what are your thoughts on what Larry's talking about? Yeah, I mean, I think the problem is, and you're right, the internet, there's there's lots of folks out there that really saying there should be cash pay. The problem becomes, you know, there that's fine for prescription drugs and other things, but the problem becomes it is the catastrophic hospitalizations that are occurring. And you can't cash pay those things. I mean, so you know, I get really frustrated. Where I was actually going with that was you know, you actually have a backstop. I don't expect to cash pay a quarter million dollar bypass out later, but I I can cash pay if I eat the first 10,000 or pick a number if you eat let's say 10,000, then the federal government, to me, the federal government's job could be to backstop all of it. Yes, it could if they had money. The federal government should backstop and and so so you know, when with when 1% of the population represents 50% of the cost of health care, you know, you're gonna find that most people in that cash pay moment will be able to access care very efficiently at a low cost, and then we we feather in the HSAs and all the benefits of those things, and people will be more empowered to take control of their own health care. So that's where I feel like cash pay plays that role. I agree, but let me just stick a pin on cash pay because there's something about cash pay everybody's not recognizing. No one's using cash anymore. Well, no, well, that's number one. But but I think the real problem is with cash pay is the underlying agreement with the provider. So let me explain. It won't work if you're saying that every patient goes into a provider and says, hey, by the way, I'm here to have you stitch up my knee and I'd like to negotiate with you what you're going to charge me. That will never happen, cannot happen, is impractical because a truck driver has no idea what the cost of doing a knee is. So underlying cash pay is my concept, which is you've got to have everybody direct contracted. And I'm saying, why go to the trouble of individual direct contracting? Let's use the national PPO, which is Medicare. So I agree with the concept of whatever you want to call it. I don't like the term cash pay because it doesn't connotate what really happens. But I think what we should go to is a set number so that when you walk into your provider, you know that you're going to pay for this amount at this level. Then I agree how you finance that payment is now completely up to you. Meaning, if you're very wealthy, you may choose a plan that says, I've got a $25,000, $30,000 deductible, and you use an HSA and you just hand a credit card in and you pay for all the little stuff. If you're currently, you know, not working and you've got no income, that's a different story. You may need to have some help to be able to do that. But I agree with the concept and I agree with the fact that providers are willing to give us deeper discounts if we pay them faster, which is what I was talking about. But I see I see some of these little cash play kind of plans where I'm going to give a credit card to people and I'm going to give them, you know, cheap financing, and they can go negotiate their own. No, it doesn't work. In practice, that doesn't work. And by the way, in talking with the doctors and providers, they don't want that. It's going to cost them more to negotiate with individual members. That's not going to work. So that's why I say let's let's have a PPO and then do exactly what you both are saying, which is let people finance above that. Yeah, I mean, I wonder. I mean, it's that it's a couple things that we haven't talked about, which I think is on the horizon that might have a big impact. One is the Consolidated Appropriations Act, which is basically for the first time saying if you're an employer, and I'll give you a real live example in our marketplace, there's a hospital that does they charge Medicare to do a knee replacement of $15,000. That's what Medicare has determined for that hospital, is their cost of delivering that care. There's a hospital in northern Maine. Um it so for Medicare, Medicare that hospital gets reimbursed $15,000. You mentioned the Medicare Advantage plan earlier, Larry. And people think that was great, but actually the insurance, they just bought it from the insurance company, they bribed the insurance company. The margin of the insurance companies, the Medicare Advantage plans is almost $2,000 per patient. That's their earnings. On a normal insurance policy, they make about five to seven hundred dollars. So they were in seventh heaven. They were much more lucrative to provide the Medicare Advantage plan. So in our state, Anthem, they had a contract on their Medicare Advantage plan that they paid the hospital $15,000 for that knee replacement. And it was kind of a wink, wink, nog, nod nod, on all their other commercial lines, they promised the hospital that they would charge $45,000. So people were cross-subsidizing the Medicare Advantage Plan. And so I think going back to my example of the Consolidated Appropriation Act, for the first time, what it says to plan sponsors, if you're on the board of directors, if you're the benefit manager and you're paying in Northern Maine $75,000 for a knee replacement out of the plan, and you can get it for $15,000 in Portland, those executives are personally responsible, liable for the difference between the $75,000 and $50,000. I think we could really leverage that. You start putting in place, establishing, I think kind of gets to your point about how can we establish what fair and reasonable prices are? And that will force the hospitals to then deliver their services, find a way that they deliver it for that, because there are going to be other hospitals that do it. It's like Six Sigma. And if they can't do it, they better go visit the hospitals that are doing it because they can learn from them. But I think And we know, we know, Peter, not to interrupt you, that quality is not tied to price in our system. So we know that that hospital that is doing it for $15,000 and is surviving and making a little margin, their quality is probably equal to or better. Because the argument I hear when I talk to like UPMC is we charge 800% of Medicare because our quality is the best. I mean, you you can look at quality rate. Now I'll give you an example where you can leverage markets. This was 20 years ago when I managed that benefit plan at the supermarket chain. We had a knee replacement. We were self-insured, we didn't have any stop loss, we paid every claim dollar. We had a person that violated sort of the tenants, and I had a tenant of let's just make sure we're delivering right care. Because in this country, about 40% of the time, you're not getting right care. Let's make sure you go to the right place because the outcomes are dramatically different, as you should suggested. And let's make sure we pay the right price. So, right care, right place, right price. So we had a gentleman in our plan that was over 80, had a knee that failed, went to a hospital that had really low quality ratings. The knee failed three times, it got infected. We were on the hook for over a million dollars. I spent time traveling Europe, went to Singapore, spent some time in Singapore. Singapore at that point in time would do a total knee replacement, hip replacement for $10,000, global fee, warranted for a year. We put a benefit design in place to our employees saying, hey, if you want to go to Singapore, we'll pay 100%. We'll pay 100% for you to go and your significant other. The Wall Street Journal picked up the article. The next day, I got calls from hospitals all across America. And I also got a call from a hospital in Maine saying, hey, we want the same deal. I say, well, you have to match the quality and you have to match all this. And they did. And so you can leverage the market to try to drive to value, which is which is what I think you're talking about. It can be done. I agree, Peter, a hundred percent. And we've seen it. I have examples as well. But before we run out of time, Vinny, I got to drop a big bomb here because I think we're talking. I love a big bomb, Larry. Yeah, we we gotta, and and and this one's gonna hit hit home, Vinny, but I think you're gonna be okay with it. We have not talked about another part of the cost of healthcare, and that is a brokers and consultants. And I'm sorry, but it's time to raise that issue. Some take 30 cents on the dollar. Yeah, well, I mean, the numbers that I have seen over the last 25 years are unconscionable, is the only way to say it. And Peter, I agree, CAA is supposedly going to help, but we all know you have to disclose over a thousand dollars of uh compensation. I have been watching brokers over the last two years, how shall I say this, navigate around the CAA regulations to the point that it makes you nauseous. And I guess Mike, my we talked about big solutions, Vinny. Here's one. 38 years ago, I wrote a paper saying that all healthcare brokers should be paid like all other professional advisors. Your CPA does not get paid as a percentage of how much tax you paid. He gets paid a flat fee. Your attorney gets paid a flat fee. If we really consider ourselves to be these magnificent, brilliant advisors that we all say we are, why aren't we being paid like that? I believe as someone who might have a little experience in that space, um, you know, I I uh wholeheartedly agree with you, Larry. Um you know I am so fed up with the brokerage community right now. Um they all think they're legends in their own minds, bringing in, you know, self-motivated, you know, uh solutions that just line their pockets. And every single, and and this is this is two things. One, the smart brokers, right? The the the the ones who are up and comers, the ones who are trying to build a book, all they're the ones who should be going after the the because the data is all publicly available. They should go after that that client who they say is is you know making paying their existing incumbent half a million dollars in commissions and come in with a flat fee arrangement. Everything should be flat fee, flat fee, flat fee. And it should be fair. But I also blame CFOs and CEOs and VPs of HR. I blame the entire damn organization because they don't challenge the broker. The brokers won't come in and say, oh, let's do a compensation review of what you've paid me the past five years. They have to ask for it, number one, even if it's disclosed, it's disclosed in a nebulous manner. And so they should be forcing their brokers to justify the amount of money they're they're paying and be very clear about what they're because they have now, to your point, that that CAA fiduciary responsibility to their employees. I have done an analysis and I've got the spreadsheet spreadsheet sitting on this computer right here with the with the 5,500s downloaded of every single firm in California, not brokerage firm, every single employer in California, right? And what they pay their brokers, right? And so what I did is I took it, I took the spreadsheet and I put an extra column in and I put in compensation divided by the number of employees, right? So that gives you a metric of per employee per year comp. You know what the this was now. This database is about two and a half, three years old. Three years ago, the median, the median was 400 bucks per employee per year. There are brokers charging two, three, and four times that. And the CEO and CFO has no idea they're paying their brokers. That's right. I agree, Vinny, and it adds to the cost of care. It adds to the cost of premium because guess what? A lot of those arrangements are commission arrangements. And if you talk to an actuary, and I spend a lot of time with them, the reality is you build in those kinds of compensations into a stop loss, into a premium, they add significant dollars. But the last piece is value. How can a third-party administrator charge $25 PEPM, $300 per year, to do all the administrative functions? Think about all the work they're doing and all the costs. And the brokers make it. And a broker makes twice that, three times that. You know, I won't where's the value, Peter? Yeah, no, I'll the other bombshell, if we're dropping bombshells. Let's just drop one more, Peter. Do it. You know, if you think about costs in dollars, and it's gotten a lot of exposure in Washington, if you take the 340B drug program, which started out as being a well-intended public policy to help our most vulnerable populations, it's turned into an $82 billion revenue stream for hospitals and eligible providers. And Minnesota just did a study that shows there's, you know, the quid pro would be they're using those dollars to improve care and access to vulnerable populations, community benefits. Right. There's no accountability for that, there's no requirement. And Minnesota has shown there is absolutely no evidence that those monies are being used for the community good. So that's one place you can go. Second place you can go is similarly in our town, hospitals that have the tax-exempt status, so they're not paying any taxes or property taxes. We have a facility in our town, which is non-exempt, it services all of southern Maine. They would owe normally with our tax rates five or seven million dollars in real estate taxes. But because they're tax exempt, the residents of Scarborough, the town I'm in, are paying those taxes for them, but it's benefiting a broader community. If we just took the dollars that they pay in real estate taxes and we do a better job of managing the 340B program, that would be a lot of revenue that would fall that we could do some of these other things we're talking about. And I think you know that's starting to get addressed, but it that that that's a huge sort of elephant in the room that needs to be addressed. Yeah. No, no, I appreciate that perspective. Larry? 340B is huge. I mean, I'm working with with hospitals today and looking at those numbers. And you're right on target, Peter. What what what it was designed to do and what it's being used for today, completely different things. Hospitals are making up for tremendous losses that they're taking on delivering care, financing that with 340B markups, as I like to call it. And it's unfair. Look, the bottom line is every hospital in this country has to face some uncompensated care. I get it. That is our safety net, and I believe very strongly in that federal legislation. But we can very simply take that and turn it into exactly what every other business does. If you do $8 million of uncompensated care this year, you get to deduct that from your taxable income. It's just, it's like a big company. You spent X millions of dollars in developing a particular program or expenses on travel and entertainment and promotion, you get to deduct a portion of that. We should not allow these systems to just get away with paying no taxes. It makes no sense. And on a 340 B, I mean, I agree. If if there was some accountability and transparency, we tried to pass a law, and I that purchaser alliance, we went to the legislature and asked for the hospitals to at least show what they were doing and community benefit with the dollars, and they killed it. They refused it. They said no, we're We, you know, it's a black box. There's a much better way for us to fund that charitable care that needs to take place. It needs to be a direct line of sight as usual, yes. It shouldn't be a black box where the money just goes into a coffer and there's no accountability for it. And that's another thing we we all should talk about is, you know, we've done all this movement and we did Obamacare, we did ACA. And guess what? What did we accomplish? There are still, well, let me back up. Prior to the subsidies being cut in ACA, we still had 28 million Americans that were uninsured or underinsured. Guess what? Did we have a major impact with ACA in getting people insured? Yes. We added nearly 20 million people to the Medicaid roles, which, by the way, is the reason we have these major payment problems. We do. Why? Put 20 million people in at the lowest payment level possible and ask an inefficient hospital to provide that care. What are they going to do? They've got to go over here to the commercial side and rake that payer mix to subsidize the other side. So it was a poorly thought-out process. But the point is, we have not moved the needle. Now, Peter, you raised the issue. Now that those subsidies are gone, the amount of people we are seeing that no longer can afford to buy on healthcare.gov is unbelievable. And I can't wait to see what the new data will be probably in August for what amount of people disenrolled. And I'll give you another proof point. The amount of people that are now buying these supplemental and ancillary programs because they can't afford ECA anymore. I work with clients that provide hospital indemnity, cancer care, all those. They're seeing 30 and 40% increases in purchasing in the first quarter of the year. At high commissions to the brokers. Oh, at 35% commissions to the brokers. And I think that's where we're at. I mean, not only have we talked earlier about with the assassination of the UHC president, CEO, but physicians are having a record amount of burnout. They don't want to practice medicine anymore. They don't like practicing corporate medicine. So you have a whole provider side. So you've got patients who are unhappy, you've got the providers that are unhappy. The only people that seem to be happy are the entrenched intermediaries that are making record bottom lines. It almost feels like we're at this tipping point. If we could, as and I'll use an example in Maine where we came together as a community, when we had this purchaser alliance, which had about 60% of the commercial lives, Maine had the most unsafe hospitals in the country, according to Leapfrog. We came together and at the supermarket, as at in the state of Maine itself, we said, hey, look, if you go to a leapfrog hospital that has an A or B rating, safety rating, will wave co-pays and deductibles. You fast forward 10 years, and the governor of Maine accepted award saying Maine had the safest hospitals in the country. So when you call coalesce a village, when you align some stakeholder groups, like if you align physicians with patients, independent physicians with patients. And I think as I started off in the conversation, I think there's some there's the structure of ways to do that. And that's what we should really focus on. I mean, certainly your point about using electronic cash to transfer, that technology exists. I mean, any everybody's on Amazon.com. You do it every day. It can be done. And keep in mind, keep in mind the statistic. Today we've fallen off the cliff. Only 31% of all U.S. physicians are independent. Ten years ago, we weren't even at 50-50. It's ridiculous. The fact that we now allow big private equity firms, hospitals, and others to own physicians. And you can't blame the physicians because they're tired. Corporate medicine, like you say, is impossible. I mean, I have so many friends, I have family members who are doctors, and they say, we're not practicing medicine. I don't get enough time. I'll throw a couple of stats at you about physicians. The average physician group in the United States has 20 payer contracts. They wrestle with approximately 1,920 pre-authorizations per year. That's 45 per week. They average 11 minutes per patient visit. They typically have between 2,000 and 2,500 patients. They spend 23 cents of every dollar on administrative functions like billing, verification, and collections. Their operating expenses up this year by 11%, meaning 2025. Their average receivable collection time is 35 to 45 days. Only 31% of them are individual and nationally, physician PPO discounts have now risen to 148% of Medicare. Chew on that for a moment. That's why we face the problems we do. Well, I'm going to give you that. That's going to be the last word here, Larry, because uh that that really covers. But uh to me, this conversation opens many more conversations, right? I I hope people listen and they and they take gems, bombs that we dropped and gems to think about, because there's room for there's a lot of room for solutions, right? I think we've started a conversation around some of them. I I uh want to thank both of you for for being here today. And um, as I always say, let's do it again because as as you've had a chance to to to process this uh this episode once it comes out in a few weeks, um do the best to promote it, put it out there to your channels, let people listen to it. I'll be doing doing the same. And the more people start to listen to this, uh, this conversation, which is solutions driven, not want, want, one. We're complaining about this. We're really trying to get somewhere. Um, I think it begins to hopefully build some interesting momentum as we go into the midterms. Healthcare is going to be an important topic. As we go into the next presidential election, healthcare will be continue to be a big topic because premiums aren't slowing down in their growth. And someone has to figure it out. So thank you again, gentlemen. I appreciate your time, and um, we'll talk to you guys soon. Thank you. This public hand is reflecting personal news of the host and games, not their employees. See you next time.

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Vincent Catalano

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