Don (PMN): Hi welcome. This is Don Langsdorf with the Pharma Marketing Network pleased to welcome today Dave Chase, co-founder of the Health Rosetta. Good morning, Dave. Thanks for coming on the podcast and if you wouldn’t mind, could tell us a little bit about yourself.
Dave (HR): Sure. Thanks for having me on. Quick background on myself. I started my career in consulting implementing systems inside of a couple dozen different hospitals and then I went on to find Microsoft’s healthcare partner ecosystem. That’s about 28,000 partners today just in healthcare. It’s probably approaching a three-billion-dollar business. Then I left Microsoft and now, I’ve spent more time away from my pre Microsoft has post about 16 years ago when I left and since you spent time in media and startups and prior to what I’m doing now, I founded a company called Votto that was ultimately acquired integrated into WebMD and you know along that Journey, I also had a lot of personal experiences with the healthcare system. Unfortunately, having had ten friends my age or younger die by the time I was 40 gave me a very unique look into health care and some of the devastating impacts of it.
Don (PMN): Yeah sure, it affects you personally in a big way, 10 people, that’s pretty incredible. Well, to start, could you tell me a little bit about the Health Rosetta’s Mission and how you’re progressing towards that?
Dave (HR): Yeah, I mean really everything we’re doing you know is about overturning the devastating effects of the status quo health plans. So that individuals can realize their full potential. We are now in a 20-yearlong economic depression for the working and middle class as a result of health care prices inflating, prices not cost. The way we challenge the status quo is to provide a proven blueprint for optimizing well-being through world-class benefits that are affordable, often costing 30-50 percent less and providing easy access through our ecosystem to align benefits advisors. Unfortunately, there’s a lot of problems with the way the economic structure has been set with benefits brokers and then together, you know, we provide health benefits that dramatically improve the patient experience and health outcomes while costing far less so that previously squandered money can go to which we know that the healthcare system only drives 10 to 20 percent of health outcomes and consumes ninety percent of the dollars.
Don (PMN): Sure, if we could, I want to drill down a little bit on something that you said. You said prices not costs, could you elaborate a little bit more on that and what the difference is for our listeners?
Dave (HR): Yeah, I actually have a chapter in my book on this. What I talk about is, particularly in PPO networks. So for example, you think about the doctors and nurses that you know, are they getting paid far more than they were, you know, five ten twenty years ago now, I mean, maybe it’s growing at the rate of inflation and there’s really two markets now particularly because of high deductible plans and the high prices in healthcare. There’s what I call the real market and so this market really exploded, and I have data in this chapter about it. It essentially has two elements. It’s a cash paste, you know market where people are just paying out of pocket and its direct contracts where middlemen are removed. In that market, the real Market, my view prices have been flat for 5 to 10 years. There’s another market that the majority of people operate in that is enabled by PPO networks and there’s this fiction of medical trend that gets put out there and so prices go up even though the underlying costs have gone up. I mean probably the only real exception is in specialty pharma in terms of, underlying cost actually having gone up. Even there, that’s impacted by some distortions around pbms and how hospitals radically markup those drugs, but that’s probably the one exception.
Don (PMN): Is that because it’s mostly online, or primarily online?
Dave (HR): Which part?
Don (PMN): The specialty pharmacy.
Dave (HR): Oh, no, I think the Specialty Pharmacy. I mean, you know, there has obviously been a lot of breakthrough biologics and different therapeutics like around cancers and things like that, that have high price tags because maybe they don’t have as big a market as you know, something’s wrong, you know blood pressure medication. So yeah, there is plenty to talk about there. But that’s probably the one area where you could say the underlying costs and prices are somewhat correlated. Whereas where we’re spending 80 percent of our dollars on medical care and whatnot. That’s where there’s a real distortion between the underlying costs. You know, unless you call costs being hospital execs salaries and marble entryways and real estate they’ve acquired and things like that.
Don (PMN): Yea, so where do you draw the line then between price and cost?
Dave (HR): Well to me, you know again this real market, people are getting great care and great outcomes and the physicians, surgery centers and so on are very happy and thriving economically and so there’s a fair trade if you will, between the two parties in the kind of this rigged sort of PPO market. Both parties aren’t satisfied, one is massively profiting while the other is getting bankrupted.
Don (PMN): Sure, I know that you’ve written a lot about the opioid crisis. You’ve written a book about the opioid crisis. If you could, can you summarize your thoughts on how you feel the opioid crisis came about, and what actions our listeners can take to help break this cycle and avoid another crisis coming down the pike.
Dave (HR): Yeah, I mean I would try to summarize it maybe by an example and sort of high-level address it in terms of the last book I wrote, called ‘The Opioid Crisis Wake-up Call,’ and it looks at the broad dysfunction in our healthcare system through the prism of the opioid crisis and the basic thesis is, the opioid crisis is an anomaly, it is our healthcare system and it outlines how there’s twelve major drivers at least that I found on the opioid crisis. It’s unfortunately being greatly oversimplified by media and government and 11 of the 12 major drivers, the employer is the key unwitting enabler, you know, there’s the expression ‘every addict needs an abler.’ Well unwitting is certainly the key word here, they’re not intending to do this but their actions or inactions have led to that and the way I would kind of summarize it, is by way of example with lower back pain, because it kind of captures what’s going on more broadly. So lower back pain, you know, that’s the second most common reason people go to the doctor after cold and flu and it’s the number one driver of disability and it’s the number one driver of opioid prescriptions, even though there’s essentially zero evidence that it’s the most effective method for caring for lower back pain. At best, it masks short-term pain while the underlying problem exists. It may be like we’re driving down the road and suddenly my car is making horrible noises. I could crank up the radio and drown out that sound but the underlying problem with the car doesn’t get fixed.
Don (PMN): Right, focusing on the symptoms and not the root cause of the problem.
Dave (HR): Exactly and you know it’s actually interesting. I did a TEDx talk and highlighted this employer that’s really an amazing story in many ways, but I wasn’t focused on the opioid issue at that point when I did that talk and then wrote my first book on where they were mentioned. I had this hypothesis that if you had proper primary care versus this kind of drive through, hamster wheel model that’s… I don’t think you can even call it primary care anymore. It’s just kind of milk in the back of the store to get to the high margin stuff that you wouldn’t have the opioid problem. So, I went back and said okay, this is a company that’s got physically demanding jobs. It’s a hotel company with 5,000 employees. You know, they’ve got Maids, they’ve got maintenance workers. You’d think they might have some problems here and they’d say “hey, what’s your prescription rates for opioids?” And I would say well, I don’t know, we’ll go look.” Turns out there at 1/6 of the level of a typical employer even though they probably have more physically demanding jobs, which essentially puts them at the level of France or Italy where you know, there’s appropriate uses of opioids, but they basically don’t have a problem there in the way that we do, and to further my point on ‘it’s not an anomaly, it is our healthcare System benzos’ you know the category of drugs for like Valium and Xanax and so on. It’s essentially tracking at the same rate of addiction and overdose death as opioids are about a decade behind. It’s again, the situation where we’ve just devastated primary care and then we have these kind of quick fixes and they really aren’t fixes, you know, and here we have this big problem and I like to remind employers that, given that you think about the people who are impacted by the opioid crisis overwhelmingly, they’re working age people or their dependents. So, you know, it’s employee-based health care that’s fueled most of this and every CEO I’ve ever spoken to says something along the lines of ‘employees are our most valuable asset.’ So what I say to them is well, you need to act like it, you know, we are the undisputed world leader in medical bill driven bankruptcy, you know, while spending 50 to 100 percent more than others while having the worst health outcomes and it’s 47 times safer to jump out of a plane with a parachute than it is to be admitted to a hospital in terms of preventable medical mistake death and opioids are just you know, one example of potentially harmful effects. They really need to take control because if they do believe that employees are their most valuable asset, they’re doing a terrible job of stewarding that asset and they could get a much greater return if you just want to put it in capitalist terms.
Don (PMN): Sure. So, in your view then, what is the appropriate role of the employer in this healthcare equation? I mean is it to continue to facilitate healthcare through the employment practice or do you think that that should be removed from the employer’s hands entirely? I’d like to know your thoughts on that.
Dave (HR): Well, I mean there’s a bigger public policy debate around that, that we could go into but as long as we have the system we have, I’d say probably the one chapter title that you know resonated more than any other in my books is a title that says something to the effect of you know, you run a health care business whether you like it or not. Here’s how to make it thrive and you know, if employers are your most valuable asset and you know, if you don’t have your health you really don’t have much, you know, there’s some logic there. Now, there’s a broader discussion, politically which we could get into is, you know, employer-based healthcare sort of an accident of history. We also have a dynamic where ninety-four percent of the net job growth in the last decade is in jobs that don’t come with traditional health benefits, it’s freelancers and contractors economy and so on so there’s a broader discussion there that we might have, but as long as they’re in that business and that’s not going to probably change any time real soon, just put on your problem solving hat like you do in every other area of your business. I mean companies tackle more difficult issues than healthcare. They’ve just sort of been trained to not worry about it because… one once upon a time, when this stuff all started, healthcare costs might be one percent of payroll or something like that. Well the power of compound interest, you know, created a very different scenario.
Don (PMN): Yeah, indeed and I’m aware of some employers that are rewarding employees for doing healthy things and they’re providing healthy activities or opportunities to partake in healthy activities to improve the health of their employees. More of one, a close friend of mine, their employer actually reduces the cost on their end of their health care that comes out of their paycheck and then contributes more to that if they put together some sort of a healthy action plan where they’re walking 10,000 steps a day or something like that. Is that where you see this going? I mean, where do you see this whole healthcare in the hands of the employer? Where does that evolve into?
Dave (HR): Yea, I mean somewhat, you know, counter-intuitively, I’m all for true wellness and we’re doing this call quite early and I’ve already gone out for a run and gotten back and so I eat well and all that so I’m all for that. But I guess to be a bit of a contrarian and backed up with a lot of data. I’ve got a chapter about how workplace wellness programs are hazardous to your health. There’s actually a pretty good case to be made there, and so it kind of goes through that, and one of the key things if you want to actually have your healthcare costs and outcomes optimized you have to recognize that most of the things that are impacted by workplace wellness programs aren’t actually what’s driving costs. It really boils down to the biggest thing as what we call outlier claims. These are the 5 to 8 percent of the employees who consume 50 to 80 percent of the dollars and it’s a different set of employees every year and so it’s not just like, oh, here’s some problem employees. I mean there can be a little bit of overlap but overwhelmingly it’s a different set of people and so that’s where you got to have very specific strategies and that’s where you see things like true centers of excellence where unfortunately there’s pretty horrific levels of misdiagnosis ranging from about 20% in cancer to 67% for spinal issues. So, of course, if you don’t have the right diagnosis, everything is kind of harmful both medically and financially and so that’s where you got to have very specific strategies. So, we kind of lay that out like whether it’s an organ transplant or neurological procedure or cancer. You better get people to a Virginia Mason or a Mayo Clinic or things like that. So that’s where you see organizations, you know large employers now, it’s been democratized to really any self-insured employer and most you know, I think about two-thirds of the workforce are in self-insured employers’ scenarios. So, it’s very easy for a $100,000 cancer case to turn into a half a million or a million-dollar cancer case if it’s not well diagnosed and there’s not a good treatment plan. I mean Mayo Clinic, they found about 20% misdiagnosis. But even when there was the right diagnosis 40% of the time, they made significant treatment plan changes. So those types of things are really what’s driving the cost issue more. The workplace wellness programs are really in my view another attempt to kind of blame the victim, you know, in terms of the employee. Now, of course obesity and smoking these issues are an issue that will grow over time, but that’s not really what’s driving most of the cost right now.
Don (PMN): Sure, is not necessarily the lifestyle choices. Although they may be detrimental to those individuals’ health and to the healthcare system at large long-term, that’s not what you’re saying, that’s not what the problem is with it currently.
Dave (HR): Yea, I mean, when you talk about rebuilding proper primary care, you know, there’s three pillars and one of the three pillars is sort of the rising risk and how you go upstream and you know with people like health coaches that are actually quite effective at impacting lifestyle decisions, a lot of people just simply don’t know how to shop properly at the grocery store, you know. It’s things like that, or they don’t know how to use the transit. Maybe they have social isolation. The health coaches will go teach them how to use Transit. I mean its kind of regular human stuff, not necessarily medical stuff that makes a big difference.
Don (PMN): Yeah, good stuff. Okay, well, I’d like to take a pause now. I want to hear a word from our sponsor and then when we come back, I want to dig in a little bit more into the current state of affairs with the healthcare system and the political climate and take a little bit of a deeper dive into that.
Don (PMN): All right, welcome back everybody. We’re here with Dave Chase, co-founder of the Health Rosetta, and we’ve been talking a lot about the opioid crisis and the current state of affairs in the price versus cost equation of our healthcare system and the employer’s role in that and I want to kind of shift gears a little bit now. I want to talk about the current political climate and the current state of affairs in the healthcare system. I would kick it off by saying…if President Trump called tomorrow and said ‘Dave, I need you to help me to fix the healthcare System.’ Where would you tell him to start and why would you tell him to start there?
Dave (HR): Yeah, I’d answer it in kind of short, medium, and long term. You know, short term actually provided a fair bit of input to the senate help committee, which is the most important committee in congress on healthcare and there’s a bill called the ‘lower healthcare costs act’ and they did their homework. There’s a lot of things, it’s not going to solve all the healthcare problems, but if it passes, and I’m sure there’s going to be plenty of obstacles along the way, but it shines a light on the issues and it’s a significant superset of what the president announced fairly recently in an executive order and that’s a good sort of short-term punch list of you know, there’s like transparency around how benefits consultants are paid, and how pbms are paid and contracts between hospitals and carriers and things like that. So, there’s some good stuff in there. Then medium-term talked a little bit about primary care. I mean if you want to talk about making something available any way possible, universally it’s rebuilding proper primary care in this country. There’s no well-functioning healthcare system in the world not built on a good foundation of primary care and you know, we’ve essentially destroyed it over the last 20-30 years. So that’s actually an area where there’s been quite strong bipartisan support, you know the last couple decades. Then long-term, where I think ultimately right and left will meet is an idea that I’m developing around what I call community-owned health plans. So, it’s sort of re-localizing healthcare. I mean, what’s more local than interaction between the patient and the doctor. Yet, you know, you take a community like mine where you know, there’s no locally-owned health plan, there’s no locally-owned health system, over half of the dollars so-called healthcare dollars get extracted out of our local economy and are taking away from things like education, and clean air, clean water infrastructure, you know, social services, public health, all these types of things. There’s a zero-sum game opportunity there. So, we’re starting to see this. This is actually you see places, you know from parts of Alaska, there’s examples of this in Wisconsin and you can go abroad, you know people tend to think of Sweden as a monolithic socialized system. Well, it’s actually governed at a more of like the equivalent of about a county level and there’s some great examples there. You see places in Spain, Brazil’s got 20 million people and health cooperatives. So, these types of things get a longer story that I’m happy to get into, but essentially health, you know, shouldn’t be rented out. You know, you need to own it in your community since 80% of the things are driven by non-sick care system things and then certainly, you know within the healthcare system side, there’s a lot more that can be done and properly governed and you know, it’s probably more like the equivalent of a school district or a fire district governance level. The sort of local control, and taking responsibility, if it uses something like a Medicare advantage type model like the private and the left likes the social impact and everybody being able to reach their potential. Really, everybody likes getting rid of distant, unconnected, insurance bureaucracies and getting rid of waste and abuse and fraud. Frauds are easier to do in these sort of disconnected systems and sadly there’s FBI and others will say that 10% of our healthcare dollars are spent on fraud and a lot of that is actually offshore. You know, it’s leaving our economy. So, shop local kind of returns to healthcare.
Don (PMN): Interesting. I don’t want to get too much into the weeds on this but isn’t there an argument to be made that governing things at that local of a level when it comes to healthcare. Doesn’t it have its own problems inherently? Are there specific challenges that you’re aware of that those folks are facing?
Dave (HR): I mean in general those places, because really what I’ve been on for the last decade is a scavenger hunt trying to figure out what’s already working and then what are the common threads whether it’s an employer level or at a community level and so for sure, there’s no perfect system. But if you look in the bang for the buck, we always apply the quadruple aim, you know, does it improve the care team experience for both the professional, and non-professional members of the care team, does it improve the patient experience, does it improve outcomes as a lower cost? These are the organizations that you know decade after decade, having the strongest results. So for sure there’s always areas to improve, but I always like to remind people, you know health doesn’t start in a hospital or a pill it starts with Mom, Dad and home, you know, and then the further you get from Mom, Dad and home the more bureaucratic it gets and the more costly it gets.
Don (PMN): Sure, it kind of ties that together in the current political climate. I think both the two major parties in the United States are really taking aim at pharma and telling them you’ve got to reduce prices. Is there any advice or insight that you can share with our pharmaceutical marketers and in our audience around drug pricing and how that can change?
Dave (HR): Yeah, I mean following on the lower healthcare costs act, there’s some transparency around PVM payments. So I think for pharma, you know, that’s your friend, in terms of getting that out there I mean, I have a lot of friends in pharma who are very frustrated with how the whole distribution process works and how everybody has got a hand in the pie. More broadly, you know, one of the pieces I wrote for Forbes a few years ago, outlined what I called pharma’s Stark Choice, a future that looks like IBM or Martin shkreli and IBM is a great example of a product company that transformed into kind of a solution and service company and you know obviously pharma is not excited with having somebody like Martin shkreli as the face of the industry, which for a time he kind of was. You know, there’s a number of strength just as IBM had strengths, pharma’s got a number of strengths that can be repurposed in a lot of ways from its provider relationships through sales and medical affairs and really understands the landscape through clinical trials, management, and you know kind of data analytics and having a long-term view, you know, this is a time to be investing in those things. You are starting to see some examples of pharma investing in or requiring digital therapeutics companies, and I think what you’re going to see is kind of one plus one equals three on a lot of this. So it may be spinning off new businesses and the other analogy will sometimes draw it with Microsoft and how there was a very different story and how they did MSN vs. Xbox, you know both were really critical areas to their future and they both threw a lot of money at it, and there’s a lot of smart people working at it. For one case, they were really shackled by the mothership and the other in the terms of Xbox, they separated that culturally, physically, brand wise, business model wise, and we’re able to use the resources of Mothership. It was an enormous investment, but Microsoft has done very well there and is well positioned as anybody in the living room, which is one of the next battle fields. Whereas MSN, you know, was so shackled by people thinking oh, this is just like Windows or this is just like office and it’s totally different. So, I think there’s some lessons to be learned there from what IBM did.
Don (PMN): Yeah, very interesting. So, I want to dig in a little bit to something. I read a tweet of yours, I guess from a couple weeks back where you mentioned something about the great heist nine. I know there’s two parts to this when we’re using that phrase ‘the great heist’ in context with pharmaceutical drug pricing. I’d like you to touch base on this a little bit of the film that you were crowdsourcing. I don’t know if that’s still active. Can you tell us a little bit more about that?
Dave (HR): Yeah do you want me to start with the film or the PPO PBM side of things.
Don (PMN): Yeah, let’s start with a PPO PBM side of things. I think that falls more in line with the conversation and I’d love to hear a little bit more about the film when we get through that.
Dave (HR): Yeah, really I focus mainly on the PPO side, although there’s some similar dynamics of the pbms and there was a Forbes piece that you know, something to the effect of have ppos, created the greatest heist in American history and I write about some of this in the book, spoiler alert, yes, it has. I go into how that whole scheme is worked and what the successor of that already is and what’s emerging. There’s what we call pricing failure where there’s no correlation between what you pay and the value you receive and that’s endemic in ppos. Whereas the successor is something called, transparent open networks where there is a correlation between price and value. So that’s kind of that side of the highest and then related, as we had a crowdfund for a film called ‘The Big Heist’ and it talked broadly about the healthcare heist and how it’s what I believe is the greatest wealth transfer in American history from the working in middle class to underperforming healthcare system and that has morphed into a couple of things. So, it was originally thought of this kind of a documentary mockumentary. We got some nice visibility through successful crowdfunding and ended up becoming business partners of the former Disney and Sony president and then also became a consultant on a show called the resident on Fox, so they just finished their second season. Even though they were in a pretty tough spot, they already got 10 million and they’ve renewed for a third year. So, some of the storylines I talked about in ‘The Big Heist’ in my book have certainly gone in there. You’re going to see some pretty interesting things next season that I can’t get into but are very much impacted. Then the other one that is more long term and we decided that if we really want to, to some extent…control the narrative, where you can’t really do that in the documentary. It’s kind of where the story takes you. You need to do more of a scripted thing. So, we have something in development that if you’ve heard of the show ‘The Black Mirror’ sort of loosely hints at the concept we’re working on is sort of like a near-term Sci-Fi thing of soap. Probably enough said on that, but so there’s some work there, so you know it’s a process for sure. But ultimately the whole point here is the Health Rosetta is this grassroots movement that we’ve catalyzed and as I studied great societal challenges, like civil rights and climate and better food and so on. What you see time and again is that there’s a pretty significant grassroots movement, but the general public doesn’t see it until there’s some catalytic moment. Whether it’s Selma, you know in terms of civil rights, or Super-Size Me food Inc., the Inconvenient Truth, that kind of brings things into the broader public consciousness and you want to be ready with that grassroots movement to be able to move on that. So that’s where our media efforts with the book, the resident, and the stuff we’re working on comes in as a way of basically waking people up. This is the wake-up call, you know, title in my last book is this is a solvable problem, you know, this isn’t like trying to solve Middle East peace, even though a lot of people think fixing healthcare is the equivalent of that. There is hope, you can do it…here’s hundreds of examples and it’s being done every day by large organizations, small organizations, private, public, rural, and urban. I haven’t found a place where it’s not working. It’s just still the exception to the rule and we’re just trying to change that.
Don (PMN): Yeah, I think that’s an incredibly important point that this is a solvable problem and you mentioned the word ‘hope’ there is hoped to resolve this. In fact, one of the things that I liked about reading about you was that you’ve been referred to as the hope merchant, and I thought that was really interesting. I was asking you a little bit about this before our interview here and I’d love to hear you expand a little bit upon that and where that phrase came from and a little bit of the background.
Dave (HR): Yeah. I mean what happened over and over was either somebody read my book, or they heard me give a talk, or they watched the TEDx talk and the one word that just kept coming back over and over was hope. Like ‘wow, you’re actually giving me hope, I was so depressed on this’ and you know, I’m not naive about the challenge ahead and three and a half trillion reasons to protect the status quo and all that. But we’re following a system change model that led tens of Millions of people out of poverty in India and is now remaking a key part of the food system in the US. So actually, it’s pretty compelling around how it can work and so people are excited about that and they want hope, I mean everybody wants hope and somewhere I wish I could remember who it is. I didn’t coin the term ‘Hope Merchant,’ I read that somewhere and I was like, “I don’t have many characters in my little LinkedIn or Twitter profile. So, I’ll just throw that up there” and thought it just kind of resonated with me. So, I took it.
Don (PMN): Sure, yeah. Well, I think it’s really fitting and you know, I think we’re all thankful for folks like you who see big challenges and big problems at a societal level and work so hard and so passionately to break them down and figure out, you know, the best methods for change the best route to change and I thank you for it. I also want to take a moment here because we don’t have all day, I can talk with you about this stuff for hours. But can you let us know where folks can go to learn more and maybe dig a little deeper into your book?
Dave (HR): Yeah, definitely. You can go to Halthrosetta.org and if they just go / friends, there’s a link that they can download two of my books for free. They’ll get the pdf version. You know, they scan it and of course there’s different ways to purchase it and there’s links there as well. So, we just want to get the word out on that, and you know, we’re fully cognizant that this is a 10-20-year Journey, and as I sort of joke, sometimes people are like “you’re delusional for taking this on.” Well, I think we’re less delusional when you see all the results and at the same time sober that yeah, this is a 10-20-year Journey. You can play a different game and make big stuff happen when you take that long-term view.
Don (PMN): Well good stuff Dave Chase. Thank you so much for joining us here on the Pharma Marketing Podcast. It’s been a pleasure, great conversation and a lot of good information. I’ll put some stuff in the show notes for those links that you mentioned to download the free book and best of luck to you and onward keep doing the good things that you’re doing in fighting the good fight. Looking forward to seeing what’s coming down the pike.
Dave (HR): Well, Thanks so much for having me on and I look forward to hopefully people downloading the book or reaching out to me.
Don (PMN): Alright, wonderful. Thanks again, Dave. Take care.
Listen to this podcast, Ep. 005 – Dave Chase here: https://www.pharma-mkting.com/the-pharma-marketing-podcast/