Employers are overwhelmed by hundreds of so-called “point solutions” designed to lower the cost of their employee health benefits and improve clinical outcomes. But that era is giving way to a new world order in which collaboration will be the driving factor that disrupts the status quo. That’s the principal takeaway from my recent conversation with Brian Klepper, a highly regarded health care analyst who is CEO of Proven Health.
Klepper says the aim is to present employers with a bold offer they simply can’t refuse. It starts with a methodical process Klepper has been focused on over the past decade that identifies and vets high-performing health care organizations that consistently deliver better health outcomes and lower costs.
He says this approach has proven to be particularly helpful in high-value niches such as chronic disease, musculoskeletal care, maternity, drugs and surgery – all of which gobble up most of the money in health care.
(The interview was edited for space and clarity.)
How do you vet employer clients?
KLEPPER: The vetting is a fairly involved process that answers straightforward questions about, for instance, longitudinal evidence for the last three or four years that demonstrates consistent delivery of better health outcomes or costs than competitors, a willingness to take on performance-based financial risk, how a plan is funded or scaling growth. If you’re funded with private equity, you’re carrying a heavier burden and your pricing has to be higher, which generally makes it less competitive.
The companies that make it through the vetting process are truly best-in-class or in the top echelon. And once that process is completed, I take them into the market. Many of the big employers, stop-loss carriers or “captive” organizations I go to are spectacular. There was one out of Ohio, for example, that just got sold that uses AI to guide the prescribing behaviors of physicians treating chronic disease patients, which is a big problem because most chronic disease management in this country is poorly done. If you test them randomly, their numbers are within acceptable limits for hypertension, which is the substrate of cardiometabolic diseases. Forty-four percent of Americans with hypertension have it under control, while 56% are out of control. So that leads to other more serious chronic diseases. This tool was piloted with two large primary care physician groups, one in Pittsburgh and one in Dayton, Ohio, with over 30,000 patients, and they got 94% under control. So if you did this one thing differently in the health care system, it would generate about an 18% to 20% reduction in total health care spend.
How do you scale something like that?
KLEPPER: It’s very difficult because the system is still set up to do fee for service, and the hospitals, health plans and everybody else likes it that way. I had one hospital system ask me, ‘why would we want to do fewer surgeries?’ And I thought, ‘that summed it up.’ We’re very much an evolving process, and the kinds of companies that I’m finding are in different niches, and the path we’re going down now is for them to come together under a single organization or contractual umbrella as a booster for managing risk, so they would be attached to advanced primary care organizations and having been integrated into part of the management. The criteria for them to participate is that they have to be vetted. They have to be willing to put their fees at risk, and they have to be willing to guarantee the results using the existing numbers that they’re already working on. The math says that we can do way better health care for about 45% of the money, and we could walk into an employer and guarantee that they’ll save 25% over what they spent last year with better outcomes.
You have a large and growing email list of what I’ll refer to as “health care hackers.” Can you tell us a bit about why you started this and who you communicate with?
KLEPPER: I did it on a whim. I’m in the habit of sending any really great piece of content that I find to my pals. And so I started sending health care articles to a group of people, and they all jumped in. And so now we’ve got about 1,200 people on the list, and many of them are quite prominent like Scott Haas of USI Insurance Services, who’s probably the country’s preeminent PBM authority. We’ve got people from the Walmart Health group, Kaiser and all kinds of different people such as lawyers, benefits managers, benefits advisors, innovative vendors, journalists and policy people. So it’s very animated, and I’m like the hall monitor. I try to make sure that people behave and don’t say things that are outrageously wrong. I’m tough on people who use misinformation.
Why do employers need the work that you do?
KLEPPER: One of the great mysteries of my career has been why the employers who pay so much for health care have been absolutely resistant to collaborating to fix problems, which is straightforward. If you don’t like the way that some vendor is treating you, you go to a different vendor.
That hasn’t happened in health care. If you ever go to business health coalition meetings, as respectful as I am of them, everybody is presenting on the programs they’re working on and not leveraging their collective purchasing heft to change how the purchase and mechanisms of health care work, and it’s become almost inscrutable. People like you and me are devoted to explaining what just happened behind the curtain and hopefully raising the ire of employers. They are the only ones in the system that can fix it. The reason for that is there is nobody who is stronger and more influential.
Do you believe that they’re beginning to wake up, pay attention and work together?
KLEPPER: Jeff Hogan [president of Upside Health Advisors] would say yes to that. He has more direct relationships with C-suites of large employers than I do. Lee Lewis from the Health Transformation Alliance might agree with that. The goal is to make employers a new deal that they can’t refuse. The deal has to be so strong that if a benefits manager blows it all because she really likes her broker and going to the country clubs he takes her to, and the CFO finds out about it, she’ll lose her job. It has to be that powerful because you’re trying to break a convention, and that’s the only way to get there. So it will either be something like that or there’ll be systemic collapse where all of a sudden none of us have any access to health care, and it’ll be remade. That’s plausible. It’s not an imaginary idea.
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