How Healthcare Stole the American Dream – Dave Chase | Hint Summit 2017



love to introduce our first speaker a gentleman named Dave Chase raise your hand if you've never heard of Dave Chase seen his writing some Forbes heard about his Institute heard about the movie he's producing okay I figured no need for an introduction with that please welcome Dave chase going back to when I came back into healthcare and I was the start of starting and so you know what you do for market gaps you make some bets on how the future is gonna hold and to me this was years ago model cutout non-value add middleman I think pretty obvious particularly garrison was here so it was it was fun to see that seat garrison I mean I think he's like the the father or grandfather of a lot of the practices in here and anyway as I went out searching for a market gap what I found I believe is the greatest heist in American history and I think the people in here can have a lot to to say and do about that so I'm gonna get into it and provide a little context I'd start out with if you think about the 2016 presidential election certainly the most unique one in my lifetime I think the biggest media whiff on that was the story of the middle class you know if you keep in mind that a definition of an economic depression is two or more years of income decline by that measure the middle class has been in a 20-year long economic depression you know it would have been actually shocking if there wasn't crazy stuff that happened and so I believe there's an opportunity to really change that and so I'm going to go into that in some detail this is a chunk of a book cover for a book I've got coming out this summer and I really believe that the health care system itself is the greatest existential threat to our country and I don't think you can solve health care without direct care and so I think there's a lot at stake in this room take a look at the youngest boomer 52 years old been working for 30 years if you look at what the employers were paying for their health care and bear in mind most people who aren't the vast majority of people who aren't poor old get their health care through work and had health care costs grown at the rate of inflate regular inflation from the time they started their career you know it's versus well in an S&P index fund the average American household would have over a million dollars in their retirement accounts unfortunately despite the fact that employers are spending far more on employees and they did 20 years ago all those dollars and then some basically have gone to health care if you you know keep in mind there's been 20 years of wage suppression and decline and the result of that is 70 percent of American households have less than $1,000 in savings half of those people have basically no savings and we now have passed the 50% threshold for over half the workforce has over $1,000 deductible and so the math simply doesn't work in that instance you know the one thing that it's undisputed that were the best in the world out in health care is medical bill driven bankruptcy and so we need to do something about as bad as that is for the boomers it's worse for Millennials if you read one book in health care it would be David Gould Hills catastrophic care in that he goes through Becky who's a millennial working for him makes some assumptions about her life and how her income would grow and basically she leaves loves a healthy healthy life and he actually presents an optimistic scenario which is that health care costs will only grow at half the rate of inflation which I don't know if they've ever done and in that scenario again very well sourced you see kind of the apart above the surface of this iceberg that is the things that Becky sees you know her co-pays and her share of the premiums and so got 600 600 thousand over the course of her life but really the below the surface it's all these other things that are directly going to pay to what I call morbidly obese health care system those are all coming out of her paychecks so in this optimistic scenario half of her lifetime earnings go to health care in a more real realistic and maybe even still a little bit optimistic scenario where health care grows at the rate of inflation 75 80 percent of her lifetime earnings go to health care I mean that's being an indentured servant I think there'll be riots in the street before that happens we can do something about that and I think Millennials are a particular opportunity because the oldest of the Millennials are leaving the invincible stage of their life where they're starting to have their own kids some of their own maladies like most of us we didn't pay that much attention to health care if we weren't in the industry and if you look at health care it's pretty much designed perfectly for Millennials that is if you do essentially the opposite of everything we do in health care and so with that I think that presents an opportunity and one thing I would bear in mind this is a little bit of a chart but some of you may have seen this study of studies that Robert Wood Johnson Foundation did and it basically bubbled up what actually drives health outcomes and by the way this I'll make this deck available so if anybody wants it you can get the details on it but basically you know the upshot of the is clinical care only drives 20% of outcomes the other 80% of outcomes are actually driving out overall health count you know health outcomes so whether it's social and economic factors health behaviors physical environment these are all the things that drive outcomes and when you look at this next slide point in the right direction this is data from Massachusetts which i think is an interesting kind of preview of coming attractions we know Romneycare was kind of the the sort of template for Obamacare and this is at state level spending basically since the turn of the millennium and you know you can only increase taxes so much so the dollars that are going to pay for you know government workers and Medicaid in Massachusetts have to come from somewhere so you look at the items that they've come out of largely it's a social determinants of health and while you know Boston is sort of held up by some is kind of a beacon of our healthcare system I think it's a beacon of the dysfunction of our healthcare system while there's obviously pockets of brilliance in places like partners you look at what it is done and literally in the shadow of billion dollar medical facilities is methadone mile which is ground zero for the opioid crisis in Massachusetts and that's an entirely healthcare industry caused issue and we can do a heck of a lot better than that taking a step back and I think any of this I hope that many of you steal these slides using them in your community you're all leaders in your community people trust the medical profession and doctors in particular but one of the big picture things is this book that for the chairman of Gallup wrote called the coming jobs war and he argues that we're actually in this early stages of World War 3 and it's a war over jobs and it will have as profound impact on which communities have success and thrive in the future and he goes through a number of things you could imagine about what would lead to a successful community but makes a point that healthcare costs you know if you're a high value or low value community that would wash away any tax break you could give I mean because economic development 1.0 was kind of just happenstance you know you happen to be a port city or a transportation hub economic development 2.0 was you know throw some tax breaks to retract or retain maybe put a marketing veneer on your Community Economic Development 3.0 is playing the healthcare card and there are already we're seeing Canaries in the coal mine on this in terms of companies that are actually acting on this information so a good example that is there we go IBM they saw this this is what they were seeing as far as their healthcare costs and what they were projected to do and they realized that increasingly they weren't competing with HP and traditional American companies they were competing against Wipro and Infosys and so they really had to get their their cost down which they've done quite successfully so that far right bar is not their reality they've actually are spending about a third less than a typical company and what this has done is really they've done what I thought was a good way that a private equity firm we were talking to recently described it so they Blackstone they have about six hundred thousand employees and all the companies that they own about half of those are self-insured and the first meeting that they have with a newly acquired CEO they say it's a manufacturing company they'll sit down ask them this question how's your healthcare business you know usually get a puzzled response you know puzzled look in response to that and they're like well we're a manufacturing business you know what are you talking about and like they've course looked at the financials and say they're spending 32 million on health care so how's your thirty two million dollar health care business they oh you know and by and large what you see is the people who are running the spend in health care they're not the people you would have run a thirty two million dollar division of a company and that's that's one of the things that's going to really change and is starting to change and you look at on the 401k in retirement benefits side 401k administrator that's a very serious role well compensated well aligned and yet we probably spend twice on health care that we do on retirement benefits and so that's going to present an opportunity and and you look at what IBM did when they were looking at basically where would they put jobs they you know did this global study their health care spend and you know this is a variant on this graph you've seen before we've got longevity I mean a per capita spend on the vertical access and longevity on the horizontal axis and this is actually one of those graphs we want to be bottom right and so you see two clusterings of figures from 1975 and 2005 so you see all the countries kind of banded together in 1975 and then they all kind of move up and to the right so costs have gone up but also longevity and then you know in American exceptionalism we stand out in that we are way off the chart and then we actually backslide in terms of longevity but then you see this Dubuque Iowa well that's one of a few communities that's actually their value proposition is like Japan or Netherlands in terms of bang for the buck so guess where IBM puts thousands of jobs in Dubuque Iowa so that's a different kind of mindset that employers are starting to bring and one of the things that I've observed in healthcare is baked into almost every legacy business model inside a healthcare is this assumption that employers will remain there in their duties to manage a very important spend I think that's a really bad bet I mean employers probably spend about a little over half of the healthcare dollars perhaps a little bit less but when you look at the profits it's probably two-thirds to three-quarters of the industry profits because most employers are basically like you know Joseph Hazelwood you may remember he was the skipper on the Exxon Valdez they're kind of drunk and asleep at the wheel and that you know they're heading towards the rocks most employers have hit that spot and are really gonna do something about it this is what I call the Bernie Trump slide and so this is from The Wall Street Journal a Brookings study that basically looked this is an article in the fall and again it's kind of that micro household level what does health care done to people and you know the you see at the top of course health care spending is gone up that was 2007 to 2014 and you look at what has come out of you know to pay for that this wasn't like we're canceling our vacation to Tahiti this is food transportation clothing the picture that they had in that article was a couple in Boise that was on their boat fishing because they couldn't afford enough protein at the grocery store so they are fishing for their protein I mean this is why you have the level of anxiety and angst and anger because of that and it can't stand so one of the things I know we're going to talk about sort of category creation if I have one thing that I have some competence in and passion for it's sort of industry ecosystem shifting and thinking and so what we're doing and it's a bunch of us is looking at how do we fix this and the thing that in this kind of scavenger hunt that I've been on over the last seven eight years it was who's actually already fixed health care because you know there's that old quote the futures here is just unevenly distributed and as we say on our Institute site Health Care's fix we're scaling the fixes and so as I thought about this and it was just frustrating to me that these people who was theoretically it was their job to know things in fact talk about direct care direct primary care I remember talking to insurance executives benefits consultants about DPC and direct care and like I'm pretty busy running a tech startup and doing some writing and stuff and I'm finding this and you would thought I'd showed him fire for the first time I mean it was like crazy and so I was like just out of frustration I'm just gonna give it a name health Rosetta cuz you know Egyptian hieroglyphics were indecipherable one time and the Rosetta Stone decoded those well the I looked at the people who'd fixed health care is sort of they decoded this indecipherable health care system for a lot of people it is indecipherable and they just kind of lock up or they look at it maybe depressingly like Middle East peace where it's like they know that's a big problem they like it's all but it just seems kind of hopeless and out of their control and certainly the health care system profits from that feeling of helplessness and so I called the Health Rosetta and so as I thought about you know the magnitude of this problem that we have this is on the order of civil rights better food climate change I mean this is a massive problem and if you look at how our you know how those aren't all solved but we've made some headway in those areas much more than health care if you look at what catalyzed those changes it was catalyzed by media and film and then some other things but median film you know an MLK's day you know it was the evening news and the morning newspaper I mean if he was alive today doing this thing he'd probably be on vine and YouTube and Facebook live and and this sort of thing and you know you look at climate you had Al Gore's film I think it was a real catalyst you look at you know the food movement you know things like food Inc and supersize me have driven that and so I realize you know media plays a big role and so that's the first piece of this in terms of the kind of air cover like how do you create sort of a better you know field to play on and so there's the book I mentioned that is really targeted CEOs of companies I think they have an incredibly important role to play and then the big heist as I say you know I went looking for a market gap and found the greatest heist in American history and so I just put that out there it's like hey somebody needs to make this movie nobody's made this movie we've got some wonky you know PBS worthy documentaries but Joe Sixpack doesn't you know watch those you know we need to to reach people and you need to do that in a very entertaining way and so I threw that out there and just hope somebody actually would do that people like that's a great idea you should do it's like I don't know anything about making a film and I still don't really but what I realized is in some ways it's actually awful like a lot like a startup you know you build a great team you tell a story you raise capital and by putting out there it's been incredible the people that have come in and my business partner now is a on this is a former Disney Sony president and just some incredible things that have come from the community it's really great connection some of which will tap into later as we come out so that's going to hopefully create some awareness I think wake up America is basically objective there and then it's gone down to the ground game so I'm going to get in a little bit on this notion of education and certification and talk about that I would say broadly the way I would characterize that is if you're familiar with lead that has really taken sustainable building practices from a fringe concept 20 years ago to a marketing advantage for developers ten years ago to the default way buildings are either built or remodeled we're the this is basically the health as a blueprint for how to purchase health care smart we're actually focused in on employers but really it's it's actually not even employer specific or even u.s. specific but you got to start somewhere so I'll go into what we're doing there and then on the other piece of it is capital matters and so we one of the pieces of our investment fund that we have is a early-stage tech venture fund so when I met Zack and learned about what they were doing it was really obviously because actually my startup we worked with a lot of direct care providers and a bunch of them were asking us to build what hint belt and I was like no no we're focused in this area and so we couldn't do that and so it was like click you know we we invested so full disclosure we're investor and hint and and there's basically the health Rosetta is also the investment thesis for our investment themes both early-stage tech venture but also later stage more private equity type of investments so let me get into a little bit more about this sort of certification and what it is we're trying to do and hopefully have you know you participate in this and be aware of it we think that addressing the employers is really important and what we have seen is great in terms of there are employers spending twenty to fifty five percent less per capita on health care with significantly better benefits packages they're not just like cutting off spend and we've seen that in small companies large companies urban settings rural settings private employers public employers it really runs the gamut there's no excuse I mean really the common thread amongst these employers is they have a spine and a brain and they're willing to stand up to an industry that really you know kind of hoodwink some frankly a lot of times so let's go through a little bit more detail there's some common threads that you see beyond the having a spine and a brain which is certainly you know primary care is fund a tional you see that in every case and then they take these if you look at a typical companies depending on their size and where they have a stop loss it'll be as as few as 6% of their employees will drive 80 percent of their spend because of outlier claims so you have to have a really thoughtful strategy on that and these organizations do that and they take it like any other big cost item and tackle it and so you see incredible things my favorite is rose and hotels and you look at the impact on their business and how they've been able to grow massively without having to take on debt and they have a challenging patient population I mean an employee population 56% of their pregnancies are categorized high-risk so it's not like it lay up and despite that they're spending 55 percent less and so they can then take that money that would have otherwise been squandered in health care and provide great benefits so employees have free primary care on the clock and free transportation to get there after five years of service employees get their college education paid for after only three years of service the employees kids college education gets paid for but they don't stop there they adopted a nearby crime-ridden neighborhood invested in daycare pre-k after-school program so so far four hundred and fifty college education during that time crime went down 67% and high school graduation rate went from forty five percent to nearly a hundred percent the total investment for that was less than five percent of what they save compared to a similar employer and so now they're adopting a neighborhood five times that size so that's what's possible when you don't buy what I think is the biggest lie in health care that you can't control healthcare costs and so really what we're trying to do is provide this kind of Good Housekeeping Seal of Approval on practices in health care and it's a voluntary deal and so like lead they started out pretty focused but they had a big vision we have also a focused strategy big vision to begin with phase one really years one to three is about people like benefits consultants and their counterparts inside and really gilding that role leveling up that role inside of a company phase two is going to be about products and services and different components and then longer-term you know five to ten years out our places and you know in the breakout session I can go into more detail if you're curious about what some of those things are but we're starting very focused basically like a startup in a narrow area and proving it out and we believe that employers are a particular opportunity because they can operate independently they are shouldering the burden along with their employees and there's an imperative to do that and the thing that the employees employers that I spoke to earlier they had to do a lot of heavy lifting frankly and their benefits consultants had to do a lot of heavy lifting to do that we need to reduce the friction for them make it a lot easier to do the right thing and so that's a big part of what we're doing and then really what we're trying to do if you think about the benefits consultants they have an incredible influence over what employers do for better for worse and probably 95 percent of cases it's for worse and so you think about the parallel with you may remember stockbrokers that existed like 20 30 years ago and largely went the way the dodo bird well the smart ones reinvented themselves into financial and wealth advisors and thrived and you know a new breed arose and so we're really trying to accelerate this shift from you know today's benefits brokers are the stock brokers of yesteryear and so we need to shine a light on the folks who are the the right stuff have the proper disclosures and have their incentives aligned because what you find is that they're pitching themselves as a buyer's agents but they're really they're compensated like a seller's agent in most cases they're in a lot of cases just a glorified sales force for the insurance companies and whatnot so we really need to change that dynamic and we think that's one of the ways we move the needle so kind of wrapping up we think if you fix how you pay for healthcare that actually changes how we go about providing care that in turn drives good things I mean the name of our tech venture fund is the quad aim fund because what I observed over these several years is you know probably everybody in this room knows the Triple Aim but what I found is the folks who are actually achieving the Triple Aim on a sustained basis focus in on the Forgotten fourth aim which is care for the care team and so it's kind of common sense not only is that that good for the care team but that naturally leads to that better patient experience and I'm sure many of you have seen that's when the kind of magic happens where's that partnership between the care team and the patient and by the way it's also the non-professional members of the care team families have a huge role to play and that's what leads to the better outcomes and in the right models that leads to the lower costs and the approach we're taking is one where we believe it's an approach that can avoid incumbent obstructionism it's kind of one of these things where it's it's so diffused it's kind of easy to ignore until it's too big to do anything about and avoids polarization so with that I'll just wrap up I have a breakout I believe at 11:30 this book I'm donating all of the proceeds from the book to the Institute to kind of get this off the ground the dollars from the the crowd fund for the film that's going to basically also that the profits from the film will go to the Institute the certification some of that will provide the sustainability model there so hope you join us I hope you join me at 11:30 but hopefully you know implicitly you've already joined this movement but I hope you get even more active in your community so applaud what you're doing and thanks for your attention Thanks

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