Encore! EP385: Morgan Health and the 5 Things Self-insured Employers Should Do Right Now, With Dan Mendelson

You can listen to the episode here.

[00:00:00] Stacey Richter: Encore episode, Morgan Health and the five things self insured employers should do right now. Today I am speaking with Dan Mendelsen. 

American Healthcare Entrepreneurs and Executives You Want to Know, Talking. Relentlessly Seeking Value. 

There are two big reasons why I decided to encore this show with Dan Mendelsen from Morgan Health at this exact moment in time. Reason one, it's a great show. One of our most popular shows in the last year, actually, with lots of keen insights for self insured employers.

And by self insured employers, I mean HR folks, of course, but also CEOs and CFOs. That was foreshadowing for my second reason, reason number two for encoring the show right now, it's going to be an employer CEO slash CFO triple play here on relentless health value. Next week on the pod, my guest is Mark Cuban and Mark Cuban spoiler alert has his own message for CEOs and CFOs of self insured employers.

Then the week after that, we hear from Andreas Mang from Blackstone who shares amongst other things, what happens when some company gets bought by Blackstone and that CEO shows up for a meeting with Andreas and that CEO happens to know nothing about their vast, inefficient, and wildly wasteful healthcare spend.

And with that, here is your encore for a physician practice to transform itself from an FFS fee for service machine, cranking out volume, but not necessarily health or care. The office has to have a high enough percentage of their patients in value based arrangements to make it actually feasible to transform.

It is only when they hit a tipping point of enough patients in risk based contracts that they can afford to be accountable for their results. At that point, yeah, everybody wins. Doctors, patients, actually the entire community wins. Because when a local practice transforms, all of their patients tend to benefit at some level from the new processes and procedures and standardizations and pop health systems that get put in place.

So let's move forward with this with all haste, shall we? Why aren't we? What's the problem here? Well, there are lots of problems, don't get me wrong. But a big one is self insured employers on the whole are not offering any sort of accountable care arrangements to the providers in their community. This is 150 million patient lives we're talking about here, a huge chunk of many providers patient panels.

Self insured employers have a really big opportunity to level up the care in their whole community due to the spillover effect when a provider practice transforms itself because it has enough patients to do so. But these employers are stuck. They are paralyzed. They are doing the same thing this year that they've done last year and therefore their whole community is eagerly stuck in a smorgasbord of suboptimal FFS goings on.

So offering accountable care contracts is one thing, a very big consequential thing. That is also one of the five things self insured employers can do to improve employee health that I talk about today with Dan Mendelsen. Dan Mendelsen, my guest today, also wrote a Forbes article. Listing out these five things, there's a link in the show notes.

Here are all five things that Dan mentions in one handy list. Thing one, as aforementioned, expand availability of accountable care models to improve the care experience, quality, and affordability at a local level. For a deep dive on this, listen to the show with Dave Chase, episode 374. Number two thing that Dan Mendelsen mentions to improve employee health.

Invest in the data access needed to assess health outcomes. For a deep dive on this, listen to the show with Cora Opsahl, episode 372. Number three thing. Align employees health benefits with POP health outcomes. Again. Deep dive. There's the show with Mark Frick, md. That's episode 308. Number four thing, prioritize care models that can meet employees wherever they are.

For a deep dive on the DEI, diversity, equity, and inclusion aspect of this, listen to the show with Monica Lipson, episode 322. And lastly, number five, make care navigation, a central part of the benefits package and experience. My guest today, Dan Mendelsen, is CEO of Morgan Health at JPMorgan Chase. He previously founded Avalere Health.

Before that, Dan served as Associate Director for Health at the Office of Management and Budget. Besides exploring the why and the what for each of the five things employers should do right now. I also wanted to find out from Dan what's going on at Morgan Health and how they are looking to help self insured employers who want to do these five things actually do them.

My name is Stacey Richter. This podcast is sponsored by Aventria Health Group. 

Dan Mendelsen, welcome to Relentless Health Value. 

[00:04:57] Dan Mendelsen: Great to be here. 

[00:04:58] Stacey Richter: You wrote a really interesting article in Forbes magazine, which is entitled Five Things CEOs Can Do Today to Improve Employee Health. First of all, this article is directed at CEOs.

I'd suggest that many CEOs delegate health benefits in a big way. They remove themselves from most decision making here. So given that, why did you direct this article to CEOs and not CHROs, for example, or even CFOs? 

[00:05:26] Dan Mendelsen: It does ultimately accrue to the CEOs to expect more from their health insurance companies, things like demanding accountable care and making sure that incentives are aligned and making sure that providers actually have programs to address health equity.

These are things that companies that offer insurance to their workers can do. 

[00:05:44] Stacey Richter: So that's actually the first on your list of five things that CEOs can do to improve employee health. Expand availability of accountable care models to improve the care experience quality and affordability at the local level.

[00:05:58] Dan Mendelsen: And much to dig into there. First of all, Accountable care models. If I'm thinking about this as a self insured employer, what does accountable care model mean to me? What does that mean? 

In the fee for service model, there's no alignment between the interests of the employees and the interests of the providers who are providing the care.

They're not taking accountability for improving population health, making sure that people are having routine cancer screenings, making sure that diabetes is being cared for properly, making sure that that high blood pressure is being managed in populations, and they're certainly also not accountable for improvements in health equity.

And those are the things that can be aligned through accountable care models. 

[00:06:43] Stacey Richter: I think the point that you're making is that Medicare, to a certain degree, has star ratings that hold physicians accountable. And certainly there's HEDIS measures and some HCAP scores, etc, where provider organizations get ranked.

But in the commercial space, there's really nothing aside from what a plan sponsor may put into place or their commercial carrier, there's a lot less incentive, financial incentive for a provider organization to keep a population healthy. Yeah, that's exactly right. It's really it's breathtaking how little accountability there is.

In employer markets look for those of us who have worked in government There has been a very consistent push to drive more accountability into medicare and medicaid over the last 20 years It's really paid off the work that cmmi does the work of the medicare advantage program has resulted in a world Where providers really are on the hook for quality in most cases, I think it's about 80 percent right now of care that's being provided through Medicare has some level of accountability layered into it.

Whereas our estimates are that it's less than 10 percent in the employer markets. That's what we have to do because this alignment. of value will never work, even in public programs, if the 150 million Americans who are getting their health insurance through their employer are not also aligned in the same way.

Which is kind of strange to say, because obviously, at least from an FFS perspective, the rates that commercial patients and commercial payers pay is so much higher than Medicare. So it's ironic to think that despite the higher prices that are being paid in actuality, the level of health that is delivered could predictably be lower just given the fact that no one, this accountability results in less accountability.

It makes things all the more urgent because think about it from the perspective of a hospital. If you're the hospital administrator, you're going to make a lot more money if you fill those beds. Then if you don't, and that's the incentive that we have to change. The system is not going to get better until employers start to take more responsibility for population health.

And that's what we're trying to accomplish. Easier said than done, of course, especially if I am a plan sponsor, CEO, even CHRO with an in quotes day job, sometimes, you know, we can want to do something, but It becomes very difficult because what the first step is or just figuring out how to actually do it is incredibly daunting.

So would you suggest or do you want to talk about the work that you're doing in Columbus as potentially a way to create a glide path for self insured employers here? I'm smiling right now because no one said this would be easy. You know, we've done a lot of thinking. About how to drive innovation in employer sponsored care and have decided that really the first order of business is making sure that we're driving accountability into the provider world.

We've also done a lot of thinking about how to do that. You're right. Employers don't have a lot of choice right now, and in most markets can't go out and say, Hey, I want to put an accountable care model. In some markets, they can do that. So Kaiser, for example, is a great system. One of the first things that we did last year was make Kaiser available to our employees in California as an option.

Interestingly, about 45 percent of our new employees are opting for Kaiser, even though it's a Narrow network. They look at the system. They see value. They understand that there's going to be a level of consistency and care and they're opting for it, which I think is really very instructive to us. So a lot of the early work that we're doing right now in our early investments.

is to build programs that do have a high level of accountability and also give the patient some level of choice. That's really the needle that we're threading in Columbus and elsewhere. So our first investment is in a company called Vera Whole Health. We're working with them to create a new accountable care framework in the Columbus market.

We have about 38, 000 employees and dependents in Columbus. Right now, they have really no choice other than a traditional fee for service model. So, we're in the process right now of building with Vera, a new accountable care program that will serve as an option for our employees in that market. When you say employees in that market, obviously you're talking about J.P. Morgan employees, so you're testing your methodology with your own employees. 

[00:11:24] Dan Mendelsen: You know, what I would say is that we're offering them a higher level of service. It's really not a test in that respect because we're actually adding additional benefits and it's optional for them. I'd say that the most important thing, though, is everything that we do is intended to be scalable and not just for us.

So any employer in the Columbus market who wants to avail themselves of this program, Welcome to it. In fact, we will make it available broadly in the market. 

[00:11:51] Stacey Richter: Test was probably not the best way to put it. It is a, it's a innovation strategy to roll out your program internally first. Yeah, exactly. So you become your own first customer.

Yeah, that is exactly right. We have an obligation to do better for our employees, and that's what's motivating this. And then we also have a very clearly stated mission to improve care for 150 million Americans who get their insurance through their employer. 

One of I think the most overlooked opportunities for those who are trying to innovate in the market is to roll out the program that they're trying to convince other employers to do to themselves.

That is a really good testament to someone's belief in their program if they eat their own cooking, so to speak. We are really motivated by providing a better product for our employees. We also have better data on our employees that enables us to see whether the programs are addressing the needs of our population.

What we're doing fundamentally is investing off of the JPMorgan Chase balance sheet. And then we become. An active investor and sit on the boards of the companies that we're working with. So we have a high level of alignment. When I was in Columbus over the last couple of days, we had the CEO of Vera there.

We had the CEO of central Ohio primary care, which is the primary care group that we're working with very closely to feel these offerings and everyone is completely aligned. We all want to see the program succeed. We're aligned around the same outcomes measures. Plan sponsors can get agency, they can get data, they have the ability to evolve relatively quickly.

And then also there's alignment amongst stakeholders, which builds this accountable model. One of the things that you were talking about relative to Columbus, and then you said California, we're clearly talking about local markets here. And that's actually in your number one point, the very end of it is doing things in local markets.

One of the things that you hear often, or I do anyway, from larger employers is that they do have, they're national, they have people all over the country and many times their first pushback is, I can't do stuff that's local because I have people spread out all over the place. It sounds like what you're doing is realizing where you have concentrations of employees and then offering things very specifically in those local markets that may not be available nationally.

Is that your approach? Yeah, that's right. So we have 285, 000 employees and dependents in the US, but half of them are concentrated in seven geographic markets that include Columbus, Wilmington, Delaware, Mesa, Arizona. In some of these markets, we're a relatively large fish in a small pond, like Columbus, and others like New York City, things are complicated.

So we're actually going to deprioritize those markets initially for accountable care in favor of the markets where we really can have a better level of engagement with the delivery system. But I think one of the things that's really important here is that employers need to understand the only way to get outstanding care is locally.

Employers need to understand that you have to work with outstanding local providers who are ready to take risk. If you just think about the benefit as something that has to be utterly consistent, it ignores the fact that healthcare is delivered locally by human beings that are actually caring for people.

So we can have, and do have, a nationally consistent benefit. But yet work with the providers that are best equipped to provide more accountable care for our employees. And I think local providers would be very keen for that philosophy to spread more broadly. One of the biggest things that I hear about from independent providers trying to do the right thing and get value based contracts is that they cannot.

There are so many plan sponsors who are not offering the kinds of things that you're talking about. So, for example, our partner in Columbus is Central Ohio Primary Care. It's an outstanding primary care provider. And in fact, about half of our employees in the Columbus market who had a committed primary care relationship before we introduced Vera already had it with So,

It's a very trusted system in that market, and by deciding to work with them, and by giving them access to our on site and near site clinics, and introducing them into our population, they certainly benefit from that, from the volume, and from the trust that we're placing in them. Then, what sits on the other side is that we are A consistent partner for them.

We have committed to them that we want to work with them. It becomes a trusting relationship when you have 38, 000 employees and dependents in a market, it can be really be a meaningful relationship. That's something that, that we take very seriously. There are other models though, of accountable care and there is not our only investment.

One of our other investments is in a company called Sentivo. What Sentivo does is comes into a market, let's say, you know, the Dallas market, where we also have a concentration of employees, by the way, and offers a restrictive network at a very low price. In the Dallas market, for example, they're working with Baylor.

It's a name brand in the Dallas market. And in fact, a lot of our employees get their care from Baylor and associated providers. What Centivo does is goes in, negotiates a great contract with Baylor that, by the way, is accountable for quality. And then they offer that into small and medium sized employers that want to get a lower cost option that also is fully accountable to quality.

For more on that, we've had on the podcast earlier, Ashok Subramanian and then also most recently Wayne Jenkins. Let's move on to your, your second point here about data. What do CEOs need to know about collecting outcomes data that maybe they frequently Misunderstand. We see a lot of self insured employers just cutting a contract with an insurance company and not really paying close attention to the outcomes that are being accomplished by that care.

I think it's really, it's super important for employers to have higher expectations about getting outcomes data from insurers until you understand the care that is actually being delivered to your employees. Thank you. You're not going to be able to get the value that you think you're getting by just deploying an insurance product.

When you say outcomes data, are you talking about quantitative biometrics, like A1Cs 

Getting quantitative biometric data is very important. Employers should also be looking at ER usage and cancer screenings and some of the other data that can be derived from claims. The number three point that you made in the Forbes article was to align employees health benefits with population health outcomes.

And I just want to remind listeners that Dr. Mark Fendrick was on the podcast a bit ago. We just did an encore of his show. The idea, which I had never really thought about before Dr. Fendrick came on the show, but if you have providers who are incented to do. eye exams for patients with diabetes and then the benefit design has a deductible that's 5,000 and so the provider says, hey, patient, you should go get an eye exam and the patient says I can't afford it because my deductible is so high, then basically everybody loses.

You get providers who are getting dinged, not because they aren't trying to do the right thing or doing the right thing, but because the patient's insurance benefit doesn't match. Is that kind of the point that you're making there? Mark has done really important work on benefit design. We have studied it and appreciate it.

I'll say that from our perspective, there are a whole range of incentives that need to be aligned to make sure that patients are getting the best care. In Columbus right now, we offer our employees 25 bucks just to walk through the door of the clinic and talk. with a counselor there because we're not only providing physical health or also providing mental health.

And so it's, it's even going beyond the co patient deductibles that are layered into the system. 

So certainly it's difficult to have patient engagement if the patients don't engage initially. Yeah, exactly. You've really doubled down on that, and you're trying to jumpstart that relationship. 

[00:20:12] Dan Mendelsen: All of our models have very strong primary care.

And it's not just a doctor patient relationship. It's making sure that there's a whole system of care that includes both digital and physical to fully embrace the patient's needs. There needs to be advanced primary care. There needs to be integrated mental health. And these are things that you just don't get right now in a fee for service health insurance product.

So that's where employers really need to raise the bar. They have to have higher expectations in order for the system to evolve. 

[00:20:44] Stacey Richter: When we're talking about accountable care here, are we mainly talking about an advanced primary care relationship? Yeah. Or are you also doing things elsewhere? Yeah, this is a much broader vision of accountable care than just the primary care aspect.

Where we're going with this, Vera is actually going to take risk for total cost of care. And the primary care front end is really just an invitation into a system that is providing a higher level of accountability. What will happen as we continue to evolve this model is that when a patient has that primary care relationship, They'll also be relying on that individual for referrals.

And as we continue to evolve the network that we have in place currently, we're going to be holding positions accountable downstream in the network, the specialists that provide care to our employees as well. So, it is a much broader vision of accountable care than just primary care. Vera's taking the risk, it sounds like, for the full continuum of care, but then are they the ones that are working with Central Ohio Primary Care?

Just trying to understand that relationship. So, the way the relationships work is that we invested in Vera, and Central Ohio Primary Care is Vera's primary partner in Columbus. And Vera is taking full responsibility for that care. Now, we don't need COPC or really any other provider to take full risk on our behalf.

But what we want to do is make sure that we're completely aligned with respect to the incentives, quality, costs, and equity. It's interesting because these APC, Advanced Primary Care models, sometimes I'm in the same camp as you. It's weird for me. to think about them as primary care when you basically have those physician organizations, provider organizations, taking risk of the entire continuum of care.

They're doing a whole lot more than primary care at that at that point. 

[00:22:36] Dan Mendelsen: And that's really the way it needs to be is that The employer needs to have a group take responsibility for outcomes, costs and equity until everything is aligned, the employer is just not going to be providing an optimal product to their employees.

You know, look, we see this as over time, a very important competitive advantage for employers who take health care seriously, and we want it to be available to everyone. We don't see this as a proprietary advantage. We want it. it to be available to everyone in market, because ultimately what we're trying to do is drive change in the healthcare system, not just for our employees.

You've mentioned equity a number of times. And in fact, I was just at the IBI WTW conference in Chicago and equity also came up a number of times. Is this coming up because it's the right thing to do? Or are there other reasons that also make this imperative? Look, equity is coming up here because there are substantial issues with our health care system with respect to health equity and employers are paying for the care of 150 million Americans in this country.

I think that any employer that doesn't take that seriously is really not doing their job. We have the ability to align incentives so that Providers do take this more seriously. We want to see performance guarantees in place so that the providers that are providing the care to our employees care about this as much as we do.

I think you made a really important point that if we actually are going to achieve a healthcare system that treats all patients equitably and fairly, then the incentives have to be aligned to very much make that a priority amongst the provider organizations. I mean, from an employer's standpoint, though, they are paying the same amount for the care no matter what color or social group the employee falls into.

If some get worse care on any basis, then as an employer, even if all you care about is the money, you're getting a bad deal. So it's definitely about aligning the financial incentives because the money is already on the table being spent. 

I'll say even today, you have a lot of CEOs who believe that health equity is a Medicaid problem and is not prevalent in employed populations.

We did a study, we hired NORC to do this with us. They did a great job and we did a major national benchmarking study where we used all of the publicly available data we could get our hands on to characterize health equity in the United States. You see the disparities, they're well documented. We see disparities in our population as well.

I would argue that it's really incumbent on every employer. to address those issues because the employer is the payer. Unless the employer takes it seriously, no one else is going to. So your number four point in the Forbes article is that in, in this new era of hybrid work environments, we have to prioritize care models that meet employees wherever they are.

Is this a nice feel good retention kind of thing or does this actually, is this important to create meaningful health for employees and the outcomes that you're talking about? 

I believe that digital health access is really important for creating meaningful relationships between patients and providers.

We surveyed on this and particularly our employees under the age of 35 have a core expectation that they will be able to engage digitally. They want to be able to text a nurse with their issues. They want to be able to do it on the go. It's actually a very efficient way to do a lot of things. Look, you can't palpate a mass over a Zoom call, but you can do a lot of other things to get that kind of first scrape of knowledge.

We'd much prefer to have our employees be able to engage digitally than just to Google the information and be met with a lot of misinformation at the point of care. So. I think it's really very important in this day and age to have that as an option, both with respect to the expectations of our employees as well as the geography.

To be able to have care that is fully accessible to them is not a fad. It's really, I think, kind of something that we all need to engineer into our programs to make sure that they're responsive to our employees needs. And this whole meet employees wherever they are, obviously this also has equity overtones.

Yep. One of the things that becomes abundantly clear if you look at the data, and I know that you certainly have hourly employees, for example, are at a distinctive disadvantage when care is very inconvenient. They definitely recognize that it is a trade off. Do I take time off of work to go figure out if this mole is actually melanoma?

And oftentimes this results, this is a big driver of downstream disparities and health outcomes. That's exactly right. So the point here really is that offering the same benefit to all employees is not the same thing as being equitable. If you have employees who live in geographies where there aren't good providers, that's a problem.

And unless you provide transportation to them to help get them to providers who are outstanding quality providers, you're not really going to be providing an equitable benefit to your employees. One of the other companies that we're really excited about is a company called Let's Get Checked. They offer lab testing in the home.

One of the most important things about this is that it's fully accessible to all of our employees. We have employees who, by virtue of where they live, really don't have access to good lab testing. And by offering a home test, it ultimately is much more accessible to the employed population. So part of it also is making sure that the care that we're offering is really everywhere. 

[00:28:13] Stacey Richter: So just recapping what you said there, it's really important for the total health of a employee population to ensure that care is available where people need it, when people need it.

Otherwise, disparities are going to be exacerbated where there's some people who have more flexible schedules, for example, or who live in closer proximity to good providers who actually wind up getting better care. And those who are disadvantaged in some way wind up lagging relative to health outcomes.

So this is a very important point for plan sponsors to really think about here, because it is going to happen if they don't. 

[00:28:51] Dan Mendelsen: Yep. Said a different way, we have to make sure outstanding care is fully accessible. To all populations and look by virtue of money and geography you have a lot more clinical labs In higher income white areas than you have in lower income black areas.

It's just the reality so by deploying lab testing directly to people's homes, we can erase that disadvantage. That's the kind of thing that we need to do in order to provide equitable care for all of our employees, 

[00:29:22] Stacey Richter: Which is just another reason why plan sponsors really need to start getting more involved in the benefits that are offered because it is not common.

That you're going to have a traditional commercial payer really think through where everybody is in a company and then start creating these additional services and making sure that these additional benefits are available. Right we have to fight this myth that one consistent national benefit means that there is an equitable benefit for all of the employees working in a company.

That's the core of it, and I think a lot of employers don't want to tackle that because it's hard, and By virtue of having a kind of a consistent national benefit, they can easily say, Hey, we're providing the same thing to everyone. But providing the same thing to everyone does not mean that you're going to have health equity in populations.

So let's talk about your number five point that you make in the Forbes article, which is about care navigation and making it a central part of the benefits package and experience. Why is this your number five point? And why is it so important to be included in the list? Care navigation is important for employees because it enables them to have the information that they need to make a good decision about cost and quality in health care.

We've worked a lot with a number of care navigation companies. So included health, for example, has provided a second opinion service for our employees for many years, but regardless of how it's done, the need is there and the standard insurers are not providing a lot of the most important information that employees need in order to make a good decision and that's really why it's there in the list. Oftentimes in PPO networks, there are actually bans in the contracts against doing such navigation. So if an employer is trying to ensure that their employees get the care from providers who have demonstrated a higher, even accountable care, then it's incumbent on the plan sponsor really to offer these navigation services.

Additionally, as is beyond a shadow of a doubt right now, consumerism is not going to be a solve for employees getting to high quality providers. There's just too much asymmetrical information, asymmetrical knowledge. The quality information just is not out there. Did the show with Dr. Sunita Desai, which just brought all of these points home in a very data evidence driven way.

So again, these are things that if an employer wants them for their employees, they really have to take upon themselves. Yeah, employers can expect to see better outcomes, lower costs, better quality if individuals are making good decisions. And that's really at the core of it. One of the benefits of accountable care.

One of the best ways to navigate quality in providers is to rely on a very well informed recommendation from a primary care provider that you trust. So one of the things we're doing in Columbus is making sure that our primary care providers have really excellent information about cost and quality on physicians in their area so that they can help guide our employees to make good decisions. Which has been determined is the best way to do it. To have a PCP that actually is the quarterback of care, so to speak, and can help ensure that care is coordinated with high performing providers. 

[00:32:41] Dan Mendelsen: Look, it's really important because patients will tend to take the recommendations of their physicians.

And if the physician is knowledgeable about the cost and quality associated with their referrals, then they really are acting in the best interest of their patients. And so everything is aligned. Dan, if someone is interested in learning more about Morgan Health, where would you direct them? First place to start, of course, is the website.

On the website, you'll see the studies that we've done, the investments that we've made. And you also get to see the staff. We have a really outstanding staff of 30 healthcare experts from all walks of healthcare. Of course, we have a number of folks who have focused in their careers on deploying capital and making sure we make investments that are strong and congruent with the mission.

And then we also have some really excellent health equity experts. 

[00:33:26] Stacey Richter: Dan Mendelsen, thank you so much for being on the show today. My pleasure. Anytime. 

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