Introduction and Episode Overview
[00:00:00] Stacey Richter: Episode 493. "Revelations Mainstream CEOs Are Having About the Healthcare Market Right Now. Also, Some Advice". Today I speak with John Quinn.
[00:00:28] Stacey Richter: Hello all you great people trying to figure out how to do right by patients. Welcome to it. I was and am always extremely curious if any of what we talk about over here on Relentless Health Value has in any way percolated over to your average employer CEO. The ones who do not listen to this show, I mean.
This is what I try to figure out during my conversation upcoming here with John Quinn from Wellnecity, and I score some advice to boot for employers in the face of any of these revelations that they may have. That's what's gonna go down today, and this whole endeavor is a decent plan, if I do say so myself, because John Quinn chats up a lot of employer CEOs. He's certainly got a bit of a catbird seat there.
So taking it from the top, I wanted to see how clued in these employer C-suites might be to a fundamental myth, which if employer folks don't realize it is in fact a myth, it means that a whole lot of transformational power is going nowhere fast. And this myth is the mother of all myths. The, there is a market in healthcare, myth.
We've been on a tear about this for three episodes now, at least as it relates to hospitals and health systems. I'm gonna refer everybody to LinkedIn because Luke Trocchio put up, I don't know what you call it, a reel, highlighting, something that Shane Cerone said in episode 490.
And then I'm gonna tell you why whatever CEOs at self-insured employers are thinking here makes all the difference in the world. But what Shane said is this, "The myth is that we have a functioning marketplace and we don't".
Shane continues, "What I mean by there is no actual healthcare market, as somebody who's been a CEO of multiple hospitals and health systems, hospitals don't compete on price for patients. It … doesn't work that way. And so we don't really have a normal market incentive to reduce costs, or in this case, the price of services in order to remain competitive."
Now look, and this isn't rocket science, but it needs to be said out loud. The reason there is no healthcare market largely is because self-insured employers have not insisted upon there being one.
Is that fair? I don't know. And whether or not it's fair is irrelevant to this point.
Employer CEOs and Healthcare Costs
[00:02:52] Stacey Richter: Self-insured employers pay for healthcare for like 160 million Americans. They are largely, the demand curve. They are the demand side of any market that exists because you know something that doesn't our market make, you can't ask the supply side to create demand elasticity. You can't get a seller to get a buyer to buy or not buy at some price point. That would be like a comedy skit.
Except in this case, you know, patients die or go bankrupt because they can't afford care. So it's not really all that funny. But if in this country we are depending on health system prices being constrained by a market, and then you don't have a buyer who doesn't buy, when the price is higher than the buyer wants to pay, or a buyer who doesn't buy unsafe stuff or low quality goods or services, you're gonna get sky high prices. Welcome to it right now.
Also, if there's no competition, again, no market. But competition a lot of times doesn't surface if there's no point in starting up a business because there's no demands for lower prices or higher quality care. I mean, if no one cares, if you have lower prices or higher quality, then how are you gonna attract patient volume or steal market share, right?
Like unless you're really good at marketing, I guess, or have accumulated market power.
I'll say this again. If our whole, the whole healthcare sector pricing structure is built on the myth that there is a market and then there's no market and employers aren't filling for whatever reason, the vital demand side role that they have to play for there to be a market then, right, hello 37% renewals like we see coming up in New Jersey. Listen to the show with Kevin Lyons.
So I say all this to say, do employer CEOs even know they have one job here? And I'm not talking about again, whether or not this is fair, whether they're capable of pulling this off. I'm just distilling this whole thing down to this is the question that remains on the ground.
So anyway, this is first and foremost what I go after John Quinn from Wellnecity to figure out today, where's your average CEO in this learning curve?
Now here's some Demand curve optimism. The show from two weeks ago with Elizabeth Mitchell from PBGH, the Purchaser Business Group on Health. In that show from a couple weeks ago, we talk about what PBGH members, who are very large employers, what they're up to. So certainly go back and listen to that if you haven't.
Okay, so with that, here's my conversation with John Quinn from Wellnecity, as I have mentioned, and you'll get two things out of this conversation. Number one, a level set on what employers leadership teams are figuring out and why they are figuring this out. Renewal shocks and employees complaining about affordability much.
But also how the mindset needs to shift in the C-Suite for anything to really happen here. In other words, what's the assignment and what's some very top line advice to get there? That's how I finish up the conversation with John Quinn today.
Do just wanna note that Wellnecity, so kindly offered to pick up some of the tab to produce this Relentless Health Value show, which as I keep saying is yeah, it is expensive to keep this train on the track. People often forget it's not just what goes into the recording, the hosting, the producing, the editing of a podcast, but there also is a whole website and an API feed and headshots and graphics and transcriptions and a proofreader. It's a whole thing, guys, even if the host is a volunteer with a day job.
So thanks much to Wellnecity for the contribution to the fund and for coming on the pod today.
John Quinn is CEO of Wellnecity. Wellnecity does health plan management for employers that self-fund their health plan. The key role Wellnecity plays is how do they help those employers better manage the spend category called health benefits.
My name is Stacey Richter. This podcast, as I said, is partially sponsored by Wellnecity and also Aventria Health Group. And here's my conversation with John Quinn.
John Quinn, welcome to Relentless Health Value.
[00:06:53] John Quinn: Thank you, Stacey. It's good to be here.
[00:06:55] Stacey Richter: Alright, John Quinn, We've been talking about the sleeping giant of employers waking up and doing something to transform the healthcare industry. We've been talking about that for many years. I've heard you say right now, C-suites and boards are finally, at a minimum, they got some eyes on health spend that maybe they haven't in the past. What leads you to this conclusion?
The Financial Impact of Healthcare on Employers
[00:07:21] John Quinn: Well, for starters, we've been pulled onto the field with some employers because of the exact situation that they missed a quarterly earnings number because their health benefits went through an uptick and surprised them.
We have seen boards worried about trend and its impact or offset on earnings as kind of a regular concept, which is getting people active within the corporate planning function to say, yeah, what are we gonna do about this sleeping giant that is no longer sleeping.
[00:07:56] Stacey Richter: You said something, which I wouldn't take it as a given, or at least I haven't. There are dots being connected between healthcare spend and trend going up and earnings. I mean, I did a show two years ago with Paul Holmes and he was basically saying: “Employers connect the dots here for every dollar saved, whatever your profit margin is, like, do the math.” This really matters. And that was a revelation.
[00:08:21] John Quinn: Yeah. It's really striking for me, having come out of business in large corporations that many people don't really understand how the dollars flow as it pertains to health benefits and a corporate P&L. But said simply, if you do a cost cutting measure in sales, that's just a fraction of your overall cost of goods sold.
If you do dollar cuts in plant, you know that's a fraction of your product manufacturing and maybe the efficiency. When you do a dollar cut to health benefits, that dollar drops straight to the earnings line. Or conversely, if you have to spend another dollar, that takes away from your earnings line. So savings in health benefits are directly connected to earnings at a one for one level.
[00:09:10] Stacey Richter: And I'm assuming that when you say savings on healthcare, you are talking about rationalized savings. I'm not sure how to put this, like not some kind of draconian cost containment that actually worsens employee health and then creates a whole other can of worms.
[00:09:26] John Quinn: Correct. So the easiest way that I talk to clients to kind of analogize is think of a supply chain function where you're purchasing steel.
You can buy lower quality steel. Nobody wants to get lower quality healthcare, but you know that's an option. You can buy steel and have it delivered quickly and pay a premium. You can buy higher quality steel. You know, you can buy steel that's available Monday through Friday, or you can buy steel that maybe gets delivered 24/7. All of those factors affect the price of steel.
The health benefits are very similar mindset. The employer, like it or not, is buying healthcare for their employees. And when they begin to think about that, they'll step past all the intermediaries and get to, well, what does it mean if I spend money on emergency room visits? What does it mean if I'm spending money on Humira?
All of those things have alternates. And if I can steer people to the alternates, they still get quality healthcare at less dollars.
Strategies for Managing Healthcare Costs
[[00:10:32] Stacey Richter: I just want to emphasize that in the continuum of employers purchasing healthcare or paying for benefits, this is actually a sea change if what John Quinn is saying here hits the mainstream.
And listen to the show with Elizabeth Mitchell, the first one with her, not the one from a couple of weeks ago, but the first one about TPA and broker inertia for more on this. But it has been true for way too long that C-suites at employers have kind of felt like a dollar spent on healthcare benefits was a dollar spent on healthcare benefits, that there was no better or worse way to spend that dollar.
Maybe this was true because of so many broken promises in the past where some vendor promised whatever miracle of cost and quality and failed to deliver. But many CFOs and CEOs just stopped believing that it was possible to control healthcare spend, so they just sort of ceased to even bother trying.]]
CEOs have been confronted with, there's gonna be 10 to 11% trend for the next couple of years. Historically, trend has been six to 7% every single year. It's like the opposite of compounding interest.
[00:11:39] John Quinn: Now. It's really bad. It grows pretty fast.
[00:11:41] Stacey Richter: Yeah. Especially year over year. One of the things that you've said is this is now boardroom chatter. When you're talking about missed earnings, or you're talking about a shock in the C-suite. Can you give some specific examples?
[00:11:53] John Quinn: Imagine a company that has projected a 5% trend, and this is happening this year. Or an insurance company that has projected a 5% trend. And all of a sudden the actuals come in at 8, 9, or 10%. That puts that budget underwater by a significant amount. So that's an example of kind of in the moment shock and we'll see people that AI projected wrong. And now I have to pay.
Or B, what oftentimes happens for small and mid-sized companies is some new situation emerges mid-year, like GLP-1 or the genetic therapies and it wasn't planned for, and it has a material impact and it's not covered by stop loss. For smaller companies, you can put 'em out of business.
In a prospective way, the shock that's happening is the Milliman's of the world are forecasting next year to be 10, 11, 12%. Well, I'll give you a large corporation that is a client of ours who is in its own kind of negative side of a business cycle. So things are getting tight, they're getting tighter.
And the forecast is trend will be above 10%. Okay, well, what does that mean? Well, they spend over $500 million on medical claims alone. So that's an extra $50 million earnings hit. Pharmacies, another 200 million. That's an extra $20 million in earnings hit. So all of a sudden these corporate planners are looking at $70 million in a tight market.
Fortunately, what they've done is they forward invested over the past few years in new strategies. So they were able to bring some offsets onto the playing field, but most corporations don't have those offsets. They just take the bill and write the check.
[00:13:56] Stacey Richter: Or they take the bill, write the check, and then talk about cutting benefits, if I am just reading the tea leaves here. What you've seen historically done that someone says, Hey, our benefits are just too rich. We just can't afford 'em. Let's reduce the actuarial value of these plans. Let's cost shift. Let's do all the normal usual suspects.
[00:14:20] John Quinn: There's a couple things going on there that I know most people think about. Well, I don't know if most people think about them.
One, we've been shifting costs to employees for 20 years. So we've gone after that tactic, you know, high deductible health plans, higher deductibles, higher copays, limited access, etc. And the reality is, is the financial impact of those decisions are now household breaking moves.
You put your employees into financial stress and or bankruptcy. That's not a healthy employee. And if you're in the business of hiring healthy employees are keeping them healthy so that they're productive with their day job. You can't just throw 'em into financial stress or bankruptcy.
So there's the internal view on what do we need to help people be productive and healthy? Then there is the competitive view, which is, I can't cut if my competitor doesn't. So this is not going to be, you can't make singular moves because if you do that you're not retaining your people or you're not able to acquire people.
So very real obstacles in the way for employers to just make singular moves without the market moving with them.
[00:15:43] Stacey Richter: And all of that is very logical. Everybody's first instinct is cut costs. You have to have a greater understanding of what's going on and what the downstream impacts are, and actually be concerned about something that it's longer term than this quarter.
[00:15:57] John Quinn: Well, I think Stacey, I think the big thing that has changed, right? What's changed? Is it a sleeping giant? Is it awake? Is it small? Is it large? Everybody would agree it's awake. Everybody would agree it's large. I think one of the things that's different is it's not only large for the corporation, it's large for the American household.
In the past, healthcare was a small number in our household for all of us, and now it is probably the single biggest number young families have to manage through, right?
I mean, your house is smooth financial planning. Your car is smooth financial planning. Healthcare can throw you upside down for a year. You know, we have a young workforce, but they're starting to have families and our health plan is very, very good. We pay all the premiums, so our employees pay no premiums.
We have relatively low deductibles and yet our family out of pocket deductible, $16,000. So I was just going through this with our HR staff. And I've got young families having babies. Well, if you have a baby, you're gonna spend $16,000. It's a real issue for these families to budget through the cost of healthcare.
So I think that's primarily what's different is the noise level in the workforce, that this is causing financial stress. Is at a scream level. Whereas 10 years ago, 15 years ago, 20 years ago, you could shift cost to the employee and they're like, okay, I guess I'm not gonna buy ice cream on Friday night.
[00:17:36] Stacey Richter: We did a show with Peter Hayes from the Purchaser’s, formerly Purchaser Coalition of Maine, and he kind of said the same thing. He called it public outrage. It's reached on unprecedented heights and yeah, December 4, 2024. So I think that is, is very much in line.
And then you also have providers too, because the higher, actually, Mark Cuban told me this the other day in an email. The higher deductibles go, the more providers turn into subprime lenders because they wind up taking the financial risk, which creates a bit of a flywheel because then who can fund that risk?
Not indies, who are actually the most well priced. So then they go out and the whoever the market dominant player is, which is the most expensive consolidated health system in the area, or the PE funded whoever, they wind up getting more market dominance and the downward spiral continues.
[00:18:23] John Quinn: Yeah, so I think the idea that we're gonna shift more to the employees is just becoming a non-starter.
I think the idea that we're going to remove healthcare for now as a nonstarter and less the broader system changes somehow.
[[00:18:43] Stacey Richter: Notice employers realizing they can no longer cost shift, so that's a pickle. What are they gonna do?]]
[00:18:51] John Quinn: The simple answer is we have to fix, we have to hit it front on, and I think that's where we're going is employers are basically grabbing the bull by the horns and saying, I can't just write a check and be satisfied with a 20% discount on something that's wasteful, right? I mean, that's the real problem is the purchasing and the usage is wasteful.
[00:19:12] Stacey Richter: One of the things that Lauren Vela said on a pod we did about employer inertia, she said, Nobody's job description is fix the healthcare industry. Nobody in HR even has run a small insurance company off the side of your desk, which is what they're being tasked to do if the company is self-insured.
I think what you're saying though is now the conversation has elevated outside of HR. That's what I'm hearing.
[00:19:36] John Quinn: What's interesting is we feel like we're at crisis and tipping points or something. People always debate, but I think the sheer cost level is crisis. In the last two to three years, I'm hearing more and more board conversations where, why did this happen? Why did I miss earnings? Where did this shot come from? How come I couldn't predict it? Right? Businesses hate surprises.
I remember one CEO, who took his health benefit team aside and said, you know, you guys are the only ones that miss budget every year. I run a business that's very well-managed and everybody hits their budget except for you. We gotta fix this problem.
So the sheer magnitude seems to be, well, it's risen to the point where the CEOs and board have noticed. At the same time, we have a second shock, which is post COVID inflation in healthcare.
So at the same time that we've hit this ceiling, the healthcare system is saying, Nope, not 6 or 7% increase, 10, 11 or 12% increase. And you compound those numbers and it gets really ugly really fast. Especially in businesses that are low margin A or B, live in a competitive state, which means their ability to take price is probably right around the inflation rate.
[00:20:59] Stacey Richter: So I'm gonna assume I can definitely see this happening, and I also can definitely see if I was a CEO, who, I wouldn't even have to go to business school to start digging in and saying, whoa, whoa, whoa, wait. As per the CAA, the Consolidated Appropriations Act, even if they don't even realize that's a thing, but they start looking at what accountabilities in our contracts.
They start thinking about the competitive pressures and, and maybe what others are doing in the market. Like I think any self-respecting CEO would probably start doing those things. What do you see?
[00:21:30] John Quinn: One of the unfortunate things about health benefits is they move at a one year cycle. They move incredibly slow.
The Role of Real-Time Data in Healthcare Management
[00:21:36] John Quinn: So one of the things that we're helping our employers do is actually get at the speed of business. So don't wait a year before you make a change. If you see a problem in January, fix it in February. You don't wait for a year. Okay?
The second thing that we see happening is these performance guarantees out there. For a long time it's like, if I can't save you 5%, I'll write you a check. And then I come back with my data, I'm a supplier, and I say, look, I saved you 5%. And the employer's like, yeah, who did the math? Right? I don't really understand what's in that black box.
What I mean there is the performance guarantees are now being submitted to the employer actually doing its own savings calculation and they're finding out over and over that the savings aren't there. There's a joke in healthcare right now that if every vendor hit their savings guarantee, healthcare would be free.
[[00:22:32] Stacey Richter: Look guys, I just saw a contract the other day, point solution vendor, and the savings guarantee, first of all wasn't if we don't save you a million dollars or whatever, we will write you a check.
The savings guarantee was, if we don't save you a million dollars, you'll get a credit. Also a million dollars calculated how this was not specified off of last year, off of trend. And if so, what trend?
And then as the icing on the cake, how the savings was calculated, you can't make this stuff up, was if an employee like called to call center. Depending on the question asked, like, is it a what care setting should I go to question? Or was it a I have this condition, I have a question. Or was it a, I have these symptoms, I have a question. Depending on the question asked, $400 to $5,000 was added to the total saved. No clue how this in air quotes, savings was calculated, mind you.
Just like if a nurse picked up the phone, voila, there was $400 to $5,000 saved. And not to be a downer here, but it was a signed contract I was looking at, signed by a CEO who kept talking about the million dollar savings guarantee. So yeah, just saying the learning curve is a thing.
I'll check in next year and see how it went, which I guarantee you won't be well. So then we'll have another CEO running around saying healthcare costs are intractable.]]
[00:23:53] John Quinn: So the first thing, the performance guarantees are being put out there. Second thing, the employers are actually starting to understand what went into the guarantee and calculating it on their own.
The third thing that we're seeing, these are unfortunately, these are taking, these are one year steps. We're seeing the penalties basically akin to a speeding ticket. So I didn't give you a 5% offset to trend, so I'm gonna pay you a couple hundred thousand dollars.
I'm like, well, wait a minute. 5% to trend is costing me 50 million, and you're gonna pay me a couple hundred because you missed 50 million. So more and more we're seeing people put real teeth into these performance guarantees.
I think the third thing that I see is there's new vendors that are actually so confident that they can generate savings, that they're in essence becoming their own insurance. What we're seeing is the breakup of risk and the good actors that can really control that risk are able to price it better than the current state, which is nondiscretionary consumption anywhere, anytime for any amount.
And they're saying, I will manage all cancer for a fixed dollar. So those are positive steps, but to do all of those steps, you need more information to be able to refit it back together within the context of a person that needs healthcare.
[00:25:23] Stacey Richter: So let me just recap what you just said and then I'm gonna ask you what you mean by the new information that's necessary.
The first thing that you said is, how do we help C-Suites? How do we help self-insured entities, plan sponsors move their healthcare business unit at the speed of business. Because currently, and we've heard this over and over and over again on this podcast, you get a C-suite, the CFO, somebody else besides HR who dips in once a year at renewal time. That's it.
And we've had guest after guest on this show say, look, it, it is a full year operation. You, you can't do it that way. And you, you bring up, they had a number of different reasons. You brought up another one. Which is very specifically that if you wait until renewal time to do anything, then every business decision is delayed.
[00:26:09] John Quinn: Yeah, the benefits, the costs have, you know, gone on too long, or the benefits have waited too long. So A, one of the things that was embedded in there, Stacey, is you need that finance function on your health benefit plan.
So if you don't have a financial controller or a finance type, or a financial planning type integrated with your health benefit team, you're not managing that spend category with the same intensity that you're managing the rest of the business. That's a mistake. So change one, put a finance function into health benefits.
Change two, is if you talk to business, say, how do I make decisions while I go get data? Well, what kind of data do you want? Well, I want it to be current, right? Meaning if I'm making a decision today, ideally I'd like the data that arrived yesterday. I'd like it to be, you know, correct.
[[00:27:04] Stacey Richter: Or a CEO of healthcare, perhaps at the self-insured employer. Mark Cuban and Cora Opsahl were talking about that in the episode with them recently. Having a CEO of healthcare at any given plan sponsor.
And in the context of this whole conversation, this makes a lot of sense. You need a CEO to run these small insurance company that any self-insured employer is defacto running whether they want to be or not. Them's the cold, hard facts. Listen to the show with Andreas Mang.]]
[00:27:35] Stacey Richter: I am raising my eyebrows right now. Because you said two things. You want current data and you want correct data and Wowza, that's a thing.
[00:27:44] John Quinn: Something that would help us is we get too many actors in the system. The broker advisors or carriers and PBMs or the HR team itself and, and we say we want daily data. And they're like, why do you want daily data? I mean, we look at reports once a month or once a quarter, and I'm like, because I wanna know when that new cancer diagnosis arrived.
I wanna know when somebody just got a prescription and I've got a biosimilar and they should be on the biosimilar. Because the system historically had a one year planning cycle, monthly or quarterly data was good enough. But if you're actually managing healthcare, it's a daily, realtime, continuously evolving situation.
So realtime data, current data is essential. And that's one of the things that, as you can tell, it's a bit of a stump for me.
[00:28:36] Stacey Richter: We had two shows about high cost claimants recently.
Like, if you wanna have actionable data, you can't find out six months later that your oncology patient went to the place where the infusion costs $3 million. When down the street, or there was a direct contract or something with a place where it costs a fraction of that. This information is actionable, and if it's too old, it's not actionable anymore.
[00:28:59] John Quinn: Exactly. And then the other thing that you know is kinda lost in people is if you're just doing risk modeling, historical medical claims and pharmacy claims work fine. But if you're trying to manage healthcare or the health of an individual, what did that primary doc say? What was the result of that second opinion? You know, what surgeries are being requested?
So you think about all those moments. Those are real time moments. Our advice consistent stance and CAA has given us teeth is to say, if your duty is to manage your healthcare spending, because you're collecting premiums, you probably would like to have real-time data, understanding how that situation's changing.
And how the healthcare system is responding so that you can be a better purchaser. You can be a better guide for that healthcare member. And that's where we're moving towards. They're so logical, but the healthcare system's like, no, you don't want that. You don't want,
[00:29:58] Stacey Richter: It's a total gaslight, right? Like you ask for something, which seems so logical in it's face and then you get somebody who's like, oh no.
[00:30:05] John Quinn: You don't want doctor centric healthcare. You don't want member centric healthcare. You want, I don't know, pull me back.
[00:30:10] Stacey Richter: Just like, wow. That's crazy talk.
Final Thoughts and Conclusion
[00:30:12] Stacey Richter: So, let's just sum up where we are in this conversation right now. We've talked about kind of like maybe like three revelations that are happening at plan sponsor organizations.
And the first one was C-suite are starting to cotton onto the idea that healthcare decision making, it has to move at the speed of business. And it hasn't. In the past, it's been a once of year bender to try to…
[00:30:37] John Quinn: You know, you pull up once a year and you say, oh, what I'm gonna do about this thing? And, you know, let me get me some numbers from outside and let me do some crude math and
[00:30:48] Stacey Richter: Yeah, so it's been a once a year sprint.
[00:30:49] John Quinn: Slide it into my budget.
[00:30:51] Stacey Richter: No, it's a round the clock round the year sort of thing. It's 52 weeks a year. It is a cross-functional team that has to have some finance person on it. It may also have a medical person on it.
And I don't wanna understate that you know, once you get above a certain size, you really need a medical director who's on your own team. Like, that is something Kevin Lyons just talked about that in a recent podcast. So 52 weeks a year cross-functional team. This is not a, you know, again, renewal season bender can't do it that way.
The second revelations piece of advice is really hold vendors accountable. Really think if you've got these very asymmetrical guarantees that don't actually cover if you are letting them crunch their own data and audit themselves, all of those things have very intuitive problems. And the second you start thinking about 'em, you're like, yeah, that's intuitively not a great idea.
So second piece of advice, hold those vendors accountable. Then the third is, look, if the current vendors can't do it, move on. I think is what I'm sort of hearing and what kind of, I'm gonna say writ large, you're advocating is to buy service bundles. Buy service packages. Which you really can break apart and understand like is done for everything else.
There's lots of purchasing that happens this way, but just buy what you want, be able to evaluate what the value is on the backend or whatnot. But you've won already if you simply understand what you're purchasing and you've done some kind of comparative shopping.
So I think those three things will get anybody who wants to started.
[00:32:38] John Quinn: Yeah, and you know a tag here, Stacey, is one of the problems with the health benefit mindset is all members get all things and they're all equal. And it's a very odd mindset because we're all different. We all have different healthcare conditions and needs. I've never gotten that part of this has to be everybody gets everything.
If you move to a different stance, one of the main things that we've done is 80% of the population needs wide access and commodity care. And fee for service and wide networks make sense for that 80% of the population. That's not where we're failing.
Where we're failing is the 20% of the population that needs specialized care. That has high cost treatment needs, and we're giving them a wide network. What we really need to do is take that 20% and break them into those specialized care pods and getting them access to those specialized care pods at a reasonable price, a managed price.
And if you can make that split, you're, you begin to win the game.
[00:33:45] Stacey Richter: Which is really interesting. And Dr. Eric Bricker said something very similar to that, you know, the quote I asked him or something [EP472], I said, how do you control healthcare spend? And he said, focus on your high cost claimants.
[00:33:56] John Quinn: One of the sad realities is a high cost claimant doesn't become a high cost claimant until they're 50% of a specific loss, right? Which means the system doesn't wake up until the train's out of the station and on down the tracks.
For us, a high cost claim emerges when the risk profile shifts in flex, which means some new event happened that says, oh my, you are now on a high cost claimant journey. And to find those events, you need real time data. And the easy one for everybody to understand is cancer.
Why would I wait to get to $50,000 and spend before I engage them? I knew when that diagnosis came through, I mean, I'm sorry, wake up the fire station and put 'em to work.
[00:34:46] Stacey Richter: We did a whole show on that with Christine Hale.
[00:34:48 John Quinn: Is she the the medical officer out of Dallas?
[00:34:51] Stacey Richter: Yes.
[00:34:51] John Quinn: She's amazing.
[00:34:52] Stacey Richter: John Quinn, is there anything that you would like to mention that we didn't talk about today?
[00:34:57] John Quinn: I love it that we're broadcasting these new ideas because for me and us, the biggest obstacle we face is confidence. There's too many people that kind of accept what the system is delivering and say it's too complex to change. Or it's gonna take a long time.
And we are seeing that no, it's actually imminently changeable. You just gotta break it down into a bunch of small pieces and manage it like any other business, any other supply chain. And you won't be subjected to trend. I mean, trend is a force that's gonna raise the cost for all of us, but I don't have to be average.
What if I can beat it by 50%? That's a big number.
[00:35:46] Stacey Richter: And there's just so much waste in the system. I think underpinning your point. I just wanna highlight this, that there's so much waste in the system that what we're talking about is cutting out the waste that doesn't accrue any health to anybody not doing draconian cost containment.
[00:35:59] John Quinn: Yeah, I mean, that's the beauty, right, is we don't have to actually take away necessary care. Alls we have to do is find people when they need care and route them to higher quality care, more efficiently priced care, and everybody wins.
[00:36:15] Stacey Richter: Here. Here. John Quinn. Thank you so much for being on Relentless Health Value today.
[00:36:19] John Quinn: Thanks, Stacey.