Introduction to the Series
[00:00:00] Stacey Richter: Take Two. "Why Are Commercial Carrier Marketplaces Completely Boring? Maybe Because There Isn't a Marketplace." Hmmm, Today I speak with Jacob Asher, MD.
[00:00:28] Stacey Richter: We have been doing a little series called "The Inches Are All Around Us". Digging out waste in the $5.6 trillion healthcare sector where half an inch of waste can equal billions of dollars.
Introducing the “No Market” Series
[00:00:42] Stacey Richter: I'm going to right now introduce another series that is complementary but has a slightly different focus. And we will toggle kind of back and forth between these two series coming up here for a bit.
I'm gonna call this other series our "No Market" series, as in general, there is no healthcare market and that is material because anyone who is relying on a market and the invisible hand or any principle of capitalism, frankly, to constrain costs or raise quality. Yeah, bad strategy.
Or what did Julia Roberts tell the shopkeeper ladies In Pretty Woman, how'd she put it? "Big mistake. Big. Huge".
Do not rely on a market to keep vendors in line when there is no market. Whatever you accomplish, you gotta do it yourself, but the results are there for those who pick up the baton. There's just so many success stories, so many examples of how someone cut 15% of costs and actually raised quality for their health plan members. There's so many examples of that.
So yeah, it's just one of these areas where if you don't actively not get taken advantage of, you will actively get taken advantage of. Don't kill the messenger.
Why the Carrier Market is Boring
[00:01:52] Stacey Richter: So I'm doing a Take Two of the show with Jacob Asher, MD about why the carrier market, now he's talking specifically about California, but this is not limited to California, just why the carrier market is so boring. Why it never changes. It's completely stagnant.
And I'm doing this resurfacing the show from three years ago, because it is both a great follow on and also a great prelude for episodes past and future, and also three years later, it's still completely boring. Nothing has changed. Giant spoiler alert.
But the reason the carrier market is so boring sort of fundamentally is again, because there is no market here. What I mean is no one is competing on the strength and quality and affordability of their provider network.
And while there is an obvious fetish for discounts, as has been discussed deeply in many shows, but most thoroughly maybe in that episode with Jonathan Baran about flywheels.
Discounts do not automatically equal lower prices. In fact, discounts plus gamed shared savings goings on often equate to perversely higher prices paid, irrespective of what the contract says. In short, no market.
Now look. And this is exciting. There are some new TPAs inching into the market, but if I'm just talking in general, this no market business is devastatingly material. Elizabeth Mitchell talked at length about this in the episode that I reprised recently. It's called, "Let's Talk About TPA and Health Plan Inertia Instead of Jumbo Employer Inertia." So again, that was with Elizabeth Mitchell from the PBGH. It was a really popular show. So if you haven't listened to that, go back and do so.
So yeah, while the commercial payer/commercial carrier marketplace is completely boring because there is, in fact no market to spice it up with any action whatsoever, the reasons it's boring and there's no market are, frankly, not boring.
[00:04:26] Stacey Richter: So let me walk you through this conversation that follows with Jacob Asher, MD. First, we establish that the relative number of each carrier's commercial members in California specifically doesn't seem to change year over year. And this has been true for years and it's still pretty much true. When you rank order carriers by member count, the song remains the same. It is Groundhog Day.
Then Dr. Asher and I dissect what anybody's actually doing to cut into Kaiser's market share or try to grab share from the two big blues plans. If anything, these three being the biggest plans going.
Why did I ask Dr. Jacob Asher to participate in this particular conversation? It was because he was a full-time health plan, Chief Medical Officer for first Anthem, then Blue Cross, then Cigna, then UHC. Now he's retired, and kind of reflecting back on unsolved and unaddressed issues within healthcare, such as, why is the commercial marketplace as boring as it appears to be?
After I had this conversation with Dr. Asher, I did a little reconnaissance, a little reconnoitering, meaning, I called up Wendell Potter, who everybody probably already knows, but if not listen to episode 384, and I also called up Lauren Vela from episode 406. And I learned a few things from the two of them that really helped me frame my thoughts on some of the issues that surfaced in the conversation that I had had at that point with Dr. Asher.
Six Reasons for Market Stagnation
[00:05:48] Stacey Richter: So why doesn't the relative market share of the biggest payers change year over year over year in the commercial space? May I present six reasons for the lack of market, and again, we're talking about California, but same rules apply across the entire country.
Here's Reason 1. Everybody I talked to, Dr. Jacob Asher, Wendell Potter, Lauren Vela, first thing right outta the gate that practically everybody mentioned is employer inertia, which is, by the way, the topic of the show with Lauren Vela, episode 406. Just trying to get an employer to switch carriers is like trying to pull Excalibur from the stone.
And not surprising because employer starts talking about changing. Someone will bring up the D word as Claire Brockbank calls it, the disruption word. It's obnoxious for employees and also benefit teams if the carrier is switched all the time. You could also listen to the show with Lee Lewis coming up about the beliefs of many CEOs, that also adds up to this inertia.
Reason 2, for the boring no market when it comes to carriers and their networks. EBCs (employee benefit consultants) they have deals with carriers and others, and they also have a lot of power over employers.
Listen to the show with A.J. Loiacono, episode 379, and Paul Holmes, episode 397 for a whole lot more on this.
Reason 3 for the no market. In many states, the real money for carriers is not in the self-funded ASO market, administrative services only market, so they don't really care much about aggressively competing for market share. It's a little bit less true today, but it still is a factor.
But what is undeniably maybe even a bigger factor here relative to what the carriers are up to. It's the pretty obvious negotiating strategy where carriers use higher self-insured employer rates and prices as a lever to get themselves lower Medicare Advantage rates.
Let's not forget in the commercial markets, self-insured employers are spending the money, right? The carrier is administrative services only. They're just moving self-insured employers money around. So it's not their money they're spending, it's the employers.
In the Medicare Advantage market. It's the carrier's money, right? Neat trick. You go into a negotiation and you trade lower rates for yourself, for higher rates for your commercial members.
I hear about this happening all the time, but again, it adds up to stagnation, like nobody is aggressively trying to cut costs in order to gain market share. There's Medicare Advantage incentives, much more attractive than trying to lower commercial rates so that you're competing for employer business. You see what I'm saying?
Reason 4, for the no market, Kaiser excluded, all of the rest of the California payers have what amounts to largely the same provider network. I'm exaggerating slightly here, but largely the same hospitals, the same consolidated, integrated delivery networks. It's tough to have market forces leveling up network quality or affordability when all the providers in the network are largely the same.
Reason 5 why the market is so boring and there is no market. Because of this same provider business, traditional carrier negotiating power all boils down to how many members they have because the bigger the promised volume to any large corporatized consolidated health system, the higher the discount you probably can finagle.
The market remains stagnant with the big, staying big because they can probably promise the best discounts for those who are buying discounts.
Reason 6, for the no market total stagnation going on in the carrier space. As Dr. Asher mentions in the show today, he never saw an employer buy on quality. Again, if everybody's focused on discounts, the biggest plans maintain their market share.
Another nuance I would not lose track here is the stuff that Brennan Bilberry talks about in episode 395, and this is health systems who have anticompetitive contracts with carriers, and that has implications that undermine a carrier market as well.
Okay, so these are your six reasons for the no market, very boring stagnation situation. There's a lot of ramifications to this, but the show cannot be seven hours long.
Upcoming Episodes in the “No Market” Series
[00:10:04] Stacey Richter: I will just mention though, the adjacent shows in our “No Market” series coming up here we have an upcoming show where Ivana Krajcinovic. She talks a lot about the impact of what she calls lazy networks, carrier networks. I also speak with Dr. Leo Spector, Adam Stavisky, and Ryan Wells. Ryan is from Health Here about how to go around the networks and enable providers and purchasers to directly collaborate together.
I talk also with Ryan Jacobs from Marathon about the payer perspective on advanced primary care and just kinda like how the nonmarket has an impact here.
Conversation With Dr. Jacob Asher
[00:10:41] Stacey Richter: So yeah, here is my conversation with Dr. Jacob Asher.
My name is Stacey Richter. This podcast is sponsored by Aventria Health Group and also we got an assist from Payerset who I could not thank enough. Those guys over there are great. Check 'em out.
Jacob Asher, MD Welcome to Relentless Health Value.
[00:11:00] Dr. Jacob Asher: Pleasure to be here.
[00:11:01] Stacey Richter: Just starting at the very beginning here.
Understanding the California Health Plan Market
[00:11:03] Stacey Richter: What is the California Health Plan competitive picture?
[00:11:09] Dr. Jacob Asher: By way of background, I guess it's a little hard to explain what my job was and would certainly cause my wife endless problems defining what I actually did for the health plans. But broadly speaking, I was the lead clinical officer for a market and had leadership engagement with the business leaders, including sales, cost of care, network pricing, and so forth.
Through that experience, I gained market level insight into essentially the sales picture and membership growth picture. And reflecting back after 14 years, I suddenly realized that very little had changed in the relative membership rankings of the large plans in California, despite on paper being what appears to be quite a competitive market.
[00:11:49] Stacey Richter: When you say nothing changed in in 14 years?
[00:11:52] Dr. Jacob Asher: Yeah. I'm not talking about earnings or income or financial performance. I'm simply talking about membership totals and the relative rankings did not seem to budge again. And to be clear, my comments are largely restricted to the commercial market, not to the Medicare or Medicaid markets.
[00:12:08] Stacey Richter: The situation is we've got a bunch of different carriers. We have Anthem, we have Blue Shield, we have Health Net, Aetna, United, Cigna, Kaiser, obviously, and they all are in the market and they all are scuffling for market share. Basically trying to grow their membership base and nothing has changed in 14 years.
Now, were they trying anything unique? Do you have any comments relative to what everybody was trying to do to take market share?
[00:12:34] Dr. Jacob Asher: The market has multiple segments and has numerous individual drivers of market share within segments. From small group fully insured to individual business to large groups, single state to national account customers who have business in California and members in California.
There are sort of micro markets and micro drivers within each.
Challenges in Market Competition
[00:12:55] Dr. Jacob Asher: Obviously Kaiser more in Northern California than Southern California was standing out there as a major competitor, and among the things I came to observe was what is the marketing plan? What is the focused industry approach to the biggest competitor in whatever segment they might be vulnerable, be it small group, large group, and so forth.
[00:13:14] Stacey Richter: You mentioned two words that I'm very interested in. You mentioned micro markets and you mentioned drivers in each. What are some examples of that? What's a micro market and then what's a driver?
[00:13:24] Dr. Jacob Asher: I'm not sure it's the right micro, but there's public sector, there's unions, there's small employers, there's private employers, there's self-funded employers.
There's tech, tech employers. There are heavy industry. They're agricultural employees. The, you know, the Sacramento area and the Central Valley might have a different mix of employers who are funding insurance than Orange County and, Los Angeles, which might be different obviously, than my area, Silicon Valley and Northern California.
And so each market would have an employed population with a range of employers and they sort out into various areas. Unions negotiate their health benefits as part of their contract negotiations. You have very large California cooperative buyers like CalPERS and teachers trusts and so forth that negotiate healthcare benefits for hundreds of thousands of public sector employees, often including unions, and that's an entire sector unto itself for example.
[00:14:21] Stacey Richter: It sounds like what the carriers are doing, like how they're figuring out what their strategy is. They take the whole market. They're not just, here's our commercial strategy.
It's more complicated than that. They will segment the market into exactly some of the things that you said, like you've got your public sector employers who tend to maybe behave in a certain way and want certain things. Private tech, heavy industry, union, CalPERS, like we often hear for the tech industry, they're a little bit less concerned about price and a little bit more concerned about ample and attractive benefit options.
So what is is going on behind the scenes is the market's getting split into these micro cohort segments and then figuring out what the drivers are in each segment, what the carriers gonna focus on, which they are deciding they may have a competitive differentiation in, and then going hard into that particular segment in order to steal share from somebody else.
It, did I get that right?
The Role of Brokers and Consultants
[00:15:14] Dr. Jacob Asher: Basically, it's the brokers who represent the employers and advise them on how they should choose their health benefits. The sales teams cultivate their relationships with the brokers. Again, who each also have their focuses on different groups of employers or different industry sectors, public, private within that milieu, the marketing and targeting of new clients and new business of new employers exists. The ultimate is to get into, in the door, to be able to make a new business pitch.
[00:15:41] Stacey Richter: The EBCs, the benefit consultants are a wrinkle here, right? We've done a number of different shows, so if anyone is interested, they should go back and listen to those shows.
Would this potentially be a reason why it's really tough to take market share from somebody else? Because from an EBCs, employee benefit consultants, perspective being quite cynical, but everybody knows that many EBCs are getting paid by carriers in many different indirect ways.
[00:16:06] Dr. Jacob Asher: It's an interesting question that I obviously am not the expert on, but I think it's also not asked often enough of those folks.
As a matter of course, there can be a fair amount of inertia. Changing health plans can be a bureaucratically complicated maneuver, new ID cards, explanations, let alone if you're changing health plans and then you have to negotiate your employees actually having to change doctors, which obviously can be disruptive for folks.
So, user requires a significant push to go through with the effort because it is a significant business effort on many levels.
[00:16:37] Stacey Richter: Okay. Even if the EBCs are in there, let's just say adding another layer of complexity, we also have the inertia that you mentioned, and then also the employers who are looking disruption in the face and deciding that this is also a major decision making or not decision making factor.
When you were in these meetings that you're talking about, who were you pitching to? Were you pitching to large employers that your team that you were sitting in on these meetings, or were you pitching the large employer and an EBC, or are you pitching directly to EBCs as my first question and then I have another one for you?
[00:17:13] Dr. Jacob Asher: First of all, it's not my team. Let me be crystal clear. I totally understood that I was a consultant to the account team and as one of my early mentors explained to me. Jack, your job here is to support this account executive whose compensation and whose business is utterly dependent on winning clients and keeping clients.
So in the room would be the account executive, there'd be representatives of wellness teams. There would be from our side, there would be the brokers are always there. And then from the employer there is, usually it's the HR, some representatives of the HR team. Rarely, it was extremely rare that a C-suite level person ever attended these meetings. In my experience.
[00:17:52] Stacey Richter: As the clinical consultant was there, data pulled and then somebody said, oh, hey, employer, whatever percentage of your employees have diabetes, and this is what we're gonna do. Like, how did this get back to the actual health of the population?
[00:18:10] Dr. Jacob Asher: You're on the right track. That is essentially my role.
So what I would call, it's a bit of jargon, but I think the industry would call it a clinical value proposition on top of the financial value proposition that the employer might be interested in. I would be representative of the health plan clinical toolbox, be it case management, disease management, care coordination, utilization management, medical policy.
Essentially explaining how my company was going to deliver healthcare in a way that took the best care of your employees and as you've told the brokers you were looking for, be it greater diabetes management, better maternity care, better cancer care, we could, whatever there were, it really varied.
And this is usually in the mid to larger employer segment, over 500 to a thousand employees usually.
Kaiser's Unique Position
[00:18:56] Stacey Richter: This is a great transition to Kaiser because based on what you just said, I could see how Kaiser would have both that clinical and that financial value prop, obviously, in such a way that they can manage to be the big Kahuna in California because they not only have historically the best financial story, the lowest prices that they're charging, but then also they have an integrated delivery system.
So if we're talking about how they're doing running some of these programs, they seem to be very well equipped to be able to pull that off.
[00:19:27] Dr. Jacob Asher: Those are interesting questions. I eventually got to the point where I would ask sales reps, did an employer ever buy a plan because of quality? Essentially that bluntly, and I never got a yes answer. Frankly.
Kaiser, they are certainly known and lead in all usual quality studies in California. More often than the quality, though I think the integrated experience can be a selling point for them. No matter where you go, they have your medical record. You don't have to fill out the same form 10 times.
It's a, there was a simplicity of the integrated network that's integrated with your benefits that I think is an appeal to some folks. I don't have. Like I say, I don't know whether those are the deciding factors in gaining new business.
And my final comment is certainly historically they were enormously price advantaged in the market, but increasingly what I would hear from the brokers and sales folks is that in certain markets, they were no longer the cheapest plan.
They've made enormous investments in new hospitals, earthquake compliance. And hiring much more specialist specialty care, enormous IT investments, and so they are often cheaper, but they are not always the cheapest anymore in every single market in California is my understanding from my sales colleagues.
[00:20:41] Stacey Richter: To overlay my experience. I have spoken with more than one employer, working with people who are making plan selections and have heard more than once a message that very much appeals to employees is the integration, the integrated care message. Potentially even more than the low cost message. So I think that kind of corroborates what you just said, that the idea of having integrated care is very appealing.
And so if I'm an employer and I wanna make sure that I give a variety of options to my employees, I could see how I would certainly want the Kaiser option and the mix there.
[00:21:22] Dr. Jacob Asher: And probably that a significant portion of their employees have long been members. So if it's not, if you don't list it as an option, there's gonna be a significant disruption issue.
[00:21:32] Stacey Richter: Alright? You've got Kaiser, and obviously they are a payvider, and everyone who's listening knows exactly what that means. Kaiser employs the physicians, most of them, and they also run the plan. Let's just pretend, just so that we won't, don't wind up having a seven hour conversation that all of the Kaiser physicians are employed by Kaiser, right? So take them off the table.
Then you've got all the doctors that are left. Now, keeping in mind that Kaiser is the biggest plan in California. If I am one of the whatever, five or six competitive plans, I'm assuming that there's some PPO network and most of the physicians that are in that PPO network take all of the rest of the insurance carriers.
Right. So all the carriers have this, maybe a Venn diagram that has a lot of overlap relative to the physicians that are in network. Is that correct?
[00:22:26] Dr. Jacob Asher: So Kaiser is a closed, narrow network integrated provider. Where a health plan exclusively contracts with two medical groups, one in Northern California, one is Southern California for medical services through a capitated arrangement, and all the financials are then dealt with, dealt internally between the two entities. And the physicians are salaried. They're not paid fee for service, at least when I was practicing there.
In the non-Kaiser world, there are a variety of networks of providers. It's don't forget that there is also a non-Kaiser HMO or capitated provider network, more in Southern California than Northern California, with providers like HealthCare Partners, Monarch Heritage Network and so forth, who are, they're not integrated, but they are capitated networks that contract with all the other health plans but Kaiser.
But your point is essentially, in the world of open network physicians, they are free to contract with any health plan that pays their price, essentially. That's correct.
[00:23:23] Stacey Richter: So just thinking about this from a payer perspective, if you have a whole bunch of providers who are going to significantly contribute to the cost and quality of the plans you have on offer.
Any improvement to the standard of care that those providers make is an all boats rise kind of scenario from a payer perspective. It kind of diminishes the incentive for a payer to get in there and really do a whole lot.
[00:23:48] Dr. Jacob Asher: One point I wanted to talk about with you, I think we talked about before, regarding the competitive situation.
When I was at these plans, the frequent comment was about unit price advantage. And this is inside baseball jargon, but the non-Kaiser health plans negotiate prices with providers, which is called a unit price. And they have a concept called a discount from retail, essentially. And the plans have achieved different discounts through their contracting efforts.
And I came to learn that as far as I could tell, the biggest factor in driving how much a discount a provider would give a health plan had to do with how many members that health plan brought to that provider. And then it struck me that this sort of leads to a bit of a circular reasoning, so that the largest plan gets the best price from major providers because of their volume, which in turn allows them to deliver a premium based on their lower network price than their competitors, which guarantees that they continue to be the largest membership.
And it was one of these factors regarding the competitive stasis issue we talked about earlier.
And the other observation added to that is I also worked with folks who had worked at plans where they claim to have achieved what's called parity or equal discount level with the market leader, which has been Anthem for a long time in California, in the non-Kaiser market in terms of this contract rate. And I didn't ask them at the time, if you achieved unit price parity, why has there been no movement higher up in the rankings closer to Anthem?
And it's a dynamic that I think it's not discussed a lot.
[00:25:22] Stacey Richter: Despite the fact that on the surface, as you said, it appears that there's a competitive market, meaning there's a lot of competitors. It's not like one of the plans comes up with something amazing and then all of a sudden they are at the top of the market share. They have the biggest slice of the pie chart.
And as you said earlier, just tucking this in here, you've, you haven't necessarily seen employers particularly, at least they're not saying they're doing it, buying anything based on quality, it seems to be a price competition. While at the same time in negotiations with provider organizations, it seems like the major negotiating point is how many patients, how many members a plan has. That's the negotiating point.
So therefore the bigger plans have the negotiating advantage. Like you can see how that ends in a stalemate and the big stay big and the small, stay small. You have spoken with some who have said that they've managed to negotiate just the same rates, but then their market share doesn't change, so something doesn't add up.
[00:26:20] Dr. Jacob Asher: Exactly. And even with the larger employers or self-funded employers who might have additional benefit needs, the RFP process, it was my understanding, often as a first pass would use this unit price ranking to even to get to a finalist position where you could present customized care management, population health, concierge level services, whatever the market might be interested in doing.
So it was, it was a hill to climb, just to get in the door to get to a finalist presentation.
[00:26:49] Stacey Richter: And if you're gonna hypothesize on the why there, and I do understand this is all complete speculation.
[00:26:54] Dr. Jacob Asher: We talked about this earlier about the non-Kaiser plans are essentially using the same hospitals and doctors very often. So the actual care delivered is very hard to differentiate, and the unit price continues to be a factor, but it doesn't seem to budge.
[00:27:10] Stacey Richter: We just keep hearing over and over again that the Americans utilization of healthcare may not be strikingly larger than it is in every other country. It's just that "It's the prices, stupid”, Uwe Reinhardt.
[00:27:21] Dr. Jacob Asher: I would ask physicians, are you aware that my health plan has this and this? And they would point to a pile of paper on their desk and say, I got eight, eight health plans with 27 different programs.
So I don't, good to know, but I don't have, how am I gonna get the patient into it easily? These kinds of workflows. Then there, there's improvement on that. The challenge has been engagement to get folks into the programs.
[00:27:42] Stacey Richter: When you say there's improvement on that, what do you mean?
[00:27:44] Dr. Jacob Asher: I think the plans have gotten more sophisticated and have worked on making the user experience and the telephone experience better, and partnering particularly with larger employees, with HR benefit teams to reinforce the message that your health plan benefits include this and this.
And if you want help with your smoking or your diabetes, your obesity, your mental health, your depression, this is all covered and here's this wonderful apps available. Or there are dedicated teams standing by ready to work with you and your doctor or your therapist to coordinate your care for complicated illnesses.
I think that they invested a great deal in that, and I don't have the numbers, but I sense it's slowly improving. There just may be a chronic issue where the plans are not seen as an ally and more as just as the transactional service. And so they, they're continually trying to work on that to either partner with providers to co label services under the provider to increase engagement.
The ACO movement has tried to make health plans services more available to the providers and to increase enrollment and engagement and available services.
[00:28:51] Stacey Richter: So we have carriers and they're trying to improve the quality for a whole bunch of different reasons, which may be related to improving market share or whatever.
But the confounding issue is that, as you said, patient gets a letter in the mail from the carrier. It's not like they at least traditionally, at least, have skipped up the driveway and their eagerness to open it up.
Plans, as you said, are not necessarily regarded as a trusted ally and just as consequentially on the provider side, providers are round filing your, “Hey, let's work together letters,” ie, sliding a lot of them off the side of the desk into the trash unopened.
It'd be really tough to produce much of a competitive advantage either financially or clinically given this issue with both patients and providers and ahem, is it a self-inflicted wound, just given other things that the plans may be doing to patients and providers elsewhere in their business?
Have the carriers gotten better at reaching employees, maybe through employers?
[00:29:52] Dr. Jacob Asher: I don't have a lot of data for you on exactly how much more penetration there is, but I think there's much better communication and then I would assume that the plans are doing much better, direct marketing kind of stuff.
And open enrollments and health fairs at larger employers and working with like, again, internal HR teams at employers to propagate value added programs to increase engagement.
[00:30:13] Stacey Richter: If we're talking about carrier's ability to improve the quality of care, as you said, working with employers to help them improve their ability to engage employees could be a good thing to do because it's shocking sometimes how not good employers are at that.
You were saying going to health fairs, potentially there's, I don't know, maybe templates for communications or best practices that get shared or like what's going on there?
[00:30:40] Dr. Jacob Asher: Yeah, no, exactly. I think particularly in the self-funded space. As you go up market and again, the more higher margin profitable and industry is, the more add-on services they can afford or believe is a virtue as an employee benefit to retain employees. In tech in particular this was common and there's lots of new entrants.
There's a fair amount of innovation to enable easier access to these kinds of services. Onsite clinics, near site clinics, they're on the campuses to remove barriers to accessibility for a lot of primary care, occupational health, mental health kinds of services for employees. And then again the, all the telemedicine.
[00:31:16] Stacey Richter: Dr. Asher, is there anything I forgot to ask you that you wanna mention here?
Final Thoughts and Reflections
[00:31:19] Dr. Jacob Asher: The other part about Kaiser that always struck me is also it's very hard to compare their clinical performance to the non-Kaiser world. So in the non-Kaiser world, everyone lives on bed day metrics, days per thousand and so forth, and procedures per thousand.
I'm not aware of Kaiser's numbers in that space. I presume they're good. And when I practiced there, they were good. And you presume there had the aligned incentives to avoid excessive utilization of discretionary procedures. But their financial model is so different that it's very hard to compare their hospital cost structure to the non-Kaiser hospital cost structure. And that presents cost advantage that the non-Kaiser hospitals point out is a challenge.
Particularly having to do with Medicaid burden and uninsured care burden that the non-Kaiser hospitals have. I, I think a reasonable argument that they do more of and deliver more of than Kaiser does, and therefore is that a structural cost disadvantage to them.
But the actual comparison is incredibly complicated and the data is very hard to get to understand exactly how many fewer spinal fusions is Kaiser doing than the outside market, that kind of thing. What are their average lengths of stay for this or that? You can get some maternity data from some of the collaboratives and their C-section rates are public.
But it was a challenge for me to try and understand that from inside their competitors, to look back and say what clinical elements are driving their pricing advantage? Because you don't have a unit price metric easily available.
[00:32:44] Stacey Richter: Yeah. So circling back on our quality costs. Those are the two factors here, which could potentially lead to competitive differentiation and competitive advantage. And we have a big entity in California, obviously, where this information is tough to get your hands on.
And then also to your exact point that many hospitals say that they have to charge the prices that they're charging due to cost shifting in order to support their uncompensated care, and Kaiser does not have that burden.
That's gonna lead to more difficulty competing with Kaiser for sure. For others in the market.
[00:33:26] Dr. Jacob Asher: Exactly. I never heard anyone actually break it down as, this percentage of their pricing advantage is due to this structural issue on the hospital side, for example. I just never saw that kind of in depth analysis.
It, maybe it doesn't, maybe it exists, but I certainly, I never saw it.
[00:33:40] Stacey Richter: The Sage Transparency Project, which I talked about [EP390] with Gloria Sachdev and Chris Skisak attempts to do that, and it's not something that necessarily a hospitals are super thrilled about.
[00:33:49] Dr. Jacob Asher: I had never heard of that dashboard before I listened to your podcast.
I was stunned. I I did forwarded it to a bunch of network contracting colleagues to see if they'd ever heard about it and I haven't heard back, but I thought that was fascinating data.
[00:34:01] Stacey Richter: Dr. Asher, if someone is interested in learning more about your work, where would you direct them?
[00:34:05] Dr. Jacob Asher: I can be reached on LinkedIn pretty easily and would be happy to answer any questions.
[00:34:09] Stacey Richter: And that would be Jacob Asher, MD on LinkedIn.
Dr. Asher, thank you so much for being on Relentless Health Value today.
[00:34:15] Dr. Jacob Asher: It's been a pleasure. Enjoy conversation.