Sarah Monroe: Hi. This is Sarah Monroe in Chicago, and I'm a benefits procurement leader. And I'm curious why you think so few executives take proactive bold action in health benefits strategy given the magnitude of opportunity.
Stacey: Isn't that a great question?
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Okay … so, last week we did an Ask Me Anything episode with Lee Lewis (EP508) where we answered this exact same question Sarah just asked from the standpoint of a CEO (chief executive officer).
This week, we're taking the same question but from the standpoint of a CFO (chief finance officer) and/or the finance team writ large. And this week we're going through a very crisp roadmap for how to move forward toward proactive bold action in alignment with said CFO/finance team.
This roadmap, though, since we are talking about finance folks here, it does double duty setting up the hardcore why—as in, Why should finance wish to upgrade benefits? Why get away from being kind of complacent and maybe a passive price taker?
I mean, consider Step 1 of the roadmap that we're gonna cover here in a moment. Step 1 is to recommend that the finance team set their next-year and out-year forecasts at an accurate, greater than 7.7% trend. You might be able to see how that will get a finance team to find their why pretty quick.
Oh, was that a spoiler of what's to come? Why, yes, it was.
My guest today, Patrick Nelli, is currently the CEO of Aligned Marketplace, which has a really cool premise based on the power of advanced primary care. Check them out.
Patrick Nelli is also a former CFO. So, yeah … you can see why he'd be a really great guest to take us through this roadmap for how folks at a plan sponsor not in finance can align with finance to move forward toward a health plan that works better and costs less.
So, without further ado, here's Patrick's roadmap. But, for sure, listen to Patrick explain it. The points that he makes and the details that he brings up are both helpful and also really thought provoking.
Step 1: Stop the renewal surprise. Engage with CFO finance teams and take in the advice of John Quinn from episode 493 and Lee Lewis (EP508) from last week. This is an ongoing engagement-type engagement, not a "see ya right before renewal" thing.
Step 2: Confront an accurate trend. Set year-over-year trend accurately. As just stated a minute ago, this trend is not CPI (the consumer price index). Trend will be two to three points minimum above CPI, which is gonna be in the 7.7% range or higher for reasons that Patrick will lay out coming up here.
When you speak in finance talk like this and forecast these out-years accurately, the why for taking bold action becomes really crystal clear. The status quo is financially untenable. Here's a link, by the way, to a page that Patrick gave me that covers this #2 forecasting step.
Step 3: Offer a win-win alternative to the status quo. So, make it clear that this high estimated trend is only accurate if—and this is the important part here—if we stick with the status quo. It is possible to create an actually better plan that is more affordable and better for everybody. I will say this Step 3 is maybe a little bit more fraught than I had previously considered.
Go back and listen to the show last week with Lee Lewis (EP508) for more of a deep dive into this Step 3 in the roadmap.
Step 4: Lean into proven strategies that have been shown time after time to bend said cost curve and improve the health of employees, such as, again, advanced primary care. How many times does this need to come up?
Step 5: Align your incentives and also your safeguards. So, look, if you decide to implement a model like advanced primary care, you gotta ensure that the payment model actually incents the behavior you want to see. You gotta think that through. There is a pachinko machine in the healthcare industry and a pachinko effect of incentives. So, know what they are and then put up safeguards and backstops to prevent unintended consequences if you know that the incentives are, in fact, misaligned.
Step 6: Optimize via your contracting, which includes direct contracting. So, once you consider the incentives and figure out what you gotta watch out for, optimize contracts accordingly. And often that means finding ways to direct contract with independent practices such as primary care practices.
Listen to that episode from two or three weeks ago with Ryan Jacobs (EP504), which is one half-hour fully getting into what the perverse incentives that just batter the premise of primary care if you don't take them on board.
So, that's Step 6 of the roadmap. Optimize contracting, maybe direct contract.
Step 7: Steer and tier. Steer and tier, especially for rising risk and/or to make sure employees get the highest value. In other words, risk stratify and disproportionately engage those with rising risk. Steer and tier them to high-value provider organizations. And look, as I said in episode 507, define value and then demand it. Steer and tier away from wildly expensive organizations who may not perform at the level that you're looking for.
Is that easy? No. Can you start with, for example, advanced primary care organizations with a clear mandate who to refer to? Yes.
This podcast is sponsored by Aventria Health Group. Today we got an assist from Aligned Marketplace. They gave us some financial support to help cover our expenses around here, and for that I am very, very grateful to Aligned Marketplace.
And with that, here is my conversation with Patrick Nelli.
Also mentioned in this episode are Aligned Marketplace; Sarah Monroe; Lee Lewis; John Quinn; Ryan Jacobs; Aventria Health Group; Gary Campbell; Shane Cerone; Sam Flanders, MD; Scott Conard, MD; Stan Schwartz, MD; Vivian Ho, PhD; Al Lewis; Dave Chase; Ryan Wells; Adam Stavisky; Leo Spector, MD, MBA; Barbara Wachsman; and Tom Nash.
For a list of healthcare industry acronyms and terms that may be unfamiliar to you, click here.
You can learn more by visiting alignedmarketplace.com and by connecting with Patrick on LinkedIn.
Patrick Nelli is the CEO and founder of Aligned Marketplace, a national, value-based advanced primary care and specialty marketplace for employers. Prior to Aligned Marketplace, Patrick spent a decade at Health Catalyst, a data and analytics company focused on supporting some of the largest healthcare organizations in the country, where he was president and chief financial officer and helped take the company public. Previously at Health Catalyst, he helped build value-based care analytics for some of the largest ACOs in the country in pursuit of Health Catalyst's mission to deliver data-informed improvement. Prior to Health Catalyst, Patrick invested across the healthcare space and performed drug discovery research. Patrick's passion is to drive healthcare improvement through innovation.
00:00 Introduction to this episode.
02:48 Roadmap Step 1 highlights.
03:07 Roadmap Step 2 highlights.
03:49 Roadmap Step 3 highlights.
04:15 Roadmap Step 4 highlights.
04:27 Roadmap Step 5 highlights.
04:58 Roadmap Step 6 highlights.
05:37 Roadmap Step 7 highlights.
06:28 Introduction to the conversation with Patrick Nelli.
06:36 Step 1 to Patrick's roadmap: Open the conversation.
07:57 What Patrick thinks is sometimes missing in health benefits.
09:07 What finance teams need in order to change their behaviors.
09:53 What Baumol's cost disease is.
10:58 EP341 with Gary Campbell.
11:14 EP492 with Sam Flanders, MD, and Shane Cerone.
12:18 The second item stacked against employers: Being price "takers."
13:49 The percent inflation employers should expect if they follow the status quo.
16:54 Proven strategies to bend the health benefits finance curve.
18:42 EP391 with Scott Conard, MD.
19:37 SUMS11 with Stan Schwartz, MD.
20:18 How employers and plan sponsors can bend the cost curve.
21:47 The two distinct business models that finance teams need to consider when setting up their health benefits model.
24:11 Milbank study on the role of primary care.
24:53 A quick reminder of high-cost spending within health plans.
25:00 EP466 with Vivian Ho, PhD.
25:59 What finance teams need to hear right now to understand why disrupting their health benefits plan is worth it.
27:45 The next step when an employer recognizes that they should seek out an advanced primary care option for their members.
28:41 EP503 with Ryan Wells; Leo Spector, MD, MBA; and Adam Stavisky.
30:27 Next steps after an employer enlists an advanced primary care system and aligns values and incentives in their benefits plan.
34:26 A last word to benefit teams working with finance teams.
34:55 EP430 with Barbara Wachsman.
35:08 How Aligned Marketplace fits into this entire conversation.
@PatrickNelli of @AlignedMP discusses aligning #healthfinance with #benefitdesign on our #healthcarepodcast. #healthcare #podcast #financialhealth #commercialpayermarketplace #digitalhealth #healthcareleadership #healthcaretransformation #healthcareinnovation
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