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Saul Marquez:
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Saul Marquez:
Welcome back to the Outcomes Rocket, Saul Marquez here and today I have the outstanding Mark Newman joining us. He is the co-founder and Chief Executive Officer of Nomi Health. Newman and his team are working to solve the employee health care crisis by removing the waste embedded in the traditional process and cutting health care spending costs by 30 percent. Previously, he founded and built HireVue, the world’s largest provider of aid-driven talent assessment and video interviewing solutions, which sold to the Carlyle Group in the category’s largest sale to date. Newman is an active adviser in startups across enterprise software, human resources, and health care. And he’s an investor in health care, making a huge impact with that. Mark, I want to welcome you to the podcast. Thanks so much for joining us.

Mark Newman:
Thank you for having me.

Saul Marquez:
Absolutely. Before we dive into Nomi health and the work that you guys are up to there, tell us a little bit about your health care inspiration. What got you into the space?

Mark Newman:
You know, the intersection of the patient, consumer, business owner, you name it, and the pain with all of it. I was building HireVue. I have three kids under five, so life is filled with no sleep. But I was building HireVue and my son was born. And the craziest thing that happened is that nice person from finance came into our hospital room and said, Oh, congratulations on your new baby. I just wanted to come to talk to you about the bill for it. And I sat there just stunned and I said, OK, what is it? She said, Well, you’re on a high deductible health plan. It’s forty-five hundred dollars. We need to talk about a payment plan before you leave. And I sat there just blindly going through this life-changing experience on one hand and hearing this on the other. And I whipped out my card and they just gave it to her. She said, what are you going to do with this? Said, Pay the bill. She goes, well, you have to put at least 10 percent down. And I’m thinking in my head, I’m building I’m running a company. We have lots of people. We have great health care, great benefits, fully funded HSA like we are living the privileged life of tech. And I’m sitting there and I’m like, OK, what if I just pay all of it? She’s like, I’ll take 30 percent off right now. Life changing moment on one hand, very important moment on the other, because I sat there and to be frank a little pissed because here I am, I have money, so I get a lower price. I grew up in Canada. I come from a long line of hypochondriacs. None of them fear the bill for it. Here I am. And I’m sitting here thinking on this exact same day, if one of my call center team members or someone that workforce part-time and starting a family and going to school or whatever it might be, showed up, have the exact same thing and had to walk out with a payment plan, not only would they probably be paying it with post-tax dollars because they weren’t planning right, they weren’t doing all these different things. But on top of that, they paid more. And at that point in time, I was building HireVue, which was a great company and helping companies build transformative teams or diverse and inclusive state and performed highly. And that was, I thought, my life’s work. I spent 15 years building that business. Yeah, but at that moment in time, I realized that there was another chapter and we had to go solve that problem.

Saul Marquez:
Now it’s a great, great story. And Mark, I mean, that’s the sad reality of the way that health care is accessed today. Blindly, surprises left and right and then lack of transparency. And so you’ve put together your thoughts from your experience both as a father and as a company leader. And now you’ve embarked on and leading the Nomi team. So so talk to us about Nomi Health. What exactly you guys are up to and how are you adding value to the ecosystem for sure.

Mark Newman:
So the problem I recognized in that situation was that there had to be a much better way to connect the employer. So in this case, a higher view was a new name of fortune for two thousand companies directly with the provider, because every day of the week they would trade immediate payment for a lower cost every day of the week. And as I dug into the problem, what it really was, is that there were way too many middlemen and way too many people who made way too much money off of dragging that out, slowing it down, going through the pain that is medical billing and collections claim adjudication, you name it, today. So what we’re building it now is a complete rewrite of the plumbing for self-funded health care in America, where we believe the system should run in real-time, connecting directly between employers and providers and bring full visibility around patient communication, no experience, money, any movement value, you name it all in a real-time way. Our entire lives running real-time credit card payments, Venmo, you name it. If for some reason in health care, we still think it’s acceptable that 40 percent of the value chain is just lost the middleman and time and waste, we think it shouldn’t be. So we’re going to rewrite the system.

Saul Marquez:
And so are you guys honing in on that upfront pay for a discount to start? Are you tackling other areas too? Talk to us a little bit about the approach.

Mark Newman:
So, yes. So direct contracting has existed in some form or another for a century. The old towns had direct contractors on staff, and he paid them directly. Health care used to be quite simple that way. The issue is scale. Every TPA out there or any employer with ten thousand people in Fort Worth, Texas, says, you know what we’re going to do? We’re going to call up these hospitals. We’re spending so much money and I’m going to go do a contract directly with them. The issue is it breaks. You either have an existing business that you don’t want to disrupt because you’re a TPA. Your bread is buttered by the carriers. You know you don’t want to totally upset them. You want to add some value for clients, but you don’t transform your business. Or you’re an employer. And we worked all the banks on Wall Street. One of them in particular is fascinating to me because they spent two hundred million dollars a year on recruiting. They had six hundred FTE on their team managing that spent and doing the job. They spend a billion dollars a year on benefits. The cost is exploding at three to five percent per year, and they have ten managing that entire process.

Mark Newman:
They’ve outsourced it all to the consultants, the advisors, the BPO, you name it. None of them have the incentive to solve this problem. And what happens quickly is that you have your ten thousand people in Fort Worth and you say, oh, great, we’re going to do direct contracting, it’s going to be fantastic. Then someone in legal says, are you doing this for everybody across the country? How are you scaling this? Are you going to make this repeatable? How do you do different plan designs for people? And you get into the death by a thousand policies that either your carrier or your consultant or your legal department throws in front of you. So we aren’t just saying, oh, let’s drive prompt payment for a lower price. What we’re actually building here is a total replacement for a book carrier for a national employer. This goes from network to member management claim adjudication, data analytics, disease management, pharmacy, and building it from scratch.

Saul Marquez:
Got it. Very cool. Appreciate you going down that path. It’s all-inclusive. It is rethinking the way that the entire transaction happens, at least the financial pieces of it.

Mark Newman:
Yeah, I mean, the great the greatest thing we could do as an industry is stop calling the carriers payers. They’re facilitators and there, frankly, stagecoach thieves at this point because ultimately they don’t pay fast. They take a huge part of the value chain and there needs to be a better way and a better system. And so let’s start calling them carriers. That’s what they are. They’re not payers, but facilitators of payers. And let’s connect the real payer, the employers, and the members that they support directly with the providers.

Saul Marquez:
Boom. Well said, my friend. And you know, a lot of the existing nomenclature out there is embedded in misunderstanding. And I appreciate you giving us this fresh perspective. I think it’s something that we all need to be thinking about. What would you say makes the solution you guys are offering today? Obviously, it’s different. How is it better than what’s available today?

Mark Newman:
We have to go through the hard thing, and that’s building it from scratch. You think about the current carrier ecosystem or ecosystem. It’s built by a thousand acquisitions. They have all sorts of various systems. More importantly, they have suffered from the bias of tradition. This is how we’ve always done it. Oh, if we speed up things from 30 or 60 days to 14 days, we look like rock stars versus saying, why should the movement of value take more than ten milliseconds? The stagecoach companies didn’t invent credit cards and the credit card companies didn’t invent Venmo. You had to take a fresh approach to it and you had to do it, not burdened by a traditional business model, because they will throw it out. The brokers, the advisors, the consultants, you name it can’t throw it out. They can’t bite the hand that feeds them. So for us from scratch, we’re building the engine, the platform. So essentially that’s a vertically focused spin management system. If we had to get very, very, very geeky on it. Right. And it encompasses my experience, from my experience from employers, my co-founders. One was the CEO Overmatch and Health, which was a narrow network, high-performance plan providers. And then our CTO came from Goldman Sachs, where he was the chief digital officer there, Marcus and Apple Cart. And if you think about combining those experiences, not to mention the subject matter expertise across our team, it’s connecting the self-funded employer with the modern fintech platform that runs in real-time, married with all the essentially the content, the network, the rules, the claim adjudication mentioned the fraud and waste and abuse and appropriateness and everything you want in there to be running in real-time. So where is that takes tens of thousands of people in the large carrier, it won’t be here?

Saul Marquez:
That big picture. I admire the well thought out approach, Mark. And so as we think about the challenges that a project like this will embark on, I’m sure you’ve already run into them. But it’s like the daily challenge, right? So what would you say one of those biggest challenges has been and key learning that’s come out of that?

Mark Newman:
One of the biggest challenges is creating trust in the solution because people, the provider groups of today, and the hospitals are so broken, they’re demoralized, they’re burned out and broken and just started to accept that this is the status quo of what health care should be. It’s why you’re seeing practices shut down and just sell to the big systems. That’s why you’re seeing big systems, mergers with other big systems to hopefully have to negotiate leverage with payers. And the other piece of it as well is how do we connect employers and willing to be first and you have to find him and hunt for them because the way this works is a dollar of negotiated health care in America, which we spend tens or hundreds of billions of dollars trying to get to and manage and fight over. But we get you to know, we go to a doctor, we have this claim. It’s –. What happens in 90 percent of cases is actually ninety-nine percent of cases of people disconnect all the players. They are geniuses. They treat everyone to separate the witnesses.

Mark Newman:
And so if you think about it, though, for that dollar negotiated health care, you dig into your plan documents and we say, OK, only 80 to 85 percent of our actual premiums have to be spent on care, the medical loss ratio. So that means Right. out the door. As the CEO and business owner, we’re paying a buck twenty-five. You take that dollar down further down to the provider path and you ask any provider, you say, OK, on the dollar that you’re owed contractually, what do you collect? And they laugh and cry. At the same time. You say, OK, how long does it take to collect 80 cents on the dollar? And they say, do you know anyone that does that? They get into patient collections. It’s in the teens. And so they look at this and you say, OK, maybe it’s 80 cents. Best in class we’ve ever seen as 90 cents now is on a high-end academic hospital.

Mark Newman:
And they said, OK, and that takes us four to six months to figure out. So if you connect up that whole value chain, you say, OK, on the top end, as employers, we’re paying a buck twenty-five. And for the people who actually deliver value, they’re collecting 80 cents at best in four to six months. Where’s the rest of all that going? Got it. Can we pay you eighty or eighty-five cents right now? Can we then run the entire system like a credit card on three or four or five percent, run it in real-time and take that value back to patients, employers, and providers and finally take back the system. So you’re talking about the biggest challenge. People say, yes, I want that, like who else is doing it? And so that’s what we’re going through where there is no such thing as a better health plan. So we’re building that entirely and are bringing on our first employers and bringing on network and building that out. But it’s hard rock mining for sure. People are very used to the status quo, even if they want something new and different.

Saul Marquez:
Yeah. Yeah. And so, Mark, walk me through the buck twenty-five because I miss that. I want to make sure I understand it and the listeners understand it. So I get the collection’s piece. But where’s the buck twenty-five. Talk to us about that.

Mark Newman:
We can use Anthem’s earnings call as an example. So Anthem Public Company, they have to report on their medical loss ratio every single quarter under the Affordable Care Act. They’re supposed to spend at least 80 cents of any plan on actual health care. They’ll be 83, 82, 81 on any given quarter. And if it goes too high, they get hammered by the stock in was for spending too much on health care. When we talk about that metric as if it’s like its own unique unicorn Right. that only concerns the carriers. What that means though is that when they collect one hundred billion dollars of premium revenue across their customer base are only spending 80 billion of it on actual health care. And so as a business owner and CEO and head of H.R. and health benefits and you as an individual consumer, when you spend twenty thousand dollars a year on premiums for your family, at best, only sixteen thousand will be spent on health care.

Saul Marquez:
I’m with you now. I appreciate your elaboration because I was I was wanting to better understand it and that right there put it together. Thanks for doing that.

Mark Newman:
And so you take that sixteen thousand and you say, great. provider, that’s what you’re going to get paid and they were like I wish they collect maybe thirteen. And so now we see this path of we spend twenty thousand dollars on premiums. The provider, if we only went to one provider the entire year, Right. gets thirteen thousand, where does the rest go? And that’s what we want to eliminate.

Saul Marquez:
Man, that’s awesome. And thank you for that. And you know, it’s, it’s a great opportunity. And I’m really, really hopeful that you guys can knock this one out as you as you’re building and learning. What are you most excited about today?

Mark Newman:
What I’m most excited about is if we’re right, we’re going to be really right. There’s no small right here. If we win, that benefits everybody. If we do right by patients, we finally give them affordable health care, do right by employers. We finally help them tackle affordable health care. We do right by providers because they finally get a shot to practice medicine and not just focus on building and payment collections. We think we can have the system we all deserve. That’s great health care at low cost, that isn’t going to make carriers happy. We don’t have to. Let’s build an alternative to them. And so that’s the greatest opportunity is the human effect that this has. We can show up and say the thing you fear most will now be 30 or 40 percent less cost and same doctor, same care, 30 percent lower cost. We feel when I look back and measure my life, that will be something that we can be really proud of delivering.

Saul Marquez:
Totally. Man, that’s awesome. Thanks for that. I’m excited too. And I hope you’re really, really right.

Mark Newman:
We have to do something. I mean, as a country, as health care buyers and consumers and the real payers, we have to do something. There are so many companies in the health payments and collection space and the three carriers in there that are worth tens or hundreds of billions of dollars. You’re upset at the robber barons in the eighteen hundreds around train tracks and ship lines and you name it. We should be upset that the carriers didn’t.

Saul Marquez:
Love it. Well said. This podcast. We’ll definitely give me a lot to think about. And you’re listening to this as well. I’m hopeful that it does the same for you. Mark, tell us where listeners could get in touch and learn more and also leave us with the closing thought.

Mark Newman:
For sure. So come visit us at NomiHealth.com. I’m Mark@NomieHealth.com. We have a fabulous team of almost four hundred people now across all of our operations, from technology building to network development and a lot of our public health and public sector programs as well that we support states with and reach out to us and come get involved, whether you’re self-funded employer or provider or an individual that just wants to see change. Love to have you for a closing thought perspective is we actually all can do something about health care. We’re not helpless. What it takes is standing up and showing up and fighting for it.

Saul Marquez:
Great closing Mark. And with that, I just want to give you a big thanks. We’re rooting for you just to have success with this venture and certainly look forward to staying in touch with any major updates you guys have.

Mark Newman:
Many thanks. Thanks for having me. Look forward to it.

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