A PBM that Delivers Deep and Sustainable Savings with Karthik Ganesh, CEO at EmpiRX Health: Audio automatically transcribed by Sonix
A PBM that Delivers Deep and Sustainable Savings with Karthik Ganesh, CEO at EmpiRX Health: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.
Saul Marquez:
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Saul Marquez:
Welcome back to the Outcomes Rocket everyone, Saul Marquez here. Today, I am joined by the amazing Karthik Ganesh. He’s the CEO at EmpiRX Health, the industry’s only value-based PBM with a clinically focused and tech-enabled approach to bending the cost curve. He is also the author of The Happiness Model, a book that explores resilience and finding inner peace under the most difficult of circumstances. Karthik is passionate about maximizing value at health service companies while also creating a culture of belonging that embraces new ideas and deliberate approaches to tackling key health care challenges. Applying these leadership principles, he has built EmpiRX Health into an Inc one thousand company and certified great place to work while transforming it into a high growth and high innovative engine. Karthik, I don’t know how you do so much, but I’m excited to have you here and to learn about the work that you guys are up to. Thanks so much for joining us.
Karthik Ganesh:
Thank you for having me.
Saul Marquez:
Absolutely. I love that you are so focused not only on results but also on fulfillment and happiness. And so I’m excited to dive into our conversation today. Before we explore what EmpiRX Health is doing. Tell us a little bit about you and what inspires your work in health care.
Karthik Ganesh:
Thanks for the question. So I’ve seen health care from a number of different angles. I’ve seen health care as a management consultant, seen health with both Deloitte and Ernst and Young have seen health care sitting squarely in the midst of some extremely large corporations with Aetna, Cigna, etc. Express Scripts. And then I’ve seen health care from a provider and a provider-sponsored lens and really a value-oriented lens over the last 10 years. So really, what I’ve been able to I’ve been privileged truly to be able to see health care from so many different lenses and really figure out what really assess for myself what’s working and what’s not. And I truly believe in life. Sometimes we have we learn more from lessons learned more so than best practices. So I have a ton of lessons learned today. Try bringing to every organization I’m a part of.
Saul Marquez:
Well, I think that’s great. I totally agree with you. We definitely learn more from our failures than our successes and they get ingrained. So we’ll touch on one of your biggest setbacks later in the interview, which will we hope to learn from you there. So talk to us a little bit about EmpiRX Health. How are you guys exactly adding value to the health care ecosystem?
Karthik Ganesh:
Sure. When you look at value based health care at large, right. I mean, we’ve been talking about value based care now for 13 plus years, Saul. Value based care has continued to be about the payer holding the provider accountable. But who’s holding the payer accountable? Right. 80 percent. Eighty two percent of health care costs in this country are borne by employers. Yet the employers are squarely sitting on the sidelines as it pertains to all things value based care, which is just unfortunate. I mean, just think about it. If you picked up 80 percent of the tab and had zero control over the outcome and just kept getting in one direction or another. I mean, how fulfilling is that if you’re an employer and how excited as an employer get to continue funding an employer based insurance system? So when we look at EmpiRX health, the paradigm that we’re looking to shift as the only value basically is this the reason employers when I said employer employers getting yanked, the reason the system hasn’t worked for employers is because while payers health plans PBM would love to talk about Wikipedias for a second, health plans especially would love to talk about value based as it pertains to providers. Their interactions with employers are volume based. PBM’s especially with PBMs now. Pharmacy benefits are twenty five percent plus of health care costs. Pharmacy benefits are continue to be volume based. It feels like retail. It’s volume based discounts as arbitrage, which is why PBM’s are referred to as middlemen versus a part of the health care continuum. EmpiRX health is changing that. When we say we’re the only value based PBM, we’re doing a number of things that you would squarely put into the mold of the triple aim to quadruple aim that pertains to health care at large.
Karthik Ganesh:
One, our financial model is paid for performance. Our financial outcomes literally depend on how our clients do. If clients to better, we do better. That’s the first part to it. The second part to it is this notion of condition oriented, clinical anything. We’ve been trying it as an industry for twenty five, thirty plus years. It hasn’t worked. Costs keep going up. Population orientation is where we need to be right now. COVID has taught us that all over again. We are a pure population health play. Then you start thinking about employer satisfaction in tandem with patient satisfaction and because again, the folks we’re picking up 80 percent of the tab deserve some love as well. We are a white glove service model for not just our members, but we bring clients, even client services for us that are twenty four by seven shop because we understand that clients deserve, our employers deserve that kind of attention as well. Then you put the a quadruple aim standpoint to take the layer of staff satisfaction, we’re certified a great place to work, we understand that the employee experience is always going to translate to the customer experience, and that’s where we’ve been able to really change the mold and bring in, again, the industry’s only value based PBM. The industry’s only population health, pharmacy driven population health play. And again, the industry’s only pay for performance model as well.
Saul Marquez:
Yeah, that’s really, really interesting. Karthik, appreciate the you outlining that. So help us understand. Walk us through how you’re delivering this value based play and talk to us about how you’re doing it different because obviously it’s different. So talk to us about how the mechanics of that work and what that looks like.
Karthik Ganesh:
So you look at a volume based, a traditional volume based, you have to be able to set the context for where this where the market has been and where the market continues to be to be able to showcase the difference. Right. every single PBM out there, whether they call themselves traditional or transparent, the model is based on volume. The way they make money is when volume goes up. Yet when volume goes up, we’re essentially saying we are OK with more drugs being pumped into the health care system. When volume goes up, the employer’s health care spend goes up as well. So there’s a fundamental misalignment between when the PBM does better and when the employer does better because the employer is truly doing better. It’s going to be tough in a volume based model for the PBM to do better because it’s just the fundamental dichotomy of one. One goes up, the other has to come down. When you look at what we’re doing from an EmpiRX standpoint, so we put we will put like every other PBM out there, we offer rebate and discount guarantees because those are things that are par for the course as it pertains to being in the space. But then what we also put on the table Saul are hard clinical guarantees, when I say hard clinical guarantees, they are fully auditable on a plane by plane basis.
Karthik Ganesh:
The beauty of pharmacy benefits are that claims are adjudicated in real time. So you really don’t have to extrapolate and say, well, if you do these kinds of things, you should expect these kinds of outcomes. You can see on a plane by plane basis exactly what’s going on. So when prescription A when therapy is prescribed for a patient that we feel that goes through our artificial intelligence algorithm, we use the Johns Hopkins ACG. We use a number of very sophisticated tools as part of that. When it goes through that algorithm and it’s identified as an opportunity for an intervention, our pharmacists work directly with physicians which to have a clinical consultation and switch therapies from A to B, from higher cost to a lower cost of therapy from a while, ensuring clinical efficacy is either unchanged or improved. The fact that we are using a clinical consultation to drive costs down is where the difference comes in. Our clinical guarantees are pure pay for performance. If we don’t hit those numbers, we pay the difference dollar for dollar. We don’t charge administrative fees. So the only way we make money is when we over perform on this clinical guarantees. So it truly in its purest form is a downside risk model.
Saul Marquez:
Yeah, that’s really interesting. So the clinical guarantee is basically you’re going to deliver equivalent or better care at a lower cost right. you have another drug that can do the same thing.
Karthik Ganesh:
Correct.
Saul Marquez:
OK, I’m with you. I’m tracking to make sure we’re on the same page. And so you’ve got a patient, you’ve got claim level data and they go for a particular therapy. It triggers the algorithm. There’s an opportunity for something different. So that gets passed on to a clinician that then that’s it and says, yeah, there’s an opportunity to do to do better here.
Karthik Ganesh:
I think that even one step further. So when you look at accountable care organizations or look at ACOs, especially Medicare service, the places where they’ve done extremely well is where the patient panel is well stratified. From a risk standpoint, predictive models are in place to see not just where clinical and financial risk exists right now, but where it could go when this comes in, when the claim, if you will, comes in that might have an opportunity. It runs through our Johns Hopkins plus other clinical algorithms. What is handed off to a clinician and are and is a full case summary. So is all of the information is curated and handed off for a clinical consult. And then you’ve got our clinicians engaging with the physician directly to switch, essentially drive behavior change. Physicians came from the provider sponsored world. Physicians will engage all the along the critical conversation and are willing to change the prescription. If it’s a clinical for it versus an arbitrary formulary or administrative rationale for it.
Saul Marquez:
Fascinating, fascinating. Thank you for that. And certainly unique layering in both the financial and clinical outcomes is certainly unique. Talk to us about how one of these instances, or many of them across an employer have led to to better business results and improved outcomes.
Karthik Ganesh:
Saul, our first client came to us in 2015, and they’re sitting on the same PMPS as when they came to us in 2015. I mean, you look at an industry where specialty growth is anywhere from twenty one to twenty four percent. On average, the self-funded employer sees their pharmacy spend growing by 15 to 17 percent year over year. Our first client is sitting on the same PMPMs. Most of our clients on an average experience, a 15 percent drop in their PMPMs at year one. We have about 70 percent of our book is sitting on negative trend right now on a multi-year basis. This is why I mean, our retention is ninety eight percent plus and we’re growing. We’re the fastest growing PBM on the block. An employer, especially the committed employers, is picking a partner to to service their employees. On one hand, especially and this is gets this gets magnified now with COVID rate you’ve got I always feel like you’ve got me, especially having said on the instead of the employer side of the house and buying benefits for our employees as well. You’ve got one voice that tells you lowest cost because the bottom line is important. But then you realize that it’s you’re talking about people and their families.
Karthik Ganesh:
So you can’t divorce the financial aspect. The health wealth intersection becomes incredibly important as a part of the thought process and giving employers the peace of mind to say you don’t have to choose, you don’t have to choose between health outcomes and financial outcomes. You don’t have to choose between cost and access. These are artificial dichotomies that the industry has propagated. You can have both if done right.
Saul Marquez:
Yeah, well said. Well said Karthik. And astounding the amount of money that employers are paying and it just keeps going up every single year. It’s really unacceptable. And there’s a solution that could get you both savings and improved or the same type of health outcomes. Why not? And a lot of these things, it’s just so difficult for the untrained eye. And it sounds like Karthick, you and your team have have done a really great job of building the systems and processes to make these types of opportunities clear for all of us. So talk to us about a setback. All of this didn’t just come together easy peasy. Talk to us about a setback you’ve experienced and what you learn from that.
Karthik Ganesh:
You know, I would say so two things. One, so I’m mom. I’m not a big believer in headwinds because you turn your head it becomes a tailwind. With that being said, there is a fundamental underlying I’m not going to call it a setback, but there’s an underlying I’m going to say maybe the word asset-backed is an underlying factor that kind of weighs innovation down in our industry at large. And the factor is a lack of inertia. That factor is an acceptance of status quo. That factor is that there is no other facet of our lives where we would pick up 80 percent of the tab and not demand something more. And this lack of inertia, this acceptance of old tired solutions, the acceptance that it’s OK for pharmacy benefit managers to behave like retail entities, it’s OK for them to act like middlemen when they’re called middlemen. Podiums are called middlemen. The industries we’re well, we’re we’re adding value. Let’s take that back to adding value, just like any other retailer in the industry would, where you’re probably buying for one price point and selling for a better price point and building an arbitrage model that’s not value. So there’s this overwhelming this pulldown effect, if you will, where when you go out and you’re talking about cost and access not being mutually exclusive, some of this needs a little bit of you need to be pushing harder to communicate this than you would have thought would be required because people are. So some of the stuff is so ingrained into the way we’ve talked about buying insurance or buying pharmacy benefits at large, which I will be candid with you Saul. That’s for all of the the challenges that COBRA has brought our way over the last, let’s say, thirteen, fourteen months. That’s the most exciting thing that excites me the most. Have employers reached that breaking point where they understand that the employer is going to drive the reimagining of health care in this country? Have they reached a breaking point? I hope they have listened.
Saul Marquez:
I think I agree. And that eighty two percent figure is just like where else? Where else do you tolerate it? And I, too, have have a lot of hope for what employers in this country can do for health care. It’s a big opportunity. And I think to your point, a lot of employers are smelling the coffee and they’re waking up and they’re taking advantage of things like you and your company, Right. EmpiRX Health is doing. There’s a big opportunity here. You’re doing an awesome job, you and your team, Karthick, and we appreciate it. As you look ahead, what would you say you’re most excited about?
Karthik Ganesh:
I will tell you the reimagining of health care in this country with the employer to the point, smelling the coffee. Stepping up and leading the charge, calling out cost of access shouldn’t be mutually exclusive. Employee employer satisfaction is when we think about health care services and we think about, you know, let’s say we either us or a family member had to go and see a physician or a friend. The two questions that would come to mind would be, is the person competent and well credentialed? And the second, does the person have a great bedside manner? Why shouldn’t health services companies, why shouldn’t insurers, why should a PBM have a great bedside manner? Why shouldn’t they be taking care of the folks who are picking up 80 percent of the tab? Then that should come from employers putting their foot down and saying enough is enough time for a change and it’ll be telehealth picking up. There are so many facets of our health care system right now, so that I’m just excited in terms of what the next 10 years could bring. I’m hoping with with the fact that mental health is just a an overwhelming factor. It’s a tsunami in the midst of all things called it. And I’m really hoping that mental health stops being a taboo. People embrace it. People understand that now is the time for us to collectively, as a society, as a country, step up and embrace that mental health is could be, quite frankly, the driver of physical health challenges. There’s just so much to be excited about in the next 10 to 15 years.
Saul Marquez:
There is Karthick. I couldn’t agree with you more. We need people to step up to the plate and start making that change because it starts with one and then two and then three. And so Karthick, the work that you and your team are doing is making a difference in the PBM space. You called out mental health and beyond. So I appreciate what you guys are doing and the listeners also appreciate the work you guys are doing. If somebody’s listening today, if your message resonated with them, what’s the best way for them to get in touch and interact with you and your team?
Karthik Ganesh:
I’m on LinkedIn all the time. Very active contributor on LinkedIn, EmpiRXHealth.com, EmpiRXHealth.com. I mean, we are again the only value based PBM. And if you’re looking for cost, access and an incredible service experience, we are the place and thing that excites me is in our own way. We are impacting the total cost of care, which is very excited about the journey we’re on.
Saul Marquez:
Awesome. Yeah. So if you’re tired of paying a lot of money every single year, I think Karthik is your guy and EmpiRX Health is the company you got to check out. As he mentioned, EmpiRX, you could check them out at OutcomesRocket.Health, type in EmpiRX in the search bar and you’ll see our entire show notes, transcript, links to EmpiRX, and the company so you could start exploring how you two can get more value out of the eighty two percent that you’re covering in your employee benefit. So, Karthik, thank you so much. This has been super interesting and certainly grateful for the work that you and your team are doing.
Karthik Ganesh:
Thank you. So take care. Stay warm.
Saul Marquez:
Thanks. You too.
Saul Marquez:
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