Dave Chase, Co-founder and CEO at Health Rosetta

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Saul Marquez:
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Saul Marquez:
Hey, welcome back to the Outcomes Rocket podcast, appreciate everybody tuning in. Today I have the privilege of having Dave Chase on the podcast again. You have and listen to his initial podcast episode. Feel free to check him out on the website. Just type in Dave Chase in the search bar outcomesrocket.health. Dave is a hope merchant. He’s a creator of a health Rosetta, author of the Opioid Crisis Wake Up Call and author of a most recent book that we’re going to be talking about today. It is an extraordinary time to be thinking about how we are rethinking health care. And Dave with his experience with Health Rosetta and his experience across different companies, he’s doing a great thing for us and helping us think through what the future of health care could be. And so I’m privileged to have him back here on the podcast today. You haven’t heard of Health Rosetta? They’re an ecosystem for scaling adoption of practical, nonpartisan fixes to our health care system by enabling public and private employers and unions to reduce their health benefits spending by 20 percent or more while improving the quality of care for plan members. Just an extraordinary work that he and his team are up to. In today’s interview, we’re going to dive into his new book, and the title of that book is Re-Localising Health and the Future of Health Care is local, open and Independent. And so with that intro, Dave, I want to welcome you back to the podcast.Thanks for joining us.

Dave Chase:
Really appreciate having me back.

Saul Marquez:
Yeah, likewise. And so, Dave, you know, the typical script, we’re putting it off to the side. This is obviously your second round with us. But I do want to go back to what does inspire your work, because that’s one question that always merits revisiting. So why do you do what you do? What inspires you to get up every day and do what you do?

Dave Chase:
Well, really, what’s bothering me up now is really, frankly, restoring the American dream. And what put me on this journey, however, was one where, unfortunately, by the time I was 40 and had 10 friends my age or younger died. And of course, all those are gut punches. But the last one was particularly brutal. And make a long story short, it was a complete system failure by our health care system. And this is somebody who had a career somewhat similar to my own, done the right things, done quite well. But at the end of the day, got the wrong diagnosis, of course, led to the wrong treatment plan, devastated or medically, psychologically, financially, leaving behind a single mother, a 10 year old daughter. And that was brutal. And that’s really what got me digging in, asking why I was one of those people who just why, why, why, why, why? And you get to the root cause of issues. And fundamentally, it’s not that we lack for money that we’re spending on health care. It’s not that we’re lacking for incredible talented gratification clinicians. We’ve got all that in this country. It’s that the way we purchase health care in this country is fundamentally and radically flawed, and it has all kinds of collateral damage. And so we’re all about changing that over. And we can go into, of course, more detail. And I can filibuster the next 30 minutes on that. But that’s the big picture and it’s really a good news story now. But it started through some real tragedy in my life and really the lives of my friends.

Saul Marquez:
And I feel you, man. I mean, we all have our health care story, something that didn’t go well or we were charged too much or we didn’t know. And whether it’s us as individuals or we’re leaders of companies right.. So what’s happening to our companies as a result of these things to our government? And so so the premise of your book, Relocalization Health Care, assumes, OK, it’s not it’s not local right now. Talk to us about that and why this is the premise.

Dave Chase:
Yeah, I mean, some of this common sense Right. Health doesn’t start in a pill or a hospital. It starts at home with mom, dad, and then it fans out from their neighbors. In your community, we know that at least 80 percent of health outcomes are driven by things other than the sick care system. Yet it’s the kind of system run amok that has stolen from the things that drive health and well-being. The data is very clear. They’re stolen from education. Bill Gates, the entire TED talk to that, stolen from public safety, clean air, clean water, have data in the book about DROs, Massachusetts. It could be any state. And you look at you bring it down to the local level. One of the things that I’ll say is health care is inexpensive. After all, clinicians only get twenty seven cents of every dollar ostensibly spent on care. What’s expensive is profiteering, price gouging, fraud, administrative bloat and you take a county like the one I live and kind of give you really bring it home to local, about a quarter million people. So all ages we spend about two and a half billion dollars on health care in our county. At least a billion very conservatively gets extracted out of our local economy, basically to Wall Street. And what’s more local than interaction between a patient and doctor? This makes no sense. And even if we just repatriated 10 percent of that, imagine in our economy what one hundred million dollars recurring could be doing in our community. And so in the book, you flip over the back of the book. I got it here. Like, there’s this basically is like five step plan that spells out local. And it’s quite a straightforward process. There’s a lot of people want to complicate health care. And of course, specifics of medicine are complicated, but the way we pay and organize doesn’t have to be. And so it’s basically time for a reset. And that’s what the book outlines.

Saul Marquez:
I think it’s so interesting. And by the way, folks, stick around, because on the tail end of this interview, Dave is giving the book away. So you’ll have the link to get that just. But today we’re going to talk to you a little bit about what it’s about. I mean, I’m intrigued by this number that you just shared. So two and a half billion and one billion is extracted. Can you zoom into that? Like what happens?

Dave Chase:
Yeah, what happens is good. I’d say there’d be two things that would sort of jump out as big examples. One is in drugs and there’s this company called Pharmacy Benefit Managers. Most people haven’t heard. These are some of the biggest companies, the world’s fortune 50. In some cases, they’re making more money than the pharmaceutical companies on a drug. In fact, there’s only one pharmaceutical company in the Fortune 50 is the pure pharmaceutical companies, Johnson and Johnson. Yet you got some of the biggest companies the world has heard of and the games are endless there. So the good news is there’s a lot of low hanging fruit there. So that’s one example that all kinds of shenanigans going on there, spread pricing rebates, clawbacks, all kinds of stuff. And then the other huge example to actually the biggest areas is with hospitals. And what’s happened there is there’s two markets. The market that I talk about in the book, which is really grown explosively over the last five to 10 years, is what I call the real market. And in the era of high deductibles, cash and direct contact between the employer union and the health care provider has really changed the equation. And it’s quite amazing that there’s these things. You buy some you’ve heard of PPO networks, Right.. They probably made sense at one point in time. Now they’re kind of a glorified YellowPages.

Dave Chase:
You ever heard of YellowPages for younger people? And they’re basically just the value extraction device where it’s very, very common for the same service to be charged five or 10 times the same rate. And it’s odd where you have an employer who’s employers in aggregate are paying for about half of health care in this country, and an employer that will reject an expense report for missing some seventy six dollar restaurant receipt will pay sight unseen a six figure bill. And I can tell you, having been like earlier in my career working in hospitals and billing department, I don’t think there’s ever been a hospital bill over ten thousand dollars. It hasn’t gone out there. And we have examples all the time. In one of my favorite examples of a creative employer was they said we can have third parties who can check claims and bills, but who’s the best sort of billing the patient and their family. They were there. And so they said to the employees, hey, if you find an error that we were going to pay, that we don’t pay, we’ll give you a 20 percent finder’s fee. And so lo and behold a woman had a charge. Two hundred thousand dollars that was in error. They were going to pay. And so what they did was pull out the Ed McMahon giant check and presented her at the office with a forty thousand dollar check.This is somebody making a little over fifty thousand dollars.

Saul Marquez:
Game changer for her.

Dave Chase:
Everybody in the office is like, I had to go look at these bills.

Saul Marquez:
Let me go look my bills.

Dave Chase:
And so it’s just it’s just run amok based on price gouging. And so you have them over and over and over. And so in our case, the hospital is owned by the town. Shame. We’ve got all the PPO shenanigans that PBM shenanigans again go back to. Clinicians are only getting twenty seven cents of every dollar in this chapter. How about in the real market? The prices are flat. There’s data now five to ten years where in this real market that I’ve talked about, prices have gone. I think about it. Have the inputs fundamentally changed? Are we getting are we charging different for sutures? Are nurses and doctors paid five million different than ten years ago? No, a little bit. But not much. About the only area that’s really gone out, the specialty pharmacy. And so when you do this type of thing, you know, when we were chatting earlier about Pacific Steel, you know, they went from spending over eight million to under three and a half million by putting in five thousand draft contracts. This is just a seven hundred person company. These are incredibly fair, simple contracts like you’d expect anywhere else in your life. Just not the normal healthcare.

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Saul Marquez:
So the opportunities big right. and so I appreciate you helping us understand how this wealth is being extracted. Some great examples there, Dave, and more in the book. But chapter two is health care is breaking local, state and federal budgets. And you call out how health care’s hyperinflation is breaking US schools.

Dave Chase:
Yeah, and that’s actually the title of Bill Gates Ted talk.

Saul Marquez:
Oh, is that right?

Dave Chase:
And it’s been eight or nine years now. We use California data in the book. I have Massachusetts data, but it really could be any state and talk to any governor, talk to any mayor Right. they all have this kind of one uncontrolled expense. And in that that local thing that I showed on the back of the book, it’s an acrostic spells out the first L is basically leave behind a status quo mindset. And that’s a big thing. You just have to have a mindset shift that a lot of people think that health care is trying to solve. It is like trying to solve Middle East peace, like they’d like to solve that, too, but it seems kind of hopeless and out of their control. So we disabuse them of that notion and walk them through the steps. And it isn’t actually that hard. But unfortunately, what most people do is kind of lipstick pigs and paid kowpows rather than doing a reset. And in health care about every 50 years, there’s a fundamental reset. And I believe that the combination of this Covidien sword that slicing through the Gordian knot that we call our status quo health care system and a generational shift.

Dave Chase:
Millennials are the biggest chunk of the workforce today, biggest generation in history. By twenty twenty five, millennials and millennials are going to be seventy five percent of the workforce. They’ve got no loyalty to the status quo. And I actually heard a great definition of status quo. It’s Latin for the mess we’re in. And so let’s use this this opportunity to do this reset. I do believe COVID is like a World War two and you see a lot of massive changes that happen coming out of World War Two during and after World War Two, both in our country, UK and in other places. And I fundamentally believe that that’s happening. And we’ve seen it already. It’s accelerating things. Like I mentioned earlier, the budget deficits. There’s a city that we’re working with that has it’s about a seven million dollar deficit because of tax receipts going down. We’ve proposed a plan based on lots of previous success that will take their spending from twenty two million to fifteen million. Guess what? Problem solved. So those are the types of things that are happening now as people of necessity is the mother of invention. That’s definitely a blind.

Saul Marquez:
Totally. Dave, it’s a good example, right? It’s a societal problem. It’s a thing that’s happening. WWII or two is an example. Right. I had another friend that compared it to the Spanish flu of 1918 that led to the Roaring Twenties. We can see change right now if we make the right moves. And the there’s there’s openness right now. We have a window and there’s this opportunity to have that traction. And then he shared a timeline. Shout out to you, Jim, for that timeline. It was basically pandemic. 2020, restabilization 2021 and boom, 2022. And in order for this to work, we have to take advantage of the open window for innovation. And you’re doing that in a very interesting way, Dave, and the ideas that you’ve laid out. And one of the things that I love is that at the end of each chapter, you give key takeaways and things to think about. Will you share some of those.

Dave Chase:
Yeah. I mean, one of the big ones is there’s this role that a lot of people don’t even know about. It’s called the benefits brokers and the benefits consultant benefits advisors, different terms. And they’re the people who advise companies on what goes in their health plan. And the best ones are worth their weight in gold. And that’s the people that we accredit. Unfortunately, it’s a lot like what happened with stockbrokers. If you’re old enough to remember what stockbrokers were, they were around twenty, thirty years ago. They largely went the way of the dodo bird. But the smart ones reinvented themselves as financial and wealth advisors and whole new categories of financial advice and models and robo advisors. Now, the tech emerged and the problem is the way the industry was set up is these people were positioning themselves as representing the buyers are paid by the sellers. And so that is a guarantee of massive conflicts of interest and lack of disclosure. And we found up to 17 undisclosed revenue streams the employer had no idea about. And one of my co-founders, he’s a securities attorney, got a securities license. He was involved in a massive fraud cases and he’s just been in health care the last five to seven years and he’s just stunned. He’s like, oh my gosh, what’s standard operating procedure would get you thrown in jail in financial services. And so that’s one of the big takeaways, is people always ask, what’s the first thing I do? We’re we’re a 40 person Ma and Pa retail work. Whatever it is. What’s the first thing you’ve got to hire the right benefits adviser with the Right. aligned interests. We have rights both in the book on our site. We’ve got an advisor benefits adviser code of conduct. We have a benefits adviser disclosure form in terms of compensation. For most people outside the industry, these look like motherhood and apple pie, but there are 180 from the status quo and who apply to be in the program. Fifteen hundred and started. Two hundred and fourteen have made it through. And in this last cohort, we’ve had hospital CEO clinicians such as physical therapists and MDs, Saul Marquez, White House policy adviser. Just kidding on that. But it’s really cool to see the people who’ve made the switch because it is really going to work when you actually have the right aligned interest to be able to help people. And it’s you bet it’s great to have the story with the CFO. But the best stories, like the one I talked about my Ted talk. Employer has been doing over 20 years. Cumulatively, they’ve saved over four hundred million dollars what they’ve done for their workforce and their community. Unbelievable. And among one of the punch lines that will give away the whole story is crime went down. Sixty seven percent. High school graduations more than doubled from forty five percent in nearly a hundred percent. This community they adopted with just five percent of what they say or just a very specific human example. There’s one of the organizations to work with. They own convenience stores. So there was this there is this cashier who was on a pretty expensive medication. So she had it out of pocket expenses herself with it. Of course, the company is spending a bunch of money, and once they revamped their health benefits, all the cost sharing went away because there was so much money saved up. So what did that mean for her? For the first time that she’d been married and had kids, they were able to take a vacation. They’d never been able to go anywhere or take a vacation. Now they were able to do that. This is somebody making less than fifteen dollars an hour. Those kinds of stories happen all the time. I mentioned Pacific Steel. Forklift driver. He just retired, tapped out, making forty five thousand dollars a year, retired with a seven figure nest egg, because about half of that is because of what happened to health care. They happen to be an employee stock owned company. I mean, that’s really exciting. That’s what draws in people that were White House policy advisors in the hospital, CEO around twenty one different hospitals. It’s really amazing the sort of magnet that’s been created with this.

Saul Marquez:
So they’ve and so, I mean, and this is gets to the center of it keeping health care local. So these folks that are joining, they’re different than the typical people joining right.. And so what are they getting out of it and it being Health Rosetta, on the program you guys put together, what are they getting out of it?

Dave Chase:
There’s there’s a people who’ve been outside trying to affect things from outside of this particular arena who then saw this lever. The majority aren’t yet aren’t the career switchers that the people who’ve been doing it and we have Marshall on is the best investigative journalist in health care. He came to our last in-person event pre covid, and one of his observations was like, wow, I was looking around and I was surprised, like how many middle aged white kids were here. I was just expecting this to be kind of early career people. And here’s the thing was they’ve been in the industry twenty, thirty years and were really frustrated with delivering bad news every year. You guys, great news. Pay more, get less. That’s been the health benefit story, those wage gains. Yeah, they’ve been gone for twenty years. But boy, we’ve got this new challenge, step challenge. Let’s get excited about them like they were just Right.. And so, I mean, really heartfelt stories I get from people like, oh my gosh, I can actually deliver good news. I know where the bodies are buried. And now I’ve been awakened. And it’s interesting to people who have been I haven’t been in this part of the industry until fairly recently, but just was why why why you get to the root cause and they just been breathing this air and only knew of a certain set of solutions that the carriers gave to them.

Dave Chase:
And the thing that’s the other thing that’s weird about the way the industry is set up is not only they position themselves as representing the buyer paid by the seller, but. The way they are set up with their relationship with the carriers at a drop of a dime is they don’t tow the line. They might be getting 30 percent, 40 percent, 50 percent of their revenue. That can get cut off in 30 days. So that’s called losing your appointment. And so that’s a heck of a sword hanging over Right.. And these people just said enough. And so when they move in this new model at one level, yeah, maybe you’re your golf handicap is going to go up some. It is more work, but the rewards are there. I mean, the analogy I would draw is having kids.

Dave Chase:
I think a lot of us, maybe if we knew how much work it was going to be before we had kids, we might not have done it. But then once you have kids and it’s so rewarding and so fulfilling, you’re really glad that you had it. And that’s kind of that way. Well, they’re re energized. They’re doing great work and and they should be paid fairly. Some of them have bonuses built into their compensation if they reduce costs. This isn’t just about slowing the growth. I mean, it’s one of the goofy things in the industry is that people call savings and air quotes something where premiums were supposed to go up five million and they only went up four million. So that’s a million dollars savings. Like, that’s not savings. I’m talking about going from spending 10 million to spending six million.

Saul Marquez:
That’s a net reduction. Net increase. Yeah, it’s it’s game changing stuff. I think, as I mentioned, folks, the the windows open right now. This is the time. And and while a lot of folks are running around with fear, this is an opportunity for you to take a step back and make some great decisions. And the framework here that Dave offers is is unique. Dave, what’s the link for the book?

Dave Chase:
Just go to HealthRosetta.org. Right. front and center when it says get the book and you can get a free download of the PDF there. You can go buy it online if you want to check it out, see if it is worth it. The other thing you’ll see when you get to the site is both a true and aspirational statement. We say health care is fized. Join us to replicate the fixes. So the point is all the solutions have already been invented. They’ve been proven and modestly replicated. They’re not the mainstream. Don’t get me wrong. And that’s where the work really comes, is not figuring out the solutions that are there. It’s how in the face of three and a half trillion reasons to protect the status quo, do you make it happen? So there we’ve we followed a system change model that’s been very effective in other areas. And that’s what we’re following here.

Saul Marquez:
That’s great, Dave. And folks, we’re going to touch on one more thing before we conclude, and that’s Chapter eight. You’ve run a health care business, whether you like it or not. I love that. I love that so much. Talk to us about that. And one example that I’ve heard is, OK, you’re running this business. You will put a committee together if you’re going to buy 80 trucks and you’re going to have that purchase analyze inside and out. But yet you buy 80 back surgeries and you don’t even look at it twice. And think about that, folks, that that one got me. That got me. So tell us about this and give us some perspective here.

Dave Chase:
Yeah. I mean, we and we actually had a CEO present at our last summit that really talk about it and kind of supply chain. And every CEO I think I’ve ever heard has said employees are our most valuable asset Right.. And I would argue that and this is often the second, third, fourth biggest expense in a company after payroll. Warren Buffett famously said GM is a health care company with auto company attached to it because they spend more on health benefits than steel. Starbucks spends more on health benefits than than coffee. And so this is a Chappells really resonated with people is and it always say this put the same problem solving mindset, just as you alluded to, that you apply in any area, apply value and don’t accept the status quo because there is a solution. And that particular line came from a guy who’s a private equity firm where they require they acquire companies so that say they hired or acquired a manufacturing company. Of course, they got access to all their financials. And in the first meeting they have with the CEO, the first questions they ask, how’s your health care business? And the CEO got this puzzled look like we’re a manufacturer. And and then said, well, how’s your twelve million dollar health care business? And then kind of light goes on. Oh, yeah. Would we apply the same resource to a 12 million dollar division or purchase or whatever? No, we would bring a talent, a resources and get a result. And so. That’s really the essence of that is serious if you believe employers are the most valuable asset and we’re putting them into a system that has produced a world leading, undisputed world leading medical bills during bankruptcy in 70 percent of those people had, quote unquote, insurance. Are you stewarding that asset well? So that’s really the key thing. That’s a big part of that mindshift huge.

Saul Marquez:
Dave, I can’t thank you enough. This this is great. It’s Chapter nine is steps for business leaders looking to prevent loans and layoffs. And then there’s five steps. I mean, incredible stuff. Dave, just a reminder to everybody. It’s healthrosetta,org. Just go to the website. The book is there for free. You’ll get to download it. Big thanks to Dave for coming on and sharing his his wisdom and his work and his mission with all of us. Dave, but I can’t thank you enough. What closing thought would you leave us with and where can people continue engaging?

Dave Chase:
Well, you already shared on where to engage, but go to the site or connect with me on LinkedIn and social media, I’m Chasedave just on just about everything. But here’s the parting words. The cavalry is not coming from D.C. to fix health care. We’ve had both parties in full control. No industry spends more than health care to protect the status quo. Spend more on lobbying than oil and gas, defense and financial services combined. It’s on us Right.. It’s on us and it’s in our power. Wherever we have influence, it could be with our local school district, could be with our employer, could be with the municipality. We might be a business owner ourselves or business decision maker. It is within our power. This isn’t some abstract concept that’s not impacting people. And and I think sometimes people look at health care as like the separate magic money pot that’s separate from the rest of the world. Now, this is clearly what has driven twenty years of wage stagnation and decline for the working middle class. It is a solvable problem, but we all have to step up. As you mentioned earlier, this is a great time. Let’s not butcher of Hamilton say or don’t I’m not going to miss my shot. This is a shot. Go for it.

Saul Marquez:
Yeah, I love it. Don’t waste this opportunity, folks, to make change. Dave can’t thank you enough for this perspective of relocalize health. This is a fresh idea for me and I hope for everybody listening. It was fresh for you too, and fresh in a way that inspires action because ultimately that’s where change is going to is going to come from. So Dave can’t thank you enough. Man, thanks for spending time with us.

Dave Chase:
Absolutely. Thanks for having me on. I really appreciate it. Love your show.

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