Reducing Employer Healthcare Costs

Don Marette, CMO at Noveta Health

Reducing Employer Healthcare Costs

Taking on the ambitious challenge of changing healthcare and doing it on a nationwide basis

Reducing Employer Healthcare Costs

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Reducing Employer Healthcare Costs with Don Marette, CMO at Noveta Health (transcribed by Sonix)

Welcome to the Outcomes Rocket podcast where we inspire collaborative thinking, improved outcomes, and business success with today’s most successful and inspiring healthcare leaders and influencers. And now your host, Saul Marquez.

Saul Marquez: Welcome back to the podcast. Today I have a wonderful guest for you. His name is Don Marette. He’s a Chief Marketing fficer at Noveta Health. As CMO, Don is responsible for sales and marketing and positioning of services and products. Noveta’s health cost containment system is a solution that’s going to help the rising cost of healthcare in today’s market. The runaway costs have to be curbed somehow and Don and his team are really putting forth some some innovative approaches to do this. His ability to envision the value of non-traditional partnerships has created new dimensions for market delivery. Defining each partner’s role and establishing trust between partners and clients has been the hallmark of his success. So it’s a pleasure to have you on the podcast Don. Thanks for joining us.

Don Marette: Oh thank you very much.

Saul Marquez: So did I miss anything in that intro that you want to cover?

Don Marette: Well just just one thing I just want to take a second if I may and speak to my partners. So the founding partners of Noveta Health are, along with myself are Mark Lindsay. Mark work for the in the Clinton White House and then went on and worked for United Healthcare for a number of years at the very top level position. Duane Gibson who worked for Senator Stevens from Alaska, Chief of Staff for many many years and also worked on the 9/11 Clean Up Healthcare Superfund and Cristy Payne, who has been an executive in the supplemental health insurance world for many years. And the reason why I wanted to emphasize this is that when we got together and we decided that there were there was an enormous change a C change that needed to happen in the health care industry, our different backgrounds and our different expertise led us to different conclusions than people who were kind of stuck inside the industry box you know at that given time. So I just want to bring that point to light.

Saul Marquez: Don I’m glad you brought it up and it definitely gives the listeners an appreciation for the group that you’ve assembled there are the group that you guys assembled. And it’s great because when you have a a variety of experienced leaders that have played a role in government and payers and the healthcare system you definitely have insights and so excited to dive into some of those with you today. What is it that got you into the healthcare sector to begin with?

Don Marette: Well we saw independently of one another and then we we it all happened to be be friends and we saw that the current path in the healthcare system was unsustainable for the country that you know healthcare had become a percentage of GDP overall that that was going to collapse under its own weight for most state local governments. It had become an enormous profit drain from corporations, was holding down you know their hiring and raises and everything else. So we really set out from day one to take on the current system to completely change it and to do so on a nationwide basis. And I know it’s ambitious but that is exactly where we started right out of the gate and that’s what we’ve taken on.

Saul Marquez: So what’s the plan Don, I mean what are you guys planning to tackle first? You know is it the what cost right because there’s a lot of different costs that we could talk about right.

Don Marette: So here’s the largest problem that we see in the healthcare system. It is actually the transfer from from care to cost. Right at the sponsor level. And when I say sponsor level I’m talking about the employer who provides the healthcare for their employees so be it a state, a county, a city, or Corporation, a nonprofit, a university, whoever that happens to be who is sponsoring the healthcare program and administrating it for their employees, that’s where the that’s where the level and driver of all the costs has happened and the reason why it’s happening is because the current system is fat. It’s top heavy. It is profit motive driven, their overall goals are not in line with those of users and sponsors and so that’s where we really saw the place to make a difference. And then that difference will ripple out throughout the entire system and change a lot of things. And if I can I’d like to say here that one of the largest problems is the lack of transparency. There is an incredible incredible amount of smoke and mirrors that’s going on in the healthcare system when you’re out there and you’re talking to H.R. directors be they the H.R. director of a large county with you know with ten thousand employees or whether they’re the H.R. director of a corporation that has 50 employees. It’s amazing to me every day how little they know about the actual healthcare that they’re sponsoring and paying for their members and and how little data they get back about where the money actually goes.

Saul Marquez: Well I’m going to have to say that I agree with you Don. A couple days ago I was even even at the individual level right. And then it just expands from there. I was in the urgent care with my wife. She had a kind of a stomach thing going on, a lot of pain. It was we were like on day three right. So we get we get to the urgent care and we are more informed consumers. I would think than most given our involvement in healthcare and we go through and then they literally just recommend some x rays and then a test for some bacterial infection. A walk outside. I mean nobody talks about price. Nobody talks about anything and you don’t even get a bill like you know your insurance pays for it but you don’t even get a bill so you walk out of there not knowing what happened. So I asked the girl at the front “Hey so how much are x rays?” You know they took three. They took an AP and two laterals. What’s the cost? And she’s like “all your insurance pays for it” but I’m like “Yeah but what’s the cost?’ And then she told me so I was surprised that she knew actually it was two twenty five per x ray too much. But anyway you know to your point even then that really bugs me. You know like there is no there was no bill I got no bill Don.

Don Marette: Yeah. And then on the other end. So when your when your employer of your you your sponsor your plan your employer gets that bill. They know even less at that point in time. It is amazing to me…

Saul Marquez: That’s crazy.

Don Marette: They have no clue about duplicates. They have no clue with the amount that was charged for any particular procedure was actually proper on their end. If they’re in fully insured plans what happens is all they do is they pay the bill every year and then the following year they they get their increase. Usually it’s anywhere from 10 to 30% that their premiums go up and they’re just like “oh well that’s how it is.” And they pay it again if they’re even if they’re self-insured, many times they have no clue where those bills are going. And right and there is and trust me those services that you’re receiving are being marked up by the plan’s sponsors. I’ve seen instances where procedures have been marked up anywhere from 10 to 300% before they get billed back to the clients and the client has no reference point on it. If and when it comes to pharmacy that’s where the enormous enormous abuses are taking place in the PBM industry and PBM of course is Pharmacy Benefit Managers and that’s where that’s where that the cost of drugs being billed back to plan sponsors are all over the board. We’ve seen seen incredible how dare I say it profiteering. You know that’s going on in the drug industry U.S. politicians every day who scream all the time about the drug manufacturers. I will tell you that while they’re not without blame, they are not the true problem when it comes to the costs of drugs. The real problem when it comes to the cost of drugs is actually the pharmacy benefit managers who are the middlemen between the Pfizer’s in the abstract denizens of the world down to your plan’s sponsor who who pays for those drugs that you receive and they are enormous profit centers. They are some of the largest by earnings corporate entities in the world. They’re bigger than Home Depot you know in other household, Microsoft, other household names, their incredible profit centers. They’re some of these PBM are one of them last year or three point six million dollars net per employee profit. That’s in their FCC filing so they’re the ones who are really marking up these drug.

Saul Marquez: Give us an example. What have you guys done at Nevada to curb some of these costs? Can you give us some examples of what you’ve done differently to create results?

Don Marette: Exactly. So so we’ve taken each component. First of all, everything we do at Noveta is one hundred percent transparent. Every single one of our clients knows where every single dime is going towards their healthcare spend. So let us take the different components. So the first thing you have to do in healthcare is you have to reinsure yourself against catastrophic loss. We have a captive that does that, the captive is run on a fee for service basis. So one flat administrative fee. No markup on any claims whatsoever. The captive aggregates all the members of the captive so that they get to buy their coverage their aggregate individual stop loss as a large large group paying less for it. Those premiums, any unused premium from the captive is returned. So we’re really running the major medical portion of this right in alliance with our member groups each and every claim is checked to make sure there’s no duplicates. We check each claim to make sure it’s proper and that it’s the right amount that you’re paying for it before it’s billed to you. So that that was our largest component that we tackle. And we’ve taken care of that. So there’s an enormous savings there. That’s next on the list.

Saul Marquez: Are you working mainly with employers to achieve this?

Don Marette: So the captive that we use right now has. Yes we are working with the players in the captive we have right now is about 60,000 covers about 60,000 lives. And then of employed lives and then you have family members and what have you in addition to that. And as you can imagine you know if you’re purchasing your your stopwatch and your IFL at that level you’re you’re buying it very efficiently. Right. And so that’s keeping your costs down and then we’re not marking up claims like you know the other major insurers are marking up all your claims you’re getting them straight up as they come from the doctor. We are additionally running the TPA third party administrator to service those claims and do all your billing and accounting and everything else at cost to keep costs down there and then an enormous one. OQur pharmacy benefit manager is running pharmacy on a one hundred percent transparent pass through model where all any revenue at all associated with any particular drug is passed back to the member. We actually warrant and I believe we are the only one in the country who warrants that are sole source of revenue is our administrative fee. That’s it. So there’s no none of your drugs are being marked up if you get attacked we even share with our members access to our portal so they can see where we’re buying the drugs at that you know at the wholesale level and that’s how they’re being built the that and enormous game that is played out there in the market by the pharmacy benefit managers. They say “Oh where we’re really we’re really big and we give you X amount of percent off of the offer wholesale. And our percentage is very good.” That’s great. But all of what you know it’s it’s kind of like you know when you walk into the store. Right. And they’re telling you that everything in the store that day is 50% off. Well 50% off of what. Well you know unit you know when you look at that sweater you’re going to buy that you know the 50% off price is about where it ought to be anyway and that’s the similar game that is played in those markets and that’s why you see this enormous alignment right now between the PBM and the and the large insurers they’re aligning together because that gives both of them a greater avenue in which to hide costs from the people that they’re servicing right. So then the other component that has to change in this country it has to change is wellness population management. People’s wellness cannot be dealt with electronically which is the way unfortunately a lot of wellness managers try to do it. And the problem with that is they do cartwheels if they get 25 or 30 or 35% participation within a group. That’s not the way to do it. Personal engagement is the way to do it. When we go out we personally engage with our populations. We get and we give wellness enrollment participation of 80, 90 over 90%. The reason why we do that is we sit with everybody. We call it a black bag approach. It’s kind of like when I was a kid and I remember being sick on the couch with the mumps and you know Dr. chestnut would ring the doorbell and come in with his black bag and see me, see me there. You need to hold people’s hands when it comes to healthcare. They don’t need electronic transmissions. They need people to talk to them about their particular situation and incidents. They need their hand held. And when you do that you’ll actually change their the way they treat healthcare the way they go about it the things they do in their daily lives for themselves. And that’s the big turning point. So we’re going to save everybody 30 percent on their healthcare costs in year one by making these administrative changes to transparency. The real key is changing and managing their population so that in year two, year three, year four, we actually bend that cost curve instead of it going up like it previously was. We’re looking to actually bend everybody’s healthcare cost curve downward over the next 5, 10, 15 years. We’re looking for people who are who want to partner with us and make a real change.

Saul Marquez: Well if you are an employer listening to the podcast today, at the end of it we’ll definitely give you a way to get in touch with Don and and the work that they’re doing. I don’t know about you but I definitely would like to see healthcare costs go down. Aside from labor and things doing business, costs continues to be one of the largest line items so what can we do to bring that down. So you guys have done a lot of work done to build this. To grow it, share with us a story when things didn’t go so well a setback that you had and what you learned from it as a result.

Don Marette: Oh absolutely. I’d say the largest thing we learned from the beginning that we didn’t have a full grasp on when we started this process was we didn’t understand how well entrenched the large insurers were with the H.R. departments and how they had really figured out a long long time ago that at the H.R. level was the place that if they got H.R. you know to just buy in that oh the mediocre or you know kind of level of service and to buy in with that “Oh well that’s just how it is. You know the cost of it goes up every year and there’s nothing we can do about it. You know my my broker or agent brings me my renewal and I had absolute best I’m thrilled if it’s somewhere close even or you know we’re only up 10%” and how they have over time work to endear themselves to H.R. you know through either the personal relationship or a you know unfortunately sometimes monetary and so breaking that cycle and getting HR to realize that ultimately the cost of this spiraling out of control was going to cause them all kinds of problems. You know for the organizations that they work for, that was an that’s an enormous task for us still is it’s our everyday goal that we do. And convincing H.R. that there is a better way to go about it and that we can help them and we can lighten their H.R. load and that by fixing these problems, we can get H.R. back to doing something that H.R. used to do years ago which is actually managing human instead of managing paperwork because so many of now we’re spending their time managing paperwork that goes along with this. Usually for most entities you know their second or third largest spend, theirs and they they’ve been through years of you know poor wellness programs coming in and and having marginal success and what have you. And so that that really was the learning curve for us to just get a feel for what a strangle hold. You know these large insurers had on all these organizations and frankly that’s just profit driven. You know when the profits are as high as they are people will do anything to sustain that mechanism.

Saul Marquez: For sure for sure. That’s a really interesting call out Don. And you know the entrenchments of H.R. and the large insurers, buying into the mediocrity, not accepting better, the call out is “hey if you’re an HR, what can you do to not have to accept this?” And also to executives running large organizations medium to large size organizations how can you task your H.R. team, your H.R. leader, to cut some of these costs. Don how about the other side of things. What’s one of your proudest leadership moments to date?

Don Marette: So one of the things we’re so other than you know saving people a lot of money. We’re really proud of the engagement that we have with employees and and I get the most personal satisfaction when I know that we were able to engage personally with an employee and make an enormous difference in their life especially when they’re faced with some kind of medical crisis that’s happening in their family. And and I will tell you it is always worse for people who are dealing with something that that’s going on with their kids. And when we can make a huge difference there and make that outcome happen smoother and take a burden off of them and help and walk them through it that that really that really puts a smile on my my face at the at the end of the day because as I said before healthcare is personal and and it’s about engagement and education and it’s about handholding. That’s really what what kind of floats our boat.

Saul Marquez: Love it. It’s that black bag approach right. Yes. So so very cool and at the end of the day you do make an impact on people’s lives daily. Tell me about an exciting project that you guys are working on today.

Don Marette: So we’re actually working on a project right now where we would like to bring this system that we put together how to smaller and smaller groups so that this is easily done all day long for companies from fifty to thousands you know not a problem. We’re actually working on a project now we don’t have it done yet but it’s fairly far in the mix where we think we can bring this down and reach out even to all the way down to hopefully single proprietary companies that would be. So yeah you know you can’t wait you can’t wait on Washington. I know that the you know I know that there was an executive order about association health plans and it was it was loosely written challenged in the courts it’s probably got you know in the end it’s probably going to be you know shot down or what have you and unfortunately the way it was written it was going to incite poor poorly constructed low benefit players to get in the market and that’s not what people need anyway. You know what we always do all the time when we’re talking about saving people money. We’re not talking about saving them money on a on anything that’s cut rate to what they have now. We always improve their overall benefit package and save them money at the at the exact same time. So we’re looking to simultaneously increase the level of benefit to the members because at the end of the day it’s all about the members. And I sat in front of I’ve sat in front of CEOs and said You know what I really don’t care about you. And the reason why I don’t care about you I care about your member because ultimately both are good. If your members are happy and you remember as well taking care of and we can change their life and their future outcomes and avoid their risk of heart attack and type 2 and and hypertension and all those things it’s going to work out for you and I anyway. So they’re really the ones that guide down on the guy who works on the assembly line. The guy who works out in the field the woman who’s department heads whatever it happens to be there. Our most important concern every day.

Saul Marquez: Well I think that’s a great point Don. And so when you’re talking about even being the individual proprietor and smaller to the up to larger companies are you is your model one that is self-insured. Are you working with an insurer? Like what’s the basic model there?

Don Marette: Right. So we’re running everyone into our captive as I explained before so. So all groups are with us are self-insured. We make it easy easy for them to make the transition from fully insured to self-insured and by the way the reason why we can we can do smaller group and we do this all the time is because normally they’d go out in the market and the self-insurance market would say to them all you’re too small you know you’ve got 70 people or you’ve got 50 people or 30 people a. You’re too small we can’t get a stop loss right or to underwrite you because you know there just isn’t. The risk is a problem or whatever. Well with us we’re bringing your company to all the advantages of being self-insured but you’re not on your own island right. So you’re coming in with us and you’re being you’re jumping in and now the sudden you’re becoming part of a 60 thousand man group. You’re not out there by yourself trying to buy your your stop loss Uriah sell your anger get insurance for your group right. Your. You’re part of a 60 thousand man group. And if you have bad year which is small group we already know it’s going to have a once out every six years. It’s not going to cause a problem and it’s not even really going to cause you any cost increase at the end of it because we’ve already planned it into our numbers. And if you’re a 50 man group and you have that one bad year you’re not going to even be a blip or move the needle on our sixty thousand man group where we’ve spread the entire risk. So not a problem. You could be with us be a 50 man group haven’t have your one off year. And by the way that means the other five years are gonna be great. Right. And you’re going to save all that money right. You’re not going to get your your maximum amount and you’re going to save you know a lot of time. Those savings those years will pay for your six year and you’re still going to get overall Stop Loss premium back because the overall group did great and you didn’t move the needle. There’s a lot of times that fully insured companies come to us and at the end of the day the aggregate Max spend that we give them which is basically hey if you have that horrible year by chance. This is the absolute max that you’re gonna be out of your pocket. A lot of times our maximum number is less than what they’re already paying in their fully insured premiums. They have no downside. So with us to switch to us they’re totally upside. We have never. Yes. That I know of had a situation where anybody on a current plan moved over and any member because again it’s all about the members at the end of the day none of them have had to leave their their primary position or or their specialists or anything. We operate on on all the major networks. And so it’s really a painless transition that we do for them. We just need the people to get out of this this old fashioned thinking that nothing can change and that’s just how it is.

Saul Marquez: I think that’s a great call out. You know it’s I think the competitor here is is really apathy. Get up you’ve got to say “okay you know what I’ve got to try something new at least I’ve got to look at it.” So folks that’s why we have conversations with awesome health leaders like Don doing things differently because you know today’s systems won’t necessarily take care of tomorrow’s needs with the growing competition not only in the U.S. but also externally. We’ve got to take a look at things like this. So Don I really appreciate you’re running us through here getting close to the end of the interview, I’ve got five questions for you in a lightning round followed by a book that you recommend to the listeners. You ready?

Don Marette: Okay.

Saul Marquez: All right. Here we go. What’s the best way to improve healthcare outcomes?

Don Marette: Engagement. Personal engagement.

Saul Marquez: What is the biggest mistake or pitfall to avoid?

Don Marette: Thinking that there is no better way to do things than the way we’ve been doing. And that it’s all just going to continue to go up in costs because that just doesn’t need to be the case.

Saul Marquez: Love that. How do you stay relevant despite constant change?

Don Marette: You know I go I will tell you that the heads of our different components. So our PBM head, our captive head, our wellness head, and our administrative head. We work every single day with one another and are of one mind. We work all the time to constantly create the next better mousetrap and we literally feed off of one another and one another’s experiences and ideas in order to constantly bring that next better step.

Saul Marquez: Wonderful. And what is one area focus that drives everything in your organization?

Don Marette: Transparency and honesty. Honesty is a very weird concept when it comes to the healthcare industry and the way it’s been run but it’s the thing that’s going to change it for the future.

Saul Marquez: What would you say your number one success habit is?

Don Marette: Really in all. Really I know at times people say that I sound a little bit like an evangelist or on my soapbox but and I get that because really we are driven by as we were from day one by the feeling that if we don’t change this for the better it’s going to collapse to our country.

Saul Marquez: Agreed. And so what would you say your favorite book for the listeners is Don?

Don Marette: Anything about the political life of Teddy Roosevelt. He was at a time in America where a number of items serious social circumstances needed a major change and his determination and courage to change those really made a lasting difference that you know has changed the way America views everything and the way we do things and led to our progress in the last hundred years.

Saul Marquez: Love it. Anything by Teddy Roosevelt. Pick one of those books up folks I had opportunity to read a book one biography on him and definitely a lot of learning, a lot of going against the grain for the better of the country. Just like Don. So Don before we conclude I love if you could just share a closing thought and then the best place or the listeners can get in touch to learn more.

Don Marette: Sure. If you’re out there and you’ve been on this whether you’re a large or small and you felt that you were probably being overcharged for the medical services or you really want to take control of your population and learn and receive the data that will help you make informed decisions about your group and get off the merry go round that you’ve been on. Please talk to us. It will be well worth your time if nothing else you’ll get a great education out of listening to it and we can I can be reached that dmarette@novetahealth.com, can also be reached on our website www.novetahealth.com and we would love to talk to you about what this partnership could look like and you’ve got to remember we’re fee for service so I have no other goal with the little bit that we charge you other than to keep you as a client. Our overall goal is to get you off of that merry go round of changing your carrier every two point three years which is the national average out there and we want to keep you forever.

Saul Marquez: Love that Don and one of my favorite quotes is I forget who said it but it strikes me especially with your comments here is that the only thing more powerful than all the world’s armies put together is an idea whose time has come. And today with the frustration and the things that are going on with health care costs I think your solution time has come down so listeners I encourage you to to just go to outcomesrocket.health type in noveta health in the search bar. Don’s information is going to pop up there. You’ll see in the show notes his email address like he shared it, make contact and encourage you to definitely take action on his call to action. So Don thanks again for spending time with us man. It is truly a pleasure.

Don Marette: Thank you Saul, appreciate it.

Thanks for listening to the Outcomes Rocket podcast. Be sure to visit us on the web at www.outcomesrocket.com for the show notes, resources, inspiration, and so much more.

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