Changing Everything: Cash-Pay Healthcare in the Age of COVID
Episode

Tom Davis, Principal at Tom Davis Consulting

Changing Everything: Cash-Pay Healthcare in the Age of COVID

We are privileged to host Dr. Tom Davis. Dr. Davis has created, run, and sold his multi-specialty health system and insurance products. He is also the founder of Tom Davis Consulting and is the lead advocate for WoW Health Solutions. In this marketplace, physicians and patients could engage through direct cash payments without the third party system.

In this episode, Dr. Tom shares his mission of helping clinicians so that they, in turn, can take better care of their patients. He discusses his assessment of our current healthcare system, the impact of COVID in the practice of medicine, and the huge potential of cash payments.

Dr. Tom also talks of the enormous costs of health insurance compared with the actual cost and encourages clinicians to be open to other options and start living their dreams.

This podcast interview is fascinating, and Tom has plenty of insights to share. Please tune in and enjoy my interview with Dr. Tom Davis.

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Changing Everything: Cash-Pay Healthcare in the Age of COVID

About Dr. Tom Davis

Tom has cared for his patients as their family doctor for 30 years. He’s created, run, and sold his own multi-specialty health system and insurance products. He’s been in every seat at the table. He’s also learned firsthand the destructive consequences of third party payments. As the lead advocate for WoW health solutions, he spreads the word that the cash pay market for health care is a winner for everyone, except, of course, the insurers.

 

Changing Everything: Cash-Pay Healthcare in the Age of COVID with Tom Davis, Principal at Tom Davis Consulting transcript powered by Sonix—easily convert your audio to text with Sonix.

Changing Everything: Cash-Pay Healthcare in the Age of COVID with Tom Davis, Principal at Tom Davis Consulting was automatically transcribed by Sonix with the latest audio-to-text algorithms. This transcript may contain errors. Sonix is the best audio automated transcription service in 2020. Our automated transcription algorithms works with many of the popular audio file formats.

Saul Marquez:
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Saul Marquez:
Welcome back to the Outcomes Rocket, Saul Marquez is here and today I have the privilege of hosting Dr. Tom Davis. He has cared for his patients as their family doctor for 30 years. In his career he’s created, run and sold his own practice, his own multi specialty health system and his own insurance product. So he’s been in every seat at the table. He’s also learned firsthand the destructive consequences of third party payments. As lead advocate for WoW health solutions, he spreads the word that cash pay market for health care is a winner for everyone, except, of course, the insurers. The COVID-19 pandemic changes everything. And as horrible as it is, it also provides a huge and unique opportunity to accelerate the needed changes in how health care gets paid for, making it more affordable, effective and rewarding for everyone. It’s going to be a great topic. Obviously, the topic of payments and health care is something that is sensitive, but also an area that requires major reform. So I’m excited to have a conversation with Dr. Tom today. And with that, I want to welcome you to the podcast. Thanks so much for joining us.

Dr. Tom Davis:
Thank you, Saul. It’s a privilege to be here.

Saul Marquez:
Absolutely. So your experience in health care is fascinating and very broad. You’ve sat in the seat and have had the perspective of many of the stakeholders before we dive into what you guys are doing at Wild Health Solutions and dive into your thoughts as a leader in health care. I’d like to know what inspires your work in health care.

Dr. Tom Davis:
Well, I have had a very fortunate life. I walked into a great situation out of residency and with a great group of folks and was very successful. And I’ve spent the last 10 years of my life trying to pay that good fortune forward by helping clinicians and other providers have the same wonderful experience that I did as I have been going around the country working with health systems clinicians. I really noticed how depressed and how suffering the providers were even before COVID. Since COVID, it’s gone up to an 11. And I’ve really made it my mission to be one of the people that takes care of the caregivers so they in turn can take care of the patients who trust them. So I kind of think of myself as kind of a provider or medic. I’m I’m the guy that helps the soldier stay well and do a better job.

Saul Marquez:
I think it’s great. And our health care leaders and providers need it. And it’s awesome to have somebody that’s been in their shoes provide that sort of care and guidance. And so I’m excited to dive into the work that you do with the many different hats that you wear. Dr. Tom, whether it be with your consulting firm or as a clinical instructor at the WashU School of Medicine, definitely want to dig in and hear your thoughts around this topic of payments. And so what would you say, the work that you do at WoW and other roles? How are you guys thinking about payments and this idea that cash is king?

Dr. Tom Davis:
Well, for clinicians, there really is a spectrum of how well they’re doing under the current circumstances. And one end of the spectrum there are the ones that really have patient care as their passion. But they’re looking around at how the system is working, allowing them to practice autonomously and compensating them for their effort. And they’re wondering why they should continue. At the other end of the spectrum, there are clinicians that are just burned out. They’re really ill, and they really need to take a step away from patient care for a while to heal, to see where their next step of the career is. And so what I and my colleagues do is we assess the health systems, the providers within the health system, see where they are that spectrum, and then offer them tools to get them where they want to go. Clearly, in America today, as a clinician, there is really only one revenue stream that will allow you to grow your compensation greater than the rate of inflation, and that’s cash pay. It used to be that Medicare Advantage contracts was one of those. In the past that was true. But now with the consolidation of the Medicare Advantage payers, really all that benefit is accruing to the Medicare Advantage organizations themselves and less to the providers. And third party payment, really one of the side effects of COVID Saul is that there really is going to be a tremendous consolidation in both payers and the health systems as a result of the demand destruction from COVID. And when you get into a consolidated system like that, one of the things you can be certain of is that the financial benefits are going to accrue right at the top of the pyramid and that’s at the insurers. So the health systems, the providers and the clinicians, they are going to suffer a dramatic decline in income compared to inflation. So really, the cash pay revenue stream is the only game left in town. And so that’s one of the tools that we use for those clinicians that still want to practice, but don’t really don’t really want to play the game in which they just fall further and further behind.

Saul Marquez:
It’s a big challenge. And what do we do? What is the world of health care providers do? And maybe you can offer some guidance here. Dr. Tom, around an approach that makes best sense for them to take.

Dr. Tom Davis:
We clinicians, we’ve been socialized to jump through the hoops to get into the rough, stay on the trail and don’t deviate from it. I mean, we have been socialized from day one in our training to do that. And if there’s one thing that COVID has demonstrated is that really that path is not a path to personal fulfillment or personal prosperity simply because it doesn’t allow you to take advantage of all of the skills and all of the assets that you bring to the practice of medicine. And the nice part about the cash pay alternative is, is that it really kind of frees you from the tyranny of our highly regulated system, which really defines what it is you can sell and then defines what it is you have to do to get paid. And so that’s why I’m so enthusiastic about cashpay health systems, simply because it really allows the individual clinicians and then the local health systems that employ them to unlock their value in ways that really aren’t available under a third party payer system and ways that they really need to execute in order to get ahead of the game and make them feel like they’re being rewarded for what they do.

Saul Marquez:
Tom, it’s great. And I want to get into the details of this Right.. So if we’re going to get cash payments, let’s chat about that. What specialty’s and what exactly can we segment into cash payable options and who’s the key target audience? Right. Because there’s a lot of folks that, on the one hand can’t afford it. And then that’s fine, right? That’s the Medicaid. Then you have Medicare. So where are you getting your cash payment patients from and what exactly are we doing for them?

Dr. Tom Davis:
Well, the Accountable Care Act has completely failed the majority of the population. As you probably know, you go on health care, dot gov. And if you don’t get any subsidies, you’ve got to pay as individual eight to 12 grand just to get coverage. And then once you get coverage, you’ve got to pay another eight to 12 grand before that coverage kicks in and saw the function of health insurance isn’t to get you access to health care or anything like that. The function of health insurance is to indemnify you as an individual against catastrophic financial loss due to health care expenses. And with that definition of mine, the current structure of health insurance is a complete and total failure. And you can you can quibble about the statistics. But about two thirds of personal bankruptcies involve medical debt, and about two thirds of those had them incurred the medical debt while they were covered by insurance. And you and I think about bankruptcy. We think about somebody like a monopoly that’s lost millions of dollars. Most bankruptcies are to the tune of a few thousand dollars, and that’s how close most people are to insolvency. So you have to create a system where these folks can get access to great health care while at the same time not risking financial ruin.

Dr. Tom Davis:
And the current health system doesn’t do that. That’s why there needs to be another system that can. And we’re fortunate in the dirty little secret of health care is that it really is not that expensive if there’s an emergency room. One of my colleagues I worked at, if you went into his emergency room and just paid two hundred fifty dollars upfront, they would discount all of their charges by eighty five percent. As a personal clinician, for me, if you wanted to come to see me for just a regular office visit at the time, you know, it was sixty six bucks. It’s not that expensive. So what makes it expensive is all the parasites in the financial stream from premium to service that suck off all of the value. And we simply a society can’t afford that anymore. And that’s why taking a look at the robust cash pay market is really the only alternative, not just for clinicians, but also for patients. And there are absolutely ways to structure it. And I’m pleased to say that there are a number of innovative folks out there that are doing just that.

Saul Marquez:
Some great call outs Dr. Tom and I couldn’t agree with you more. There are a ton of people going through bankruptcy. Sixty six percent. And the numbers huge of those that already have insurance. A lot of people are locked into their insurance. They’re employed and they’ve got a program and they’re almost forced because I guess lack of knowledge. What are you going to do, opt out of an insurance program? I mean, that’s almost unheard of, Right.. So how do we get this revolution to cash started? What’s your perspective there? And then as a clinician, how can you get started, especially if you’re part of a large hospital system.

Dr. Tom Davis:
Well, you’re absolutely right, this would be an absolute no go, and I honestly wouldn’t even waste my time on it if the alternative to the cash pay market wasn’t so horrible. I mean, the competition is terrible. And so people are actually more receptive to these models now than they ever have been before because of the political sclerosis in our society. The tightly regulated insurance industry has really resulted in, as you said, a lack in effect where the competition is so poor. The biggest barrier is the psychology of these alternatives are viable and they do offer financial protection.

Dr. Tom Davis:
And, of course, the one organization in America that doesn’t want people to take cash pay are the health insurers Right.. I mean, they use in one way or another, most of their premium dollars go back to the federal government and they use those resources to make sure that people understand that there’s no other alternative to protect themselves except for their product. And that is a barrier that is starting to crumble. And covid has really accelerated that process. From a clinician standpoint, it really is the same thing. One of my service lines is to help clinicians who are in that bad place that we talked about before, transition out of clinical medicine and into a role where they can still support patient care, just not in a direct clinical role through being a physician executive or speaker or whatnot. And, you know, those clinicians there can really provide some outside support to help the clinicians that want to stay in the game, transition into a cash pay system. It really is simply a question of the clinicians making the determination that there really is no other game in town that allows them to win and it requires to see change. But one of the fortunate side effects of this whole situation is that ideas that were previously not under consideration are suddenly things that you want to think about.

Saul Marquez:
Right. Yeah, it’s certainly the case and we’re exploring a lot of different things during this time. The front door to health care will forever be changed. And so how about the payments? Right.. Let’s take a look at those payments and how can we make a shift? And Dr. Tom, I think you’d agree Right. the employers, large, self-insured employers are actually taking that step and doing a lot of this work. Maybe that’s the place where the movement has to accelerate more so than just the individual thoughts there.

Dr. Tom Davis:
Well, it’s really interesting. I just got off a call with a large employer and he admitted that he suffers from Stockholm syndrome. They’re just used to sit down again, double digit premium increases year after year after year. And they’re only now kind of freaking up and looking around, see what else is out there. But the institutional sclerosis is slow. And the bottom line here of all of our conversation is that you simply have to as a consumer, as a provider, as a business, make yourself open to the alternatives that they’re going to be different. But if they didn’t offer better protection for a person who’s in health care, they wouldn’t be out there. So that’s really the bottom line of this whole conversation, is simply to make yourself open to the alternatives out there that are being presented. They are out there, takes very little effort to find them. I’m certainly one conduit, but there’s that you can talk to your benefits broker as well, but you simply have to make yourself open and it’s getting easier and easier because the alternatives are so bad.

Dr. Tom Davis:
Well, Dr. Tom, certainly great to think about and action a plan to get things going in a better direction for whether it be your entire business or whether it be yourself. And so what type of opportunity is there if somebody is listening to this right now to say, hey, you know what, Dr. Tom, I can help you explore this payment model. So talk to us about that. And then also, what types of results are you seeing? And maybe an example would be great.

Dr. Tom Davis:
Well, the first step is if you’re a clinician is simply to do something, anything, go out there and make sure that you have actually have a cash pay service and then marketed on a very simple basic level. I work for one of the pediatricians I work with. We talked and he liked piercing ears. He figured if kids are going to get their ears pierced as well, be a doctor, that does it. And in the one half of day a week that he has a ear piercing clinic, he generates more revenue for himself than in one and a half days of fee for service. And his patients love it. And he draws additional patients and he advertise that on Facebook. So that was an epiphany for him. So for anybody out there far away to say that you don’t need me, you just need to do something, just start. And then once you start, then you can start thinking creatively about other service lines that you’re allowed to pay cash for. I mean, you got to check your local regulations and you got to check because some states don’t allow you to sell your health care based on a subscription. But there is still a great deal of freedom. And you can very quickly, ramp up any practice so that 20 percent of their revenue comes from cash pay, then if you want to extend it into cash payment for routine health system health expenses that you’re not really used to thinking of paying with cash, like treating hypertension or diabetes, there are a ton of resources out there.

Dr. Tom Davis:
One of the resources that I work with is WoW health solutions. And I encourage you all to go to wildcat health care. Certainly I have a financial interest in representing the product, but as a practicing physician, I can’t represent a product unless I know that it’s going to be beneficial. And really, my mission isn’t to generate revenue for while. My mission is to help clinicians stay in the game. And a couple of years ago, when the founder of Wow, a while a guy named Dr. Drew Watershed, approached me to help him with his system, I knew from my experience of creating my own health system and creating my own insurance products that this was it. This was the one this was a head slapping moment. And he has really built a better mousetrap to benefit the clinicians, the individual consumer and the businesses who are so strapped. It’s all explained and laid out to you at Wow. www.wow.healthcare Go there, experience it and keep yourself in the game because life is too short to live somebody else’s dream.

Saul Marquez:
Well said. Well said, Dr. Tom. And you know, as clinicians look for different options. Wow.healthcare. Take a look and just you have to explore Right. virtual care in different care delivery opportunities, payments. What would you say in your experience was one of the biggest setbacks and a key learning as an entrepreneur, a physician, entrepreneur, I’m sure you run into a lot of issues. Can you share one of your biggest learnings with us?

Dr. Tom Davis:
As a physician trying to create his own health system in competition with other health systems in my state, the biggest setback was when we planned on building and licensing our own hospital to serve our patients and ran into a regulatory brick wall that we didn’t expect. And they got rejected for objectively no good reason. And really, it took a recollection of why we’re doing this. And we finally had to go all the way to our state Supreme Court before we were granted a license, but a license we were granted. The big setback was my realization about how the system can work in markets where there’s limited competition.

Dr. Tom Davis:
Yeah, and kudos to you for taking it that high and getting it done. Once you are able to get it done, you were able to operate that. How long do you operate it for?

Dr. Tom Davis:
Well, the moment that we got licensed, we were given an offer to be acquired and.

Saul Marquez:
Oh, really?

Dr. Tom Davis:
es. And at that time, our health system was built on the shoulders of the very first total Medicare Advantage plan that was offered anywhere in the country. And at that time, at the time that we got licensed, it was the time the ACA had been passed and it was to be funded half by Medicare Advantage funding. So the visibility for Medicare Advantage was very poor. And as it turned out, there were some serious cuts about five years ago in the program. That was before it really went mainstream. So my partners and I decided to allow ourselves to be acquired. We signed personal service guarantees and and that’s how I transitioned into from clinical medicine into being a business consultant. And it’s in the business consulting that I learned that so many systems and so many providers were so stressed and feeling like they’re playing a losing game that I really decided to become a medic for the medics.

Saul Marquez:
Very cool. Wow. You fought the fight and then right when you get the license, they want to buy you. And that’s amazing.

Dr. Tom Davis:
That was a life lesson. And I want to emphasize, it was very much a group effort. It wasn’t just me,

Saul Marquez:
Without a doubt.

Dr. Tom Davis:
My partners and I was very fortunate in the people that they mentored me coming out of residency because I stayed in one place the whole time and I decided to work with just absolutely phenomenal people to work with. Saul and that was fortunate. And I have to pay that forward because so many clashes that they made the right decisions and there are absolutely not in the same place.

Saul Marquez:
Well, your mission is outstanding, Doctor Tom, and I congratulate you for doing that. What makes you most excited today?

Dr. Tom Davis:
The potential for change. I know this is going to be a long six months ago. This cashpaywas going to be a long slog, even though the competition was was so poor, it was still going to be really an exercise in psychology and sociology to get folks to start adopting it. COVID really has changed everything on so many levels. The secondary effects are now just beginning to be felt, the tertiary effects nobody has any idea about. And so the new earth has been upturned by the earthquake. And I am very excited to be off the treadmill so that I have the resources and the expertise and hopefully some of the wisdom to be one of the planters. And everybody wants to leave the world a better place than when they came into it. There’s so much negative=ity in the media, you know, it’s hard to make an accurate assessment, so you just got to look at your own little world and what you can affect. And this is an opportunity that generations of clinicians would have killed for. And I’m the one that gets to live it. So I have a responsibility to make that change worthwhile. And I know that the providers and the clinicians that I work with feel the same way.

Saul Marquez:
That’s great. I appreciate that, Tom. And there’s a great opportunity here for all of us. Making change is part of what’s going to help us take our health care system and make it to really something that benefits everyone in a bigger way. As we close the interview here, Dr. Tom, I love to hear maybe a book that you recommend to us to read.

Dr. Tom Davis:
Joseph Conrad’s The Heart of Darkness. I can’t tell you how many times that I go back to that, especially when I’m wondering what direction to take one of the advantages of being a little older and having your family all taken care of. And you look in as a physician, I know that I don’t have near as many years left as I did when I first entered medicine. So the consequences of errors are a lot less. But whenever I have to decide which way to go in a given situation, I will almost always go for the hardest one because it’s in the heart of darkness that you find safety. I mean, Frodo knew that in the Lord of the Rings, Right. Every great literature hero journey ends up having the person go to the most dangerous place and then get redemption. Well, that’s what I found. The hardest place to go is the one with the greatest rewards. And I keep going back to Joseph Conrad’s Heart of Darkness over and over again to reinforce that lesson.

Saul Marquez:
That’s an awesome recommendation. And folks, for all of the resources that we’ve discussed today, whether it be, WoW.healthcare or The Heart of Darkness or the work that Dr. Tom does, just go to outcomesrocket.health and in the search bar type in Dr. Tom, you’ll find all of that there, including a full transcript and the brief show notes. This has been a great discussion, Dr. Tom. I’m privileged to have this conversation with you and to have the listeners join us today. Why don’t you leave us with the closing thought? And then the best place for the listeners could continue the conversation with you.

Dr. Tom Davis:
As clinicians and as providers, we work within a system that demands more and more from us in exchange for less and less. But once you work outside the system, once you provide services and then work your dream outside of those regulations, not only will you be stunned at how much your expertise is worth, but you’re also be stunned at the quality of the life that you can lead and people can get to me email me at tomdavisconsulting.com or I have a number of different service lines. You best start with www.wow.healthcare and I would love to connect with you. We’re all in this together and that’s the only way we’re going to succeed.

Dr. Tom Davis:
I love it, Dr. Tom. Well, there you have it, folks. Wow.healthcare. check them out. And whether you be a provider or an employer or even an individual, there is an opportunity for you to engage to make health care better and more profitable and less costly. So, Dr. Tom, really appreciate your time here with us today. It’s been fun.

Dr. Tom Davis:
It’s been a privilege. Thank you.

Saul Marquez:
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Things You’ll Learn

  • How cash payment is a better alternative to costly third party payments.
  • Health insurance’s function is to indemnify you as an individual against catastrophic financial loss due to health care expenses.
  • About 2/3 of personal bankruptcies involve medical debt.
  • Health care is not expensive.
  • The most challenging place to go is the one with the greatest rewards.

 

Resources
www.wow.healthcare

https://www.tomdavisconsulting.com/