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Where we share our weekly news debriefs and discussions with industry experts. These are lo-fi recordings aimed at giving our readers more opportunities to engage with our analysis and a view into some of the conversations that shape it.
Martin: Hey, Kevin.
Kevin: Happy Monday morning, Martin.
Martin: Happy Monday.
So, uh, Kevin, I'm curious, you know,
I previewed this a little bit on
LinkedIn and I said you were gonna
be sharing a controversial and brave
opinion about what people need to give
up to make American healthcare better.
And so here I am teeing you up.
What is it?
What do we gotta give up?
Kevin: You know, I spent a lot
of, I did see that on LinkedIn.
I spent a lot of time this weekend
trying to figure out how I was gonna
answer that question in a thoughtful way.
I will tee it up first.
Zika Manuel shared a article in Bul work
last week that did a really good job.
I thought.
Unpacking this question, offering some
helpful suggestions, general premise being
healthcare costs too much in this country.
How are we gonna cut expenses for that?
And this is gonna be under my way to the
answer, but starting with a non-answer,
I thought Emmanuel suggestions were
a good set of suggestions, right?
He kind of talked through, um,
okay, everybody's gonna need
to share in the trade-offs.
Everybody today focuses on what they
need to do, more good stuff, but we
actually need to focus on like, what
would we be willing to give up in
order to collectively spend less and
we all need to do that together and get
out of this finger pointing scenario.
That reminds me a little bit of that
Spider-Man meme where everybody's pointing
at each other, uh, and they're the same.
And he suggested a couple things.
He suggested no direct to consumer pharma
advertising, PBMs moving to transparent
systems, site neutral, neutral payments
for hospitals, insurers capping out
of pocket expenses among other things.
And I'm like, all of those seem
pretty reasonable to me, right?
No direct to consumer pharma advertising.
Great.
Like, sign me up for that.
Uh, PBS being transparent, pass through
pricing, great site neutral payments.
No real concerns on my part.
I'd be all for those.
It was funny to me to see the reaction
in community social media elsewhere,
where I saw a couple posts being
like, you know, if you add up Zeke's
suggestions, this doesn't actually
make a huge dent in healthcare costs.
Which to me is part of the, the
issue with the construct of the
question in the first place is.
It's hard to figure out how to do it
and whoever, whatever you suggest, you
are taking something away from somebody
else and that is going to piss them off.
It gets into the whole societal
conversation about like how we
collectively talk about these things.
And I think that is just a really
problematic and hard thing to do today.
Like I think you could think
about some pretty drastic things
to, to reduce healthcare costs.
Like maybe we don't do surgeries on
people over the age of 80 anymore, right?
Or something wild like that.
Obviously that is going to come with a
set of concerns that people have when,
you know, somebody over the age of 80 who
needs a surgery not gonna hold water in
any political setting in this country.
So my thought in the newsletter was
actually, what if we, what if we
reframe the question to something
that we have talked a lot about,
which is what if it's okay that
we spend 18% of GDP on healthcare?
And actually not just okay, but a good
thing, we have the best highest end
healthcare in this country for folks
who can get access and afford it.
And what if rather than trying to get
that 18% down to 12%, we try to orient
around higher value care in that 18% and
potentially even spend more, introduce
some new things that introduce access
to new high quality care options.
And perhaps that is getting away
from this GDP reduction concept.
Is, did I lose you, Martin?
Martin: I'm back.
Kevin: You back.
I was confused what was
going on for a second.
Um, getting away from the idea that
we need to reduce GDP from 12% to,
or 18% to 12% is actually the goal.
And so I, I, I don't know.
It's, it's, it's a bit of a non-answer.
I, I don't know that I have any
suggestions better than Zeke's on
directing consumer pharma, pbm, site
neutral payments, things like that.
How about you?
Martin: Well, I, you caused a bit
of a stir in the community Oh.
After this article was published when
you said, I like that hospitals are nice
places and have artwork, and I think that
that's a, a nice reframe of the problem.
It's like, we are a rich country.
We, there's a lot of different better
ways we could probably spend the
money that we're spending today, but.
It is a luxury to be able
to have a nice hospital.
You know, I spent a week at the
hospital when my son was born,
and it was a nice hospital.
It was a Johns Hopkins property,
and I'm happy that it wasn't, you
know, sort of barren and industrial.
It was a nice place to, to spend a week.
Um, so
Kevin: yeah, for sure.
That's if you spent a month
in a hospital like YYY.
Yes.
I, you know, I, anyways,
Martin: well, we are just a little
bit past the top of the hour, so
kicking us off for the grand roundup.
Let's start with a quick rundown
from the news of the week.
Kevin.
What are people worried about right now?
Kevin: So one of the topics that we've
discussed in the community is epic's
market power, uh, as it relates to AI
and the impact that has on AI adoption.
Excited to get into that later with you.
Martin: And we are also enjoying the
New York Times, discovering that there's
a problem with the IDR process, which
we'll be talking about a bit later.
Kevin: I feel like we've, we've
helped, we've helped raise
awareness of that one potentially.
I hope we could claim
some credit for that.
Yes.
Another topic that we'll be talking
about, uh, also in the sphere of, uh,
AI policy is Doc Utah Medical Board.
The escalating, uh, tensions that
appear to be going on there and,
and how we move forward from that.
Martin: But first it was a busy
first week of earnings calls
in the healthcare universe.
And so we're gonna start with that.
Kevin, you included this graph
or this chart in your newsletter.
To kick us off at a high level
thematically, can you talk about why
you're trying to hire a meteorologist?
Kevin: There was a big snowstorm in
this country if you hadn't heard in
January, and that snowstorm is the
biggest driver of payer outperformance
and provider underperformance as far
as I can tell from Q1 earnings calls.
It was a fascinating set of,
of results in that regard.
You know, the, the payers, um, and
referencing specifically to United,
Elance and Molina, which all reported
last week, all had similar talk tracks,
slightly different version of it.
Uh, trend coming in, slightly better
than expected, although hedging a
bit on, on how that will persist.
Also, things getting better operationally.
Each has kind of different flavors of
that story we'll get into, uh, later.
Um, but uh, you know, that's
kind of the two drivers on
the payer side of the world.
And then on h C's side of the world
representing the provider landscape, they
came out and they said, listen, January,
uh, was tough because of that snowstorm.
And it was interesting they mentioned
that, uh, respiratory, so flu season, it
was trending well, going into the year.
Then all of a sudden it fell
off a cliff in January, which
coincided with that, that snowstorm.
Martin: Kevin, to be clear,
when you say trending well,
Kevin: trending well means more people
were getting the flu and that was
resulting in respiratory related ED visits
and admissions as I conceptualize it.
I don't actually know that they
shared the, the volumes, uh, prior
to this, but the miss that they cited
in earnings, Martin was respiratory
volumes being down 42% and respiratory
related ED visits being down 32%.
So the combination of that snowstorm
and respiratory volumes being down.
Well, let me, let me ask you this.
In terms of impacts for the quarter
between a CA, the state supplemental
programs, which is a positive, not
a negative, ACA was negative and
snowstorms, which was also negative,
which do you ha think had the biggest
impact on HCA earnings in the quarter?
Martin: I mean, I was shocked when you
laid it out like this in our notes, but
it was the snowstorms and the respiratory.
It was something that no one
Yeah, could have predicted.
Kevin: Snowstorms, $180 million
loss, snowstorms and respiratory,
a CA impact, 150 million.
And the state supplemental benefit
programs were 120 million to the positive.
It's wild to me.
We spend so much time talking,
thinking about what's the impact of,
of a CA changes, what's the impact
of these supplemental, uh, payments
changing and all here comes along
a big snowstorm that shuts things
down in the country for a week.
And that's actually the biggest
driver of financial results for HCA,
uh, in the quarter beyond those two.
Isn't that crazy?
Martin: So crazy.
I also, so on the supplemental benefits
note, one of the things that if you have
been listening into hospital earnings
calls is sort of fascinating to hear is
everyone's getting nervous about Florida.
So Florida submitted a, um, a state
directed payment application a while ago.
It's been sitting at CMS for a long time.
It's a pretty big state directed
payment program, and the hospitals
are all sort of cautiously optimistic
about it, but people are getting antsy.
Um, the big deadline here is because
of the one big beautiful bill you
need to get it grandfathered in.
It needs to go live relatively soon.
Otherwise it, it, it's not allowed.
Um, and so I thought it was,
it was interesting to hear
their commentary on that.
And then on the a CA front, you know,
they had sized the potential impact.
Of the a CA expiration of the enhanced
premium tax credits to between, I think
600 to $800 million, and it came in
at 150 million for the first quarter.
So that's better than expected.
That kind of rhymes with what we've
been hearing, that the drop off in a CA
is not, not quite as large as, uh, as
we've seen, but you noted a, something
you sort of picked up on a theme from.
What they were talking about on
uncompensated care and a post
from, uh, the folks over at Cedar,
which I'm gonna pull up right now.
Kevin: Yeah.
They made the point that they are
seeing more patient pay, uh, even
on folks who remained on the A CA
because they switched, you know,
metal tiers and, and benefits change.
So basically more of the
payment responsibility is
going, is falling onto patients.
There's kind of, there's, there's two
dynamics at play here that I think are
gonna be interesting to keep an eye on
for health system financials in 2026.
Um, one is just that this general
rise in patient pay, which we're
seeing cedars and c and I would
imagine other startups in the space.
I would imagine we're gonna see activity
here in 2026 as a result of this kind
of increasing shift to, Hey, we need
to go collect dollars from patients.
How do we do that in a way that, uh,
maximizes the likelihood of connect
of, of collection, but also feels
good in doing so and allows us to have
high MPS store scores while saying,
pay me, pay me my money, please.
Um, the other dynamic at play that
I thought was interesting that
Cedar highlighted in a LinkedIn
post, and we should have them
on to talk about this as is.
As Q1 plays out and folks don't make
payments, hospitals are gonna have to do
this math on, and HCA was talking about
that they did this in their number, and
I would assume HCA is probably best in
class at doing this, but you've gotta
figure out, okay, if somebody shows up in
January with a CA coverage, you don't know
yet if they are not gonna pay their bill.
And if they, if they don't pay their bill
in March, it then comes back to that pay.
Like they've got a
complicated equation to solve.
I don't even know how to fully walk
through all of that in my head, but like
there are folks on financial teams in
these systems that are gonna need to
figure this, that out because you're
gonna potentially go from a CA payment
to uninsured or something else and it's
gonna be something to keep an eye on.
Martin: Yeah, they talked about sort
of scrambling the financial counselors
that are on staff at the HCA hospitals
to start to try to get ahead of this
because there's this lag, right?
Um, where you saw the patients
in January, they have till
March to pay, it's now April.
But we're still just kind of starting
to get those numbers and we'll hear more
about that as we start to talk about
the payer earnings calls and what they
were seeing in the a CA marketplace.
I think where I would like to leave
it with HCA is another sort of act
of God that Im, is impacting the, um,
the, the business, which is Hurricane
Helen in the Asheville market.
So you're as a, as a
former North Carolina.
Is that the e right
Kevin: North Carolinian
Martin: Carolinian, north Carolinian.
Kevin: You're making me think about this.
I think it's
Patrick: North Carolinian,
Martin: uh, what's going on in Asheville?
Kevin: Yeah, so, um, I mean the
Asheville market has in general
been a fascinating market to watch.
I think, I think it was the
Georgetown, GHIR or whatever the
last three, uh, letters of that.
R had a, had a, um, white paper a few
years back about the payer provider
negotiations in Asheville and how
it's a, a particularly complicated
healthcare market because of the market
dominance of mission, which is I think
now HCA, um, and the changes that have
happened in that market over time.
It was particularly hard hit by the
hurricane when that came through.
HCA provided an update
on the earnings call.
If you remember, in, in, in years past,
they've made the note that, um, markets
that are hit by hurricanes can actually
be better performing markets for a system
like HCA over the long term as they
build back capabilities in the market.
Um.
Asheville is not there yet.
That's what they shared
on the earnings call.
The reason why they said that was because
they're having a hard time recruiting
staff there and the demand's there.
So they're seeing demand coming
in volume into the system.
They're having a tough time recruiting
staff, which is leading to higher
costs to bring people in, right?
They're paying more to get folks there.
I'm sure there's a temporary
labor mix, uh, as part of that.
And the combination of those two
things has it on, on behind track,
on its profitability expectations.
The last thing they noted on the market
as well is that, um, the payer mix is
actually unfavorable in the market, which
makes sense when you think about it.
There's been a workforce disruption
in that part of the state.
Um, so presumably they didn't say
that the numbers or anything like
that, but presumably that means
commercial mix is lower in the state.
You've got more Medicaid, uh,
uninsured population going
into HCA facilities there.
So it was, I I thought it was really
interesting to hear that update and think
about just the, the impact of a, I think
that was a 2024 storm that we're still
seeing in Q1, 2026 and presumably will
persist for a bit longer too, and then
all the downstream ripple effects of that.
Right?
Uh, we talk a lot about startup models in
Western North Carolina and primary care
and value-based payments and whatnot.
And so it's, to me, it's a
really interesting healthcare
market to look at and ponder what
the, what the implications are.
Do you have any further
takeaways from that one, Martin?
Martin: No.
I'm just gonna quickly run through
Molina before we welcome our first guest.
So Molina reported earnings last week
as well, and they beat expectations
on earnings per share, slight miss
on revenue, the MC, which is what,
uh, medical cost ratio, medical
loss ratio, which is what we pay
pretty close attention to here.
Medicaid, mostly favorable, um, which
is lines up with what we'll hear
from the other, the other payers.
Um, and some of that I think has
to do with HCAs under performance.
Medicare was in line with expectations
and marketplace was 84% and that
was, um, inclusive of 450 basis
points of prior year risk adjustment.
And so Molina's Risk pool ended up being a
lot healthier than expected and they, they
kind of owed a big, a big payback there
and then some program in integrity stuff.
And so excluding those two items,
it was closer to 80%, which if
you're a a CA payer, you want 80%.
That's your, the, the MLR that you are
managing to rate adjustments for Medicaid,
it sounds like are coming in as expected.
You know, the states announce rate
adjustments, they announce them
in different cycles depending on
state budgets and stuff like that.
Um, so that's an area that we're
listening closely to is impressions on,
on rate adjustments, and then m and a.
They said wait for the investor day.
So wait, we will,
Kevin: it's coming up in two weeks, right?
Yes.
I think it's two Fridays from now-ish.
Martin: Yes.
So I am going to, um, start to
bring forward our first guest,
Allie Oaks from Trillion and oops.
And Kevin, will you tee us
up a little bit on this?
Kevin: Yeah, for sure.
Um, Allie, uh, chief Research Officer
at Trit, excited to have you here.
Trit, uh, does many of my favorite
reports on healthcare data in the space.
Always love learning from
what you guys put out there.
Recently put out a report on the
behavioral health market, uh, and what
that's looking like and thought it
included a bunch of interesting insights.
So, wanted to start off with is giving
your point of view on state of US
behavioral health market and some of the
key takeaways that you're seeing in the.
Alli: That's a big one.
Well, hi Kevin.
Hi Martin.
Thanks very much for having me.
Um, I guess the saying might go
long time reader, first time caller.
Um, but appreciate you having me on today.
Uh, so yeah, we actually have
the privilege of leveraging, um,
a really vast, um, set of data
to tackle all kinds of different
trends shaping the health economy.
Um, and just a few weeks ago we
released a 80 plus page report that was
focused entirely on behavioral health.
Um, and that's leveraging all kinds
of secondary data, but also a large
national all payer claims database.
Um, also direct data directly from the
health plan, price transparency files,
and then our provider directory too.
Um, and in a lot of our work we use
the lens of supply, demand and yield
to try and understand what's going
on within the healthcare space.
And really the punchline from the
behavioral health report, we're seeing
more demand than ever inadequate supply
that doesn't seem to be catching up
and we're seeing confusing and variable
costs that patients are up against.
Um, so unfortunately it's, it's not
such a great picture, um, from our
point of view at this point in time.
Okay.
Martin: On the demand side of the
equation, can you break us down a
little bit of what's going on with
acuity intensity utilization that's
driving that, that increased demand?
Alli: Yeah, absolutely.
So I think demand within the behavioral
health space is particularly interesting.
It's the case everywhere clinically, but
I think even more so within behavioral
health, where there's always the
question of, okay, is an increase in
utilization reflective of increased need?
Within the clinical area or is it
a matter of need that's always in
in there, but with more access you
could see an increase in utilization.
And then there can always be a little
bit of a piece of the pie too that
could have to do with sort of over
diagnosis or over utilization too.
Um, so when trying to sort of decompose
that increased utilization within the
behavioral health space, I do think a lot
of it has to do with that increased need.
Um, so we heard a lot about this
during the COVID-19 pandemic.
Um, I think being six years out from it,
there were theories that maybe we would
see a reduction in utilization that might
happen or reduction in prevalence, but
that just doesn't seem to be the case.
Um, when doing these sorts of data
analyses, it can be so easy to
really get down into the weeds and
sort of like miss the big picture.
And I have to remind myself taking
a step back, we see 23% of adults
that report any mental illness.
So basically a quarter of our population.
Um, and it's nearly a third in our
18 to 49-year-old working population.
Um, so just like wrapping your head around
that number, I think is pretty staggering.
And from a spending point of view,
um, we do see that about 8% of
personal healthcare spending or total
healthcare spending is on mental health.
But I think the more important
number is actually, um.
What we spend on untreated mental
health, that number is closer
to $500 billion rather than 200
billion on actually treating it.
Um, and that untreated number sort
of encompasses chronic physical
illness, ed overuse, productivity
loss, and premature death.
So I think like primary care, it's one of
those healthcare spaces where we probably
need to be investing more dollars.
Actually
Kevin: interest.
Allie, how do you do the math on, so
if I'm understanding that right, $200
million of, of costs today, 500 million
of potential costs, that's not actually,
um, we're not actually spending today.
How do you do the math on like
quantifying that $500 million number to
know that that's that's what it's at.
Alli: Yeah.
And it's 500 billion with a D.
5 billion.
Billion with a D.
Yeah.
Noticed such large numbers.
We're always dealing.
Yeah, it's crazy dealing
within healthcare.
Um, those particular calculations
we are sourcing from secondary data.
Um, in terms of that
direct medical spending.
Um, it would be care directly
related to, you know, treating,
um, disorders that kind of pop up
within the f section of the ICD 10.
So depression, schizophrenia,
all that sort of stuff.
When people actually go to a
healthcare visit or possibly
the ed, something like that.
Um, when it comes to those untreated
related costs of mental health, um, it's.
Really importantly, the way that mental
health or behavioral health issues
exacerbate physical health conditions.
So I think that's another really important
thing to remember related to all of this.
Like, yes, the report is focused on
behavioral health specifically, but
we know there's this really important
relationship between mental and physical
health and the way that unmanaged mental
or behavioral health issues exacerbate
those physical health problems.
Um, so there's a lot of additional costs
and utilization that goes on there when
one of these conditions are unmanaged.
Um, and then also there's issues
related to where people do receive
care for these conditions too.
Um, so there is some amount of,
you know, if people can't, uh,
access care, you know, through an
outpatient therapist, they might
find themselves in the emergency
department for some sort of flare up.
And we know those visits
are really expensive.
So that sort of like, uh, mis utilization
of the healthcare system goes into
that untreated care bucket too.
Martin: Over on the supply
side, I'm curious to hear
where the gaps are most acute.
Where are we seeing like a real lack
of providers that we need more of
and maybe on a sort of specialty
or subspecialty basis there?
Alli: Yeah, so we certainly know
that the behavioral health provider
space is pretty, um, heterogeneous
in terms of provider types.
So, you know, thinking about primary
care, for example, and many other
specialties at this point too.
You have your physicians and then
you maybe have like an allied health
and PPA workforce that's helping to
supplement at this point in time.
So we see that within behavioral
health too, but there are additional
providers in this space as well.
There's master's levels
clinicians who actually make up
the majority of the workforce.
Um, there's also clinical social
workers who practice in this space.
Um, there's doctorate level psychologists.
Um, there's our MDDO psychiatrists.
Um, and then we're seeing
this more sort of specialized
psychiatric nurse practitioner
workforce, um, start to emerge.
Um, I think something that's really
interesting here, um, in terms of the
potential for sort of artificially
constrained supply and that being a
problem from 2018 to 2024, we do see
that the number of psychiatry residency
positions has actually increased by 55%.
Um, which when we talk about, um,
you know, the a MA residency match
and all of that, there's always
conversation about needing more slots.
So within psychiatry, we actually
see that the number of slots has
increased somewhat significantly, but.
Year over year, those slots
are filled at 99% or so.
So there's sort of demand from the
practitioner point of view, if you will,
to get into this space, but it seems like
we just aren't creating enough positions.
Um, and I think one other interesting
thing we see here, one nationally,
sort of our adequacy rate of mental
health providers is only around 25%.
So we're doing pretty dismally
as it relates to that.
Um, but in terms of how the supply
market is trying to adjust, um, one
thing that we did look at using our own
data was for folks who are receiving
a medication related to mental or
behavioral health, we took a look
at who the prescribing provider was.
Um, and over this period of time we
see that the allied health profession,
um, is actually prescribing the largest
proportion of these medications.
Um, so by 2024, um, we see that, that,
that those allied health providers
since 2018, they were prescribing
around 20% of those medications.
As of 2024, they're
prescribing around 34%.
Um, and together Allied Health and
primary care providers are prescribing
two thirds of all of those medications.
So we can see how sort of a.
Non-specialized mental behavioral
health workforce is having to flex
into helping and meeting the need
of this growing patient population.
Kevin: Allie, it's time for
AI to enter the chat here.
A big topic in the community
is AI care delivery.
What's happening with that?
Certainly, it seems like there
is activity within the ai, mental
health chat bot, et cetera, front.
I'd be curious, are you seeing any
indications data around, is, is AI
helping increase productivity in the
mental health market and projecting out
the next couple of years, like is there
a point at which you think we, we see
more indications of this, learn more
about ai, how AI is impacting the space
and when that shows up in the data?
Alli: That's a great question.
I mean, I think in terms of how AI relates
to mental and behavioral health, we
have to take a step back and think about
the continuum of, okay, what might we
want or ask AI to do within this space.
Um, in general, right?
We think about AI as being a
really good use case for repetitive
sort of administrative tasks.
So where we can create efficiency
for our providers as it relates
to helping to reduce their, reduce
their administrative burden.
Great.
That's a really good application when
it comes to more clinical use cases.
I think that's where there's
still a big question mark.
Um, I think there's been some legal
activity in this space recently that
raises a lot of questions about or sort
of willingness and interest to do this
and the gray areas that it introduces.
Um, certainly something that came
out of the COVID-19 pandemic is
this proliferation of sort of.
Direct to consumer providers
within the behavioral health space.
Um, the extent to which any of
those providers are using ai,
I'm honestly not an expert on.
Um, but as it relates to the direct
to consumer providers and the extent
to which they might start working
AI into their workflow, I do think
there's a question of sort of
fragmentation that it could introduce.
So again, with that sort of mental
behavioral, physical health connection
in these new providers that are popping
up, how do we make sure we're still being
able to provide sort of high quality
holistic care to this patient population?
And then I think there's
a cost question there too.
Um, I think there's an assumption
that AI supplemented care will
inherently be less expensive.
Um, but I think if there's anything we
know to be true with healthcare prices,
it's that they don't usually do what
we would expect a regular market to do.
Um, so I don't think there should be
an assumption that AI will bring down
costs to patients or costs to the system.
Um, and that's actually
something we already see with
the direct to consumer providers.
Um.
So that's something we
unpack in the report.
We sort of take a use case, a patient
who wants to do weekly therapy, if they
pay out of pocket for one of these direct
to consumer providers, versus finding
a traditional provider who's in network
for them and they use their insurance.
The ease of doing that as a whole
separate question, um, but we see the
traditional approach is actually on
average, less expensive for people.
Um, so I think that's a, a combination
of things without totally trying to
get into a crystal ball of what's
gonna happen related to ai, but
some things to pay attention to.
Martin: I think we have time for one more
question, and I was hoping to talk about
another sort of new and novel technology
in behavioral health, though this is more
on the interventional psychiatry front.
Mm-hmm.
So we've seen a lot of, um,
increased venture capital activity
and wider adoption of TMS and
SVA and some of these things.
I'm curious if you're from, you know,
in, in, in the report section, like
what, what are we seeing here from
that perspective going beyond the sort
of traditional first line treatments?
Alli: Yeah, so we just sort of give
a little bit of a lay of the land of
some of these emerging technologies.
So like you mentioned, TMS, um,
things like psilocybin, MDMA, um,
there's definitely sort of this
emerging market I think focused on
treatment resistant issues or sort.
Sort of alternative or novel ways to
be treating some of these conditions.
And I think it's just within the last
couple of weeks we did see that the
Trump administration put out some
sort of announcement about thinking
about funding more research in that
space or coming up with some more
flexibilities as it relates to trying
to approve treatment within that space.
So again, to the extent that behavioral
health is something that's impacting a
quarter of our population, I do think
just that there's a discussion around sort
of novel treatments and new things that
we could be trying and that we're seeing
innovation as a very positive signal.
Um, as with anything though, it's
just a matter of very carefully
implementing or, you know, testing
out these new technologies.
Um, there's also sort of a software
as a treatment element here too, to
consider, um, and what those, what
the pathway for approval for those
sorts of treatment looks like too.
So I do think there is some
exciting sort of new things
coming to the market potentially.
Martin: Allie, this was a great overview.
If folks haven't read the report
yet, where can they find it?
Alli: Um, if they go to our
website, tri health.com.
Um, and on our insights page, they'll
be able to find the behavioral health
report as well as our annual trend
shaping the health economy report.
And then we also put out a weekly
analysis as well that covers
sort of any topic under the sun.
Martin: Very much worth the read.
Allie, thanks so much for
your time today and I hope you
have a great rest of your day.
Kevin: Thanks for joining us, Allie.
Alli: Absolutely.
Thanks Kevin.
Thanks Martin.
Kevin: I am gonna be thinking about that
D two C cost increase point for a while.
Martin: Yeah.
Kevin: It rings so true to me.
And like it's just, it is completely
non-intuitive when you just think
about like, oh yeah, we're gonna, we're
gonna have more D two C solutions.
It's gonna be, uh, great for everybody.
And uh, you know, classic Iron Triangle,
Martin: it is a open up access.
Kevin: And
Martin: yes, it is also an interesting
accounting exercise, right?
So if you think about the national health
expenditures and we think about where
those costs end up, something that's
D two C is coming, you know, and it's
being spent out of the per personal
or consumer health expenditure bucket,
not the insurance expenditure bucket.
And there's some people who say,
well, that's kind of a good thing.
Like that's market forces at work.
Like insurance isn't covering this thing,
people are spending their own money.
Um, and so.
But if your metric is the, the
national health expenditures, yeah.
It's gonna make those numbers go,
go up, especially in, in ways that
are people, you know, drive people
crazy, like people spending their
own money on healthcare is something
that, that people really don't like.
Um,
Kevin: are you saying that this should
have, should have been my suggestion
for Zeke earlier in the conversation
about how to reduce national health
expenditures, just shift it to the
patients outside of the budget?
Martin: You know, that's what we've
been doing for the last 10 years, and
let me tell you, it is bad politics.
Like I, the bookings put out a paper
a couple weeks ago that made everyone
really angry, which said like, actually
we, we modestly did bend the cost
curve and the way we did it is by
recording more out of pocket spending
from patients and everyone went nuts.
Um, but yeah, it's like that,
that's a way to manage utilization
is to take that spending and say,
okay, would you be willing to
spend your own hard-earned dollars?
Kevin: Mm-hmm.
Martin: People really like
talking about Singapore.
Um, I am one of one of those people,
one of the things that they do is
they have a sort of national insurance
scheme, which is conceptually similar
to Medicare Part A, if it happens
in a hospital, it's covered by the
National Health Insurance Scheme.
Anything outside of the, and
that that's for everyone.
Everything outside of that though,
you have to use a Medi Save account
similar to an FSA or an HSA account.
And people like this because they're like,
well, it, it helps price discovery work.
I also think if you tried to
do that in the us, like even
people would be so angry.
Kevin: No argument for me.
Should we go back to
earnings for a minute?
Martin: Yeah.
Let's go back to earnings.
Let's talk about Elance quick.
Kevin: Yep.
Martin: MLR medical costs modestly
better than they had assumed favorable
claims and some, some impact from
their own utilization management stuff.
So you'll be hearing a theme
when we talk about the payers.
That trend was better than expected
and you line that up with HCAs
experience and most of the payers were
very careful to not say like, Hey,
don't call it a comeback quite yet.
Ance though raised, raised
guidance for the year.
Um, and so hopefully, uh.
Hopefully they, they are on top of that.
And this wasn't just a, uh,
respiratory driven improvement.
Kevin: Yeah.
Ance and United both raise guidance, ance.
Um, it was interesting.
Couple points that I heard on the
call that I found interesting.
One, it sounds like they're
integrating Care Bridge, which was
their big acquisition, uh, in the
VBC space in inside of, um, Caron
and their home health capabilities
into a single risk model, which they
seem to be finding success with.
I'll be curious to hear
more on that over time.
It makes sense to me why they're doing
that, but thought that was interesting.
Um, MA is tracking to a 2% margin,
which I think anybody in 2026 most,
well, I should say most organizations
in 2026 would be very happy with
2% margin in ma take that and run.
Uh, and they are apparently working
through their issues over flash drives
with CMS in a way that does not sound
like it will impact the en the potential
enrollment freeze will not impact them.
But they booked what, almost a
billion dollars in accrual for
kind of a settlement of that.
Martin: Yeah.
Yeah.
They, they, they, they talked about it
very briefly and you're like, oh, that's
like a pretty large accrual for Yes.
But I
Kevin: know that's a, that's a big
number, almost a billion dollars.
Martin: It's a big number.
And
Kevin: lastly, the second blue bid
thing I thought was interesting.
They talked about that.
Yeah.
Um, um, which we'll
keep on coming back to.
Should we bring on Neil?
Martin: Yes.
We bring in, bring in Neil.
Um, hey Neil.
Neil: Hey guys.
How are you doing?
Martin: Good.
How are you today?
Neil: Oh, I'm good.
Sorry.
I'm good.
Uh, just, I'm, I'm middle of moving and
so when I'm middle of moving, so I wanna
make sure that I got, uh, Internet's good.
Um, it's like a chaotic time out here.
I'm trying to hide all the boxes.
Yeah,
Martin: no, you look great.
Um, I think a good place to start
would be just like a quick update
on the pair team approach today.
For viewers and listeners
who aren't as familiar,
Neil: I.
Yeah, of course.
One.
Thank you guys for having, having us on.
Um, so for folks that Dunno, pair
Team is an AI powered care management
group and we focus on individuals
who, whose health first starts with
housing, food, transportation, and
other kind of basic life needs.
And so we provide both system
navigation across our healthcare
and public assistance programs.
Um, but we are also a
full stack medical group.
So we are a full stack virtual medical
group with nps, RNs, behavioral
health specialists, so we can kind
of manage, um, the end, you know,
manage a patient, patient from any
sort of health or life need they have.
Um, and it's been, uh, a ton of fun.
I think things like access
make this pretty exciting.
Um, and I know we were gonna
talk about that a little bit.
Kevin: Yeah.
Neil, give us a so, so access, you
also wrote paper recently on AI and
Medi-Cal and the opportunity there.
Give us a sense of just.
Scope and scale of, of
pair team business today?
When you say medical group,
is it virtual medical group?
Are you in person?
What markets are you in?
How do you, how do you
think about the world?
Neil: Yeah.
Yeah.
So we started, started this
organization and focused on a very
high needs patient population.
So focused on individuals experiencing
homelessness, severe mental illness,
substance use, um, poly chronic folks
that are frequenting the emergency room.
And we focused in high needs Medicaid,
particularly in a program, um, that came
out in California called Enhanced Care
Management, which was just super aligned.
And one of the problems here that you
see is, um, the handoff problem where
someone, you know, a, uh, this fellow Cody
Kinsley, uh, North Carolina State Health
Department, uh, state Medicaid director
used this term pamphlet and pray, which
is someone walks into the emergency room
and you go, well, hey, here's the pamphlet
to get to the resources that you need.
Um, do they get there?
No one knows, right?
And then you have platforms like Find
Help and United, which help like, create
all the connectivity, but even then
it's still hard to like actually close
the loop from a services perspective.
And so where Pair team has been,
is focused on that high needs
population in a very full stack.
Approach.
So we have this virtual medical
group, but we also build out a direct
network of contracted, um, social
care providers and medical providers.
So we'll partner with libraries, with
food pantries, with sobering centers,
with, um, YMCAs, all sorts of different
community-based organizations that
are integrated into our model so that
you can provide and get, you know,
you reduce that handoff risk, you can
actually get someone to their care.
Um, uh, last year we put out a paper.
Uh, this was a, you know, showing
our outcomes, 52% ed reduction,
26% inpatient reduction.
It showed the model really working.
If you have community health workers,
virtual medical group in this last
Mile Care Delivery network, um, about
nine months ago, and Kevin, I'll get
to the, the paper on ai, but just to
give folks the, the story about nine
months ago, you know, our mission
has always been Whole Person care for
everyone, not just whole Person Care,
you know, for a high needs population.
And to do that, you really
have to lower cost to serve.
I think everyone knows what
Medicaid rates look like.
It is for someone to go through the
Medicaid system is, is truly heroic.
It is incredibly fragmented.
You have all these life needs, you know,
kind of working up, trying to work up
Maslow's hierarchy of needs for yourself.
Um, and you gotta do it alone.
How do we bring our personal care
management touch to everyone been
focusing on AI and what that can do?
And about nine months ago we had
this, what I'd call like a, a
watershed moment for us where.
We had built a first version of
Flora, who is our AI care advocate,
kind of trained her with all
of our protocols that we'd had.
Um, and she had a voice call
with, um, an individual.
This was a senior living out of her
car, PTSD, congestive heart failure.
And it was over an hour
long phone conversation.
It was way deeper, way more rich
than, um, we could have expected.
And like both you go,
wow, the tech is here.
It's also kinda heartbreaking.
At the same time in that moment of
just realizing kinda like the social
isolation that that happened, uh, you
know, that's so, it's so pervasive.
Um, and so as soon as we saw that
moment, we said, okay, we're, we're here.
This is our way to get whole
person care to everyone.
And so what we've been building is
Flora, who is like I I mentioned our
AI advocate who can help engage with
someone over voice and text and not
just be that 24 7 care manager, but
also be a companion to them, but still
backed with our full care model, full
backed by our virtual medical group,
our last mile Care delivery network.
It's not just chat GPT about health.
Right.
Um, um, and so as part of that, we entered
into, you know, we've been talking to
CMS and CMI about the ACCESS program
and we are, we are now officially an
access participant on bringing that Whole
Person Care model to the safety net.
We believe that care management requires
not just health navigation, but also
public assistance navigation as well.
We've been building out this model forever
and Flora can now drive it and be the
core kind of interface for it to bring
it to a much broader patient population.
Um, and as part of this, we've been
really investing in, uh, obviously
safety effectiveness of Flora.
It is now a typical, it's not
typical for us to have 45 minutes,
60 minute long conversations with
seniors who Flora is actively caring
for with support of our care team.
Um, and um, alongside that we've
also just been very deep on
infrastructure for the safety net.
I think when you see things like, you
know, when, um, uh, EMRs came out,
you saw this technology typically
kind of gloss over the safety net.
You still have FQHCs that are
using very outdated tools relative
to commercial counterparts.
And we wanna make sure
that doesn't happen here.
So we're thinking about things, um, like,
uh, if you are a state health department,
if you are in the federal seat,
building out Medicaid IT infrastructure,
how do you make it AI native.
How do you, uh, I can go a little bit
into, into that, but you know, we put out
papers on this is what our spec would look
like and do everything as open source as
possible, but incorporates things like,
let's break down the, the data silos
with, you know, model context, protocol
interfaces, you know, for that are kind of
more agent ready and um, you know, consent
systems so that people have control
over their data and kind of own it.
Um, that's a very important part to all
this, but that's, that's been pair team
journey in AI is we've set, we started
this whole person care model for high
needs individuals to bring it to ev had
our watershed moment and now bringing
it to, um, everyone in the safety net
with, with Flora, our AI care advocate.
Martin: I'd be curious
to hear how you process.
It feels like there's kind
of two camps emerging.
One on the side of AI saying,
Hey, it is, uh, this is too big
of a challenge to not use AI.
And, you know, so we had, um, Andy from
Ol Ventures and Toyen from C Block talking
about, you know, the need to, to sort
of really engage with AI to support.
Folks, um, who are enrolled in Medicaid.
And then the other side, you, you were
starting to see some pushback from folks
like the, the Medical Board of Utah,
um, on the doct chronic pilot basically
saying, this is moving too quickly.
The incentives are bad.
We, we shouldn't be treating
patients like Guinea pigs, some,
you know, some other corners.
Here's how you process that debate and how
you are thinking about those questions.
Neil: Yeah, yeah.
Um, also I realized, Kevin, I didn't
answer we're, we are coming up on a
thousand person medical group right now.
Wow.
So we've gotten to a pretty decent,
I would decent amount of scale.
Yeah.
From a data.
That's awesome.
I was like, oh, I didn't, I think,
I feel like I, I feel like I
buried the, buried the lead there.
We are, we are a big group.
We take care of a lot of folks.
We're putting out meaningful papers.
Like this is why I feel like we
have kind of the raw inputs to, um,
to do this safely and effectively.
Which Martin comes to your questions.
It, it is a, it's more about
the safe and effective rollout
of this technology because when
you actually look at the need.
We were in West Virginia, for
example, 92% of the population
is on government healthcare.
But you have folks in these rural, very
rural areas that just do not have access.
They actually closed down a series of
OB GYN clinics and, and, uh, expecting
moms have anywhere from three to four
hour drive to get to, um, uh, to get to
a hospital to actually give birth, right?
These are, these are just
like fundamentally challenging
problems with access.
So I think AI has to play a role and it's
getting exponentially smarter, right?
You see what the, what the
Frontier Labs are doing.
I don't think you just jump
into prescribing, right?
So how I process this, and this
is actually pair team's approach,
is we're first starting with
navigation and orchestration.
So Flora, for example, can say, okay, I'm
interacting with you over voice or text.
Um, if I need to invoke an np,
I can schedule that resource.
If I need to coordinate with the
pcp, I can schedule that resource.
If I need to score, coordinate
with a housing organization, I can
coordinate that resource, right?
And over time, what you're gonna be
able to see, and we're already seeing
it now, what are the things that Flora
and these frontier models are better at?
And what are they technologically ready?
To do both, both I guess,
three components, which is also
regulatory compliance, right?
So that's the other ga
uh, rate limiting factor.
Um, but you ha by starting with
orchestration, you can see like,
well in this case it might actually
be better for me to use Flora to
prescribe in these certain XXY, Z cases.
And you can ab test it and you
can start to roll it out in
a much more data-driven way.
And you're looking at evals on
safety and also quality, uh, like the
experience that an individual gets.
Um, so we are optimistic, like over time.
I do think this, a lot of virtual care
is just gonna get taken over by agentic
tools and agentic com companionship.
Um, I think the question is going to be,
and it's gonna fill about this, this very
big need of access, but if you start with
orchestration and navigation, you can then
figure out safely where to push AI into,
um, to deliver the highest quality care.
Kevin: Neil on Access Model, not access
to care, but cmmis new access model.
The rolling out, yeah.
Big headline has been, there's been
a lot of consternation in digital
health community over rates, how folks
have been thinking about rates, and
we saw when the model was announced,
a lot of folks express their interest
in participating and then fallout
when, when rates, um, actually came
out and didn't apply to the program.
I, I'd be curious to hear your perspective
on how you're thinking about the
opportunity in the program and then how
you think about building the p and l
within the construct of that program.
CM Maya has been pretty clear in
saying like, you can't think about
it from the incumbent mindset.
You gotta build from the ground up.
How are you processing all of
that, interpreting it for your
organization as you're leaning in here?
Neil: Yeah.
Yeah.
So I'll start with, um, the,
we were expecting these rights.
Um, we were, we were not expecting
anything, anything higher.
Um, it's a feature,
not a bug, so to speak.
Right.
Uh, to, to drive down, you know, and
actually get to deflationary outcomes.
Right.
Um, so that was all,
that was all expected.
Um, I, what's really interesting is when,
you know, I talked to CMI and Abe about,
you know, how these rates were formed.
Um, it's like, oh, are you forming them?
Like, give us the methodology, right?
And instead of looking at it from a
value delivered perspective, the rates
are actually composed more bottoms
up from a cost to cost to deliver.
Perspective, right?
Which is very different, you
know, than how you'd develop a
value-based contract or anything.
It's like, well, we believe it's
gonna be cost X and let's do a cost
plus model on top of it, how we are
thinking about this internally is we're
looking at, 'cause we've have just
millions of data points on the actual
workflows and orchestration of care.
And we're saying, well over the course of
the next, well, is it, is it at what, what
percentage of automation can you do now?
What is going to come over
the next three to six months?
What's gonna come over the next year?
And you actually build this
kind of, um, you know, waterfall
roadmap for task automation there.
Things like scheduling with PCPs, right?
That no longer has to be something
that a care manager has to do.
She can, you know, he or she can
focus on higher leverage tasks
that then leads to our cogs there.
And we have this very kind of confident
roadmap in front of us on, um, on
making all this, all this work in with
an ag agentic, an agentic service.
Um, I think maybe to make it a little
bit more interesting for the, for the,
the listeners, uh, two, the big key
PO components are gonna be CAC and
they're going to be, um, like how do you
actually acquire folks at, at all this?
And then, um, I've had some
consternation around device cost and
blood pressure device costs there.
Um, and uh, on the.
The CAC side, I think there's
like, you know, this is really
incentivizing partnerships.
It's really incentivizing access,
uh, providers to go out, partner
with ACOs, partner with PCPs, right?
Um, so that you're not like, like D two
C online media spend is not gonna work.
You're not gonna be able to
pay for Google ads and Facebook
ads to make this program work.
You have to go through, um,
either build a great brand or
get channel partners in place.
Um, and then on, you know, so that's
one side, one side of the equation.
Um, and then the other is, um,
like things like device costs.
They're a hit now, but, uh, you know,
have talked to, talked to Jacob and,
and other folks in the, of my team.
There's like, these hardware
costs are going down.
I think they're, they're, there's
a, a thought that they're gonna
build able a tool directory.
So preferred vendors for
these devices, right?
Which will give, um, having, having the
US healthcare system be a buyer gives
you great discounts and he pass down
those discounts to access providers.
Um, so while it's a little bit of a pain
right now, I think we'll, we'll get over
it with the, with the support of CMI.
Martin: Neil, this has been great.
Where can folks get in touch if
they would like to learn more, wanna
chat our state Medicaid director
and wanna, wanna, wanna team up?
Neil: Yeah.
Yeah.
If you are any or any of the above,
if you're, you know, state Medicaid
directors health plans, we are taking
this program and we are actually
working to bring it into managed care.
So what does AI care management look
like and our flavor of it, right?
As whole person, it's the
social in the medical side.
Uh, please reach out to, to
myself N eil@pairteam.com.
Um, and, uh, if you're a builder in
the space, I think we have a lot of
the raw materials to build an AI care
manager in a way that is just higher
quality than anyone else can right now.
And we're pushing on it.
So if that excites you, um,
please, please reach out.
We'd love to, we'd love to talk.
Martin: Neil, thanks so
much for your time today.
We'll catch up soon.
Kevin: Good seeing you,
Neil: Neil.
Martin: Good luck
Neil: on the
Martin: move.
Neil: Alright you guys.
Bye.
Thank you.
Martin: That was great.
Um, I, it's, it a thousand person medical
group is I, I chatted with them a couple.
It feels like they're
just growing like crazy.
Kevin: Yeah, that's a really,
I I mean, good for them.
That's an awesome group.
I, you know, it's one of the things
we started chatting about last week
that his commentary made me think
of, uh, was this idea that in this
AI centric world, it's actually gonna
get, uh, harder to reach the hard to
reach populations in healthcare like.
I already don't answer my, my
phone today 'cause of all of
the spam calls I'm getting.
And as fraud, spam risk rises through
digital connection points, like
you're not, it, it's gonna be tough
to figure out how do you connect
with these different populations.
And I think there's a huge opportunity for
groups thinking like pair team thinking
about that question in an interesting way.
Martin: Absolutely.
Should we wrap up ance
and move on to, to United?
So we talked a little bit
about the USB drive saga, but
what's the second blue bid?
What's, what was the, the
commentary on the second blue bid?
Kevin: So it, it was, it was
essentially, you know, things are going
gangbusters in the commercial market.
We're doing really well.
Got a lot of momentum there.
Uh, Elance seems excited there, but
then they were like, you know, it's not
actually in the second blue bid anymore.
They noted on a previous earnings
call that, um, that second blue
bid was going great for them.
I think they won nine out
of 11 second blue bids.
Of course the second blue bid is the
dynamic that came out of the, the
antitrust suit, uh, with blues plans.
Um, where.
Let me try to make sure I get this right.
Employers that have a single state
blue plan can put up that their, their
business for a bid from a blue that
is not in the state, uh, as a second
blue bid to see if they'd prefer that.
Not surprisingly, Elance is winning
a lot of those cases and that's what
they noted on their earnings call.
So it was interesting to hear them kind
of downplay the opportunity in that
moving forward, which I can't help, but
like if, if you're in the group of blues
plans, like they all know each other, that
comment could not have gone over well.
Um, among the blues plans or I would
imagine antitrust regulators because
that is like the opposite of, Hey,
we're putting in, we're, we're we,
we've got this to help employers with
their blues costs and the result is
all blues just get aggregated up.
Like, that's, that's no bueno.
I, you know, I
Martin: to say the least.
I mean, and we are seeing a lot
of consolidation in this space.
'cause ance is for better or for
worse, say consolidated glue.
And so
Kevin: whatcha gonna do,
Martin: and
Kevin: state health plans have a
bunch of, you know, we've thought
like it's, anyways, it's an issue.
Martin: The last thing I'll say
about ance is they got an analyst
question saying, Hey, can you talk
about some of the proof points today
you're seeing on the ai, AI stuff?
Any progress on that front?
Quantify those efficiency gains
And the quantification they shared
was just sizing their investments.
Uh, and I just wanna say, I'm
so excited for someone to share.
Actual productivity statistics at some
point, instead of just saying we spent all
of this money and we think that there's
going to be a return on investment.
Kevin: I, I, I'm excited
for that moment as well.
We might be waiting for some
time, but nonetheless, we'll,
we'll keep our eye out for it.
Flipping over to United, last
big earnings call, United was up,
what, 10% on the week like some of
the other payers here in general.
I, I thought, you know, business
performing on, on all fronts.
Uh, well, uh, United raised expectations
for the year, but nothing, nothing
too meaty in terms of strategic
updates on the earnings call.
Medicaid continues to work
through rate pressures.
Medicare, seeing some
favorability on trend.
Optum Health continues its turnaround.
Um, there was some interesting data
points there I thought around the
fee for service business in Optum
Health and how they have, uh, I
think increased fee for service
scheduling hours by something like 12%.
Um, that was interesting to hear and I
think, think about, uh, lastly, Optum
Insight cited as a lot of potential,
Optum real cited as the example
there again, to the Elance AI theme.
Like you can, you can
imagine the narrative.
Uh, we'll see when it starts
to materialize for them.
Lastly, it was interesting to see
United made a small acquisition.
Um, I don't actually know the full
dollar amount of it, but seems small
in the broader strategic narrative,
is what I mean by that, of a company
called, uh, alle, Allegis, Allegis
Technologies, uh, in your favorite part
of the world, Martin F-S-A-H-S-A markets.
What do you think of that?
Martin: Yeah, yeah.
No, I mean, so you go to the Alle
Allegis Alleg website, and it looks like
pretty sort of standard F-S-A-H-S-A,
um, you know, management for employers.
And so I think in some ways this
represents a bet on that being
a larger part of the story and
a benefit design going forward.
It checks out.
They, there's also some mentions for icra.
I think that, you know, as you think
about where spending is going to happen,
you have insurance dollars and you have
personal dollars, but then you have
this sort of weird center model with
the HSA and FSA and that feels, I think,
in some ways, more palatable to people
than just the, the personal dollars.
Should we talk about the independent
dispute resolution process?
Kevin: I would love to.
Okay.
New York Times had a good
article on it this week.
Uh, this is the somewhat outlandish,
uh, picture from the headline.
It covered, uh, I think
the doctor's name is Dr.
Norman Row Rowe.
He has had some, um, a lawsuit filed
against him with some kind of egregious
cases and outcomes in the IDR process,
including a $440,000 breast reduction.
Um, as an example, despite the
fact that he's advertising that
procedure on his website, I think
for 15 to $25,000 ish, according to
the, uh, headline of the article.
Uh, Martin, it just, I, to me there
is, there is no better example
of, we talk a lot about fraud,
waste, and abuse in healthcare
and how we wanna drive down waste.
And the IDR process seems like the
best example of this to me that we
have in healthcare right now that
is happening in front of our eyes,
like this is happening as we speak.
The New York Times article highlights how
we have essentially conjured up a brand
new cottage industry of these arbitrators
who are making bank off these cases.
So much so that they've now got their own
trade group that is now lobbying for it.
And you can see how these things
just like ossify an American society.
'cause once you have a trade group,
like lobbying dollars are going to dc
this thing ain't going away, right?
Martin: Yeah.
I think that it is common for people
to get really angry about, or feel
very cynical about the fact that,
you know, look, there's just like
no way we can improve healthcare.
And even when we try, our policymakers
end up with solutions like the IDR
process, which just end up raising prices.
Mm-hmm.
I think it's like worth taking a step
back and saying, number one, the IDR
process was, and the No Surprises Act
was wildly successful at, its one of
its stated goals, which was to stop
patients from getting surprise bills.
That is just like, that was
a bad thing that happened
and they solved that problem.
How you solve that problem
is actually very tricky.
So the insurance companies, when the
No Surprises Act was being debated,
said, we think the government
should just set a rate and that
if we can't come to an agreement.
It should default to that, you
know, sort of rate setting and,
you know, methodologically, there's
lots of different ways to come to
that rate, but that was their idea.
And obviously that's favorable
to an insurance company.
That's why they were advocating for
it is because that rate would probably
be less than what they were paying or
approximately what they were paying.
And providers didn't like this.
And as often happens in a democracy,
the legislators in Washington split
the difference, or, or, and, you
know, in, in the truest sense of the
world, word or phrase pulled the King
Solomon and tried to split the baby.
So they, they did a little bit of
like, Hey, here's this, this rate
that you can use, but also we're
gonna do baseball style arbitration.
Kevin: Mm-hmm.
Martin: And the baseball arbitration
kind of favored the provider groups.
So here we are, you know, I think it was
implemented in 2022 and the rate setting
never really materialized the like for,
you know, the Texas Medical Association
sued and got that deprioritized.
The baseball arbitration sort of
as come to favor provider groups.
And we have.
Like we're left with, you know,
people paying $440,000 or insurance
companies paying $440,000 for a
procedure that costs 15 to $25,000.
It's hard.
It's a hard problem to solve.
And I think we should, you know,
respect that problem rather than just
like, roll our eyes and be very cynical
about our government's inability to
do things like they solve the problem.
Kevin: Mm-hmm.
For sure.
Martin: Kinda,
Kevin: yeah.
Uh, it's got unintended
consequences, right?
Martin: Yeah.
Kevin: I thought it was
interesting to see it.
Uh, Senator Cassidy, who I think is
one of the authors of the No Surprises
Act, he was quoted in the New York
Times, is saying of the outcomes for
providers, quote, if they're winning,
it's because the insurance companies are
not coming back with a reasonable thing.
Which I, I think expresses to your
point, the provider sentiment in all
of this, of, yeah, we're winning these
cases because, uh, the insurers are
not paying enough, generally speaking.
And to your point, I, that
is the underlying debate.
Um, more broadly, just a
question of how we do that.
And when programs like this come
into a place, there's a natural
byproduct of it, of things happen.
There's unintended consequences, right?
Um, you get providers who are
charging that $400,000 crazy times.
Martin: Should we talk, should
we talk about Doc a little bit
before we welcome our next guest?
Kevin: Let's do it.
Martin: So this
Kevin: is
Martin: a, yeah, I was just gonna say,
you made a comment in the newsletter
this weekend about how you shouldn't ever
pick a fight with a state medical board.
Kevin: I, I think it's
a losing proposition.
I, this is the group who feels they are
entrusted to protect, uh, the health
of folks in the state, um, and have
providers, uh, supporting it as such.
And they certainly did not like the
way Doc Chronic and the Utah Department
of Commerce, um, rammed through this
new AI Pol, uh, policy rammed through.
I think from their perspective, they
felt like they were not brought up to
speed on how the doc, chronic pilot for,
uh, prescription refills came to be.
They are not pleased about that.
And as you see in their letter to
the right here, it is their strong
recommendation that the program
be suspended, uh, pending further
discussions with the State Medical Board.
I get that.
If you're the state medical Board,
this is gonna be your reaction.
All right.
You are not gonna be happy about this.
I think there are two potential reactions
to the state medical board's reaction.
One, val valid, uh,
concerns that they have.
They're protected trying to protect
the safety of patients in their
communities, and this is an unproven
technology that puts that at risk.
On the other side of the
equation, there is the.
They are just protecting their turf.
And as doc penned in a blog
this week, the status quo is the
biggest risk here of all doc's.
Blog post I thought was actually
a really well done piece.
It wasn't directly critiquing the
state of Utah by any means, but
conceptually, I think it's a critique
of the response and why we should have
more tools like this suggesting that
this is a human capital problem and
that actually these tools are very safe.
And in programs like in states
like Utah, they're not actually
doing AI prescribing yet.
Like we talk about this as AI
prescribing, but underneath it in fine
print, they are actually have humans
reviewing all of this until they can
prove and demonstrate that it works.
And it's like, that seems pretty
reasonable to me here, Martin, I in miss
so many ways, I, I, I think that if you
are stepping back from the politics of how
this decision were made, what Doc Chronic
has indicated is happening here and we
haven't, I, I don't think we've heard from
the Department of Commerce explicitly on
how these decisions were made and whatnot.
We've seen a lot of the
letters going to them.
This is what you would want.
Like, I, I, I would appreciate
more of this from state, federal
governments and taking these behaviors,
and I think this is, this is gonna
be the thing to watch, play out.
It has always been our concern with, um,
AI and care delivery of, of how state
medical boards and other groups react.
And you can see it here, I think doc's
up to some really reasonable stuff.
As I, as I look at all of this.
Martin: It is interesting to think about.
You know, doc really hit the, it's
AI prescribing hard and then it's
like asterisk subtitle, not quite AI
prescribing, and also just for refills
and then the sort of inevitable backlash.
I am gonna bring forward
our next guest, Amanda.
Hey Amanda, welcome to the show.
How are you?
Amanda: I'm doing well.
How are you?
Ah,
Martin: doing great.
Doing great.
We were just talking a little bit about
AI in Utah, but we're excited to be
hearing from you about, um, some sort
of different technological applications.
So you are the CEO and co-founder of Bold.
Can you give us a quick overview
of what Bold's technology
does and then we'll talk Yeah.
About Access and some of the other Yeah,
Amanda: so Bold is an AI, uh,
platform focused on healthy
aging and there's two components.
We have an AI clinic really dedicated
to serving Medicare members as well as
AI powered, um, lifestyle programming.
So that's exercise, education, behavior
change tools and support, and some
community services to actually help
someone between those clinic visits
actually adhere and sort of take control
and build those healthy habits that
add up to changing how someone's aging.
Martin: One of the things
I found, oh, sorry.
Sorry.
You go, you
Kevin: go Martin.
No, you
Martin: go.
I was gonna say, one of the
things I found interesting was
the focus on false prevention.
So my mom was a false prevention
coordinator for a while, and it is a
very challenging behavior change project.
Yeah.
Right.
Behavior change is one of those things
that is the silver bullet in healthcare.
If you can get someone to change
the behavior, you can do a lot.
I'm curious how, what your sort of focus
is when it comes to, or approaches when
it comes to sort of changing behaviors.
Amanda: Yeah.
So, um, you're, you're right that we
started with a focus on falls and for us,
our, our big mission has always been close
the gap between health span and lifespan.
So where there's been a lot of
longevity focus on adding years, we
were focused on how do you make most
of those years as healthy as possible.
And falls are often that moment where
you see a split between how healthy
someone is and how, how a, a steeper
decline once they've had a fall.
I think falls are so ubiquitous that
everybody actually has somewhat of a
latent awareness and fear of falling,
um, or fear of falling is quite common
and can actually feed into fall risk.
And so our initial proposition, and
as we've expanded the other types
of things like musculoskeletal pain
management or chronic chronic condition
support, weight management, all goes
back to what are some of those big
barriers or things that start to become
really top of mind as you're aging.
And I think fundamentally
behavior change requires someone
to want to make the change.
You can't sort of like force a change.
And so by finding ways to speak and
connect to, um, a topic like falls,
but not make it, uh, we're gonna
bubble wrap you and try and keep you
from falling by sort of controlling
you and instead saying, Hey, you
actually have a lot of agency.
If we can help you with tools, build
strength, balance, mobility, then you
can keep doing the stuff you want.
You can go out, run errands, go go
to the gym garden without feeling
un unsteady or, or off balance.
And I think that sort of.
Approach to tapping into a problem
in aging that's maybe not fun to talk
about or maybe has been talked about
in a, um, more tense or, or sort of
like, uh, uh, confrontational way
applies to many other topics in aging.
And so it's really about building
for that Medicare member who I
think, um, you know, before Bold,
not many digital health companies
said we're gonna start with Medicare.
It's often we'll build for a different
population and try and copy and paste,
and I don't think that works as well.
So really knowing our Medicare members
and being able to build and support
them and, and grow and learn from
them, I think has helped us be the most
successful at unlocking those longer
term engagement and behavior change ones.
Kevin: Amanda, I'm curious.
When I, when I first started hearing
about Bold, going back a few years, I
had in my mind, okay, fitness benefit.
And when I think fitness benefit,
Medicare, I think Silver Sneakers,
and I'm like, okay, like kind
of alternative you to that.
And then now I hear about it and I'm
like, okay, kind of more virtual MSK
type model and entering into that space.
Can you help me with like, what's
the right conceptual model there
at a very high level and how,
how, help me think about that.
Amanda: Yeah.
I'd almost say it's really actually around
that bigger umbrella of lifestyle change.
Yeah.
What are the changes that happen and
what are the, the actions that need to
happen between your clinical touch points?
We started with exercise
and movement is medicine.
Movement is medicine encompasses both
fitness benefit and more intensive,
you know, programmatic, clinical,
uh, musculoskeletal interventions.
But our thesis was movement is medicine is
a great, it's like the number one thing.
If you could, um, ask any primary
care physician exercise should
be started part of someone's care
plan and it's the least adhered to
part of most people's care plans.
And instead there's a focus on
med adherence or, or you know,
nutrition is also very important.
But the feedback loop of, I used
to be active, I'm less active.
If we can restore activity,
it's not just falls.
It's not just fitness benefit,
loyalty to a, an MA plan, it's
actually a transformation.
'cause exercise positively impacts
every organ system and there's very
little downside to increasing activity.
So I, uh, Kevin, it's a great question,
but I would say it fits within, Hey, how
do you actually drive lifestyle changes
and, and deliver lifestyle programming?
With an eye towards aging.
It's not sort of a near term shift,
it's not around optimizing for
some long-term ROI, our ROI and our
sort of transformation can happen
in a matter of months, right?
Single digit number of months.
And that's really different and it's
pretty cool from a prevention lens.
Um, as far as you know, where the
appetite has been in the market for
that has historically been within
MA and I think that's why you, the
SilverSneakers comparison is, is
worthwhile because it's been, um, there
have been dollars in benefits to attract,
uh, members to sign up for MA plans.
However, I think where we compliment the
a silver sneakers type solution is our
real sort of area we shine is getting
non exercises to convert to exercising.
So it's not go to a gym, take 45 minutes,
Zumba, it might be do 10 minutes seated
of pain management for your, you know,
your knee and over time that individual's
now doing 30 minutes three times a
week from 10 minutes twice a week.
And so that's how you think about
longitudinally sort of adding up and
why that's worked for MA plans is it's
been not the same users that have always
been gym goers before they signed up and
then after they've joined, it's tapping
into how do we actually bend the cost
curve for the harder to engage members
historically by giving them something
that feels great for them to engage in.
Martin: I am curious, so you've
been working with Medicare
Advantage folks for a while.
Access gets announced as
a, as a concept from CMMI.
There's a lot of
excitement in the industry.
Yeah.
Scanning through the list you like, I
think a lot of, some of the other big
SK digital health players chose not to
participate, they said financial concerns.
How are you seeing the opportunity?
Like talk us through what
you're seeing there and how
Bold is approaching this model.
Amanda: Yeah, I can't speak to sort
of what other company's decision
processes have been for us.
It makes a ton of sense and it,
it really naturally fits with what
we've already been proving out.
So, um, digital First Tech led, right?
It's not around synchronous touchpoints
or having, you know, PTs in the loop.
It should be a compliment.
And we've always wanted to be a
compliment where if you have bold,
maybe you see less PT utilization,
or you can manage, you know, reducing
wait times for those PT visits.
Um.
So that idea of can you predominantly use
software, AI powered software to drive
clinical outcomes has been something that
MA has historically been more willing
to, to sort of figure out and pay for and
invest in primary secondary prevention.
Um, what's great about Access is
we've seen for the last few years,
we've seen a ton of demand from
original Medicare members that
have wanted to sign up for Bold.
And there just weren't codes, right?
There wasn't something that allowed
you to, um, more preventatively
and without having, um, lots of
synchronous touchpoints with individuals
invest in, in sort of lifestyle
changes or more digital engagement.
And so I'd say there's been hundreds
of thousands of like expressed
interest and we've just said, sorry,
unless you're on one of our partner
plans, we aren't able to support you.
And so last year actually we, we
launched the, the virtual clinic
with an eye towards it's time
to build for this population.
Now that was a little bit ahead
of access then being announced
at the end of last year.
And we were thrilled because I think,
um, you know, kudos to CMS right now
for saying lifestyle and prevention and
things like exercise and nutrition are
those levers where if you can really
scale them at a population level.
We can all see a cost reduction.
And I think that's just a, an
exciting opportunity for us.
But one we've been primed for because
we've been through engaging Medicare
members and proving those outcomes time
and time again, where it's longitudinally
showing, you know, fewer inpatient,
outpatient doctor's visits, self-reported
improvements, um, and I think that
puts us in a great position to say
access is just creating a new way for
us to get, um, reimbursed and expand
our business to, to more individuals
for doing what we've been doing.
Kevin: Amanda, it's a fascinating data
point on, um, Medicare folks reaching
out to you and, and building the
virtual clinic to, to support them.
One of the questions we hear often is
about this concept of cost of acquisition
and how we're gonna drive awareness
with folks of the access model, the
cost that folks are gonna incur as
part of that cost of acquisition.
But it almost sounds like you've got,
you've already kind of cracked that nut
in a really interesting way, and it's now
just an opportunity to meet that demand.
I, I'd be curious, how are you getting
in front of these patient populations
today in terms of traditional Medicare?
How do you view that changing under
access, and how do you think about that
concept of CAC within those two settings?
Amanda: Yes.
Okay.
So a lot, a lot in that.
I think historically, um, you
know, we, we do partnerships with
the health plans and the ACOs that
we've worked with to do direct
outreach, right, to eligible members.
That's really efficient.
You get one degree away where
it's like, I love this program,
I really want my friend to do it.
Oh, she's not on the same plan as me.
And so we actually get quite a bit
of word of mouth or friend of friend
referrals where it's like, how do
you get as ubiquitous as possible?
And yes, we wanna keep expanding our
partnerships on the B2B side, but
fundamentally, 50% of folks effectively
are just on original Medicare.
And so we were starting to see, um,
more and more, you know, inquiries
in addition, when we do other
acquisition channels through, you
know, Facebook or YouTube or organic.
'cause we do, uh, we do have a
newsletter that we've been, um, sending
out, um, for a number of years now.
Those individuals have also said,
Hey, how do I check my eligibility?
And when they go through, we kind of are
able to say, okay, we're now understanding
what the profile is of who's.
Expressed interest heard about
us, but we're not able to serve.
And, um, I think that we're really excited
with access launching in a, a couple of
months that we'll be able to reach back
out and say, Hey, we're available and
now, now there's a way for you to engage.
Of course, it's um, you know,
I think this initial iteration
will be a more narrow subset.
It's, you know, particularly
focused on chronic pain.
I think the direction that this sets
up is more and more broadly, how do
you, um, how do you support, you know,
more frontline prevention of exercise?
Maybe could we engage people before
the pain is chronic or with other
types of diagnoses or risk factors?
Um, but, uh, you know, I
would say so we have a lot of.
Built up interest.
But I think continuing to, to be able to
say, Hey, there's now more people that
do those eligibility checks are going to
get that instant moment of, oh great, now
I can just go straight in to click away.
What I also think is great about access
is it doesn't necessitate that you have
that provider referral, but we've done
a lot of work with provider groups and
some MSSP ACOs where I expect that that
will also be an awesome channel for us.
And, um, there's always
clinicians that are, are really
advocating for exercise already.
And as they find out about Bold, they
wonder, how do I refer people in?
And it's tough when you say, well, a
subset of your patients can use Bold, but
you're gonna have, like, it's unrealistic.
They're not gonna sort of
filter through the funnel.
And so being able to take original
Medicare members is gonna be huge,
um, to unlock the power of some
of those partnerships as well.
Martin: We only have a couple more
minutes before we have to let you go.
I'd be curious to hear the sort of bold
philosophy on devices like I, I know for
some of the other tracks it makes a lot
of sense to have someone have a blood
pressure cuff or a wearable of some sort.
What is the interaction
mechanism for, for bold?
Like how are people interacting
with it and how are you sort of like
measuring some of those met, measuring
some of those data points for access?
Amanda: Yeah, so to the first
part on devices, we've been
device agnostic and I think.
More with an eye towards, like,
we're in an ai, AI first world now.
Um, there's so much data and there's so
much data that doesn't require necessarily
a wearable or like an additional device,
or folks already have those devices and
so you don't necessarily need to, uh,
be shipping or supplying, um, versus
helping them make sense of all the data
that those devices are giving them.
And that's inclusive of your mobile phone.
So there's a ton of activity, gate data,
um, you know, heart, heart rate, sleep
data existing on phones that you kind
of have with you all, all of the time.
Our primary interaction has
been somebody signs up for bold.
We create a hyper-personalized program
for them based on their clinical needs
and risk factors as well as their
just personal preferential, right?
You have a thousand people.
There's maybe a thousand different
reasons why they wanna take that
action to change how they're aging.
But at the core, you know, it kind
of boils down to what are some of
the, the ways you can start building
a mind body connection around how
to use exercise to manage pain.
How do you rethink about exercise fitting
in your life or movement, um, supporting
you in hitting some of these goals.
And so those, the AI sort of, and
the foundation models our team has
built as well as using off the shelf
models, is taking all that data,
whatever someone's comfortable sharing.
Um, and some of it might be, you
know, unlocking existing device data.
Some of it might just be
desire to log new things.
Um, and putting that together to
have a program that isn't just
one time personalized but is
continuously updated and personalized.
And I think that's also where we
see longer term behavior change on
lock is you need to be dynamically
checking in with someone because
things can change really quickly.
Um, and so the question for us is really
how do we make the data make sense
for someone and make it actionable
for an individual more than, how
do we just amass more data that is
interesting for our team to look at?
We always start with, well, what is
someone comfortable with and how is
it going to immediately improve their
recommendation, improve their program
experience, or improve their sort of
accomplishment or sense of progress
is how do we show people after just
a few sessions like they're reporting
less pain or they're doing more
sophisticated movement patterns that
show that they're seeing, they're
seeing their own progress and growth.
Where I think oftentimes as we
age, it's more around preservation
and not around progress.
And I think that for us, has been
something that our members tell us
is really special about Bold, is they
feel really celebrated that they're
unlocking new things as they're engaging.
Martin: This has been
hugely helpful, Allison.
Excuse me, Amanda.
Um, thanks so much for your time today.
If folks are interested in learning
more about Bold or if they're an
MSSP, the a CO and they want to get
in touch on how they can get bold in
the hands of their seniors, what's
the best way for them to do that?
Amanda: Um, you can send a, a message
through LinkedIn to me or through, um,
our website, which is age bold.com,
and we would love to, to talk
more around how we can support.
Martin: Really appreciate your time today.
Thanks.
Fun time
Kevin: today.
Amanda: Thanks.
Good to see you both.
Take care.
You
Kevin: too.
Martin: So, we had talked last week
about access and you know, we, we
spoke with the Withings folks and we
sort of conceptualized one archetype
of a, a potentially successful access
participant as a, uh, a device company.
I thought it was interesting to
hear from a device agnostic company
that has like a really, I think,
strong theory of the case as well.
Kevin: For sure.
I mean, I, I think we are, we are
seeing the angles that I imagine
CMI is hearing as well and, and.
It, it, it, it bridges the gap, right?
When we hear the reports that,
you know, hey, questions about how
are these financials gonna work?
I think those questions are out
there for a lot of companies.
I think we're also hearing the data
points of other companies being like,
I think I can find my way through this.
Um, between Bold, we heard it from
Neil too a bit earlier in terms
of their AI centric approach.
I, I wouldn't be surprised to see
organizations figuring this out over time.
So it's cool to hear.
Martin: You mentioned
Silver Sneakers before.
I wanted you to know I was doing some
shoe leather reporting yesterday at
dinner and was talking to someone
who was saying, what does that mean?
That means like I was out on the
street, I was talking to folks.
I was, you know, like,
Kevin: ah, yes.
Okay.
Martin: Fair.
Yes.
And I was, I, I was interviewing some,
some real folks on the ground, and the
gentleman I was speaking with was saying
that he had chose his United Healthcare
Medigap plan for the specific reason that
it included a lifetime fitness membership.
Kevin: I mean, we talked about this with
Minnesotans and Blue Cross and Minnesota,
and they were picketing the fact that
they lost, I mean, it's, it is a big deal.
I getting that fitness benefit, right?
It is.
It's a nice perk.
Right?
Martin: It's a real nice perk.
Okay.
Kevin: So
Martin: before, oh yeah, yeah, yeah.
You got,
Kevin: I was gonna, I was gonna
transition us to the other, the other
me too hot conversation starter, which
in the community Martin, I, I flagged.
There have been a couple conversations
recently about Epic, uh, Epic's role
in AI adoption and kind of this growing
question of what happens to all the
innovative AI tools when Epic comes in
and, and replaces your product with a
copy of theirs and what happens if health
systems choose that product, which I
think is a really fascinating question.
There was a quote in, um, one of
the articles this week talking about
how Health System Executive said
something along the lines of, if I
had to choose between B Epic product
and a minus startup product, I'm
probably choosing the Epic product.
Which then you layer on
top of that, like, yeah.
And if the B Epic product costs you a
hundred grand versus the startup product
costs you a million dollars, I don't
know, Martin, which one of those two
things do you think you would choose?
Do you want the option
to choose between them?
How do you process that?
Martin: Yeah, this is tough.
I mean, I think that the, well, first
of all, no, it's not a tough decision.
I would go with the cheaper option, like
if the marginal decrease in quality.
Is, you know, like, not nine, I don't
value that at $900,000, then yeah,
I'm gonna go with the cheaper option.
I think that, you know, we talk to a lot
of folks who are doing really incredibly
innovative work at the sort of cutting
edge of, of healthcare innovation.
Mm-hmm.
And the work has hard, and
it is a slog to get any deal.
And these deals take a long time.
And so it inherently feels really unfair
if someone comes in, like someone like
Epic who has this, this position and
says, okay, well we can, we can do
it for better, faster, and cheaper.
And so I I, I get where the
complaints come from, but this is,
yeah, this is how the market works.
I, I, I, I, I sort of am not that sym
sympathetic, I guess, to that criticism.
Like, if Epic can get, make a
comparable product at a lower
cost, that should probably win.
And if your argument is, well, we
should pay the startups a million doll.
We should, you know, they should,
they should go out of their way to
pay the startups a million dollars
versus a hundred thousand dollars.
Who, who's ultimately financing that?
I mean, it's like insurance companies
and us, like that is increasing
costs in the healthcare system.
Something that.
No one wants.
Kevin: Yeah, I I could, I I was trying to
make the theory in my head of, okay, so
Epic comes in and undercuts and because
of monopolistic behavior, it can, ch can
chase those startups outta the market.
Which, which might be a bad thing.
Like you should have optionality of
higher cost or lower cost, but, and so
I, I suppose if Epic always wins, you're,
you're worried that eventually the,
the financial backing for startups to
compete against Epic is gonna go away.
And so you're no lot like you're gonna,
you're gonna quash competition in the
market over the long term, which I
don't know, I guess I could see in,
in theory is an issue, but I think the
practical experience in the AI market
indicates the opposite is occurring there.
Right?
Which is companies are getting to
significant revenue rates faster than
ever in the AI market and healthcare.
And so I, if, if the notion is
that Epic is so dominant that
there is no opportunity for these
businesses, I, I I think they are
disproving that theory as we speak.
Are they not?
Martin: Yeah.
One of the, the threads of the
conversation that we had in the
community was around what do we
want from our antitrust regulators?
Do we want them to help engineer.
The lowest, like how, how should the
government think about antitrust?
And, and the dominant way that we approach
this in the US is consumer welfare.
If, if it is cheaper for something
that we generally allow, uh,
acquisitions and mergers to happen.
It's not the only theory
that you could have.
You could have a market or a, a sort
of jurisprudence that, that prioritize
competition and innovation and some
of these other things, but mm-hmm.
There are trade-offs to that.
And the trade-offs largely
revolve around price.
And I think the question we should ask
is like, well if, if, you know, the,
the example was a hundred thousand
dollars for Epic solution or a million
for, um, the, the startup solution.
And I think what we have to wonder
is like why is, why are they so
out of proportion for each other?
How come Epic is able to
do it for so much cheaper?
Or was the startup hoping for,
you know, sort of $900,000 of, of,
uh, incremental margin on that?
And they're upset that
they can't get that.
Kevin: Yeah, and maybe the argument on
cost is a bit of a straw man, right?
Maybe the differential isn't that
much, but either way, like I, I fail
to see how it's a bad thing that
epic upping its game and coming to
product with a market because there's
credible alternatives on the market.
Today is a bad thing.
Like, I, I,
I don't know.
I'm not complaining about that, I suppose.
Martin: Yeah,
Kevin: I see it.
If you're, if you're an investor
in those startups, I, I get the
concern and risk in that, right?
Like, there's going to be less
upside as a result in those models.
But if I'm just thinking about
healthcare in this country, great.
Martin: Yeah.
And you, the, the, the
conversation was a good one.
And for folks who are in the
community, I recommend checking it out.
Brendan Keeler had a nice riff on
interoperability and how that is sort
of helps preserve a competitive market.
Um, we, we covered really
like a lot of ground there.
I think though, that, you
know, philosophically you just
kind of have to, to game out.
Like what do we want and what trade-offs
are we willing to accept when it comes
to, um, having there be a market?
And in general, people tend
to prefer cheaper stuff.
I I the, these are conversations
that I think we have in lots
of sort of different ways.
There's like a, a certain sort of
approach to, or a certain type of
thinking that would say like, it is sad
that there are not mom and Pop five and
dime stores everywhere and that they've
been displaced by Target in a Walmart.
Um, and economies of scale mean that
Target and Walmart can offer things for
cheaper, but people like cheaper stuff.
Kevin: YYY, yes.
It's almost like there should be a theory
for evaluating the trade-offs between
cost quality and access to healthcare that
we should talk about from time to time.
Martin, we should come up with that
Martin: one.
We, uh, this would be the
perfect opportunity to debut
the, the Iron Triangle.
Kevin: Just start
Martin: Yes.
Kevin: Ringing that thing away.
Yeah.
I, uh,
Martin: yeah.
Kevin: Do we wanna talk wiser
for a couple minutes before?
Um,
Martin: let's talk wiser
for a couple minutes.
I think this fits nicely with
what I was talking about a little
bit in today's op-ed and the
Grand Roundup, uh, prior auth.
Yes.
Incredibly unloved flavor
of utilization management.
I don't think there's anyone
out there defending prior auth.
Except for maybe Jeremy fries
from, uh, uh hum at the moment.
Patrick: I'm trying to think if there's
maybe somebody out there who's defending
prior auths, but yes, they are.
Kevin: Yes.
They're not the popular topic.
So, CMI rolled out wiser program, right?
Wiser was bringing prior auths in a
very, uh, small set of Medicare to
market across a handful of states to
pilot whether or not it could be used.
AI could be used to do prior
au, a more effective way to
manage a handful of particularly
concerning areas of medical spend.
Um, the state of Washington, for
whatever reason, it seems to be causing
some issues in particular, or we saw
Seattle Times article that we covered
a couple weeks back highlighting how
there were perceived delays in care
as a result of the wiser rollout.
Um, a senator this week from Washington
State picked up on the same set of
criticisms, suggesting that it is
increasing wait times in Washington state.
AI is denying care, which I think
folks in the wiser model would tell you
isn't actually how that model works.
But we'll leave that aside for a second.
Um, and of course, the, uh, criticism
that, um, is a political death now.
It is putting profits over patients.
Martin, um, something I have
learned, you never, never want to
hear out of a politician's mouth
about what you are working on.
I, you know, the thing that
makes me curious, so the, the
con criticism is, is isolated to
Washington state at the moment, um,
at least that I've seen publicly.
I'm gonna be fascinated to see how this
is rolling out in other states too.
I would assume that if there are issues,
there is someone in the political
spectrum who is looking into this data
in their state right now, figuring out
is there a story here I can tell about
how, how, uh, the federal government is
denying care for my, uh, constituents
and Medicare and how that is unacceptable
from a political perspective.
Martin: Yeah.
And CMMI is starting to react to
these criticisms, so they've delayed
implementation on two of the CPT codes.
I always feel the need of the
discourse around this stuff
drives me absolutely nuts.
Prior auth is not new
to original Medicare.
We do it today for non-emergency
medical transport, and it's a very
good thing because we are spending
a lot of money on potentially
wasteful, fraudulent, or abusive use
of non-emergency medical transport.
And the CPT code that they talk
about when it comes to wiser the
most often is skin substitutes.
And, you know, I go back to Q4 2025 and
it was like, uh, or maybe 2024 and it was
like, uh, $3 billion for original Medicare
and skin substitutes versus Medicare
Advantage, and it was $300 million.
And you're like, it's not just
prior auth doing that, but come on.
Come on.
Alright, I need to read a quick disclaimer
before we welcome on our next guest.
This live interview and the recording
are for informational purposes only.
By listening live or accessing the
recording, you acknowledge that Bailey
and Company makes no warranty guarantee
or representation as to the accuracy or
sufficiency of the information featured.
The views, information, or opinions
expressed during this conversation
series are solely those of individuals
involved and do not necessarily
reflect those of Bailey and Company.
This interview should not be used as
a substitute for competent investment
advice from a license professional in
your state and should not be construed
as an offer to make or consider
any investment or course of action.
Kevin, we should probably say that
at the top of every of our episodes,
Kevin: we, we certainly are not
providing competent investment advice
as we, as we banter about topics during
Martin: the day.
Yes.
So let me bring Rebecca and Patrick on.
Welcome to the show.
Patrick: Hey guys.
Thanks for having us.
Kevin: For sure.
Martin: Appreciate.
Patrick: Sorry to throw that
wet blanket on top of it at
the, uh, introduction there.
Martin: I think it's, uh, I think it's
probably something we should, we should
definitely say when we're opining
on, on Ance and United Health Group.
Um, so Medis happened last
week, big broker conference.
You also, uh, recently published a
report on the, the brokerage market.
Could you talk to us a little bit
about p pe activity, basically in,
in the brokerage, uh, the brokerage
space, and what were the lessons
learned from these sort of last wave of
activity into, to where we are today?
Patrick: Sure.
Would you like me to cover that?
Rebecca?
Kevin: Rebecca?
I can't.
Patrick: Can you guys,
can you guys hear me?
Kevin: Yes, I can hear you.
I can't hear Rebecca.
Patrick: Got it.
Okay.
Well, I'll start off here.
Um, so I would say that, uh, activity,
just, just kind of keeping this pretty
high level, 'cause there's, uh, a lot to
the story here, but, um, activity in the
space really started off, I'd say like
in the, you know, the 2017 18 period.
Um, so had private equity firms investing
in Medicare Advantage brokerages.
Medicare Advantage was continuing to,
uh, to increase as far as enrollments go.
I think they were probably getting
to like 20 million members,
um, eclipsing that amount.
And then something happened in 2018,
2019, there was a change in accounting
practices, uh, called 6 0 6 accounting.
And effectively it sounds kind of,
um, you know, esoteric, uh, or,
you know, just, uh, uh, you know,
kind of very niche of the space.
But it had a really dramatic impact on
how these Medicare Advantage brokers
accounted for the revenue and ebitda.
And effectively what it said was that
once you place a policy, you need to
recognize today when the policy is
placed, uh, the expected future cash
commissions, you're going to collect
over the lifetime value of that policy.
So that concept, lifetime value
became very, very important in
the Medicare advantage space.
So you could see how with certain
assumptions you assume a life of a
policy is three years, four years,
five years can have pretty dramatic
effects on the revenue and ebitda you're
recognizing when a policy is placed.
So in 2019, this, uh, accounting
policy was implemented.
Medicare Advantage was
growing very rapidly.
So you had the MCOs looking to acquire a
lot of members aggressively, and they were
using these Medicare Advantage brokers
as a conduit to access those members.
About half or maybe more of all
members get their Medicare Advantage
policy through a broker as opposed
to going direct through a an MCL.
So with this accounting change,
um, and the superficial increase
in in revenue and ebitda.
Both private investors, private equity
firms, and public markets for a period
of time from 2019 to 2021, were valuing
these businesses off of their gap EBITDA
as opposed to their actual cash ebitda.
So you had situations like GoHealth that
was negative cash flow, negative like
cash ebitda, but had a positive EBITDA
of, I don't know, a hundred million, 150
million, 200 million, something like that.
So for a couple years, uh, these
companies were valued off of that type
of revenue in ebitda and therefore, uh,
private equity firms were aggressively
investing in these businesses.
And these companies built their model,
not predicated on long-term cash
flows, but predicated on what the
market was rewarding companies for,
which was gap, ebitda gap revenue.
Hmm.
Patrick: So you had a flurry
of deals getting done in
the 2019 through 21 period.
You had GoHealth go public
at a pretty wild valuation.
I think it topped out around nine or 10
billion market cap after it went from.
Uh, it went from, uh, Norwest Equity
Partners to Center Bridge in 2019 and
then Center Bridge, uh, explored both
the sale and IPO and ended up IPOing
that business at the 10 billion valuation
after they'd acquired it for 1.5
billion.
You had, uh, CD and R sell
transact to Willis Group.
They bought that for
a few hundred million.
They sold it to Willis Group,
the big broker for about 1.5
billion, and then a host of other
private equity backed deals and public
deals, uh, during that time period.
So that really characterized the 19
through 2021 time period, and you had
a big shift in the marketplace starting
in 21, 2022, which we can talk about
as well, but most of the private equity
and certain all the public activity was
happening during that 2018 or 2021 period.
I'll take a pause there.
Rebecca, would you add anything to that?
Kevin: I'm still not
Patrick: Rebecca.
Kevin: We'll, uh, okay, we'll keep
going and, and give you opportunities
to chime in again, Rebecca.
Um, so one of the other things we were
talking about coming, Medicares the, um,
the big annual gathering of, of brokers
in the market, uh, I think was, it was
last week, if I'm correct, timing wise.
That's correct.
Trying to keep my days straight here.
So, um, stepping back, it's, it's
obviously been a tumultuous few years
in the Medicare Advantage market.
As I was reading the white paper, there
was this interesting sentiment, uh, that
I, I saw through it, of it, it could
actually be a good time for brokers to
lean into that disruption, um, to become
more of an indispensable partner for
Medicare Advantage organizations as they
think about attracting, retaining members.
Um, and that dynamic,
creating a new opportunity for
brokerages to win in the market.
Uh, I, I'd be curious, um, assuming I
got that sentiment right, feel free to
amend it if I missed anything in there.
I,
Patrick: I think that's right.
And Rebecca, can you hear us now?
Can you, you,
Rebecca: I think I'm, yeah, I
think I should be working now.
Good.
Kevin: Awesome.
Yep.
Patrick: You want me to take this one?
I'll hand it off to, so I'm
getting a little echo here.
Yeah, we're getting
Kevin: your echo too.
Patrick: So, as I kinda laid out,
like the PE activity, the public
activity back in 19 to 21 really
predicated on volume-based enrollments.
So volume today, not focused
on long-term member retention.
I'll hand it up to Rebecca to kind
of cover the current status of MA
brokers that is very different from
what was happening in 19 through
21 during all that activity.
But Rebecca, why don't you go ahead.
Rebecca: Yeah.
So, um, uh, sorry about
the audio issues there.
Um, you know, in terms of what we
heard out at Medicares, we spoke
with, um, small brokerages, very large
players, you know, tech platforms, lead
generators, the, the whole ecosystem.
It was a really tough, a EP is
sort of the, the headline, right?
I mean, uh, you know, we heard groups
that came in 20, 30% plus, uh, south
of, of where they expected revenue, uh,
to hit because of some of the actions
that carriers took, um, over this a EP.
Um, so, you know, it was, it was
an interesting conference in the
sense that, you know, everyone
there obviously believes in the long
term, uh, you know, tailwinds and,
and value of insurance distribution
and, and Medicare, US included.
Uh, but, uh, but there have been some,
some challenges to kind of break down
what, what happened, what folks have seen.
Um, you know, for the last
two years you've had carriers.
Pulling, uh, plans from specific
markets, specific plans from specific
markets, and in some cases pulling
out of, of a market entirely.
What happens, uh, when one
carrier pulls out is that those
members go to other plans.
The plans don't know what
they're inheriting, they don't
know what the risk scores are.
Uh, they sometimes don't want that risk.
They get nervous.
Um, they may pull plans or they may
decommission, or they just take on members
that they, they may or may not be able
to manage, uh, and price effectively.
So, uh, lots of, of churn in the market.
Um, you saw Humana, uh, and United, uh,
and a number of other carriers, um, cut
commissions on a large number of plans.
Humana terminated, um, roughly a
third of their call center contracts.
Um, there were regions where just
sort of through a domino effect
of carriers, uh, uh, making plans
non-commissionable, there was effectively
no, no commission available for plans
in a, you know, given, uh, small area.
So it was kind of a roulette depending
on where, where you were concentrated,
um, as to, to what the, uh, effect was.
Now, ironically, and this is what we
sort of push on in the report, uh, all of
this churn means that brokers are more.
More valuable to carriers than ever if
they're doing their job in the right way.
Right?
Because, uh, carriers need, uh,
high quality, long-term membership.
They need, uh, meaning they need folks in
the right plans for their medical needs.
Uh, they need, uh, a an upfront view
as soon as possible of the member,
what their, um, what their health needs
are, what their, what their profile
is, what their, uh, risk looks like.
And they need to engage the member and
get the member into the right, you know,
programs and, and care management, um,
as soon as possible and not take nine
months as it often does for them to sort
of work through the carrier systems.
Um, so, so we are, we can, we can talk
about this more in a second, but we are
seeing, seeing, uh, brokers both, um,
kind of like, kind of try to right the
ship as there's a, there's a lot of,
uh, of choppy waters out there right
now, but also kind of leaning into,
uh, member engagement and quality and
compliance as, as differentiators, uh, as
carriers become more and more selective
in, uh, in their broker relationships.
Martin: I'd be curious to double click
on what do those capabilities look
like that are gonna distinguish the
brokers of the future, the successful
brokers of the future from I, I guess
what you would call the older model.
Rebecca: You wanna jump in
on that, Patrick, at all?
Patrick: Yeah, so I'd say there's
a, there's a pretty, um, pretty
dramatic juxtaposition between like
the brokers of six or seven years ago.
They're really predicated on,
on really volume above all else.
I mean, they were rewarded for volume.
They were not rewarded for retention.
They were not rewarded for
acquiring the specific members in
specific geographies that carriers
were, you know, were looking for.
So I think the best brokers today, the
ones that we have seen successfully
navigate what's been a, a very tough,
like, you know, three or four years
now, you had the accounting change,
then the reverberations from that.
You had the post COVID, uh, dramatic ramp
up in utilization at the healthcare plans.
And then with that, uh, them pulling
back as Rebecca just covered.
So, and then, you know,
marketing dollars have decreased.
Plans have been decommissioned.
It's been a very challenging space,
um, over the last like couple of years.
But there are successful
brokers out there.
There are ones that have
navigated this very choppy
water, uh, done like pretty well.
And what we're seeing from those are,
um, heavy investment in technology.
Oftentimes, uh, the top brokers
out there are generating most,
if not all of their own leads.
So they generate their own leads.
They use technology to do that.
They track the overall cost of
the leads and how effective of
policies that those leads produce.
Not just like did they submit.
Do they place?
Do they make it through
rapid dis-enrollment?
And then what's their
longer term retention?
So looking at the overall quality of
a policy over a long period of time,
and the leads that produce that.
They focus on long-term member retentions.
They're constantly
engaging with the members.
They submit a policy.
There's certain times in the policy
life cycle where they're reaching out
to that member and they're practically
engaging with them to keep that
member from churning on the plan.
Or even if they do churn, they retain
that member as part of their brokerage
and they place them in a different
plan, more solutions to the health plan.
So member engagement, benefit
activation, that's become really
important, not just in becoming a more
valuable intermediary for the MCO,
the carrier and the member, but also
too, it allows the broker to further
monetize that member and to generate,
you know, cash revenue off cycle.
So now just getting the commission
dollars when a policy like places,
but also like monetizing that member
in several different ways that
happens to make them stickier for
both the member and for the carrier.
We've also seen this push
for product diversification.
So oftentimes these brokers would
only be focused on Medicare Advantage.
We're now seeing care, uh, brokers
focus more on MedSup, other types of
ancillary solutions, um, that this
particular member base is looking
for basic wealth solutions, life
insurance, final expense, which is
basically a form of life insurance.
Um, other types of ancillary products
pushing outside of Medicare in the
senior audience into a CA as well.
So be more of like a holistic individual
health insurance broker, uh, in other
ways to monetize that member throughout
their entire life cycle and throughout
the year as well too, so that they don't
have to be such a seasonal business of
hiring a bunch of agents for a EP and
then, you know, churning them, firing
them, riffing them as like the a EP
period ends, volume, like goes down.
Um, Rebecca, what would you add to that?
Rebecca: Yeah, I just echo
the point on diversification.
We heard that over and over again.
Uh, uh, lot, lots of buzz
around final expense.
That seems like a, a pretty
frothy, um, theme right now.
Um, CS NP and dsnp, um, uh, another,
you know, sort of product, uh, variation
that, that folks are leaning into
and one that you can, uh, enroll in,
uh, on more of a year-round basis.
Um, so, uh, definitely heard,
heard that theme repeated
Kevin: that year round.
Patrick: One.
One other thing I, sorry
to cut you off there.
One other thing I'd add is just
this overall view on technology.
So AI is of course, like it's a
buzz in every part of healthcare,
I'm sure other industries too.
Um, I think we've seen the early stage
deployment of artificial intelligence,
um, particularly around like kind of basic
things like qualifying someone, are they
eligible for Medicare Advantage or not.
There's a couple key questions that
even in like an AI chat, chat bot
can answer before they hand them
off to an agent for enrollment.
So I think we've seen AI
successfully deployed there.
AI is successfully deployed in, uh, making
the agents more productive to a degree.
I think we're pretty early innings of
this and I think that, you know, the
best brokers out there are gonna be the
ones that, um, really reduce the cost
of, of a lead, you know, per policy.
And then also to use AI for
better member retention.
Because the only way to really
win out on this game is like.
You need to place people
cheaper or policies cheaper.
You need to make the
agents more productive.
The human agent is probably not gonna
go away anytime soon, but you need to
make him or her much more productive.
And then, um, focusing on long-term
member retention is really the only way
to get a steady stream of cash flow.
So those are all kind of key parts of
the future of the ma brokerage tale.
But, sorry, I cut you off there.
Kevin: No, that's all good.
I, um, maybe last question for you on my
side, I'd be curious, one of the things
we hear about the brokerage market, it's,
it's perceived as one of these middlemen
who, who at times doesn't always play the,
the, the highest value role that it could
in the market and perhaps gets a negative
perception as a re as as a result of that.
A lot of what I hear you all describing
is kind of shifting that mindset to
we are the trusted partner for health
plans upfront for helping enroll members
in, um, get them signed up, get those
first interactions out of the way.
I, I'd be curious, how
often is it discussed?
Was it much of a topic out there of that
role of the broker, how brokers could be
viewed in a more positive light and kind
of this future instantiation of ma with
more lifetime value of members and less
churn and all that kind of fun stuff?
Rebecca: Yeah, I mean it's,
um, it's a key question, right?
And I think that the industry.
Um, having gone through the, uh, little
rollercoaster that it has over the past,
um, uh, you know, 5, 6, 7 years, um,
has really come to a place of actually
aligning, uh, the economic incentives,
uh, uh, in the industry with that
sort of quality and value add, right?
It, it, the, the, the time period that
Patrick was describing at the top, uh,
where you had, you know, sort of, uh,
6 0 6 gap, gap revenue and, and EBITDA
being the, the sort of, the thing
that broke straight it off of, um, uh,
you know, tended to incentivize, just
acquire as many members as as possible,
uh, as quickly as possible, right?
And, and, and that's shifted now.
Um, so, so I think you have that,
you also have AI kind of pushing
the industry toward, uh, thinking
critically about value add.
Um, you know, uh, it, CMS has been pretty,
uh, pretty open about its interest in AI
enabling insurance distribution, right?
There's an RFI that came out in
February around that, uh, various
public comments have been made.
Um, I don't think anyone sees,
uh, a near term future in which.
CMS has its own team of AI agents selling
Medicare Advantage, uh, autonomously.
Um, hopefully not.
Um, but, but there is discussion
around, well, what, you know, if if
brokers don't add value, then, then
the carrier really just wants to cut
out that expense and is gonna in-house
as much as possible and AI enable it.
And yes, carriers are slow with
technology, but like, you know, there
are vendors and, and so it, it, it just
kind of puts a finer point on, uh, the
value, uh, uh, of the broker as a, a
very targeted, uh, uh, marketing engine.
Um, a very efficient marketing engine.
Uh, and the real first human contact
that an enrollment has, right?
Where they're on the phone for 90
minutes plus in the first enrollment
call, uh, go to your medicine cabinet,
read me the labels on the, on the jars,
um, type of engagement with the senior.
So, um, if you're doing that work
right, um, that's invaluable for a plan.
Alli: Yeah.
Rebecca: Uh, and you know, I think
that the industry's push now is to,
uh, to double down on that, to sort of
stay focused on that quality, um, as
there's a continued noise in the market
and then start to measure outcomes.
We call this out in the report,
but that's really something
that, that we haven't gotten to.
Um, brokers are doing this
value add work, no one's figured
out how to sort of quantify.
Okay.
And so what to the plans
in a systematic way.
And I think that's the next
step that we need to get to.
Patrick: Yeah.
Patrick, you'd be surprised.
Kevin: Sorry, sorry,
Patrick: sorry.
Good.
Is that on my end or?
I think we got that now.
Kevin: We're good.
Patrick: Uh, yeah, I think, I
think the days of like the, uh, the
boiler room approach, um, I think
those are, those are over now.
Part of that's like a legacy of, you
know, some of the larger players,
I guess we won't name names here,
uh, really focused on volume.
You saw like the Joe Namath,
like TV ads, things like that.
Um, high volume, you know, agents that
turn like very quickly was overall
just like a, a very negative cycle.
Um, you taught to some of these like top
tier brokers out there, the groups that
Rebecca and I, you know, spent a lot
of time with, sat down with the medics.
Um, you may be surprised at
just how advanced they are
from a technology perspective.
Process perspective.
Yeah.
There's still like a direct consumer
angle like to this, but it is,
um, it is a pretty important like
sale like to the, to the senior
or to someone who's on, you know,
disability and qualified for Medicare.
It's an hour, 90 minute conversation.
It's a very important decision
that this person is making as well.
You really need like a
qualified human to do that.
And I think we are continuing to move
away from like the old perception of
boiler room, kind of smile and dial
chop shop, like type like brokers into
much more like sophisticated technology
driven, highly scaled, you know,
engaged both the member and the carrier
level and adding value to both sides.
I think you'll see like the top
brokers like continue to evolve
like with that model there.
We will get away from the days of having
this like boiler room type perception for
the, for the brokerage industry because
the best players out there like just
do not operate in that manner anymore.
Um, so we think we're finally kind of
breaking free from that perception.
Martin: We have kept you
a little bit past time.
We really appreciate the overview,
the update from Medicares.
Where can people who wanna learn
more about this space find the
report that you all put together?
Rebecca: Uh, we can share a
link to our website, um, and
you can download it there.
We'll just take your email in exchange.
Martin: Great.
Uh, well, we'll link to
that in the show notes.
Thank you both so much
for your time today.
Really appreciate it.
Um, and excited to have you back soon.
Kevin: Good seeing you both.
Thanks for the time.
Thank
Rebecca: you
Kevin: Martin.
It, uh, it sounds like Joe Namath is
gonna need to find a new revenue stream
here in the, uh, not too distant future.
Martin: Um, one of the quirks of this
job is I often am at the gym in the
sort of mid-afternoon after we do
the show, and I see a lot of, when
I'm running on the treadmill, a lot
of Medicare Advantage commercials.
Kevin: They might change coming up,
Martin: they might
Kevin: be changing.
I, I mean, it, it is a entirely
logical premise to me that we are
undervaluing the role of a broker
conceptually when done right, and that
as plans that we hear Humana all the
time talking about lifetime value of
members as plans are rethinking this.
It does seem like there is an
opportunity to get in front of that.
Um, and perhaps organizations have
been getting in front of that and
that is where you really wanna be.
But I, it seems like this is,
this is where the market's headed.
So cool to hear that update.
Martin: Cool to hear that update.
We are almost at the top of the hour.
It has been a pleasure chatting
with you and all of our guests.
Kevin, we will see you next week
on Monday or yeah, Monday May 4th.
Kevin: It's already May.
Crazy
Martin: already may.
Kevin: See you next week Martin.
Martin: Alright.
Bye-bye.
Bye.