About This Episode
In this episode of the Prairie Health and Wellness Podcast, Dr. Davis welcomes Dean Jargo, a long-time friend and seasoned business leader with vast experience in corporate finance and investments. Dean shares his journey from working at prominent firms like Arthur Anderson, KPMG, and Koch Industries to his current position as President & CEO of Fair Market Health. The episode focuses on how Fair Market Health simplifies healthcare by offering an online marketplace that provides transparent pricing for medical services, enabling individuals and self-insured employers to save significantly on healthcare costs. Dean explains the inefficiencies of traditional insurance models and how Fair Market Health addresses these by bundling services and negotiating upfront cash prices, often saving consumers 25-50%. The conversation covers the rising costs in healthcare, challenges posed by insurance companies, and solutions for becoming an empowered healthcare consumer.
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Episode Transcript
Auto-generated from the episode audio — may contain minor transcription errors.
I was — what I'd say is an uninformed consumer, which again, many of us are, I — I did believe that if you had a recognizable logo on your insurance card, a Blue Cross, a United, Anthem, uh, Aetna, uh, Cigna, any of those brand names, I thought if you had that, you had good insurance. And I also thought that any one of those insurance cards was — was effectively a discount card, that when I presented that at the doctor's office, I thought I was getting the best pricing. Well, I spent the last 3 to 4 years studying the industry, and I've learned that is absolutely not true, in fact the opposite is true — when you put your insurance card down at the doctor's office, typically what you're getting is the worst pricing that you can get, and the dirty little secret in the — in the health care space is, you actually can typically get a better price if you just say, can I have your cash price.
Welcome to the Prairie Health and Wellness Podcast, or the PHW podcast, I am really, really excited about today's guest, um, his name is Dean Jergo, I've known Dean for a very long time, um, very close personal friend of our family, personal friend of mine, very, uh, helpful in advising me in the various business pursuits that I've had, and so when we talked to Dean about doing this podcast, my mind just really started racing about all the things that we could cover. And um, I'm sure we're going to run out of time, but I just want to introduce Dean Jergo — Dean, you started at Arthur Andersen, which some people may not know, it's a prominent accounting and consulting firm, you were a senior manager there, you then, uh, went on to work briefly at one of the Big Four accounting firms, KPMG, um, which specializes in mergers and acquisitions, before you landed at Koch Industries, which we in Wichita, Kansas are very familiar with, Koch.
Um, Koch is a global, uh, conglomerate involved in everything from energy to manufacturing, and at Koch you rose to the director of corporate financing, overseeing corporate investments and financial strategies, and then eventually a CFO within Koch, at Invista, which is their textiles division, then you went back to Koch Industries as a director, focusing on investment opportunities and acquisition. You then started working directly with the Koch family, um, with Elizabeth Koch and her company, as, um, CFO of 1888, uh, which is a multi-billion dollar investment portfolio with really interesting investments, um, I think you guys invested in Rick Doblin's work on psychedelics, and then um, you were telling me about some research, uh, looking into consciousness and brain research, so it's really fascinating things, which brings you to where you are today, currently as CEO and president at Fair Market Health, so welcome to the podcast.
Thanks for having me, you wore me out with that. Well, I — you and I, I think we probably could have gone into more detail, I remember — I remember sitting down with you, I think we were at a barbecue joint, and I said, I knew you'd worked at Koch, and I knew you were higher up in the organization, but I asked you one day, I was like, what exactly do you do, and you were like, well, I'm responsible for about $4 billion of investment, and that blew my mind, I mean, that is crazy, um, but the more I got to know you, and understand your background, it made a lot of sense.
So today we're talking about, um, I think we wanted to call this "Resources for the Empowered Healthcare Consumer," so tell our listeners and viewers a little bit about Fair Market Health, and more importantly, I'm really interested in hearing, given your extensive experience in mergers and acquisitions, and your background — the way you described it is, you kiss a lot of frogs to find the prince, mhm, and I think that's such a great way to say that you're really good at looking at opportunities out there and finding out which ones are going to succeed. So tell me about Fair Market Health, and what made you excited about starting this company?
Well, the easiest way to describe Fair Market Health is really to describe it as an Amazon for health care services, cause most people are obviously familiar with Amazon, I've used Amazon, um, we're similar to Amazon in that we're an online marketplace, and basically what we do is we connect buyers and sellers of health care services, and on the supply side, that really means doctors, surgery centers, um, uh, mental health professionals, physical therapists, anybody who provides a health care service, that's the supply side of our marketplace. And then on the buy side of our marketplace, we serve two main customers, one is any individual who's looking for a health care service, so uh, regardless of what you use for your insurance, uh, if you need a health care service, an MRI, a surgery, a mental health visit, you can come visit fairmarkethealth.com and you can buy that service.
And what's unique about what we do, ultimately, is we disclose the price of all the services up front, because anybody who's ever interacted with the health care service or system knows that you don't get to find out the price up front, you find out after the fact, and unfortunately after the fact, you have no ability to impact that price, and so we disclose the price up front so you know exactly what you're going to pay. So as individual consumers, you can use Fair Market Health, but our other customer group is self-insured employers, so any employer who sponsors an employee health plan can use Fair Market Health as a way to, what I call, direct purchase health care services, because most businesses hire an insurance company and use the insurance so-called network to acquire health care services for their employees, and that can be an okay way to get services, but again, when you buy services that way, you don't know any of the prices until after the fact.
And what we bring to employers is the ability to have transparent pricing for their employees, and the reality is, when you buy directly from a health care provider instead of through an insurance company, you save significantly, and typically the numbers we see are 25 to 50% savings by buying directly through Fair Market Health with a health care provider, versus going through an insurance network. So I think it's interesting, when — in your experience with all your other employment — have you ever seen an industry where you would buy something and not know what the price would be? Does that happen in any other industries? No.
So — of course not — yeah, where — so I'm sure you've learned a lot about the health care industry, and probably a lot of it surprises you, now being a physician, this — I've sort of taken a lot of things for granted that happened in the health insurance industry, but I mean, one thing that really surprises me is that people ask me all the time, well, how much is this going to cost, and I have to look at them and go, I don't know, right, and they'll usually say, well, I have really good insurance, right, so tell me, what is the definition of really good insurance, and where are most consumers — I don't want to say misled, but perhaps unaware — about what insurance is actually doing for them?
Right, so — and I had to learn all of this myself, cause I didn't know this either, I was — what I'd say is an uninformed consumer, which again, many of us are, mm, I did believe that if you had a recognizable logo on your insurance card, a Blue Cross, a United, Anthem, uh, Aetna, uh, Cigna, any of those brand names, I thought if you had that, you had good insurance. And I also thought that any one of those insurance cards was effectively a discount card, that when I presented that at the doctor's office, I thought I was getting the best pricing.
Well, I spent the last 3 to 4 years studying the industry, and I've learned that is absolutely not true, in fact the opposite is true — when you put your insurance card down at the doctor's office, typically what you're getting is the worst pricing that you can get, and the dirty little secret in the health care space is, you actually can typically get a better price if you just say, can I have your cash price, not the insurance negotiated rate, but the cash price, and when you do that, you'll actually save typically 25 to 50%. So good insurance is a — is a lie, it's a fallacy, and we've all been led to believe that good insurance is getting you a good deal on your health care pricing.
So for that good insurance card that gives you access to more expensive pricing, hopefully, you know, at least that good insurance card doesn't cost you anything, right, I mean, premiums now are really low for insurance, right — right, exactly — well, and that's part of why people want to use their insurance, it's a very natural thing, because they've paid so much in premiums, mentally you're like, well, I gave them all of this money, I need to use my insurance, because I gave them all this premium dollars, they are supposed to return to me value by better pricing, but the reality is that's just not how it works.
Yeah, I think you taught me the term, uh, sunk cost fallacy, yeah, where — where you see this in a lot of industries, where you feel like, we've invested so much in this, we've got to continue doing it, yeah, and um, I think that's exactly what people, in fact — I've heard people say, well, if I meet my deductible, then it's covered at — so a lot of people don't understand, so when you're paying your premium, or your employer, usually a patient has some part of that premium that they pay nowadays, yeah, um, that plan then decides what your, uh, deductible is, so talk a little bit about deductibles, co-insurance, co-pay, all of those things, I think just add even more confusion to how people use their insurance.
For sure, in fact, I don't remember the statistics, but there's statistics out that talk about how many employees or plan members understand how their insurance actually works, the math that goes behind deductibles, co-pays, co-insurance, it's all very confusing, and people are in fact confused, because when you ask them to explain back to you, how does your deductible work, and do you understand what co-insurance is, most people — and I'm talking like 95% of people — cannot accurately describe how their health plan and their insurance actually works, and if you don't understand how it works, of course you're not going to be able to be a very smart consumer.
And I'm personally convinced that insurance companies like it that way, they designed the system to be confusing, so people are not able to adequately and appropriately navigate the insurance system. Yeah, we like to say the complexity is a feature, not a bug. 100%. So tell me if I have this correct, this is how I describe it to patients, so if I've had somebody who needs to get, um, a colonoscopy, let's say they've had some bleeding and we want to make sure that they don't have a cancer growing — when you go get a colonoscopy, what are you exactly paying for, because that's another thing I think a lot of patients don't understand, right, so what are the things that are involved with just getting a colonoscopy, something that most people over age 50 are familiar with, right?
So so when you get a colonoscopy, there's typically four things that you're really buying, uh, the first thing you're buying is the physician's time, you know, the person who's actually going to perform the procedure, you're buying the time of the anesthesiologist, you're buying time in the facility, so all the equipment and supplies, uh, where the procedure will be performed, and then the last thing you're paying for is the lab, because typically there's a specimen or a sample that needs to be analyzed. You're buying all four of those things, and typically all four of those things are separate legal entities — the doctor is a separate legal entity, the facility, the anesthesiologist, the lab, they're all four separate, which is why when you use your insurance you typically get what they call explanations of benefits and invoices from all four of those different places.
And that's part of the confusion, right, as a patient, you get these bills rolling in, you're like, wait a minute, didn't I already pay this, and well, you paid the physician for the physician's time, but you didn't pay for the anesthesiologist, or you paid the anesthesiologist but you haven't yet paid for the facility or the lab, and so it's very, very confusing to people. So when the colonoscopy is finished, talk about what happens at the back office of each of these legal entities, these separate entities. I've heard stories, and these are not uncommon, of people getting bills related to, especially, surgical procedures, that are months after the procedure, I mean, you've almost forgot that you even had the procedure.
It happens, actually, a lot in the maternity space, after having a baby, I've heard people getting bills, from a baby that was born a year ago, celebrating their first birthday, and the parents are still getting new bills showing up, so it's a very slow process, and again, partly by design, by the insurance company, because you've paid your premiums into the insurance company, what do they want to do, they want to hold on to your money as long as they can, and that's one of the frustrations that doctors talk about all the time, of, quote unquote, billing insurance, right, they performed a service, and they're trying to get paid by the insurance company, the insurance company has your money, they have your premiums, they should be paying for the services that were delivered on your behalf, but they want to hang on to the money.
So there's this fight that takes place between physicians and insurance companies, so I think a lot of people don't understand that these — this change, where the insurance company used to be interested in keeping prices under control for their, uh, beneficiaries, um, and it's the reason we have networks, as networks were, you know, you'd get certain doctors in who would agree to give you a better price, and then the insurance company would funnel more patients to those doctors — a lot of people don't understand that with the Affordable Care Act, there was a fundamental change in how insurance companies behaved.
Yeah, so before, an insurance company would make money based on how much they could claw back some of that payment that they sent to physicians, so Obamacare said, well, we want to decrease how much insurance companies are making, they're making too much, and so they said, you can only make your profit — your profit is a percentage of the premiums that you collect, so they fixed that. Yep, but then said, and the only way that you can raise the price of premiums is if the cost of health care goes up, and my — now, looking back at this, I have to wonder, how did they not understand that insurance companies are often the ones that negotiate those prices, and get to decide what a service like a colonoscopy is paid for.
So how — how has that — if that was the goal of that government intervention, was to decrease the profit of the insurance companies, talk to me about how much insurance companies are suffering now under Obamacare. Yeah, so uh, this is a perfect example of — I'll give politicians the credit and say they were maybe trying to do a good thing, but as is typical with government interventions, they don't think about the second or third order effects of the policies that they implement, and this is a perfect example of that, because if they thought they were going to be, you know, reigning in insurance company profits, boy did they get that one wrong, because now, through the Obamacare, uh, legislation, they have basically created an incentive, as you said, for insurance companies to raise prices.
Because if you fix somebody's profit margin as a percentage, which is what Obamacare did through the provision called the Minimum Loss Ratio, or MLR, when you fix a company's profit percentage, you are driving an incentive for them to make the pie bigger, and in the case of insurance, the pie is the premiums that they charge and the costs that they pay out as claims, and if you look at the last 10-plus years since Obamacare was passed, that is exactly what has happened. And if you look specifically at United Healthcare — kind of the poster child of these insurance companies, because most of them are public, you can see the results — United Healthcare, which I think is the fifth largest company in the US by market cap, or thereabouts, their profit over the last 10 or 15 years since Obamacare — their profit and their stock price has been a hockey stick, up into the right, I mean, it's basically pointing straight up right now, and we, of course, as consumers, are all feeling the impact of that.
And it's not, by the way, it's not just United Healthcare, they're the largest by far, but you know, you can go look at any of the other insurance companies, and they're experiencing the same thing, they get to control, because they're so-called negotiating on our behalf, uh, but when a health care provider or a large health system asks for a 10 or 15% increase in price, the insurance company, pre-Obamacare, used to say, whoa, whoa, whoa, no, no, now they say, are you sure you don't want any more than that, and that's the world we're living in today. And to be fair, I think Obamacare, there are some things that I really like about the Affordable Care Act, um, you know, the pre-existing condition, I think, was a really important change that happened, so I — you know, and it might be — I mean, again, I don't want to blame politicians for shortsightedness, I don't think there was malicious intent, but I was surprised when Obamacare was being floated out there, the insurance companies seemed to be very quick to get on board with it, there wasn't much pushback, and it felt a little bit like, um, what's the rabbit who says, oh, please don't throw me in the briar patch, is that Peter?
I don't know, I don't know, it's — it's basically, I think it's a fable, maybe one of Aesop's fables, where the rabbit wanted to be in the briar patch, right, and then, all the while, saying please don't do that to me — the insurance companies have massively gained from the Affordable Care Act, which was an attempt to really clamp down on that industry. So so again, going back to our — so we've got our patient who's had their colonoscopy, they're getting their four bills, um, their deductible, which can be $5,000 to $10,000, let's say it's $7,000, how much is that colonoscopy going to cost, let's say that they had to have a polyp removed, something that's very common during colonoscopies, how much of that is going to go towards deductible?
Almost all of it, typically, a colonoscopy, especially if it's diagnostic, and there's a polyp or two or more involved, you're going to pay — I don't know the exact number — but you'll, through insurance, you'll typically pay somewhere around $5,500 or $6,500, and again, if you have a deductible that is anywhere near that number, it basically means you are paying the entire cost of that service, because you haven't yet met your deductible. Well, let's use an example where someone has met their deductible, let's say that their family deductible is set at 7,000, their kid broke their arm earlier that year, so dad's really excited, because his colonoscopy that he needs to get — he's already met the deductible, so he won't get a bill from his colonoscopy, I'm assuming?
Well, again, this is where health care gets very complex, very quick, uh, if he's going in for what's called a screening colonoscopy, under the Affordable Care Act that's a preventative care service that's supposed to be 100% covered by whatever his insurance carrier is, the problem is, if one polyp is found, that flips the coding of the service, from a preventative care service, it's now a diagnostic colonoscopy, and so he's on the hook for that amount. Now, in your example, he met his deductible already, but he also — this is where we get back into more complication — he has what's called an out-of-pocket maximum, that he still has to hit, and so, under most insurance plans, he'll have what's called a 20% typically co-insurance, that he has to pay, so he's responsible for 20% of the bill, even though he's met his deductible, up to the amount of his max out of pocket.
And so, back to the point we made earlier, this is why people get so confused in health care, and again, why we both agree on this point, that health care is made complex, as a feature for insurance, not as a bug, they're not trying to simplify things, they want people to be confused, and to throw up their hands and not be able to understand any of the services they're being charged for, the cost of those services, or when the bills start pouring in, how to even ask an intelligent question about any of it. Yeah, so he's met his deductible, let's say he goes in and it is a diagnostic, um, he's now on the hook for 20%, but you were saying earlier that because he used his card with the name brand insurance company on there, he's getting a different price sheet, right, and so his 20% of a procedure, uh, and sometimes there's also co-pays with that, I understand, where you have a $500 co-pay for a surgery, and then you have your co-insurance, that you pay 20% up to some stop loss for your policy, I guess, right.
Um, so how often is that person, who's even met their deductible, how often are they going to be paying much more than what they could have paid if they were given just a cash price for the procedure? Well, almost 100% of the time, I won't say 100 quite, but almost every time, in fact, I'll — back to the colonoscopy example, if you buy a colonoscopy just directly from, you know, a surgery center, a surgeon who offers that service, and offer to pay a cash price, you'll typically pay something around, call it, $2,000 or $2,200, that's the all-inclusive price, and that's whether you have a preventative-only service, or whether you have what's called a diagnostic, meaning they found a polyp and needed to remove it.
Um, and again, if you buy that service through insurance, you're typically going to pay somewhere around $4,500, $5,500, $6,500, sometimes the number can even be more, and so that's a 50% savings if you just buy it direct, and buy it for cash, as opposed to plopping down your insurance card and using your insurance. So if the consumer wanted to go to a surgery center, they could just walk in the front door and say, I want to buy a colonoscopy — yes, but there are four separate entities involved in that procedure, so how do they then have to — they have to then find a surgeon who uses that surgery center, which not all surgeons use all surgery centers — correct — they would then have to go find an anesthesiologist who gives them that price, and then — well, you don't often know whether you need pathology — so right — can you go to a pathologist and say, I want to buy a polyp analysis — right — you know, because they're going to ask, probably, well, how many polyps, how big is the polyp, exactly, you know, so there's a lot of complexity involved in there.
So we've got our patient who's now paid their deductible, met, they've now had to pay a co-pay, a co-insurance comes back — tell me what does the experience look like when they go through Fair Market Health, what does Fair Market Health do to solve the problem for the consumer? Right, so all the complexity that you were just describing, we basically eliminate all of it, right, so instead of — because a patient really could do what you just described, they really could go talk to the physician's office, get their price, talk to the facility, get that price, it's possible to do all of that, but nobody wants to do any of that, right, that takes time and effort and probably a little bit of knowledge.
Well, we do all that for them, we go talk to the physician, the facility, the anesthesiologist, the lab, we get all of that pricing, and basically what we do at Fair Market Health is, we ask the physician, the anesthesiologist, the facility, and the lab for their cash price, we don't care about the insurance price, because we know that's over-inflated, we say, just, if we pay you in cash, what price will you give — give us that — that's almost always the best price available. We put all that together in what we call a bundle, right, so it's a bundled service, and we list that bundled price on an online marketplace, on the website, and so when you come to Fair Market Health, and you type in colonoscopy, up pops all the doctors and all the facilities that offer that service, you click on any one of them, the one nearest to you, or with the doctor that you want to pick, you put that in your shopping cart, you click checkout, and that is the price that you pay.
It's all been pre-negotiated, it's all known up front, again, very different than insurance, where every bill you get through insurance is a surprise bill, right, right, you might know you're getting a bill, but you have no idea what the amount is, you're gambling with your finances when you use your insurance card, your "good insurance." And so we eliminate all that — you're writing a blank check almost. You really are, because you — how much power do you have to say, I'm not going to pay that, you've already signed on the line saying that you'll be responsible for whatever payment comes, and you don't know what that payment is going to be.
I remember I had a patient who was a cash paying patient, uh, this was probably, I don't know, eight or nine years ago, and they, um, got a bill from the pathologist, it was a $6,000 bill, right, this is the person who's taking the polyp, looking at it under a microscope, and I thought, this has got to be a mistake, there's no way that someone looking at — but this is going to cost 6,000, so we called the pathologist, well, they had to use a special stain, which they said, this is how much we get paid when we have to use these special techniques, and how are you to know, I mean, at the time of colonoscopy you have no idea what stain your pathologist is going to use.
Exactly, um, yeah, it's — I think it's been frustrating, because on the physician side, people come back after this experience, and they hate it. Yeah, so we're creating customers who don't want to come and use the system ever again, right, in one way, which is very different again from most businesses, you'd think you'd want to make the shopping experience pleasant for your client. Well, and that's one of the things that is also happening because of the high cost of care, is patients are avoiding, or entirely avoiding, or at best deferring care, because they're worried about the cost, and they, I'd say appropriately, assume that it's going to be more money than they want to spend.
Again, the unfortunate part is, if they use their insurance, that's probably a true statement, right, but if the service was available at a transparent cash price, there's probably a lot of services that people would say, yes, I need that, I will happily pay that, right, I've got assurance this is a price I can pay and afford, but people putting off care, and avoiding care entirely, that just makes problems worse, so things get ultimately more expensive because of this. So we've set up this terrible system where people are not getting the health care they need because of the lack of transparency in price.
Yeah, yeah, I would say that statement is very true, the longer a health problem goes on, it tends to be — I mean, geometric progression in complexity, I mean, you go from — if someone has a small growth on their lip, uh, it could be something as simple as an in-office biopsy that completely gets all the margins free, you wait a year, right, and that thing could have spread to who knows where, and now you're talking extensive surgical resection, plastic surgery to rebuild things, chemotherapy, radiation, I mean, you name it, going down the line, and then the care goes through the roof, and so yeah, I think that's again a frustration I have of our current health care system, me being a physician, I see it all the time.
Well, and that's the thing too, is you know, I had to learn all of this, I knew patients didn't like the insurance system, because if you look at scores like, uh, Net Promoter Score, right, that says, would you recommend this service or this business to a friend or family member, that is the question that gets asked in Net Promoter Score, and it's a 10-point scale, and if you answer nine or 10, you're called a promoter, and if you answer anything seven or below, you're a detractor, and there's math that gets calculated, promoters versus detractors — insurance companies have some of the lowest Net Promoter Scores out there, they are on par with companies like cable companies, uh, cellular companies, I mean, you think of the worst of the worst companies, in terms of people's views of them, insurance companies are right there with them.
And so I knew patients hated insurance, I knew employers hated insurance, because, you know, the cost goes up every year, what I didn't appreciate fully, until I came into the space, is how much doctors hate insurance. Yeah, doctors hate insurance, and understandably so, again, right, they are trying to get paid for the services that they perform for patients, and have to fight with insurance companies to really just get paid for the service that they've delivered, and what a frustrating situation to be in. Yeah, well, and that speaks very much to personally what happened in my own practice, I recognized this 10 years ago, that I didn't want to be working for an insurance company, because it felt like I wasn't really working for the patient, because that's not who pays me, right, I always had, you know, someone said, can we do this thing, I go, I don't know, I have to check with your insurance first, right.
And so I moved into the Direct Primary Care space, where you know, prices are transparent, we tell people up front what the costs are, I don't negotiate with insurance companies, and I will say, having done this now — we celebrated 10 years recently — nice — I would never dream of going back, right, I mean, and I look at some of my colleagues who are still in that system, and I think, I don't know how you're doing it, right. Well, and the statistic that's out right now is physician burnout is hovering around 40 or 50%, which — think of that, yeah, that's almost half of doctors, are — don't want to be doctors, are — yeah, they're just burned out, and the reason they're burned out is because of all the obligations that are placed on them by insurance companies, prior auth that you mentioned, doctors don't get paid for doing prior auth, and guess who the patient gets mad at, the doctor, the doctor has nothing to do — right — the doctor examined you, in their professional judgment made their expert recommendation, but they got to go play Mother May I with the insurance company, by the way, an entity that didn't physically examine you or have anything to do with you.
Typically, uh, you're talking, as a doctor who did examine the patient, you're talking to a specialist who didn't have the expertise that you have, not only did they not examine the patient, but they don't even specialize in the area that's being discussed, and they're denying care, by the way, without legal liability — the doctor who examined you has legal liability, the insurance company who frequently denies the care has no legal liability in this situation, and the doctor who has to spend hours on the phone and with faxes doing this, running around to approve the treatment that they have recommended, that they don't get paid for that time — of course doctors are frustrated and burned out.
So I don't know if you know the story, but there were, um, there were two doctors who were at a, um, a CME, continuing medical education conference, somewhere in Florida, I think — yeah — so there, one of these large hotels, where you've just got endless hallways of conference rooms, they're trying to find their conference room, they walk by an insurance conference that's happening at the same time, you know, they've gone for a break, they're getting coffee, they're like, yeah, let's pop in here and see what this is about, they sit in the back of this health insurance conference, they are horrified by what they're hearing.
So they're discussing this concept of the walkaway rate, and so the insurance company is talking about things like prior auth, um, automatic denials, so some of the software systems automatically deny without even reviewing whether the claim is legitimate, and they're saying that what they're aiming for is the physician walkaway rate, and what these two doctors learned was that if they can frustrate you enough, a certain percentage of the doctors are just going to go, I'm not going to do the prior auth, and the insurance company can say, well, they didn't — you know, they can go to the patient, go, they didn't do the prior auth, or they didn't do it correctly, the doctor's fault, or, yeah, or they didn't use the right code, or it wasn't medically necessary, that's another term that drives me crazy, and I've sat on the phone with these.
Yeah, and you're absolutely right, they're often not a specialist in the area, I remember one particular prior auth, I needed to get someone an advanced cardiac screening, which was a CT coronary angiogram, they're much safer than doing a heart cath, um, and they're frequently denied by insurance companies, and they cost around $2,000 or $3,000 to get, so I told the patient, all right, I'll talk to the insurance company, I think we can make a pretty good case for this, because you've got this dyslipidemia, and you've got the family history, you're hypertensive, I mean, you're at high risk, so I get on the call, um, it's a scheduled call, and of course I can't see the person's face, I don't know who they are, other than their name, and I begin laying out my case for them.
Well, this guy stops me halfway, and he goes, whoa, whoa, whoa, whoa, he goes, I don't know what you're talking about, I'm a pediatrician, right, and what they tell you is, that you're going — the insurance company says you're going to have a peer review, right, which in the insurance company's language means it's an MD or a DO, right, but not a peer, right, so I'm talking to a pediatrician who knows nothing about advanced cardiovascular screening, they're experts at pediatrics, they're experts in taking care of kiddos who don't have heart attacks generally, right. So um, I quickly realized, I'm like, what, why am I having this phone call with you, and you know, he's trying to kind of explain, like, what the process is, and I quickly realize, you're just here to say no — yep — and I think he's just following a script, to be honest.
For sure, so that was a frustrating experience, and you're right, now when a patient says to me, hey, can you sign this prior auth for me, I mean, even in the Direct Primary Care space we still come in contact with this, yeah, my first gut reaction is to go absolutely not, and what the insurance company will also be quick to say is, oh, we're not telling you you can't have that service, right, we're telling you we're not paying for it, but if your doctor tells you you need that service, by all means, pay out of pocket and get that service. Yeah, yeah, that's exactly right, but to find out that — I mean, again, feature not a bug — they were literally in this conference talking about that they wanted to achieve a certain walkaway rate, and the way they're going to achieve that is just by making the hurdles higher, that physicians have to get on the phone and jump through.
And here's the other little dirty secret that I don't think enough people are talking about, is United Healthcare is now one of the largest employers of physicians, so the insurance company is now buying up physician practices, so now they're on both sides of the equation, right, you pay them your premium, and then, as part of your network, they can send you to a physician that they own. How is that not anti-competitive? It's a great question, part of the reason this happens is because the antitrust rules have dollar thresholds attached to them, and so below certain dollar thresholds, companies are kind of free to go acquire whoever they want to acquire, so as long as you're doing a bunch of little transactions, which is exactly what United Healthcare is doing, they're just buying up — they're not buying, there's no billion-dollar physician practice for sale, they're all little practices, five to six sit together, you just buy them, you know, one after the other.
And why are these doctors selling out to United Healthcare? Because they're frustrated, they're fed up, they're tired of trying to be business owners, trying to get paid from the insurance company, so just imagine the system that's been set up, the insurance companies know, if I frustrate those doctors enough, I can just come in and swoop in and buy them, and in fact that's one of the things that happened out of the Change Healthcare debacle, right, they got hacked, it shut down all payments to doctors, because again, Change Healthcare is owned by United Healthcare, which many people don't know — United Healthcare, when Change got hacked, was unable to pay all these doctors.
Well, a lot of doctor's offices are kind of living hand to mouth, right, they need money coming in to pay all their workers, etc., well, United Healthcare was like, sorry, we got hacked, we can't process any payments, so these doctors were put into a position where United Healthcare basically came in and acquired them, because of United Health's screwup. We talk about evil vertical integration, holy smokes, and again, we have a Federal Trade Commission that is supposed to make sure that we've got fair and competitive marketplaces, and for the most part they've been sitting on their hands while all of this has gone on.
Change Healthcare, when it was approved, or when it was acquired by United Health, it did get reviewed by the FTC, but it was ultimately approved, because it's a small dollar amount, there's a bunch of these smaller transactions — well, they claimed it wouldn't harm competition, and you know, they made whatever arguments they made, it got approved, the acquisition happened, and then it was that acquisition that allowed them, through this hack, to ultimately go acquire — there's 990,000 doctors, 10% of the doctors in the US actually work as employees for United Healthcare, and some of them probably don't know that that's actually who they're working for. That may be true, I don't know that, but that may be true.
Wow, wow, so, one thing that we talked about is that, um, there is an effort to make prices transparent, in fact I remember that Trump got this passed, that health insurance, or I guess it was hospitals and maybe surgery centers were supposed to have transparent pricing, in an effort to make a more informed consumer, so where has that gone? Yeah, so there's really — and this part has been bipartisan, for the most part — uh, there was one piece of legislation that's called the No Surprises Act, that basically said, hey, if you end up at a hospital and you know, you get a service from a really out-of-network provider, because what happens in a hospital is, you're in an emergent or semi-emergent situation, you don't have time to be verifying, is everybody here in my network, you know, somebody can walk into your hospital room, as a hospitalist, let's say, they could be — in fact, good chance they are — out of your network, and so then you'd get hit with what was then determined to be a surprise bill.
Well, the No Surprises Act tried to tamp all of that down, that has been very rough to implement, I'll say, um, again, good intent, but the devil is in the details, in terms of how those prices all get worked out, so that was one piece of legislation, overall good, but probably some things that need to be done to further improve it. There was another piece of legislation that said, all hospitals have to clearly disclose the prices of their most frequent services, and I think it was a list of like 500 services, for the most part, many of the biggest hospitals do not comply with that law, partly because the fines are a joke, right, if you're a billion-dollar hospital corporation, and you're getting fined a dollar a day, no big deal, no big deal, you would rather pay the fine than clearly disclose your prices, and so that's what a lot of the largest hospital systems have done, is they've just chosen not to comply with the law.
More and more hospitals are starting to comply, and I think they're, uh, looking at adding some teeth to that law, but again there's a decent way to go on that. The other piece of legislation that was passed was called the Transparency in Coverage law, and that basically required insurance carriers to disclose their negotiated prices, again, it's been slow to be adopted overall, but for the most part, most insurance companies are in fact disclosing most of their prices now, a lot of them play a lot of games to put junk data into their public disclosures, and there's a lot of work that needs to be done to unpack all of that and make it more clear, but we are miles ahead of where we used to be, from a transparency standpoint.
Now I can tell you, with a high degree of confidence, what is the average, uh, insurance rate for a whole host of services, colonoscopies, surgeries of all sorts, now I have an idea of what is the market negotiated price for that service, and again, that's why I'm always confident to say that the cash price is almost always better than the insurance negotiated price, is because I know what the insurance negotiated price is, right, I remember when that change first came down, there was a large hospital that released their prices, uh, in compliance with the law, but they released it in a proprietary file format, right, and they put it on their website, they said, anybody can download this file, but no one could read it, right, and according to the law, they had complied, right, you know, it's not their fault that somebody doesn't have the special software necessary to decode the file.
So it's amazing, the more the government tries to sort of clamp down on something, it feels like it just slips through their fingers, like sand, yeah, and the industry is going to just adapt and get around it, and do end runs, and play — I'll say, show me the rule and I'll show you the way around it. Exactly, yeah, um, okay, so we've talked about the frustration that the patient feels, we've talked about the frustration that the doctor feels, tell me about the frustration that the business owner feels. Yeah, if you talk to most business leaders, owners, CEOs, CFOs, even heads of HR, um, again the theme is frustration, and part of the frustration, I think, is driven by the fact that many people just don't know what to do about the rising cost of health care, they feel very helpless, they have the idea that there's nothing they can do.
Now the reality is, that's not true, there's actually a lot of relatively simple to implement strategies, um, to actually lower the underlying cost of health care, um, but many employers are just — they're in this state of helplessness, and they don't really know how to get out of it, and a lot of it has to do with, in fact, frankly, with the poor advice they've been given, because there's a whole industry of what's called health care consultants, mhm, out there, and I usually break them into a couple of categories, one category, uh, I call brokers, and brokers are people who, for the most part, are paid by the insurance companies, these are insurance agents, right, and they receive most or all of their compensation from the insurance carrier, and what's especially unfortunate about the industry as it currently exists is, much of that payment comes under the table, so the employer doesn't actually see all of the compensation.
The employer thinks that that insurance broker is working for them, right, they show up at the meeting and they behave like they're their advisor, but when most of their compensation is actually being paid by the insurance company, and most of it under the table, not visible to the employer client, incentives get a little questionable. Um, now there's another group of people who work in the health benefit space, and I put them in the category of, you know, true advisors and true consultants, meaning they are truly working in the best interest of their employer clients, and most of those advisers are paid a fixed fee, meaning they don't take any under-the-table payments or commissions from insurance companies, they're — here's, you know, they disclose, here's what I get paid, I'm working only for you, all of the advice you get from me is without bias and uncompromised, right, I'm going to give you the best advice I know how to give, and I'm not going to let any financial interest from any insurance company or any other vendor cloud or confuse my judgment.
Which seems to me a better alignment of incentives, and how many, in all the businesses you've worked with, how many businesses actually know that their insurance agent, who they've, you know, arguably been using for years, doesn't really try to find them the best price? At this point, very few, I think it's — I think it's something that's changing very quickly, because again, back to some of the laws that have been recently passed, one of the laws that got passed was effectively a clarification of what's called the fiduciary duty rule, and this is something that happened in the retirement, in 401K space, over a decade ago, well, that rule has now been very clearly applied to the health benefit space, and one of the rules embedded in that is, that employers are required to have the compensation of their health plan vendors disclosed to them.
So every employer should be reaching out to their broker, advisor, and any other vendors providing services to the health plan, and saying, I need to know all of your compensation, both disclosed and previously undisclosed, I need to know every dollar that you are paid related to my account, many employers don't know that they have that obligation, but many of them are going to find out as soon as a lawsuit gets filed and asks them for that disclosure. In fact, not only are they supposed to have the compensation disclosed to them, they are supposed to make a judgment as to whether it is reasonable or not.
Wow, so, and oftentimes, what happens with these rule changes is it really does take large lawsuits to sort of turn the tide in the industry, yeah, and so are there any lawsuits right now that are ongoing, that are sort of seen as index lawsuits, that maybe then other companies will look at the findings and go, oh, we need to be doing this too? Yeah, so there's three lawsuits that are in play, class action lawsuits that are in play right now, uh, one is against Johnson and Johnson, one is against Wells Fargo, and one is against the Mayo Clinic, all of them basically have this fiduciary rule at the center of it, and basically all of them are health plan members or employees claiming that their employer — Wells Fargo, Mayo, and Johnson and Johnson — did not perform their fiduciary duty.
And all of these lawsuits have something in common, and that they're all picking on the pharmacy claims, they're picking on what the health plan paid for pharmacy benefits, so you know, drugs that the plan members were using, and the heart of all of these lawsuits is basically, hey, we know what you paid, through the insurance company and through what's called the pharmacy benefit manager, we know the price that was paid, but when we compare it to the price that is available when I just walk into the pharmacy and ask for the cash price, it's thousands or tens of thousands of dollars cheaper. The cash price, again, without insurance, just marching in there as a regular old consumer, is orders of magnitude less than the so-called negotiated rate that the insurance company or the pharmacy benefit manager was able to negotiate, and those employees are looking at that, saying, well, hang on a second, that's not operating as a very good fiduciary, looking out for our plan member's best interest, right.
Yeah, I mean, that brings a whole other discussion we can have on the pharmaceutical industry, and the fact that who knows how the prices are set with that, talk a little bit about what a pharmacy benefit manager — that sounds like a wonderful thing for a plan to have, this can be somebody, I assume, who really helps lower the cost of prescription drugs, can you talk a little bit about how that is not what a pharmacy benefit manager does? Yeah, I mean, that's the heart of, again, all of these lawsuits, is the pharmacy benefit managers, and there's three large — they own, I think it's 80% of the pharmacy benefit manager market is three companies, and those three companies are owned by insurance companies.
Okay, okay, so now the insurance companies own — they're owning physicians, yeah, and now they're owning pharmacy benefit managers, which are essentially setting the prices for the drugs at pharmacies. Right, again, I got to wonder, where is the Department of — is it the Department of Justice — that goes after these anti-competitive practices? I think it actually does sit under Department of Justice, I think it's the FTC, Federal Trade Commission, uh, that polices all of this, and all of these pharmacy benefit managers and insurance company executives, they've all been called into Congress, and you know, Congress wags their finger at them and tells them how evil they are, and asks them a bunch of hard questions, but once that's over, they all go back to doing things the exact same way.
Well, the reality is, these insurance companies are writing big checks to those same politicians that are wagging their fingers, which is a whole separate discussion we could have, because again, one of the eye-opening learnings that I've had is, the insurance — and I'll just say health care space, or industry generally — they spend more on lobbying than the defense industry, you know, so you think of the Lockheed Martins and all the big companies that are lobbying our government trying to get the government to spend more on defense spending, they pale in comparison to what the drug manufacturers, you know, the pharma industry, and the American Hospital Association, and the insurance companies, they spend orders of magnitude more than the defense industry does in lobbying.
You know, about tax time every year, I start looking at where our tax dollars are going, and it really drives my blood pressure up, it's probably not a great thing for my health, but I was shocked to find out, you know, not only the debt that we're occurring in the United States is just mind-boggling, that the fact that we're adding what, a trillion dollars every 90 days, I was shocked to find out that we're spending more on the interest rate on our debt than we do on our military, which is an insane spend for a country. Yep, I was even more shocked to find out that chronic care in the United States actually costs three times our military budget, right, um, the number in the US, and these numbers are so big you can't even really wrap your head around it, but in the US today we spend $4.5 trillion a year on health care, I mean let that sink in, per year, right now health care is just shy of 20% of our GDP, one in every $5 that we spend in GDP in the US is health care.
So I'm a big proponent of value return, if I'm going to spend money on something, I want value from it, so America is spending, I would say, by far more than any other country on the planet, and the data bears that out, our health outcomes, shockingly, are barely above where Venezuela sits, right, so we're getting third-world value from this insane spend. Yeah, in fact, to put numbers to it, the US spends 2x per capita than any other developed country, two — so twice as much as anybody — twice as much, and to your point, we have some of the lowest health outcomes out there, maternal health, life expectancy, I mean, all the things that you would look at as measures of how we're doing.
Yeah, it's — and another interesting thing is, you would look at it and assume that, okay, Americans are consuming more health care, we actually — I mean, by a little bit we do, but for the most part, we don't get more images, more surgeries, more X, Y, or Z, it — again, it's back to prices, prices are what drive the 2x spend versus other developed countries, and the $4.5 trillion per year that we spend — you know, I often point out to people, they look at other countries and say, we need better health care, like those countries, and then they'll say, um, we need health insurance, I think people conflate health care with health insurance, for sure, and the reality is, we have very good health care in the United States, for some things.
I mean, I've always said, like, if you're going to have a heart attack, the United States is a great place to have it, I mean, you can be in the cath lab, yeah, a balloon in your artery, opening up, life-saving procedure within 30 minutes, I mean, even in this town we're in, you could easily do that, but health care is expensive. Well, let me ask it this way, is it safe to say that the reason health care is so expensive in the United States is because of health insurance? 100%, and this is a statistic that is mind-blowing too, and this gets quoted a lot by Dave Chase, who's a great follow as well, who spent a lot of time in this space studying it, I think the quote that he has is, 27 cents of every health care dollar is what goes to the health care providers, yeah, so invert that, right, the rest of it is not going to health care providers, so we have this idea that our high health care cost is driven by all this money flowing into health care providers, that is 100% false, you know, it's basically a quarter of every dollar we spend, is what goes to health care providers.
My father sent me a graph that was stunning, and it was — it was basically — showed the number of physicians in the US, I think this goes back to the 1970s up till current, and that growth in physicians — I know exactly which one you're going to describe — that growth in physicians is about 150%, and so that tracks pretty closely with the growth in population in the United States, but the line above it is the growth in the administrators in health care, right, and that is a 3,000% — 3,000% — increase since the 1970s. Yep, so that's the 75% that's going to pay essentially for the complexity. So how do we — I think all of the listeners are going to be really frustrated, because — and you and I have talked about this a lot — how do we fix this, right?
Right, if the complexity is baked in as a feature, the insurance companies are the largest lobby by far, the more administrators you get, the more the health care costs rise, the administrators themselves are actually creating the complexity, I would argue, both on the physician side and on the insurance company side. Agreed, so what are the solutions that the average consumer has, that can help them get a hold of this on a personal basis? Well, I do think, you know, we say frequently, cash is king, yeah, um, I think that's a lot of it, is because we talk a lot about, how do you become a smart consumer in the health care space, well, a lot of it is just knowing that cash really does drive a lot, or can drive a lot, of health care consumption.
Uh, you know, me personally, and for my family, we buy all of our health care using cash, my wife, uh, you know, went through a big cancer journey over the last couple of years, also in the middle of it had an open heart surgery, and we purchased all those services with cash, we don't have what's called — we don't have traditional insurance, we do something called health cost share, uh, which would probably be a whole separate podcast episode to unpack that, but um, that's how we protect ourselves against catastrophic loss related to a health care claim, is a health cost share, but other than that, when we interact with the health care system, we're just cash consumers, when we show up at the doctor's office, and what they'll always say, because we've all experienced this, is I need your ID and your insurance card, we always respond with, here's our ID, we don't have traditional insurance, right, again we have something called the health cost share, but they don't care about that, they just want to know, do you have an insurance card, because what they're really asking is, hey, if you have one of those, I'm going to be able to overbill you.
Uh-huh, we don't play that game, we say, what's your cash price, right, and we are always very pleasantly surprised when they tell us their cash price, and we're happy to pay the cash price, we hand them the credit card and pay it, just like we do when we take our car in for service, and it needs an oil change, or it needs some work done on the engine, that's what health care really needs to look like more, is people need to start asking more for the cash price, and stop walking around with that insurance card that they think is a discount card, it is absolutely 100% not.
So I do love the cost sharing programs, um, again, because I think the neat thing about them is, that when you're paying into your membership for those cost sharing plans, and this was true a few years ago, I don't know if it's still the same, about 90% of the dollars that you pay in actually go to other people who need it to share, so they're able to fund these — to run these plans with 10% overhead — which, I'm sure insurance companies, it's probably the inverse of that, I would imagine. So I talk to patients about these plans, and it scares them, because it's not traditional insurance, it doesn't have the terms like co-pay, deductible, and they often will say, well, I mean, this sounds great if you need stitches, or if you need an X-ray of a bone or a cast, but oh my gosh, what happens if I need open heart surgery, or I get cancer.
And I now can say to them, how about if you had open heart surgery and cancer, and you're a great example of two of the worst things you can think of when it comes to the personal health care costs that a family could have, you came out ahead, I mean, I think you said you did the analysis on what you would have paid through traditional insurance, in that one year, because both of those events happened to my wife in the same year, in that one year I conservatively saved $330,000, $115,000, because my premiums were so much lower, and then the other half, because I didn't hit — I don't have the plan I have, I didn't have the co-insurance obligation, I didn't have to pay that 20% on top, and then couple that with the fact that I was asking for the cash price for everything.
People are always surprised, and I tell them this all the time, for my wife's open heart surgery, so she had an open heart surgery, three days in an ICU bed, and one day in a regular hospital bed, so four days in the hospital, with high intensive care for most of it, and our all-in price for that was $10,000. I had an acquaintance who had open heart surgery a few months before, and I asked him, what was your bill, cause he put down his Blue Cross card, and he's like, I can't remember, he said, I think the last bill I saw was 175,000, now again, that's not what he paid, I think he maxed out his out-of-pocket max, which is like 10 or 15 grand, but again, he paid more, yeah, just for his little portion, than I paid for the total bill, and I had my health cost share, which kicked in half of that number, right, so my wife got open heart surgery for 5,000 bucks.
Well, something else that people don't consider, is the deductible that that guy would have met, gets reset every 12 months, great point, right, so had he had this open heart surgery in, let's say, December, beginning of December, and had his stay gone over, or if he'd had a complication related to that in January, he's going to get hit with another full deductible. Correct, exactly, so in the health plan sharing plan, how does that work? It's measured on a per-event basis, and we got to experience this with my wife's cancer, um, she started all of her cancer treatment basically in September of one year, she didn't finish her cancer treatment until May of the next year, under traditional insurance, to your point, we would have had to pay two deductibles, under a health cost share we paid one, because it's per event, so really everything that happened from January to May — in fact she's still actually getting, you know, checkups and other treatments related to her cancer — that's all covered, yeah, we don't pay any more money, because we paid the first time, the sharing program is picking that up, and that is something that absolutely does not happen in the traditional insurance space.
So patients need to be asking for cash prices when they go pick up prescriptions, they need to be asking what the cash prices are when they go in for procedures, shopping on Fair Market Health is a great way to get all the prices in one, for complicated procedures, and even simple procedures, like you mentioned, health care, or, uh, mental health care. Well, yeah, like one of the ones that we see all the time is imaging, imaging, uh, CTs, CAT scans, PET scans, MRIs, all those imaging procedures, through insurance, can be very expensive procedures, if you just buy them directly, or ask for the cash price from the imaging center, it can be half the price or less.
Does Fair Market Health do anything to help people with the price, um, with medical, uh, medicine costs, pharmacy prescription benefits? Yeah, we have a program with a company called Direct Rx, and they specialize in generics, okay, and so if anybody happens to take a generic, or could take a generic, because there's lots of people are on a brand name drug that could very easily switch to an equally effective generic, Direct Rx focuses on generic meds, they do mail order, um, they even have kind of a subscription plan, so that if — I think the cost is like 150 bucks a year, and you can get on their subscription plan, and I think it's a list of like 500 or a thousand medicines are inside the prescription plan, so you know, there's lots of ways to, again, be a smart consumer and get the medicines you need as well.
Yeah, it is, my first introduction to this was GoodRx, yeah, plan, and I think a lot of people now know about it, but I always tell people, look up the prescription on GoodRx, they get — it looks like an insurance card, but I'm assuming it's some kind of a discount card, I don't actually know how GoodRx gets paid, I don't know if you know how they get paid, but I've tried to study it, and honestly it's so confusing, I'm like, as long as it works — and it does work, it does work — you can walk in and get something that might be a $100 listed price, and you show them the GoodRx card, and you're getting it for $10, which to me just seems crazy.
Yeah, and what's crazy is Walgreens will have a different price than Dillons, and then CVS, and that's the part with GoodRx, is you can look on their app before you go, yeah, and you just find whichever location has the lowest price, and you go to that one. So again, in the interest of trying to empower listeners who are trying to figure out how to navigate this incredibly complex system — and I think we've just touched on the complexity, I mean, it goes layers and layers deeper than this — for sure, if they have — if you need a colonoscopy or something that you can schedule, you should be looking on the marketplace first, asking for cash prices, yeah, um, you should look at your insurance premiums and see if maybe one of these sharing programs would be better off — who would the sharing program not be good for?
I don't generally recommend sharing programs for people who have employer-sponsored insurance, and the reason I say that is, typically your employer is subsidizing a big part of the premium costs, so even though I hate traditional insurance, and I think it could be done so much better, um, if your employer's going to subsidize, you know, 80, 90% of the cost, it's hard to justify switching to a health cost share, because it incrementally probably will cost you more money. Now what I'd recommend to people who have traditional insurance through their employer is, go have a conversation with the person who manages your benefits, because there's lots of things that can be done, in fact this is what we do with self-insured employers, is we work with them to help them be smarter and better purchasers of the underlying health care cost, because again, if you buy anything through an insurance network, you're likely overpaying, but if you, as an employer, can help your employees buy things more directly — and again, that's what we do at Fair Market Health — you're going to save not only on the underlying cost of the service, but that helps lower your insurance premium on a go-forward basis, so you kind of win twice, and again, both as the underlying employee or plan member, but also as the employer who's pumping in a lot of the dollars to subsidize all of this.
So in the employer space, there's sort of three buckets that I would say employers fall into, you've got your small company, like ours, where we're just kind of lumped in with a bunch of other companies that are like size, we don't really have any negotiation ability to lower costs, then you've got, on the other end of that spectrum, very large companies like Koch, who just — they pay, they are truly self-insured, yeah, and all the expenses they have related to health care, they pay directly, I mean, but they use a Blue Cross Blue Shield, right, to do that, and then there's a middle area where a company might be large enough that they can cover it up to a certain point, but then they have an insurance program that kicks in a stop loss, am I correct in saying those are the three?
Okay, you got it, the small end is usually what's called fully insured, meaning they don't really take any risk, they pay their premium and everything's off, uh, on the obligation of the insurance company, the insurance company is assuming all the risk. Um, that middle group is what you would call partially self-insured, because they take some risk, up to some dollar amount, and then after that they have stop loss to cover it, and then the very largest companies, Koch and others, they are what's called fully self-insured, meaning they pay truly all the health care claims, they have no insurance or stop loss that kicks in, they are 100% on the hook.
So for those companies that are fully self-insured, um, you know, there — Koch isn't going out and asking the doctor what the price is, so they're still having to use insurance companies to manage all of that? Yeah, so, right, because they have employees spread all over the country, and frankly the world, but let's stick in the US, right, um, yeah, they use an insurance company to purchase what's, you know, the so-called network, right, so they get the card, and so their employees can go see these doctors, which again, back to the point we made earlier, you don't really need an insurance company to go to any doctor, in fact insurance companies are restrictive, and there's some doctors that are in, some doctors are out, but the reality is you're not getting any special pricing by being in, as a consumer or a buyer, so what is the point of the network?
But again, we live in this kind of archaic way of thinking, that the insurance network matters, so companies still offer the network, right, um, because I think they treat it a little bit like a safety blanket, they think, oh, because I have a network I'm offering a real benefit to my employees, but a lot of companies, like Koch, and the clients that we work with, they have a traditional insurance network, but they also have a service like Fair Market Health. So there's effectively a two-option choice here, you tell your plan members, hey, if you want to use your insurance, you're free to, we're not telling you you can't, but if you go to a doctor and you plop down your insurance card, you have a deductible, you might have a co-payment, you probably have co-insurance, all those rules are going to apply, so you're going to have some out-of-pocket obligations.
However, if you use Fair Market Health, we'll waive all of your out-of-pocket costs, so now the employee has a choice, oh, do I want to go to this doctor and pay something out of pocket, or do I want to just pick one of the Fair Market Health doctors and have my employer pay the entire cost, and why does the employer offer that second option, the Fair Market Health option? Because they know they're paying less overall, so they're happy to pay the employee's portion for them, knowing that the overall cost, the bill, is so much less. Well, and I think there's a third benefit there, in that — what's the experience like for the patient when they use Fair Market Health, talk — let's talk about your Net Promoter Score.
Yeah, how satisfied are people with going through Fair Market Health, compared to if they had gone through their traditional insurance, what's the difference from the consumer side? Yeah, my favorite thing in the whole world is reading our customer reviews, like I just — I get a little — I get giddy when I read them, because um, we actually use a five-star rating system, and our rating is 4.8 out of five, and you know, you just read people, and the most common thing that you read from patients is, I love how easy this is, right, I just love how easy it is, and that's what we designed it to be, right, we talk about the complexity that exists in the health care system, one of our missions is to make it less complex, let's make this easy, right, I mean, we have the technology, let's apply technology to make our lives easier.
And you know, I talk a lot about how millennials are now the biggest generation in the workforce, they are the largest portion of the workforce, millennials grew up with technology, right, and Gen Z is coming quickly behind them, and they've never known a world without technology, but millennials had it as they were growing up, and you know, millennials are accustomed to renting houses online, they order cars through Uber, they buy groceries online, they have food delivered online, they do their life online, right, except for health care. Yeah, and millennials, at some point — now, again, now the biggest portion of the workforce — they're going to be demanding, especially as they come into leadership positions, they're going to start asking, why can't we consume health care the same way I operate every other portion of my life?
Yeah, yeah, it's, uh, the next generation will probably be the one to really demand that kind of change, and I think that generation is here, and again, I think the oldest millennials are in their 40s, so that means they are really officially entering those leadership positions in companies, and they're going to be asking that question. That's a really good point. Yeah, all right, is it 10:50 already, oh my gosh, okay, do you want to wrap it up? Because I got two — is there anything that I haven't — well, I don't want to get into any new topics, so — wow, um, there's so many more things that I want to cover, so I know we're definitely going to have to come back and have a part two of this.
Um, but I'm really thankful, not only for your friendship and what you've been to my business personally, but I love the fact that you are a problem solver at heart, and I think what Fair Market Health, and what you're doing, is solving a monumental problem, and it's crazy to me how people don't realize that these solutions are out there, and how much money that people can save. So yeah, um, where can people find out more about you, do you have a social media presence, um, where — if people want to reach out and find out for their company, you know, if we've got CEOs and CFOs listening to this, or HR managers, how do they engage with you, where do they go to find out about Fair Market Health?
Yeah, you can hit me up on LinkedIn, I post fairly frequently there, uh, or if you just want to drop me an email, [email protected], those are the two easiest ways to reach me. Great, well, thank you again for being a guest on our podcast, and I look forward to future conversations. Sounds great, great.