The Challenger Sale (part 1 of 4)

The Challenger Sale: Taking Control of the Customer Conversation

By: Matthew Dixon and Brent Adamson of CEB (2011)

[Pigeonhole] A Practical Principal Book

[Premise] B2B Sales have evolved to the point where sales processes are commoditized, so companies need to look to have a different approach. The authors suggest a few type of salesperson styles exist, and that one of those styles – the ‘Challenger’ – will be the most successful.  In addition to the personality and sales type, there is also a prescribed sales method to apply. As the name implies, the sales rep is encouraged to challenge the customer’s assumptions and present their product in a new light.


Introduction (p1-4)

  1. The Evolving Journey of Solution Selling (p5-13)
  2. The Challenger (Part 1): A New Model for High Performance (p14-29)
  3. The Challenger (Part 2): Exporting the Model to the Core (p31-43)
  4. Teaching for Differentiation (Part 1): Why Insight Matters (p44-64)
  5. Teaching for Differentiation (Part 2): How to Build Insight-Led Conversations (p65-100)
  6. Tailoring for Resonance (p101-118)
  7. Taking Control of the Sale (p119-139)
  8. The Manager and the Challenger Selling Model (p140-169)
  9. Implementation Lessons from the Early Adopters (p170-186

Afterword (p187-196)
Acknowledgements (p197-204)
Appendix A: Challenger Coaching Guide (excerpt) (p205-207)
Appendix B: Selling Style Self-Diagnostic (p208-209)
Appendix C: Challenger Hiring Guide: Key Questions to Ask in the Interview (p210-214)
Index: (p215)

[Key Points] – Sales reps should perform “Commercial Teaching” with “Commercial Insights” and choreograph the process to scale.

Healthcare “Syntopical”: Compiled Thoughts (part 15 of 15)

Insurance is about Risk vs Benefit

The Healthcare exchange spreads the risk around, so it also owns the benefits from health people – this is a bad deal for a healthy workforce.

In order to gain from being healthy, you must assume the risk – but there are protections against real risk.

Self-insurance means the company pays for all the healthcare costs (high risk) – but if people adjust their mindset and use healthcare in the manner of an informed consumer, the program has very low costs.

There is a specific approach (mindset shift) to keeping utilization costs low, but first, the company needs to mitigate their risk.

  • Stop-loss insurance to cover against a major incident
  • Aggregate-loss insurance to cover against cumulative incidents
  • Any high-risk individuals, or if the company has a very bad year – the company can always defer to the public health exchange


Create a Health Reimbursement Account (HRA) for the company to draw from for medical use. This is a pool of money that covers the deductible for Stop-loss, but is pre-tax and earns interest when it’s not being used.

Create Health Savings Accounts (HSA) for individuals to draw from for their share of the costs. This is an account that accumulates over time if it is not used, but is pre-tax going in, and tax-free if used for specific medical expenses.

The company must incentives the employees to use a carefully curated network:

  • Carefully Selected Centers for rare but critical procedures
  • Carefully Selected Quality Hospitals for in-patient care
  • Carefully Selected Physicians, professionals and Urgent Care facilities for primary and out-patient care

Use primary care providers that are incentivized to direct patients to the least invasive approach to a desired outcome.

Primary, in-patient and specialty care are selected using visible pricing and quality scores

Pharmaceutical co-pays are based on 1 of 2 tiered pricing systems

Outside providers are necessary to set up the curated network and to process claims

Healthcare “Syntopical”: Cracking Health Costs 3 (part 14 of 15)

Chapter 5: Your Employee’s Health is Too Important

The following are some reasons for this overtreatment that I’ve collected over the years:

  1. Like most people, most doctors get paid more for doing more.
  2. Doctors often don’t keep up with advances in medicine.
  3. The patient wants surgery, and the doctor figures that the patient will simply get it from someone else if he declines to perform it
  4. The surgeon believes his professional judgement and experience trumps science.
  5. A doctor looks at a patient and sees a blocked artery. He or she wants to fix that artery, often with little regard for the fact that the patient may be too feeble for the surgery or that a nonsurgical medical alternative might be equally effective and even safer for the patient.
  6. Like people in many professions, doctors often have employers.
  7. The official government-established rules are distorted to enhance the income of “proceduralists” (specialists doing procedures)
  8. A doctor can get in more malpractice hot water by doing less than by doing more.


Chapter 7: The Company-Sponsored Centers of Excellence Model

Establish direct contracts between employers and clinics and hospitals that have achieved outstanding levels of success in managing the care for the very sickest members of your workforce. We refer to these organizations as “Company-Sponsored Centers of Excellence” (CSCOEs), to specifically distinguish them from marketing-oriented models where a well-known hospital anchors a local network using the (often self-designated) moniker of “center of excellence.”

What to look for in a CSCOE:

  1. Doctors and hospital facilities fully integrated (same organization)
  2. Fully salaried doctors, especially surgeons, with no “productivity bonuses”
  3. Doctors accountable for finding the safest and least invasive treatment to achieve desired patient outcome
  4. Patient tracking to observe long-term outcomes
  5. Transparent pricing such as providing global fees
  6. Stay away from academic health systems (University of … )
  7. A ‘medical destination’ program including logistics for your people being flown in
  8. Non-profit


Chapter 8: Hospital Safety: How to Get Your Employees Back to Work in One Piece

Hospitals probably constitute about 50 percent of your overall healthcare spend. … We’ve already provided half the strategy to reduce that percentage: medical travel through CSCOEs. But what about the many hospital admissions that don’t justify flying people out of town – people who may end up in unsafe hospitals right in town?

Using a high-deductible plan might help control some other expenses. But nearly every inpatient stay exhausts the allowed annual deductible, saddling your company with the rest of the bill. That means even if your employees become adept at shopping for outpatient care, lab, radiology, and physician services, they will still have little or no incentive to shop for the most price—competitive hospital.

So here you have very high-priced suppliers producing a slipshod product … and yet your only strategy today is to try not to use them by instead using wellness programs that, as previous chapters showed, may create more provider interaction. I suspect the following are the barriers preventing you from being more assertive with provider organizations:

  1. “I can’t pretend to know more than the doctors and nurses”
  2. “I don’t know how to evaluate the quality of a hospital”
  3. “My health plan handles my relationship with hospitals. I don’t need to get involved”
  4. “My business doesn’t have enough purchasing leverage to influence hospitals”

Action Steps:

  1. Determine your frequent lower-cost procedures
  2. Review those procedures against the Leapfrog scores at the hospitals in which those procedures were done
  3. Do some simple arithmetic to see what these lower scores are costing you and, through great chance of harm, your employees
  4. Tell your employees which hospitals are better than which other ones
  5. Nudge your employees financially toward the higher quality hospitals
  6. Let the hospitals know you’ve done this


Chapter 9: Real Care Coordination: The Only Other Way to Save Money

Quantum Health model, which we will call the “care coordination model” in order to avoid plugging a particular vendor, has subsequently become even more popular as a way to control benefits expense

  • Customer service for all benefits issues including eligibility, coverage, and claims
  • Provider services
  • Utilizations management including Precertification, Concurrent inpatient review/case management and Retrospective review
  • Case management
  • Disease management
  • Wellness programs (for employees that insist)

Think of the care coordination model as an ACO run for employers rather than by providers

How to Select a Coordinated Care Vendor:

  1. “Which of the functions listed above will be provided by you?”
  2. “Are all functions accessed by plan members (employees and dependents) and providers though a single-point service process – one toll-free number, website, and other access channels?”
  3. “How fully integrated are member services, patient advocacy, and care management functions in the vendor’s operation?”
  4. “How many calls do you CSAs handle?”
  5. “Explain the role-blending in your organization and give specific examples”
  6. “Does the IT/data system reflect a horizontal coordination of care platform?”
  7. “What specialized staff development methodologies do you use to foster care coordination?”
  8. “What specialized preadmission, post-discharge, and transition-of-care programs are included in the vendor’s program?”
  9. “Are post-discharge care management and disease management integrated?”
  10. “How are people who did not just get discharged referred into programs?”
  11. “What do you report on?”
  12. “How do you interface with Company-Sponsored Centers of Excellence”
  13. “How do you validly measure and guarantee outcomes?”

Although care coordination is a fast-growing field, you can see why more self-insured employers don’t do it. It requires actual work. … The total administrative fee (carrier plus care coordination vendor) is also higher with care coordination, since a care coordination vendor is doing much more. But that doesn’t mean it costs more. … And of course, you will actually be doing something.



  • Charge a higher monthly contribution to employees who do not do something of ‘wellness value’
  • ‘Subsidize’ healthy food options or ‘tax’ poor food options
  • Use ‘specialty pharmacies’ for ‘specialty medications’
  • Set up drug co-pays by category, not by price
  • Negotiate Spread with your PBM
  • Stay out of PCMHs forever and ACOs for now
  • Set up CSCOEs for the very sickest outliers of your workforce
  • Pay the employee’s $250 co-pay if they use a high-performing hospital for in-patient care




  • com for Proof of ‘wellness value’
  • Companies that use CSCOEs: BP, Burger King, Hershey, Lowes, Walmart, Pepsi, Boeing
  • BridgeHealth Medical to set up a CSCOE for small companies
  • Laurus Strategies to set up a CSCOE
  • Leapfrog for High-performing hospital scores
  • com for Care coordination model vendors
  • Healthways for well-being vendor (as opposed to wellness)
  • Gallup-Healthways Well-Being Index (WBI) for well-being measurement and Well-Being Assessment (WBA) for individuals
  • Ascentia Health Care Solutions for tools for physicians by physicians
  • “Private Exchanges” to compare to standard, Public Exchanges. Rates will probably be the same, but services may differ drastically.

Healthcare “Syntopical”: Cracking Health Costs 2 (part 13 of 15)

Cracking Health Costs
Tom Emerich and Al Lewis


Chapter 2: Does Your Broker Have Your Back? 

So what is the action step for all of this? First, your embedded long-time consultants aren’t adding any value and are charging you a lot of money. So instead of negotiating yet another contract with them, we recommend auctioning off your business. Announce your total requirements and ask for one fee. Expect your spending on consultants or previously hidden brokerage fees to fall by close to half – even if you keep the same consulting firm. Your consultants will likely stop doing unnecessary 15-page work plans, 100-page RFPs, overly detailed but completely invalid outcomes analysis, and – my favorite – site tours of vendors on your nickel. But you probably shouldn’t end up with the same consultant if the bids are close. If your research into this market-place showed us anything, it’s that some nimble and flexible middle-market firms are far more capable of doing this job than the old-line houses.


Chapter 3: It’s Time for the Wellness Industry to Admit to Doping

Part 1: Vendored Wellness Programs Do Not, Will Not, and Never Have Reduced Your Health Spending, Period

The bottom line? There is an utter lack of metrics and, really, an utter lack of thought. We’re now more at a herd mentality.

Yes, I really shouldn’t be making such inflammatory statements. The good news is, I don’t have to. That’s a direct quote from a major wellness supporter, the manager of benefits at the Society for Human Resource Management. Apparently, he didn’t get the memo that candor and wellness don’t mix.

Part 2: The Actual Value of Wellness

You can’t purchase a culture of wellness with individual incentives. Your company must invest in its workplace. As such, there are at least three undeniable ways to profitably deploy a wellness program. One is tactical, one strategic, and one morale-building. Naturally, none has anything to do with any aspect of the vendored get-well-quick programs.

We’ll begin with an easy tactic. Suppose you want to raise your annual deductible or contribution or anything else that increases employee share of spending. Let’s say that you’d specifically like to raise the monthly contribution from $100 to $110 … announcethat you are raising the monthly contribution to $130. However, in the same announcement, let employees know that their contribution will stay the same – at $100 – if they do something that has wellness value.

  1. The increase is optional. If people really want to keep their monthly contribution at $100, they can.
  2. You’ve created an incentive without paying for one.
  3. You’ve let your employees know that patrolling their health is an important enough goal that you will subsidize it.
  4. You’ve taken a step toward the ultimate goal below, which is making your organization more attractive for people who are interested in their health.
  5. And there is always the chance, however slim, that this “something of wellness value” will prevent a medical event

This tactic means wellness is really just a cover for a financial decision to raise the employee share of health spending. But there is also a strategic pony in the tactical wellness pile: creating a culture of wellness probably does improve the bottom line. Not by paying a vendor to hire coaches, paying your employees to promise to eat more broccoli, or by trying to turn your obese smokers into triathletes – but by making your organization more attractive to healthy people in the first place.

The same people who administer the health benefit run all of human resources, as well. And the human resources department, more than any other, sets the tone for a wellness culture.

The other place you’d like to intervene is in the cafeteria, where you can subsidize healthier choices and maybe even “tax” unhealthier ones. … Beware, though, that if allthe food is too healthful, people will eat elsewhere, probably at a fast-food place. … A good meal planner can solve for that, and hence the words “subsidize” and “tax” in the previous paragraphs. The idea is not to dictate but rather to encourage smart dietary choices.

[You want to show] your employees you care about them. Many initiatives foster that feeling, and wellness is one of them – but only if you do it in a high-profile, visible way. Paying your employees to complete an anonymous form and have blood drawn is not one of those ways.


Chapter 4: This is Your Health Benefit on Drugs

I: Striking Back at the PBM Empire

  • Because the majority of PBM contractors prohibit pharmacies from talking to employers, the PBMs can increase their “spread” without disclosing their piece of your pie
  • Average Wholesale Price (AWP) discount for generic drugs doesn’t matter
  • Corollary: PBMs can tell you that their pricing is “transparent” or “pass-through,” but it may not be
  • Mail-order programs frequently cost more
  • A $0.00 PBM administration fee may not be a good deal
  • The rebate is the ultimate nonopaque component of pricing and is increasingly a distraction

II: Specialty Medications: The Bad News and the Bad News … and the Bad News and the Bad News

First, the bad news. It won’t be long before 1 to 2 percent of your employees account for half you drug spend, as biologically engineered specialty medications will soon comprise most of the 50 top medications based on total cost. … This will only get worse. Over half the medications currently in the R&D pipeline are specialty medications.

To begin with, don’t let your employees regularly get these medications from the corner drug store – insist on use of a specialty pharmacy. … Of course, they also make more money the more drugs get purchased, so you still have to keep an eye on them. … The specialty pharmacy requirement can cause extreme frustration when employees visit the local retail pharmacy to obtain their medication. It is therefore best to allow at least one fill and possibly one refill of the medication at the retail pharmacy as this avoids frustrating delays in treatment.

At this point you won’t be surprised to hear this, but your PBMs are ripping you off. This time it’s because there is not a bright-line distinction between regular and specialty drugs, particularly as specialty drugs, which historically have required injection or even refrigeration, increasing become available in oral form. … Your consultants, of course, are blissfully unaware of this.

So what can you do? Well, in addition to insisting on a specialty pharmacy and recontracting to tighten definitions of “specialty,” not much. If you are a university

III: Regular Prescription Drugs

Tiers have worked so well that we are going to propose that you next apply them according to categoryof drug, not just whether the drug happens to be preferred or generic within that category:

  1. Lifestyle Enhancing– All, or most of the cost for these medications, would be assumed by the employee. [Viagra, Chantix, Retin-A]
  2. Convenience– Medications that produce outcomes not directly associated with the preservation of life or the normal functioning of body systems essential to life or medications with less costly treatment alternatives should have high co-pays. [Nexium, Clarinex, Provera]
  3. Life Preserving – This is the largest grouping, including medications for treatment of conditions such as infections, pain, seizures, depression and cancer. Low co-pays would apply here.
  4. Business Preserving– Medications to treat controllable chronic health conditions resulting in the highest levels of lost work time and long-term disability. Includes hypertension, high cholesterol, diabetes and asthma. These medications – especially the generic ones – should have invisibly low co-pays.

Look hard at these categories. If you think about it, the first – and even the second – categories really have no business being subsidized at all; they are merely consumer goods too hazardous to sell off a shelf. (This is what flexible spending accounts are for. Employees can pay for these indulgences themselves with pretax dollars.) If you do subsidize them, it’s for recruitment/retention reasons.

There are a number of asterisks along the way. … even though prescription contraceptive methods might be considered as Category 2, they must now be covered at 100 percent under federal law. In addition, the inability to think clearly or reproduce were recently deemed disabilities, and, thus, care must now be taken to assure that coverage of adult attention deficit disorder treatments and fertility enhancers is equal to that of the majority of other medications. … occasions such as these will require prior authorization or appeals to determine the appropriate cost share.

It really doesn’t matter how many times you produce lists of medications in the various categories. Employees are not going to pay attention to them. You can save a great deal of time and frustration by electronically posting the lists and focusing instead on clearly communicating the concepts.



Healthcare “Syntopical”: Cracking Health Costs 1 (part 12 of 15)

Cracking Health Costs: How to Cut Your Company’s Costs and Provide Employees Better Care

by: Tom Emerick and Al Lewis
c: 2013

Pigeonhole: Social Science – Public Administration


Forward: Davide A Rearick (p ix)
Introduction (p xiii)

Part 1: Mostly Bad News (p1)

  1. Myths and Facts about Your Health Benefit (p3-24)
  2. Does Your Broker or Consultant Have Your Back (p25-38)
  3. It’s Time for the Wellness Industry to Admit to Doping (p39-56)
  4. This Is Your Health Benefit on Drugs (p57-68)
  5. Your Employees’ Health Is Too Important to Be Left to the Doctors (p69-88)
  6. Are New Delivery Models Deja Vu All Over Again, Again? (p89-108)
    Part 2: Mostly Good News (p109)
  7. The Company-Sponsored Centers of Excellence Model (p111-130)
  8. Hospital Safety: How to Get Your Employees Back to Work in One Piece (p131-144)
  9. Real Care Coordination: The Only Other Way to Save Money (p145-160)
  10. Goofus Retains a Wellness Vendor, Gallant Implements Well-Being (p161-174)
    Part 3: What Should You Do Next? (p175)
  11. Health Insurance Exchanges: Should You Stay or Should You Go? (p177-188)

Notes (p189-192)
Bibliography (p193-194)
Acknowledgements (p195-196)
About the Authors (p197)

Healthcare “Syntopical”: The CEO’s Guide to Restoring the American Dream 3 (part 11 of 15)

Chapter 13: Independent Claims Administrators vs. Insurance Company Claims Administrators – the Trade-Offs

It’s important to realize that not all self-insuring is the same. It can vary enormously depending on whether you decide to work with an insurance carrier that provides the administrative services (ASO) or an independent third party administrator (TPA) that provides them.

When a company self-insures its health plan, it sets aside its own money plus employee premiums, using them to pay claims for medical services itself. But rarely does an organization have the resources necessary to process claims – to receive, interpret, and pay medical bills. Nor does it understand the intricacies involved in creating and managing a health plan while complying with applicable laws. Thus an ASO or TPA is required.

Second, to address the cost of catastrophic claims, a self-insured plan will purchase reinsurance or excess coverage from a stop-loss carrier.

The traditional and simplest way to administer a self-insured plan calls for a large insurance carrier to shed its risk-bearing role but continue to serve as a claims processor for the employer – substituting the employer’s money for its own.

ASOs prefer to pick and hire the stop-loss coverage company (sometimes called excess or reinsurance coverage) for clients themselves and provide a predetermined health plan that aligns with its own excess loss carrier and provider network agreements. This bundling of the plan document, excess insurance, and network agreements severely limits plan customization. On the other hand, it eliminates potential gaps in coverage between these components. … it’s easier with an ASO.

The downside is that the employer can’t take as much of an active role in cost management or provider relations. Nor can it easily negotiate a direct contract with a hospital or “carve out” a particular type of claim. … With a TPA, on the other hand, you call the shots and get more transparency and flexibility at what is generally a lower cost. The TPA does what you dictate.

A TPA can afford medical expertise and achieve group purchasing discounts that are significantly more advantageous than those available to a single employer.

With a TPA, there is a true unbundling of services. For some employers, the fact that a TPA requires the employer to see and select the moving parts is exciting. It allows a hands-on employer to more actively contain costs and pick what they feel is best for their employees. For others, it is frightening and overwhelming. For those employers, an ASO that makes the decisions for them is likely the way to go – if they’re willing to pay the premium.

Caveat: Whether ASO or TPA, some claims processors are partly owned by large insurance carriers, health systems, network administrators, and other entities.

Here are some reasons you might decide to self-insure:

  1. Plan Control
  2. Interest and Cash Flow
  3. Federal Preemption and Lower Taxes
  4. Data Access
  5. Risk Reduction

Is the TPA able to drive you value? This can be in the following forms:

  • Value-based contracting
  • Integration with local primary care practices
  • Chronic care management and reporting
  • Cost and quality transparency
  • Seamless integration and promotion of third-party solutions like telehealth or second opinions
  • Flexibility in customer communication (phone only between 8am and 5pm? Or text, email, chat anytime?)


Chapter 14: Value-Based Primary Care

There are two primary models for VBPC:

  • Direct Primary Care (DPC), in which care is offered to individuals, plan administrators, and employer in a range of practice models from solo practitioners to national organizations.
  • Onsite / near-site clinics fully or partially dedicated to the workforce of a specific employer.

Providers of VBPC typically charge a monthly, quarterly, or annual membership fee, which covers all or most primary care services including acute and preventive care.

The flawed incentive structure of FFS demands very short primary care appointments, which often drive referrals to unnecessary high-margin services such as scan and specialists and result in an overreliance on prescriptions. The reduced overhead from eliminating FFS billing also allows VBPC practices to offer a more proactive care model that can lead to significant reductions in downstream costs.

What are the Key Elements to Look For in a VBPC Provider?

  1. Quality Reporting
  2. Shared Decision Making
  3. Care Coordination
  4. Population Health Management
  5. Value-based Payment Models
  6. Patient Experience
  7. Evidence-based Medical Care
  8. Participation in a Health Information Exchange (HIE)
  9. Ease of Access to Care and Care Information
  10. Clinical Pharmacy and Mental Health Embedded within Practice
  11. Physician Loyalty
  12. Referral Patterns

What Challenges Can You Expect?

  1. Administrative Challenges
  2. Employee Education
  3. Care Dislocation
  4. Criteria for Choosing a Practice
  5. Care Coordination
  6. Slow Migration to the New VBPC Model
  7. Obfuscation to Preserve Status Quo


Chapter 15: Transparent Medical Markets

A Transparent Medical Market (TMM) offers purchasers such as employers and unions fair and fully transparent pricing for medical services / procedures ranging from specific treatments to specific conditions.  Services and procedures are typically bundled, meaning there is just one bill for all the services received from multiple providers and multiple settings.

Providers supply up-front pricing at significantly reduced rates in exchange for increased volume, quick pay, reduced friction, and avoiding claims/collection problems. … In exchange for significantly reduced rates, employers encourage plan members to use these providers, typically by waiving all of the individual’s costs including copays, coinsurance, and deductibles.

What are the Key Elements to Look for?

  1. Transparency
  2. Bundled Payment
  3. Shared Risk
  4. Efficient Administration
  5. Employee Education
  6. Ease of Use

An effective TMM functions best in tandem with a value-based primary care model and use of shared decision-making tools to avoid overtreatment.

What Challenges Can You Expect?

  1. Administrative Challenges
  2. Provider Reluctance
  3. Complex Implementation
  4. Employee Education
  5. Data Sharing
  6. Data Analytics
  7. Confusion About Price Transparency Tools
  8. Obfuscation to Preserve Status Quo


Chapter 16: Concierge-Style Employee Customer Service

Concierge service is the conductor that harmonizes much of this discord and fragmentation, providing one point of interaction and distilling complex information down to actionable guidance.

Concierge services are available as a subscription benefit for employees in value-based reimbursement contexts. … the key to an effective concierge experience is integration of information so employees have hassle-free access to simple and actionable guidance on any issue when they need it.

What are the Key Elements to Look for?

  1. Network Directories
  2. Price Transparency
  3. Scheduling Capability
  4. Understanding of the Individual Consumer


Chapter 17: High-Value, Transparent TPA

Employers who choose to partner with a high-value, transparent TPA typically do so because they are sick of convoluted rules, data that aren’t actionable, opaque provider contracts, constant administrative runaround, and paying unknown and irrational amounts in exchanges for services that don’t add value.

What are the Key Elements to Look for?

  1. Health Care Cost Transparency
  2. Quality Data
  3. Utilization Data
  4. Continuous Progress
  5. Positive Financial Outcomes
  6. Engaged, Satisfied Employees


Chapter18: Transparent Pharmacy Benefits

 The term transparency is incredibly over-used in the market and not all transparency is created equal. … Compared to some Health Rosetta components, Transparent Pharmacy Benefits don’t’ actually work much differently than what you’re used to. The primary difference is the process for engaging your consultant or PBM services vendor. It focuses on contracts, access to data, and distribution channels for accessing drugs that counteract the pricing opacity, undisclosed financial incentives, and other conflicts that permeate status quo pharmacy benefits. The most critical piece is the role and involvement of an expert who know the space top to bottom and has incentives aligned with your interests.

What are Key Elements to Look For?

  1. Clarity on How PBMs Work
  2. Access to Your Claims Data
  3. Complete Contract Understanding
  4. Expert Resources
  5. Creative Distribution Channels

What challenges can you expect?

  1. The Appearance of Savings
  2. Interference
  3. Lack of understanding
  4. Not all transparency is equal
  5. Obfuscation to preserve Status Quo



5 Steps to Start Implementing High-Performance Benefits

  1. Reset your benefits advisor relationship expectations
    1. Complete and Sign the compensation disclosure form in Appendix C
  2. Start now and select approaches that minimize disruption to your benefits group
  3. Build compounding momentum by implementing programs that quickly reduce spending and deliver value
    1. Three simple examples that work for nearly any size organization and don’t require geographically concentrated workforces are pharmacy analysis / optimization, Centers of Excellence models, and out-of-network claims settlement services.
  4. Develop an outstanding communications strategy to ensure program success
  5. Let the Health Rosetta ecosystem help guide the way.



  • Hire a specialized Benefits Consultant (Broker)
  • Seek “aggregators” for prepackaged access to Centers of Excellence
  • ASO is easier than TPA. TPA allows more control and is cheaper
  • Use a TPA to get group purchasing discounts
  • Use a TMM vendor to make all pricing known
  • Use “cost plus a management fee” model for drugs instead of Average Wholesale Price (AWP) [ain’t what’s paid]




  • org/employers for brokers
  • org/health-rosetta for lists of VBPCs, TMMs, Concierge Services, TPAs, PBM vendors, best practices, toolkits, etc
  • TLC Benefits Solutions for claims processing
  • HealthInsight for hospital rankings
  • The National Quality Forum (NQF) for evidence based quality measures
  • Hospital Compare for hospital quality comparisons
  • Business Groups on Health are nonprofits that support employers in purchasing and managing health care benefits
  • Catalyst for Payment Reform is a nonprofit that helps navigate value-based payment models
  • Crystal Clear Rx for pharma transparency
  • Broker Compensation Disclosure Form – Appendix C

Healthcare “Syntopical”: The CEO’s Guide to Restoring the American Dream 2 (part 10 of 15)

The CEO’s Guide to Restoring the American Dream
Dave Chase


Chapter 9: You Run a Health Care Business Whether You Like It or Not

The reality is most companies wouldn’t hire their present benefits leader to run a multimillion dollar business unit or product. So why do they run a multimillion dollar benefits spend?

So, what’s different about employers who are winning the battle to slay the health care cost beast? It’s all about mindset. It’s about waking up to the understanding that improving the value of health benefits is the best way to improve the well-being of their employees while boosting the company’s bottom line – then committing to that path.

In choosing care providers partners, wide-awake employers understand that the well-being of caregivers has a direct impact on the care of their employees. … Like Fair Trade coffee … I’m proposing that you likewise insist that halth care organizations exhibit fair and ethical treatment of clinicians and patients before you become one of the [mistreated]. Here’s what Fair Trade for health care should include:

  • Transparent Prices
  • Bundled Prices
  • A Culture of Safety
  • Staff Treatment
  • Ethics-based Organizations
  • Data Liquidity

What you need is a sophisticated health administrator, analogous to the person who’s administering your 401(k). This is someone whose skills and experience are commensurate with the magnitude of your investment in health benefits and the level of fiduciary responsibility it carries. … In short, you need someone to run a major business, your health business. Some skills are listed on pg. 99


Chapter 10: How to Pick a Benefits Consultant (Broker)

[Instead of the traditional 60 day notice for annual renewal process] Most consultants (although not all) that support self-insured plans are far more sophisticated than the brokers profiled earlier. If they’re not, self-insured plans can be a financial disaster of epic proportions. A consultant in this space needs to know (1) how to set up a plan and build it out component by component and (2) how to put protections in place for your company to ensure your liability is no greater than you can financially stomach.

Here are the main components of high-performing self-insured plans:

  • The third party administrator (TPA) that is responsible for paying claims (with your money) according to the specifications you set up and the supporting plan documents
  • The network (usually “rented” from a large carrier) the provides discounts off billed charges
  • Balance billing protection. Employers have a duty under ERISA to only pay fair and reasonable charges. After that price is determined and paid, some providers will try to get additional payments from an employee. A proper plan protects an employee against providers pursuing this. In extreme cases, that can include legal services for the employee.
  • A pharmacy manager to handle the pharmacy network
  • Pricing contracts
  • Stop loss protection to pay for large claims

A common first misstep to lower costs is workplace wellness programs. As we saw in Chapter 8, at best, only a tiny percentage of such programs have a real ROI. … Instead, a progressive consultant brings you a multiyear health care plan designed to lower the quantity of care consumed, built on a proven approach to lower the actual cost of care for ALL employees – whether they are healthy or not.

The plan will generally reflect the following:

  • Serious thought for ERISA fiduciary responsibility
  • An emphasis on value-based primary care
  • An emphasis on the highest-cost outlier patients
  • Transparent medical markets / reference-based pricing (ie ways to know the actual prices you’ll pay for services)
  • Transparent pharmacy benefits
  • Data proficiency

The plan will also include payment arrangements with providers and, importantly, complete disclosure of the consultant’s sources of compensation.

As you can see, the actual “insurance” is a smaller and smaller piece of what the nontraditional benefits consultant brings to the table. In the self-insured model, stop-loss is the only insurance policy purchased, generally accounting for less than 20 percent of the overall costs. This person should be able to provide you with all the information you need to identify the best renewal options for noninsurance administrative functions and, critically, the right strategies to positively impact both the cost and quality of your employees’ care over the long term. … You don’t necessarily want to pick your consultant based on how low their fee is.


Chapter 11: The 7 Habits of Highly Effective Benefits Professionals

Habit #1: Insist on Value-Based Primary Care

Habit #2: Proactively Manage Pharmacy Benefits

Habit #3: Have Specific Plans for Uncommon (But Predictable) Gargantuan Claims

Habit #4: Deploy Evidence-based Musculoskeletal (MSK) Management Programs

Habit #5: Refuse to Sign Blank Checks to the Health Care Industry

Habit #6: Protect Employees by Sending Them to Providers With First-rate Safety Records

Habit #7: Avoid Reckless Plan Document Language that Costs Millions

All your moves to implement these habits should be properly documented for two reasons. First, you want your entire team (not to mention your successor) on the same page. Second, not doing so can leave you and your company vulnerable to litigation related to health plan design and administration.


Chapter 12: Centers of Excellence Offer A Golden Opportunity

What to look for in a Center of Excellence:

  • Patients are seen by multiple specialists
  • A multidisciplinary team does the diagnosis
  • That same team prescribes treatment the treatment plan
  • If surgery is required, it is done at the highest quality available
  • The patient experience is excellent
  • Health care is integrated, collaborative, and accountable
  • Bundled payments and global fees rather than fee-for-service payments

Remember that organizations are usually only a center of excellence for certain procedures and specialties, not everything.

In health benefit plans today, about 6 to 8 percent of plan members are spending 80 percent of the plan dollars. Outliers may have wildly different medical conditions, but they have a lot in common. (see pg 120)

Admittedly, contracting directly with health systems that qualify to be centers of excellence usually takes a lot of effort, and you have to be a pretty large employer to get their attention. The good news is that “aggregators” are available today … to get prepackaged access to top-notch centers of excellence.



Healthcare “Syntopical”: The CEO’s Guide to Restoring the American Dream 1 (part 9 of 15)

The CEO’s Guide to Restoring the American Dream: How to Deliver World Class Health Care to Your Employees at Half the Cost

by: Dave Chase
c: 2017

Pigeonhole: Social Science – Public Administration


Acknowledgment & Author’s Note (p ix)
Forward (p xvii)
A Note From A Fellow Traveler (p xxi)
Introduction (p1-12)
Part 1: The Current Situation (p13)

  1. America Has Gone to War for Far Less (p14-24)
    Case Study: Pittsburgh (Allegheny County) Schools (p25-29)
  2. Health Care Prices: Hyperinflation or Flat? (p30-38)
  3. What You Don’t Know About the Pressures and Constraints Facing Insurance Executives Costs You Dearly (p39-46)
  4. Millennials Will Revolutionize Health Benefits (p47-55)
    Case Study: Rosen Hotels & Resorts (p56-60)
    Part 2: How and Why Employers Are Getting Fleeced (p61)
  5. 7 Tricks Used to Redistribute Profits From Your Organization to the Health Care Industry (p6269)
  6. PP Networks Deliver Value – and Other Flawed Assumptions That Crush Your Bottom Line (p70-76)
    Case Study: City of Milwaukee (p77-79)
  7. Criminal Fraud Is Much Bigger Than You Think (p80-84)
  8. Are Workplace Wellness Programs Hazardous to Your Health? (p85-90)
    Part 3: Doing It Right (p91)
  9. You Run a Health Care Business Whether You Like It or Not (p92-99)
  10. How to Pick a Benefits Consultant (p100-107)
    Case Study: Langdale Industries (p108-111)
  11. The 7 Habits of Highly Effective Benefits Professionals (p112-116)
  12. Centers of Excellence Offer a Golden Opportunity (p117-121)
  13. Independent Claims Administrators vs. Insurance Company Claims Administrators – The Trade-offs (p122-134)
    Part 4: Health Rosetta (p135)
  14. Value-based Primary Care (p136-143)
  15. Transparent Medical Markets (p144-150)
    Case Study: Enovation Controls (p151-155)
  16. Concierge-Style Employee Customer Service (p156-160)
  17. High-Value Transparent TPA (p161-167)
  18. Transparent Pharmacy Benefits (p168-175)
  19. “ERISA Fiduciary Risk Is the Largest Undisclosed Risk I’ve Seen in My Career” (p176-185)
  20. The Opioid Crisis: Employers Have the Antidote (p186-199)

Conclusion (p200-209)
Appendix A: Detailed Case Studies on the Failures of Workplace Wellness Programs (p209-219)
Appendix B: Client Notice, Plan Sponsor Bill of Rights, and Code of Conduct (p220-225)
Appendix C: Sample Compensation Disclosure Form (p226-231)
Appendix D: Health Rosetta Principles (p232-246)
Appendix E: Health 3.0 Vision (p247-256)
Appendix F: Health 3.0 Vision: Implications for Providers, Government, and Startups (p257-262)
Author Bio (p263-264)
Bibliography & Endnotes (p265)

Healthcare “Syntopical”: The Grassroots Health Care Revolution 4 (part 8 of 15)

Chapter 7: Centers of Value: Companies Move Business

 If you are looking for an elective surgery, consider looking for the cheapest price. … The more procedures a medical team performs, the better it gets. The better it gets, the more surgery it attracts. … Second, the highest-quality providers are often the ones that are the most serious about lean disciplines. … Higher quality begets more volume; less waste begets lower costs and prices; lower prices and high quality beget more volume and higher profits.


Chapter 8: Restructured Pricing: Companies Demand Better Models

If Safeway can offer its employees the choice of five accredited endoscopy shops where they can buy colonoscopies for $1500 or less, and they are within a reasonable distance, why would they ever pay more? Whey indeed. So they don’t

Safeway and a number of other payers have developed what is called Reference-Based Pricing (RBP) to keep a lid on health care costs. They simply say to their employees, “You can go anywhere you want, and we will cover the costs up to $1500. If you pick an uncompetitive clinic, and the charge is higher than that, fine, but you pay the difference out of your pocket.”

Another provider uses a plan they call TrueCost that sets payments at Medicare rates, plus a 40 percent “provider bonus.” … another provider uses a cap of 175 percent of Medicare if an employee chooses to go outside of network.

BidRx is using direct dynamic pricing (online auction) for pharmaceuticals. It allows patient and doctor to go to its website, call up any prescription drug, look at a baseline price, check out all the valid substitutes, including generics and their lower prices, ask for an auction price, punch a button, and order at the low, “dynamic” price. The inexpensive drug arrives by mail a few days later from the low-bid pharmacy.

Smart employers have made generic drugs free to employees because they are so cost effective. … pharmacy benefit management systems that offer incentives for generic substitutions and disincentives for high-priced brand drugs generally work well. They often have three tiers for generics, low-price drugs, and high price drugs. Copays are set highest for the high-price brands.

Smart purchasers also use a “step system,” in which employees are asked to try lower-price alternatives before moving step by step to more expensive, still-patented pharmaceuticals.

Yet another payment reform is moving rapidly across the country. Employers pay a retainer to contracted doctors and nurses for primary care. They are paid a set amount each month per member, so they cease to be worried about pumping up volumes for procedures as promoted by CPT codes. … That is called a capitated plan, in this case for primary care only.

Still another reform is the simplest of them all: straight cash payments. … some convenience clinics and other providers are offering low, fixed prices for cash payments.


Chapter 9: On-Site Clinics: Companies Take Over Primary Care

Essentially, the on-site primary care turns the existing business model upside down. Instead of the specialist at the center of medical attention, the primary care doctor becomes the quarterback – just like he or she was in the family-doctor era a couple generations ago.

It is the employer’s doctor, not the big system’s captive doctor, who controls key medical spending decisions.

  • The company doctor orders tests and screenings at the best prices and quality
  • The company doctor orders up the specialists, but only when warranted by patient condition – not as routine protocol
  • The company doctor or nurse practitioner orders prescriptions, with generics as the first option.
  • The company doctor orders, in collaboration with employees, admissions to hospitals or outpatient clinics.

In short, the employer and its on-site team (nurse practitioner, or physician’s assistant, nurse coaches, dietician) offer proactive, intimate, convenient, cost-effective, integrated care in wat is called “a medical home.” The primary care doctor could be seen as the CEO of the medical home.


Chronic Diseases: Companies Go Where the Money Goes

Safeway has installed targeted programs and incentives to get its employees and their families to adopt healthy behaviors. Safeway hones in on five conditions: tobacco usage, healthy weight, blood pressure, blood sugar control, and cholesterol. If an individual passes metrics tests in those five areas, he or she wins a premium reduction of $1040; $2080 for a family that passes. Progress towards goals also earns premium rebates.

A new frontier for proactive primary care is mental health. Levels of mental illness can be elicited in the annual assessment process through a simple, proven eight-question screen, called the PHQ-9. … Remove any stigma attached to seeking help for such illnesses as anxiety, depression, and addiction. … adding behavioral treatment professionals to the on-site teams will be the next step.



  • $6000 deductible ($2,500 is the median threshold to incentivize behavior change)
  • Split savings 50/50 found by shopping around for service that costs more than the deductible, or for finding overcharges.
  • Give a cash bonus / rate reduction for using a pre-determined Center of Value
  • Make 2ndopinions on elective surgeries free
  • Need to shop Stop-Loss and Insurance to protect against catastrophic claims ($35,000 median premium) and Aggregate-Loss Insurance to protect against a bad overall year. (125% of expected)
  • Need to shop around for a healthcare network
  • Need to shop around for Claims Processing (ASO)
  • Search for a joint clinic to act as an “on-site” provider of primary care ie “Medical Home”
  • Set prescription co-pays to a 3-tier system based on price and availability of generics
  • Get warranties on top of bundled prices so there are no readmission costs
  • Negotiate low primary care prices for using cash
  • Consider an “in-house” doctor to direct all medical decisions with cost and quality for the consumer in mind. Ie create a “medical home”
  • Reduce premium prices for passing (5) health tests



  • Anthem and Humana for visible pricing
  • QuadMed for on-site clinics
  • Costco for Prescriptions
  • UnitedHealthcare for Stop-Loss insurance for 10-person company
  • Alithias for transparency tool
  • UnitedHealthcare myHealthcare Cost Estimator for transparency
  • Auxiant FocusHealth transparency tool
  • Castlight for transparency
  • Compass Professional Health Services for transparency
  • Mutual of Omaha mpower360 for transparency
  • New York made public the charges on 1,400 procedures in 2013
  • Wisconsin has the Wisconsin Health Information Organization (WHIO) All-Payer Claims Database (APCD) and “Datamart” for hospital level transparency
  • Par80 for “direct dynamic pricing” which is essentially an online auction for medical procedures
  • BidRx for direct dynamic drugs
  • RxCut by Free For All inc for direct dynamic drugs
  • Walgreen’s Take Care Health Systems for worksite primary care clinics
  • Humana’s Concentra for primary care clinics
  • ModernMed renamed Paladina Health for concierge primary care
  • Safeway Health consulting services

Healthcare “Syntopical”: The Grassroots Health Care Revolution 3 (part 7 of 15)

Chapter 4: Self-Insurance: Companies Keep Their Health Savings

Aggressive executives don’t want to be lumped into an insured pool of passive payers who are doing little to control their health care costs.  … They want to keep offering a health care benefit, but they can’t afford the double-digit annual premium increases levied by fully insured plans.

The enabler for smaller companies is to shop for what’s called stop-loss insurance at the right level to protect themselves against catastrophic medical incidents or a rash of claims. … We stop our losses at $200,000 and pay a premium of $250,000 per year to do so. … For companies with fewer than 50 employees, the median stop-loss (or deductible) was $35,000 in 2012

In an unexpected twist, some small employers with healthy workforces will use ObamaCare to their advantage: they will move to self-insurance to save money. Then, if they have a bad year with a couple losses that exceed their stop-loss limit, and they are faced with premium hikes for the following year’s stop-loss coverage, they can bail out to the new health insurance exchanges. … In effect, the small companies have a backup plan mandated by the federal government. They have a safe harbor if self-insurance doesn’t work out.

Companies that self-insure still need a health plan that offers a network of providers and discounts. And they need an Administrative Service Organization (ASO) to administer claims. Almost no company wants to process its own claims. … Fortunately, the big health insurers like the ASO business, so they offer not only the stop-loss insurance but also the discounts obtained from their network of providers and their transaction services. They like group contracts for more than individual policies for health insurance.

Most small companies also cover themselves for “aggregate” losses to protect themselves against a bad year overall for medical losses. The most common policy is to protect at more than 125 percent of expected claims for a given year.

The main deal is to get your company self-insured. But self-insurance is just a launch pad for other reforms. By itself, it doesn’t yield big savings. … Once self-insured, a company can embark on other reforms, such as installing consumer-driven incentives, making prices and quality of procedures transparent, purchasing from Centers of Value, aggressively managing chronic diseases, and offering proactive primary care.


Chapter 5: Consumer Driven: Companies Engage Employees

Employees become real customers, and a company’s health costs are reduced by 20 to 30 percent. … When people spend their own money, even if their employer gives it to them, they consume much more wisely than if someone else pays. … Companies are working with employees to improve these five behaviors:

  • How employees utilize health care
  • How they purchase care when they need it
  • How they live their lives – their lifestyles
  • How they follow regimens if they have a chronic disease condition
  • How they collaborate with their doctor on long-term health

The immediate bang for the buck comes from reducing overutilization. For instance, instead of using a physical therapist for months of sessions after surgery at $600 per hour, the employee-turned-consumer quickly figures out when to end the supervised treatments and do the exercises at home.

A person might tough out a sore throat and avoid an office visit that costs $160. If it gets worse, she would go to a convenience clinic or a doctor’s office, but she wouldn’t even think of going to an emergency room, where she’d pay $600 or more for a visit.

Smart employers also contract for relatively inexpensive advocates for their employees to help weigh tough decisions on surgery or no surgery. … Smart employers offer incentives to plan members to audit medical bills for overcharges. Employees are allowed to keep up to half of any errors discovered, and they soon find that overcharges are rampant.

HSA vs. HRA Chart pg 74

The charm of account-based health plans for employees is at least twofold:

  • People like being in control of major parts of their lives. They are quite capable of buying homes, automobiles, computers, life insurance, and education for themselves and their children. Why would they not want to control their spending on health care?
  • Totals in HSA accounts, for which contributions, buildups, and withdrawals are tax free, are becoming real assets. A few have reached six figures.


Chapter 6: Transparency: Entrepreneurs Shine Light on Prices, Quality 

Transparency platforms are absolutely necessary for intelligent consumerism to take hold, because providers are woeful at best, and misleading at worst, at volunteering real prices and meaningful quality ratings. … the trick for employers is to get employees who need a procedure to use the site and to use the best providers. The best method is plain old cash.

Example: MedSave plan offers $2000 in cash to coworkers who select a Center of Value for a joint replacement of coronary bypass. It’s $500 for smart purchase of a colonoscopy and $250 for an MRI. … Other companies use the stick instead of the carrot. Employees pay more if they pick low-value providers.

Again, though, the trick is getting a high level of steerage to the best provider in the emerging marketplace for health care. That’s where the major dollars are saved.

Ultimate price transparency comes from what is known as bundled prices. Corporate payers are demanding all-in prices for an episode of care, and they are getting them.