The Edge of Healthcare: Crushing Confusion: How Simplified Billing Is Saving Healthcare

Martin Cody: Welcome to The Edge of Healthcare where the pulse of innovation meets the heartbeat of leadership. I’m Martin Cody, your guide through riveting conversations with the trailblazers of healthcare. Tune in to gain exclusive access to strategies, experiences, and groundbreaking solutions from influential payer and health system leaders. This isn’t just a podcast; it’s your VIP ticket to the minds shaping the future of healthcare right now. Buckle up, subscribe, and get ready to ride to The Edge of Healthcare, where lessons from leaders are ready for you to use today.

Martin Cody: …, everyone, and welcome to another episode of The Edge of Healthcare: Lessons from Leaders to Use Today, as in right now. I’m excited about this next guest because he’s going to shed some light on an area of the healthcare industry, which is often misunderstood, largely impacts every single one of us, and if we had the answers that he’s going to provide many moons ago, I think we’d be all better off. One of the things he addresses, too, is access to care. With us today is Tom Policelli, CEO of HPS PayMedix. Tom, welcome.

Tom Policelli: Thank you. Great to be here.

Martin Cody: I’m excited to jump into this because healthcare, specifically healthcare insurance, impacts just about everybody in the United States. And it’s often misunderstood. We have open enrollment going on, I think, right now, or certainly, going to be wrapping up soon. So we’ll get into the CEO role and how you became CEO of different organizations. But walk us through HPS PayMedix.

Tom Policelli: Sure. So our company has been around for over a dozen years now. Started in Milwaukee, Wisconsin. And we really have two products. The first is a PPO network. So that is a network of hospitals and doctors. We negotiate prices, and employers can rent access to that network to provide affordable care to their members. And the second business is what we now call PayMedix, and that is consumer engagement and patient financing. And what we do there is we consolidate all of the healthcare information that no one understands and can sort out, and we consolidate all the money, which also people just don’t understand or can’t figure out. So we consolidate all of that and greatly simplify the whole process.

Martin Cody: Can you give me an eye, I can appreciate that because one of the things you just mentioned there is consumer, and we’ve talked about it a lot on various episodes of the program. Some of the confusion within healthcare is because we call it a single entity, a consumer, a member, a patient, a customer, and there’s four different entities for allegedly the same individual, depending upon what organization you’re talking to. So pull on that thread that you just talked about with regards to aggregating some of the financial information for the consumer and making it easier. Walk us through kind of a use case.

Tom Policelli: Sure. So because you’re absolutely right. So that same individual has a different label depending on who’s looking at them. So let’s say that you or a member of your family needs to get some care. So you are going to be a patient. You have an insurance ID cards. You’re a member. You’re all those things. You are all those labels, all the lines. But today what happens is if you’re going to go get care and you have insurance, 24% of hospitals last year in the United States required a form of payment before they would schedule a service. Now you can always go to the ER, but they require money up front or a form of payment, and a lot of people just don’t have it. So some people aren’t accessing the care they need to. If they do have funds and they do access care, then, as a patient, they’re going to get hit with bills, this is not a bill, all this stuff from the providers, because the providers are desperate to make sure they get paid. On the insurance company side, where a person is a member, they’re going to get all of these EOBs, explanations of benefits, that actually don’t explain very much. And they sure don’t reconcile with the stuff the consumer, my label, is getting from the provider who views them as a patient and the insurance company as a member. So as a person, regardless label, you’re being hit with a bunch of stuff from all directions. And so as an industry, what we’ve done in healthcare is that we’ve trained people to ignore us because we send them an enormous amount of junk that makes no sense whatsoever. That’s exactly the wrong answer. Consumers need to be engaged if they’re actually going to be able to improve their health.

Martin Cody: Sure. And so your organization endeavors to streamline that, make it more manageable, and make care more accessible, and remove some of the administrative and financial burdens in care access.

Tom Policelli: That’s right. So we sit in the middle and really we serve the individual, the consumer, if you will. And what we do is we turn off all of those EOBs from the insurance company that didn’t make any sense in the first place, turn off all the provider bills that were confusing as well, and the consumer gets a simple monthly statement. We have reconciled everything for them. So if you think about it, no, we’re not a credit card, but if you think about it, you get a credit card, a bill or your cell phone bill, everything on there is itemized for you. If you have an American Express card, American Express has made sure there’s no fraud charges or whatever. If you have any questions, you can always call Amex. Same with us. Call us. But we’ve gone through and we’ve checked everything for you. And then we pay the provider on your behalf. And so as a consumer, you have every single consumer who through their employer has us, automatically, in effect, has a financing element for them because they’ve already paid the provider. We will go and look for if there’s charity care available, if there’s incentive accounts, if they’ve got HSAs or FSAs or HRAs or any of those other healthcare-related accounts, we sort that out. Basically, our job is to consolidate all that information for consumers and make sure that every single person at that company can get the care they need when they need it, and not when they think they can afford it.

Martin Cody: Right off the top of my head, I come up with two amazing benefits. One, well, maybe ten amazing benefits of what you’re doing. I didn’t want to …

Tom Policelli: You go with as many as you want.

Martin Cody: And think, well, first of all, you hit upon the EOBs because you’re right. I’m not certain the purpose of an EOB, and I don’t believe there’s a timely filing period for EOBs, because they seem to come randomly in 90 days later, and you are.

Tom Policelli: … it’s just not always met, but not a requirement.

Martin Cody: Okay. That’s the first thing I would love to see those removed. So you’re doing that. The other part of what you’re doing, and I think this has long-term financial benefit, is if the person gets access to care when they need it versus putting off because they’re waiting for financial means, then when they do need it, they’re going to be sicker and it’s going to be more costly. And the statistics, and I’m hopeful that you have them more readily available than I do, that the number of individuals in the United States or households that are, you know, one paycheck away from medical bankruptcy and those sorts of things, it’s incredibly important now to have financing for care that is very arduous process to get through normal channels, but you’re also making that available. Tell us a little bit about some of those stats, and why what you’re doing is so important.

Tom Policelli: That’s right. So 43% of Americans with insurance, which is the scary part, they have an ID card. But they’ve avoided getting necessary care in the last 12 months because they’re worried about how they’re going to pay their part of it. And I said earlier how some, an increasing number of hospitals are requiring money upfront for scheduled service. 25% of our members today can’t get credit, commercial credit. If they have a credit card, it’s maxed out. And a lot of them can’t even get a credit card to begin with. These are people, again, with jobs that can’t get it. So what do they do? They don’t have credit, but the facility is requiring a form of payment before they can schedule a service. They don’t go, and they wait and they show up in the ER much later. Now we all saw during Covid when people can’t get care or are afraid to get care, that they end up getting care later when they’re much, much sicker and much more expensive. And so it’s terrible for the consumer. The employer also gets hit by this because their people are now much sicker and cost a lot more money. So we’ve demonstrated, which is wonderful, we’ve been doing this long enough, we’ve got great data set, we’ve got almost $6 billion through this machine, we’ve demonstrated to employers that we saved them on-trend every single year. So this year employers are seeing trend increases of seven, eight-plus percent. And our employer clients are seeing rates, you know, 2% to 4% increase because people are getting that care when they’re not as sick, which makes sense.

Martin Cody: Absolutely. So trend increase is a nomenclature germane to the industry. For the layperson who’s not everyday an insurance, what does trend increase mean?

Tom Policelli: Inflation.

Martin Cody: Okay. So inflation. Cost of care. Cost of access to care. Just the percent increase of inflation of what it’s going to cost you to get care this year. So you’re half as much as what the traditional inflation rate is.

Tom Policelli: That’s right. And that happens every year. So if you’re an employer with us, we have very, very low employer turnover. Because if you’re saving a couple percent each year, well, that’s compounding. If you’ve been with us for a couple of years, definitely not leaving because we’re saving you a ton of money.

Martin Cody: It actually is a lead into my next question would be why wouldn’t an employer want to engage with you?

Tom Policelli: I don’t know. I haven’t found one yet. Historically, I mentioned, you know, we’ve got these PPO networks, we’ve got PayMedix. Historically, you could only get PayMedix as consumer engagement, patient financing if you rented our network, our PPO network, which was only available in eastern Wisconsin. So people in eastern Wisconsin knew all about us and love us, but the rest of the country, we didn’t have a PPO network, and that was the only way we would sell it. We’ve now separated the two. And PayMedix is now, we’ve retooled it. So now we can work for any employer anywhere in America with any underlying benefit plan using any insurance network. So we’re now expanding out everywhere.

Martin Cody: Great. Access to you and what you’re doing to PayMedix is going to help businesses and the states and the people within the region, so it can just level up all parties, which I think is a great thing. I want to go back in time a little bit before your CEO time here. And where did Tom grow up?

Tom Policelli: Well, I grew up in Connecticut.

Martin Cody: In Connecticut. So born and raised. And did you have an interest in business first or an interest in healthcare that led to kind of the business side of things? How did you end up where you are?

Tom Policelli: Well, a series of really wonderful accidents. In college, I was a history major, concentrating in European imperialism in the Third World. So nothing to do with anything that they do now.

Martin Cody: Huge demand for that in the market.

Tom Policelli: Yes, yes, yes. So obviously, I was clearly very commercially focused. I just, I thought it was cool. It was a really interesting. Great professors. I really enjoyed it. And I ended up in healthcare because we had a little house on campus. This is a long time ago. So interviews are in person. We had a little house and you’d sign up for interviews. And the interviews are all in different rooms, and there’s a front desk with all these clipboards, and I was interviewing with a company that I really didn’t like whatsoever. And as I was leaving, I saw that on a clipboard for Cigna Healthcare. There was a slot that was open. Someone had canceled, and it happened to be right then. And so I had nothing to lose. I walked up, and knocked on the door, and met the woman inside, and said, I have half an hour to kill. I know nothing about your company. Would you mind if I just did a practice interview with you? And she was very nice. Said, Yeah, sure. Again, she didn’t have anything to do. And we really hit it off. And I didn’t know beans about the company. And really hit it off. Went through the next rounds, and really, really liked the people, and really started digging into what it is the company did, and I thought it was fascinating. So I went into underwriting. I did not own a calculator in college, and they wanted me to go into this program where they were going to, at the end of it, six-month training program, they give you $100 million book of business. And they say, Go forth and make money. At the end of the day, I decided if they were nuts enough to want to do that, then I shouldn’t say no. So that’s how I started. And I really got fascinated by the business. I mean, it is huge, it is critical, and it is a mess. The mess is a different mess than it was when I started. In some ways, it shouldn’t be so negative. In some ways, I mean, health care in our country is fantastic. People have conditions now, live much, much longer than they did just a couple of decades ago. You know, we’ve made a ton of progress, but when it comes to access to care and paying for care, we really haven’t done well at all. And so that’s been my thing. And so I’m a consumer engagement nut because at the end of the day, I think if we can’t get the consumers to really, really be engaged in their own care, it’s not going to work. And we have to put them in a position where they can do that.

Martin Cody: It’s interesting because we talk a lot on the program about leadership and things they’ve done potentially differently, and your type of leadership style, we’ll get to it a little bit, but I find fascinating that little episode in the house doing interview slots, you glanced down and you took a chance. Sometimes leadership is all about taking a risk or taking a chance. You know, they’re calculated and you do cost-benefit analysis and stuff like that, but sometimes you just have to kind of throw caution to the wind and say, This is something we should do. You did that. Like you mentioned, you didn’t know beans about the organization. You had time to kill. And it was, I found it interesting, too, because you thought, I’m going to practice up on my interview skills, and here’s a free slot to do that. Ended up hitting it off with the person. So at any point in time, did that impart in you going, Okay, I need to take more risk because usually, yeah, I might get knocked down, but I’m going to learn something; and on the other side of this lesson is something more valuable that I can use the next time?

Tom Policelli: Yeah. I don’t know where that started. I think that was the first day, but that is the approach I take. And to me it’s I should step back. So I did the big company thing. I’m actually two times Cigna guy, one time UnitedHealthCare, and then did a whole bunch of blank sheet of paper startups. And this company now HPS PayMedix came in and bought it three and a half years ago. So first time I’ve done that approach. So I’ve done the big, I’ve done the, you know, starting from nothing. I’ve done kind of all that. And risk-taking is definitely a part of it. My own phrase that I’ve kind of gravitated towards is that in order to do a startup in particular, really anything, if you really want to make progress, you need to have what I call focused self-delusion, right? So if you really sat down and looked at it, if you’re going to start something from nothing, right, a blank sheet of paper, and you really tried to do the cost-benefit analysis, most of the time you’re going to conclude that you’re nuts if you’re going to proceed. There’s just, there’s so many unknowns you just can’t possibly know. So you have to, you know, hedge against that. And you look at it and say, No way you can figure this out. So you need to be delusional in order to start in the first place. But you need to have focus and give yourself check-in points, and establish ahead of time yard markers to say, Okay, this is what I need to have go right in this period of time. And at the end of that period of time, at that check-in you established for yourself, you got to stick to these things. Then you step back and you have to do an honest appraisal. How am I doing? Am I making the progress I thought? And a lot of times when you find out is that the progress you made isn’t the progress you thought you’d make, it’s different progress, and that’s okay too. But sometimes the answer is no, you’re just not. And so you need to retool or shoot it and move on. But you have to have that discipline of taking risk is great, but you’re not gambling. You’re trying to be really focused on it. But you have to have those moments of I’m just taking a leap right now, but it’s for three months, and I’ll see how I’ve done on these goals that I set out for myself.

Martin Cody: Well, it’s interesting because you hit upon a bunch of psychological discipline elements there that.

Tom Policelli: Well, I didn’t mean to do that. Sorry.

Martin Cody: No, I’m glad you did. Because you’re right. You have to monitor the yard markers that you’re setting. Are these grave yard markers because you want to have the gratification of hitting a milestone that you know you can hit anyway subconsciously? Or are they stressful ones? Do you get assistance setting those yard markers from outside; someone who is neutral, a neutral observer, so to speak? And then you also have the discipline after 90 days or whatever the metric is that say, Okay, what did we do right? What did we do wrong? What do we need to iterate without sugarcoating it and without giving yourself the benefit of the doubt. And the great leader Warren Bennis, out of, I think, UCLA or Stanford, now deceased, unfortunately, but he said, In order to look ahead with accuracy, you need to look behind with honesty.

Tom Policelli: I like that.

Martin Cody: You have to forensically give yourself that 90-day audit or what have you with no emotion to say, Yep, this sucked. This, we knocked out of the park, that sort of thing. And then to move on. And I guess you need to remove ego out of it.

Tom Policelli: As much as you can. None of us are ego-free individuals, but you really have to. And that gets easier, frankly, as you start growing, as you start bringing other people into this. Because now you’ve got other people have bought into your mission, your vision, your where you want to go. And when other people buy in, now you have responsibility for them too. Right? And so to me, the accountability gets easier in a way as you move forward because you’re responsible for so many other people. That’s a natural thing. Well, of course, I’m going to check-in. Of course, I got to be honest, because all these people are, you know, they’ve been on this too; employees and investor, anybody. Right? It really is critical. And to me, just jumping ahead on that and you’re talking about the honest feedback, one of the things that I’ve gravitated to over the last bunch of years that really has been helpful is having that independent sounding board that’s outside of the company. You’re in the trenches with the people and you’re building and you’re working and you’re doing everything you’re doing. They’re all caught up in the same emotional swirl that you are. And so having outside advisors, friends, a really effective board. Not every board is effective. Having a really effective board is different, but also super helpful. And I’ve found that has given me a lot of value and helped me see things that frankly, I kind of knew but didn’t want to acknowledge oftentimes. Sometimes the stuff I never even saw, but a lot of times it’s stuff that I didn’t want to admit to myself that this isn’t working as much as I thought it should.

Martin Cody: And I think that’s an amazing disclosure, because even as CEO, where the buck stops there, for all intents and purposes, you still need to benefit the organization, a quote-unquote accountability partner, someone that is not as emotionally invested, someone that’s going to hold you, you know, your foot to the flame, so to speak, and honestly describe what went right, what went wrong. And is that person a coach? Is that person a? I think a friend might be too close, quite honestly, because they don’t want to see you hurt or harmed in that capacity, but that you also need someone that’s going to give you the straight truth so that you can then make more intelligent, informed decisions and be better for the organization. So how do you find that entity?

Tom Policelli: I haven’t done it exactly the same each time, so it’s varied. So I can just give you a couple of examples. Some of it are people who’ve been through a similar experience is really important, right? So it’s not theoretical. And it’s very easy for all of us to see other people’s problems clearly. It’s harder for us to see our own. So years ago, some friends and I, we were all running small healthcare companies, very different corners of the healthcare world. But we were all CEOs of these small companies. And we created a little club and we called it the WTF club. And it stands for what you think it stands for. And we would just get together and share what’s going on, what’s been working, what we just haven’t figured out yet, what we’re struggling with; whatever. And the other folks listening would almost right away say, Well, obviously, this is what’s really going on. And really, and sometimes that didn’t happen. But a lot of times it really did. And so we were this little, kind of this little safe space. We were all CEOs. So we all had the same pressures. So we kind of understood what we were going through. And some of it was tactical things. It’s not just all tactical, like, Okay, I need to do this. I need to get a line of credit. What’s the best way to approach this? So then it was more organizational and people-related and go-to-market tactics. That was a great benefit to me, frankly, and I think all of us in that. And so different versions of that I’ve had at different times. But early on, the very first startup I did, thankfully, I failed very quickly. So it was a year and I was like, Nope, I’m not hitting my metrics. It’s not going to happen. I turned it off. And moved on. One of the people who I met with about two-thirds of the way through that year is I was walking through everything. He stopped me and he said, This is a great idea. You’re too early for the market. You’re going to sit here and spend a lot of money for years till the market’s ready for what it is you’re doing. And I thought he was dead wrong. And then 4 or 5 months later, I realized he’s probably right. I turned off the company. 15 years later, maybe, I was starting another company. I sought him out and said, Please join my board of my new company, because you gave me this advice that I didn’t listen to. And you were right. He didn’t remember the conversation; he remember giving me that device. And so he joined my board and he was a fantastic board member. But that’s the type of people you need, is the people who are going to just give you that clear-eyed view and be honest with you; and you can take it or leave it, but at least listen.

Martin Cody: Right. Listening doesn’t cost anything. It could cost a fortune if you don’t act on it. I also think it’s interesting, too, that you had the intestinal fortitude to, again, put ego aside, because I’m sure after 5 or 6 months and pulling the plug on a business, that’s never an easy decision, never a fun decision. It’s less fun if there’s investors. But you knew it wasn’t going to work, so congratulations on that. And then you moved on to something else. And there’s another age old axiom, If you’re going to fail, fail fast, type of stuff. So I think that tends to be borne out more often than not. I want to touch upon go back to what you said earlier about a PPO network that you rent out. Explain PPO networks at a high level to individuals.

Tom Policelli: Sure. So a PPO network is really, think of it as a directory. It lists out various healthcare providers, so hospitals, physicians, imaging centers, everybody. And this network, the PPO network, has negotiated a price for each of those services and turns around and takes, negotiates that with the providers, and turns around and rents that to employers. And employers say, Okay, that sounds like a good deal. I get 50% off if I grow, so I’ll take it. And at it’s simplest, that’s what a PPO network is. It’s trying to give access to basically bulk purchasing prices to the employer.

Martin Cody: And then the PPO network or the organizers, they go out and they negotiate the rates with the provider organizations, whether that’s hospital, ASCs, providers themselves, offices. They bundle all that in a package, and then they go to employers and sell that or rent, as you mentioned earlier, that access to this network, to the employers.

Tom Policelli: Right.

Martin Cody: Okay. And then so there’s an enormous incentive right now in the industry from the transition from fee-for-service to value-based care. And access to care, obviously, like you talked about earlier, has a significant impact on care value, cost. How does the PPO network and how are you able to influence, augment, impact the cost of care from a quality perspective and the whole V2V movement to VBC?

Tom Policelli: I can say the industry is kind of all over the place on this. And as typical with healthcare overall I don’t think is moving terribly quickly. But I’ll tell you what we’re doing. And we kind of view at this point: as we’re expanding out to other markets, we view our PPO network as kind of our test kitchen. We can do things and try it out and then bring that to other markets, working with other partners. What we’ve done with our own network is we’ve, basically, carved things out against ourselves. And so we set a two-hour meeting with one of our great value-based care partners this morning, kind of an update meeting, and what we do for them is they have worked out these very efficient episodes of care bundles, if you will. So they got all the prices together. They’ve got great management of the whole process and worked very closely with the providers. It’s really very well done. Clearly saves a ton of money. What we’ve done is we’ve pulled them into our PPO network and basically carved out against ourselves. So we say all these claims that would have gone through our network, that we would have gotten paid for because we went through our network, we’re going to carve out and send it through them and said, because they’re doing it cheaper, better job. And as a result, we can turn around to our employers and say, Look, all you care about is how much, are you people getting the right care? And are you paying a decent price? So employer, you stay happy because we’re delivering more and more value to you. And that’s worked out really well. So I think more and more PPO networks are starting to realize they should do that. But it hasn’t certainly been widespread at all. It’s been a lot of people saying, No, we’re the network. We got this. And our approach is to say if someone else has managed to focus and come up with a better, more efficient way to deliver care, then we should absolutely just pull it right in. And so that’s the approach we’ve taken. I think it makes more sense.

Martin Cody: I think it does too. I actually come in contact with a lot of PPO networks for what we do at Madaket around the country. I don’t think many of them, if any, I could probably count on one hand that are as forward thinking as that. And I’m curious because the PPO network model has been around for a while. Is it one of those instances now with how we’re evolving in healthcare, certainly, the reimbursement side and the transition to VBC, that if you don’t evolve, you’ll die?

Tom Policelli: Well, I hope so, because what was working or what was happening wasn’t really working right? In other words, if you step back, and just to be negative for a moment here, take the negative view: if a PPO network is able to negotiate 50% off all the sticker prices in a market, let’s just say for a simple example, and those sticker prices are going up 7 or 8 or 10% a year, over time, what does that PPO network really delivering for value? What is it really doing? I don’t think it’s doing much of anything. And there’s now this whole transparency in the market where everyone has to post the various prices that they have, and it’s not really fully happening the way it should, but we’re getting there, and it will get there. And at that point, the basic vanilla PPO network, I’m not sure what the end game is there. It seems like it’s getting commoditized and it should. If you can’t deliver differential value, then you are a commodity and you deserve to be treated like one.

Martin Cody: Yeah. You’re not going to enjoy 50 points.

Tom Policelli: So I really think that the undifferentiated, your traditional PPO is either going to figure out how to deliver value in ways it hasn’t before, or it will go away, or just be so commoditized it might as well go away. Not an attractive business.

Martin Cody: I agree with you, and I’m glad to hear you say that. And I think it’s just part of the business, right? If you’re not delivering value and, certainly, incremental value year over year, and you’re just taking a percent off the top and really not delivering a lot, then there’s really not much lifespan in that type of business.

Tom Policelli: Not really deserve to survive.

Martin Cody: Correct. Completely agree. Looking ahead, as we kind of wrap up 2024 and beginning Q1 of 2025, what’s ahead for the organization that you’re excited about?

Tom Policelli: Growth. I mean, we’ve got a fantastic model. We’ve shown that we can deliver value to the consumers, to the providers. We prove their cash position. They’re out of the billing, collecting bad debts they hate, and we deliver value to the employers. So we’re delivering value in all directions. And so now it’s just grow, grow, grow. And that’s really what we’re doing. It’s all about expansion and growth for us, so we’re very excited.

Martin Cody: It sounds fantastic, and I want to switch gears in the format now and kind of go through some Q&A in a rapid-fire succession. So I’m going to say some things or words or phrases and you told me kind of the first thing that pops into your head.

Tom Policelli: Like a Rorschach test. This could be dangerous. Okay. All right.

Martin Cody: A little bit of a verbal Rorschach test. Yes. Okay, let’s go back in time to that schoolhouse on the campus. And you walk out of that Cigna interview, and someone were to pull you aside. And knowing what you know now, what would you have liked that individual to have whispered in your ear that says what for the next 20 to 30 years of your life as it relates to business and healthcare? Like, what did no one tell you about that you’ve encountered that no one even prepared you for?

Tom Policelli: Well, the thing that I found in healthcare is that things just move too slowly, that finding the right answer is not nearly good enough. You then need to figure out how you’re actually going to get things to change and get people there. Even when people know that the right thing is in front of them, it still can take some time. So if someone were to pull me aside and give me some advice, hopefully, it would be something along the lines of, Tom, you really need to start today. Start today, practicing to pretend that you can be patient because you’re going to have to pretend to be patient a lot. And I’m not. So I wish I, yeah, that would be the advice I want. Start practicing right away.

Martin Cody: I think that’s great advice because you’re right, it is one of the slowest-moving industries, if not the slowest. And I don’t know if that’s a people problem or a tech problem or what have you; I’m leaning towards people in leadership because it is very, very slow. And I think we’re cut from the same cloth there because sometimes you look around rooms going, Why are we still talking about this? We talk about this.

Tom Policelli: Are we done yet?

Martin Cody: Yeah. Exactly. All right UHC Cigna: who wins or loses in a cage match?

Tom Policelli: Well, today UHC just for sheer weight I mean in a cage, especially, it’s a cage match?

Martin Cody: Sure.

Tom Policelli: Because, you see, all it has to do is just pin Cigna up against the bars and squeeze the air out of them. Worked for both companies. Have learned a lot from a lot of people there. A lot of very, very skilled. But I mean, when I left UHC a long time ago. It was a planet, and now it’s a galaxy. I mean, I think it’s just gigantic.

Martin Cody: You’re running CMS for a day. What’s the first thing you do?

Tom Policelli: Well, it would probably be only a day. So I’d have to be really busy. Well, let’s pick something really, really easy. Pharmacy costs. Super easy. Fix it in a day. I guess, you know, putting out edicts has been very fashionable for the last 20 years. So I’ll put out an edict. And I’ll say that okay pharma industry, you can pick whatever you want as your price for every single drug. We’re not going to interfere at all unless you really screw up. But just let’s presume that you won’t. Pick whatever price you want. You get to pick one price one day a year. And the backdrop behind this is as an insurance guy. So I started and ran a nonprofit health plan a bunch of years ago, too. And what you find when you’re doing the insurance stuff is that for the fully-insured business in virtually every state, what you have to do is you have to file your rates with the state. And it’s secret that every insurance company files the rates and the insurance department will review them. And you go back and forth. But then, on one day, all of those rates will be made available to the market on the same day, at the same moment. So on that day, each insurance company figures out their price’s too high: Am I not going to sell any business? Did I price too low? I’m going to have too much business. I don’t know how to handle it. You’re going to find out how you did. And imagine if we did the same thing for the pharmacy cost. We said to the pharmaceutical manufacturers, Make whatever price you want. But if you make it too high, no one’s going to use your stuff. And it all becomes available on one day, so you can’t shadow price off each other. And I would make that day, by the way, be early in the year so that the insurance companies could actually know what the prices of the drugs are going to be when they do their insurance rates. Because every year is an insurance company, when you’re calculating your rates, you’re guessing what’s going to happen to drug costs. Yes, as well as you can, but you really don’t know. So this will lock it down. So anyway, that would be my one thing. Every pharmaceutical company, there you go.

Martin Cody: 100%. Full transparency, 24 hours. Everybody knows. Play their cards on the table.

Tom Policelli: On February 1st, every year, we’re going to publish the price of absolutely every drug in America. And it’s the price that everyone pays for it, period.

Martin Cody: I like it, actually. And you know, another thing that has increased complexity and confusion and administrative friction is another phrase from the insurance companies’ prior authorizations. Good, bad, or indifferent? How do you feel?

Tom Policelli: I think the way it’s used right now, I think prior auth is very, very infrequently useful. To me, what prior auth should be is all about getting the consumers engaged in making an effective decision. So to me, prior auth shouldn’t be you have to be authorized before you go to that facility to do that whatever. We should have been talking to the consumer way before that, saying, What are your needs? Where are you? And help them figure out where they should be going. By the time someone’s already been in that office, and what’s really going to happen, what’s really going to change? It becomes kind of a reason that ensures it’s an excuse to deny something, well, that’s dumb. What we should be doing is figuring out what does this person actually truly need, and making sure that they have access to that.

Martin Cody: Right, and can afford it.

Tom Policelli: And can afford it. Exactly. Right. And so I just think that, like so many things in healthcare, it’s the classic the horse has left the barn. Let’s shut the door and burn down the barn. It’s like, yeah, sure, that was really effective.

Martin Cody: No, good point. And no one knows where the horse is.

Tom Policelli: Yeah, exactly.

Martin Cody: Last question. Anybody living or dead in healthcare that you would like to sit down and have an adult beverage with? Who is that individual that you’re going to have a conversation with, and what are you drinking?

Tom Policelli: I’m going to cheat and go with two people, both of whom I have met and spent time with, but I don’t think they’ve ever met each other, and I would love to be there for this. And so one of them is Adrian Gore, who is a co-founder and CEO of a South African company, Discovery Health. And what he’s an actuary as of most of his team and what he really pioneered, still, the leader, as far as I’m concerned, is behavioral economics when it comes to health and life insurance. I know this is like the most boring sense you’ve ever heard in your life, but one of the real issues that goes on is that we as consumers think like two minutes in front of ourselves or we just we’re not very good at planning ahead. And if you think about it, we have health insurance, which is a one-year contract. And so insurance companies care how healthy you are this year, but not really next year or the year after. Life insurers want you to stay alive for a very long time, because they don’t want to pay out a huge amount of money. And what Adrian has done is matched up health and life insurance, and figured out how to get us as people to actually do things that we should be doing anyway, but aren’t. So they’re saving consumers a ton of money. They’re much healthier. And it’s really, really amazing to have it. And he’s now in like 40 countries around the world. The second person is Steve Hemsley, who was the president and CEO at UnitedHealthCare when I first got there and became CEO later and is now the chair of the board. He is a brilliant person. He built this galaxy, UnitedHealthCare, into what it is today. Fiercely smart person. And I just think these two really smart people, two of the smartest people I’ve ever met in business, period, never mind healthcare, and sitting down with them, that would be fascinating. And in terms of what we’re drinking, well, either one of them should take on this role. But I’m going to pick Steve. Steve has made so much money. I’m going to go into Steve’s cellar because Steve’s got a nice cellar, and I’m going to pick something out of his cellar, and maybe at random, because I’m sure it’s great.

Martin Cody: I like it, and I really appreciate and applaud the idea of getting two great minds together and then rubbing that up against each other and just seeing what comes out of it.

Tom Policelli: I’m totally selfish on my part. I would learn a ton.

Martin Cody: Well, and genuinely, it would be good and useful to the industry, so we should probably do more of that just as a byproduct anyway. So I like the idea. Tom, it’s been fascinating as I had envisioned it would be. And thank you for shedding a whole bunch of light on this side of the industry. I’m looking forward to seeing what happens with the group in 2025, because I do think you’re poised for some very stratospheric growth, because it sounds like you put all the building pieces in place. Congratulations on that, and thank you so much for the time on The Edge of Healthcare.

Tom Policelli: Thank you. Really, I appreciate it. It’s been a lot of fun. Thanks.

Martin Cody: Awesome.

Martin Cody: Thanks for diving into The Edge of Healthcare with us today. I hope these insights will fuel your journey in healthcare leadership. For more details, show notes, and ways to stay plugged into the conversation, head over to MadaketHealth.com. Until next time, stay ahead of the curve with The Edge of Healthcare, where lessons from leaders are always within reach. Take care of yourselves, and keep pushing the boundaries of healthcare innovation.