Aligning Incentives with Quality Care with Nick Reber, founder and CEO of Garner Health

[00:00:02] Hey everyone, welcome back to the Outcomes Rocket founder stories. Saul Marquez here and I'm super excited to be hosting Nick Reber on the podcast. He's the founder and CEO of Garner Health. He's doing an incredible job there. Garner Health has become one of the fastest growing healthcare tech companies in the country over the past five years. And Nick has made it Garner's mission to change the economics of healthcare so that providers thrive by practicing the most important thing.

[00:00:32] medicine that they got into the business to practice. So excited to have you here, Nick. Thanks for joining us.

[00:00:40] Thanks for having me, Saul.

[00:00:41] Hey, it's a pleasure. Look, help us understand more about you. What got you into healthcare entrepreneurship and why are you doing what you do?

[00:00:48] Let's see. So maybe going back, gosh, over 10 years now, I started to have health issues myself. So I had back pain and got misdiagnosed and had a surgery in my thoracic spine, which then turns out was the wrong surgery and was done poorly.

[00:01:01] So then I had a revision and I'm on surgery number five now. So I got to see everything from the inside. And about the fourth surgery, I got, I had a neck surgery and was rolled out of the hospital in a wheelchair and I could walk fine.

[00:01:14] And the hospital was like, here you go, here's your wheelchair. And I said, well, but I don't need one. I can walk fine. And they said, yeah, but it's covered by your insurance. And I was like, but who actually pays for this? And they're like, oh, your insurance company pays for it.

[00:01:27] And it turned out, I did a little research in this. My company was self-funded, which basically meant that the equity holders of the company, one of which I was actually paying for it.

[00:01:35] And I started to just pull the thread here. And I got to realize that all of these healthcare expenses were ultimately being deducted from the paychecks of the average American when you really pulled the thread.

[00:01:46] And that felt just unjust and to have all this waste, all this excess care complications, bad things that not only lowered our life expectancy, but cost everybody in the country such a ton.

[00:01:55] And so that's what I've been working on for the last decade or so. And that's what we're up to here at Garner.

[00:02:01] Man, thank you for sharing that very personal story. And sorry, it's frustrating. And a lot of Americans deal with this too.

[00:02:08] And then the insurance thing, to your point, a lot of people end up footing that bill if the employer doesn't. So a lot of issues here.

[00:02:18] And so help us understand what Garner Health does and how you guys are changing this.

[00:02:22] Yeah. So I think ultimately, if you think about healthcare, today we have a day where even though providers may have great intentions, the way they get paid is candidly not aligned with great outcomes.

[00:02:35] And we've heard about that and talked about value-based care. Providers get paid to churn through patients very quickly.

[00:02:40] They get paid more if there's a misdiagnosis. They get paid more if there's a complication.

[00:02:45] And I helped get a health plan off the ground called Oscar and really started to see that changing that economic model is really hard.

[00:02:53] And so where we started, actually, we're starting is working with employers who have a much more natural incentive to lower costs and improve quality because they're paying foot in the bill ultimately.

[00:03:02] And they want obviously healthy employees. And I think they're much more naturally aligned with what you want.

[00:03:08] And what had been in that world in terms of really lowering healthcare costs in a broad way across all disease segments has been narrow networks.

[00:03:17] And you narrow your network around one hospital. And candidly, those products don't sell very well to employers and nobody wants to lose access to doctors.

[00:03:26] Or you have navigation tools, which candidly nobody uses, these sort of digital overlays that you can search and nobody's picking up an app while they're in the doctor's office.

[00:03:34] And what we started to do is we started to look at what really works that actually moves the needle on cost and quality.

[00:03:41] And what we started to realize is that one intervention matters a lot more.

[00:03:45] And it's which individual doctor do you go see?

[00:03:49] And that the doctors may only be 20% of your healthcare bill, but their pen, their prescription patterns control the other 80%.

[00:03:56] So they decide where you go for surgery, whether you need surgery, what drug you're on.

[00:04:01] And almost all the time, the patients listen to their doctor.

[00:04:04] And so almost the unit of healthcare is the doctor.

[00:04:07] And yet there's very little understood in the industry about the quality or efficiency or cost of that unit.

[00:04:13] And so that's what we do is we have really taken a real step forward in terms of understanding provider performance based on a data asset of three quarters of all the claims data in the country, a much more modern approach to machine learning.

[00:04:27] And then we're also an incentive company so that we actually get about 10 times more engagement by administering financial incentives that really haven't existed in the industry.

[00:04:38] And I think in a thoughtful way previously.

[00:04:39] So that's really what we do is we've taken a step forward on provider analytics and we've taken a step forward on engagement.

[00:04:46] And most of what we do is work with employers to start.

[00:04:49] Although now we're starting to work with providers who want to improve their practice as well.

[00:04:53] Got it.

[00:04:54] That's interesting.

[00:04:55] So you've focused on employers then with this program?

[00:05:00] Yeah, most of what we do is work with everything from small fully insured to large Fortune 500 companies.

[00:05:07] And we help them restructure their benefits really.

[00:05:10] Keep their network, keep their carrier in place.

[00:05:13] So this isn't narrowing your network, etc.

[00:05:15] But what we do is we administer incentives that layer on top of their healthcare plan.

[00:05:21] So they keep their Buka network, whatever it is.

[00:05:23] But if their employees choose to engage with Garner, we work with them to administer incentives that will cover either all or most of that copay deductible coinsurance bill.

[00:05:34] So an employee can either have their standard higher and higher deductible plan that's going to probably bankrupt them if they go use a doctor or they can use Garner.

[00:05:43] And if they use Garner, they just have to see one of the highest quality, best performing doctors in network.

[00:05:48] And then there's so much savings when you do that, that it more than pays to cover their out-of-pocket expense.

[00:05:53] And that's the basic economic model for employers.

[00:05:56] That's great.

[00:05:56] And what about in a situation like yours where you were offered a wheelchair and you didn't need it?

[00:06:02] Is that type of stuff caught by the system or is that future state maybe?

[00:06:05] Totally.

[00:06:06] So what we realize is that ultimately from a patient perspective, I saw an orthopedist and the orthopedist says, hey, you need surgery.

[00:06:15] And it's booked for next week at this hospital.

[00:06:17] And I say, okay, I guess I'm going.

[00:06:19] Right?

[00:06:20] So what we do at Garner is we analyze not just is that doctor making the right decision on whether to do surgery or not,

[00:06:27] or do they have a great low complication rate on that surgery, low revision surgery rate, great long-term outcomes.

[00:06:33] But we also assess what's going on at that facility at which they refer.

[00:06:37] So who's staffing the anesthesiology department?

[00:06:40] How much durable medical equipment, such as a wheelchair, are you stuffed with afterwards?

[00:06:44] Is it all the right stuff that you really do need, the right implants and the right things?

[00:06:47] Or are they just throwing things in there to add cost and lower quality to the system?

[00:06:52] So we do that both for the physician and every facility that physician works at.

[00:06:57] And from a member experience standpoint, they don't need to know all that complexity.

[00:07:01] They just go to Dr. Jones, who is one of our top performing providers, and all of that stuff is figured out in the data for them.

[00:07:08] So they don't have to worry about it along the way.

[00:07:10] Cool. I love that.

[00:07:12] Well, it definitely seems like the proactive care that a lot of employers would like to have.

[00:07:19] Look, the benefit space is complicated.

[00:07:21] And certainly solutions like this, I would say probably ruffle some feathers.

[00:07:26] Talk to me about things you guys are doing to hit the market and get people to really open up their eyes and consider.

[00:07:32] Well, my view on it is that I agree.

[00:07:36] The goal is to basically improve quality and lower cost per unit of disruption.

[00:07:41] And as I mentioned previously in the marketplace, I think there's been a few things.

[00:07:45] There's been increasingly sort of individual point solutions, musculoskeletal, diabetic, cardiometabolic.

[00:07:50] And those are just impact a couple percent of your population sort of things.

[00:07:54] But if you want something broad, it's tended to be either not very effective or incredibly disruptive.

[00:08:00] Like everybody loses access, half your people lose access to doctors and are walking down to the HR office.

[00:08:06] And so what garners is a way that to start to do a little bit of disruption, which candidly we need a little bit of disruption.

[00:08:12] We need a lot of it.

[00:08:13] But we can't.

[00:08:14] But to do so in a way that you don't have to change your network, you don't have to change your carrier.

[00:08:19] And and also we do a bunch of things like we allow people to keep their existing primary care doctors if they have 10 year relationships, all that stuff.

[00:08:26] But when someone gets sick and needs that for me, needs to treat their back pain or their stomach pain or their chest pain, that a those tend to be not very long term sticky relationships, but they're huge dollars.

[00:08:38] And if we can give that person the right carrots and sticks, incentives and information to make a better decision, our view is that's really the key of how to move the needle massively without doing too much on the disruption side.

[00:08:51] So it's a bolt on.

[00:08:52] You bolt on to an existing plan.

[00:08:54] Exactly. That's the basic idea.

[00:08:56] Very cool. Very cool. I love that.

[00:08:58] Well, look, it sounds like you're making strides with this program.

[00:09:02] Lord knows we all need this as employers in the space because these costs come as surprises often.

[00:09:10] And especially if you're self-funded, you need to do something better.

[00:09:13] Guess what? You don't have to fire your existing plan.

[00:09:16] A lot of people shy away from captives and the different options that are out there, narrow networks.

[00:09:22] But you don't have to do that anymore because Nick's team's come up with something cool.

[00:09:26] As you built the business, Nick, what's been a setback you've had?

[00:09:30] Founder stories that really has built you guys to be even stronger.

[00:09:34] I think from our side, man, if you don't like live a year, much less maybe a month or much less five years without a lot of setbacks in starting a business.

[00:09:43] I think for us, COVID was a really trying time.

[00:09:46] We had our early, earliest clients going.

[00:09:49] But we were really trying to scale and really go to market.

[00:09:52] And in the course of two weeks, we went from everybody was interested in what we were doing to absolutely nobody was interested unless you were a mental health solution or a back-to-work solution.

[00:10:03] And by the way, healthcare costs were down 10% overnight by least.

[00:10:07] And so nobody really wanted to hear this story, like, hey, I'm going to help you manage your, improve your healthcare costs and improve quality because nobody's at the doctor.

[00:10:14] And so I think for us, that was actually a really challenging year.

[00:10:17] We sold an annual benefits calendar.

[00:10:19] We sold nothing all year until mid-October, which is like the latest time anybody's making a decision normally.

[00:10:25] And we probably would have gone out of business, candidly.

[00:10:28] And, but we really, we were thinking, well, do we pivot and do we help people get back to work?

[00:10:33] And we made the decision, I think, luckily, that we would stay the course and realize that eventually this thing would come back.

[00:10:40] And from basically end of October 2020 since now, I think people have started to realize, wow, cost is coming back fast.

[00:10:48] Quality is really important.

[00:10:49] So we learned, and it was not at all easy, but we really learned that eventually if you build it, they will come.

[00:10:55] And that if you really don't get too sidetracked with the thing that's popping up right now and you just say, okay, over the next decade, how are we going to really improve the healthcare system?

[00:11:05] I think that's really been important for us as you're always asked to do new things and all these little thing, new fads, and there's AI, and there's this thing that comes up and all these things.

[00:11:15] And the goal is for us is we've really cemented on that North Star of, okay, what's, how's this actually going to help the people that are really sick get better and lower their cost?

[00:11:25] Love it.

[00:11:26] Well, hey, kudos for sticking to it.

[00:11:28] It could be challenging, but if you have a very clearly defined true North and you stick with it, obviously the benefits could be huge.

[00:11:37] The question is, have you done what you need to do to prepare the cash in your bank account to do that?

[00:11:45] That's critical.

[00:11:46] And so it's a reminder to all of us that make sure you secure your funding and make sure that you're leveraging your cash position adequately to be able to do what Nick and his team were able to do.

[00:11:58] Huge kudos.

[00:11:59] And now it's paid off.

[00:12:00] So I really appreciate you sharing that, Nick.

[00:12:02] For sure.

[00:12:03] That's your income statement, man.

[00:12:04] That's the whole thing.

[00:12:05] It really is, man.

[00:12:07] I've guessed on that.

[00:12:08] Don't take your eye off that.

[00:12:09] Well, Nick, certainly super valuable to know what you guys are up to.

[00:12:13] If you had to leave the listeners and viewers with one thing that they should be thinking about, how would you close out today?

[00:12:21] And then what's the best place people could get in touch with you?

[00:12:23] If you want to get in touch with me, just the best place is on LinkedIn, actually.

[00:12:26] So follow me on LinkedIn, message me on LinkedIn, all of that stuff.

[00:12:29] That's where I'm most active.

[00:12:30] And or you can find us on getgarner.com and follow up there and we'll get back to you.

[00:12:35] And then in terms of the lesson, I think it's going to be a fascinating time.

[00:12:39] I don't think everyone fully appreciates how the inflation pipeline has really worked over the last three years that we had for the first time general economy inflation above health care inflation for three years and two years.

[00:12:53] And now that's coming back with a vengeance.

[00:12:55] And the more I talk to folks who were getting closer to the health systems, they're really at a deficit.

[00:13:02] There's their three year contracts that they are really negotiating up aggressively over the last year or so.

[00:13:08] And so the trends are going to just keep getting worse and worse.

[00:13:11] And so I think that's going to be the big theme.

[00:13:13] It's not all that sexy or exciting.

[00:13:16] But I think now's the time where you're going to have eight, nine, 10 percent trends.

[00:13:21] And I think pretty much everyone, if you're not solving this problem, is going to it's going to be rough out there.

[00:13:27] So whether that's if you're a benefit manager, if you're a solution in the space.

[00:13:31] So that's what we're really focused on is I think there's going to be a big wave.

[00:13:34] We see it in our claims data that's coming.

[00:13:37] And so I think however you think about preparing, I think now is really the time.

[00:13:40] But hey, there's never a better time than now, especially with the numbers that you share, Nick.

[00:13:45] So love that call to action.

[00:13:48] Folks, health care is not a vertical.

[00:13:50] It's a horizontal.

[00:13:52] And like Nick said, if you are not doing something today to really curb your costs, it's going to bite you in the behind.

[00:13:59] Call to action here is check out what Nick's got going on.

[00:14:03] The opportunity for you to say, is there like an average savings you're getting for people when you do these?

[00:14:09] I don't want to put you on the spot there.

[00:14:10] Maybe you have the answer or not.

[00:14:12] Our average between all of our clients, we average 12% trend reduction in year one and a little bit more in year two and three.

[00:14:20] And it's a pretty meaningful.

[00:14:22] You're talking about $1,500 per employee per year or something like that.

[00:14:25] That's significant.

[00:14:26] So, folks, the money is on the line.

[00:14:29] Your employees lives are on the line.

[00:14:30] And I love what Nick's got to offer here.

[00:14:33] So make sure you check out the show notes.

[00:14:34] Get in touch with him and his team.

[00:14:36] Get in touch with him on LinkedIn.

[00:14:37] We'll leave ways to get in touch with him.

[00:14:39] All the links inside the show notes to take advantage of that.

[00:14:42] Nick, thanks for joining us.

[00:14:44] This has been Truly Value Add.

[00:14:46] It was a pleasure.

[00:14:46] Thanks, all.