Relentless Health Value

Buy and Bill vs. Pharmacy Bagging: Weighing the Options for Plan Sponsors, With Erik Davis and Autumn Yongchu (EP371)

Stacey Richter continues her conversation with Erik Davis and Autumn Yongchu of USI Insurance Services, comparing the real trade-offs among buy and bill, pharmacy bagging, site-of-care steering, and home infusion for plan sponsors trying to control specialty drug costs without shortchanging patients.

WHAT YOU'LL LEARN

✅ Why specialty drug procurement has to be managed case by case, unlike retail drug spend, since a single patient can cost as much as the rest of the member population combined

✅ How white bagging can be used as leverage to reduce markups, and where it does and doesn't actually save money compared with buy and bill

✅ Why vulnerable patients on specialty drugs require extra care when plan sponsors change site-of-care or bagging arrangements

✅ How comparison shopping for infusion sites can become "a vicious circle" when consultants aren't educated enough to guide the decision

✅ Why transparency initiatives have sometimes been used by health systems to keep buyers' eyes off the real cost drivers

✅ Why plan sponsors need a collective understanding of every variable—contract terms, site of care, drug type—before making specialty pharmacy decisions

WHY THIS MATTERS

There's no single right answer between buy and bill, white bagging, site steering, and home infusion—each carries different savings potential and different clinical risk depending on the drug and the patient, which is exactly why plan sponsors get taken advantage of when they don't understand the full menu of options. Davis and Yongchu's case-by-case framework helps plan sponsors ask the right questions before locking into one approach.

MENTIONED IN THIS EPISODE

EP369 with Keith Hartman, RPh: Apple Podcasts | Spotify | Other Apps

EP365 with Scott Haas: Apple Podcasts | Spotify | Other Apps

=== LINKS ===

🔗 Show Notes with all mentioned links: Episode Page

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=== CONNECT WITH THE RHV TEAM ===

✭ LinkedIn ✭ Threads ✭ Bluesky ✭ X

00:00 Introduction.

04:45 Can you actually save money by carving out specialty infused drugs and making them a pharmacy benefit?

06:28 How can plan sponsors use white bagging as leverage to reduce costs from markups?

06:47 Does white bagging save money compared to buy and bill?

07:42 "You also need to understand that with some of these drugs, you're dealing with very vulnerable people."—Erik

11:10 "When your insurance carrier is married to your PBM, it doesn't matter where the money goes."—Autumn

12:00 "You need to have a collective understanding of every variable … when you're making those … decisions."—Erik

14:53 How can comparison shopping save plan sponsors money when it comes to specialty infusion costs?

16:51 How can comparison shopping be a vicious circle in the wrong setting for plan sponsors?

18:43 "That's part of the problem: It's not just the plan sponsor not being educated enough; it's also the consultant … that they believe is supposed to be that isn't."—Erik

19:03 How has transparency been used by healthcare systems to keep buyers' eyes off the ball?

26:55 "It is very case by case, but it comes down to your risk appetite."—Autumn

28:19 "It's something that you have to, as a plan sponsor, really continue to monitor throughout the plan year."—Autumn

28:38 "The more you know, the better equipped you're gonna be."—Autumn

29:27 What can employers who are feeling aggressive do?

31:19 "The dollars circle, whether people realize it or not."—Autumn

How Hospitals Hide 6x Markups on Specialty Drug Bills, With Erik Davis and Autumn Yongchu. The Billing Tricks Behind 6x Markups on Infused Specialty Pharmacy Drugs. Episode 370.

Stacey Richter talks with Erik Davis and Autumn Yongchu of USI Insurance Services about how some health systems manage to charge up to six times the cost of an infused specialty pharmacy drug—and the specific billing tactics, from miscellaneous J-codes to bare revenue codes, that make those markups nearly impossible to catch.

WHAT YOU'LL LEARN

✅ Why Medicare Part B caps buy-and-bill markups at ASP + 6% for commercial-like patients, but no such guidance exists for commercial payers negotiating off chargemaster rates

✅ How J-codes identify the specific specialty drug used in a procedure—and how hospitals obscure markups by billing a vague "miscellaneous chemotherapy" J-code instead

✅ How revenue codes function like a menu category header, letting a hospital bill for "some seafood" without disclosing which dish or how much

✅ Why requesting line-item charges, per Marshall Allen's advice in Never Pay the First Bill, is the essential first step to catching inflated bills

✅ How hospital charges make up over half of many employers' healthcare spend, making these opaque billing practices a high-stakes problem

✅ Why coding opacity, more than any single contract term, is what allows 6x markups to survive scrutiny

WHY THIS MATTERS

A patient's coinsurance and an employer's premium both scale with the size of the bill, so when a hospital bills a vague code instead of the actual drug used, no one downstream—patient, payer, or auditor—can verify whether the price is fair. Davis and Yongchu's breakdown of J-codes and revenue codes gives plan sponsors the specific vocabulary needed to demand transparent, auditable bills instead of accepting opaque ones.

MENTIONED IN THIS EPISODE

EP369 with Keith Hartman, RPh: Apple Podcasts | Spotify | Other Apps

=== LINKS ===

🔗 Show Notes with all mentioned links: Episode Page

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=== CONNECT WITH THE RHV TEAM ===

✭ LinkedIn ✭ Threads ✭ Bluesky ✭ X

00:00 Introduction.

07:33 How do hospitals maximize inpatient bills?

08:05 How can hospitals upcode on specialty pharmacy products?

09:44 "It's really not uncommon to be overbilled and overcharged."—Autumn

11:11 Why do marked up bill charges actually affect the price commercial payers pay?

12:49 "If your payer's not double-checking … how do you know that fraud's happening?"—Autumn

12:52 "If the payer doesn't have the detail to validate what that drug actually is, then are they really checking?"—Autumn

13:33 Why is it so hard to verify what you're actually paying for on a hospital bill?

16:28 How do hospitals maximize profit with outpatients?

17:12 "Really it comes down to contracts and how [the] contracts are written."—Autumn

21:54 "There are … silos within healthcare, and none of them actually talk to each other."—Autumn

24:56 "There are these rules out there, but there are also big loopholes out there."—Autumn

26:13 How can hospitals maximize payments for Medicare patients on drugs that have been out for a while?

29:30 "We just have a tendency to assume … that Medicare has a rate for everything, and Medicare doesn't."—Autumn

Brown Bagging, White Bagging, and Clear Bagging Explained, With Keith Hartman, RPh. A Field Guide to Specialty Pharmacy Bagging and Who Profits From Each Kind. Episode 369.

Stacey Richter talks with Keith Hartman, RPh, CEO of ContinuumRx, about the evolution of specialty pharmacy "bagging"—brown, white, clear, and gold—and how each variation shifted which party captures the profit on increasingly expensive infused and injected drugs.

WHAT YOU'LL LEARN

✅ How brown bagging (drug shipped to or picked up by the patient, then brought to the provider) gave way to bigger money once specialty drug prices skyrocketed

✅ How "buy and bill" lets provider organizations profit more from more expensive drugs, since a percentage of a bigger number is a bigger number

✅ How white bagging emerged as PBMs stepped in to buy drugs directly and ship them to providers, promising savings to plan sponsors

✅ Why clear bagging—where one organization owns both the pharmacy and the administering provider—solves some clinical issues with white bagging while letting hospitals capture a cut

✅ Why oncology providers, on average, are reported to collect roughly six times the cost of some drugs they administer

✅ What gold bagging is, and how this whole "who gets the money" fight between providers, PBMs, and hospitals continues to evolve

WHY THIS MATTERS

Every iteration of specialty pharmacy bagging is really a reaction to the last one—a cascade of "equal and opposite market distortions" as providers, PBMs, and hospitals each try to capture a share of the profit on increasingly expensive infused and injected drugs. Understanding the brown/white/clear/gold bagging taxonomy gives plan sponsors and clinicians the vocabulary to see past the jargon to who's actually profiting and where clinical care might suffer along the way.

MENTIONED IN THIS EPISODE

Encore! EP216 with Chris Sloan: Apple Podcasts | Spotify | Other Apps

EP337 with Olivia Webb: Apple Podcasts | Spotify | Other Apps

=== LINKS ===

🔗 Show Notes with all mentioned links: Episode Page

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🫙 Support the podcast with a small donation to the Tip Jar

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=== CONNECT WITH THE RHV TEAM ===

✭ LinkedIn ✭ Threads ✭ Bluesky ✭ X

00:00 Introduction.

08:09 What kinds of patients and/or drugs is the concept of bagging relevant to?

08:53 What is brown bagging, and what are the issues with it?

10:28 What is white bagging, and how is it different from brown bagging?

11:30 Who are the key players in pharma bagging?

12:25 Why does a PBM want a specialty drug to go through them?

12:49 From the physician's perspective, why is buy and bill ideal?

16:46 How does white bagging impact patient clinical care?

23:05 What are the two main reasons patients might not continue their therapy?

23:29 "We've got to leave some authority with our prescribers to be able to make a clinical decision of what's best for that … patient."

24:41 What is clear bagging?

26:51 How does a hospital specialty pharmacy get in network with a PBM?

28:57 What is gold bagging?

30:11 "Outlook really needs to be what's best for the patient."

Do You Know How Much Cancer Centers Get Paid to Put Patients on Drugs? With Aaron Mitchell, MD, MPH (Encore! EP282)

In this Encore rebroadcast, Stacey Richter revisits her conversation with Aaron Mitchell, MD, MPH, an oncologist and health services researcher at Memorial Sloan Kettering, about "buy and bill" — the payment model that pays cancer centers a percentage of drug cost to infuse chemo, creating a built-in incentive to reach for the more expensive drug.

WHAT YOU'LL LEARN

✅ How the "buy and bill" payment model works and why it rewards oncology centers for choosing costlier drugs

✅ Why some provider organizations make four to six times the cost of a drug in profit under this model

✅ Why financial toxicity from cancer drug costs is a form of clinical toxicity for patients

✅ What reimbursement reform and capitated systems could look like as alternatives to buy and bill

✅ Why patients are the only real losers in the current system, and who needs to lead the charge for change

WHY THIS MATTERS

Buy and bill isn't a minor billing quirk — it's a payment structure that financially rewards oncology centers for choosing the most expensive drug rather than the most appropriate one, with patients absorbing the cost-sharing consequences. Understanding the mechanics is the first step toward the reimbursement reform Dr. Mitchell argues is overdue.

=== LINKS ===

🔗 Show Notes with all mentioned links: Episode Page

✉️ Enjoy this podcast? Subscribe to the free weekly newsletter

🫙 Support the podcast with a small donation to the Tip Jar

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=== CONNECT WITH THE RHV TEAM ===

✭ LinkedIn ✭ Threads ✭ Bluesky ✭ X

00:00 Introduction

04:34 Following the drug and following the dollar.

04:56 The "buy and bill" system.

05:43 The perverse and problematic incentives of the system.

08:38 "It creates the incentive for us to gravitate toward the more expensive drug."

08:42 The hesitancy to address the financial toxicity of drugs for patients.

09:53 Why the only person losing in this situation is the patient.

10:51 The financial impact from the patient perspective.

13:57 Are patients realizing this impact?

14:42 Solving the problem of oncology drug choice.

16:45 Reimbursement reform.

18:24 Capitated systems and incrementalist impacts to reimbursement reform.

23:30 Are we at a tipping point?

23:51 "The current system…works too well for too many people."

25:01 Who isn't well served by the current system.

25:32 Who has to lead the charge for change.

28:28 Large oncology providers vs small oncology providers in the buy and bill system.

The Absence of Collaboration Between Healthcare Stakeholders: What It Means (INBW34)

Stacey Richter shares a personal story about her grandfather's fragmented heart failure care to dig into why healthcare stakeholders don't collaborate — and argues that revenue maximization, not technical or regulatory barriers, is the real root cause.

WHAT YOU'LL LEARN

✅ Why heart failure patients generate a third of Medicare spending yet readmissions keep rising

✅ The two things required to improve chronic care outcomes: nonfragmented patient journeys and steering patients to the best care setting

✅ Why revenue maximization, not interoperability or HIPAA, is the real barrier to healthcare collaboration

✅ The three kinds of collaboration — along, informing, and navigating the patient journey

✅ Why "stakeholder prejudice" holds back collaboration with organizations, like Pharma, that could add real value

WHY THIS MATTERS

Fragmented, uncoordinated care isn't an accident — it's the predictable result of a healthcare system built on revenue maximization rather than patient outcomes. Real collaboration requires stakeholders to work with organizations they may not love, and understanding that a lack of collaboration is a symptom, not a mystery, is the first step toward fixing it.

=== LINKS ===

🔗 Show Notes with all mentioned links: Episode Page

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🫙 Support the podcast with a small donation to the Tip Jar

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=== CONNECT WITH THE RHV TEAM ===

✭ LinkedIn ✭ Threads ✭ Bluesky ✭ X

00:00 Introduction

03:07 How do we improve care, especially for chronic care patients?

03:18 What are two important contributors to patient outcomes?

03:40 EP361 with Carly Eckert, MD.

03:56 "We know that financial toxicity is clinical toxicity."

04:09 EP358 with Wayne Jenkins, MD.

06:05 Why can't parties across the healthcare industry seem to collaborate?

08:05 EP366 with Kevin Schulman, MD.

08:07 EP365 with Scott Haas.

08:10 Upcoming episode with Autumn Yongchu and Erik Davis.

08:34 "I would say that a lack of collaboration is a symptom."

10:10 There's lots of evidence that interoperability has been solved. It's been solved for years.

10:37 Upcoming episode with Cora Opsahl.

10:46 EP349 with Lisa Trumble.

10:53 EP354 with Shawn Rhodes.

10:57 EP324 with Nicole Bradberry and Kelly Conroy.

11:04 Upcoming episode with Dave Chase.

11:19 EP367 with Doug Hetherington.

11:25 EP350 with Katy Talento.

11:28 EP294 with Steve Schutzer, MD.

11:50 EP277 with Eric Weaver, DHA, MHA.

13:00 What are the three kinds of collaboration in healthcare?

13:23 Do collaborators need to have equal status in a collaboration?

13:57 "Care can be improved at the population level, at the community level…at the disease or the condition level."

15:10 How is stakeholder prejudice holding healthcare back?

15:42 EP356 with Ge Bai, PhD, CPA.

16:55 "Outcomes-based contracts…we need to figure out how to operationalize them."

17:08 "Colluding and conflict of interest is not cost neutral."

17:30 EP364 with David Muhlestein, PhD, JD.

The Five Steps to Change Management That Actually Sticks, With Ashleigh Gunter. Why Rolling Out New Benefit Designs Fails Without Real Change Management. Episode 368.

Stacey Richter talks with Ashleigh Gunter, president of Translucent Healthcare Consulting, about why changes to benefit designs and care delivery models so often trigger suspicion and failure—and the five-step change management framework that helps them succeed instead.

WHAT YOU'LL LEARN

✅ Why health decisions feel like "one-way-door" choices, which raises the emotional stakes of any change to insurance or care delivery

✅ Why simply communicating a change is not the same thing as managing it

✅ Gunter's five steps to effective change management: great leadership, building a case for the change, finding champions, overcommunicating, and measuring and celebrating progress

✅ Why skipping implementation steps in the name of speed often gets a well-intentioned initiative labeled "disruptive" and doomed to fail

✅ How change management challenges differ on the provider organization side compared with the benefits/insurance side

✅ Why educating operational staff, not just clinical or leadership staff, is essential to a change actually taking hold

WHY THIS MATTERS

Even changes made with the best of intentions—better benefit designs, team-based care models—can fail or get management labeled "disruptive" if leaders skip the unglamorous work of building a case, finding champions, and overcommunicating. Gunter's five-step framework gives health system and employer leaders a concrete process for the implementation work that strategy alone doesn't cover.

=== LINKS ===

🔗 Show Notes with all mentioned links: Episode Page

✉️ Enjoy this podcast? Subscribe to the free weekly newsletter

🫙 Support the podcast with a small donation to the Tip Jar

📺 Subscribe to our YouTube channel

🎤 Listen on Apple Podcasts

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=== CONNECT WITH THE RHV TEAM ===

✭ LinkedIn ✭ Threads ✭ Bluesky ✭ X

00:00 Introduction.

07:46 How does change management go wrong in healthcare?

08:27 "Communication [of change] in and of itself isn't change management."

10:03 What is change management?

11:06 What does great leadership look like in change management?

12:29 "Leadership sets the tone."

12:38 What makes change management so hard?

13:27 "What's the company reason to make this change happen?"

15:57 What are change champions, and why do you need to create them when changing your benefit plan?

19:18 Why is it important to overcommunicate change?

22:46 Why is it important to measure your successes and communicate those after a change?

24:14 How does change management work on the provider organization side?

28:53 "You want to ensure you are educating the operational folks."

Why Hospitals Say Yes to Direct Contracts That Pay Them Less, With Doug Hetherington. What's Actually in It for Hospitals When They Direct Contract With Employers. Episode 367.

Stacey Richter talks with Doug Hetherington, CEO of Health2Business, about why a hospital would agree to direct contract with a self-insured employer at a lower price—and what a provider organization actually needs operationally to make direct contracting work.

WHAT YOU'LL LEARN

✅ Why direct contracting, done well, can cut employer costs anywhere from 10% to 50% by removing middle-people from the transaction

✅ What the three categories of open direct contracting agreements look like, and how a "full-pay open contract" lets employer and provider jointly design benefits

✅ Why keeping healthcare dollars local matters for communities, not just for the employer footing the bill

✅ What data providers and employers should actually be capturing to make a direct contract work

✅ Why so many hospitals struggled to get out of their own way on direct contracting, even when the financial case was clear

✅ How much an employer can typically expect to save, on average, through a direct contract

WHY THIS MATTERS

Direct contracting has obvious upside for employers, but the harder and less-discussed question is why a provider organization would sign on—and Hetherington's answer is that it takes real infrastructure, not just goodwill, to make direct contracts work for both sides. His on-the-ground experience with community hospitals shows what separates a direct contract that sticks from one that stalls at the negotiating table.

MENTIONED IN THIS EPISODE

EP308 with Mark Fendrick, MD: Apple Podcasts | Spotify | Other Apps

EP350 with Katy Talento: Apple Podcasts | Spotify | Other Apps

EP363 with David Scheinker, PhD: Apple Podcasts | Spotify | Other Apps

=== LINKS ===

🔗 Show Notes with all mentioned links: Episode Page

✉️ Enjoy this podcast? Subscribe to the free weekly newsletter

🫙 Support the podcast with a small donation to the Tip Jar

📺 Subscribe to our YouTube channel

🎤 Listen on Apple Podcasts

🎤 Listen on Spotify

=== CONNECT WITH THE RHV TEAM ===

✭ LinkedIn ✭ Threads ✭ Bluesky ✭ X

00:00 Introduction.

05:38 Why are health systems interested in direct contracting?

10:06 What are the essentials for direct contracting between a health system and an employer or payer?

11:16 What are the three categories of open direct contracting agreements?

14:43 What direction do we need to be moving to solve the cost problems in healthcare?

18:10 "What does a value-based model begin to look like?"

20:31 What is one of the inherent benefits of a direct contracting environment?

21:01 What data should we actually be capturing?

25:01 "Sometimes you really begin to wonder, why is there such a high level of misalignment?"

25:16 How much can an employer save, on average, with a direct contract?

26:33 What are healthcare costs going up by per year?

26:50 "We pay for these insurance plans … and yet what you're paying for that and how they're assessing the risk is not … in line with the actual cost of care."

30:20 "I would say that … consolidation … is one of the reasons why we're … seeing more movement towards direct contracting."

Why Insurer Profit Caps Reward Rising Healthcare Costs, With Kevin Schulman, MD. Why 15% of a Bigger Number Is a Bigger Number: How Insurer Profit Caps Backfire. Episode 366.

Stacey Richter talks with Kevin Schulman, MD, professor at Stanford's School of Medicine and Graduate School of Business, about a JAMA paper he coauthored on the dysfunctional health benefits market—and why capping insurer profits at a percentage of costs quietly rewards insurers for letting costs rise rather than negotiating them down.

WHAT YOU'LL LEARN

✅ Why commercial insurance costs have risen roughly 4x the rate of other benchmark goods and services, per the paper discussed in the episode

✅ How capping insurer profits at 15% means higher healthcare costs translate directly into higher absolute profit for carriers

✅ Why Wall Street rewards predictable, rising-cost performance more than it rewards insurers who successfully restructure care to lower costs

✅ Why nonprofit hospitals and carriers aren't exempt from this dynamic—"margin" and "profit" function the same way regardless of tax status

✅ Schulman's framing of cost as "a dynamic fiction": how health systems' own capital decisions become the justification for cost shifting onto commercial payers

✅ Why competitive markets, or regulated ones like Maryland's, show hospitals can do fine on Medicare rates without needing to cost shift

WHY THIS MATTERS

When the rules of the game reward insurers for bigger dollar amounts rather than genuinely lower costs, "negotiating" with providers becomes theater, and patients and employers are left absorbing wage stagnation, bankruptcies, and financial toxicity that is really clinical toxicity. Schulman's research reframes the debate: the dysfunction isn't a market failure so much as a market working exactly as its incentives are built to work.

=== LINKS ===

🔗 Show Notes with all mentioned links: Episode Page

✉️ Enjoy this podcast? Subscribe to the free weekly newsletter

🫙 Support the podcast with a small donation to the Tip Jar

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🎤 Listen on Apple Podcasts

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=== CONNECT WITH THE RHV TEAM ===

✭ LinkedIn ✭ Threads ✭ Bluesky ✭ X

00:00 Introduction.

07:13 Why have commercial insurers become price-takers?

10:04 How does a health plan get bigger profits?

10:40 "At the core at this, Wall Street rewards predictable performance; and the predictable performance … is great if healthcare costs go up."

11:00 What does it mean to have a "dysfunctional equilibrium" in healthcare?

12:05 What's really changed in healthcare in the last 20 years that's caused this increase in healthcare pricing?

12:47 Commercial price versus Medicare: Do hospitals really need to cost shift?

15:51 How is value-based care really going to work?

17:43 "It's not A or B; it's a dysfunctional market."

17:57 "Little changes in volume or incentives is not going to change the underlying dynamics."

24:32 "I think it's an open question whether this model is really serving the American public."

29:25 "It's a really important time for us to think about, how do we create a different trajectory?"

The Real Deal on PBM Rebates and Drug Pricing Contracts, With Scott Haas. Why the Word "Rebate" in a PBM Contract Can Mean Whatever the PBM Wants It To. Episode 365.

Stacey Richter talks with Scott Haas, senior VP at USI Insurance Services, about the true mechanics of PBM rebates—how much of the so-called rebate a plan sponsor actually gets back, why formulary exclusions punish cheap generics, and what it takes to negotiate a PBM contract with real, absolute pricing terms.

WHAT YOU'LL LEARN

✅ Why "rebates" comprise only about 40% of the back-end dollars PBMs collect from pharma, with the rest hiding under fees like administration, data, education, or clinical program fees

✅ How the two-part rebate transaction works: pharma pays PBMs cash back for formulary access, then PBMs promise plan sponsors "100% of rebates" while redefining what counts as one

✅ Why cheap generics get excluded from formularies—they don't generate rebates, and PBMs lose money when a high-priced brand goes generic

✅ Haas's bottom-line advice: contracts need to define the actual final price in absolute dollar terms, not percentages off AWP or WAC

✅ Why plan sponsors need to understand the five things that go into getting a fair PBM price

✅ How GPOs formed by the "Big Three" PBMs aggregate and maximize rebate collection even further

WHY THIS MATTERS

As long as "rebate" can mean whatever a PBM decides it means, plan sponsors negotiating for "100% of rebates" have no real guarantee of savings—they need contracts that specify actual per-unit prices, not percentages or acronyms that can shift at any moment. Haas's plan-sponsor perspective gives employers and their advisors the specific contract language to insist on before signing.

MENTIONED IN THIS EPISODE

EP342 with Christin Deacon: Apple Podcasts | Spotify | Other Apps (link unavailable)

=== LINKS ===

🔗 Show Notes with all mentioned links: Episode Page

✉️ Enjoy this podcast? Subscribe to the free weekly newsletter

🫙 Support the podcast with a small donation to the Tip Jar

📺 Subscribe to our YouTube channel

🎤 Listen on Apple Podcasts

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=== CONNECT WITH THE RHV TEAM ===

✭ LinkedIn ✭ Threads ✭ Bluesky ✭ X

00:00 Introduction.

10:29 What's the major flaw with the buyer-seller relationship between plan sponsors and PBMs?

12:04 What are the five things that need to be considered in order to get a fair price from a PBM?

13:16 Why does using average wholesale price cause problems for plan sponsors?

15:05 What does it mean to put the network risk on the PBM?

17:10 What's happening with drugs moving from specialty brand to specialty generic?

19:14 "A generic is a generic; in our world, it's binary."

23:31 "The term 100% of rebates is really irrelevant."

23:54 What does it mean to have a minimum guarantee in drug rebates?

26:39 "When you do a line-item assessment … is it producing an optimal result in comparison to competitively achieved … pricing for generics … and for specialty?"

27:52 "Plan sponsors need to grow a backbone."

29:05 Why do you need to understand your consultant's process as a plan sponsor?

29:30 Why do you need to understand formulary exclusions as a plan sponsor?

29:41 Why is it important to create a more equal PBM contract?

30:52 "Rebates inure to the benefit of the plan sponsor; they don't necessarily benefit the consumer."

31:45 What does Scott do at USI?

A Framework for Transforming the Healthcare Industry, With David Muhlestein, PhD, JD. Repair, Remodel, or Rebuild: A Framework for Transforming Any Healthcare Organization. Episode 364.

Stacey Richter talks with David Muhlestein, PhD, JD, chief research and innovation officer at Health Management Associates, about a holistic framework for how healthcare organizations—and the industry as a whole—can actually change, starting with getting brutally honest about who the real customer is.

WHAT YOU'LL LEARN

✅ Why healthcare being nearly 20% of GDP and the largest employer in 47 states is treated as a problem, unlike other large economic sectors

✅ Why dollars spent on healthcare or insurance premiums carry no marginal utility for consumers, unlike most other spending

✅ Why changing payment incentives alone isn't enough unless organizations upstream and downstream share the same objective—otherwise it's "game on" for revenue-maximizing loopholes

✅ Why leadership teams need to honestly identify their actual paying customer, since 99% of the time it isn't the patient, regardless of what's printed on the front door

✅ Muhlestein's four-step framework for organizational change: understand your current state, consider your timeline to existential demise, decide what legacy you want to leave, and then repair, remodel, or rebuild

✅ Why cost-related nonadherence is projected to become a leading cause of death in the US by 2030, surpassing diabetes, influenza, pneumonia, and kidney disease

WHY THIS MATTERS

Real transformation in healthcare requires more than swapping in a new payment model—it requires organizations to honestly name who they actually serve today and confront how long they can survive without changing. Muhlestein's repair-remodel-rebuild framework gives health system and payer leadership a structured way to move past inertia instead of waiting until an existential threat forces the decision.

=== LINKS ===

🔗 Show Notes with all mentioned links: Episode Page

✉️ Enjoy this podcast? Subscribe to the free weekly newsletter

🫙 Support the podcast with a small donation to the Tip Jar

📺 Subscribe to our YouTube channel

🎤 Listen on Apple Podcasts

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=== CONNECT WITH THE RHV TEAM ===

✭ LinkedIn ✭ Threads ✭ Bluesky ✭ X

00:00 Introduction.

07:38 Is it an issue for the healthcare industry that it is one of the largest employers in the country?

08:42 "I think that we need to figure out what is an appropriate amount to spend on healthcare and get to that level."

09:01 How do we not decrease the amount of healthcare we're receiving while paying less for that healthcare?

10:11 What are the two ways we can look at decreasing healthcare spend?

15:39 "I think that a regional approach may happen."

16:56 "When somebody takes less, others are going to follow them."

17:33 Who is really paying in our current healthcare system?

19:47 "Any sort of a model that you start with influences everything else that you do."

20:09 What's the common challenge David Muhlestein sees in value-based care systems?

23:21 "There are countless things that you can do to improve the current system today."

27:25 What are the three options for building up better healthcare?

28:19 David's advice for healthcare executives.

33:22 "To really lower the total cost of … healthcare, it's a 30-year process."