Relentless Health Value

As Stacey Richter reflects on a year of Relentless Health Value episodes, three themes kept surfacing in nearly every conversation: the foundational role of trusted relationships, the cost of underinvesting in primary care, and the dominance of perverse financial incentives and profiteering. This is Part 1 of a two-part year-end Inbetweenisode hosted by Stacey Richter, drawing on episodes featuring Dr. Kenny Cole, Ann Lewandowski, Jonathan Baran, Nikki King, Yashaswini Singh, Dr. Ben Schwartz, Dr. Mick Connors, Mark Cuban, and more.

WHAT YOU'LL LEARN

✅ Why trust is the foundational element required for both clinical and financial outcomes — and how a pervasive lack of trust is showing up across the system, from the patient-clinician relationship to the employer-TPA-PBM relationship

✅ How "trust and verify" or defensive plan sponsorship protects self-insured employers whose partners may not be as transparent as assumed — and why simplicity in benefit design is directly linked to trust

✅ Why ER spend reaching approximately 6% of average total plan costs is evidence of broken primary care — and how investing in unconflicted, independent advanced primary care reverses the cost flywheel

✅ How hospital systems can undermine primary care by acquiring practices and using them as referral funnels for expensive downstream services, gutting their ability to deliver real primary care

✅ Where the line is between fair profit and profiteering — and how private equity, carrier float, intercompany eliminations, upcoding, and consolidated market power all function to extract value from the system rather than create it

✅ Why Kevin Lyons' observation that "profit defends profit" matters: healthcare entities use growing revenues to fund lobbying and political contributions to the very legislators negotiating contracts with them

WHY THIS MATTERS

Healthcare costs keep rising in part because the incentives at nearly every layer of the system reward spending more, not less. Stacey's 2025 recap makes the case that trust, primary care investment, and confronting financial misalignment aren't separate problems — they're the same problem showing up in different settings. As she put it, 2025 surfaced some of the most egregious behavior she's seen in 25-plus years, which is exactly why understanding these dynamics — and demanding accountability — matters more than ever.

=== LINKS ===

🔗 Show Notes with all mentioned links: Episode Page

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00:00 Introduction.

02:06 Theme 1: the critical need for trusted relationships and simplicity.

02:28 The two categories of trust that are needed.

02:43 Clip of Kenny Cole, MD, from EP473.

03:43 Clip of Ann Lewandowski from EP476.

06:07 Why simplicity and trust have to go together.

08:30 Theme 2: primary care as an investment, not a cost.

08:41 Clip of Jonathan Baran from EP483 (Part 1).

09:01 Clip of Nikki King, DHA, from EP470.

09:34 How broken primary care affects self-insured employers.

10:12 Why there are perverse financial incentives to gut primary care.

15:19 Theme 3: the dominance of perverse financial incentives and profiteering.

15:46 Clip of Benjamin Schwartz, MD, MBA, from EP481.

16:18 The actual definition of margin.

16:55 Clip of Mick Connors, MD, from EP495.

18:25 Clip of Yashaswini Singh, PhD, from EP474.

From $9 Million in the Hole to $112 Million in the Black: How Marilyn Bartlett Turned Around Montana's State Employee Health Plan.

What happens when a self-funded health plan is headed for bankruptcy and a CPA with a spreadsheet and her eye on the target gets to work? In roughly three years, Marilyn Bartlett, CPA, CMA, CFM, CGMA took the State of Montana's employee health plan from a $9 million deficit to a $112 million surplus — while enhancing member benefits and holding premiums flat since 2015. In this encore episode, Stacey Richter revisits her conversation with Marilyn Bartlett, who served as plan administrator for Montana's state employee health plan starting in 2015 and is now the driving force behind the NASHP Hospital Cost Tool, which version five launches in January 2026 as a resource for plan sponsors negotiating directly with hospitals.

WHAT YOU'LL LEARN

✅ How Marilyn followed the dollar on day one — identifying out-of-control medical trend, non-transparent PBM rebates, and redundant point solutions — and turned those findings into immediate action, including terminating four of five wellness vendors and saving $5.5 million right off the top

✅ Why Montana hospitals represented 43% of total plan spend, how Marilyn used Medicare cost reports, 990s, and audited financial statements to build cost-plus reference-based pricing contracts, and how signing two cooperative hospitals first created the momentum to bring the rest along

✅ How pharmacy spend, which was approximately 20% of total plan costs, was brought down 23% by switching to a transparent pass-through PBM and removing CVS from the network when they would not match required pricing

✅ Why assembling the right internal and external team — including the governor's office, budget director, union leadership, a retired primary care physician, a pharmacist consultant, and a communications specialist — was the single most important factor in surviving the lobbying and political pressure that came from every direction

✅ What happened after Marilyn left in 2018: successors reversed the reference-based pricing strategy and added point solutions back, adding costs — a cautionary tale about the institutional will required to sustain these gains

✅ How the NASHP Hospital Cost Tool, now in its fifth version, can serve as a starting point for any plan sponsor approaching hospital contract negotiations

WHY THIS MATTERS

This is what is actually possible. Marilyn Bartlett didn't find a magic solution — she followed the dollar, eliminated waste, built a coalition with enough power to negotiate, and refused to get sidetracked by what Stacey calls transformational theater. The fact that hundreds of millions of dollars were sloshing out of a state health plan and into vendor pockets is not unique to Montana. It is the norm. What is rare is a plan administrator with the fiscal discipline and political backing to stop it.

=== LINKS ===

🔗 Show Notes with all mentioned links: Episode Page

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00:00 Introduction.

07:09 What gave Marilyn the confidence to fix Montana's state health plan?

08:35 Why Marilyn knew she would have enough power to make the changes needed in Montana's state health plan.

09:35 What Marilyn achieved in her time as the administrator of the Montana State Employee Health Plan.

11:03 What were the "quick wins" Marilyn was able to achieve when she first took over as administrator?

17:55 EP453 with Claire Brockbank, which covers RFP in detail.

18:12 How Marilyn structured her plan for the Montana State Employee Health Plan.

21:42 What's the key to setting yourself up for success when doing what Marilyn was able to achieve?

25:23 Why putting together your own team is so important.

28:20 EP397 with Paul Homes.

28:24 EP418 with Mark Cuban and Ferrin Williams, PharmD, MBA.

29:28 What happened when Marilyn left the Montana State Employee Health Plan?

31:28 Have the costs of the plan gone up since Marilyn's time working on it?

The value equation in healthcare is outcomes divided by cost — but here's the revelation Stacey Richter had in this conversation: we've been measuring it exactly backwards. In American healthcare, costs are tracked at the macro aggregate level while outcomes are measured at the narrow individual service level. Flip that — measure costs at the unit level and outcomes at the whole person and whole community level — and a very different picture of the system emerges. In this episode, Stacey Richter speaks with Dr. Mick Connors, MD, an emergency room pediatrician and healthcare entrepreneur who has worked across for-profit institutions, hospital administration, and pediatric telemedicine, about why the margin-over-mission drift is making everyone miserable — clinicians, patients, and plan sponsors alike.

WHAT YOU'LL LEARN

✅ Why the absence of unit-level cost accounting is a foundational flaw in healthcare: when no one knows what it costs to deliver any individual service, and purchasers are buying discounts rather than prices, the only financial lever left is raising aggregate revenue

✅ How "no margin, no mission" is routinely misapplied — conflating revenue with margin — and why Dr. Connors illustrates this with a real case where spinal surgery rods cost more than the reimbursement, producing negative margin despite high downstream revenue

✅ How an investor mindset in pediatric primary care — whether driven by private equity or fee-for-service incentives — produces the same result: cherry-picking healthy patients, routing sick and complex kids to the ER, and gaming HEDIS metrics rather than improving total cost of care for the attributed population

✅ Why Dr. Connors argues outcomes should be measured at the population level, not the process level — and what it would actually look like to say: here are 1,500 attributed patients, here is what they spent this year, now reduce that spend by improving outcomes for the 20% driving costs

✅ Why dyad leadership — a clinical co-leader paired with a finance or business co-leader, both with actual decision-making authority — is necessary to keep mission from getting steamrolled by margin, and what happens to trust and care quality when that balance is lost

✅ How CEO salaries have grown 100% over 10 years while physician compensation has declined — and why Dr. Connors argues the pendulum needs to swing back before the system loses what remains of patient and clinician trust

WHY THIS MATTERS

When the incentive structure rewards volume, revenue, and efficiency over outcomes, clinicians who do the non-billable work — the follow-up call, the 20-minute visit with a complex family, the relationship that keeps a kid with asthma out of the ICU — are effectively penalized for practicing good medicine. Stacey's framing here cuts to the core: we are incentivizing A and expecting B. Until cost accounting happens at the unit level and outcomes are measured at the whole-patient level, the value equation that everyone claims to be pursuing remains structurally impossible to actually achieve.

=== LINKS ===

🔗 Show Notes with all mentioned links: Episode Page

🔗 Visit this week's sponsor Payerset

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00:00 Introduction.

06:32 How Dr. Mick Connors defines margin.

08:18 EP294 with Steve Schutzer, MD.

08:54 Why nobody wants to do cost accounting in healthcare.

09:20 EP490 with Shane Cerone and Sam Flanders, MD.

11:05 Infographic by Andrew Tsang showing streams of income.

12:27 What is the value equation?

15:55 EP404 with Suhas Gondi, MD, MBA.

15:59 EP466 with Vivian Ho, PhD.

16:01 EP482 with Preston Alexander.

16:25 EP474 with Yashaswini Singh, PhD.

17:44 How business decisions can really undermine the value proposition.

18:58 Classic article on incentivizing.

23:07 EP295 with Rebecca Etz, PhD.

24:21 Why it comes down to the 80/20 rule.

26:31 EP445 with Tom X. Lee, MD.

26:35 EP460 with Rushika Fernandopulle, MD.

26:40 Why mission return requires dyad leadership.

27:13 What does dyad leadership mean?

27:33 EP492 with Sam Flanders, MD, and Shane Cerone.

If a drug keeps a patient out of the hospital — and hospital spend is 50% of most plan sponsors' total costs — why do we design benefits that make patients less able to afford that drug? That's the martini-fueled question Stacey Richter started with, and it threads through this entire conversation about why pharmaceutical pricing in America is so persistently broken. In this episode, Stacey Richter speaks with Sarah Emond, CEO of ICER (the Institute for Clinical and Economic Review), the only financially independent nonprofit in the US conducting rigorous health technology assessment, about the six core tensions that prevent drug prices from reflecting drug value — and what it would actually take to fix that.

WHAT YOU'LL LEARN

✅ Why list prices are, in Sarah Emond's words, a lie — and how the rebate system creates a dynamic where formulary placement is driven by discount size rather than clinical value, leaving patients on the wrong drug for the wrong reason

✅ How coinsurance based on list price rather than net price means a patient can face unaffordable cost sharing even after their payer negotiated a steep discount — and why that directly undermines adherence to high-value medications

✅ Why GLP-1s like Wegovy and Zepbound are wildly cost effective by ICER's analysis — meaning society is paying a reasonable amount per unit of health gain over a patient lifetime — but still threaten to bankrupt plans due to the sheer size of the eligible population

✅ How 70 to 75% of ICER drug reviews find that pharma has overreached on price, and why a decade of tolerating that overreach has left purchasers with sticker shock that causes them to block access even to fairly priced cell and gene therapies

✅ Why value-based pricing would eliminate the logic for most prior authorization and most cost sharing — and what Dupixent's launch for atopic dermatitis and Eisai's Leqembi for Alzheimer's Disease show about what it looks like when manufacturers actually price within the ICER range

✅ Why siloed pharmacy and medical data make it nearly impossible for self-insured employers to see whether a drug reduced hospitalizations — and how that analytic gap makes draconian cost containment look rational even when it isn't

WHY THIS MATTERS

The mother of all tensions here, as Stacey frames it, is that without value-based pricing there is almost no mechanism connecting net drug price to patient affordability and access. ICER's framework — measuring how much better patients feel and how much longer they live, then comparing that to what the drug costs including net downstream savings — exists to fill that gap. But without more unconflicted entities doing this work, and without pharma and PBMs willing to use it, plan sponsors are left managing drug spend with blunt instruments that shift costs onto the sickest patients.

=== LINKS ===

🔗 Show Notes with all mentioned links: Episode Page

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00:00 Introduction.

08:18 Why list prices are a lie.

10:59 How does the rebate model sometimes get in the way of paying for value?

12:50 Bonus clip with Sarah Emond.

13:14 EP491 with Elizabeth Mitchell.

13:20 EP490 and EP492 with Shane Cerone and Sam Flanders, MD.

14:37 The tension that is created between affordability and adherence.

15:03 When cost sharing makes sense in pharmaceutical drug pricing.

17:26 INBW42 with Stacey on moral hazard.

18:53 How GLP-1s are "wildly cost effective."

21:32 Why the sticker shock on cost-effective drugs is a failure in the system for paying for value.

22:38 ICER's report on GLP-1s.

26:59 EP385 with Dan Mendelson.

28:57 How employers and payers can have a value assessment approach and a health insurance system that allows access to cost-effective drugs.

29:48 How cost-effective prices are calculated.

31:55 One of the core value underpinnings for value assessment of drugs.

34:54 Why manufacturers and pharmacy benefit managers should work together more by referencing something like an ICER report.

36:55 EP426 with Nina Lathia, RPh, MSc, PhD.

38:21 "We can make different choices."

Pharma raises list prices to maximize rebates. Higher list prices blow up patient coinsurance. Pharma responds with copay cards. PBMs fight back with maximizers and accumulators. Prior auths ramp up. Premiums rise. Deductibles climb. And at no point in this cycle does anyone stop to ask: is this drug actually worth its price? That is the pharmaceutical pricing arms race Stacey Richter lays out in this bonus episode — and it is the entire reason ICER exists. This short companion episode to EP494 features Sarah Emond, CEO of ICER (the Institute for Clinical and Economic Review), the only financially independent nonprofit in the US conducting rigorous, public, multistakeholder value assessment of prescription drugs. If you have not heard of ICER before, start here.

WHAT YOU'LL LEARN

✅ What ICER is and how it works: comparative clinical effectiveness analysis combined with cost-effectiveness modeling to determine a fair, evidence-based price for new therapies — conducted publicly, with all stakeholders invited, free from financial conflicts of interest

✅ How the pharmaceutical arms race was built: list prices inflated to generate rebates, coinsurance tied to list rather than net price, copay cards disrupting PBM formulary strategy, maximizers and accumulators responding, and the whole system spiraling without anyone anchoring price to value

✅ Why Sarah Emond believes the arms race can be deescalated — because higher prices, more access restrictions, and more cost sharing are the result of choices the system has made, and different choices are possible

✅ Who actually pays for all of it: only three ultimate purchasers exist in US healthcare — taxpayers, self-insured employers, and patients themselves — and every dollar extracted by any intermediary comes from one of those three

WHY THIS MATTERS

The pharmaceutical pricing debate generates a lot of heat and very little light because most of the actors in the system have a financial stake in the status quo. ICER's value — as Sarah Emond describes it — is not just the math but the process: a public, multistakeholder forum where the evidence gets scrutinized and a fair price gets defined, independent of who stands to gain. Without that anchor, plan sponsors and patients are left absorbing costs that have nothing to do with how good the drug actually is.

=== LINKS ===

🔗 Show Notes with all mentioned links: Episode Page

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00:00 Introduction.

02:38 What is ICER?

02:54 What does the Institute for Clinical and Economic Review do?

05:14 The importance of still showing up, even when others don't understand or disagree.

06:51 EP293 ("Game Theory Gone Wild") with Dea Belazi, PharmD, MPH.

09:12 Why it's important to think about population health and how our choices impact affordability for everyone.

It will take a village to transform healthcare. Stacey Richter says this so often it is taped to her wall on a Post-It. This Thanksgiving Inbetweenisode is her chance to say thank you to the people actually building that village — and to make the case, with a detour through a drunk blacksmith charity auction, that the demand curve is the most underappreciated concept in healthcare reform. This is a solo episode hosted by Stacey Richter, with short audio clips from community members including Cora Opsahl of 32BJ Health Fund, Shane Cerone of Kada Health, Chris Skisak of the Houston Business Coalition on Health, Rob Marty, Chris Deacon of VerSan Consulting, and Vivian Ho, PhD.

WHAT YOU'LL LEARN

✅ Why Stacey calls 2025 the lowest point for basic civility and integrity she has seen in 25-plus years in healthcare — and why community, not individual heroics, is the antidote

✅ What the narcissism of small differences costs the healthcare reform movement, and why Winston Churchill's line about fighting with allies versus without them applies directly to this tribe

✅ Why effective collaboration will be the next breakthrough innovation — and why members of the RHV tribe do not need Stacey as an intermediary to connect with each other

✅ Why there is no healthcare market without a demand curve — and who actually has to be that demand curve for 160 million Americans covered by employer-sponsored insurance

✅ Why independent clinicians, indie practices, and others who offer real alternatives matter to market function: competition is a prerequisite for a market to rationalize prices and quality

WHY THIS MATTERS

The secret to a fulfilled life, Stacey quotes, is relationships, purpose, and service. This community exists at the intersection of all three. The demand curve argument is not abstract: without purchasers — self-insured employers and unions — actively using their buying power to reward value over volume, there is no market mechanism to rationalize hospital prices, drug prices, or anything else. The tribe is not just a podcast audience. It is the demand curve.

=== LINKS ===

🔗 Show Notes with all mentioned links: Episode Page

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=== CONNECT WITH THE RHV TEAM ===

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00:00 Introduction.

01:25 First thank you: to those who do not succumb to healthcare narcissism.

01:36 INBW39 with Stacey.

02:51 INBW37 with Stacey.

03:00 EP399 and EP400 with Stacey.

05:40 Second thank you: to those willing to pay it forward.

05:53 EP489 with Dan Greenleaf.

08:12 EP452 with Cora Opsahl.

08:38 Third thank you: to those who aid the demand curve in healthcare.

09:14 EP490 with Shane Cerone and Sam Flanders, MD.

09:16 EP491 with Elizabeth Mitchell.

09:17 EP492 with Sam Flanders, MD, and Shane Cerone.

09:49 Why healthcare needs a demand curve.

13:34 Fourth thank you: to those who have contributed financial support to the Relentless Health Value podcast.

15:47 The final thank you: to the listeners.

Direct contracts between employers and clinical organizations perform way better than what most third parties negotiate — and the Employers Centers of Excellence Network (ECEN), built by the Purchaser Business Group on Health (PBGH), proved exactly that. This Take Two episode revisits that work in light of a key finding from a recent PBGH data demonstration project: plan sponsors can now use publicly available transparency and claims data to build their own high-value networks, all by themselves. In this episode, Stacey Richter speaks with Olivia Ross, who led the ECEN program at PBGH, about how the network selected Centers of Excellence down to the individual surgeon level, structured prospective bundles to create price predictability, and avoided unnecessary surgeries — which turned out to be the single largest source of cost savings.

WHAT YOU'LL LEARN

✅ Why over 50% of spine surgery patients referred to ECEN Centers of Excellence were counseled against surgery after multidisciplinary review — and why that number reflects the scale of inappropriate surgical care happening in local markets

✅ How ECEN used prospective bundled payments covering facility fees, all physician fees, and initial post-discharge outpatient care at a single negotiated price — and why competitive pricing alone was not enough to drive employer adoption

✅ Why the ECEN center selection process went down to the individual surgeon level, measuring procedure-specific outcomes like surgical site infection rates and return-to-OR rates — and why that granularity matters when hospital-level quality scores mask wide variation between surgeons

✅ How direct contracting creates market pressure even in consolidated geographies where hospital monopolies have eliminated local competition — giving self-insured employers a way to route members to higher-value care elsewhere

✅ Why self-insured employers pay on average approximately 30% more in their claims wire than what the actual provider received — and what transparent, direct contracting without confiscatory middlemen changes about that math

✅ How continuous quality improvement within ECEN allowed best practices — like a nurse follow-up call 24 hours post-discharge — to spread beyond ECEN patients to the broader patient population at participating centers

WHY THIS MATTERS

The ECEN model got dismantled when the TPA administering it was acquired by a larger firm — a cautionary tale about institutional will. But the underlying lesson is more durable than any one program: employers who are willing to act as the demand curve, and who pair that with genuinely rigorous quality assessment, can create competition where none exists, eliminate unnecessary care, and drive costs down without shifting them onto patients. With current price transparency data now making it possible for any plan sponsor to do this themselves, the old is new again.

=== LINKS ===

🔗 Show Notes with all mentioned links: Episode Page

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00:00 Introduction.

07:40 Prospective bundles and the cost of care.

08:22 How the largest cost savings come from the improvements in quality.

09:51 What Olivia looks for in choosing centers of excellence.

10:36 Creating market pressure and avoiding consolidation.

11:17 Creating positive disruption in the healthcare system.

12:17 How Olivia chooses the centers and providers she works with in the Purchaser Business Group on Health.

13:12 The quality metrics Purchaser Business Group on Health looks at when assessing providers and centers.

14:04 What a team assessment is, and why it's important.

15:07 How local PCPs have to factor into this health care model.

17:57 How Purchaser Business Group on Health intervenes in the patient journey to ensure that the patient and the employer are getting the best quality care for the best price.

19:39 Olivia's suggestions on how to have an intervening conversation with a patient who has already been told he or she needs surgery.

20:18 EP468 with Matt McQuide.

20:20 EP471 with Christine Hale, MD, MBA.

20:22 EP472 with Eric Bricker, MD.

25:27 "Even at a more competitive price point, there's still an upside to them getting this new business."

25:52 How choosing specific physicians is part of the COE designation process.

27:35 How COEs and their physicians are also involved in continuous quality improvement.

30:56 Employers Centers of Excellence Network collaboration with The Leapfrog Group.

32:24 How the Employers Centers of Excellence Network program is open to any employer, no matter the size.

32:54 What it takes to join the Employers Centers of Excellence Network.

Employer C-suites have been largely absent from healthcare purchasing decisions for decades — dipping in once a year at renewal, then handing the whole thing back to HR. That era is ending. Boards are noticing missed earnings numbers. CEOs are confronted with 10 to 12% trend forecasts on top of already strained budgets. And cost-shifting to employees — the go-to move for 20 years — has finally hit the wall. In this episode, Stacey Richter speaks with John Quinn, CEO of Wellnecity, a health plan management firm that helps self-insured employers manage healthcare as the spend category it actually is, about what is driving this C-suite awakening and what employers who are ready to act should do next.

WHAT YOU'LL LEARN

✅ Why employer C-suites are finally paying attention: boards are now regularly discussing healthcare trend as a direct earnings variable — one large client faced a $70 million swing when medical and pharmacy trend both came in above 10%

✅ Why cost-shifting to employees is no longer a viable strategy — high deductibles have already pushed household healthcare costs to the breaking point, and further shifting creates a workforce productivity and retention problem that offsets any premium savings

✅ Why healthcare benefit management has to move at the speed of business: waiting for annual renewal to make decisions means acting on data that is already a year old, while cancer diagnoses, new prescriptions, and high-cost claimant trajectories emerge daily

✅ How vendor performance guarantees are routinely gamed — and why employers who let vendors calculate their own savings are discovering those savings often aren't real once the employer runs the math independently

✅ Why 80% of plan members need wide-access commodity care while the 20% driving costs need specialized care pods with managed, direct-contracted pricing — and how blurring that distinction is where most of the waste lives

✅ Three concrete steps for employers ready to act: integrate a finance function into health benefits, hold vendors to genuinely auditable performance guarantees, and buy service bundles you can evaluate independently rather than black-box solutions

WHY THIS MATTERS

Self-insured employers cover roughly 160 million Americans and are the demand curve for any functioning healthcare market. When they don't act like purchasers — when they accept discounts off inflated prices, let vendors audit themselves, and treat benefits as a once-a-year administrative task — prices rise unchecked. John Quinn's argument is that fixing this doesn't require taking away necessary care. It requires finding people when they need care and routing them to higher quality, more efficiently priced options. The waste in the system is large enough that winning is possible without cutting benefits.

=== LINKS ===

🔗 Show Notes with all mentioned links: Episode Page

🔗 Visit our Sponsor Wellnicity

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00:00 Introduction.

07:06 Why CEOs are looking more closely at healthcare spend.

08:06 EP397 with Paul Holmes.

08:21 How savings and health benefits are directly connected.

10:45 EP436 with Elizabeth Mitchell.

11:46 What missed earnings look like in relation to healthcare.

14:27 How costs have been shifting to employees for years, and why this doesn't work anymore.

17:36 EP475 with Peter Hayes.

18:23 What employers need to do instead of cost shift.

19:12 EP406 with Lauren Vela.

21:30 Why it's important to make health benefit changes at the speed of business, not at the speed of the benefits year.

26:17 Why is it important to put a finance function into your benefits?

27:10 EP488 with Mark Cuban and Cora Opsahl.

27:33 EP478 (Part 1) with Andreas Mang and Jon Camire.

27:35 Why daily data matters.

31:10 EP487 (Part 1) with Kevin Lyons.

31:21 Why it's important to hold vendors accountable.

31:47 Why it's important to move on from vendors who can't hold up to your scrutiny and needs.

33:46 EP472 with Eric Bricker, MD.

34:46 EP471 with Christine Hale, MD, MBA.

Beaumont Hospital Royal Oak was nationally recognized in nine medical specialties, received top hospital awards for seven consecutive years, and charged 143% of Medicare. That combination — genuinely high quality and genuinely low price — is supposed to be impossible. Shane Cerone and Dr. Sam Flanders built the management model that made it happen, and in this solutions-focused episode they explain exactly how. Stacey Richter speaks with Shane Cerone, former president of Beaumont Hospital Royal Oak, and Dr. Sam Flanders, MD, former chief quality and safety officer for the Beaumont health system, now both at Kada Health, about the management operating system that got them there and what employers can do to create the market conditions that reward health systems for doing the same.

WHAT YOU'LL LEARN

✅ Why the Toyota continuous improvement model — not Lean, which is a different thing — is the management framework that allows a hospital to improve quality and reduce costs simultaneously: Toyota's principle is that no one loses their job from improvements, and the people doing the work are the ones finding and fixing the problems

✅ How Kaizen at the frontline works in practice: a small team watching CAT scan flow identified empty gaps between patients, dedicated a transporter to the area, nearly doubled throughput, and avoided a $1 million equipment purchase — without making technicians work harder

✅ Why decentralized, frontline-empowered improvement outperforms centralized quality teams and conference-room spaghetti diagrams — and why consolidation and centralized decision-making actively undermine the two things that matter most: making it easier for clinicians to deliver care and easier for patients to receive it

✅ Why hospitals spend every dollar they are given — not because hospital CEOs are bad people, but because there is no market pricing pressure constraining them, and their fiduciary duty is to maximize resources for their organization

✅ How employers can create competition where none exists: issue RFPs to providers asking for quality data and prices as a percent of Medicare, set tiered networks based on value, and use TPAs to administer the contracts employers negotiate themselves — not to negotiate on their behalf

✅ Why Shane Cerone believes employers working together within a single metropolitan market could achieve 15 to 25% price reductions in a first-year pass, with much larger long-term gains once market structure changes

WHY THIS MATTERS

The problem and solutions shows with Shane Cerone and Dr. Sam Flanders are a pair — listen to EP490 first if you haven't. This episode is the actionable half. The management model is proven. The question is whether enough hospitals have leaders willing to adopt it, and whether enough employers are willing to stop asking their TPAs to negotiate prices and start negotiating themselves. As Shane puts it: don't let Visa negotiate the price of the milk. Negotiate the prices, then let the card process the transaction.

=== LINKS ===

🔗 Show Notes with all mentioned links: Episode Page

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=== CONNECT WITH THE RHV TEAM ===

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00:00 Introduction.

07:08 What are the many problems that health systems deal with?

08:44 EP483 (Part 1 and Part 2) with Jonathan Baran.

09:43 What was the real achievement in building this hospital system?

10:25 EP489 (Part 1 and Part 2) with Dan Greenleaf.

10:42 Why productivity and patient access are the top two things to focus on.

11:36 EP488 with Mark Cuban and Cora Opsahl.

12:32 EP455 with Beau Raymond, MD.

12:58 The lean model versus the Toyota model.

16:06 EP438 with John Lee, MD.

16:40 EP481 with Benjamin Schwartz, MD, MBA.

17:44 Why small changes accumulated create greater change than big changes.

21:01 How an efficiency mindset can increase improvement faster.

27:42 Why administrators should not be negotiators.

28:11 EP491 with Elizabeth Mitchell.

29:06 What are the steps to this multifaceted process?

30:17 EP286 with John Rodis, MD, MBA.

30:48 Study by Suhas Gondi, MD, MBA, on hospital boards.

33:03 Why it's important to focus on the pricing issue first.

33:49 What Kada Health is all about.

There is zero correlation between price and quality in hospital care. That is not speculation — it is in the data. The PBGH Transparency Demonstration Project, conducted by the Purchaser Business Group on Health with Milliman and Embold and funded by the Peterson Center on Healthcare, combined price transparency data, claims data, and quality and safety scores from Leapfrog down to the individual NPI level. The result is the first tool that lets jumbo self-insured employers see what they are actually paying, what they should be paying, and how quality and safety compare — all at once. In this episode, Stacey Richter speaks with Elizabeth Mitchell, CEO of PBGH, whose member employers collectively spend over $350 billion a year on healthcare, about what this project found, what it means for TPAs and consultants, and what employers should be doing with it right now.

WHAT YOU'LL LEARN

✅ Why the Consolidated Appropriations Act (CAA) of 2021 changed the fiduciary accountability calculus for self-insured employers: you cannot outsource this risk to a consultant or TPA, individual C-suite executives and CHROs are personally accountable, and not using available transparency data now actively increases liability

✅ What the PBGH Transparency Demonstration Project actually did: combined hospital price transparency MRF files and health plan negotiated rate files with employer claims data, Embold quality scores, and Leapfrog safety data to give employers a true cost-quality-safety comparison across providers — a tool that did not previously exist anywhere on the market

✅ Why discounts are irrelevant without actual prices: one employer participating in the project discovered she was paying 30% more than her peers for the same services, despite being assured by her consultants and carriers that she was getting competitive rates

✅ Why directly contracted arrangements outperformed TPA-negotiated rates in the PBGH data — confirming a decade of anecdotal evidence that when employers negotiate directly, they get better prices than when TPAs do it for them

✅ How site-of-service cost variation is dramatic enough to matter: the same high-quality service from the same type of provider can cost half as much at a different location — without any compromise in care quality or access

✅ Why some incumbent consultants and TPAs are now being called into client boardrooms to answer hard questions — and why unconflicted advisors who can actually use this data have a competitive advantage for the first time in the history of employer-sponsored health benefits

WHY THIS MATTERS

As Elizabeth Mitchell puts it, if you are a self-funded employer and you do not use this data, it is irresponsible. The tool exists. The compliance obligation is clear. And for the first time, employers have enough information to distinguish high-value providers from expensive-but-not-better ones, to build their own high-value networks and Centers of Excellence, and to hold their advisors accountable. The market for high-value providers is finally becoming visible — but only for the employers willing to look.

=== 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.

06:35 How did PBGH's transparency project start?

07:35 EP428 with Julie Selesnick.

07:37 EP408 with Chris Deacon.

07:39 Why the changes to the CAA and ERISA meant heightened risk for employers and individuals within companies.

09:09 "You can't outsource the risk."

11:10 How PBGH's transparency project demonstrated some clients being noncompliant.

12:52 Why is it irresponsible not to use the data presented if you're a self-insured employer?

15:06 How did PBGH use the transparency data and apply it effectively to improve their offerings and business?

18:37 Why TPAs should not negotiate contracts.

19:17 EP485 with Cristin Dickerson, MD.

19:22 EP486 with Stan Schwartz, MD.

19:24 EP488 with Mark Cuban and Cora Opsahl.

20:58 "There is no good price for unsafe care."

21:36 How PBGH found using the transparency data to be totally feasible.

25:03 EP483 (Part 1) with Jonathan Baran.

25:32 Why the market will evolve with this data.

28:04 EP369 with Keith Hartman, RPh.

28:06 EP370 with Erik Davis and Autumn Yongchu.

28:34 What PBGH discovered about high-value centers and centers of excellence.

28:59 EP240 with Olivia Ross.

32:26 Why incentives are another challenge.

33:49 Why this is good news for unconflicted benefits consultants.

36:04 EP487 (Part 1) with Kevin Lyons.

39:48 Why transparency is going to become the new normal.

40:22 The Innovator's Dilemma by Clayton M. Christensen.

42:14 EP436 with Elizabeth Mitchell.

44:07 EP286 with John Rodis, MD, MBA.

45:22 Why there is a great incentive to be a great clinician right now.

46:18 How this information can motivate competition in the right place.

46:52 EP490 (Part 1) with Shane Cerone and Sam Flanders, MD.