The Edge of Healthcare: Innovation Meets Regulation: Solving Healthcare’s Toughest Challenge

Martin Cody: Hello again, everybody, and welcome to the Edge of healthcare lessons for leaders to use today. My name is Martin Cody, SVP of Sales and Marketing for Madaket health. And today I’m thrilled to talk with John McCluskey. Mccluskey I apologize. Head of health plans for Vital Health. And why am I thrilled? Because we’ve had a lot of guests on the provider side. Today we’re going to dig deep into the plan side and payer side. And we’re going to learn all about how John does this at Biteable. So let’s jump right in, John. Welcome.

John McCluskey: Thanks, Martin. Nice to meet you.

Martin Cody: I appreciate you taking the time today. It’s it’s always fascinating to learn a little bit about each area within healthcare that people are trying to fix, and plans and payers often get described as, you know, Darth Vader in healthcare. They’re the evil empire, if you will. But there’s always some great examples of people doing massively wonderful things. And I think vital is one of those types of examples. So walk us through first, if you may do us a favor. Tell me a little bit about John. You know, where did John grow up? How did John get into healthcare. And then we can transition into vital.

John McCluskey: Yeah. Perfect. Yeah. So a little bit about me. I live in Madison, Wisconsin. I’ve been in Wisconsin for quite some time. I would consider myself a Wisconsinite native at this point. I initially got into healthcare, stumbled into it probably like many, didn’t really know exactly what I was going to do professionally long term. I have a background initially in mechanical design that actually I found myself working for a small biotech startup here in Madison, and we were making the manufacturing equipment for therapeutics and vaccines, and it was really that experience that was really eye opening for me, where I saw where you could take technology and humanities, and they could cross and do something really valuable. So we were working with a large drug manufacturers, and they were working on trying to identify new ways to make medications for Ms. or other types of vaccines. And so that just that experience stuck with me of how valuable our technology can allow us to innovate in the future. Which then led me to there was hardware software in that. And that’s kind of was my early kind of beginnings. That led me to another company here in Madison, where we had built out hardware and software for physical therapy. So initially we were we were clinically focused. So it allowed us to measure force, really in a very portable way where historically that hadn’t happened. And so we digitized this whole experience around the way Pts are prescribing exercises. So if you’ve ever been in a PT, visiting PT, they gave you these printouts. You go home and you’re trying to figure out whether you’ve done that exercise right or not. I personally, as a as a young person who went through an ACL repair, so it was very meaningful for me to know and live that experience firsthand.

John McCluskey: And so we we worked with health systems and did a lot of research with that product. And what we ultimately found is we shifted our focus to a business, to business to consumer model, where we actually built out programs for people to do programs at home that help them with their low back pain knee, neck and hip, and a lot of deep learnings inside of that around how you can actually get technology into people’s hands, have them doing meaningful exercise, um, core mobility, strengthening programs at home. And then ultimately it’s really, really valuable for payers and others in the healthcare space on how you can deliver that. And then, most importantly, is all of those tangible results where you talk to people, where they’re sharing. I’m able to hold my grandchild again, I’m back in the garden. I’m walking around the block, right? I’m able to drive down, you know, and visit my, my family. And so that’s really a rich experience and was really a leading experience for me to see that there’s still more you can do in healthcare, which then led me to another startup where we were focused as a third party administrator, building out technology to help better deliver health plans. And that’s where I got this deep, rich experience of building de novo health plans, integrated health systems, and seeing all of the challenges that exist in building health plans in different markets, and how you actually do health plan. Well with the cost management side, while still focusing in member satisfaction and overall utilization of good health care services.

Martin Cody: It’s interesting because you come with a significant startup experience and and startups, as you know, people should know there’s an energy at a startup that is that is palpable. There is a sense of urgency. There is a sense of desire, passion. Which is why people gravitate toward startups. And you’re working on great technologies, and you can see instantly the impact that these can have. How do you and you compare and contrast that with healthcare? And healthcare is one of the slowest moving industries from a decision making standpoint. It seems to be stuck in the Stone age. As I’ve said often, it’s single handedly keeping the fax industry afloat. And how do you then juxtapose your passion for startup energy and decision making and innovation and risk taking to a healthcare firm that is on the planned development side, to where you can see those results in a similar speedy or quick fashion like you would in a startup. Because there’s a long time lag between a health plans effectiveness and acceptance in a market versus designing it. So how did you balance that?

John McCluskey: Yeah, that’s a great question. I think there’s several things that kind of jump out to me when thinking about that specifically, one is there’s a continued focus on the increase of health care costs, right? In 2024, we’re at roughly going to be about a 4.8 trillion economy inside of healthcare and projected by 2032 to be at seven plus trillion, right. And so people year over year do that typical thing where it’s okay, my renewal is coming up. There’s going to be, you know, some percentage that I’m going to have to factor in. And so knowing that that’s sort of your true north of how do I deliver value across different stakeholders and what’s valuable and understanding that allows you to do a lot of testing in that process. And so at Viterbo, being a virtual primary care is a really good example of that. And one of the things that drove that, to your point about the compliance piece, after the Affordable Care Act came out, it mandated that employer groups over 50 employees offer some sort of minimal coverage, and so these minimal essential coverage plans came out that were being sold and there was low utilization or minimum value plans. And it was really about help me meet the compliance.

John McCluskey: And so Viterbo looked at it and said, there is a bigger value play here, which is if we can build primary care in a way that people want to use it, that we can actually solve their compliance problem, but more importantly, get better access to care for people. And so in Pennsylvania, where Viterbo started, and you could take two different zip codes, and there’s an average life expectancy sometimes of five years difference. And when you think about that, where you live can affect how long you’re going to live. We have a lot of opportunity, but I think it always comes back to thinking about access to care and providing and making care available for people. And when you do those things, you find the ways to work within the health care system. Most people have gone through the soc2, the high trust, all the security, compliance and those things are there for a reason, the HIPAA. And so you play within that space, but then you find the degrees of freedom where you can actually test things quickly, figure out what works and innovate on that, and ultimately get something to market that’s really valuable for people.

Martin Cody: I like it, I like the access to care. There’s and I’m in this camp. I didn’t used to be in this camp, but I’m in the camp now to where I don’t think we have a healthcare system. We have a sick care system. It seems people enter the system when they’re sick. So being a virtual primary care organization, I would imagine two things. One, that your business exploded during the pandemic because if the pandemic did anything, it essentially highlighted just how acceptable virtual care can be. So it brought the adoption of virtual care accelerated probably by ten or more years. Uh, second, getting people access to care, which you just talked about earlier from a prevention standpoint, can save significant amounts of money downstream and it seems inevitable would be in a position to augment both of those areas. Is that an accurate statement?

John McCluskey: Very much so. And in the way that I think about this, specifically with primary care, it’s about the relationship. And so we see this play out in a couple of different ways. Like we’ll actually go on site for employers and do those pop up camps for, you know, if they want flu shots and other things. And really, it’s just that establishing that relationship is so key in long term care. If they feel like they are heard, if they feel like they can get access to appointments. And so we make it very easy for them to do that. That’s like the entry. Right. And then once they’re once they’re part of our program, we do a lot to make sure the member is engaged, that they feel like they can use our program. And so a piece of that is we’ve embedded mental health visits and not and not only that, like the way that our subscription model works, anybody in the house has access to our primary care. So we’ve made it very yeah we’ve made it very flexible. So we have actually have a lot of clients and members who have multigenerational families living together. And we’ve been pretty relaxed on that. As long as they have the same address, they can come see us.

John McCluskey: And so what it does is long term, it helps us establish that care. And we often find underlying other health care issues that maybe they were ignoring. And so then we’re able to help them longer term, turn that around. Whether it’s hypertension or they want to focus on other aspects of their health care. And we believe in moving towards a world where there’s whole person care. And one of the challenges today, in today’s healthcare world is we actually ask a lot of people to make a financial decision on their health care, right? Am I going to do a high deductible health plan? Am I going to add an HSA? How much is that going to reduce my paycheck? All of those things. Right. And it’s less about what is meaningful for you. Like what do you want to focus on in your health care today? In an individual. And a family of five have very different needs. And so how do we do that? Well, we see primary care being a really key piece to that of allowing an individual to establish that relationship and then keep that relationship longer term to help them move forward with the way they want to receive their health care.

Martin Cody: Sure, the entire care journey from that standpoint, who would be the ideal customer for Viterbo? Who do you go after to present your portfolio of health plans?

John McCluskey: Great question. We see a lot of interest from several different groups. I had mentioned earlier, those clients who are trying to meet the compliance piece for the Affordable Care Act. And so those oftentimes those employers want is it comes from their growing. And now they have to start thinking about that. They’ve never offered benefits before. So it’s a really great opportunity for them to have a program that’s really robust that they can just plug in and get access for their their employees. What we also see is other clients who and working with brokers who have self-funded employer groups, who have taken that journey towards self-funding and managing their own health plans for their employees. And they’re looking for additional ways to manage cost and also provide additional care. And so in those arrangements, we see two ways that that kind of plays out oftentimes. One is we can just be complementary to their health plan and the way that it exists today. The second one is we can actually embed in the plan design, where we can even be a tiered part of that, that network structure where we can actually reduce the cost for everybody by coming through our primary care, because on the back end, what we can do is our guided care model, where if you need to see a specialist and you need to go to a physical location, our team can help you do that whole navigation and figure out the best way to get that care. Quality care at the best price point for everybody involved. And so we’re seeing a significant increase in interest in how you do that. Well. And brokers are looking at it wanting to bring value to their clients and everybody in the health care system, knowing that costs continue to go up and up. And so we’re able to save even on the stop loss side by being plugged in. So there’s value there for our clients as well.

Martin Cody: Yeah, I think that could solve a myriad of challenges if I’m an employer and they don’t have to have all their eggs in one basket, so to speak, and you can facilitate the primary care, care and then when a specialist is needed. We talked about back pain. Maybe the primary care physician wants to have some x rays done if someone has injured their back and then those x rays revealed, okay, this is a little bit out of the scope of a PCP. I’m going to send you to an orthopedist, and that can be right there in the employer’s own plan. And your team can help them navigate to not only find that orthopedist, but find the one that’s closest to them and continue them on their care journey. Yeah.

John McCluskey: And, Martin, as you know, when you’re trying to find a provider, there’s a lot of different factors that you’re considering. How close are they to me? You do the phone call, when can you see me? And I know you’re working on enhancing how that works, right? Because we’ve all had probably really good experiences around that and ones that are less ideal. And so for us to be there in that bridge, we see time and time again how valuable that is and hear that from our members. And we see that in our our scores of our NPS and our member satisfaction. And our members are able to rate our providers. So we want the best providers and they’re able to give us feedback. And a lot of that informs how we think about the future of even delivering healthcare on things that we would love to do in the future, and just innovation in a great, fantastic way.

Martin Cody: Yeah, I love the feedback loop and I think it is it’s faster, obviously at a startup because you can instantly see if something’s working or not working. And okay, let’s iterate and get something working. Health plans as we talked about, is a little bit more challenging, but the consumer and I think this is one of the many areas that causes confusion in healthcare. Is it a consumer? Is it a patient? Is it a member? Is it a customer? I mean, we have so much additional nomenclature around this particular individual. But having said that, if they get access to care and the NPS score reflects that, they’re thrilled with the provider. Everybody just benefits from that whole experience, the patient and the employer. And then also the costs come down because you’re addressing care issues earlier in the journey.

John McCluskey: Yeah. And and to add on to that point. You know, we were talking about the employer, right. And so what we also see is where a member has a really good experience, and they go back and tell their coworker about it, and their coworker is like, oh, I’m going to use this too, right? So you build that community trust within that. So we establish it. Right. Like we talked about before with doing the pop up clinics and other things like that. But then it’s longer term. You get those advocates that are like, hey, this is really valuable. And it sort of snowballs that way. So we see that being really valuable. And then from the employer, we do a good job of sharing back how much value they’re getting from this. Right. Like we’re able to share out reports of here’s how many of your members are seeing us. Here’s like some high level like, had they gone into a traditional healthcare system, here’s how much you would have spent. But because it’s all contained within our our virtual walls, here’s what it looks like. And so they see that. But it’s also other things that are a little harder to to look at, like if you can get a virtual visit, I’m not having to drive 30 minutes somewhere. Wait in a room and then drive back. And there are reasons why you you need to do that, right? And we just look at ourselves as complementary to anything that anybody is doing, not necessarily taking away. We just are really, really focused around access to care. And if you’re getting the care you need in the way you need it already, great. But we’re always here for you. And we see this sometimes where it’s just augmented, like, hey, I can’t get to my normal facility, can I see you tomorrow? And so we’re happy to do that too. So it’s really just focusing on the member and caring for them, and it shows up differently every day. But that’s what’s exciting for us is to see how we can do that. Well.

Martin Cody: Right. You forgot one important aspect of that patient having to drive 30 minutes and sit in a waiting room and then being handed a clipboard of forms that they’ve already filled out a dozen times, that asks them if they’ve still had an appendectomy in 2014, and the answer hasn’t changed yet. But I digress, so I’m going to draw upon your tech background and your startup background and kind of turn the scales a little bit. Knowing how fast startups can work, which I love. What has frustrated you the most about the payer plan world?

John McCluskey: Yeah. So if anybody that’s been around me for very long knows I use this as a pretty, pretty consistent theme, which is if regardless of the startup, regardless of the healthcare focus, if you don’t have access to lives or have a meaningful impact, you’re probably not going to make it very long. And so the thing that I’ve come to realize, and I’d mentioned that MSK startup that I was with, Right., we even looked at a lot of different strategies, one being let’s just work with self-funded employer groups. And the thinking there is, well, they can say yes really fast when you unravel that. Turns out you actually have a broker who has their own ideas. You have a TPA is involved. There’s a lot of different actual stakeholders that are helping influence that decision. So it’s not as fast as you would think. Secondly, it’s a fair amount of work to get a 50 employee or 100 employee group. Then for you to look at how do I work with a larger payer that’s maybe sitting on hundreds of thousands of lives? And so the challenge with that model, though, is that they’re going to tell you, we want a pilot. We got to see if this is going to work. They’ve got to they’ve got to dedicate their own resources, money and time, and you’ve got to convince them and earn their trust that what you’re doing is actually going to actually really bring the outcomes that they want.

John McCluskey: And so in those examples, we did long term see that. And we actually would go back and look at claims data. There was reduction in opioids. There was reduction in urgent visits and all the things that you would want and hope to see, right? But it takes a longer period of time to actually get that full trust where they’ll open the full book of business. And so that’s that’s a frustration that I hear over and over with startups where it’s, it’s why do I go play with Medicare Advantage? Well, there’s a whole set of things inside of doing that. And if you’re going to do like RMT, you got to have an FDA approved device. Um, you know, you gotta go through that whole due diligence piece, right? So do you, do you go after that or do you go after the commercial space? And then how do you do that? So there’s a lot of different strategies. But I think organically you start to find your way. And what I, what I typically try to look for is who can I partner with? How can I build a bigger moat together, and how do we all get access to those lives and do what we do well together? I think that’s been a theme for me. That’s worked out pretty well to date.

Martin Cody: Where where did that theme originate?

John McCluskey: When I was when I was building these health plans, one of the things that we learned along the way. Well, there’s two things that were really valuable. One is in a given health plan, you’ll like a self-funded, just an employer group, self-funded health plan. There can be anywhere from 12 to 14 vendors that you have to integrate a utilization management vendor, a pharmacy benefit manager, and the list goes on, right. And so there’s a lot of work that happens to connect all the dots and make that work. And then when we started building health plans, what we what we learned was it takes about 3 to 5 years, even for the best designed health plans to get in market. Nobody wants to go first. And so you have to convince those early adopters to actually, you know, come on that journey with you, and then you start getting results. And then it’s much easier to snowballs. And so moving data around is another big challenge with that. So everybody brings their own point solution. They bring their own ideas of how the plan should be designed. And and so what I, what I started to realize was again, two time repeater of this, of how much effort it takes just to get a program built for a 50 employee group, or if I build a whole health plan and they have even a couple thousand lives, I it’s the efficiency piece of it that I learned.

John McCluskey: And one of the things that often is used in startup is you build the plane, you jump off the cliff and build the plane on the way down. As an operator, what I’ve come to really appreciate is it’s actually more about flying the plane and how are you going to do that well., and so there’s a lot of variables inside of that. If you’ve got to get people, people in the seats, you got to have the fuel to get to where you’re going. You got to have the vision, the pilots to see and navigate you there. And so this, this theme kept coming out of I was already working with great partners, and they were sort of off doing their own thing as well. And I just kept pausing myself and saying, you’ve got lives. I’m adding value here. Why are we not working together? And over time, we just started really pushing on that, and it just kept repeating itself and seeing value every time I did that. And that’s really where it came from organically, of how do I fly this plane? Well, and how do we work together? Because we like each other. We want to work with each other. Let’s just do it and get that conviction and that partnership to to establish and move forward with it.

Martin Cody: And I think that’s a great point. It’s a little bit of a consistent theme on the edge of healthcare, where that requires a little bit of risk taking because there’s some uncertainty. Are we going to get the short end of the stick? Who’s going to you know, there’s a lot of variants that has to be worked out. But if, as you mentioned, if you like each other and there’s some established trust that can grow, and then the net net of everything is that you’re helping the employer, you’re helping the member. Costs are coming down. Outcomes are going up. I mean, it’s you can see the vision on the wall pretty quickly. It just takes a little bit of tenacity, a little bit of leadership skill to make the risk manageable so that the outcome is, I don’t want to say guaranteed, but darn near guaranteed.

John McCluskey: Correct. And I would say inside of that is trust is a key piece to that like we talked about. And so one of the things that I found that is really built on that is if there are things that come up because no doubtedly they will they won’t all go perfect. How do you respond to it? So how does your team respond to it? How do you actually solve that problem, whatever it might be. How do you collaborate and how do you move forward? How do you learn from that and not repeat that same mistake? I think those are equally as valuable, and it can become a little bit of a challenge if you’re growing and you have a lot of competing priorities as a startup. Scaling, you have other stakeholders, from venture capitalists to others who are really pushing you to hit certain numbers on your growth factors, etc.. So those are all very, very key points to consider when you’re doing that.

Martin Cody: Completely agree. Very refreshing perspective. So congratulations on coming to that knowledge set. I’m going to switch gears now. And we’re going to transition into what we call the speed round. So I’m going to say a word or a phrase or a question. And I would love for you to answer with the fastest thing that pops into your head. Okay. So given that you’re in Madison, I’m going to say Illinois football Badgers. The badger crowd is Badger faithful are happy with that answer. They might be questioning why it took so long, but that’s all good. You are the head of CMS for a one week period. What are you doing?

John McCluskey: I am putting a really big focus on how you connect value to all of the other programs that they have, everything from the measurements and the quality bonuses that it’s are we actually adding real value for our members?

Martin Cody: A great point. Uh, a common theme that I see in healthcare is paralysis by analysis. What’s your cure for that?

John McCluskey: Move quickly. Test it. Look at data. Evaluate whether it’s working and iterate.

Martin Cody: Good points. Uh, recently, Humana was notified by CMS that they’re going to lose a Medicare Advantage star. I have my theories on why this has happened. Most of it related to member experience, but I’m sure there are numerous causes. If you’re the CEO of Humana, how do you correct that?

John McCluskey: I, I find a I established a task force and I go deep into the numbers. And what I love about this is you can look at all the CMS data and you can look at things like, how are we doing on diabetes management? How are we doing on controlling blood pressure? I’m going to really want to understand where we’re Are performing and take quick action on how we actually move that forward because it’s multi-year factor, right? That with the with the reporting and the quality bonuses. So you’ve got to act quickly. And in some cases, like as an example with controlled blood pressure, you have to get two measurements. So in the first measurement in the first six months, if you’re not doing that or you’re not performing well there, how are we going to implement that really quickly to actually get back on track?

Martin Cody: Interesting. And I find it fascinating. There’s a consistent theme in your thought process and it’s speed to decision. There’s a there’s a swiftness and decision making that is required to solve a lot of these problems which which I appreciate and applaud. All right. Last one, living or dead, if you could choose anybody in healthcare who you would like to have an adult beverage with, who is that individual and what are you drinking?

John McCluskey: Mm. So in healthcare, um, so I’ll go with slightly outside of this. So I would love to have a glass of wine with Serena Williams for multiple reasons. One just phenomenal athlete. And I think you can just like learn so much from any athlete who’s performed at that level. Two invested in a lot of different startups, and several of them have been in the healthcare space. And so I’d love to just like deeper understanding of like, why did you pick Noom as an example and what matters there? And I just think there’s so many learnings that that they can bring over to how they think about investing. Kobe Bryant, while he was alive, did very similar, kind of just became a master obsessive about like investing. And it really played played out well for him is a next journey for him. As far as what I’m drinking, I if I was going to stick with wine, I would probably go with something like a Bordeaux. I like old world wines, you know, just like something that’s really classic but really rich and good.

Martin Cody: Outstanding, I like it. Very good answers. Impressive. And I think Serena has not been named before as a chosen individual. So that was a nice fresh twist. John, I really appreciate you taking some time. If if there’s employers out there that are interested in saying, hey, we would like to augment our existing health plan. How do they get in touch with you? Yeah.

John McCluskey: The best way probably you can find me on LinkedIn. I’m pretty active over there. You can also reach out to me at John Avitable Health.com is another way.

Martin Cody: Awesome. I appreciate the time today, and thank you for expanding our knowledge as it relates to health plan creation and deployment. Super fascinating stuff and thank you for bringing a fresh perspective to it. Good stuff.

John McCluskey: Thank you so much.

Martin Cody: All right. Cheers. Thanks everyone.