Jeffrey Hogan: It it is just astonishing the number of things and schemes when we now show the customer what's inside of these contracts, it's like a punch in the face. it is motivating it causes them to say all right let's go What next? not just purchasers. supply side vendors, need to know how to get in on the game here, suddenly that CFO who is the named fiduciary, they have personal liability now, okay? Hey, your lake house and your ski house, they're coming for it, okay? So you better figure it out. never have I felt more optimistic about the opportunity to completely transform this system than where we are right now.
John F Rodis: Thanks for joining us for another episode of Moving to Value Unscripted. My name is Dr. John Rodis, and I'm a recovering ex-hospital president and the president of Moving to Value Alliance Our mission is to advocate for a value-based healthcare ecosystem with the highest quality outcomes at a reasonable cost for our communities. I want to thank our members whose support makes this podcast possible. In particular, today I want to recognize our trade member, Connecticut Joint Replacement Surgeon LLC. I'm joined by my fellow board members, Dr. Steve Schutzer, Kim Lynch, and Donovan Pyle.
steve schutzer: Yes, good morning. I'm Dr. Steve Schutzer, orthopedic surgeon, co-founder of the Moving to Value Alliance, also co-founder and chief medical officer of Upswing Health, a national virtual orthopedic company focused on improving patient access, clinical outcomes, and value in MSK care.
Kim: I'm Kim Lynch, founder and CEO of Metis Health Technologies, where we help clinicians and healthcare organizations align revenues and deliver better patient care. I'm originally from Michigan, now based in DC.
Donovan Pyle: Donovan Pyle. I am the managing partner of Health Compass Consulting based in Orlando, Florida, author of Fixing Healthcare and Senior Advisor at the Validation Institute. Good to be with you all.
John F Rodis: Our guest today is Jeff Hogan, co-founder and managing director of the Judi Group. It may be safe to say that Jeff needs no introduction. He was a founding member of the Moving to Value Alliance and was an early host of this podcast, Moving to Value Unscripted. He's had a long career in healthcare consulting and is a champion of value-based care. Early this year, he teamed up with our friends at Judi Health, formerly Capital RX, to launch Judi Group, an advisory firm dedicated to remediating hidden cost drivers, contractual conflicts, and compliance gaps in employer health plans. With a stacked team of industry experts analyzing forensic level data, Judi Group helps employers make smarter decisions about health plans. Jeff returns to our podcast at a moment of flux. The crisis of healthcare spending is only getting worse. Next year will be bruising for employers of all sizes. That pressure could be the push we need to start getting serious about healthcare reform, particularly payment reform. Meanwhile, policy changes like this year's expanded consolidated appropriation act are shifting the landscape. Jeff joins us to unpack what employers need to know to navigate the next year or two. Welcome to moving welcome back to Moving to Value Scripted, Jeff.
Jeffrey Hogan: Thanks so much. Great to be here again.
John F Rodis: So Jeff, I was thinking this morning, I've known you for a long time, and I I thinking twenty years ago, I remember people saying, and you probably were one of them, that the healthcare costs are not sustainable. And that was back when it was getting close to two trillion dollars. Well, in the past twenty years, healthcare costs have tripled in this country. So now there are what five point seven trillion and rising, which is more than fifteen thousand dollars per man, woman, and child in America, which is kind of crazy when you think about it. We know that employers are gonna now face, I think, nearly double digit, if not double digit increases again this year. They've shifted a lot of the cost to their employees to higher premiums, deductibles, co-pays. So my God, maybe it is sustainable. But Jeff, before we jump into all of that, tell our listeners, a little bit about your journey and in particular when you made, I would say, the shift from a more traditional broker of side of that equation to value based healthcare.
Jeffrey Hogan: Sure. Thank thanks so much. It's it's really exciting to be back with you guys and having done so much work over the years and see the maturation of this organization and to see some new board members on as well, that have national scope. It's it's really great and I I appreciate the opportunity. So I've been in healthcare literally forty two years now. was checking the other day and as I've said before here, the most unique aspect of my background is that I've pretty much worked in every area of the healthcare ecosystem. So for 30 years, I ran New England for a a national general agency. We managed about a billion dollars commercial premium, premium equivalent, mostly self-funded. So that was one part of my career. Really saw that side of the business. About twenty-seven years ago, I was given the opportunity to create and start a national healthcare advisory firm that was primarily focused on ready, the supply side of healthcare, care delivery, primary care, clinically integrated networks, health systems, early digital health solutions and what have you. And really the the most remarkable thing over that many. decades, literally, is that never the two twains shall meet, care delivery and demand. It's always been moderated by moats, by monopolies that are in the middle, you know, really effective, complex supermarket, so to speak, that moderated the two sides. And I I would say 15 years ago really started to get Fatigue around what the system did or did not do. I've had various health issues over time. I'm a cancer survivor. Steve knows I have plenty of metal in my body as well, and have experienced the health system firsthand over the years. And I'll tell you, after 30 years on the demand side and seeing things that way, I realized that there was a tremendous opportunity. Opportunity, if you will, to fix things. And you know, never, I have four grandkids now as well, never have I felt more optimistic about the opportunity to completely transform this system than where we are right now. Lastly, as part of the advisory firm that I ran, I was also given the opportunity, while focused on supply side, to work. with very large populations, state employee health plans. Now I'm on seven of those at this point, Fortune 500 companies, Taft-Hartley groups, and even PE portfolio companies. And really that gave me the motivation, if you will, to do better. And we'll get into what that looks like and means and what's happening in this marketplace right now.
Donovan Pyle: it's not very often that we talk to people that have so much experience in the general agency part of the business. And you spent 30 years there. So I think there are a lot of people don't know what a general agency is. Can you explain what they do? And then my follow-up question is why are other companies buying general agencies?
Jeffrey Hogan: Yeah, it's a it's a really good question. So effectively general agencies are agents for the brokers. so I I mean that's the easiest way to describe it. Often brokers, particularly in the middle market and the small group marketplace, are most interested in engaging directly with the customer and many of the services that need to be performed, whether It's dealing with data or reporting or analytics or even underwriting functions are performed by another party that's involved in in the mix. and effectively that's what we did in this marketplace. I was particularly interested in servicing middle market groups, primarily because they have the greatest lack of sophistication. in dealing with data and reporting and I'll I'll argue from a risk point of view as well, stop loss being the largest fixed cost in the plans, understanding how to manage risk. And very few of them, particularly if we look now in moving into CAA and fiduciary duties and things like that, procurement, accountability, contracts, And giving them strategy and tactics. So at least from my vantage point in the region that we serviced, that was a function that we performed or helped to perform with many of the brokers in this marketplace. Other general agencies are really facilitating, they're quoting, they're running RFPs, they're doing functions that brokers would. Rather not do or don't do efficiently.
Donovan Pyle: Got it. That that's super helpful. So so they're they're providing back office services for retail brokers. so so w would it be fair to say that GAs are essentially wholesalers and and brokers are are retailers? Is that a different you know, way to look at that?
Jeffrey Hogan: Yeah, it's a it's a it's a good way to say it. I'll tell you though that you know, particularly in the self-funded marketplace or with captives and what what have you, sometimes you're an adjunct subject matter expert for specific things and you're very front facing with the broker.
Donovan Pyle: huh.
Jeffrey Hogan: so it it depends on the circumstance. So it's not necessarily just back office stuff. It it is also often front facing with the customer as well. There's a tremendous amount of variation relative
Donovan Pyle: Yeah.
Jeffrey Hogan: to general agencies. Some just do voluntary benefits or non-med benefits. And at least in my application, it was often a hybrid role, both retail and wholesale, and dealing with the carriers directly to negotiate renewal methodologies in terms and things like that.
Donovan Pyle: Awesome, awesome. Yeah, I I think it's a part of the industry that doesn't get talked about very much. And it's it's important that we we bring that to light. So thank you for that.
Jeffrey Hogan: Yep, agreed. and I'll just add one more thing. It it is particularly right now, because of the prohibited transaction requirement now that is really waking up employers. This is a segue by the way. I had to offer a segue having been a
Donovan Pyle: Ha ha ha.
Jeffrey Hogan: host in the past. The the big deal we're dealing with right now, just like the retirement industry got completely transformed by this whole Notion of prohibited transactions. It's basically any vendor that the plan has that's getting paid more than $1,000 a year has to be evaluated by the plan fiduciary, small group, middle market, large group, fully insured, self-funded. Really doesn't matter for direct and indirect compensation, how it affects the needs of the members of the group. Why do we have it? Okay. Number two, in
Donovan Pyle: Mm-hmm.
Jeffrey Hogan: the assessment of fee reasonableness. And if in fact you can't do that, it's a prohibited transaction, you have a fiduciary breach, I will tell you this is transformative for business for all of the middlemen that have been involved in these plans over time. Suddenly the employer discovers the amount of money that's getting extruded from the system.
steve schutzer: Hey Jeff, first first of all it's great to have you back. we miss you on the board. If you ever run out of things to do. Yeah. But you know, we've we've been friends and we followed your career for a long time and you've really landed at a great spot as managing director. I mean, for you i it's a match made in heaven. And you've been at this I guess you launched it almost a year ago. And you've described healthcare as a complete black box surrounded by protective moats which is a great description. So as you start doing these fiduciary forensic analyses, what is the I mean there are many, but what's the single biggest hidden cost driver that you're finding? And and what is the cost? What what what is what what is the impact of that hidden cost?
Jeffrey Hogan: Yeah, so so thanks for that. They just to give you a little bit of background, so we created Judi Group. Judi Group is a completely independent organization from Judi Health or Cap Rx. Actually, AJ Loiacono has clearly been a visionary in this space and driving it. And you know, he and I met about this time last year to discuss really the the opportunity for transformation in the marketplace and had this discussion around the fact that many employers finally got sick and tired of the mystery, as Stacy Richter describes it,
steve schutzer: Yeah.
Jeffrey Hogan: and getting some intuition and trying to solve things, you know, to fix things, instead of putting up with this trajectory. of healthcare, which just keeps moving and moving more toward 20% of our GDP. So we had this conversation, you know, honestly, I tried to retire about three years ago and it lasted for about two weeks. My wife got sick
Donovan Pyle: Mm-hmm.
steve schutzer: Yeah.
Jeffrey Hogan: of all the phone calls at home. It just didn't stop. And she said, you know, I'm I'm fine with you you know, working. you can work from home, just not from my home. And
Donovan Pyle: I hope.
Jeffrey Hogan: So we we decided to continue working. So this this Judi Group idea, I I really thought about it. did I want one more thing? and I I realized that the timing was really quite perfect. You know, we'd had CAA 2021, we had fifteen thousand podcasts about, hey, this is what you should do and this is where we should be going and Employers should be doing these things, and you know, not a whole lot of people did. The publicly traded companies did, many Taft-Hartley groups did as well, but there really wasn't a lot of movement. And then we saw the Cornell decision relative to prohibitive transactions, which basically said, Hey, here's a hot potato, employers. This is in your lap right now, the JP Morgan lawsuit right now. It's a prohibited transaction argument. and then ready, CAA 2026 gets passed, which basically ready federalizes the PBM model. It says no more spread on drugs, you're gonna pass through your your rebates. Amazing. we saw the FTC settlements, which require the three bigs to offer this option to every employer's no spread and the rebates. and then and then we also saw the DOL regulation coming down, which will hit in the next couple of weeks around disclosure or what have you. So we had this idea that employers were starting to lean toward doing things, getting their data, doing things differently, identifying things that they could do differently. And it kind of made my decision in October or November to co-found this organization. We launched in January with a really strong team. and you know, our emails, everything is separate from the parent company. and we got some big clients right out of the gate. we were able to work with a number of Fortune 500 companies.
Donovan Pyle: Yeah.
Jeffrey Hogan: Taft-Hartley groups, public entities, and even big PE portfolio companies getting their contracts and going through this diagnosis. So that's your administrative services agreement, your provider agreements, sometimes the stop loss agreements, sometimes the PBM agreements, to, as Stacy would say, take the complexity out of it and show. What is going on inside of these contracts? The 60 or 80 provisions in an administrative services agreement that actually takes money out of the system to actually benchmark those things. And Steve, to your question, what did we discover? All kinds of stuff. Okay. the fact that brokers were taking a buck seventy-five a script, or that the TPA. was taking a third or two-thirds of the rebates on a group for an admin credit on the TPA, the out of network confiscatory costs. We found health systems that for their own employees are trying to attract and keep employees and get nurses in a time where it's really hard to do that, but have really bad plans, high deductible plans that were really expensive. They're doing domestic claims in tier one, and yet we're we find their own domestic providers getting paid as out of network and the carrier taking 35% of savings on these things. It it is just astonishing the number of things and schemes that are out there. But most important, okay, to your question, and Donovan, I'm sure you've seen this with clients as well when we showed the customer or when we now show the customer what's inside of these contracts, it's like a punch in the face. It is astonishing you know the extent and scope of these things and most important for this discussion it is motivating it causes them to say all right let's go What next? And that what next should be a major part of our conversation today. You know, what does it do? It and it encourages or creates the impetus for employers to get their data and to own it themselves in their own place, not dependent on any other party to get it. Retrospective, prospective, to get data rights negotiated into their contracts, number one. Number two, to demand of the payers that they're working with the opportunity to carve out. They discover the network does not take care of the unique needs of their unique population. Number two, three, pre- and post-payment and audit rights as well. So these are just some of the things that happened with the motivation. And honestly, we've even been able to enter the fray with employers having not done that diagnosis to start with, but when they're at finalists in their RFP process. They may have had the worst RFP in the world, but to come in and to negotiate these things at the end. And I will tell you, here's the denominat go directly to the end of this podcast we are now seeing basically every BUCA and even regional carrier at this point giving up concessions to allow the data rights, the carve-outs, the pre- and post payment, the audit, the things ready that give the employer utility and agency over their plans so they can convey their unique needs into the marketplace. That hadn't happened before. It's happened.
Donovan Pyle: Yeah, that I mean that that's that's the the the demand
John F Rodis: Jeff
Donovan Pyle: side of the equation, waking up and exercising their power. That is just yes. Amazing.
Jeffrey Hogan: Finally, finally, yes, yes.
John F Rodis: And Jeff, j I'm I just listened to a podcast on Costco and I'm thinking healthcare is like the antithesis of Costco, right? I mean Costco stripped out all these middlemen and it's it they they they make a little profit but it's like 11 to 15 percent margin and that's how they they help their consumers. Healthcare is literally the opposite of that. There's all
Jeffrey Hogan: Yep. Yes.
John F Rodis: these middlemen. So put it put a little meat on the bones as a number. So if for every dollar an employer spends on healthcare. in general, how much of it is all of this middleman skimming off a little bit of the top? And then yeah, then I want to delve in, of course, the solutions, whether it's centers for excellence, direct primary care, pharmacy benefit management, you know, all all of those things that I think we're familiar with. But more or less would you say for every dollar healthcare spent, how much is this stuff costing employers?
Jeffrey Hogan: Yeah, it's a it's a great question. So so I'll I'll qualify it. John, you know I was a politician for fifteen years, so we qualify everything. You know, the the larger groups, the larger purchasers, the Fortune 500s and things like that, tend to be slightly better purchasers of healthcare. They are, okay. Not all, but most, okay. once we get down into jumbo groups, It's anywhere from twenty five to thirty two, thirty three percent is the number that we're talking about here. Yeah. And you know the
John F Rodis: before you spend an hour on actual health care.
Jeffrey Hogan: So so and and let me just qual let me qualify it just a little bit more here. And we alluded to this a little while ago. The middle market groups and even the small groups tend to be the worst purchasers of healthcare, you know, simply because they don't get guidance and they get abuse. So there's another element to this, and I d I don't wanna complicate it too much, but it's a big deal. Donovan will be very familiar with this, you know, about 73% of self-funded employers in the country carry stop loss. And almost without exception, the stop loss that they purchase is neither adequate or appropriate for their needs. and the broker is adding commission to it, which makes it even worse. So that largest fixed cost in their plan actually has a a drag effect on the plan as well. So that becomes part of our diagnosis is to be able to get retrospective data and prospective data
John F Rodis: Yeah.
Jeffrey Hogan: and to look at the underlying basis for the stop loss that they're purchasing to take care of their catastrophic needs. We looked at a group who you'd recognize a name brand recently who is paying double double what they should for their stop loss. Why? Because it was in a cabal, a broker cabal. the broker controlled the stop loss carriers they went to, and even the methodology for renewal and the socialization of the renewal methodologies and things like that. So so not only are we not purchasing the things, the care delivery, the digital solutions, and what have you appropriately, But we're further putting this lag or drag on the plan because we're clueless around what the catastrophic risk coverage should look like or what we should be paying for it.
steve schutzer: Jeff, I'm gonna ask you a question, because I mean this is obviously fascinating and I think we are at that tipping point where these macro trends 2027 is gonna be a very interesting year. Tell me about the Judi Group. I'm just curious, do you have data engineers, data analysts, how how big a team do you have to do what you're doing here?
Jeffrey Hogan: Yeah, the team is growing every day. I'll tell you, we have a law firm inside of the Judi Group, Judi Law. the Julie Selesnick who I think all of you know, leads up the legal side of things for us. She's really been at the tip of the spear, so to speak, in all of these fiduciary matters and the ability to negotiate terms. So, you know, part of what we have to do is if in fact we discover problems and issues, well then we have to negotiate those and cure those problems. so the cure gets embedded into the new contracts on a go forward basis. So the legal aspect is particularly important. so we have a law firm for that specifically. you heard it here first. Within the next two weeks, we will be launching Another division, a government affairs division as well, which is critical at this point. Congress and Senate can't get out of their own way on anything. And the states have shown you know an awful lot of innovation from a legislative point of view, particularly around anti-tiering, steering, most favored nation, that companies want to take advantage of, not just purchasers. But supply side vendors, which I want to talk about in minute as well, need to know how to get in on the game here, okay? How to be part of this mix. So we've brought on some pretty substantial assets on the government affairs side, both from a national and a state point of view, to help purchasers, health systems, any of those organizations as well. We have technology inside. So I'd say the most important thing that we're doing right now, one, ready, is emancipating data on behalf of employers. So, you know, ask an employer what is data? And they think, Donovan,
steve schutzer: Yeah, well said.
Jeffrey Hogan: you know this. It's reporting that they get from their broker occasionally. Okay, well, it's not. It's all the stuff, you know, whether it's Claims data, it could even be clinical data, it could be invoices from Point Solutions. it's even their contracts, which they don't have for the most part, all the stuff they need ready to make decisions on behalf of their members. That's their fiduciary duty to buy stuff on behalf of their members using member money and their own money as well. They have this duty. So emancipating the data, and you know, first explaining what data looks like, what is it, okay, and getting it for them. And then we have both technology and people who do the analytics, try and prioritize the issues, lack of primary care, lack of clinical integration, lack of knowledge around the prevalence and acuity of disease process, lack of knowledge on how to estimate the value. Of a point solution relative to your population. These are just such critical issues. And for the average employer, you know, we get that data and start to do the analytics, and it's an overwhelming, you know. I often say, you guys have heard me say it before, you get a look like I get from my Labrador Retriever when we start this process. Like, you know, how how do we start? Where do we start? and so So that's what we're doing as well. So that's that's one aspect of what we're doing. But we're also ready working on the supply side of healthcare right now because the supply side has been treated equally as bad as the demand side. Okay. I'll I'll
steve schutzer: So true. Right.
Jeffrey Hogan: tell you, you know, we've analyzed many health systems, employer arrangements at this point. It's astonishing how poorly. Health systems purchase for their own employees and don't go to bid and don't do things, you know, to have accountability.
John F Rodis: Ironic.
Jeffrey Hogan: So so think about it. The predominant health system in your area, is one of the predominant employers. John, you know this as well. And never does that information, the second largest expenditure in the group after wages, get back to the decision makers in the organization. I will tell you. doing the diagnostics on health systems and showing them this has been the biggest punch in the face for them as ready purchasers, but also getting them aligned with a thought process for direct care delivery in a marketplace. And we look, so you say, Show me evidence of that. I'll tell you look at the state of North Carolina right now, that I've Been able to do some advisory work on 700,000 plus employees. Look at what they're doing. They are direct contracting competitively with health systems for DRGs and these types of things as a big part of what they're doing. So the theme here, guys, you know, what's Judi Group doing, what's happening in the marketplace, the value of the network. Has gone down substantially for all of these BUCAs. Employers are waking up to the opportunity to procure services and to know what those services cost, what they should cost, and what they could cost as well. So our job is to help enable all of that thing that's occurring, which is the creation of a bona fide marketplace in healthcare.
John F Rodis: Is value part of that equation, Jeff, as far as cost? Let's talk about, you mentioned your own hardware and your body. so for North Carolina has numerous orthopedic programs of big health systems as an example. Without giving specifics, I suspect there's a wide variability in the cost and outcomes related to where people go. So is that part of the Judi Group's analysis?
Jeffrey Hogan: Yes. Yes. So not only is it a duty group analysis, but we're finding in the marketplace right now, and you guys have heard me say this before, for an employer purchaser, and even for a deliverer of that care, the whole notion of what is value based has been conscripted by the book of carriers as well, unfortunately. And even on the care delivery side, you know, with RVUs and everything that else that's out there. So really from an employer point of view, the way we talk about value ready, is in the payment mechanism, is predictable. You've heard me use that word many times before, access, cost, quality, outcome ready, and patient experience. So all of those things go into that. Predictability is a critical function of the fiduciary. It's a critical function of the fiduciary. Yeah, it is. And so all of those things, all of those components go into their procurement, meaning an appropriate RFP. and I will I will use the term ready, John, putting a warranty on those things. So having the conscription on the backside. Why why is it so critical right now to have these types of things happening in the marketplace. so AI helps us in analyzing contracts and even data in many ways. but AI is being used much more quote unquote effectively, not in a value-based way, by care delivery organizations that have done ready you know, any of their revenue cycle management and what have you. And we In just in the last three years, I've seen the acuity of DRGs go up sometimes 2,000% in a region. So they're playing chess, purchaser is playing checkers, you know, never the two twains shall meet. So part of solving for that problem is being able to recognize those things that are occurring. By the way, the abuses in OB around this on the delivery of babies and on DRGs, we know this is happening. So literally being able to deploy the technology that recognizes it, one, and two, right into those administrative services agreements, if in fact those technologies are being used, that we recognize them so that the TPA can do accountability on those things as well. so technology is you know, we're we're having some battles around that right now, but how do we solve that problem? It's in the payment mechanism where we're out there shopping and we require all of these functions. Steve, it it goes back to your episode of care days, you know, with using appropriate providers and excluding those who are not, who have bad quality. you know, the the original Carrum model looked like this as well.
Kim: I I'm loving this conversation, Jeff, and I think what's striking me the most is how the models that work. Whether we're talking about value-based care or states or Kaiser, or I would even throw in the DOD and the VA, is that they all do the same boring predictable things of knowing your population, understanding their needs, buying your care thoughtfully, and watching where the dollar goes. I love your points around you need to know how the money works. That fiduciary role, like you said, there were 12,000 podcasts around the CAA, I really don't think folks have sat with what that means, right? And and
Jeffrey Hogan: Nope.
Kim: what I know from value-based care and everything I've done in my career, and again, it just repeats across models and models and models, is what you said of turns out it's primary care. You invest there, right? And the the simplicity of it is so clear to us clinically, at least I think it is. We've accepted that you know clinical autonomy leads to better outcomes. I guess I'm curious what accelerates this fiduciary accountability and running towards it as a good thing, knowing how your money moves as a good thing. Cause I think there's still just a lot of fear, or at least that's my hunch, is that there's a lot of fear still holding people back from the punch in the face moments that they are afraid of, that you're right, they're coming fast and furious as you actually take the big gulp and look at these things soberly.
Jeffrey Hogan: Yeah, it's a it's a it's a great question. So the the biggest obstacles that we're running into right now is that most employers are not equipped, meaning they don't have governance that can even embrace this at all. So they need they need help. they they need genuine help, they need objective help. And Donovan, you post on this all the time, and I love it actually that you know if you think about it, I've known hundreds of brokers, some Really great people, you know, great personalities and what have you. but I'll I'll say straight out, the majority of brokers in healthcare know nothing about the supply side of healthcare at all.
Kim: Sure.
Jeffrey Hogan: clinical anything, data analytics, triaging, prioritizing, and what have you. So think about it. If we talk to CFOs and I did an address little over a year ago to fortune 20 CFOs. And, you know, I use the line that I did earlier. You know, what other area of business do you not know what things cost, what they should cost, what they could cost, and do you give them a blank check? You know, and so it's provocative and they like, my God. And but if we look at the average employer, they've conveyed the responsibility for this huge thing. To CHROs. And there's some really nice CHROs. They really care about people, they're empaths and you know what have you, but they are not trained in procurement, risk, finance,
Kim: Hundred percent.
Jeffrey Hogan: accountability, and what have you. And unfortunately, especially when we do our big diagnosis and say, look at how terribly you've procured for the last seven years, You know, it comes back to them. It's a it's personal. So part By the way, part of this for us now, recognizing that, is doing the engagement through the law firm so they have privilege. Okay, so there is a comfort that we're gonna deal with them, that we're not gonna point fingers, that we're looking at creating governance and processes that don't personalize it, making sure that we have the right resources, supporting that person on the analytics of their data and you know, all of the processes that are being involved. But remember that CHRO or Chief People Officer has primarily depended on a broker. Okay. And that broker is not necessarily thinking about the best interest of the member. Okay. So if there is a fiduciary duty here, hey, you know, I get paid by this one and get paid this way and what have you. So this reliance, this is a dysfunctional,
Kim: Mm.
Jeffrey Hogan: if you will, relationship relative to fiduciary duty. So You know, what what do we do? How do we solve this? How do we break away and get things done differently? Well, suddenly that CFO who is the named fiduciary, he or she knows nothing about procurement or networks or even the contracts or what have you, they have personal liability now, okay? Hey, your lake house and your ski house, they're coming for it, okay? So you better figure it out. So this is this is the thing. This is the impediment right now. You know, good governance. we do some of the governance training. People like Jamie Greenleaf are doing an amazing job setting up governance internally. The governance thing is really important that you have the right people and resources
Kim: Mm-hmm.
Jeffrey Hogan: internally, they may be internal people and external that are helping you with this giant problem and issue. So that's that's number one.
Kim: I also love your your point about getting outside council. I mean I think I think right, like that it sh that should be highlighted along with the governance. Like that's a really great tactical point, Jeff. Please go on. Yeah.
John F Rodis: Great.
Jeffrey Hogan: Yep, so so that's you know the governance thing and getting them to think differently is is really hard. And usually it occurs, you know, with that punch in the face. Hey, look, a real case, you you gave up sixteen million a year in remits sixteen million a year in remits to a certain carrier who may be in Connecticut for a two-dollar admin credit, because you didn't look at your administrative services agreement for the last 10 years and they just boiled you as a frog. Okay. They said, they're not paying attention. We're gonna do this on claim edit, or we're gonna do this on shared savings, or we're gonna do it's a, you know, it's all this. Here it is. This is what was done to you. This is what you gave up. Wake up. And by the way, as you get renewed, we go out through this RFP process, they just assume, as in the boiled frog syndrome, well They'll take this, they're already paying it. So let's just do it a little bit more, you know? So this is wrecking ball. A lot of the stuff we're doing is the wrecking ball. And like I said before, it's not necessarily, hey, give me your contract so we can do the diagnos. No, it's suddenly you know, Chief People Officer or the CFO is calling and saying, Hey, we're at the end of a really terrible RFP process that doesn't do anything in our interests. Help us. This is when we have leverage now. Okay. Come in and negotiate these contracts and get us some of the stuff that we want and need to be able to do things more appropriately. So whereas in January I said, well, we have to go through the diagnostic and then we have to get the data. And then we'd no, no, not at all. And in fact, when CAA 2026 hit, it was a great opportunity because. Once that employer knows that their PBM agreement, for example, is not compliant, and is, you know, basically, you know, taking money out of the system and not doing the rebate thing, well, you know it. So if you're in the middle of an RFP process, why would you give, knowing this is coming and you know, in on FTC settlements that they have to give you a better terms? Well, why? Why would you enter into a contract that doesn't have those better terms for your people? I mean, you're just shooting yourself in the head. So this is now. This is like right now. And the great opportunity, again, when this DOL right hits and what have you, it'll be by the end of the year where you've got to go out and do this very common disclosure process on every one of your vendors. And if you discover they're not doing it. It's a prohibited transaction. You can't
John F Rodis: So yeah.
Jeffrey Hogan: enter enter into that contract.
John F Rodis: You know, five years ago, you five and a half years ago now, you told us about the first CAA 2020-21 how it was gonna be a game changer and how this was gonna, you know, change the game. And of course here we are now five plus years later, and not that much has happened. But I think you're just hit on the key point here, which is In the old days it was let's get your like you said, you this is very important. So let's get your data and then look at it, which sounds cumbersome and let's face it, takes time. By the time you get it's
Jeffrey Hogan: Yes, it does.
John F Rodis: a year, could be two, and then you're gonna start
Jeffrey Hogan: Yes.
John F Rodis: implementing changes, you're gonna do some PBM stuff. And now it's like, hold it, stop. You can actually an employer now of any size, it sounds like for me, anything from probably fifty to, you know five thousand, I'm thinking in Connecticut, you know, with with five to fifteen thousand, it probably covers ninety nine percent of the employers in this state,
Jeffrey Hogan: Yes.
John F Rodis: including municipalities. They can they can intervene on day one with just looking at the contracts. Is that f is that
Jeffrey Hogan: Yes. Correct.
John F Rodis: fair?
Jeffrey Hogan: Looking at looking at the contracts and doing disclosure. So John, you you hit the nail on the head, you know, at age sixty-three, forty-two years in the business. We've been waiting for a long time for a way that requires the employer and others, if they're gonna get a tax deduction on this thing and manage the money of their employees, requires them to follow. A very common disclosure on every one of these vendors. And it is number one, transformative and emancipating. those that go through this process are astonished and it it it just creates immediate action. You know, we're we're even seeing it sometimes, you know, it's not just the broker or the TPA one or the PBM disclosure, which we're getting now, by the way. It's disclosure on a point solution. it it's amazing, you know, how how much, you know, comp is built into the thing. And the fee reasonableness thing, this is what happened in the retirement industry. Do remember this is what Morningstar did in the retirement industry. They benchmarked. Okay, what is fee reasonableness by categories? That's where we are, that's where we're going. We now have hundreds of these administrative services agreements that we've analyzed. by carrier, we can show the pattern of behavior for each carrier by provision, which is cool, but we're also now getting that data on point solutions as well, which is really interesting.
John F Rodis: Great.
steve schutzer: Hey Jeff, first of all, on behalf of my colleagues on this call, thank you for helping us launch the MTBA. Nine years ago, Jeff, when we had a cocktail and said, why don't we do something different here? So it's been nine years. So thank you for that. Thank you for your time today. we know you work seven days a week, been passionate about this, and congratulations on you being relentless in all of your achievements. You know, we John and I are on the provider side. We we just want to take care of patients and and it just troubles us to see people not be able you know, you walk around a s place like Walmart and you look at the disease and it's just right there in front of you and you just feel so bad. So congratulations on on all you're doing. Really quick, 'cause I know that you gotta jump, What do you think it's gonna look like at the end of 2027? You know, are we at that inflection point where this is not just a one-off for Judi Group? Is it gonna start to scale like we saw in 401(k)? What do you think?
Jeffrey Hogan: So Steve, thank you as well. I mean this was your idea many years ago and we've all joined in and you've continued the mission and educated so many people and most people don't know how much you help people behind the scenes to navigate the system and to get the type of care that they need. So very appreciative of all the work that you've done as well. So my my prediction is I'm already seeing evidence in in the marketplace, in contracts that have been negotiated just in the last week that are really superior. so from a from a disclosure point of view and what have you, I only expect things to ramp up. we launched this company in January. I can't keep up, can't add enough people, can't add enough resources. so there is tremendous demand. I'm even finding, and I really like it, Donovan brokers are starting to change their behavior and say, all right, we're going to fees, we're going to get educated, and we're going to help. Never seen this before. Obviously, there are exceptions to that and
steve schutzer: That's huge. Right.
Jeffrey Hogan: what have you, but we're now seeing literally the rudimentary aspects of a functional healthcare. marketplace. Okay. This is not a regional thing. It's nationally. I mean look at states right now like Indiana, which have passed legislation requiring health systems to direct contract with employers. It's creating an entirely new ecosystem in a state. I mean Gloria years ago really helped to inspire the Rand Hospital Transparency Report because of the variation in cost and quality That they had in Indiana. It was such an expensive place. And now she's driving it from a public sector point of view. And by the way, John and Steve, a reminder that she was the one who helped me, and Paul Grady, at the time, with the state of Connecticut to bring the state of Connecticut's data into RAND for the first time ever. So I am, I am, you know, I've been very cynical about the progress or lack of progress. We are seeing actual change on the supply and the demand side, measurable change in the marketplace. And I'm really excited.
steve schutzer: Fantastic. Fantastic.
John F Rodis: Yeah, for for
Kim: Man, is that nice to hear?
John F Rodis: Yeah, Jeff, th first of all, well, let me echo Steve's words and thank you so much for not only, you know, today, but for all the work you've done in this space. And and I have to say, for the first time in a long time, I'm actually leaving this podcast fairly optimistic that that changes afoot. I I'm l I'm thinking of my God, between the Taft-Hartley folks like 32 BJ that is set you know, years ago showed what you could do, how many of those there are. Municipalities have so many opportunities. Mid sized employers like Rosen that are in a high geography have such huge opportunities to take advantage of the marketplace. And and it goes on and on and on. It's probably even harder, I think, for the very large, you know, international employers. They have obviously space with a lot of opportunities and probably in the drug spend. I I just I think it my god, there's so many places to begin. But I think that we're really at a point where I truly believe we're gonna see changes. So thank you so much for joining us today. We're really appreciated.
Kim: Yeah, thanks
John F Rodis: appreciate it. I want thank
Kim: again.
John F Rodis: my co-hosts as well. And we wish you and and Judi Group the best. and we think you all we all have a bright future, hopefully, and it's starting to see some change and bend this cost curve finally finally the so called unsustainable rises we've seen for now two decades, three decades probably, may finally start to not only reduce the cost, 'cause I don't want to keep focusing on that, it's actually make it better. And you hit it on the head. Better access, better cost, better quality, better outcomes, all so important. So thank you so much, Jeff. Really appreciate it.
steve schutzer: Great job.
Jeffrey Hogan: My pleasure. Thanks again for having me. really enjoyed it.
John F Rodis: Thanks for joining us for another episode of Moving to Value Unscripted. My name is Dr. John Rodis, and I'm a recovering ex-hospital president and the president of Moving to Value Alliance Our mission is to advocate for a value-based healthcare ecosystem with the highest quality outcomes at a reasonable cost for our communities. I want to thank our members whose support makes this podcast possible. In particular, today I want to recognize our trade member, Connecticut Joint Replacement Surgeon LLC. I'm joined by my fellow board members, Dr. Steve Schutzer, Kim Lynch, and Donovan Pyle.
steve schutzer: Yes, good morning. I'm Dr. Steve Schutzer, orthopedic surgeon, co-founder of the Moving to Value Alliance, also co-founder and chief medical officer of Upswing Health, a national virtual orthopedic company focused on improving patient access, clinical outcomes, and value in MSK care.
Kim: I'm Kim Lynch, founder and CEO of Metis Health Technologies, where we help clinicians and healthcare organizations align revenues and deliver better patient care. I'm originally from Michigan, now based in DC.
Donovan Pyle: Donovan Pyle. I am the managing partner of Health Compass Consulting based in Orlando, Florida, author of Fixing Healthcare and Senior Advisor at the Validation Institute. Good to be with you all.
John F Rodis: Our guest today is Jeff Hogan, co-founder and managing director of the Judi Group. It may be safe to say that Jeff needs no introduction. He was a founding member of the Moving to Value Alliance and was an early host of this podcast, Moving to Value Unscripted. He's had a long career in healthcare consulting and is a champion of value-based care. Early this year, he teamed up with our friends at Judi Health, formerly Capital RX, to launch Judi Group, an advisory firm dedicated to remediating hidden cost drivers, contractual conflicts, and compliance gaps in employer health plans. With a stacked team of industry experts analyzing forensic level data, Judi Group helps employers make smarter decisions about health plans. Jeff returns to our podcast at a moment of flux. The crisis of healthcare spending is only getting worse. Next year will be bruising for employers of all sizes. That pressure could be the push we need to start getting serious about healthcare reform, particularly payment reform. Meanwhile, policy changes like this year's expanded consolidated appropriation act are shifting the landscape. Jeff joins us to unpack what employers need to know to navigate the next year or two. Welcome to moving welcome back to Moving to Value Scripted, Jeff.
Jeffrey Hogan: Thanks so much. Great to be here again.
John F Rodis: So Jeff, I was thinking this morning, I've known you for a long time, and I I thinking twenty years ago, I remember people saying, and you probably were one of them, that the healthcare costs are not sustainable. And that was back when it was getting close to two trillion dollars. Well, in the past twenty years, healthcare costs have tripled in this country. So now there are what five point seven trillion and rising, which is more than fifteen thousand dollars per man, woman, and child in America, which is kind of crazy when you think about it. We know that employers are gonna now face, I think, nearly double digit, if not double digit increases again this year. They've shifted a lot of the cost to their employees to higher premiums, deductibles, co-pays. So my God, maybe it is sustainable. But Jeff, before we jump into all of that, tell our listeners, a little bit about your journey and in particular when you made, I would say, the shift from a more traditional broker of side of that equation to value based healthcare.
Jeffrey Hogan: Sure. Thank thanks so much. It's it's really exciting to be back with you guys and having done so much work over the years and see the maturation of this organization and to see some new board members on as well, that have national scope. It's it's really great and I I appreciate the opportunity. So I've been in healthcare literally forty two years now. was checking the other day and as I've said before here, the most unique aspect of my background is that I've pretty much worked in every area of the healthcare ecosystem. So for 30 years, I ran New England for a a national general agency. We managed about a billion dollars commercial premium, premium equivalent, mostly self-funded. So that was one part of my career. Really saw that side of the business. About twenty-seven years ago, I was given the opportunity to create and start a national healthcare advisory firm that was primarily focused on ready, the supply side of healthcare, care delivery, primary care, clinically integrated networks, health systems, early digital health solutions and what have you. And really the the most remarkable thing over that many. decades, literally, is that never the two twains shall meet, care delivery and demand. It's always been moderated by moats, by monopolies that are in the middle, you know, really effective, complex supermarket, so to speak, that moderated the two sides. And I I would say 15 years ago really started to get Fatigue around what the system did or did not do. I've had various health issues over time. I'm a cancer survivor. Steve knows I have plenty of metal in my body as well, and have experienced the health system firsthand over the years. And I'll tell you, after 30 years on the demand side and seeing things that way, I realized that there was a tremendous opportunity. Opportunity, if you will, to fix things. And you know, never, I have four grandkids now as well, never have I felt more optimistic about the opportunity to completely transform this system than where we are right now. Lastly, as part of the advisory firm that I ran, I was also given the opportunity, while focused on supply side, to work. with very large populations, state employee health plans. Now I'm on seven of those at this point, Fortune 500 companies, Taft-Hartley groups, and even PE portfolio companies. And really that gave me the motivation, if you will, to do better. And we'll get into what that looks like and means and what's happening in this marketplace right now.
Donovan Pyle: it's not very often that we talk to people that have so much experience in the general agency part of the business. And you spent 30 years there. So I think there are a lot of people don't know what a general agency is. Can you explain what they do? And then my follow-up question is why are other companies buying general agencies?
Jeffrey Hogan: Yeah, it's a it's a really good question. So effectively general agencies are agents for the brokers. so I I mean that's the easiest way to describe it. Often brokers, particularly in the middle market and the small group marketplace, are most interested in engaging directly with the customer and many of the services that need to be performed, whether It's dealing with data or reporting or analytics or even underwriting functions are performed by another party that's involved in in the mix. and effectively that's what we did in this marketplace. I was particularly interested in servicing middle market groups, primarily because they have the greatest lack of sophistication. in dealing with data and reporting and I'll I'll argue from a risk point of view as well, stop loss being the largest fixed cost in the plans, understanding how to manage risk. And very few of them, particularly if we look now in moving into CAA and fiduciary duties and things like that, procurement, accountability, contracts, And giving them strategy and tactics. So at least from my vantage point in the region that we serviced, that was a function that we performed or helped to perform with many of the brokers in this marketplace. Other general agencies are really facilitating, they're quoting, they're running RFPs, they're doing functions that brokers would. Rather not do or don't do efficiently.
Donovan Pyle: Got it. That that's super helpful. So so they're they're providing back office services for retail brokers. so so w would it be fair to say that GAs are essentially wholesalers and and brokers are are retailers? Is that a different you know, way to look at that?
Jeffrey Hogan: Yeah, it's a it's a it's a good way to say it. I'll tell you though that you know, particularly in the self-funded marketplace or with captives and what what have you, sometimes you're an adjunct subject matter expert for specific things and you're very front facing with the broker.
Donovan Pyle: huh.
Jeffrey Hogan: so it it depends on the circumstance. So it's not necessarily just back office stuff. It it is also often front facing with the customer as well. There's a tremendous amount of variation relative
Donovan Pyle: Yeah.
Jeffrey Hogan: to general agencies. Some just do voluntary benefits or non-med benefits. And at least in my application, it was often a hybrid role, both retail and wholesale, and dealing with the carriers directly to negotiate renewal methodologies in terms and things like that.
Donovan Pyle: Awesome, awesome. Yeah, I I think it's a part of the industry that doesn't get talked about very much. And it's it's important that we we bring that to light. So thank you for that.
Jeffrey Hogan: Yep, agreed. and I'll just add one more thing. It it is particularly right now, because of the prohibited transaction requirement now that is really waking up employers. This is a segue by the way. I had to offer a segue having been a
Donovan Pyle: Ha ha ha.
Jeffrey Hogan: host in the past. The the big deal we're dealing with right now, just like the retirement industry got completely transformed by this whole Notion of prohibited transactions. It's basically any vendor that the plan has that's getting paid more than $1,000 a year has to be evaluated by the plan fiduciary, small group, middle market, large group, fully insured, self-funded. Really doesn't matter for direct and indirect compensation, how it affects the needs of the members of the group. Why do we have it? Okay. Number two, in
Donovan Pyle: Mm-hmm.
Jeffrey Hogan: the assessment of fee reasonableness. And if in fact you can't do that, it's a prohibited transaction, you have a fiduciary breach, I will tell you this is transformative for business for all of the middlemen that have been involved in these plans over time. Suddenly the employer discovers the amount of money that's getting extruded from the system.
steve schutzer: Hey Jeff, first first of all it's great to have you back. we miss you on the board. If you ever run out of things to do. Yeah. But you know, we've we've been friends and we followed your career for a long time and you've really landed at a great spot as managing director. I mean, for you i it's a match made in heaven. And you've been at this I guess you launched it almost a year ago. And you've described healthcare as a complete black box surrounded by protective moats which is a great description. So as you start doing these fiduciary forensic analyses, what is the I mean there are many, but what's the single biggest hidden cost driver that you're finding? And and what is the cost? What what what is what what is the impact of that hidden cost?
Jeffrey Hogan: Yeah, so so thanks for that. They just to give you a little bit of background, so we created Judi Group. Judi Group is a completely independent organization from Judi Health or Cap Rx. Actually, AJ Loiacono has clearly been a visionary in this space and driving it. And you know, he and I met about this time last year to discuss really the the opportunity for transformation in the marketplace and had this discussion around the fact that many employers finally got sick and tired of the mystery, as Stacy Richter describes it,
steve schutzer: Yeah.
Jeffrey Hogan: and getting some intuition and trying to solve things, you know, to fix things, instead of putting up with this trajectory. of healthcare, which just keeps moving and moving more toward 20% of our GDP. So we had this conversation, you know, honestly, I tried to retire about three years ago and it lasted for about two weeks. My wife got sick
Donovan Pyle: Mm-hmm.
steve schutzer: Yeah.
Jeffrey Hogan: of all the phone calls at home. It just didn't stop. And she said, you know, I'm I'm fine with you you know, working. you can work from home, just not from my home. And
Donovan Pyle: I hope.
Jeffrey Hogan: So we we decided to continue working. So this this Judi Group idea, I I really thought about it. did I want one more thing? and I I realized that the timing was really quite perfect. You know, we'd had CAA 2021, we had fifteen thousand podcasts about, hey, this is what you should do and this is where we should be going and Employers should be doing these things, and you know, not a whole lot of people did. The publicly traded companies did, many Taft-Hartley groups did as well, but there really wasn't a lot of movement. And then we saw the Cornell decision relative to prohibitive transactions, which basically said, Hey, here's a hot potato, employers. This is in your lap right now, the JP Morgan lawsuit right now. It's a prohibited transaction argument. and then ready, CAA 2026 gets passed, which basically ready federalizes the PBM model. It says no more spread on drugs, you're gonna pass through your your rebates. Amazing. we saw the FTC settlements, which require the three bigs to offer this option to every employer's no spread and the rebates. and then and then we also saw the DOL regulation coming down, which will hit in the next couple of weeks around disclosure or what have you. So we had this idea that employers were starting to lean toward doing things, getting their data, doing things differently, identifying things that they could do differently. And it kind of made my decision in October or November to co-found this organization. We launched in January with a really strong team. and you know, our emails, everything is separate from the parent company. and we got some big clients right out of the gate. we were able to work with a number of Fortune 500 companies.
Donovan Pyle: Yeah.
Jeffrey Hogan: Taft-Hartley groups, public entities, and even big PE portfolio companies getting their contracts and going through this diagnosis. So that's your administrative services agreement, your provider agreements, sometimes the stop loss agreements, sometimes the PBM agreements, to, as Stacy would say, take the complexity out of it and show. What is going on inside of these contracts? The 60 or 80 provisions in an administrative services agreement that actually takes money out of the system to actually benchmark those things. And Steve, to your question, what did we discover? All kinds of stuff. Okay. the fact that brokers were taking a buck seventy-five a script, or that the TPA. was taking a third or two-thirds of the rebates on a group for an admin credit on the TPA, the out of network confiscatory costs. We found health systems that for their own employees are trying to attract and keep employees and get nurses in a time where it's really hard to do that, but have really bad plans, high deductible plans that were really expensive. They're doing domestic claims in tier one, and yet we're we find their own domestic providers getting paid as out of network and the carrier taking 35% of savings on these things. It it is just astonishing the number of things and schemes that are out there. But most important, okay, to your question, and Donovan, I'm sure you've seen this with clients as well when we showed the customer or when we now show the customer what's inside of these contracts, it's like a punch in the face. It is astonishing you know the extent and scope of these things and most important for this discussion it is motivating it causes them to say all right let's go What next? And that what next should be a major part of our conversation today. You know, what does it do? It and it encourages or creates the impetus for employers to get their data and to own it themselves in their own place, not dependent on any other party to get it. Retrospective, prospective, to get data rights negotiated into their contracts, number one. Number two, to demand of the payers that they're working with the opportunity to carve out. They discover the network does not take care of the unique needs of their unique population. Number two, three, pre- and post-payment and audit rights as well. So these are just some of the things that happened with the motivation. And honestly, we've even been able to enter the fray with employers having not done that diagnosis to start with, but when they're at finalists in their RFP process. They may have had the worst RFP in the world, but to come in and to negotiate these things at the end. And I will tell you, here's the denominat go directly to the end of this podcast we are now seeing basically every BUCA and even regional carrier at this point giving up concessions to allow the data rights, the carve-outs, the pre- and post payment, the audit, the things ready that give the employer utility and agency over their plans so they can convey their unique needs into the marketplace. That hadn't happened before. It's happened.
Donovan Pyle: Yeah, that I mean that that's that's the the the demand
John F Rodis: Jeff
Donovan Pyle: side of the equation, waking up and exercising their power. That is just yes. Amazing.
Jeffrey Hogan: Finally, finally, yes, yes.
John F Rodis: And Jeff, j I'm I just listened to a podcast on Costco and I'm thinking healthcare is like the antithesis of Costco, right? I mean Costco stripped out all these middlemen and it's it they they they make a little profit but it's like 11 to 15 percent margin and that's how they they help their consumers. Healthcare is literally the opposite of that. There's all
Jeffrey Hogan: Yep. Yes.
John F Rodis: these middlemen. So put it put a little meat on the bones as a number. So if for every dollar an employer spends on healthcare. in general, how much of it is all of this middleman skimming off a little bit of the top? And then yeah, then I want to delve in, of course, the solutions, whether it's centers for excellence, direct primary care, pharmacy benefit management, you know, all all of those things that I think we're familiar with. But more or less would you say for every dollar healthcare spent, how much is this stuff costing employers?
Jeffrey Hogan: Yeah, it's a it's a great question. So so I'll I'll qualify it. John, you know I was a politician for fifteen years, so we qualify everything. You know, the the larger groups, the larger purchasers, the Fortune 500s and things like that, tend to be slightly better purchasers of healthcare. They are, okay. Not all, but most, okay. once we get down into jumbo groups, It's anywhere from twenty five to thirty two, thirty three percent is the number that we're talking about here. Yeah. And you know the
John F Rodis: before you spend an hour on actual health care.
Jeffrey Hogan: So so and and let me just qual let me qualify it just a little bit more here. And we alluded to this a little while ago. The middle market groups and even the small groups tend to be the worst purchasers of healthcare, you know, simply because they don't get guidance and they get abuse. So there's another element to this, and I d I don't wanna complicate it too much, but it's a big deal. Donovan will be very familiar with this, you know, about 73% of self-funded employers in the country carry stop loss. And almost without exception, the stop loss that they purchase is neither adequate or appropriate for their needs. and the broker is adding commission to it, which makes it even worse. So that largest fixed cost in their plan actually has a a drag effect on the plan as well. So that becomes part of our diagnosis is to be able to get retrospective data and prospective data
John F Rodis: Yeah.
Jeffrey Hogan: and to look at the underlying basis for the stop loss that they're purchasing to take care of their catastrophic needs. We looked at a group who you'd recognize a name brand recently who is paying double double what they should for their stop loss. Why? Because it was in a cabal, a broker cabal. the broker controlled the stop loss carriers they went to, and even the methodology for renewal and the socialization of the renewal methodologies and things like that. So so not only are we not purchasing the things, the care delivery, the digital solutions, and what have you appropriately, But we're further putting this lag or drag on the plan because we're clueless around what the catastrophic risk coverage should look like or what we should be paying for it.
steve schutzer: Jeff, I'm gonna ask you a question, because I mean this is obviously fascinating and I think we are at that tipping point where these macro trends 2027 is gonna be a very interesting year. Tell me about the Judi Group. I'm just curious, do you have data engineers, data analysts, how how big a team do you have to do what you're doing here?
Jeffrey Hogan: Yeah, the team is growing every day. I'll tell you, we have a law firm inside of the Judi Group, Judi Law. the Julie Selesnick who I think all of you know, leads up the legal side of things for us. She's really been at the tip of the spear, so to speak, in all of these fiduciary matters and the ability to negotiate terms. So, you know, part of what we have to do is if in fact we discover problems and issues, well then we have to negotiate those and cure those problems. so the cure gets embedded into the new contracts on a go forward basis. So the legal aspect is particularly important. so we have a law firm for that specifically. you heard it here first. Within the next two weeks, we will be launching Another division, a government affairs division as well, which is critical at this point. Congress and Senate can't get out of their own way on anything. And the states have shown you know an awful lot of innovation from a legislative point of view, particularly around anti-tiering, steering, most favored nation, that companies want to take advantage of, not just purchasers. But supply side vendors, which I want to talk about in minute as well, need to know how to get in on the game here, okay? How to be part of this mix. So we've brought on some pretty substantial assets on the government affairs side, both from a national and a state point of view, to help purchasers, health systems, any of those organizations as well. We have technology inside. So I'd say the most important thing that we're doing right now, one, ready, is emancipating data on behalf of employers. So, you know, ask an employer what is data? And they think, Donovan,
steve schutzer: Yeah, well said.
Jeffrey Hogan: you know this. It's reporting that they get from their broker occasionally. Okay, well, it's not. It's all the stuff, you know, whether it's Claims data, it could even be clinical data, it could be invoices from Point Solutions. it's even their contracts, which they don't have for the most part, all the stuff they need ready to make decisions on behalf of their members. That's their fiduciary duty to buy stuff on behalf of their members using member money and their own money as well. They have this duty. So emancipating the data, and you know, first explaining what data looks like, what is it, okay, and getting it for them. And then we have both technology and people who do the analytics, try and prioritize the issues, lack of primary care, lack of clinical integration, lack of knowledge around the prevalence and acuity of disease process, lack of knowledge on how to estimate the value. Of a point solution relative to your population. These are just such critical issues. And for the average employer, you know, we get that data and start to do the analytics, and it's an overwhelming, you know. I often say, you guys have heard me say it before, you get a look like I get from my Labrador Retriever when we start this process. Like, you know, how how do we start? Where do we start? and so So that's what we're doing as well. So that's that's one aspect of what we're doing. But we're also ready working on the supply side of healthcare right now because the supply side has been treated equally as bad as the demand side. Okay. I'll I'll
steve schutzer: So true. Right.
Jeffrey Hogan: tell you, you know, we've analyzed many health systems, employer arrangements at this point. It's astonishing how poorly. Health systems purchase for their own employees and don't go to bid and don't do things, you know, to have accountability.
John F Rodis: Ironic.
Jeffrey Hogan: So so think about it. The predominant health system in your area, is one of the predominant employers. John, you know this as well. And never does that information, the second largest expenditure in the group after wages, get back to the decision makers in the organization. I will tell you. doing the diagnostics on health systems and showing them this has been the biggest punch in the face for them as ready purchasers, but also getting them aligned with a thought process for direct care delivery in a marketplace. And we look, so you say, Show me evidence of that. I'll tell you look at the state of North Carolina right now, that I've Been able to do some advisory work on 700,000 plus employees. Look at what they're doing. They are direct contracting competitively with health systems for DRGs and these types of things as a big part of what they're doing. So the theme here, guys, you know, what's Judi Group doing, what's happening in the marketplace, the value of the network. Has gone down substantially for all of these BUCAs. Employers are waking up to the opportunity to procure services and to know what those services cost, what they should cost, and what they could cost as well. So our job is to help enable all of that thing that's occurring, which is the creation of a bona fide marketplace in healthcare.
John F Rodis: Is value part of that equation, Jeff, as far as cost? Let's talk about, you mentioned your own hardware and your body. so for North Carolina has numerous orthopedic programs of big health systems as an example. Without giving specifics, I suspect there's a wide variability in the cost and outcomes related to where people go. So is that part of the Judi Group's analysis?
Jeffrey Hogan: Yes. Yes. So not only is it a duty group analysis, but we're finding in the marketplace right now, and you guys have heard me say this before, for an employer purchaser, and even for a deliverer of that care, the whole notion of what is value based has been conscripted by the book of carriers as well, unfortunately. And even on the care delivery side, you know, with RVUs and everything that else that's out there. So really from an employer point of view, the way we talk about value ready, is in the payment mechanism, is predictable. You've heard me use that word many times before, access, cost, quality, outcome ready, and patient experience. So all of those things go into that. Predictability is a critical function of the fiduciary. It's a critical function of the fiduciary. Yeah, it is. And so all of those things, all of those components go into their procurement, meaning an appropriate RFP. and I will I will use the term ready, John, putting a warranty on those things. So having the conscription on the backside. Why why is it so critical right now to have these types of things happening in the marketplace. so AI helps us in analyzing contracts and even data in many ways. but AI is being used much more quote unquote effectively, not in a value-based way, by care delivery organizations that have done ready you know, any of their revenue cycle management and what have you. And we In just in the last three years, I've seen the acuity of DRGs go up sometimes 2,000% in a region. So they're playing chess, purchaser is playing checkers, you know, never the two twains shall meet. So part of solving for that problem is being able to recognize those things that are occurring. By the way, the abuses in OB around this on the delivery of babies and on DRGs, we know this is happening. So literally being able to deploy the technology that recognizes it, one, and two, right into those administrative services agreements, if in fact those technologies are being used, that we recognize them so that the TPA can do accountability on those things as well. so technology is you know, we're we're having some battles around that right now, but how do we solve that problem? It's in the payment mechanism where we're out there shopping and we require all of these functions. Steve, it it goes back to your episode of care days, you know, with using appropriate providers and excluding those who are not, who have bad quality. you know, the the original Carrum model looked like this as well.
Kim: I I'm loving this conversation, Jeff, and I think what's striking me the most is how the models that work. Whether we're talking about value-based care or states or Kaiser, or I would even throw in the DOD and the VA, is that they all do the same boring predictable things of knowing your population, understanding their needs, buying your care thoughtfully, and watching where the dollar goes. I love your points around you need to know how the money works. That fiduciary role, like you said, there were 12,000 podcasts around the CAA, I really don't think folks have sat with what that means, right? And and
Jeffrey Hogan: Nope.
Kim: what I know from value-based care and everything I've done in my career, and again, it just repeats across models and models and models, is what you said of turns out it's primary care. You invest there, right? And the the simplicity of it is so clear to us clinically, at least I think it is. We've accepted that you know clinical autonomy leads to better outcomes. I guess I'm curious what accelerates this fiduciary accountability and running towards it as a good thing, knowing how your money moves as a good thing. Cause I think there's still just a lot of fear, or at least that's my hunch, is that there's a lot of fear still holding people back from the punch in the face moments that they are afraid of, that you're right, they're coming fast and furious as you actually take the big gulp and look at these things soberly.
Jeffrey Hogan: Yeah, it's a it's a it's a great question. So the the biggest obstacles that we're running into right now is that most employers are not equipped, meaning they don't have governance that can even embrace this at all. So they need they need help. they they need genuine help, they need objective help. And Donovan, you post on this all the time, and I love it actually that you know if you think about it, I've known hundreds of brokers, some Really great people, you know, great personalities and what have you. but I'll I'll say straight out, the majority of brokers in healthcare know nothing about the supply side of healthcare at all.
Kim: Sure.
Jeffrey Hogan: clinical anything, data analytics, triaging, prioritizing, and what have you. So think about it. If we talk to CFOs and I did an address little over a year ago to fortune 20 CFOs. And, you know, I use the line that I did earlier. You know, what other area of business do you not know what things cost, what they should cost, what they could cost, and do you give them a blank check? You know, and so it's provocative and they like, my God. And but if we look at the average employer, they've conveyed the responsibility for this huge thing. To CHROs. And there's some really nice CHROs. They really care about people, they're empaths and you know what have you, but they are not trained in procurement, risk, finance,
Kim: Hundred percent.
Jeffrey Hogan: accountability, and what have you. And unfortunately, especially when we do our big diagnosis and say, look at how terribly you've procured for the last seven years, You know, it comes back to them. It's a it's personal. So part By the way, part of this for us now, recognizing that, is doing the engagement through the law firm so they have privilege. Okay, so there is a comfort that we're gonna deal with them, that we're not gonna point fingers, that we're looking at creating governance and processes that don't personalize it, making sure that we have the right resources, supporting that person on the analytics of their data and you know, all of the processes that are being involved. But remember that CHRO or Chief People Officer has primarily depended on a broker. Okay. And that broker is not necessarily thinking about the best interest of the member. Okay. So if there is a fiduciary duty here, hey, you know, I get paid by this one and get paid this way and what have you. So this reliance, this is a dysfunctional,
Kim: Mm.
Jeffrey Hogan: if you will, relationship relative to fiduciary duty. So You know, what what do we do? How do we solve this? How do we break away and get things done differently? Well, suddenly that CFO who is the named fiduciary, he or she knows nothing about procurement or networks or even the contracts or what have you, they have personal liability now, okay? Hey, your lake house and your ski house, they're coming for it, okay? So you better figure it out. So this is this is the thing. This is the impediment right now. You know, good governance. we do some of the governance training. People like Jamie Greenleaf are doing an amazing job setting up governance internally. The governance thing is really important that you have the right people and resources
Kim: Mm-hmm.
Jeffrey Hogan: internally, they may be internal people and external that are helping you with this giant problem and issue. So that's that's number one.
Kim: I also love your your point about getting outside council. I mean I think I think right, like that it sh that should be highlighted along with the governance. Like that's a really great tactical point, Jeff. Please go on. Yeah.
John F Rodis: Great.
Jeffrey Hogan: Yep, so so that's you know the governance thing and getting them to think differently is is really hard. And usually it occurs, you know, with that punch in the face. Hey, look, a real case, you you gave up sixteen million a year in remits sixteen million a year in remits to a certain carrier who may be in Connecticut for a two-dollar admin credit, because you didn't look at your administrative services agreement for the last 10 years and they just boiled you as a frog. Okay. They said, they're not paying attention. We're gonna do this on claim edit, or we're gonna do this on shared savings, or we're gonna do it's a, you know, it's all this. Here it is. This is what was done to you. This is what you gave up. Wake up. And by the way, as you get renewed, we go out through this RFP process, they just assume, as in the boiled frog syndrome, well They'll take this, they're already paying it. So let's just do it a little bit more, you know? So this is wrecking ball. A lot of the stuff we're doing is the wrecking ball. And like I said before, it's not necessarily, hey, give me your contract so we can do the diagnos. No, it's suddenly you know, Chief People Officer or the CFO is calling and saying, Hey, we're at the end of a really terrible RFP process that doesn't do anything in our interests. Help us. This is when we have leverage now. Okay. Come in and negotiate these contracts and get us some of the stuff that we want and need to be able to do things more appropriately. So whereas in January I said, well, we have to go through the diagnostic and then we have to get the data. And then we'd no, no, not at all. And in fact, when CAA 2026 hit, it was a great opportunity because. Once that employer knows that their PBM agreement, for example, is not compliant, and is, you know, basically, you know, taking money out of the system and not doing the rebate thing, well, you know it. So if you're in the middle of an RFP process, why would you give, knowing this is coming and you know, in on FTC settlements that they have to give you a better terms? Well, why? Why would you enter into a contract that doesn't have those better terms for your people? I mean, you're just shooting yourself in the head. So this is now. This is like right now. And the great opportunity, again, when this DOL right hits and what have you, it'll be by the end of the year where you've got to go out and do this very common disclosure process on every one of your vendors. And if you discover they're not doing it. It's a prohibited transaction. You can't
John F Rodis: So yeah.
Jeffrey Hogan: enter enter into that contract.
John F Rodis: You know, five years ago, you five and a half years ago now, you told us about the first CAA 2020-21 how it was gonna be a game changer and how this was gonna, you know, change the game. And of course here we are now five plus years later, and not that much has happened. But I think you're just hit on the key point here, which is In the old days it was let's get your like you said, you this is very important. So let's get your data and then look at it, which sounds cumbersome and let's face it, takes time. By the time you get it's
Jeffrey Hogan: Yes, it does.
John F Rodis: a year, could be two, and then you're gonna start
Jeffrey Hogan: Yes.
John F Rodis: implementing changes, you're gonna do some PBM stuff. And now it's like, hold it, stop. You can actually an employer now of any size, it sounds like for me, anything from probably fifty to, you know five thousand, I'm thinking in Connecticut, you know, with with five to fifteen thousand, it probably covers ninety nine percent of the employers in this state,
Jeffrey Hogan: Yes.
John F Rodis: including municipalities. They can they can intervene on day one with just looking at the contracts. Is that f is that
Jeffrey Hogan: Yes. Correct.
John F Rodis: fair?
Jeffrey Hogan: Looking at looking at the contracts and doing disclosure. So John, you you hit the nail on the head, you know, at age sixty-three, forty-two years in the business. We've been waiting for a long time for a way that requires the employer and others, if they're gonna get a tax deduction on this thing and manage the money of their employees, requires them to follow. A very common disclosure on every one of these vendors. And it is number one, transformative and emancipating. those that go through this process are astonished and it it it just creates immediate action. You know, we're we're even seeing it sometimes, you know, it's not just the broker or the TPA one or the PBM disclosure, which we're getting now, by the way. It's disclosure on a point solution. it it's amazing, you know, how how much, you know, comp is built into the thing. And the fee reasonableness thing, this is what happened in the retirement industry. Do remember this is what Morningstar did in the retirement industry. They benchmarked. Okay, what is fee reasonableness by categories? That's where we are, that's where we're going. We now have hundreds of these administrative services agreements that we've analyzed. by carrier, we can show the pattern of behavior for each carrier by provision, which is cool, but we're also now getting that data on point solutions as well, which is really interesting.
John F Rodis: Great.
steve schutzer: Hey Jeff, first of all, on behalf of my colleagues on this call, thank you for helping us launch the MTBA. Nine years ago, Jeff, when we had a cocktail and said, why don't we do something different here? So it's been nine years. So thank you for that. Thank you for your time today. we know you work seven days a week, been passionate about this, and congratulations on you being relentless in all of your achievements. You know, we John and I are on the provider side. We we just want to take care of patients and and it just troubles us to see people not be able you know, you walk around a s place like Walmart and you look at the disease and it's just right there in front of you and you just feel so bad. So congratulations on on all you're doing. Really quick, 'cause I know that you gotta jump, What do you think it's gonna look like at the end of 2027? You know, are we at that inflection point where this is not just a one-off for Judi Group? Is it gonna start to scale like we saw in 401(k)? What do you think?
Jeffrey Hogan: So Steve, thank you as well. I mean this was your idea many years ago and we've all joined in and you've continued the mission and educated so many people and most people don't know how much you help people behind the scenes to navigate the system and to get the type of care that they need. So very appreciative of all the work that you've done as well. So my my prediction is I'm already seeing evidence in in the marketplace, in contracts that have been negotiated just in the last week that are really superior. so from a from a disclosure point of view and what have you, I only expect things to ramp up. we launched this company in January. I can't keep up, can't add enough people, can't add enough resources. so there is tremendous demand. I'm even finding, and I really like it, Donovan brokers are starting to change their behavior and say, all right, we're going to fees, we're going to get educated, and we're going to help. Never seen this before. Obviously, there are exceptions to that and
steve schutzer: That's huge. Right.
Jeffrey Hogan: what have you, but we're now seeing literally the rudimentary aspects of a functional healthcare. marketplace. Okay. This is not a regional thing. It's nationally. I mean look at states right now like Indiana, which have passed legislation requiring health systems to direct contract with employers. It's creating an entirely new ecosystem in a state. I mean Gloria years ago really helped to inspire the Rand Hospital Transparency Report because of the variation in cost and quality That they had in Indiana. It was such an expensive place. And now she's driving it from a public sector point of view. And by the way, John and Steve, a reminder that she was the one who helped me, and Paul Grady, at the time, with the state of Connecticut to bring the state of Connecticut's data into RAND for the first time ever. So I am, I am, you know, I've been very cynical about the progress or lack of progress. We are seeing actual change on the supply and the demand side, measurable change in the marketplace. And I'm really excited.
steve schutzer: Fantastic. Fantastic.
John F Rodis: Yeah, for for
Kim: Man, is that nice to hear?
John F Rodis: Yeah, Jeff, th first of all, well, let me echo Steve's words and thank you so much for not only, you know, today, but for all the work you've done in this space. And and I have to say, for the first time in a long time, I'm actually leaving this podcast fairly optimistic that that changes afoot. I I'm l I'm thinking of my God, between the Taft-Hartley folks like 32 BJ that is set you know, years ago showed what you could do, how many of those there are. Municipalities have so many opportunities. Mid sized employers like Rosen that are in a high geography have such huge opportunities to take advantage of the marketplace. And and it goes on and on and on. It's probably even harder, I think, for the very large, you know, international employers. They have obviously space with a lot of opportunities and probably in the drug spend. I I just I think it my god, there's so many places to begin. But I think that we're really at a point where I truly believe we're gonna see changes. So thank you so much for joining us today. We're really appreciated.
Kim: Yeah, thanks
John F Rodis: appreciate it. I want thank
Kim: again.
John F Rodis: my co-hosts as well. And we wish you and and Judi Group the best. and we think you all we all have a bright future, hopefully, and it's starting to see some change and bend this cost curve finally finally the so called unsustainable rises we've seen for now two decades, three decades probably, may finally start to not only reduce the cost, 'cause I don't want to keep focusing on that, it's actually make it better. And you hit it on the head. Better access, better cost, better quality, better outcomes, all so important. So thank you so much, Jeff. Really appreciate it.
steve schutzer: Great job.
Jeffrey Hogan: My pleasure. Thanks again for having me. really enjoyed it.
