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Episode Transcript

Announcer [00:00:00] Welcome to RadioRev, podcasting from the heart of healthcare in Minneapolis, Minnesota. This is the podcast for change makers looking to do more than just health engagement. It’s about getting people to take action and do things that actually improve their health. It’s a radical idea, right? So we’re talking with the leaders, innovators, movers, and shakers who are bringing new ideas, inspiring others, and leading the way.

Jenn [00:00:26] Today, Icario CEO Jeff Fritz is talking with Rev Up 2019 speaker John Gorman. John is the Founder and former Executive Chairman at Gorman Health Group. Prior to founding GHG in 1996, he was appointed by President Clinton as the first Assistant to the Director of Health Care Financing and Administration’s Office of Managed Care, now known as CMS. He is currently the CEO of Nightingale Partners and speaks regularly at healthcare conferences across the country. Welcome to the show.

John [00:00:56] Thank you. Pleasure to be here.

Jeff [00:00:59] Well, hey, John, it’s finally good to catch up with you again. You’re a tough man to connect with. You’re so busy jetting around the country trying to solve everybody’s healthcare problems.

John [00:01:11] It’s just a rough commute to work, my friend. But all good, all good. I’ve been doing this for 30 years now, and it just, the road feels like home.

Jeff [00:01:21] That’s awesome. Well, we appreciate you being part of our community as well.

John [00:01:26] Of course.

[00:01:28] So we like to start these things with a little glimpse into how your road might be enhanced with music. And we have to ask, what’s your favorite ’80s song? If you were to be on the open road, you turn on the radio and this song comes on and you just light up. What is it?

John [00:01:49] Well, I’m a son of Detroit, so I grew up on Motown. But my ’80s belonged to the great Purple Son of Minneapolis. And that’s Prince. I mean, Prince—I’m still a practicing, playing musician and nobody had more influence on my entire life than Prince. So I’d have to go with “I Would Die 4 U.” {music plays}

Jeff [00:02:32] Nice. I love it.

John [00:02:34] That’s a great song. I love that one.

Jeff [00:02:35] That one hits home. I thought you were gonna go—you said, “Motown,” which threw me a little bit, and then I was thinking Detroit, Bob Seger, maybe? And then, no, you go right to Prince.

John [00:02:46] You can’t say Bob Seger…you can’t say, Kid Rock and not say Stevie Wonder. You know, all of the great music that I grew up with was what made me a musician. And it was an hourly part of my day to this day.

Jeff [00:03:13] Awesome. Well, just to level set, we like to talk about this thing called ‘Social Determinants of Health.’ I think it gets thrown around our industry kind of willy-nilly. And, as a guy who’s just focused on this, can you just start with just a simple definition of Social Determinants of Health?

John [00:03:36] Sure. They’re basically just four fancy words for poverty, Jeff. The social determinants are basically about everything that’s happening with a patient or a member outside of the doctor’s office. So it’s housing, and it’s water, it’s food security, it’s your ability to access healthcare. And you know what? All the research has found over many decades now is that your ZIP code has a hell of a lot more to do with your health status than your own genetic code. And why we care about it in our industry is because it’s thought that as much as 60% of healthcare expenditures are attributable to Social Determinants of Health. And that’s the case among seniors and low-income patients who tend to be the most vulnerable and the most expensive. So that’s why we are spending so much time and attention and treasure on it today. I mean, I think it’s such a hot issue now because we spend less than 1% of our gross domestic product on our social safety net. And so we spend out the nose for it on healthcare for those who need it the most. Basically, if we had a social safety net like the other industrialized countries in Europe, we would be spending a fraction of what we spend on healthcare. So, I like to say that poverty charges interest and nowhere is that more the case than in healthcare, and nowhere for real is it more the case than if you are an insurer at risk for 100% of those healthcare costs.

Jeff [00:05:36] Right. And so unpacking that a little bit. Not only does that give you a focal point on where probably the biggest opportunities are for us to deliver healthcare in a more efficient and effective way, but the return on that…

John [00:05:55] It’s staggering.

Jeff [00:05:57] It’s staggering. As we’re moving more into these…the alignment of risk is going from just the payers in an “insurance company” insuring risk to the whole supply chain getting on board with going at risk with those insurers.

John [00:06:13] Yes. And, one of the reasons it’s so white-hot right now is because every one of the interventions that have been researched and tested in the field consistently show three to eight X return on investment in terms of what you save in healthcare expenditures later. So let me just give you an example. I was having a conversation with a client who’s the Chief Medical Officer of a large urban Blues plan. We were trying to get at some root causes of why they’re seeing their healthcare costs go up at least 6% annually in their city. And so we sat down and looked at his top 2% most expensive members. And one thing that we really noticed was that…those two percenters were overwhelmingly housing and food insecure. They were overwhelmingly low income and/or elders, and they were all incurring at least a weekly encounter at the emergency department…a $6,000 admission at the ER on a weekly basis, largely because they had no place to go, and they had nothing to eat. And when you’ve got folks that are dealing with basic survival like that, these are not going to be compliant patients for any of the chronic conditions that they may bear. They’re worried about where their next bed or their next meal is coming from. They’re not worried about adhering to their medications and trying to stay healthy. And so when you’re incurring a weekly $6,000 admission, that means you’re spending close to $25,000…on preventable ER admissions. And I said to him, “As a Chief Medical Officer whose job it is to provide better quality care at a much lower price, wouldn’t you think it would make more business sense to pay for folks’ housing and food?” Say, that was…and this is multiples more than it actually cost…but say you’re going to spend $5,000 a month for each of your two percenters to house them and feed them, versus $25,000 a month in unnecessary ER utilization. And so already you’re reducing their healthcare expenditures by 80% just by housing them and feeding them. And that’s why I think we’re seeing this. It’s really not just the basis of the 60% of healthcare expenditures and where that comes from. But what a missed opportunity it is for our industry to address it head on.

Jeff [00:09:13] Right. And, in the world that we live in where our health plans are historically coded, they receive a treatment code to reimburse a physician, and we don’t have codes for housing or…

John [00:09:32] Oh, we do now! That was the greatest entrant, the new entrant to the ICD-10 codes are all the new Z codes for social determinants.

Jeff [00:09:43] Tell me more. Tell me more about that. 

John [00:09:48] UnitedHealthcare right there in Minneapolis has been working hard with CMS, my old agency that runs Medicare and Medicaid, and they developed this whole group of Z codes that are now in the testing phase that would cover certain interventions and social determinants. And over the next couple of years, you’re going to see those codes get disseminated, and you’re going to see them get more specific over time so that there will be a code for, say, a home health aide visit. You’ll see a code for a home modification like a bumper or railing or ramp. You’ll see a code for a home-delivered, medically appropriate meal, and so on. And so this stuff is really about to break into the mainstream in a big way. And what we’ve got to start thinking about now is, what are the best ways to focus energy and investment in the industry where it’s going to have the biggest bang for the buck? You know, I think there’s this growing realization, Jeff, that we’re never gonna be able to really bend the curve on what we’re spending in healthcare until we start dealing with poverty. And, when you’re 100% at risk, as my clients are, as Icario’s clients are, these large insurers, that means you’re not just the payer of their bills. It means you’re their social service agency as well, if you’re smart.

Jeff [00:11:25] Right. Right. How does that work with contracting? Are they contracting? Is there a world where there’s a whole new sub industry within the payer-provider space that there are contracted agencies or contracted agents of these treatments or codes that you’re talking about?

John [00:11:52] Yes. That’s what this new venture I’m working so hard on, Nightingale, is. Basically it’s what we call…we coined a phrase for it. It’s a health equity marketplace where we’re basically going to have a curated, leasable network of this wide panoply of vendors that you need to meet these sorts of needs. So everybody from housing and home modification vendors to meal delivery services to transportation services. You name it, we’re going to have it in the Nightingale network. And so it will be a turnkey operation for payers to basically go out and handle this stuff for them. And then, the other component is, of course, identifying all of the members that need these sorts of interventions and then basically stratifying them based on what their needs are to match the appropriate social service member.

Jeff [00:12:51] This sounds really important to the programs under Medicaid for the state. How are they reacting to all this? Typically, we’ve seen a varied response to programs on a state-by-state basis. Some states are very progressive. Others are laggards. Some are very—they’re embracing the change and want to evolve. Others want to stay in the Wayback Machine and managed care.

John [00:13:22] Let others lead, yeah.

Jeff [00:13:24] What are you seeing out there? What are they doing to solve this?

John [00:13:29] I think a lot of the attention to social determinants, Jeff, really originated in the Medicaid managed care industry because it’s needed most there among lower-income folks, and where you see some of the greatest and most pernicious effects of poverty. So WellCare, for instance, was a real early leader on this. And what you’re now seeing actually is an arms race among payers that originated in the Medicaid managed care industry and has now spread into the individual market for folks serving Obamacare…who in many respects look a lot like Medicaid beneficiaries because of the eligibility requirements. And now you’re really starting to see it proliferate into Medicare Advantage for services for elders. So, for instance, in just the last six months, we’ve seen everybody from CVS-Aetna to…saying that they’re investing a minimum of $100 million dollars into a social determinants platform to better address the nonclinical needs of their members. Kaiser and United are both going to invest north of $400 million this year. And we’ve seen so many transactions in just the last two months, Jeff, in this space where you’ve got companies like Unite US, which just got a $35 million seed round from Andy Slavitt, another son of Minneapolis, who is the former CMS administrator for Obama. His new venture, Town Hall Ventures, just gave a big pile of money to Unite Us. And Kaiser’s engaged Unite Us. And I think it’s really a lot of policy changes that we’re seeing. You’ve now got at least a dozen states that have let major, major contracts out there for social determinants services. You saw the Congress in a rare act of bipartisanship pass the Chronic Care Act two years ago…which is being implemented. And then you saw the surprise new supplemental benefit policy in Medicare Advantage. So the whole space is on fire like I haven’t seen since the days of risk adjustment awakening in Medicare Advantage about a decade ago.

Jeff [00:16:01] The cousin of all these government programs, the commercial groups—are you starting to see any conversations around the group either, I suppose individual is probably closer to the Affordable Care Act or Obamacare, but the commercial group insurance of employer-employee relationship? Do you do anything in that space?

John [00:16:25] Sure. I mean, it’s not as pronounced. And interestingly, in the commercial and the individual markets, it often takes different shape because you’re dealing with different income strata of folks, you’re dealing with slightly different populations, friend, peer group to peer group. But, in Obamacare, because so many of those folks look, from an actuarial standpoint, from a benefit design standpoint, very much like the moms and kids that you see in Medicaid, you’ll see some of these types of intervention. In the more general commercial market, the roughly 55 million people that are still insured through their employer, Jeff, you see it particularly among large employers with largely a low-wage workforce. And these sorts of interventions are largely designed to reduce absenteeism and to improve productivity. So it takes a different form than you would see in a Medicaid plan or in a Medicare Advantage plan. It’d be like subsidized childcare or onsite childcare or onsite adult daycare even. You see food delivery. You’re seeing a lot of employers with large, lower-wage workforces getting Amazon Prime memberships for their workers now so that they can have food delivered. You’re seeing over-the-counter drug benefits go mainstream among commercial and individual markets because a lot of them use an over-the-counter benefit sort of like a carrot, especially for workers with chronic conditions…if they take their insulin flawlessly for 30 days, they’ll get a $200 gift card that they can use for over-the-counter drug benefits. You’ll see stuff like onsite clinics and caregiver respite programs. So they take a slightly different shape than you would see…in the permit programs. But still, they’re really about addressing the effects of poverty and really the neighborhoods in which these folks live.

Jeff [00:18:50] Yeah. What are some of the cool innovations that you’ve seen across the board when it comes to addressing the Social Determinants of Health? What something that’s novel that you’re saying, “Wow, somebody came up with that. That’s clever.”

John [00:19:11] Well, it’s all innovation right now because especially to the payer community most of this stuff is all brand new. And so this stuff is really a big, giant, innovative leap for many of them. Having said that, generally dealing with poverty isn’t particularly sexy, but you want to know the coolest thing that I’m seeing that Medicare plans are going to do in 2020? Pest control. They’re gonna start covering pest control. You’re going to see home modifications and home improvement allowances go really mainstream next year. But pest control is a huge example. Most of us wouldn’t think of that as something that an insurer would jump into, but when you consider that the presence of pests, and cockroaches in particular as an exacerbator of things like asthma and COPD, it really then starts to make sense. It’s somebody with a respiratory problem living in a damp, leaky basement. It would certainly make a lot more sense to provide that person with some modest home improvement than it would to see them show up at the ER on a weekly basis like those two percenters we were talking about earlier. I think the provider community, this stuff is a lot more intuitive, Jeff. I had a brief stint in my career working for the community health centers 25 years ago. Those federally qualified health centers, the federally funded clinics for poor folks, they’ve been dealing with Social Determinants of Health since the day they opened their doors back in the late ’60s. A doc I was talking with from the community health center down in El Paso was telling me that the innovative thing that he was doing was in the winter he was prescribing firewood because out there on the fringe of the desert in El Paso, it gets cold at night in the winter. And he was…from his folks in COPD and congestive heart failure. And so he prescribed them firewood so that they can keep themselves warmer at night, and you saw a dramatic decline in the number of hospitalizations. So that’s the kind of stuff that most of us don’t tend to think about because we’re not in our day jobs typical anti-poverty…but that’s what we’re becoming in healthcare. I never thought Anthem Blue Cross Blue Shield was an innovator, and they never have been in government programs until recently. You look at the benefit design that they…in Medicare Advantage for 2019. Now at the helm is Gail Boudreaux, a daughter of Minneapolis who came out of United and ran Medicare for them. Gail’s fingerprints are all over this benefit design. So, for instance, Anthem this year offers $500 annually for in-home modifications. They offer 64 meals, medically appropriate meals per year linked to an episode of care. They offer you up to 124 hours of…assistance. They offer a visit to an adult daycare center once a week. They offer in several of their markets a certain allowance for therapeutic massage and even acupuncture. So what you’re seeing…is these aren’t really big, big deep benefits for somebody who needs a lot of home healthcare. But it’s Anthem, one of the biggest insurers in the country, sticking its toe in the waters. And how do we start to directly affect poverty, and that is a great start. People kind of chuckle when they hear therapeutic massage or acupuncture or things like that. And look, for somebody who’s had chronic lifetime trauma that comes from being low income, being poor, desperately poor in this country, and especially if you’re a person of color to be dealing with systemic racism, basic stuff like helping reduce stress can be a game changer in terms of reducing rates of hypertension and cardiac events that lead to hospitalization. I think we’re going to start to see a big breakthrough in telehealth thanks to the Chronic Care Act, which really codified the availability of telehealth benefits in Medicare Advantage. And so I think you’re going to start to see some really cool stuff popping up around group therapy appointments in this next couple of years, for instance. That’s where you see the greatest returns on telehealth is when you can use remote visits from groups. That’s what makes them really cost effective. So I think you’ll see group therapy for opioid treatment. I think you’ll see group therapy for chronic conditions like diabetics. And I think you’re going to see a lot of telehealth use really going mainstream in terms of monitoring homebound members who really make up those two percenters who we talked about. I think that’s some really cool stuff, but it’s really just important, Jeff, to remember how local this stuff is…very often you’re going to see insurers in this next couple of years offering very different benefits, even from ZIP code to ZIP code within their service area.

Jeff [00:25:38] That makes sense. It just makes sense. So you’re going to come and help us out with this Rev Up conference and give us a little talk. And I think the title of your talk is “New Policies and Trends.” And you’re giving us a little bit of a sneak peek. Is there anything you can add that is something that you can put on somebody’s mind ahead of the conference and meeting in Minneapolis?

John [00:26:08] Yeah, sure. I certainly want in this talk with you and your clients to really focus on how we start making this stuff actionable. There’s so much talk about it going on right now. I want to help the folks who are going to be there understand how to get moving on this stuff. So the speech will be a call to action. And I want to lay out some really concrete steps that folks can take to get started if this is all new to them. The first step is always just making sure that they understand…and that doesn’t mean cities, counties, that means block to block. That means you’ve got to know your members’ needs intimately. And in every market you see, whether it’s urban or rural, you see huge changes just from block to block as far as what the needs are. And so you can never know your members too well. That means using a lot of publicly available data to do some market research and analysis. But it also means just getting the hell out there and start talking to folks and having advisory groups that can tell you what the folks in this neighborhood need versus what folks in the neighborhood over it might need. I want to share with them how do you go about screening members for social determinants? All the research shows you that, for starters, screen everybody who is a person of color. Generally, anybody who’s using safety net providers like community health centers, anybody who is under 300% of poverty. I want to have a better understanding of what their home life is like, where they live, where they’ve lived, what they eat, what they drink, what they’re breathing. That gets you to a data-driven strategy where you can stratify those needs based on what you’re seeing out in the market. I think from a product design standpoint, Jeff, we’ve got to understand what you see out there…the latest report from the Federal Reserve showed that 40% of Americans don’t even have $400 liquid for, say, an unforeseen medical bill and that medical bankruptcies are on the rise again as the number one cause of bankruptcy. So the first thing that payers can start doing around social determinants is to just start rethinking copayments and deductibles and your benefit design. Every conversation I have with actuaries and insurers about…is like, “Well, man, that’s skin in the game, and that’s how we’ve always done it.” And we’ve got to start really rethinking that in a very serious way, because this is not skin. You know, this is real money where almost half this country doesn’t have even $400 without selling something or going into debt to cover it. So we have to start thinking of copayments and deductibles as what they are, which is an economic barrier to access. And we can start dealing with that directly in our benefit design. I mean, Jeff, what kind of sense does it make…low-income diabetic a $25 or $50 co-payment for insulin? It’s just completely nonsensical and goes completely against what it is that we’re trying to do here. The most impactful intervention that you can have on behalf of vulnerable people is just help them sign up for existing social welfare programs that they are already eligible for, like Medicaid, like low-income heating assistance, like housing subsidies, like utility abatement programs. And so really starting to get to the things that are already out there as available resources and just serve as a connector between your members and those programs makes absolutely the best return on investment that an insurer could ask for. And it’s a great way to get started, to get to know who your members are, what their needs are. So you start thinking about…those…benefits that we talked about.

Jeff [00:30:49] I think you’re going to spur a lot of great conversation with all the folks that are participating, and we’ve got some good, good leaders that cut across multiple areas of our health ecosystem. And who knows? The conversation might lead to a couple new ways of thinking that people can bring back to their companies or help influence policy the way you’ve worked to influence policy over your career. So I’m really excited to have you up there.

John [00:31:25] Me too, Jeff. And I think this is a tremendous opportunity for your own company. I mean, Icario as a consumer engagement operation—the hardest folks to reach are the ones who need to be reached the most. And, to the extent that you guys have made such a name for yourselves…as the ones who can find and engage, this is the next frontier for you guys, too. And you’re going to find yourselves in your business a few years from now going to look for that guy under the 14th Street Bridge at night because that’s where all the…for our respective clients is now and in the future. It’s all about helping deal with poverty and its effects on the most vulnerable and expensive patients in the system.

Jeff [00:32:18] Yeah, I think you’re touching on it. It’s just such an exciting, exciting time. And if we can see some breakthroughs, the rigidity of how healthcare was thought about and payments were made. We’re starting to see that break loose a little bit from government programs and commercial programs, payers, providers, and all of this ecosystem that you’re talking about that are getting involved. That’s really exciting. For our part, we’re just part of a federation of thinkers and players out there that are hopefully coming together to make a real difference.

John [00:32:59] Yep, absolutely.

Jeff [00:33:01] Well, I’m going to let you go, but thanks for taking time today. I really, really appreciate the conversation, and I know that the people listening to this and the people that come and see you at the Rev Up conference are really going to appreciate your comments.

John [00:33:16] It’s my great pleasure, and I can’t wait to see you guys in August.

Announcer [00:33:19] Thanks for joining us for the RadioRev podcast, brought to you by Icario. If you found today’s conversation as informative and energizing as we did, please take a moment and subscribe to the podcast. As always, we invite you to learn more about us and check out all of our content at

Inside the Episode

Revel CEO Jeff Fritz is talking with Rev Up 2019 speaker, John Gorman. John is the Founder and Former Executive Chairman at Gorman Health Group. Prior to founding GHG in 1996, he was appointed by President Clinton as the first Assistant to the Director of Health Care Financing Administration’s Office of Managed Care (now CMS). He is currently the CEO of Nightingale Partners and speaks regularly at healthcare conferences across the country. 

In this episode, John gives a sneak peek into his Rev Up 2019 presentation. Topics he addresses include:

  • Defining social determinants of health
  • New SDoH innovations and successful strategies that have been introduced in healthcare
  • How health plans are creating new approaches for SDoH as a result of new government policies

To keep the conversation with John going, connect with him on LinkedIn.

“Social determinants of health is just a fancy word for poverty.”


John Gorman

Chairman at Nightingale Partners

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