Judson Howe
So you're an MD, PhD, Fulbright scholar, and you chose to go to family medicine. a specialty that in the medical hierarchy is often seen as lower on the ladder.
Brandon Alleman
Way down.
Judson Howe
What led you to make that decision?
Brandon Alleman
I think looking at it in retrospect, it was a couple things. We were part of a community at Iowa, part of a house church in Iowa, and the community aspect of how can family medicine impact a community was interesting to me. The other one that I joke with my wife is that I always say I'm functionally unemployable, like I could never work for anyone. I was aware of direct primary care even in medical school, and I was like yeah if I'm probably going to practice medicine, that's the only place that would ever employ me, is me starting a clinic. So I had some inklings of that even choosing a specialty.
Judson Howe
I want to know more about functionally unemployable. What does that mean?
Brandon Alleman
Sometimes people ask me am I rule follower, and it depends. We don't break rules just for the sake of breaking rules, right? We don't try to get put in jail just by not doing our taxes or things. We follow normal rules, but the well we're just going to do this because we've always done it that way, I have never tried to follow those rules. Going into an institution, it's just hard to integrate in that system so I kind of knew that I was going to probably do something on my own post-training. Again, if you're a surgeon or you're an orthopedist or you're a urologist, it's very hard to spin up your own urology clinic, but family medicine offered this kind of different pathway, an easier ramp to start something new.
Judson Howe
Give me an example of a rule that you felt you needed to challenge.
Brandon Alleman
A little bit leading into the incentives and stuff we'll talk about later, fee-for-service and family medicine just don't mix, right, fee-for-service and primary care. If I do a procedure, like if I do a colonoscopy — I don't do colonoscopies — somebody does a colonoscopy, it takes 20 minutes. It's like we started it, we stopped, and then paid an amount of money for this. That makes total sense. When you turn family medicine into visits and I get paid for visits, well, that's not what primary care is. Primary care is like taking care of a population. So that was just a rule that I could never understand like why we should do it that way, why my reimbursement should be tied to these chunked out things, if that makes sense.
Judson Howe
So just looking at different incentives around this. Let's go back then to your choosing to go into family medicine for, it sounds like almost like a moral or maybe a values perspective.
Brandon Alleman
That's probably giving me more credit than at the time.
Judson Howe
Okay. So then recraft that then.
Brandon Alleman
I think family medicine afforded me the opportunity to explore what I wanted to explore, so doing primary care differently. Probably the more impactful classes I took in medical school were not pathology — I mean, we have to know those things — but they offered actually evening courses at Iowa where you could do global health and you could do US healthcare systems. Those are the things that kind of impacted me, seeing the issues with systems, and saying well how are we going to address these. Even in medical school, the business school had a pitch competition, and so I won an amount of money to start a business in a pitch competition, trying to bring price transparency to simple procedures. The business failed miserably, but because I didn't have time to do it while writing a thesis, but that should always on my mind about what can you do to change this direction.
Judson Howe
Tell us, you mentioned pitch competition. Why did you enter a pitch competition?
Brandon Alleman
With that medical tourism paper that I wrote, options was like there's no price transparency in the US so I have to fly to India to get my knee surgery done. So the thought was, well why can't there be price transparency in the US? So the pitch was, hey we want to, for common procedures — colonoscopies, simple surgery, simple orthopedic procedures — the idea at that time was the Lending Tree model. I post that I need a colonoscopy, and people bid on my colonoscopy, that was the goal. Again, failed miserably, didn't get off the ground. But that was the thought.
Judson Howe
You think it failed though because you didn’t put the time into it?
Brandon Alleman
Well that was certainly an option.
Judson Howe
Do you think the idea would work if someone put the time into it?
Brandon Alleman
I think you're seeing models for modeled prices and price transparency come up. I think it was probably the wrong time for it. Again, this was right around the time of the ACA, so there wasn't as much movement in this direction of price transparency as there is now. So I think it was early to be successful in that.
Judson Howe
So Brandon, why did you choose to go to Wichita then for your family medicine residency?
Brandon Alleman
It's interesting because part of the reason for doing MD/PhD is I didn't know how much clinical medicine I would like. And then as I was in medical school and doing things, I really like the OB floor and I'm really interested in ER and I like metabolic disease and can't really decide. I didn’t love the operating room at that time, but often times people that are interested in several things wind up in family medicine because you get to do a little bit of all of that. The reason I came to Wichita for family medicine, somebody I started med school with, Nick Thompson, who we wound up starting our clinic with, he had gone to this residency program. And this residency, the Via Christi family medicine program, was known for doing lots of those things, so they had good obstetric training, they had good inpatient training, lots of the residents moonlit in ERs and rural ERs to increase their skills, so it was just a place that didn't limit my scope of practice at all.
Judson Howe
In my time in the healthcare ecosystem, I've heard people critique family medicine for trying to be jacks of all trades. How would you react to someone that has, has someone ever said that to you?
Brandon Alleman
Can we pause for a second. Can you pull up that full quote? The jack of all trades quote? Do you know the second part of it?
Judson Howe
No, it's going to be great.
Brandon Alleman
I forget what it says. Yes, people shouldn't be dangerous. In the past, have some family medicine physicians maybe been dangerous in the things they're attempting? Possibly. But I would say what our system lacks is medical homes for people. And because in family medicine you may need to take care of babies, you may need to take care of metabolic disease, you may need to diagnose cancer, you may need to perform simple procedures, you need to be trained broadly. That's going to depend on your context. If I'm rural, I may be the only one in the county delivering babies. That's not the case in Wichita, but there's still a way for me to work with specialists on all of those different areas. Yeah, don't be dangerous. What's the full quote? So it says, jack of all trades, master of none, but 10 times better than master of one.
Judson Howe
It's funny how I've never heard the full quote.
Brandon Alleman
Yes. So everybody critiques the jack of all trades.
Judson Howe
Say it again, though.
Brandon Alleman
So I think, am I getting it right? I'll try to say it again. So it's jack of all trades, master of none, but 10 times better than master of one. When people accuse family medicine of being a jack of all trades, I'm not trying to say that family medicine is better than a specialist, but it's still needed and it's still valuable to have that perspective.
Judson Howe
So you talked about safety is important, and no one goes out to practice medicine that would harm people? How does a family medicine physician draw the line between the desire to practice a broader spectrum and safety for the patient's care?
Brandon Alleman
Yeah, again, that's your abilities and your context. So, am I as good of an ER doctor as somebody who's board-certified in emergency medicine? Not a chance. But even as a second- and third-year resident, when I would go out to rural communities, if their ERs are currently staffed by people who are sometimes much less trained than I was even as a second-year resident. So it fully depends on your context. Like family medicine doing low-risk OB I think makes perfect sense in a lot of settings, right? Keeps care within the family. You keep your practice growing. You have good relationships with the people you're working with but there are ways for family medicine. No, am I going to do gallbladder surgery and appendectomies that some people in rural Utah, no that's not my context.
Judson Howe
We say its crazy, but I know family physicians doing, like you said, colonoscopies and C-sections. And there's really kind of a loose definition of broad spectrum and full spectrum. In fact, I've heard someone say full spectrum is probably one of the most overused, non-meaningful terms in family medicine.
Brandon Alleman
I think family medicine as a specialty is turning into two things. There's some people who go into it because it's easier than internal medicine or pediatrics to go through, and they're planning to be outpatient only. That's not the vision of family medicine that exists here in Kansas. So I think especially people coming to programs like Via Christi's program, they should at least start out expecting to do more than just clinic only.
Judson Howe
What makes Via Christi a program that better trains in family medicine?
Brandon Alleman
I think it's that relationship. They’re in a hospital that does obstetrics and doesn't have an OB-GYN residency there. They have their own medicine services. So it’s not just joining an internal medicine service. And then they have dedicated faculty, and we're in clinic and doing those things so you're kind of hitting all the major aspects, and then in a community that's willing to train you in more things, so willing to train you in colonoscopies, willing to train you in other procedures. Whatever you want to make of that training is available to you in Wichita, and Wichita is kind of the home of family medicine.
Judson Howe
You mentioned there's two types of family practice physicians. Maybe there's those that didn't get into other specialties, but then there's sounds like there's like a set of elite physicians that chose family medicine as a specialty for the reasons you just mentioned, maybe a broader spectrum or continuity of care or relationships with patients, the ability to explore different parts of medicine. How would someone in healthcare go about screening for that type of doctor, assuming that's the type of doctor that they want in their community?
Brandon Alleman
I don't know if you could know that. You can know where they trained, you can see what they do, you could see how they interact. But I don't know if there's a way, without sitting down and meeting them a few times, to know that before you meet them. And if it's a three-month wait to get into them, that's a hard thing to try multiple doctors.
Judson Howe
So after Via Christie, you decided to continue to not be an employee of someone else, but to be an entrepreneur in medicine. What did that lead you to?
Brandon Alleman
I was aware of direct primary care, and I use that term because that's the most common term. We can get into what that term —
Judson Howe
Yeah, what is direct primary care?
Brandon Alleman
I think of direct primary care as just non-fee-for-service primary care, and I think of it as a medical home. Instead of me being tied to 99213s, 99214s — which are codes to get paid for an office visit — I am paid on a recurring basis, usually a monthly basis in direct primary care, to be somebody's medical home.
Judson Howe
Like Netflix
Brandon Alleman
To create a medical home. I think the better analogy I often use is Costco because Costco has a membership, right? You pay a membership to Costco. The membership in direct primary care gets you your physician, their time, so whether you text them, email them, call them, they stitch you up on a weekend, there's no extra cost for the physician's time. But then what direct primary care should be doing is making all the other things in medicine cost effective and accessible. So a blood count in our office costs $3.50, I think, and maybe even less than that, maybe like $2.75. But because you're a member, I don't need to make money off the lab order. So lisinopril costs five dollars for a hundred pill supply. I don't need to make money off dispensing that medicine to you. So it's flipping the model of primary care. It's like, well we can only get paid for these visits, so we got to see this many patients a day, to if I'm taking care of six to eight hundred people, my job is to take care of them really well. The revenue is already there once they're members of our clinic. So I decided to go into that model versus going into a traditional fee-for-service model
Judson Howe
Could you make money off of those procedures and those pharmaceuticals?
Brandon Alleman
Oh yeah.
Judson Howe
And so you're choosing not to.
Brandon Alleman
The goal with ancillary is to cover your costs. There may be some margin that needs to be there to keep it going, but what we don't want to happen is our physicians to make money off prescribing those things.
Judson Howe
Why wouldn't you want that?
Brandon Alleman
Incentives. We’re going to get to where I'm probably going to say that word 75 times through the rest of this. Freakonomics, everybody's read or heard of Freakonomics.
Judson Howe
Maybe not everybody.
Brandon Alleman
Stephen Levitt, the author, was asked to summarize the book, and he's said if I had to summarize the book it's just incentives matter.
Judson Howe
It's incentives.
Brandon Alleman
My incentive, and physicians that work in our model’s incentive, is to deliver great care to patients. If the patients are members, and they are receiving great care and choose to remain members, they're going to do, the physicians are going to do well. If I charged $15 for a CBC, I would still undercut the entire market, right? It's cheaper than any lab test now, it's cheaper than walking into Lab Corp. But if I paid my physicians and said, hey, we can make money off CBCs, but we would order a lot more unnecessary CBCs. So keeping the incentive, hey, we're going to make money off the membership and then we make our membership valuable by offering other services. That's the way, that's the way we do. Everything doesn't fall into that. So I do obstetrics. So we have a charge for my time to deliver a baby in the hospital. Dr. Nick, who I started the clinic with, he does vasectomies, and so he makes money off doing the vasectomy, but those are skills that are outside of primary care, if that makes sense.
Judson Howe
If this is such a good model, why aren't we seeing this be more pervasive across family medicine? Or maybe should I say family medicine or primary care?
Brandon Alleman
I would say primary care. It's growing. When we started our clinic in 2016, I think we were one of like 200-ish, so we weren't the first by any means, but we were kind of that next wave of this is probably the right way to do primary care. Fast forward eight years, nine years, and we're at the two to three thousand clinics — so a tenfold increase over 10 years. So it's not decreasing in popularity, but it is not the mainstream by any means. I think it's not the mainstream because of the incentives of how healthcare is bought and purchased right now. That's probably our next area that we're going into.
Judson Howe
So you have a subscription model, you're the Costco of healthcare.
Brandon Alleman
Yeah. And that's how we started out. So 2016, we actually started as I started my third year of residency. So Dr. Nick started, he took patients for a year. I did all the accounting and back end and get off the ground startup stuff and then joined clinically when I got out of residency. And so we started out with that subscription model and then just grew in patients because we were delivering great care. Nick grew very quickly his first year because he delivered great care.
Judson Howe
What did that look like to you from an opportunity cost perspective? In California, first year resident grads are making $270 to 320 a year. Is that about what you were seeing?
Brandon Alleman
For ourselves?
Judson Howe
Yeah.
Brandon Alleman
Oh, no. I didn't pay myself a salary for two years from the business.
Judson Howe
For two years.
Brandon Alleman
For two years, yeah. One was residency. I was in residency. That was year one. Year two I worked an entire clinical year and took no money out of the business to be able to grow it, so I supported my family by moonlighting and additional things on weekends. So no, the opportunity cost, yes you can go be employed and certainly make a bigger paycheck initially. The sacrifices that you would have to make to get that paycheck were not worth it to me, so getting the paycheck would have felt like a sacrifice to me. Getting to do the medicine I wanted was the main driver of that.
Judson Howe
How did you put food on your table? I mean, I don't know your situation, but a lot of physicians have student debt, responsibilities.
Brandon Alleman
Yes, so that would be the one unique thing I think about both Nick and my situation and starting Antioch is the MD/PhD afforded me the opportunity to have no debt. Your tuition is completely paid for, and you’re actually paid a stipend during those seven years, so I came out of medical school with no debt. Nick had the year in between kind of deciding what to do, so did a lot of moonlighting and was able to pay off debt. So we entered starting a practice mostly debt-free. I understand that's not the situation of a lot of physicians. Although in family medicine, you have a valuable degree, and there’s always moonlighting opportunities, so people could be in less debt if they decided to do that.
Judson Howe
To moonlight?
Brandon Alleman
Yeah, or to work while you're in residency. I mean, family medicine's great. It is not the most demanding of residencies, so there are some opportunities to make money in residency if you would like to in family medicine. That's probably controversial, me saying that, but I think it's true.
Judson Howe
It is controversial. So family medicine may be an easier residency than some of the procedural specialties.
Brandon Alleman
Than neurosurgery? Yeah. Than general surgery? Yeah.
Judson Howe
All three years. Is it three years for family medicine?
Brandon Alleman
Family medicine is three years, surgery is five years, ob-gyn four years. Again, these specialties are working more hours and for longer years in residency, so that's where it's just a little bit harder to start your own thing out of a residency like that.
Judson Howe
Yeah. So I'm intrigued by this DPC idea and we have yourself finding a model, although it's requiring sacrifice financially.
Brandon Alleman
I’m big on not making sacrifices, so I wouldn't characterize it like that.
Judson Howe
So how would —
Brandon Alleman
It's a temporal sacrifice in that I didn't get a paycheck, but doing the right thing is never a sacrifice.
Judson Howe
Is that ethos instilled in your peers across the profession?
Brandon Alleman
I'm allowed to keep making controversial statements, is that okay?
Judson Howe
I hope so. Yeah.
Brandon Alleman
I think instead of being instilled, it's actively beaten out of people from when they walk into medical school to when they leave residency. Medicine is a lot about conformity, and the hey think differently is nowhere cultivated in medical training. So I think you get a lot of idealistic people entering medical school, 50% of that idealism is gone at the end of medical school.
Judson Howe
At the end of medical school.
Brandon Alleman
And then some people still come into family medicine residency and are like, I have these big goals. I'm going to do international, I'm going to do whatever. And then three years of more training, you lose even more people.
Judson Howe
Why do you think this system is set up that way to reduce —
Brandon Alleman
I don't think it's intentionally set up that way. I think that is the byproduct of the incentives. So like, hey, we got to hit these clinic numbers. You've got to do this many rotations. You're still accruing debt while you're in residency a lot. You know, you're not paying down any of your debt. I didn't mean to demean family medicine too much. I mean, you're working more hours than you would work as an attending in residency. And so you leave and be like, okay, whatever job is going to pay me something that I don't hate is what I'm going to take. I think is a lot of times what happens. But the thinking outside the box and I'm going to take a risk and I'm going to do those things. Medicine does not select for people who are willing to take risks. And that's a good thing clinically a lot of time, but it's a bad thing entrepreneurially to change a system.
Judson Howe
How would we go about getting more entrepreneurship into medicine?
Brandon Alleman
Again, you change the system, right? That's the only thing I could think. If I view the system as, well insurance companies pay me and I get paid to do 99213s and 99214s, and I have to do the math of just how many people do I see a day, there's no way to innovate. I mean there's very little way to innovate in that system, because the math only works one way, and you get to the point where often times primary care is a loss leader. So the options facing U.S. primary care are, I am employed so I go to work at a hospital system. The hospital system is going to tell me, hey we lose money on you, but we keep you around to refer into the more lucrative things. That's the reason hospital systems often times keep primary care around, as a catch net into more lucrative things. There's large independent primary care, that most of the time they make their money off ancillary services. So I own an MRI, I own a CT, I own the lab. Well I make 70% of my revenue running people through those things and not really doing primary care. That's the other model that can be financially viable. Neither of those things align a physician's value with the patient's values. So I forget what question I'm answering.
Judson Howe
What can physicians do collectively? Like if you could get some critical mass of physicians, maybe a thousand physicians in a given geography, to go with you on this journey to think about incentives differently, what could you get done?
Brandon Alleman
I don't know that you need that many physicians to be entrepreneurial. I just think that's not the right distribution. You may …we are allowed to go into Austrian economics?
Judson Howe
I hope so.
Brandon Alleman
So Mises in his book, Human Actions, talks about leaders. And sometimes he's like, well, not everybody's a leader, right? But leaders teach people to go down this path. But what often is missed is they're trailblazers who the path doesn't exist, they make the path. The leaders then lead people down that path, if that makes sense. So I think for the vast majority of people to make a change, they have to see a new path as viable. I think we're just at that point in medicine that some people are blazing a trail. The leaders are just starting to see that trail and now we're starting to see some migration in that direction.
Judson Howe
I'm almost, my mind goes to this image of someone in this dangerous trailblazing setting. Almost, they could die, right? And then the other leaders are like, oh, see, that didn't work.
Brandon Alleman
Yeah so, it's funny, in the book Mises describes the trailblazers as the most miserable people. They're never happy, they're beat up, they like —
Judson Howe
Does that describe you?
Brandon Alleman
My wife would say sometimes. I'm trying to be a little bit more healthy than that, but I am prone to dissatisfaction, I would say.
Judson Howe
What drives you?
Brandon Alleman
I think I’ve answered that question in the past of just irrational things continuing to exist just bother me. They can't stay irrational for that long, and our health care system is wildly irrational. Well, irrational in the sense of that you wouldn't design it this way, but it makes sense if you follow the incentives. The incentives have to change.
Judson Howe
Why do you think the rest of us tolerate the irrationality?
Brandon Alleman
I don't think people understand it. That's one of the big things. I give this talk on the state of the US health care system, and I give it to, well whoever will listen, but I've given it to the ob-gyn residency here, I've given it to the family med residency here, I’m giving it to the ACP meeting later this fall, but it's like no one —
Judson Howe
What's ACP?
Brandon Alleman
Internal medicine, so American College of Physicians. It's just a local chapter. People see that the system isn't working like they want it to work, but they don't understand why it's working the way it is. So step one is just understanding why the system works the way it is. If I understand that, well now I can start to say, well what can I capable of change? But I think it's just physicians specifically have this moral injury, right? I know this should be happening for my patients, it's not happening but I don't feel like there's a path to happen to it. So another example I always use, my favorite back surgeon in town doesn't do back surgery anymore because he owns a gym because that's the best way to help people with back pain. I don't want to speak for him, but it could happen that somebody who's trying to do the right thing gets the message of well you really just need to be in the OR more, even though if that's not the right thing. Well, people leave medicine when they have that level of moral injury.
Judson Howe
Did you watch that YouTube video last year from, the username was Goobie and Doobie and it was a neurosurgeon from MIT who sounds like what you just described. He was describing the moral injury that was occurring to him as the profession, the specialty, shifted from trauma and ER based to elective, and the pressures were pushing him towards more and more elective cases. And at one point in time he realized internally that he was performing highly technical surgeries on patients that then would just come back to him six or seven months later. So high-risk, they would improve for a period of time, but they wouldn't change their lifestyle. And conversely, he also noticed that some patients he'd schedule for surgery, they would qualify, and they would change their lifestyle, and then they wouldn't need his surgery. And so he started asking himself this question of like, what am I doing? So he walked away.
Brandon Alleman
You see that, you know. Surgery is the obvious example, but if I’m doing primary care and I get the message from — can I say hospital CEO, am I allowed to say that?
Judson Howe
Absolutely.
Brandon Alleman
I get the message from my CEO that says like well you're seeing 22 people, you really need to see 30. There's no way I can feel like I can do a good job, so my options are stay up charting later and see my kids less, or hey just cut some corners and well you have diabetes, go see an endocrinologist. So hey, you got some pain, just go see a sports medicine. People adapt in a way to get by, but they don't like it. They know that's not what they should be doing. and so they can only do it for so long.
Judson Howe
I don't like thinking about anyone in medicine cutting a corner.
Brandon Alleman
Right, but what are the options? If I'm given a task that I can't do in eight hours, I either have to do it in 12, or I do less.
Judson Howe
Yeah, well, I think that's one of the things I'm trying to figure out from you, because you've actually transcended up, and you've said, well, what are those options? And you've said, well, I'm going to play a different game. I'm putting words in your mouth here.
Brandon Alleman
Yeah no, I use those exact words, play a different game, yeah.
Judson Howe
I'm going to play a different game. You guys keep playing that game. It's not perfect. What would you say to somebody? And I have heard this comment. And actually I'll share a little anecdote with you. I was exploring DPCs. I met you a couple of years ago and then it got me curious about DPCs. And I spoke to another DPC provider in the New England area. And he had maybe more of the stereotypical look, you know, the ponytail, the Birkenstocks. And, you know, he was selling it. He was selling it to the T. But I took someone with me who happened to be a CMO, internal medicine gerontologist. And I took him with me to the meeting. And that person that went with me walked out of the meeting about halfway through to take a phone call that I could tell wasn't really an important phone call. And on the way home, I asked the CMO gerontologist, why did you walk away from that conversation? He says, I left so frustrated. And I was like, well, what were you frustrated about? He's like, I left frustrated because here is a physician that's really gifted at what they do. And instead of being a part of the solution, they decided to take their toys and go home. I think is what he said. He might have said Monopoly board and flip it over. I don't know which he said, but I'm guessing you've heard similar comments like that. How would you react to that?
Brandon Alleman
I use DPC because it's the most recognizable thing. So let me kind of paint the landscape of what I think. So in the ‘80s, ‘90s, there was concierge medicine. And so DPC is always accused of being concierge medicine. The history of concierge medicine is what I call double dipping. I charge you the retainer so that I can have fancy cupboards in my office and I can have a fountain and all this stuff, but I also bill your insurance. So DPC is not concierge medicine from that aspect. I'm not double dipping. I’m not charging the retainer and billing insurance. I know people that pay upwards of $1,000 a month to go to a hospital-based primary care just because their office is super nice. That's concierge medicine, right?
Judson Howe
You said hospital-based.
Brandon Alleman
Yeah, I mean, it's a major hospital system that is basically catering to CEOs. So you don't have to wait in line. You'll get into specialists faster. You pay us this huge retainer. We're still going to bill your BUCA-based insurance, but you get to feel special because you have the fancy office to come to. That's concierge medicine. I will say DPC runs the gamut. So DPC, what character is that? I’m not doing third party billing. I don't have any contracts with traditional payers. But there are a spectrum within that, so the physician you're describing with the ponytail, I would say he's chosen to be a non-combatant. He's burned out. He's like, hey I found 500 people that like me, they're going to pay me some money to do good medicine, but I'm done. It's hard for me to fault those people because what are their options? Stay in the system and just continue to receive moral injury? So I don't fault people. Those are the micro-practice DPCs, right? I may take on a nurse practitioner, I may have one other doctor, but hey it's the two of us, we found our thousand patients, we're good. Great. They're going to deliver good care to those patients, fine. I think the criticism of you're not affecting the system is true, but it's not their moral responsibility to continue to be abused by the system. Do I wish they would have a little bit of effort to take, yes. But I don't think they're to blame. The other end of the spectrum is, as people have realized fee-for-service primary care is not really a workable model, you're trying to see corporate DPC. So you've seen private equity invest in DPC. You've seen large —
Judson Howe
Give me an example. Was One Medical an example?
Brandon Alleman
So One Medical bought a direct primary care in Colorado, and then One Medical was purchased by Amazon. So, I mean, that's a pretty large investment.
Judson Howe
Okay. And there's others you're saying as well.
Brandon Alleman
Yeah. And there's other investments like that taking place. So that's a little bit of a corporatization of DPC. I don't know what the future of that will be. But that's one like, hey how do we like hyperscale this? I think what we are trying to fall into is that medical care is local and medical care is not as much a commodity as if I buy folders off Amazon. It's harder to commoditize a medical home in that way. Maybe it can be done, but 97 percent of the medical care that's going to be received by people who live in Wichita is going to occur in Wichita. You may very rarely have somebody need to go to Denver or need to go to Oklahoma City or need to go to Kansas City, but health care is local. I think the right scaling and the right way to change the system is building a local health care system that does it differently and has the right incentives. So that's the model that our direct primary care is moving towards, that's the model that we're trying to affect in our area.
Judson Howe
So I want to link back to we've kind of hit around the moral injury. We've used the term a couple times, and you used the example a moment ago of it's not someone's responsibility to subject themselves to a system that's abusing them. Draw a tighter line between that thread and how DPC is a solution or an antidote for that experience.
Brandon Alleman
I think for those people that are kind of opting out, it's the antidote of I’m just gone from the system. To me direct primary care has been a thin end of the wedge to start making some change in the way more healthcare is done.
Judson Howe
This is that trailblazing.
Brandon Alleman
I think when you go into primary care, you're like man I want to take care of people so they're healthy. But medicines help do that, but then there are lots of other things that help do that isn't classified as medicine. If I wrote a prescription for them to go buy vegetables, that would hugely impact their health but can't be done in our current system. I don't have a perfect answer to that now, but if I'm not tied to a very narrow payment model I can do what things are valuable for my patients.
Judson Howe
Give me an example of how you have done something different in a DPC model.
Brandon Alleman
You're leading the perfect question. The example of that around the time of COVID, mental health became a huge issue so we actually came across a master's level social worker that was just starting out, and she's like well I'll just have my office at your practice for your patients. I'll take a cash-based rate that's half of the rate, because you're referring directly to me, it's a warm handoff, and I don't have to spend all the money on having an office and doing those things. I can make a living by charging less by partnering with a direct primary care like that. So we brought mental health into our clinic. We're currently in talks, I was just talking to somebody that we met here beforehand about how big of a spend musculoskeletal medicine is. Well, we've had kind of direct contracts with physical therapy to refer directly into that to avoid them having surgery. So again, when you, when you are taking care of a population and you aren't tied to visits for your income, I can think, what does my population need to be healthy? Let's spend the dollars there.
Judson Howe
Your DPC is called Antioch Med.
Brandon Alleman
Yep.
Judson Howe
In Antioch Med, I've seen other, even hospital systems, start looking at the determinants of health and maybe the social factors around the patients as well. And I have, actually, I'll speak for myself. When I was an administrator, we invested heavily in running programs, mobility training programs. In fact, a system that I worked for actually purchased an internationally known lifestyle program to build communities of health. I don't know if they worked, but I do want to get a sense for DPCs. How does your DPC look at some of those factors?
Brandon Alleman
Well, why, am I allowed to ask questions? What happened to those programs?
Judson Howe
We were targeting a Medicaid population, kind of influenced heavily by the Camden Coalition projects. We did not do a good job of quantifying the efficacy of those programs. Those programs still do exist, but they're very challenging — this is to your point — I think it's very challenging to tie those back to monetary efficacy. Now I will say for you, our incentives were different for the Medicaid population we were under a capitation program. And so my incentives, the reason I'm even sitting here in this chair, is because for 10 years for 80,000 members of my community which was a community of 190,000 people, so a large number, I was paid under a model of reducing inpatient utilization. And so I imperfectly and really naively am curious about how do we reduce inpatient utilization. And in that journey I know that I know very little and I know that the traditional medical continuum is really wholly unprepared to reduce utilization.
Brandon Alleman
That’s what I come back to when I hear about programs like that. Often times it comes down to, well the payer stopped paying for it, or a payer wouldn't recognize the value of it. I think that gets back to my comment earlier that insurance companies have become much less price sensitive. So investing in something that's going to keep people healthy isn't necessarily in their interest.
Judson Howe
I think what we're not hitting on, though, is, and you know this critique well, so DPCs are great for those who can and know about this as a program and an option. What about your large Medicaid populations? What about your indigent populations? What about those maybe that have all the SDOH risks, social determinants of health risks, and adverse childhood experience risks, and maybe monetary consequences and lack of education? How do they get access to a program like this?
Brandon Alleman
The only reason we have started working more with businesses is because a CEO can change health care for their employees with one signature. Right. I don't spend money in this way. I spend money in this way. I would love to take care of the Medicaid population. It doesn't depend on one person, though. Right. It is a much larger system that's going to need to see a lot more evidence before they're going to change. They're going to say, hey, everybody can have access to a DPC. So my long-term goal is, businesses can change quickly. They're the initial ones to prove the model. When you have the model more proven, then you can make a dent in Medicaid.
Judson Howe
I'm hearing you say at scale, maybe employers are a leverage point.
Brandon Alleman
Right. Right. That's exactly the way to put it. Employers are the leverage point to prove a new model works. Medicaid and Medicare will pay attention to that once you've proven the new model. I think I told you the story before we started. I don't want to tell Dr. Nick's story, but even if you look at something like FQHC, who should have the incentive to take care of this model well, the experience in Wichita with some physicians in FQHC who wanted to do full-spectrum medicine, who wanted to provide these services, they thought they were going to be meaningful. The FQHC said, well, we get paid X amount of dollars for a well-child. You're more valuable to me just being at a school-based clinic and working with some APPs to do as many well-childs as possible. The FQHC has to exist. They're making a rational decision to say like time for dollars, it's better you do this.
Judson Howe
Does Kansas have physician-to-APP ratios?
Brandon Alleman
I have no idea. I mean, they have independent practice for NPs. Yeah.
Judson Howe
I've heard of some doctors kind of express the feeling of being a license for hire, so that they can supervise maybe four, let's say four APP, advanced practitioners to a physician.
Brandon Alleman
Well, I think the answer to the question is, I would love to — I mean we take care of a decent number of Medicaid children because they pay us an affordable amount of money, and they can get in whenever they want to, and we participate in VFC to be able to vaccinate those children at no cost to them.
Judson Howe
What percentage of your program do you think is —
Brandon Alleman
We have about 30 percent peds. I would say probably a third of those are either uninsured or Medicaid even within direct primary care. And it is because even if you have Medicaid that doesn't guarantee I can go somewhere. If my kid has an asthma exacerbation at 6 p.m or 7 p.m I can go to the ER, or if I'm a DPC member they call me and say like okay which inhalers have you given, have you done this, do they need oral steroids that I can provide you, and we can see them the next morning to keep them out of the ER. So what correctly done direct primary care should be providing would be hugely valuable to the Medicaid population. It's just hard to convince the whole system to do what I'm doing as a relatively small clinic.
Judson Howe
So you've chosen to not create significant margin off the ancillaries. And again, stop me from putting words in your mouth, but because you don't want to change the incentives or the relationship you have with the patient.
Brandon Alleman
Correct.
Judson Howe
Wouldn't that give you other, I mean, pharmaceuticals are a big space in the medical continuum that maybe has waste or high margin. How does the DPC give you new opportunities to address those issues?
Brandon Alleman
We started working with a company, both Antioch and then me and another person, Molly Brittenbach, have started consulting with businesses to change their health plans. And so this company was with a major carrier and we looked at their top drug spends. And one of the persons was on a generic cancer medication filled at the pharmacy. And the monthly spend on this drug was $1,500 a month. That’s what was taken out of the employer's account to pay for it. Like that's what the charge was against —
Judson Howe
Actual dollars, hard dollars coming against the employer —
Brandon Alleman
And they were facing 20% increases because they're like, look at your medicine costs. Well, I look at this medication. I was like, I can order that medication. Like I know what that medication costs. And it's like $125 a month for the exact same manufacturer, the exact same pill, the exact same.
Judson Howe
$1,500, $125.
Brandon Alleman
And so, again, if my incentive is like the PBMs incentive that was working with this major health plan —
Judson Howe
What's a PBM?
Brandon Alleman
PBM is a pharmacy benefit manager, so they're the entity that's brokering the transaction between a doctor writing a prescription, a patient picking it up at a pharmacy, and telling them how much that medicine is going to be.
Judson Howe
Why do we need that middleman to exist? What value adding?
Brandon Alleman
You somewhat need a PBM to keep track of things, so how much money is being spent —
Judson Howe
Like an accountant.
Brandon Alleman
So that's the correct version. You would also want a correctly incentivized PBM to find you a good price. That would be theoretically if somebody was helping you with the transaction.
Judson Howe
Sounds great.
Brandon Alleman
I mean think about this: I've never bought an individual stock through a stock broker. Have you ever bought an individual stock?
Judson Howe
No.
Brandon Alleman
The best analogy I've ever heard is — and I didn't come up with it — but imagine you called and you said, I want 10 shares or a hundred shares of Google. And the stockbroker is like, yes, Google's trading at $95. I'm going to take my $5 commission on the sale. It's transparent. Okay, we bought you a hundred shares of Google.
Judson Howe
And I took my $5.
Brandon Alleman
Yeah. But that's the transparent part. Hey, I'm only taking $5 to be the broker. But if you found out later that Google is actually trading at $85 and that person kept $15, that stockbroker would go to jail. That's illegal. It's illegal everywhere.
Judson Howe
Okay.
Brandon Alleman
But that's exactly what PBMs are doing. I'm telling you the price is $1,500. I'm paying $125, and I'm pocketing the difference. That is what PBM's current incentive is when you turn an ancillary service into a profit margin. I just want to stay away from anything that looks like that, if that makes sense. Why do we need PBMs? Yeah, you need the accounting of, okay, they bought these drugs.
Judson Howe
So how are they doing this?
Brandon Alleman
How or why or both? I mean, the how is like, so let's go back to the ACA stuff. If I'm a major carrier and I have fully insured plans, meaning they're not self-funded, they're like, I'm 100 people and we're just paying our premium and we go consume healthcare according to the plan, the ACA capped how much money they can make on a plan like that. So I give the GEICO example. This is my trick question I ask to anybody when we delve into these realms. Imagine, stop me if I'm talking too much, but imagine GEICO's actuaries come to GEICO in Kansas and say, hey, we think you're going to have $850 million worth of claims. GEICO, you should take in a billion dollars in premiums. You can pay all the claims and have a 15% margin. Makes sense. That's how people think of insurance working. I have to have some margin to keep my business open. I'm only in this to make some money. I have 15% margin. If you and I started a business that made every driver in Kansas safer, and there was only $750 million in claims in that year, would Geico make more or less money?
Judson Howe
More money.
Brandon Alleman
More money, right?
Judson Howe
Yeah, obviously.
Brandon Alleman
Cost went down, still taking the same premium. Over time, if we made all the drivers cheaper, what would happen to the premiums that Geico would charge? They would get lower, right? Because other insurance providers in Kansas would be saying, well, I can undercut them because these drivers are safer. So the total cost of insuring ourselves would go down. ACA comes in, and I think with good intention said, we don't want insurance companies to make too much money. We're going to cap how much they can keep. They can only keep 15%, right?
Judson Howe
And I think that's called the medical loss ratio.
Brandon Alleman
Medical loss ratio. Yeah, exactly. So 85% can keep 15% as profit overhead, things like that. So let's use the same scenario and find the incentives though. So I have a fully insured book of business in Kansas. My insurance company's actuaries say, hey we think there's going to be 150 million dollars worth of claims. Take in a billion dollars, you can keep your 1500. Well so I naively thought, well I’m going to start a primary care clinic, I'm going to take great care of people —
Judson Howe
Like a boy scout. They're gonna love me.
Brandon Alleman
They're going to consume less health care. Blue Cross and United are going to love what I'm doing because their costs are going to go down. Well if I actually made their cost 750 million dollars that year what happens to their profits?
Judson Howe
What you just described is it might go down.
Brandon Alleman
It goes down, because they have to return that money because they can only keep 15 percent. So in order for, on a fully insured book of business, revenue to increase, the total cost spent has to go up. So the fact that we see medical inflation is not a mystery. It's built into the way the system works. And even on the Medicaid side, so if somebody said well it might now work in Medicaid. But if we made Medicaid people look healthier on paper, what would be the reimbursement from the government for that person? They would go to a lower risk tier and you get paid less for them, right? So an MCO adjudicating Medicaid wants people to look as sick as possible on paper. If they all looked healthy, their revenues would be cut.
Judson Howe
The Affordable Care Act just turned 15 years old. If you were rewriting it, how would you rewrite it?
Brandon Alleman
I think that is too big a question for me to have an intelligent answer on.
Judson Howe
I'll take an unintelligent answer.
Brandon Alleman
There’s a couple conflations that happen. So one, you're conflating that health insurance is access to care. And I think we covered that that's not the case. Just because I have a card in my pocket doesn't mean I can access care.
Judson Howe
You're delineating between insurance is not the same as access to healthcare.
Brandon Alleman
Right. And that's why we take care of Medicaid kids. They have a Medicaid card, if I send a medicine to their pharmacy it's free for them, but it's a two-month wait to get in to do a well-child check or to do some of these things even with Medicaid in a lot of places. I think the second thing is the ACA made true insurance illegal. So I just had a physician in the doctor's lounge two days ago, I think, she's like, I think I should just go buy a policy that says if I spend more than $15,000 a year in health care then it will reimburse me. I was like, that's actual insurance. I mean that's what people think of. That's home insurance. That's fire . That's car insurance. If I wreck my car, if I sustain a catastrophic loss over a thousand dollars, two thousand dollars, whatever I set my premium, I get paid the rest. That insurance policy is illegal to buy in the United States. No one can sell it.
Judson Howe
It's illegal.
Brandon Alleman
It's illegal because if you're going to sell health insurance, it has to be an ACA compliant plan. There are different things you can do with indemnity, but I can't choose to go buy that policy because it doesn't exist in the market. So I think it has constrained the number of things that are able to be purchased on an individual market as well, because if somebody said well I'm going to charge you $99 a month for the $10000, $15000 policy, I think you might see some people picking that and getting off their employer insurance and picking that instead. Those are the things I see as it's changing sense of insurance companies. It's changed what's able to be purchased in the marketplace. And again I tend to assume good intent and that just the secondary consequences weren't anticipated at the time it was written.
Judson Howe
So, you know, I'm a healthcare executive, you're a physician, some things you're saying I’m not even fully understanding, but how do we communicate this conversation to someone who's down the street here in Wichita? And, you know, I talked to someone just the other day, I asked them if they knew who you were. And they said, yeah, they got really excited about a presentation you had given recently. And then I asked them, I was like, have you signed up for Dr. Alleman's clinic services yet? And the answer was no. How do we go about bridging that gap?
Brandon Alleman
Yeah to me again, that's the thing. We have a system in the United States which we are working with but I wish didn't exist is that your health care does — so Marty Makary in his book The Price We Pay uses the concept of proxy buyers. When I go buy something on an online site, I'm looking at reviews and these people who just love leaving reviews on things help me purchase, right? They're my proxy buyer. They compare everything, and they like these things, now I just know what widget to buy. Unfortunately in the United States the CFO and the HR are proxy buying healthcare for all of their employees, and almost none of the companies have anything to do with health care. We take care of a transportation company that they're just trusting their insurance broker to hand them a product and then they purchase it. As soon as they sign that contract, that dictates how health care is going to be purchased by all their employees. So the reason the person you're talking to isn't at my clinic is because he has no incentive to. He's taking a huge amount of his paycheck and money is going to have this card in his pocket. I don't have anything left to spend on an actual medical home. I'm just going to hope I don't get sick and go to the doctor once a year. That's the reason he hasn't signed up, is because his money's being spent for him in a different way.
Judson Howe
Okay. I want to do like three to five minutes of something kind of rapid with you. So I'm going to ask you like five questions. Just give me your answers.
Brandon Alleman
This is like a Rorschach test?
Judson Howe
Maybe, yeah. Give me a policy you'd change tomorrow to strengthen primary care.
Brandon Alleman
This is the one that's coming to mind. I think that turning healthcare's consumers into shoppers would be a good thing. And right now we have this problem of things being in network/out of network. I can deliver a baby and my professional costs are currently like half the market rate. Well somebody with a card in their pocket doesn't come to me because my charges aren't going to go to their insurance, it's not going to go to their deductible. But if we said service that you purchase that's under the current market rate according to your insurance automatically applies to your deductible, you turn everybody into a shopper, if that makes sense. So people would have the incentive to go look for inexpensive labs, to look for inexpensive services, to look for those things. So I don't have to be in network with anybody, but if they say, hey, I got my bill and I got this service and now it applies to my deductible because I was a good shopper, I think it would change the way people consume healthcare and especially for clinics like mine.
Judson Howe
Great. Second one.
Brandon Alleman
That was too long, that was way too long.
Judson Howe
No it was incredible.
Brandon Alleman
There was nothing rapid about that.
Judson Howe
Worst day you've had. Where you almost gave up on DPC.
Brandon Alleman
I think we've had physicians join us and then chose to leave and that's probably been the hardest thing. Our clinic’s made some mistakes in the past and realizing that we weren't fit for other physicians has been hard but we've grown over time. That's probably been the hardest thing about doing DPC.
Judson Howe
I will ask you this. This is not part of my five. But I want to ask, what have you learned in terms of what types of physicians are right for DPC?
Brandon Alleman
I think it has to be somebody who their clinical care is the focus. So I think —
Judson Howe
As opposed to what?
Brandon Alleman
I think people come from lots of different scenarios, like they could be academic, they could be inpatient. Taking care of a population at the outpatient level is what DPC’s core value is right now. If I don't want to spend 90 percent of my day doing that and I don't want to spend 90 percent of my day interacting with people on their health — like I'm not a people person but I'm good at faking it — then it's going to be a hard job, whereas it would be hard to take a pathologist who wants to be looking at slides and that's what they like doing and put them in primary care. So I think people just have different tendencies that make them good at primary care or make them not a fit for primary care.
Judson Howe
Three, give me a single word that describes how you feel about the future of family medicine.
Brandon Alleman
Optimistic.
Judson Howe
What makes you optimistic?
Brandon Alleman
I think a lot of people need a job created for them. They're looking for an ideal job. They're not going to go make it. That might be not how they're wired. I think with the advent of community-owned health plans, primary care fits directly into that. It's the most needed thing in a correctly designed health plan.
Judson Howe
Give me your favorite day as the founder of a DPC?
Brandon Alleman
Knowing when we've impacted people's lives positively.
Judson Howe
Give me a story.
Brandon Alleman
We were at a benefit meeting one time and they were rolling out new benefits — this is somebody that had used direct primary care for a while so their employees were familiar with it. We were sitting at the benefit meeting and they said well we've redesigned our plan to really build the plan around what direct primary care is doing. So now not only is the membership no cost, but the labs are no cost to you, the medications are no cost to you, the procedures they do are no cost to you. And an employee raised their hand — and I knew who this was because he's been in our clinic for a while — and he's like so you're telling me you're giving me a raise by doing health care differently? And the HR person's like yeah I guess so, I guess that's what we're telling you. Because this person would have to have labs every two to three months, they would have to have medications every month, and he's like this cost is now gone. Being able to turn health care from something that people view as I am scared of consuming because it might bankrupt me and it's taking a lot of my money, into something that is like our community is better and my workplace is better because we've done health care differently. Those are the meaningful things.
Judson Howe
My final question in this section would be, what role does the community play in the health of your patients?
Brandon Alleman
Talking about those social determinants of health, shifting our community to have access to affordable and nutritious foods, having activity be part of the community. I have been on a search for a validated scale of loneliness because that's one of the number one things I see.
Judson Howe
Do we not have one yet?
Brandon Alleman
I'm just saying this is a brand new for me. Somebody did a presentation, I got their presentation but I'm just trying to pick the one. So when we diagnose depression or anxiety, we have a PHQ9 and a GAD7, so we take a baseline, we start on medication, or we get them into therapy, and then we follow that. So we have some scale to say — I don't have a lab test for depression — I have some scale to assess it. But what I see a ton is loneliness is happening, and I will ask people who are not doing well do you have any name that you could go talk to that's a friend, a family member, and it's no I don't have anything. There's no pill for those things, but the community providing those things are going to make a difference in people's health.
Judson Howe
Before I go on I've just been chewing on what you said about shopping, turning patients into shoppers. When I go to a grocery store and I want a good watermelon, I kind of pat it and I look for the yellow on the side and maybe take the avocados and see which ones I want. How do we make sure that the shopper knows how to know in health care what fruit is ripe and ready to purchase and which is bad and moldy?
Brandon Alleman
There’s never going to be perfect information like that in the same way that — cantaloupe's the worst. I'm the worst at picking cantaloupe.
Judson Howe
Honeydew might be worse.
Brandon Alleman
Yeah. It's like two hours when you can, when it's the right time to eat a cantaloupe.
Judson Howe
I was told you, look for the fruit flies and the gnats when they're around it. You know it's sweet enough inside.
Brandon Alleman
So not going to be perfect information, but I think that's where that's where eventually word of mouth is going to tell you who the people that care, who the people that listen, who the people that spent time with you to like get to the underlying issues, not just give you more medications. Those are the things that are going to help. People are going to be imperfect shoppers. You know, you hear these stories of, well, I would never go to a different back surgeon, he’s done my last three back surgeries, so its like —
Judson Howe
Why have you had three?
Brandon Alleman
So yeah, shoppers aren't going to be perfect, but I think the incentive to at least look at price and quality right now is not there. So things will develop to shop if they have that incentives.
Judson Howe
So we've talked to you. Obviously, you’re a unique voice. Fulbright Scholar, MD/PhD, chose to come to not a rural community, but the Midwest, right? You could be anywhere you want. And then you continue to start an alternative trailblazing program with DPCs. I've heard you speak on PBMs in the past as well. So from your lens, what is the single biggest leverage point for transforming healthcare in America right now?
Brandon Alleman
I do think it's realizing who pays the bills and individuals pay all the bills in health care. And CEOs and CFOs realizing how much power they have to change the way health care is done is probably the biggest leverage point. Because they can change fast. Medicaid, Medicare, hard to change, slower moving. But a CEO and a CFO, I mean you get five, six, seven businesses in the community and saying we're doing this differently. That's a big enough size to matter, and we're kind of getting that critical mass here in Wichita to say hey we're doing this differently. We want to focus on the things that make our people healthy. We want to do that at a cost point that's going down not up. CEO, CFO, HR, deciding on health care is the biggest leverage point to change health care, I think. Because they control way more dollars than they realize. It's this bi-directional Stockholm Syndrome —
Judson Howe
Tell me about that. Is that a Brandon term or is that a real?
Brandon Alleman
Stockholm Syndrome is not my term, bi-directional maybe. But I will go to the physician lounge and everybody hates insurance companies. And I go to the boardroom and everybody hates insurance companies. But neither of them will leave. Neither of them will leave that process. You said play a different game. I think the purchasers a little bit have to be the first mover to play the different game, and then the providers will follow. But right now no one's willing to play a different game. Well, traditionally no one has been willing to play a different game. I think we're seeing a movement in that direction that I'm excited about. Wichita is a very cool community to do that in.
Judson Howe
And you feel like you're building, you say critical mass. what critical mass is being built?
Brandon Alleman
I think when you get to employers, when you get like a thousand employee lives that are choosing healthcare differently, that's enough to say this works. Do it with 50, it's like well that's cute. But you get to a thousand, you get over a thousand, we're getting to that point where enough people in our area are choosing that. And can I say, Health Rosetta is an organization that I think has been a thought leader on this, so a lot of the things I've learned have come from that organization.
Judson Howe
Broadly or on PBM specifically?
Brandon Alleman
Broadly, on health care incentives.
Judson Howe
Health Rosetta. What are they adding to the conversation?
Brandon Alleman
They're a non-profit that's just saying, yes health care is this extractive industry. There's a way to choose something differently.
Judson Howe
And who are they? Who's behind that?
Brandon Alleman
Dave Chase is the CEO, he's kind of the founder. He's written books kind of on the leverage point that CEOs have. He's written “The CEOs Guide to Fixing American Healthcare.”
Judson Howe
What's his background?
Brandon Alleman
He is former Microsoft person, did development in health care, and just kind of has been like, wait a second there's some there's some big problems here.
Judson Howe
What's your role with Health Rosetta?
Brandon Alleman
I can't remember if we touched on this, so a couple years ago I actually went and took my test to be in a licensed insurance broker in the state of Kansas. And I did that because my clinic that I thought was doing good primary care didn't make insurance any cheaper. Remember, I told you that delusion I had a few years ago? So to me it had to be at the insurance level, the incentive level, that this was different.
Judson Howe
So you looked upstream for like maybe where the arbitrage was. And you found it at the insurance level.
Brandon Alleman
Yeah, again, the CFO is going to a broker and saying help me find health insurance.
Judson Howe
CFO to broker.
Brandon Alleman
Well, CEO, CFO, C-suite and HR are going to broker and say get us health insurance. When we're talking about incentives, most brokers are paid on commission. Well, commission is percentage of premium, so if the premium goes up, the broker is paid more. It's like have you bought, you've purchased a house ever? Have you ever used the seller's realtor as your realtor to buy a house?
Judson Howe
No.
Brandon Alleman
Why not? Why wouldn't you do that?
Judson Howe
Incentives and motivations.
Brandon Alleman
Right. Well, that's what everybody does in health care. So I'm taking somebody who's mostly paid by the insurance company a premium. I'm asking them how to buy health care. So to me that was a leverage point. If I want the dollars to be spent differently, you have to get in front of these people with a compelling different option. My role in health care is, or Health Rosetta is, they say hey here are people that are doing it differently, so you can have a certification if you go through their course to say, this is somebody doing something different in healthcare.
Judson Howe
So I'm seeing a progression. I'm seeing mathematics, science, Budapest, MD/PhD. I'm seeing this alternative path. I like the trailblazing imagery. And here you are as a DPC provider already in the counter-culture space of medicine. Now you're moving upstream into the insurance space. What's next?
Brandon Alleman
Yeah, I think that's the next thing, is getting a critical mass in an area to purchase healthcare differently. So that's next for us. We've done that with four, going on five, kind of groups.
Judson Howe
Groups being employers?
Brandon Alleman
Employers, yeah, or school districts, nonprofits, all the above. Anybody who's purchasing healthcare, right, for a group of people. Empowering them to make different decisions is what's going to kind of transform healthcare at the community level.
Judson Howe
Put me in a room. You're meeting with a school district. What are you pitching to me? I'm the school district. What are you telling me that I don't know?
Brandon Alleman
Again they're thinking, I'm purchasing health insurance and we flip the model to say — one is explaining what insurance is for. So there's two qualities something has to have to be an insurable risk. It has to be unexpected, right. I can't insure myself against going to primary care because it's like I know I'm going to do that. That should not be an insurable event. True insurance is an unexpected event with a very high cost. Do you drive a nice car?
Judson Howe
I do.
Brandon Alleman
Did you have insurance to purchase your car?
Judson Howe
Not to purchase it.
Brandon Alleman
Was it cheap to purchase your car?
Judson Howe
No.
Brandon Alleman
Why didn't you have insurance for it? I mean, it's a huge purchase right? Well, it wasn't unexpected and you planned to purchase this thing. So people think, well a knee replacement, I surely have to have insurance for a knee replacement. No, you didn't fall out of bed and need a knee replacement in two hours. You knew this was coming for a couple years, you knew this was going to happen, and there's a transparent price for insurance. So I'm sitting for them, I'm saying we're going to buy you true insurance for the cancers and the transplants and the scary stuff. But we're going to take that. So a typical rate in Kansas is a business is spending about $10,000 per employee per year.
Judson Howe
$10,000 in Kansas.
Brandon Alleman
It's higher in other places. But so you have a hundred person group, that's a million dollars, right? So a hundred people, a hundred employees are taking your insurance. You're going to pay like right now, you're paying a million dollars in premium. I'm going to take a sliver of that and I'm going to buy you true insurance. What we're going to do with the rest of that money is we're going to buy you healthcare. Buy you primary care in a different way that is now zero access issues and free to all people. That's currently called direct primary care, you could call it lots of different things.
Judson Howe
That’s non-fee-for-service.
Brandon Alleman
That's a longer —
Judson Howe
Let's get technical back on the true insurance, though. What's that look like to the CHRO of that company? The chief human resources officer, the person, the HR person. They're going to see higher stop losses probably on their insurance plans, and we can we can edit this all out later I'm just trying to understand it actually for myself right now.
Brandon Alleman
A lot of these companies who are mid-sized are going from fully insured —
Judson Howe
What's midsized?
Brandon Alleman
75 to 200. So they're currently fully insured. So they're just getting a premium renewal. They're paying their premium every month.
Judson Howe
They're not even self-insured with a TPA
Brandon Alleman
They're not in self-insured. I mean they have a TPA, but it's through a fully insured plan. Whichever BUCA they pick is their TPA.
Judson Howe
So you're shifting them to more of a self-insured plan.
Brandon Alleman
Yeah shifting them to a self-insured model.
Judson Howe
With a stop loss on top.
Brandon Alleman
Yes. So functionally nothing's really changing. They're still on this model. There’s just a lag. they don't see any of the cost. They don't see where money's spent, but every year there comes back to be a 15% renewal with no transparency as to why. They're just like, oh you guys are sick, so here's 15%. We shift them to yes, buying stop loss if anything catastrophic happens, you know you're protected against that. And then buying health care, all the way up to buying the knee replacements, knowing the price of a knee replacement, knowing the price of a hernia surgery, knowing the price of even a transplant. You can know the price of a transplant beforehand. Obviously that's going to hit the insurance side of how expensive it is, but you're buying them healthcare in a different way.
Judson Howe
Give the people that would be listening to this some homework to do. What do you want them to take away and put into action?
Brandon Alleman
So yeah, educate yourself on how the system currently works.
Judson Howe
Break that down into a homework assignment.
Brandon Alleman
Yeah. It's like, look at the incentives. We can create a book list if you want that we can append to this podcast, but look at the incentives of people selling health insurance.
Judson Howe
Has anyone mapped this out already?
Brandon Alleman
The book I referenced earlier, “The Price We Pay”, is probably my — so when med students and residents rotate with us, it is much more a practice management rotation. There's some clinical, they see patients with us, but they spend half their day reading. And I give them — “Priced Out” by Uwe Reinhardt is a good one. “The Price We Pay” by Marty Makary is a good one. “Catastrophic Care” is a good one. Seeing how the system is currently operating then gives you the leverage point to say — and then “Relocalizing Health Care” by Dave Chase from Health Rosetta is a good one. That's going to give you, okay what incentives are brokers facing? What incentives are CEOs and CFOs and HR facing? They're often incentive is don't rock the boat because my employees are going to be mad. Just in the last two weeks though you have seen JP Morgan individual c-suite people be named in a lawsuit for spending health care dollars inappropriately. Because if I put myself with a PBM that's charging me a thousand more dollars than it should be a month, you have breached your fiduciary duty.
Judson Howe
You know what’s ironic here is that JP Morgan has the nation's largest healthcare conference annually in San Francisco. Yeah, so JP Morgan is seen as the institutional thought leader of the system.
Brandon Alleman
As long as we have employer-based health — which we can, that's probably not in this conversation — but as long as CEO/ CFO/HR hr purchasing health care for the employees, they have a fiduciary responsibility to spend those dollars well. If you're putting them with a PBM that's charging you a thousand dollars more for one pill, or you know 30 pills each month, you're probably going to get sued. So you should educate yourself.
Judson Howe
So there is hidden costs and risks are inherently in the system already for these folks. So that's how people can educate themselves more on the topics. But what about on Brandon and the work you're doing with Candid and Antioch Med? Where can people go to engage more on that?
Brandon Alleman
You can find more about our direct primary care at Antiochmed.com and see the physicians we have in direct primary care. I think Health Rosetta. If you're in Kansas, come talk to us about your business. We are focusing locally specifically, because we don't want to be a point solution that's trying to be everywhere all at once. We want to build a community-owned health plan that's truly focused on a community. But there are other people who are doing what we're doing, so see the successes that happen with — and again, I use Health Rosetta because that's the one I'm familiar with. I'm sure there are other examples of people building community health plans. But see what those look like and who's near you doing innovative work like this. That's just a good resource just to find those locations. And I would say not every organization is perfect. Not every DPC operates like we do. Not every person connected with Health Rosetta does —
Judson Howe
Is that a feature or a weakness of DPCs, the variability?
Brandon Alleman
It's just a reality, I guess. Again, I don't begrudge the non-combatants for having their smaller practices. Great. I'm glad it works for them.
Judson Howe
If non-combatants is something else here, what are you?
Brandon Alleman
I would like to think I'm trying to be on the right side of the fight. That's the goal at least. Hopefully I'm on the right side.
Judson Howe
I think that my big takeaways today — I'm going to be chewing on that trailblazer concept quite a bit. And really the imagery around there's leaders that are leading down a road or a trail, but there's also those that created the trail, and there's risks inherently in that. I really appreciate that imagery. So thanks for showing us what's possible and helping us think differently.
Brandon Alleman
Yeah. This is great.
Judson Howe
Thank you.