This is a transcript of a live presentation (Joe Polish introducing David Berg) about transforming employer healthcare from an expense into a profit center. Key claims: many American workers earn too little to afford out-of-pocket care (51% ≤ $15/hr; >75% of those ≤ $10/hr); Berg founded Arrowhead Health Centers (12 Phoenix-area facilities) and Redirect Health to redesign employer healthcare. He describes employer experience: Redirect Health covered ~4,600 people with ~2,200 more joining; his own company covers 463 employees and dependents and costs less now than in 2006. Core strategies: focus resources on the 10% of employees who drive ~90% of costs, shift care away from hospitals (hospital care can be 5–30× more expensive than equivalent services outside hospitals), decouple insurance from direct care, insure only catastrophic/last-10% costs, and use direct-care models to capture productivity gains (Berg reports a ~4:1 return on healthcare dollars). He also explains structural drivers: insurance medical-loss ratio rules (insurers must spend ~85% of premiums), and hospitals hiring physicians (expected annual losses of ~$165k for family doctors and ~$300k for specialists) to control referrals and revenue. Practical advice: employers must take ownership (don’t rely solely on brokers/CFO/HR) and prioritize redesigning benefit structure (details and checklists provided in handouts/book).
Questions this video answers
51%
More than 75%
12 facilities (Phoenix area)
About 4,600 people (with ~2,200 more joining soon)
463 employees and their dependents
Chapters
51% of American workers make $15 per hour or less. More than 75% of those make less than $10 per hour. Think about this. Even if they have insurance, this means they cannot afford to get health care because they can't afford the out of pocket costs. Some of these people might even be your employees. If you have ever looked at a hospital or doctor's bill, you know how expensive and nonsensical they can be. If you could peek behind the curtain of health care and you would be shocked by what you see. One guy, David Berg, has done just that and it's been a complete game changer for his business and he's now helping other businesses, including mine, make healthcare actually make sense. As an example, Gina, one of my team members recently broke her wrist and simply by having them help her with what she's, it's taken away enormous stress, got her the proper care, and it's been enormously useful. So Dave joined Genius Network three years ago as the founder of Arrowhead Health Centers. He's got 12 facilities here in the Phoenix area, which led him to create Redirect Health, which is a real game changer that you'll be super excited to hear about. He's figured out a way to totally transform healthcare for his own company and before helping friends companies just for fun, now he's doing it for many others through Redirect Health. A year and a half ago he was helping one company. Six months ago it was 25 companies using his system. Today it's around 100 companies covering over 4,600 people with 2,200 more joining in a few weeks. I'm one of the companies that Dave is helping and my team and I are really big fans. So that's why I'm excited for you to hear this message. No need to take any notes. It's all here. You'll each get a copy of this business owner's guide to fighting healthcare. And basically his title is called A health care profit how to turn your company's healthcare from expense to profit. Please welcome my friend, David Berg.
Thank you, Joe. Joe, you are not a damn fool. Thank you. All right, so show of hands. How many people love health care? We got a couple. I'm not the only one. Okay. I think it's the wrong question though. How many people are really irritated and annoyed by it? Keep your hands up. Keep your hands. How many are covered? Have coverage for themselves and their families? How many people have coverage for your employees? Awesome. How many people provide free health care for their employees? And it's less cost than it was last year, brothers. Awesome. Me too. Okay, but why not the rest of you? But there's more. Not only is it free for all my employees, 463 employees and their dependents this year, but it's less than it was in 2006. And you guys can do all that, too. And that's what I want to do for you today, is just help you think a little bit differently. So maybe you can get to this spot or just a little further down the road. But I want you to first start thinking about the people that we're talking about. You got to get out of your own heads because you guys all had coverage. You all had your hands up. And you can all afford it, right? As much as you're irritated, annoyed by those co pays and deductibles and the complexity, man, think about those people who work for you. Get in the mindset of somebody who makes $15 an hour or less, and you would give them a $4,000 deductible. Think what that does for them. But also think what would happen if you had a lineup of these people who just had to work for you because you're taking care of those needs. Right? Do you think you could leverage their stories and actually create some benefit for your company? Gosh, this is a genius network. What a stupid question. Of course you could. You could do it better than I can. But what if you don't do it? What's going to happen? What are these people thinking? Right? They're gonna come work for somebody like me. Your best employers are gonna come work for somebody like me. If you don't figure this thing out, it's not hard to figure out. What if you could actually take that extra productivity and that extra creativity that all those great people are providing and you can leverage it into creating enough profit, enough revenue, enough profit to actually pays for all that healthcare. I'm getting a 4 to 1 return on every healthcare dollar I spend on my employees because of the productivity and creativity I get. But okay, that's enough about me. What about you guys? I know what you're saying. You're going, Dave, you're in healthcare. You do healthcare. You've been doing this for eight years. Of course you can do it. Shut up. I can't do it. No way you guys can. But there's some basic things you need to know. And I'm going to take you through the journey that I went through back in 2007. By the way, in 2006, I was about five years in the strategic coach with Dan Sullivan and my company was rocking. And I got to about 2007 and I was sucking. I lost all my margin. And the number one reason is because my best employees were leaving to go work for the big corporations, United Healthcares, the Motorola's, the amexs. I mean it was awful. And I had to take on, take control of health care in order to fix this problem. I didn't have a chance. I didn't have a choice. I was going to lose my company if I did. So three things I had to do when I learned. Here's the first thing I had to learn. 10% of my people are going to spend 90% of the money. If it's not that, it's most of it. Think of that, if you have 20 people, two of them are going to spend almost all your money. And where are they going to spend the money? Half of the money is going to be spent in the hospitals. And here's the bigger deal. When they go to the hospital, it's going to be five to 30 times more expensive than if they got that same X ray across the street, right? Look at some of these. You just look at the numbers. Basic blood tests, antibiotics, ankle X ray, mri, typical baby. And these are two hospitals a mile apart. Knee replacement done by an orthopedic surgeon, cardiac stent. Any wonder why hospitals love orthopaedic surgeons and doctors? Right? Look at cancer treatment. Guys don't buy the narrative. Cancer's not that expensive. Take care of, it's expensive, but it's not that expensive. So mind shift number one, right? If you're like me, you got this figured out. This is like the other dozen business problems we solved this morning, right? Just make sure that we are taking care of the sickest 10% of our people, giving them more care than they've ever got before. But make sure it happens as much as possible outside of the hospital system and you're going to save five to 30 times the cost of that care right there. Can you see how those people can pay for themselves? Right? To me it was like in 2007, I was the happiest guy. I thought I'd fixed healthcare. I designed my entire system around just taking care of those 10% of the people and making sure all the services they need. They got more services than they ever had before and they were so happy and, and I look like a superstar. But it all happened at five to 30 times less cost. We started celebrating about three months left because it was really apparent to Me that the insurance company was going to pay zero dollars, right? I thought I was going to be the first one in the history of the world to have no increases in their health care costs. Didn't quite happen that way because here's what happened. I got 23% increase. Back to the drawing board. What did I miss? Right? It's just another business problem that I've got to solve. I realized there were three more things I had to know. And if you know them too, it might change the way you guys think about health care and how you put it into your business. So the first thing you need to know, there's these things called insurance pools, right? Even though my business spent no money, I was put into a pool with thousands or tens of thousands of other businesses and people. So what I did didn't even matter, right? We spent nothing. We spent a lot of money, right? For care, but it didn't go above the deductible, so the insurance company had to pay none of it. Follow me on that. My numbers didn't matter, which is so contrary to everything I was being told by as a reason for the increases I was getting every year. Right? So number two, hospitals are hiring doctors. And here's what I learned. This is back in 2008, when they hire a family doctor, they expect to lose $165,000 per year. When they hire a specialist, they expect to lose $300,000 per year. And those numbers still hold true today. Why would they do this? I already showed you, right? I already showed you why they did it. It makes perfect business sense, doesn't it? They want to control that supply of people so that we can get. So they can get the 125,000. Because the cancer care does not cost per $25,000 if it's done outside a hospital system. So here's the third thing I learned too. And this was a real game changer for me. In 2009, I learned that the insurance companies, by law, need to spend 85% of every dollar they collect from us or they have to give it back. Imagine what happens in a public company to a CEO who has to return revenue. They never return revenue. Every single publicly traded insurance company operates at that 85% number. The hospitals and the drug companies help them spend that money. Right? Okay, so this was me in 2009. Epiphany. It ain't broken. There's nothing to fix. I spent my whole life trying to fix health care, and there's nothing to fix, right? It ain't broken. But I did recognize the house always wins, right? Am I going to try to fix that roulette table that I've never won at, my friends have never won at? Matter of fact, the house even tells me I'm not going to win. Or am I going to go and take my money and go shopping with it, Go somewhere else, go play golf. I'm going to leave the game. So you decide for yourself. We've all heard the narratives. The Dow's up 80% in the last five years since Obamacare started. The insurance industry is up 270%. Those are share prices. We can't lie about those. We can tell any story you want, but you can't lie about that. Confused. Lots of people are three times a doubt. What? Right. I can say something. They're not bad people, though. Lots of good people in the healthcare system doing exactly what they have to do in order to survive. And we have to do some things we don't want to do, right? We work really hard, but it's a system that just. It's just not working right now, at least for the right people. So here's the mindset. Shift number two. The healthcare system isn't broken. It's very successful. Just not for us. Right? Just not for us. But it's working perfectly, guys, right? So just to recap, to save money, shift your mind. It's about spending more money, but in the right places, on the right people, right? And it's about understanding the healthcare system isn't broken. Stop trying to fix it. You will never fix health care. I will never fix it. Our president will never fix it. It's working perfectly. Okay, so now what? I want to give you three steps to get started. And this is all written down. So I'm going to go kind of fast over this very important first step. You got to separate the insurance from the health care. And if you don't understand it today, maybe this is a third mindset yet. But health insurance is not health care. GEICO is not a car. You can't drive a GEICO insurance policy to work. You need to get to work. The policy is great, but you got to get the car first. We'd never let GEICO buy Geico or Progressive or Allstate and then let them tell us what kind of car we can pick and what streets we can drive on and what hours we can drive at and what we have to pay for gas. We'd never do it. But we do it with health insurance all day long, right? First got decouple insurance from the health care. Second thing you need to do is you've got to separate the first 90% of health care from the last 10%, because in that last 10% is where all that overpricing is. And if it's in the first 90%, it's such a little dollar amount, it doesn't even matter. This is all in your handout now. For now. The other thing I need you to. Once we get this set up, next thing is you've got to make sure you only insure the right parts. The mistake I see every one of us make is we try to insure the first 90%. Right. Don't do it. And in the handout, in the handout there's a whole bunch of tips on what you can do to be better healthcare consumers. So I'll leave you with this one thought. You've got to do it. You can't count on your brokers to do it. You can't count on your CFOs, your HR managers to do it. You have to do it. Your broker's never going to tell you about how to do this stuff. And there's a lot of stuff in the book and there's a lot of stuff in the handouts. And I'm pleased to help any way I can. Thanks, guys.
