Removing The Middlemen Is The Key To Lowering Healthcare Costs | with Josh Walker

This video provides an in-depth exploration of how Nomi Health, led by Co-founder and COO Josh Walker, is working to rebuild the broken business side of healthcare by eliminating intermediaries and "invented complexity." The discussion centers on Nomi's mission to lower healthcare costs and improve efficiency for employers and employees by fostering direct relationships between care buyers and providers. Walker highlights that while the clinical side of US healthcare is world-class, its business operations are severely outdated and inefficient, leading to inflated costs and administrative burdens.

Nomi Health's approach is built on three core strategies: standardizing data formats, embracing price discovery to determine the true cost of care, and simplifying payment dynamics. Walker shares his insights from a career at United Health Group, where he gained an inside perspective on the healthcare system and even helped design privatized healthcare systems internationally, emphasizing the critical role of unified data formats. The conversation delves into the anxiety patients face regarding unknown costs and how Nomi aims to bring transparency and predictability to healthcare transactions, making it as straightforward as paying cash for other services.

The video further elaborates on Nomi's methodology for achieving significant cost reductions, often beating traditional carrier rates by 22-30%, not through strong-arming but through collaborative financial conversations with providers. This collaboration is possible because Nomi's model drastically reduces the administrative overhead (estimated at 22-25% of hospital costs) that providers typically incur when dealing with complex payment systems. The acquisition of Artemis, a data analytics platform, is presented as a crucial component, enabling employers to gain granular insights into their healthcare spend, akin to understanding the economics of a theme park's churro sales. The discussion also covers Nomi's pharmacy benefit management (PBM) arm, Surpass, which aims to drive the lowest net cost for drugs, recognizing pharmacy as a significant and growing portion of overall healthcare spend.

Ultimately, the video advocates for self-funded employers to become "solution makers" rather than "solution takers," taking control of their healthcare spend to not only reduce costs but also enrich employee benefits. Walker shares compelling anecdotes, including an employer receiving a standing ovation for implementing Nomi's zero co-pay, zero deductible plan, which counter-intuitively led to overall savings by encouraging preventative care and reducing patient anxiety. The overarching message is that a more efficient, transparent, and patient-centric healthcare system is not a distant dream but an achievable reality through innovative approaches to data, payment, and provider relationships.

Key Takeaways:

• Healthcare's Business Side is Broken: The US healthcare system excels clinically but is fundamentally flawed on the business side, characterized by outdated payment systems, high administrative bloat, and a lack of transparency, making it difficult for providers to get paid and driving up costs for employers and employees.
• Cash Price Reveals True Cost: When healthcare services are paid for in cash or a cash equivalent, prices can drop by 30% or more, indicating a significant markup embedded in traditional insurance payment models due to "invented complexity" and intermediaries.
• Data Standardization is Crucial: Drawing from international experience, a single, unified data format across all participating parties in healthcare can dramatically improve data exchange efficiency and reduce business friction, a stark contrast to the fragmented US system.
• Administrative Overhead is Massive: A significant portion (22-25%) of hospital costs is attributed to administrative overhead related to billing, pre-authorizations, and payment collection, which can be streamlined or eliminated through more efficient payment methodologies.
• Collaborative Price Discovery: Nomi Health achieves 22-30% savings over traditional carrier rates by engaging providers in collaborative financial conversations, demonstrating how reduced administrative burden (e.g., faster payments, fewer denials) makes lower reimbursement rates more profitable for them.
• Networks May Become Obsolete: The traditional model of large carrier networks, which promise volume discounts but often have deep overlaps and cannot truly shift patient volume, is losing its value. A future where direct payment relationships make networks unnecessary is envisioned.
• Data Analytics for Actionable Insights (Artemis): Platforms like Artemis enable employers to gain granular, digestible insights into their healthcare spend, moving beyond simply knowing total costs to understanding specific cost drivers and identifying "actionable overspending" to inform strategic decisions.
• Precision in Point Solution Application: Instead of broadly applying point solutions, data analytics can identify specific cohorts and personas within an employee population to recommend targeted interventions (e.g., for diabetes, musculoskeletal issues), leading to higher utilization and better outcomes.
• Pharmacy as a Tightly Coupled Cost Center: Pharmacy spend accounts for 24-27% of an employer's total healthcare budget and is tightly linked to medical spend. Integrating PBM services that prioritize the "lowest net cost" over rebate maximization is essential for comprehensive cost management.
• Zero Out-of-Pocket Plans Can Save Money: Counter-intuitively, removing co-pays and deductibles can lead to overall cost savings by alleviating patient anxiety about bills, encouraging earlier preventative care, and addressing health issues before they become catastrophic and expensive.
• Empower Employers to Be "Solution Makers": Self-funded employers have the power to challenge the status quo and drive significant change in the healthcare system by taking control of their benefits spend, leading to better outcomes for employees and their businesses.
• Emotional Impact of Financial Security: Providing transparent, affordable healthcare benefits significantly reduces employee stress and anxiety, fostering goodwill and loyalty, as evidenced by anecdotes of standing ovations and emotional relief from unexpected financial burdens.

Tools/Resources Mentioned:

• Nomi Health: The core company providing solutions.
• Artemis: Nomi's acquired data analytics platform for employers.
• Surpass: Nomi's acquired Pharmacy Benefit Manager (PBM).
• Trends and Spends: Monthly and quarterly reports released by Nomi/Artemis on market observations and data trends.

Key Concepts:

• Invented Complexity: The unnecessary layers of intermediaries and administrative processes in healthcare that drive up costs without adding value.
• True Cost of Care: The fundamental price of a healthcare service when administrative overhead and intermediary markups are removed, often revealed through direct cash payments.
• Lowest Net Cost: A PBM strategy focused on securing the absolute lowest price for drugs, rather than maximizing rebates which can obscure the actual cost to the plan.
• Actionable Overspending: Identifying specific areas of healthcare expenditure where employers can take concrete steps (e.g., implementing point solutions, changing plan design) to reduce costs effectively.
• Solution Takers vs. Solution Makers: A paradigm shift where employers move from passively accepting existing healthcare solutions to actively designing and implementing innovative strategies to manage their benefits.

Examples/Case Studies:

• Churros Analogy: A CEO of a large theme park understood the detailed cost margins of churros but was disconnected from the nuances of his company's multi-million dollar healthcare spend, highlighting the need for better data analytics.
• GLP-1s Impact: One of Nomi's customers, a large flooring manufacturer, leaned into GLP-1 medications early and, over 8 years, saw a precipitous drop in the overall per-member-per-month (PMPM) cost of their population, suggesting broader derivative health benefits and savings.
• Standing Ovation Health Plan: An employer's benefits leader received a standing ovation from employees after switching to a Nomi-powered plan that eliminated all financial barriers to care (zero co-pays, zero deductibles), demonstrating the profound positive impact on employee experience.
• Mother's Relief: A mother, whose daughter was hospitalized, broke down in tears of relief when informed by Nomi's call center that her daughter's care had no co-pay or deductible, illustrating the immense financial anxiety lifted by transparent, comprehensive benefits.