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Payment Reform, Physician Independence, and Rebuilding Healthcare’s Architecture with Dutch Rojas 3-5-26
00:19:50
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- [00:00]
A
This is Scott Becker with a special episode of the Becker's Healthcare in the Becker Business podcast. We're thrilled today to be joined by Dutch Rojas. And for people that don't know Dutch, Dutch is one of the most interesting, smartest people in health care who looks at the healthcare industry. He's got a point of view on a lot of things, which makes him particularly interesting and just a terrific leader to talk to Dutch today. He does a number of things. He consults with physicians, he invests, he's a thought leader. And we're going to talk to him about different trends he's watching in healthcare. And he's a keen observer of the healthcare system. He does a lot of keynote speaking. He's got his own newsletter called the Rojas Report, which is fantastic. And I don't agree with everything that Dutch says. I agree with probably 95% of what he says, but I love the fact that he's got an ardent and consistent point of view. Dutch, can you take a second and introduce yourself and tell the audience a little bit about what you do and the different things that you do?
- [01:02]
B
Well, that seems overwhelming, but yes, I'll do it. Hey, listen, thank you for having me on. It's always a joy. I love talking to you. I love your audience. What do we do? Well, I think we tackle the, the, the architecture and the structure of healthcare. We look at what's going on today and we say, can we build a company? Can we invest and deploy capital towards companies that begin to solve the challenges and think it took probably like most people, it took 20 or 25 years to figure out what the problems actually were. I think that was a really difficult discovery. I certainly made an inordinate amount of mistakes thinking, okay, I've got it solved now, right? I, and I think that's typical, like high education person, like, hey, I'm smart. I've got it figured out. If you guys just do this, this and this, and then of course you find out, you know, there's 20 things you didn't know. And not only did you not know, but you had no, like you didn't have any notion of knowing. And so you learn those things and you move on. And I think, I know we've talked about this before, but I think I turned 50 this year. And I think, man, I think I finally, you know, kind of can look back and say, I think building ASCs, developing ASCs, working at practices, helping build not only small practices, but large practices, consulting for physician owned hospitals, rural hospitals, community hospitals, university academic Centers. I think it's given you a good perspective on what do we do from here and how do we move forward.
- [02:30]
A
And so I love that. And you do have a keen perspective. Talk a little bit about the US health care system today. Where is it structurally misaligned right now? Where is it? I mean, and that's a broad question because you might say it's every place. But is it payment models, is it workforce, is it incentives? Is it something else? Where do you see it misaligned?
- [02:53]
B
I do think the, the right answer is payment. And I think everything else is downstream. I, I think again, that's back to architecture. Look, the system pays for site of care, not quality of care. Right? And knee replacement at an HOPD pays more or is reimbursed more by CMS than wanted an asc. And I think that's inherently incorrect. I don't think that's how market structure works. I don't think that's how price dynamics work. I don't think that's how mean reversion works. I don't think that's how any marketplace works. And, and so I think, yeah, everything else is downstream from there. I think you look at site neutral payments, we're, we're getting some work on that, but we've got a large lobby that works against it. Look, we had, we've had two or three chances to defeat site neutral payments, and we haven't been able to do it. And so I think until you start paying the same price for the same thing, we have real challenges.
- [03:52]
A
Thank you. And what would you say? People talk a lot about transformation in health care, and it seems so challenging right now because it seems like when you look at the triple aim, you know, lower cost, higher quality, better access, it really does feel like we're going in the wrong direction on all three of those. But can you tell me what's actually, Are there things going right? What's going right? What do you see? What encourages you?
- [04:18]
B
Oh, I got to tell you, and this is, you know, I mean, I don't know if I travel as much as you do. I'm gone a couple days a week, but my heart had a moment. And for those people who know me, you know, I have like, no feelings whatsoever. I'm completely a Dutch guy. And what I'm seeing is I'm seeing physicians return to independent practice. Look, the, the Avalir study, which I really like out of DC, said that 12% are truly independent as of 2024. I think by the end of 2027, we're gonna see greater than 20% return to the independent practice of medicine. The physicians that sold five to seven years ago, they're out of their non competes and they're not going back. I mean, I'm having, I had discussion in San Francisco about it, I had discussion in Seattle about it, and then I'm having those discussions in New York. I had one in Wisconsin last week, then you're having them in Dallas. And I think one of the things that, you know, that I've always appreciated about you is you pay attention to the signals. Like one conversation in one isolated place might be something. But when you're visiting with vascular surgeons, neurosurgeons, ents, primary care across the spectrum and then you do that in different parts of the country and then they're kind of starting to say the same thing. You have to kind of look at that and go, well, that's a good signal. I'm very happy with the DPC movement, direct primary care movement. I'm seeing more independents move to the cash pay surgery model. I largely tell physicians that the reason we didn't have large scale adoption of direct contracting, meaning employer to physician contracting, was because of the physicians. They wanted to hire an attorney and beat the daylights out of the agreements. But that's changing. We're seeing more movement towards concierge medicine. I would probably argue that none of that's at scale, but I think the trajectory is real and it's accelerating. The things that maybe are also changing are value based care. We've had great conversations. I was in New York recently, we had great conversations around can we commoditize labs, imaging, pt, gastro, like very low on the innovation pole. But, but can we, can we commoditize them in a structure that allows us to build a commodities exchange so one day employers and physicians can offer their treatments and services on an exchange and we can put pharmaceuticals on an exchange. I think that's a pretty exciting talk and I think that's where we're moving. So I'm pretty happy. You know, I think three years ago I was pretty down and since then it's kind of moved uphill.
- [06:56]
A
I think a fantastic perspective and such a positive perspective. I love that. Let me ask you, if you were advising Congress today, what would you tell them? Has to be fixed. And you might have alluded to this already when you talked about the payment system. Where do you start?
- [07:13]
B
Look, I think, number one, and you know this about me, I think you repeal the physician owned hospital ban. Like you have to get rid of it. When you look at rural, right. I live in Oklahoma. It's rural. When you, when you drive through Kansas, Missouri, Alabama, Georgia, Mississippi, all of these states have massive rural areas. And many of them, as I've said them, as I've, as I've named them, are certificate of need states. Many of them, right. They all have the physician and hospital ban. So people will say, well, we want physicians to go to these rural areas. And I'm like, well, you took away the equity piece. That's 80% of the, of the dollars they could earn, right? Profis are at an all time low. If you, if you repeal the physician owned hospital ban. Look, we do, I deploy capital today through our fund to physician owned hospitals. So why wouldn't we deploy more at scale towards those efforts if the physician owned hospital ban was repealed? So I think that's number one. I'll be, I'll be in front of Congress on Wednesday next week and Thursday next week. This is, this is all I talk about. Of course we talked about site neutral payments. Same procedure, same complexity, same outcome, same payment. Scott, Sometimes I feel like I say these things so many times that they just come right out. Like I just said the site neutral payments thing and I'm like, how many times have I said that?
- [08:35]
A
But it's, but it's so healthy because more and more people have to hear that. Obviously there's got to be some contagion to it for it to work. But you talk about the rural health crises and, and not being able to track doctors back, not be able to bring nurses back, and that starts to be the death note of a rural community. So you can't have health care. People can't really live there and young families won't go back there. But your point on physician hospitals is so well taken. It's just another avenue to make it more attractive for physicians to be in business and to be able to fund and do things in other communities, not just the 50 biggest metro communities. I could not agree more.
- [09:12]
B
That's right. Well, look, you asked about health systems. I wish I had a more amicable relationship with them. I do. Probably not on social media, but offline I do. And I think, you know, you're, you're, you're a business person too. I think there's other architecture that would help them. I think that, you know, when I studied mergers and acquisitions in undergrad and then of course in graduate school, there was this idea that you needed a lot of capital. Right. So I started studying probably 10 or 15 years ago, like Capital light movement. Well, just like we ended up with the PE model, right. Which was probably Peak PE in 2014, 15, 16. You, you've now seen what's happened. Like people are transitioning companies or PE offices are transitioning to family offices where they basically have more control over what they can invest in versus a very singular theses like hey, we're just going to do xyz. And I think health systems unbeknownst to them could deploy some of these models which are incredible, but they create a win win between the independent physician and the health system and they bolster both on the balance sheet. And physicians have traditionally not had a balance sheet and of course that's a whole other topic. But, but health system CEOs sit in a place where they don't have to raise additional capital, they don't have to go out to the debt markets which are, have been completely annihilated as far as I'm concerned, especially on the health system side. And they could actually create a win win. So I'm hoping over the next couple of years to have these conversations with the larger health systems. I've been having them for about six months and get them to understand finance, economics, capital markets and say, you know, you can control or win market share but you can do it really in a win win avenue and that will help you. Now you can do that or you can wait for Congress. I, I think the federal government, if, if the health systems don't begin to act more rationally, I think then you're going to see what AOC Dr. Murphy Guys like Mark Cuban are asking for, which is break them up. That is not something that I ever want the government to do. But you know, everyone's entitled to their opinion, of course, but, but I think like health system CEOs have a real opportunity to help the country and make significantly more money while helping independent physicians. They just have to choose to do that. So if I was talking to a health system CEO, that's the absolutely the first conversation I would have.
- [11:51]
A
Love it. And talk about. You see leaders do great things. You see leaders get caught up in sort of playing business or political bureaucracy and talking about leaders in the not for proffered sector, not politicians, but what separates leaders that you admire that are impactful and doing well versus those that don't. What do you see as differences?
- [12:18]
B
The ones that I really like and there's quite a few of them understand and probably have a lot of experience basic, you know, in lots of industries. So, so they understand capital markets, they understand Governance, they understand human resources, they understand like different pieces of the business and they know the difference between complexity and complication. Right. So like I always say, healthcare is complicated, but don't confuse that for being unsolvable. Right? Like let's get it down and simplify it and simplify it relentlessly. Like don't stop. I think too many executives that I meet around the country, they're too caught up in believing that they're not, these problems aren't solvable. And what they don't do is they, they live within the restraints of, of a lane, of a driving lane. And they don't just go, well what if those didn't exist? Right. And so I, I think the ones that are stuck in the noise really substitute kind of process for accountability. They wait for something else and they wait for someone else to move. They look for empirical evidence and I think real and there, and there's a, there's a bunch of them, there's real visionaries in healthcare that say no, no, I'll take the first step and I'll lead everybody else. Those are the ones that I think are going to make real progress coming out and I think you and I are going to see it. Look, we haven't had a discussion about AI you and I but I mean that's just going to rip roar through this industry and I don't, I've seen very few that are ready for it
- [13:55]
A
or, or that can deploy it well in an enterprise level versus a, a one off level. Dodge, I ask you a question because one of the things you do tremendously well is simplify. And as a leader, people know where you're coming from. You believe the physician owned hospital restrictions should be prohibition should be removed. You believe that should be site neutrality. You believe that some health systems are wasting a ton of money and spending too much money on top executives. Whether I agree with all this or not, one of the things about being a leader that is fantastic about yourself is people know where you stand and what you think, what your point of view is. How important is that for leadership? Not so much they know what your political points of view are, but that people know where you stand and what has to be accomplished by the organization that you could simplify that and somebody knows this is what our system is trying to do. We're trying to provide great care, we're trying to be fantastic in cardiovascular whatever it is that the mission is. How important is it that is a leader like you. Is that clear about what trying to accomplish?
- [14:59]
B
Well, I'll start By saying, I think I'm highly biased. You have to remember, like I grew up, went to school and then played soccer half the day, right. I went to soccer school. I grew up in the Netherlands. Dutch people are probably not as direct as the Austrians and the Germans, but we're fairly, fairly unconstrained in what we want to say to other people. And I, and then I was in the Marine Corps and I think the Marine Corps is a lot like the or, right? When rounds are coming down range, you begin to take life very seriously and you realize it's not a game. And, and I found that in a constrained environment ambiguity is very expensive and it costs lives. And I think there's a level of seriousness that you have when you've experienced these things. I've been in, I mean I've spent an inordinate amount of time in the OR with physicians and you know, when it's a life threatening emergency in the Marine Corps, when rounds are coming at you like you know exactly what's going to happen. Like you don't know if you're going to live or die in the next three seconds. Right. I was a radio operator and they always said we had four second life. And so I think you get really precise about who decides what. And you eliminate the consensus, you eliminate theater. Like I want very fast execution, right? I don't want a weather report, I want production. And I think a lot of organizations double meetings. They, they, they, they do things that sound like best practices. And you have to realize when you're running a world class organization, you can't compromise on what you produce. This is why I've always been for physicians. The, the equation sometimes gets left out. People say you're a physician advocate, but I'll say it starts with the patient. Like you spent time at Harvard, I got lucky and got to spend some time at Harvard. And what you learn is, well, you work backwards. And what we said is, well, what's the best way to get the best phys, the best outcomes for patients and the lowest prices? Well, if you work your way backwards, it always leads to independent physicians. That that's how it works. And so I don't know if you can cut your way to clinical excellence. I think that, that leaders who, who focus on the mission and put the mission first, I think they produce. And I, and I think that's where, you know, this is a real business where people's lives are, are, are in our charge. I mean I, I don't think, I don't think I chose to be in this business. I think God put me in it. And I just kind of said, okay, well if this is my lot in life, like I got to do the best I can. So. Yeah, that, that's, that, that's the best way I can put it. No, no, and, and, and don't be ambiguous, don't be the corporate guy.
- [17:48]
A
I, I, I, I love that, I love that. And, and I'm gonna give you one more question, Dutch. What are you most focused on and excited about this year? Where are you most focused and excited?
- [17:58]
B
Currently, you and I have talked a little bit about it, but it's all structure, right? So what I'm trying to do is teach physicians that you've got to cooperate and you have to continue to compete. And so what I mean by that is I'm seeing physicians for the very first time, understand captives, understand commercial lines of insurance, understand medical malpractice. They're beginning to understand capital markets in terms of what are the debt markets? How do the debt markets work? What does it mean? One of my most exciting and thrilling events was we had a conversation about boards and as you know, most physician owned hospitals, surgery centers, partnerships and medical practices. It's like a couple of older docs and a couple of younger docs. Well, somehow we've convinced a whole bunch of them, call it 100 plus practices, that they needed a real board and they've been able to structure a real authentic board by having lots of divergent opinions on it. They that all come from experts in their communities. These are the things I'm most excited about, I think teaching physicians how to build a balance sheet, how to fortify the balance sheet and how to understand the intrinsic value that they have in their practices and how that bolsters the balance sheet and makes them stronger so they don't have to sell, but they can create win win environments for themselves and their fellow physicians. It's probably the, probably the greatest thing I've gotten to work on and will continue to for a couple years.
- [19:27]
A
Dutch, I absolutely love that. Again, we're talking with Dutch Rojas today. He's an investor, he's the author of the Rojas Report. He writes, he speaks, he's a preeminent voice in healthcare. Dutch, thank you so much for joining us today on the Becker's Healthcare at the Becker Business Media podcast. What a great pleasure to visit with you. Thank you very much.
- [19:46]
B
Thank you, sir.