← Becker’s Healthcare Podcast
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- [00:00]
A
Hello everyone. This is Jacob Emerson with the Becker's Payer Issues podcast. Thrilled today to be joined by Scott Burton, who is the market president for Providence Health Plan's commercial business. Scott, thanks so much for taking the time to be with me on the podcast today.
- [00:14]
B
Jacob, it's great to join you. Thank you for inviting me.
- [00:16]
A
Absolutely. And before we dive into everything, we want to talk with you about a few timely trends going on in the industry. Can you tell us a little bit more about yourself, your background in healthcare and what it is that you do today at Providence Health Plan?
- [00:29]
B
Sure. I've been in healthcare now about 15 years. This is actually my second career. I made the intentional choice to join healthcare, and certainly health insurance in particular after my daughter was born. I would say it wasn't the best of experiences for our family. And as I was looking to change careers, I was questioning what would be my next calling. And ultimately I wanted to make healthcare better for my daughter's generation. What could I do to have an active seat at the table to make healthcare a different experience when she has a child of her own? Over the years I've added improving the healthcare experience of my parents generation as well as they get older. And so as I transitioned into healthcare, I came from a media background and so I started through communications but ultimately worked my way over to the business side. I was with a blues organization in the Pacific northwest for about 13 years before transitioning to Providence Health Plan. My charge here at Providence Health Plan is overseeing our commercial business across all of our operating states. That includes P and L accountability, sales, account management, working with our chief Product officer on product innovation, and ultimately with all of our executive team on the sustainable growth of our business. I've been here a little over three and a half years and just a wonderful organization, mission oriented and committed to growth across the Pacific Northwest.
- [01:55]
A
Fantastic. Well, like I said, we appreciate you taking the time to chat with us. So you've been in the industry for a while now. You've seen a lot of trends and changes and evolutions over the years. And one thing, Scott, that we've been hearing a lot about recently, especially these last few years from employers and certainly from carriers as well, is a lot more interest in individual coverage health reimbursement arrangements or ichras as an alternative to the traditional group model that everybody knows and is familiar with. So talk to us about this from your perspective. Where is demand for this new model coming from? How do you see it reshaping the employer sponsored markets in the years to come?
- [02:35]
B
Yeah, I'VE been studying ichras for some time now. There's a lot of interest in them and I think if I step back from the product itself and say why is the product even being discussed? We look at affordability and the percentage of an operating budget that healthcare represents for employers and it continues to grow. Historically we've thought about it as amongst the top three expenses for most employers. I think right now it's sitting at number two. For many employers, taking up sometimes is upwards of 25% of a company's operating budget. There was a pretty stark Kaiser Family foundation study that was done, I think it was in 2024 if I remember correctly, where they surveyed financial and other executive level staff across employers across the nation and nine out of 10 said at the time that they weren't sure if they'd be able to afford to offer employer sponsored benefits by 2030. And ye I think just a bellwether moment for the industry to say what does that tell us about the path that we're on relative to sustainable costs and access to health care through employers? I spent some time at AHIP this year and ichras were a big part of the conversation relative to a lever, one of many that were being discussed, but a lever to try to create affordability for some of those employers. I think there's a second dynamic to it as well, particularly on the smaller end. This is where ichras tend to have most interests, small to mid size employers. Just this notion of is managing benefits really part of what I want to focus on as a business leader? Do I want to focus more on running my business or do I want to focus on being in the benefits arena? And I've heard from a lot of folks that I'd like to, to provide some sort of funding to my employees so that they can receive benefits I understand as part of talent attraction, retention. But I don't want to manage a benefits program. And so then I think there's two paradigms depending on how the executive leader sees their role in benefits and their ability to afford benefits.
- [04:52]
A
And Scott, just to give our listeners a sense of where ICHRA stands right now, what some of the latest trends and data points are showing. Can you give us a sense of what you're seeing across the marketplace there?
- [05:05]
B
Jacob there's a lot of interest in ichras right now for sure, a lot of folks talking about them. I think context is important as we think of adoption first. So while ichras are a big focus of conversation right now, if we look at the data, There are about 500,000 Ichra employees on plans right now across the country. In contrast, we've got about 150 to 160 million employees on those traditional group plans that we've been operating on historically. So Ichra's 0.08 right now of the nation's population. Now, with that said, that's not meant to discount the traction and the inertia that's centered around it. Bailey and Company, that's a Nashville merchant bank that's kind of focused on growth and late stage healthcare and health tech companies. They did an estimate recently looking at how fast is the Ichra market growing? It's about 60% year over year. So there's a lot of focus and attention on it. But I think context is important. I'm also hearing as I'm talking with CFOs with Ichra vendors, with HRVPs, there are emerging some clear pros and cons. I think the pros from kind of the Ichra advocates, they point to federal and state policies that they feel advantage Ichra expansion and growth. They point to carrier and Ichra collaboration that's increasing specifically around technology integration of those Ichra vendor platforms. And then they also point to Ichra vendors working together to actually market and raise awareness. Some of the cons that let's call them maybe skeptics are raising employees may have limited individual plan options compared to what's available to them in small group and large group plan offerings. How the small group and large group rates from, you know, the small group environment to the indy environment isn't always positive for employees. Take Command Health has a great heat map tool that allows you to look at the pricing relativities in every state and even down to a county level. And then simply health plan risk is this arbitrage. Are you moving revenue going from a small group line of business or a large group line of business over to your individual line and is that financially advantageous to the business or not? And then I think finally the last piece is just investment trends. Where is the money flowing? We see venture capital and private equity leaning into this space heavily. Remodel Health, for example, announcing recently they've raised more than $100 million. Thatch has raised more than $40 million. But what we haven't seen yet is the ecosystem go through any sort of consolidation event. So a lot of companies starting up, a lot of investment dollars coming in. At some point there's likely needed to be a consolidation event where mergers and acquisitions, sunsetting of unsuccessful vendors occurs.
- [07:57]
A
That's really interesting to hear. You say all of that, Scott, and it's really good context. Definitely some cons compared to the traditional small and large group models. Big inertia in this market, a lot of money flowing in, but in the grand context of things, still a very, very small segment of the overall health insurance industry. So it's great context for our listeners to have. And to your point, going back to that KFF study that you cited, in terms of the unsustainability of rising care costs for employers, some of the most recent estimates we've seen on our side of things is that from employer groups estimating that health costs could rise as much as 10% next year alone. So employers see this coming down the pipeline. How is Providence specifically approaching alternative arrangements, perhaps not even just ichra, to help your employer customers control these costs while still continuing to deliver that value that the employees are going to continue to expect?
- [08:55]
B
Yeah, we're looking at it, I think in four paradigms. We see it as an ecosystem. I don't know that product design alone is going to be sufficient to address those affordability challenges for employers. The first arena that we're looking at is provider contracting. And can we negotiate collaboratively with our provider partners, but also firmly with our provider partners. And that includes our own system. We're part of an integrated delivery system as well. Providers need to be fairly compensated for the care that they deliver. But at the same time, we need to advocate on behalf of our members and our employers in the face of these rising healthcare costs. And so that's area one of focus. Area two for us is really care claims and payment effectiveness. You know, our entire organization is focused on a portfolio of work designed to ensure that our members are getting the right care and the right care setting at the right price. That classic triple aim. But we're also trying to optimize all of our claims and payment processes that can lead ultimately to tens of millions of dollars of annual savings. We're looking at our own administrative efficiency. Are we operating as efficiently and as lean as we can to ensure that we're doing our own part to control costs and expenses? And then finally, product innovation, determining what are the current and future products and plan designs that our customers could benefit from? And you know, I think we're seeing work being done in all four of those areas simultaneously to try to address these cost challenges facing employers.
- [10:24]
A
Got it. So a four pillar strategy for PHP to really tackle what continues to be these rising costs. Scott, if we're staying on the topic of rising costs and the ACA marketplace more broadly, as you know, going into next year, the marketplace is facing some real crisis issues in terms of affordability, market stability. We're already seeing major increases being approved in states all over the country. So how do you think that this issue is affecting the health, your health plan strategy as you balance that growth and sustainability you just detailed?
- [10:59]
B
Yeah, you know, as we look ahead into 2026, I don't think there's any question that the ACA marketplace is under significant pressure. We're seeing rising premiums, the potential expiration of those enhanced subsidies, regulatory uncertainty. So for php, you know, our focus and strategy is about balance. We remain committed to serving ACA members where we can deliver value, but we're also trying to be thoughtful sustainability, focusing on markets where our offerings are competitive, where members have meaningful support. And then certainly at the same time, we're preparing for growth and we're having conversations around ICHRA and other options. I think we would say that we are advocates for policies that preserve affordability, that enhance product design, that, you know, expand into models that can meet members where they are. But ultimately, I think it's making sure that we're positioned for long term stability while keeping coverage accessible to our members and to the communities that we serve.
- [11:57]
A
Absolutely. Well, Scott, before we go, you know, we've touched on, we've touched on ichra, we've touched on rising health costs going into next year, and we've touched on the instability of the marketplace next year as well. So is there anything else we're missing there or any final bits of advice you want to offer all the other health plan leaders that are listening in?
- [12:18]
B
Yeah, I think there's three things that I'd probably leave with. One, we have to, as an industry and as individual companies, always look at where we can be the best stewards of healthcare dollars. I think PHP has always tried to do that and I know we're doubling down on that effort now. The second piece is there are pros and cons of all of these alternative health plans. We've talked about ichras. Some have viewed it simply as arbitrage of moving membership from small group and the lower end of large group over to the individual. Is that the right financial move for carriers? Right. You need to evaluate that as well. And I think it's also the third piece maybe really easy for any of us right now to fall victim to fads, heavy investments in marketing. I'm approached regularly by vendors of all sorts of different products. It'd be really easy to say, well, maybe that's the silver bullet. Or maybe this is a silver bullet. The bottom line, right now, there is no silver bullet. We have to work on multiple fronts and do the hard work right now that's required to help this industry and help all of those whom we serve get to the other side of this crisis that we face.
- [13:29]
A
Fantastic. That's some great last pieces of advice for our listeners. So, Scott, I want to thank you for taking the time to chat with us and for sharing your insights with our listeners. We really appreciate it.
- [13:39]
B
Absolutely. Thank you again for the time. Yeah.
- [13:42]
A
And to our listeners. If you'd like to listen to more podcasts from Becker's, you can visit Beckershospitalreview.com.