Fixing Employer Healthcare: Donovan Pyle on Fiduciary Benefits, Eliminating Waste, and Protecting Employee Welfare

Summary

Podcast Summary: Fixing Employer Healthcare — Donovan Pyle on Fiduciary Benefits, Eliminating Waste, and Protecting Employee Welfare

Podcast: The Amazing Authorities Podcast

Host: Mitch Carson
Guest: Donovan Pyle (Health Compass Consulting; Author of “Fixing Health Care: How Executives Can Save Their People, Their Business and the Economy”)
Date: December 10, 2025

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Episode Overview

This episode dives deep into the dysfunction of the American employer-sponsored healthcare system. Healthcare industry insider and advisor Donovan Pyle exposes why businesses grossly overspend on group health benefits—and what structural incentives create misalignment, waste, and runaway costs. Donovan shares actionable solutions for employers seeking fiduciary advice, cost savings, and truly beneficial employee health coverage.

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Key Discussion Points & Insights

1. The Employer Healthcare Landscape and the Scale of Waste

• Employer-sponsored health insurance covers 164 million Americans and costs $1.3 trillion annually.
• According to Donovan, conservative estimates put 25% of that total as “pure waste”—$325 billion, or about $4,000 per employee, per year ([02:19]).
• Waste is driven primarily by “pricing failure,” in which lack of price transparency leads to massive variations in healthcare costs for the same procedures:

  “Health care prices vary over 1,000%... employees are getting MRIs for $6,000 a pop when they could go down the street and get it for $600—same exact thing. This is just pure waste.” — Donovan Pyle ([03:08])

2. The Origin of Our Broken System

• Donovan breaks down the history of employer health insurance—from 1920s hospital pre-payment schemes (the birth of Blue Cross) to today’s complex market.
• Insurance companies and hospitals are “partners”, not adversaries; fake public disputes are cover for regular price increases ([11:08]).

  “Health insurance companies are wholesale distributors of hospital services... they are part hospitals and insurers are partners... Employers and patients end up holding the bag.” — Donovan Pyle ([11:35])

3. Perverse Incentives: The Broker and Carrier Relationship

• Most organizations rely on brokers to advise on health plans, but brokers are paid by carriers on commission (about 5%)—meaning they earn more as premiums rise ([22:20]).

  “Every year when your rates went up from Blue Cross, your broker got a raise.” — Donovan Pyle ([22:47]) “You need an outside expert... but the difference is, the CPA works for me. They’re not getting paid by the IRS behind my back. Whereas, in healthcare, the broker... is not incentivized to do what you expect them to do.” — Donovan Pyle ([26:04], [27:02])

• Large bonuses and luxury incentives further misalign broker interests from employer clients ([45:23]).

  “I was literally flying these people and their families on luxury vacations around the world for selling our products.” — Donovan Pyle ([45:23])

4. Solutions: Employer-Focused Fiduciary Advisory Services

• Donovan champions fiduciary advisory models—consultants paid directly by the employer, contractually obligated to act in the employer's best interest.

  “[Fiduciary consultants] sit on the same side of the table as the employer to defend and protect them from the medical industrial complex and insurance complex.” — Donovan Pyle ([32:19])

• Examples given:

  • Harris Rosen (hospitality CEO, Rosen Hotels): bypassed brokers and carriers, negotiated directly with providers, hired in-house doctors; saved over half a billion dollars over 30 years ([28:47]).
  • Teacher’s union case study: switching pharmacy benefit managers after strategic advisory netted $3.6 million in annual savings ([35:46]).

• Average client savings:

  “Our average customer saves $1,856 per employee per year and has better benefits.” — Donovan Pyle ([33:49])

5. The Path Forward: A Six-Step Roadmap

• Fixing Health Care (Donovan’s book) details a roadmap for reclaiming wasted spending, improving retention, and maximizing benefits investment:
  • 1. Get unbiased, fiduciary advice.
  • 2. Undertake transparent procurement—with access to more choices than legacy brokers present.
  • 3. Implement and manage with compliance at the forefront ([42:03]).

"The first step is critical: getting unbiased advice. If you don't get unbiased advice, you're never going to get to step number two." — Donovan Pyle ([42:23])

6. Industry Evolution and Building a “Fiduciary Army”

• Fiduciary transformation in benefits is akin to the shift seen in the retirement plan (401k) industry. Donovan actively trains brokers to make the switch from commission to fee-based, fiduciary consulting ([39:42]).

  “I'm starting to do more workshops on teaching brokers how to transition to this model... We've seen this movie before with fiduciary standards in retirement plans.” — Donovan Pyle ([39:48])

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Notable Quotes & Memorable Moments

• On wasted healthcare spending:

  “That's $325 billion. That's $4,000 per employee—completely wasted.”—Donovan Pyle ([02:19])

• On price gouging:

  “Healthcare prices vary over 1,000%... This is just pure waste.”—Donovan Pyle ([03:08])

• On insurance companies and brokers:

  “They have no incentive to negotiate down the price... It’s just not their business model.” — Donovan Pyle ([11:37])

• On broker misalignment:

  “Every year when the price goes up, your broker gets a raise.” — Donovan Pyle ([24:43])

• On direct contracting and innovation:

  “He [Harris Rosen] saved his company over half a billion dollars over 30 years on healthcare... Not only did he save all this money, but he also provides a superior product.” — Donovan Pyle ([28:44])

• On fiduciary consulting:

  “They are contractually obligated to serve in the employer's best interest... It's a totally different mindset.” — Donovan Pyle ([32:19])

• On the significance of benefit spend:

  “Businesses need someone sitting on their side of the table to help them navigate the medical industrial complex.” — Donovan Pyle ([38:32])

• On transformative potential:

  “This is an opportunity hiding in plain sight... And these things aren’t etched in stone. We can change these things.” — Donovan Pyle ([41:18])

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Timestamps of Key Segments

• Background: Scale of employer healthcare & waste — [01:30]–[04:00]
• Insider story: History of employer-sponsored insurance — [07:40]–[11:08]
• How incentives create misalignment and rising costs — [21:33]–[27:15]
• Example: Harris Rosen’s direct contracting success — [27:58]–[30:08]
• How fiduciary consultants differ from traditional brokers — [32:19]–[34:02]
• Concrete savings: client examples and numbers — [33:49]–[36:28]
• The six-step roadmap to reclaim wasted dollars — [41:18]–[42:36]
• Building a movement: Fiduciary shift in benefits consulting — [38:48]–[40:57]
• Action steps: How to get started & book details — [44:44]–[45:23]

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Resources and Next Steps

• Download executive summary: FixingHealthcare.com
• Website: donovanpyle.com
• Consulting firm: healthcompassconsulting.com
• Book: “Fixing Health Care: How Executives Can Save Their People, Their Business and the Economy” (Available everywhere except Overdrive as of Dec 2025)

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This episode gives a sharp-eyed, actionable look at employer-sponsored healthcare in America, challenging the status quo and offering a pathway for businesses to reclaim lost value and genuinely care for their people. If you're a business owner, HR/finance executive, or benefits broker, Donovan Pyle’s insights and roadmap are essential—and could mean hundreds of thousands (or millions) in savings for your organization.

Transcript

[A]

Welcome to the Amazing Authorities podcast, where game changers, visionaries, and category leaders share how they built their brands, platforms, and global influence. Your host is Mitch Carson, international speaker, media strategist, and creator of the Instant Authority system. If you're ready to learn from those who've done it and want to become the go to expert in your space, you're in the right place.

[B]

Donovan Pyle is here. Now he's going to break down.

A naughty topic. The healthcare industry and everything that goes on in it. Outside, inside, and we had a little bit of a conversation beforehand. Donovan, welcome to the Amazing Authorities podcast.

[A]

Mitch, it's great to be here. Thanks for having me on.

[B]

Yeah. And I see this musical equipment behind you. You were talking about that. And you're a drummer. And do you sing?

[A]

You know, I don't, but I think I want to start.

[B]

Well, I think you want to sing about the health care industry today, so give us a little bit of a clue what's going on. I mean, I did a little bit of background check on you. Don't worry. I don't know your Social Security number, your bank account. Not interested. But in terms of breaking down and exposing what's going on in the health care industry, from a true insider's perspective, give us some juicy gossip slash real information.

[A]

Okay, sure. Well, maybe we should just take a step back and just. Just talk about the landscape for a second. Sure. Sometimes people don't really understand some of this stuff, so. So in America, 164 million Americans get their health care benefits through their employer. Right. So this is known as the employer sponsored channel.

[B]

Sure.

[A]

And. And, and last year they spent about $1.3 trillion on that care. And question for you. How much do you think of that was wasted? Like just poorly spent?

[B]

Oh, God. I'm going to hazard a guess. 70%.

[A]

Oh, that's, that's. That's a little high.

[B]

Okay, 50%. I don't know. I really. I'm just pulling numbers out of the air. I'm so ill informed, Jonathan. I don't know.

[A]

All good. So the most conservative estimates is that 25% of that was complete waste. That's $325 billion. That's $4,000 per employee.

Completely wasted. So you figure, you know, the average American makes about $60,000 a year.

[B]

Right.

[A]

That could, that could be a huge bump to the economy if they could reclaim that money and, and invest it in better places.

[B]

Well, what. What qualifies as wasted? Tell me.

[A]

What.

[B]

How do you define that? Because I'm not clear what that means exactly.

[A]

Yeah, it's a, it's a, it's a great question. So the, the Journal of the American Medical Institute says, you know, one of the things they, they call out is something called pricing failure. Meaning that, meaning that people can't see prices in healthcare. So yeah, like people think that we have this free market healthcare system in America. It's kind of nonsense. I mean, if, if you can't see a price, do you really have a market? And so because most people can't see prices these days, because they use these PPO networks as a, as a, as a purchasing mechanism, they make some really poor purchasing decisions. For example, here in Orlando, Florida, health care prices vary over 1,000%. So, you know, as we discussed, you've got employees who are going and getting MRIs for $6,000 a pop when they could go see the same machine down the street for $600 for the same exact thing. And so this is just pure waste.

And there's so many, I mean, there are so many opportunities for businesses to reclaim this profit, but only if they have the right clarity and the right support that's actually aligned with them to do it.

[B]

Thirteen years ago, I got off a seven day cruise. I disembarked in Fort Lauderdale. No, Miami. Excuse me, Miami. A buddy of mine picked me up at the.

Dock. We're driving, go to a restaurant. All of a sudden I got these intense pains in my stomach and it was out of nowhere. Had to go immediately to the toilet to pee and got sick. And I said, take me to the er. Something bad is happening. Fast forward. I went to a hospital in Hialeah, Florida, which happened to be close because I was craving Cuban food. Of course, Hialeah is a little Havana and I'm in this restaurant. Had to leave. We went to the hospital.

Two hours later, found out, I mean, two hours was the whole time I was there. They put me through a CT scan to, to see what was going on in my stomach. And I had a kidney stone that they shot me with two Demerol shots. I was in the most intense pain I've ever experienced. Incredibly painful. I'd heard about this, heard about childbirth, but I'm not in this lifetime. But the kidney stone was real?

[A]

Yes.

[B]

I was able to release it through the process. Apparently had come out and it was done. Week later I'm in California. So this is about. Oh no, this is about 15 years ago, about 2010. I'm in California, where I was living at the time, Los Angeles. And I get the bill open it up in the mail. 8, $800 for a two hour visit. Never saw, I mean, I was in a, you know, in a, with a curtain. Not even in a room with a nurse, nothing. A curtain with a nasty nurse with a really bad attitude.

Almost an un, you know.

Unintelligible accent that was so. And it started yelling at me about things. I thought, wow, this is treatment. Thank you. You're welcome to my country. Now I get yelled at here. My mother didn't yell at me like this. This, this nurse did. And then.

I got this bill. I thought, wow, that's robbery. Robbery. Even if, you know, I had Blue Cross, which covered, I don't know, 80% of it, I still was out of pocket. Sixteen hundred dollars, roughly was my portion of payment. That same issue would have happened overseas, which still. They're for profit. Like I said, I lived in Manila for a year, had a, a problem and the whole bill out of pocket would have been 300. Because I had another episode that had the same thing. I had one more and I went through the whole process. 300. 300, yeah. And they were nice to me. They didn't yell at me.

[A]

They treated you like a customer.

[B]

Yeah, like a real customer. I was paying, I was a cash paying customer and I got yelled at by a woman who hadn't even been in the country that long, you know, and I was formerly married to a Cuban, so it brought back bad memories. I was getting screamed at in Spanish, you know.

[A]

Oh my. Yeah, that sounds quite, quite, quite the incident there with the, the medical industrial complex.

[B]

Well, I mean, and it wasn't even a fancy hospital. So when you talk about this price disparity, what's going on here?

[A]

Yeah, well, basically, you know, I have a chapter in my book which is Fixing Health Care, How Executives Can Save Their People, Their Business and the Economy. And I have a chapter in the book that really goes back to the history of how these industries came to be. And so it's. I'll just give you the Cliff Notes version.

[B]

Please, please.

[A]

I mean, I think you've got a bunch of business minded people here on the call, so. Yes. So actually be kind of fascinated by this. So, you know, back before there was health insurance, believe it or not, there was a time when there was no such thing as health insurance because nobody went to the doctor because they couldn't actually cure you for anything. And healthcare prices were low because there was no demand. Right? There was no demand.

So as in the 1920s, as medical advancements came to the fore and the price of delivering these hospital services began to rise. Hospitals across the country found themselves in a squeeze because between the great depression and the rising cost basis, their patients could not, you know, over and over again were not able to afford these, their services. So they were left holding the bag. And that was a big problem for them. So they had a great idea. This, this hospital in Dallas, Texas had a great idea. What if we got a large employer to prepay for our services so that we could stabilize our revenues?

[B]

Yep. Yeah.

[A]

Okay. It's kind of like, kind of like a SaaS model long before SAS.

[B]

Sure, sure. Continuity of income.

[A]

There you go. Perfect. So they got the town, they partnered with the Dallas teachers Union in 1929 and got them to prepay $0.50 per employee per month so that these, these teachers could go to this, their hospital, their nice clean hospital and deliver their babies. Okay. And that became, that became the first Blue Cross plan.

[B]

Okay, Interesting history.

[A]

Yeah. So, but here, here's the really fascinating part is that hospital executives from around the country took note of this success, of this, this revenue model and they said, hey, how can we develop our own Blue Cross plan so that we can stabilize our revenues too? And so what they did was they actually put up the seed money to create these health plans, these Blue Cross plans around the country. By 1940, there were 14 Blue Cross plants doing business around the country.

[B]

Prepaid health plans. And that's what. Why is the American system so flawed compared to like, I live overseas. I've lived in seven different countries, been treated in each of them for different issue. And America's prices are outrageous for the same services. Many of the workers are trained in the US and go back to their home countries.

[A]

The prices are outrage, outrageous if you're using insurance.

Okay, so, okay, so I think it was in 2019, a really great study came out of the Rand Corporation. Rand said basically anyone who pays cash for healthcare gets a better deal than these Fortune 50 health insurers who have millions of lives of leverage behind them, who if they really wanted to, could negotiate a better unit price for their members. But that's not what they're in the business of doing. Going back to the history, health insurance companies are wholesale distributors of hospital services. That's what their role is. They are, they are part hospitals and insurance companies are of part our partners. I don't like. And yes, we see this, like, this like fake fight that happens in the news every couple years between a hospital and a health insurer about a network contract negotiation. They always settle.

The price always goes up. And it's the employers and the patients that get left holding the bag. So as an employer, if you were expecting a, if you're expecting your health insurer to manage your healthcare supply chain effectively, I got a big surprise for you. That's not what they do. They have no incentive to do that and negotiate down the price of services for the commercial business that they have. It's just not, it's not the business model, it's not their role. And the Affordable Care act exacerbated that tenfold.

[B]

Oh, so that did not help.

[A]

The Unaffordable Care Act.

[B]

Oh, interesting.

[A]

Yeah, I, I like the joke. Like whatever the bill's named, it's going to do the opposite.

[B]

Well, you know what, here's what's interesting. I recently turned 65, and I have to, I have three months. So in September, I turned 65. I have three months before Medicare. I have to apply for it, and then I have to pay for it. What's interesting, I must pay a monthly stipend to get medical coverage for something that I thought was guaranteed me because I reached the age of 65. That's not the case.

[A]

And you've been paying money in.

[B]

Right. For my entire life. I mean, it's one thing is Social Security. I mean, I could start taking that. I haven't taken it yet. You know, you can at 62, but I've been waiting because it comes up, the number rises. Haven't needed it. And now the Medicare, I have to apply for it, pay $185 a month in order to have it. I'm not even living in the US now, so I, but if something serious happens, I can go back to the U.S. i would imagine, to get whatever procedure I need done, or I can just stay here and get it done and pay cash and it's probably. And less hassle and all of that. What's that $185 going towards?

[A]

Well, here's, here's the fundamental problem with, with Medicare. And just, just, just for your audience's context, one of the challenges with talking about health care is that you can't, you can't speak in generalities because, okay, the Medicare portion, you know, the Medicare, Medicare business or that channel, the incentives are completely different than the employer channel.

[B]

Okay, all right. Two different, two different models.

[A]

Yeah. So my, my core competency is in the employer channel that covers 164 million Americans. But I can comment on, on what's going on there fundamentally. And here it is. The average American is, is putting in about $100,000 into. Into Medicare premiums while they're working, and they're using about $300,000 worth of care, usually towards break at the end of their life.

Wow.

[B]

Okay. So there is an roi. They do. So it's almost a Ponzi scheme because the people that are younger are paying into it to cover the people that are older and we're aging. I mean, that's a whole different argument, isn't it?

[A]

Yes, it is. And, you know, I think there are some structural challenges with the design of the program, to your point. And, you know, and so for people that think there are this quick fix that, oh, if we just do Medicare for All, everything would be solved. I always say, well, Medicare for All actually means Medicare for no. 1, because the program's going bankrupt. I mean, I mean, the CBO says so.

They'Re a nonpartisan, you know, organization that. That counts the beans. You know, that's their job. So anyway, we don't need to go down that rabbit hole. But there aren't. There aren't. You know, there are a ton of quick fixes. But I would say in the employer channel, there are some. The very easy things that employers can.

[B]

I want to hear about those because, yes, I was a former employer for many years, and I used to pay big money because I stupidly. And I did this. I thought I was being generous as a Vistage member years ago, talking about this, you know, former tech, they called it. I paid 100% of the medical coverage for my employees. I thought I was being generous. Oh, my God. And they went up 50% one year. I thought, holy moly. But how. How do you manage that better?

[A]

Yeah, So, I mean, couple things. I mean, let's. Let's, you know, I think sometimes organizations forget why they offer benefits. And so let's go back to the original, you know, intent is that, you know, the reason that most companies offer benefits is that it's twofold. They want to give themselves the ability to attract and retain talent, and then two, they want to keep a healthy workforce so that they're actually productive. So this is. This is something I really encourage organizations to do is, if they haven't done this already, is to quantify the cost of turnover at your organization.

[B]

How much is huge number.

[A]

It is. Most people are shocked.

[B]

Huge number. The biggest line item.

[A]

Yes, yes, exactly. So. So of course, it depends on their role. Right. And skill level and all those kinds of things. But the major studies on the cost of turnover is that it costs anywhere from 50 to 100% of someone's annual salary to replace an employee.

[B]

I believe it.

[A]

Yeah. I mean, think about it. You managed a team and if you lost a key person, your life got worse because you ended up holding the.

[B]

Bag until you find a replacement. And you don't know that that person is going to match the performance of the one you lost. It is a huge, painful experience to lose an employee. Huge. And two weeks is never enough.

[A]

Absolutely. And you might have to go through three or four of them before you find somebody that actually sticks. So, so that's that. When we talk about, you know, what we're investing in, benefits and how do you maintain a competitive advantage, we have to put these things in context because, sure, so you were contributing, you were paying for 100% of the medical. There might have been great ROI there in the big picture of things. I don't know if that's the case. I don't know your industry, et cetera. But let's just assume that, hey, listen, we're going to spend all this money. Healthcare is typically a top three expense for businesses. It's typically the fastest growing financial risk for organizations. What do I mean by that? I mean that, you know, let's say the rest of their business expenses are going up 2, 3, 4% a year. Health insurance for, you know, for mid market groups is typically going up 6, 7, 8, 9, 10% a year.

Okay, so, you know, you think about the compounding effect of that. And so this is, this is not, this course that most businesses are on is purely unsustainable.

I tell businesses, listen, either you're going to engage and optimize what you're doing and start putting yourself in a position where you can actually manage the supply chain for value or you're going to get cut out, you're not going to be able to offer benefits anymore, and then you're going to have a revolt on your hands depending on your industry. But in many industries you're going to, you're going to lose employees left and right. I mean, and I've seen it at companies, you know, professional services firms that didn't have benefits or didn't have good benefits. They, their employees were getting poached left and right and their life was miserable because of it. So, so my, you know, my message to, to CEOs and CFOs is, listen, 25% of what you're probably spending right now is being wasted. Okay? That's about again, $4,000 per employee per year. Here are some simple things you can do to reclaim that Profit. So to get to the solutions, we got to talk a little, just a little bit more about the buying process. Right?

[B]

Sure, sure.

[A]

And I'd love to hear, you know, your, your experience with this as a business owner. You know, you were out in California when you were doing this?

[B]

Yes, la. La.

[A]

Yeah, in la. So tell me, what, what did you do? How did you go, how did you buy benefits?

[B]

I went to a salesperson who sold. Employee who sold health insurance. Here's the Blue Cross plan. I then was married and we made the decision because I covered her. She was a lawyer, so I covered her employees under my plan. So we bought one plan together, you know, and of course it was expensed over to me, but. But we made a decision, looked at it together, and it was a Blue Cross Blue Shield, I think it was in California. I think it's Blue Cross of California. And then there was a dental that you could add on, which gave you very little coverage and a vision component and a very small life insurance. I think if you died, you got $10,000, which then bequeathed to your. Whomever you nominated. So that was the standard plan. And I remember offering that. Most of my employees at that point were very young, so I. And I was advised, okay, then a lot of them didn't use it because they were young, they were in their 20s, people that were, you know, clerical level. But then the older people and the salespeople were older. And of course that caused the price to go up because they were more likely to consume the medical coverage.

[A]

Yeah, absolutely.

[B]

And it was a huge number every month. I don't remember offhand, but I think it was close to 3, 4 or $500 an employee per month.

[A]

Yeah, yeah. This is, this is a number of years ago.

[B]

Yeah, 2005, I think. When did I get. I sold the business 2008. But I covered, you know, when I started this. Well, let's just say 2000 in around 2000.

[A]

Got it. So you said you went to someone that sold you health insurance. What did you expect that person to do?

[B]

To advise me properly, this is the best plan for you, and this will benefit your employees the best. And you as the principal. I said, good, I'm in. How much? Oh, it starts like this. And, you know, they're licking their chops. I know they get their 10% or whatever it is. I think that's an ongoing commission, isn't it? A trailing commission they get. As long as I'm in the plan, they, you know, did very well.

[A]

Yeah, so. So, so you expected them to give you financial advice, but looking at how they get paid. They get paid. You mentioned a commission basis, and it's not 10% anymore. It's more like 5%. Okay, but, but, but, but the point remains the same. They. Every year when you're, when your rates went up from Blue Cross, that your broker got a raise.

[B]

Correct.

[A]

And at the same time you expected them to negotiate against the insurers on your behalf.

[B]

Oh, I don't think that. I never even envision. And this was my own ignorance, Donovan. And I think most employers think the same way. I don't believe we knew that you could negotiate. The price was fixed by Blue Cross. It was just naivete. Now, that's no excuse, but it's how I looked at it. And I never heard anybody talk about it until I met you. I didn't realize that it was negotiable. I thought this is, oh, here's, here's, yeah, here's what you would pay for Kaiser, which nobody wants, or PPO plans and pay a little more. Because I wanted to go to a ppo. I didn't want to go to bloody Kaiser and take a number. It was horrible. I did that when I was young and I hated Kaiser for that.

[A]

But interesting. This is fascinating. So.

Fast forward to the Affordable Care act days past 2014. Sure. Some small group products, the price is fixed depending on the type of product that you're looking at. The price is the price that has to be approved by the state. There's no negotiating on certain types of products. Now other products, though, the price is negotiable. Okay. And, and so this is really like, speaks right to the core of, of my work, especially with this book, is understanding the role of the brokerage industry. The, you know, we, we mentioned earlier that.

Health insurers, their role is to serve as wholesale distributors of hospital services. Right. So they basically work for the hospitals. Right. But.

The way that they get to the retail level is through the brokerage channel. Right. Brokers sell health insurance products, as you noted earlier, and when prices go up, they make more money. So every year when the price goes up, your broker gets a raise. Okay. Now, so, so they're not incentivized to do the number one thing you want them to do, which is maximize your investment. Right. Help me get the most value for my money.

[B]

They, they're not motivated that way. They want the prices to go up because they get an immediate raise.

[A]

Yeah, I mean, I think there are thousands and thousands of benefits professionals who work very digitally. They want to do the Best thing for employers, but they are trapped in a system that financially penalizes them for doing that. Right. This is my, this is my argument to the industry. Why do you want to stay in this system? That, for the people that actually mean well, which there are many of them. Why do you want to stay in a system that doesn't reward you for actually doing the one thing that the main thing that employers expect you to do.

[B]

Find the best deal for them with the maximum value? It doesn't make any sense.

[A]

Right. It doesn't.

[B]

Disincentive.

[A]

Exactly. Exactly. And we're talking about a. Businesses. You know, if, if healthcare was, you know, number 26 on the P L, that would be one thing, but it's now number two or three for most companies. And so do you really want someone who's misaligned with your interests negotiating on your behalf? I mean, most, most finance teams know nothing about healthcare financing procurement. Most, most HR teams don't know anything about it. It's not their wheelhouse. It's not what they do. This stuff is complicated. And so you need, and I agree that most companies need an outside expert. Just like I don't want to know everything about changing US Tax policy year to year. I hire a, I hire a CPA to take care of that for me. Right. But the difference between these things is that the CPA works for me. They're not getting paid by the IRS behind my back. Okay. Whereas when we talk about a company's second largest expense, the healthcare piece, the broker who they rely on for financial advice, to your point, is not incentivized to do what they expect them to do, Maximize that investment.

[B]

What do you do? Tell us exactly how you serve these employers. Do you represent them? And, and, and, and make sure that the agents provide the best plans for them so they don't look at you. They. I, I know a lot of them are aligned to help the employer, but as it's very clearly explained up to this point, there's a disincentive. Do you keep them honest or what do you do? What's your role in this whole process?

[A]

Okay, so the, the thesis for my business, the reason I started this business, is that, you know, I, I started off on, on the carrier side, the insurer side of the equation. Benefits brokers were my customers.

[B]

Okay?

[A]

So I'm, I'm selling my products through benefits brokers who sold them to employers, who sold them to employees. That's the distribution channel. Right, Right. I was noticing that a lot of brokers seem pretty apathetic around the health insurance piece and living in Orlando, Florida, we have a gentleman by the name of Harris Rosen who is the CEO and founder of Rosen Hotels. You might have come to a conference at one of his hotels, but back in 1991, he started pioneering new ways to finance and procure health care for his, his employees. And over the next 30 years, he saved his company over half a billion dollars.

On health care over 30 years.

[B]

Wow. Wow. He went direct as opposed to going through brokers. So he got that 5% recaptured and probably negotiated a better deal.

[A]

Oh. Not only did he go direct, not did he bypass the brokerage industry, he bypassed the insur industry.

He started hiring doctors to come on site to his hotel.

[B]

Oh, oh, oh, wow. So he proactively managed healthcare.

[A]

That's right. Not only that, he cut a deal with one of the local hospitals here that was better than you could get through a PTO contract. Bless you.

[B]

Excuse me.

[A]

So not only did he save all this money, but he also provides a superior product for his employees. And so much so. We talked about retention earlier and so the plan is so good. He takes such good care of his employees that his retention rates are magnitudes of order higher than his competitors in a very high turnover industry, that is hospitality. So.

[B]

Wow. So they, they found they discovered the benefit of staying employed with him because the healthc care was so superior to being with Blue Cross or I don't know what's out in Florida.

[A]

Yeah, all the typical players. So you know, I was going to these open enrollment meetings with, with brokers and hearing executives complain about rising healthcare costs, hearing employees complain about it, and I'm just like thinking to myself, why aren't some of these guys at least recommending some of the strategies and solutions that Rosen had pioneered years ago? I mean, you don't have to even reinvent the wheel here. You can use the same providers that he's. There's so many things that they could have copied. And so at the time, this is how naive I was. I should have known better given my role. But I very naively thought, geez, if I just moved to the brokerage side of the business, I can probably, you know, start scaling some of these innovative solutions. I can probably help a lot of people and I can probably make some money doing it right. So I went and worked for a national brokerage firm, very quickly realized that's not what the goal is like. That is not. Not. We sell these, set this set of products, and if you don't fit in this box, we don't really know what to do.

[B]

So do you help companies? Do you approach a, a sweet spot of companies that I guess, what, 100 or how big is the target market that you help, that is receptive to your services? Donovan?

[A]

Yeah, so, so right now, you know, seven years in, we're focused on supporting businesses with, with 200 to 10,000 employees. And those are the businesses that really appreciates and, you know, the guidance, the unbiased guidance that we give them. So let me just, let me just get to this, you know, finish up the story though.

[B]

Oh, sure.

[A]

So, so after, after, you know, building a bucket business and having some wins for clients, you know, at the brokerage firm, I actually got terminated for being too hard on one specific carrier. And they were golf buddies. Well, not only that, but they said, listen, this carrier pays us our largest bonus each year, and you're potentially putting that in jeopardy. And we don't like that.

[B]

Oh my God. Oh my gosh.

[A]

So that's what the light bulb went out for me. I was like, wow, this, this whole business model is totally backwards. This doesn't make any sense. And so I, you know, had some colleagues through in the industry who had also, you know, been on the brokerage side, but recognized the, the failure of that business model as well. And they had started these fee based fiduciary management consulting firms that actually serve as a fiduciary to the employer. They are contractually obligated to serve in the employer's best interest. They sit on the same side of the table as the employer to again defend and protect them from the medical industrial complex and the insurance complex. So that's a completely different mindset. So I started my consulting firm that following week and luckily my former employer let me keep one client who I just brought on a couple weeks ago. And it was a pretty decent group for me. And the reason that they let me keep that client was because the CEO happened to be my uncle, so they knew they weren't going to keep the business anyway.

[B]

That's, that's quite a story. So then when you, you go out and help these companies that are 200 to 10,000 employees, which is your sweet spot, how much money do you save them typically?

[A]

Yeah. So going back to 20, 2018, our average customer saves $1,856 per employee per year and has better benefits.

[B]

All right, so let's do some simple math. If a company has, let's start small, 200 employees.

On an annual basis, how much is that? 200 times, what is it, a thousand thousand dollars.

[A]

Let's just say $2,000 per employee.

[B]

2,200?

[A]

Yeah. 400,000 a year.

[B]

That's a steak dinner for the whole entire company, you know, once a week.

[A]

It's a big deal.

[B]

Yeah, that is big. All right, so that's 200 employees. All right, and that's 400 grand. So then let's, let's go 50 times larger then we're talking real numbers if you get to a top employee company.

[A]

Yeah. So quick story. I mean, we got a call from a teacher's union a few years ago and, and they said, listen, the executive director gets me on the, this is like a random Friday afternoon. I didn't even know these people existed. The executive director says, listen, like, we've got our teachers, our union members sitting on this insurance committee. And yeah, they're smart people, but they don't, they don't understand this insurance stuff.

[B]

Right.

[A]

And they're being asked to make decisions about this $65 million health care budget. And, you know, we're not really sure if we trust the district. We're not sure if we trust the district's broker. Can you just do a project for us and tell us, you know, evaluate what we've got going on, where we are, and tell us what we should be pushing for in these committee meetings? And so we did that and we said, well, geez, I mean, you haven't gone to RFP for a new pharmacy benefit manager. This is the entity that manages your drug supply chain. They're in the news all the time these days.

[B]

Sure.

[A]

You haven't gone to an RFP for a new one in seven years. As a public, you know, this is a public school. And by the way, you're with one of the worst ones. So just as a starting point, just do that push for a new, you know, an RFP for a new pharmacy benefit manager. So they did, and you know, they got 11 responses. They didn't even go with what we thought was, was a better option for them, but they got, they got a better option than what they had, and they saved about 3.6 million bucks last year. Yeah, that's just, it's just low hanging fruit. And you can, you can times that by so many school systems throughout the country.

They're in the exact same situation.

[B]

That, I mean, I want to go back. That's fantastic. But for the smaller market. Well, it's not even small, But a. The SBA might define it as small business with 200 employees by their standards. 200 employees, you save $400,000 with better benefits. Out of that, I would imagine you work on a fee base or something just for people that might be listening. And how does that work? And how. Yeah, they go for information because, my gosh, I wish I had my old company today where I did have a few, Few employees. My gosh, the line item was huge.

[A]

Yeah. It would take some stress off you and you would. And you would have exited at, you know, at a better number. Yeah, absolutely. So. So here, here's, here's the whole thesis for, for my business is that, you know, brokers get paid to sell. They get paid commissions and bonuses to sell products.

[B]

Correct.

[A]

But the thesis for my business is that since. Since HR and finance teams don't really understand this stuff at a. At a very deep level, what they really need are advisory services. Right. So instead of getting paid commissions and bonuses to sell products, what we do is we get paid fees to sell services. So what do I mean by services? So advisory services, procurement services, implementation services, and management services. Right. I mean, to manage a Benefits program in 2025, there's a ton of compliance around these things. There's a ton of landmines that an employer can step in. And so they need someone watching their back, someone protecting them. Just like I hire a CPA to help me navigate US Tax law, I need an expert who sits on my side of the table to. Businesses need someone sitting on their side of the table to help them navigate the medical industrial complex.

[B]

And that's how you. That's the role you play?

[A]

Yes.

[B]

And that is an essential role. I mean, in America, I would imagine the supply. Are there a lot of people like you or are you pretty much on. On your own island?

[A]

No, I mean, luckily there's a growing army of small management consulting firms like mine who specialize in healthcare financing and procurement. And actually, I'm kind of starting to try to build that army. I'm starting to do workshops where we're teaching brokers, small brokers. There's tons of small mom and pop shops out there who want to do the right things, who don't get these big bonus checks from insurance companies and pharmacy benefit managers anyway because they don't write enough business with them that they say, well, I don't need that money, but I want to do the right things. I want to align with my customers. So I'm starting to do more workshops on teaching brokers how to transition to this model. And here's the thing, Mitch. We've seen this movie before. Back when you had your company on the retirement. Did you guys have a 401 plan?

[B]

Yes.

[A]

Okay, so you may have seen this back when the fiduciary standards started being enforced on 401k plans, retirement plans, about 20 years ago, that industry went through a transformation because, because fiduciary standards were being applied, a lot of businesses were, you know, officers at businesses were out of compliance because they were relying on financial planners who got paid commissions to sell them products. Right. Financial products. And that's a misalignment because again, some products pay a lot more than others. So guess which ones are going to be shown and recommended. Right. So the transition that happens with the 401k industry 20 years ago is that a lot of financial advisors switched from selling products for commissions to selling fees for a fee.

And many people in my corner of the industry on the benefits side, the health and welfare side are anticipating that. And, and very high profile risk attorneys are all, are predicting that that same evolution is going to have happen on the, on the health and welfare side.

[B]

Well, somebody. Yeah. If somebody wants to get a glimpse into your industry, show us your book. Because you literally wrote the book on the topic. So this is it. Fixing health care. How executives can save their people, their business and the economy. I love it. I love it. There's a big heart behind it.

[A]

Yeah, yeah. So I mean this is an, this is an opportunity hiding in plain sight. So in the book, you know, I, I give, I give a brief history of the industry as we discussed here. How things, how we got to where we are. And it's not like someone had some grand plan, right? It's like, you know, this, we're just like, we're just trying things. We're just trying to survive. The hospitals were just trying to survive. You know, so it's not like there was this grand plan around this. And so these things aren't etched in stone. We can change these things. Okay? And we need to change these things. And so in the book, I lay out a six step roadmap. A process that any business can use to reclaim this wasted health care dollars.

So that they can again maximize their investment, increase the value of their organization, increase their ability to attract and retain talent and fulfill their fiduciary responsibilities which are starting to be enforced. On the health and welfare side, we can get into some of that stuff if you want. There's some great stories there.

But it requires a change in the process and the first step is critical. It's getting unbiased advice. If you don't get unbiased advice you're never going to get to step number two.

[B]

Well, I think, yeah, you got to get some clarity. I think you started this. What is the clarity? I have been illuminated today. I had no clue, I had choices about this. I thought I just had to go through the broker and he found me the deal. Here's what you have your. It was cookie cutter and he gets his commission. I don't have a problem with that. You know, he's making his money. Everybody's got to eat.

[A]

Yep.

[B]

There's a distance thing.

[A]

I mean, I mean, companies are blown away at how many choices we're able to bring to them through our procurement process. So, you know, most companies these days think that, well, there's only a few carriers and either you either you self fund your plan or you fully fund your plan. Right. Two different funding mechanisms and there's only a few different carriers. So what are you going to do? Pick the cheapest one on the spreadsheet and move on. And so but in reality, the marketplace's strategies and solutions is huge. It's actually really dynamic. There are so many vendors out there that are really fighting for market share. I mean, there are hundreds of pharmacy benefit managers out there that have similar business models to ours. The revenue models are similar to ours. And so that allows them again to serve as a fiduciary to the employer and align with the employer. But yet, because most midsize and large businesses use legacy brokerage firms, they're not being shown any of these vendors. Most midsize and large businesses are still using the big three pharmacy benefit managers that have that consume 80% of the market share.

[B]

They just don't know. My God, I wish I knew about this some years ago. I don't own a company like that anymore. But it would have been helpful. I think a lot of my friends who own businesses would have been well served. And how do people get a hold of you, Donovan? Because I think a lot of people are in need of your services.

[A]

Sure. So you can go to Fixing Healthcare. And you're welcome to grab a free executive summary of my book, which is coming out November 12th. You can also visit my personal website, which is donovanpyle.com and my, my firm's website is health compass consulting.com health compass.

[B]

Consulting.Com well, you've been an amazingly helpful guest today on the Amazing Authorities podcast because this is going to help people about this, this big line item. It's a major line item.

[A]

It is. And like you said, the first step is just getting clarity. Right. And that's that's why I, I had to spend two years writing this book because I was so sick of people not understanding how this industry works. I mean, listen, and I should have known better, but, you know, when I was on the carrier side of the business again, brokers were my customers. And near the back end of my tenure of my time at that carrier, part of my job was designing the bonus packages for our top selling brokers. I was literally flying these people and their families on luxury vacations around the world for selling our products. Okay. We didn't do that out of the goodness of our hearts. We did it because we wanted them to sell our products over our competitors. Right. Recommend our products to employers over our competitors. All right? We're a publicly traded company. We've got goals we gotta meet. We gotta find a way to get it done. And so, you know, these kinds of luxury vacations were a good way to really, you know, build goodwill with the broker leg. Legacy brokerage community.

[B]

Wow. Well, are they going to be able to buy your book on Amazon? Is it through. Are you self publishing? Self publishing?

[A]

No, no. I'm using a hybrid publisher called Rethink Press, which has been great over in the uk and yeah, we're on all the channels except for Overdrive. I think we're, we're still working out that deal.

[B]

Okay, well, great. Donovan, you've been a great guest today, man. What keen insights. Loved it. I think people will benefit greatly from this interview. And good luck with your book launch.

[A]

Thanks so much. Thanks for having me on. Thanks for tuning in to the Amazing Authorities podcast. If today's episode inspired you, take a moment to subscribe, rate and leave a review. It helps more experts like you rise to the top for behind the scenes access and free resources to boost your authority. Head to MitchCarson.com until next time, stay amazing.