Personalized financial experience for patients

Chris:

Hello digital health community. Today our guest is Florian Otto, Co-founder and CEO of Cedar, a company that works with payers and providers to personalize and humanize the financial experience for patients in particular for traditionally opaque and frustrating questions. Like how much is something going to cost? What is my insurance covering? And how am I going to pay for it? And we'll discuss why Florian started cedar, how Cedar helps, where it's going and get some advice for other entrepreneurial entrepreneurs. Florian Welcome to the pod. 

Florian:

Thanks for having me, Chris.

Chris:

Absolutely. Now, you have quite a journey to this point. From medicine to McKinsey, who became Groupon, Brazil? And then ZocDoc, would you mind telling us a bit about that journey?

Florian:

Sure. Very, very happy to do that. And yeah, the journey might not make sense at first sight. But the second side actually there is I think it's an arc that is kind of getting over my career. So you probably hear that from my accent. I'm from Germany originally, and studied medicine and dentistry as a maxillofacial surgeon for some time. My PhD, was a pretty academic career on the medical side, and then joined McKinsey, worked in healthcare consulting, in Brazil. So wanting to move to Brazil was a fantastic time. And then started in 2010, a company that got acquired by Groupon, and then became CEO of Groupon, Brazil, was there for three years and then joined ZocDoc for a few years was the head of sales and then back in 2016, started Cedar 

Chris:

Got it and when you started theater, you talked about having a remarkably bad medical experience that resulted in confusion, frustration, and disillusion with the healthcare system. And your inspiration was that experience for starting cedar? Can you tell our audience about that experience?

Florian:

Absolutely. And the bad experience was actually my wife. So what happened, she fainted on the street, which happened, nothing too bad. Got treated extremely well, in the hospital, we swiped the credit card for the Co payment. And thought, okay, everything was done. And then a month later came the first stack of papers for her to pay from the hospital. Another month later, it was built from the imaging center. And then half a year later, he lands in collections built from the lab company that she never received. So she changed her address. And they apparently emailed her, they mailed her old address, it's a complete disaster. And what she basically told me was interesting, she told me, after she resolved everything, never take me back to that hospital. And then I asked, okay, why is that? Right? Just the billing, the medical was really good. She said she completely lost trust in the entire organization. And I think it's an interesting thing, right? And, Chris, you might know, this trust is kind of consistent over time. Yes, this consistent experience was broken there. So trust was eroded. And she basically put this halo over the entire visit. I mean, that is the same, the first and the last experience usually matters. And then was completely messed up in this case. So we basically said, Okay, consumers are expecting more, because when consumers right now have a touchpoint, with every single other business, usually the digital experience is better, right? When they hail an Uber, it's because they already know, I mean, Uber knows where you want to open the app. If you open Amazon or Netflix, it's personalized, right? Everybody has a different dashboard there. And of course, everything is extremely easy and transparent. And in healthcare, that is not the case. So we basically set out and said, Okay, our mission is to bring healthcare to the 21st century, put the consumer really in the center of everything. And, of course, we strongly believe that the healthcare consumers are exactly the same consumers that shop on Amazon, that books on Kayak, or that also watches Netflix, and that is the bar and that experience level, then the reality is lower than that for the satisfaction.

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Chris:

Got it. So you created a consumer first platform that really wanted to facilitate better financial experiences than for example your wife had. And I know you use data science and smart product design to do that. What are some of the most fundamental ways or problems with a financial experience that you're trying to tackle with Cedar?

Florian:

Yeah, I think that, I mean, the financial experience is pretty messed up pretty much everywhere, right? And I think a few of those things are structural and very difficult to really figure out on the technology side , because there's just a structural problem. So let's call it one of the biggest problems I have with the US healthcare systems. The healthcare system is that the people with the lowest income have the highest deductible, and the richest people have the lowest deductible, that makes no sense should be the other way around. Rich people can afford a deductible, and low income people should have a low deductible, right. So that is the fundamental problem. And to be clear, we cannot change that. Let's be realistic. However, what we can do is the following. We can basically make it for everybody more affordable, more easy to understand and reduce the friction of the entire process. So we call this compassionate billing What are we basically doing, we are putting instead of just being providers first and just turning out paper statements or digital statements in the same sort of manner for every single patient. So sometimes it's called one size fits all solution. I was rather college one size fits none solution. But we try to personalize that. So that we basically reach the patients where they are with the right message that resonates with them with the right offer to pay the bill. For some people, it's literally just convenience that matters. So Chris, if you right now forgot to pay a copayment for 25 bucks, it's probably convenient. If right now, we send an invoice to a patient, for example, that has that list in a median house. In a zip code with a median house value might be $200,200 $1,000. Patient defaulted on two invoices before then, and the invoice is maybe $1,000, we would ask them to set up a payment plan. So we will put the patient in the center of everything and build the billing around it. Because we want the patients can really focus on getting healthy instead of worrying about his financial experience.

Chris:

And founders, Cedar technology work to facilitate that type of experience. Can you walk us through that? And maybe some of the outcomes?

Florian:

Yes, absolutely. So we basically have a pre visit in the post visit solution. And together that is the cedar suite. So we're basically picking up after you booked your appointment to send you a gentle reminder on checking in for your visit. And there we have, of course, a lot of just workflows that are geared towards the financial experience. So you can snap a photo of your insurance card, we do eligibility check, we tell you how much is your co payment and your estimated out of pocket. You can already either pay it there or set up a payment plan if you notice elective procedure, okay. And then, of course, we are walking the consumer after the procedure or after the visit, also through this process. So it might be for example, that they have a denial of the claim. We can claim submission through denials, messaging, it might be that there is another balance to pay because they changed the procedure. So there are a lot of things where we are helping the patient guiding through the process. And then a new thing that we launched right now might have seen it last week was the launch of the pm intelligence layer. So throughout this process, having parent information at the top of the bill, having a one click to pay deduction from your HSA or FSA. So how many people really forget about the HSA FSA card? direct integration, it's a game changer for that. And knowing that out of pocket, the accumulator status.

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Chris:

Yeah, I know that it's great, because I think our healthcare industry is kind of rife with these fragmented experiences, and really fragmented incentives across patients, providers, and payers. And I think it's amazing that cedar is really working with all three of those, really two of them on behalf of the patient. So theater is all about meeting patients where they are and then guiding them throughout their financial journey. And everyone benefits when they get to the end. I think that's interesting is like, I mean, one of those biggest, you know, topic areas within healthcare right now are things like omni-channel and personalization. So that idea that you're talking about is that patients want to engage with their providers in a way that is convenient for them. And then there isn't this one size fits all. So I'm really happy to hear that you're thinking about this and meeting people where they are, but there's probably a lot of complexity in making that a reality. Can you just share a little bit about what you've had to do on the technology side, in terms of connecting providers and payers and, you know, to even have a chance of giving this kind of experience?

Florian:

Yeah, I think it's. I think it's a great question because let's be frank, the idea is not novel. When you look into every other industry. This is a person's slight experience, right? your Netflix account looks different from mine and so on. So it works everywhere. I mean, like personalized discounts as well works everywhere. To make this a reality in healthcare is actually very, very difficult if you're asked about the technology. And so let me walk you through on what kind of obstacles we are facing and why it's so important. Okay. So the first thing is, of course, we do have integrations with different stakeholders systems. So what is that? The first is the billing system or the EHR, those integrations then not necessarily easy, because not all of these EHRs have proper working API's. So it is a challenge to integrate with them. Secondly, we need to integrate with the pair's. They also have their own systems where they're sent the EOB is also not that easy. When you have this, then, of course, you need to integrate with HSA FSA vendors, if you have the one click to pay it function. Surprisingly, it was a little bit easier than the first. But then comes the problem, you need to normalize all of the data, because the data is usually different in these different parts. And you of course need to find a kind of with unique identifiers that you can match the records, right? That is one of the biggest problems to structure these data. And you're you're working, I mean, you're working on very large data sets, right? We are interacting with more than 20 million patients right now, on an annual basis, I suppose lots of work to do there. So then all of a sudden, you have the database on which then you need to marry that with a database from external parties. For example, I mentioned, it is very interesting for us to know what is the median house value of a zip code. It's very interesting for us to know if this right now was the demographics of a certain neighborhood to personalize this message. And most of that is actually marketing databases. So they are available kind of openly and publicly for purchase. So we're doing those integrations as well. So we are matching that. And then the third thing is, which is actually one of the easier ones is the internal CDR database. We know what worked with patients before. And we have engagement data. So whether a patient clicked on a certain link, and where did they click that triggers a different follow up message. So takes us to the last point is just the digital architecture of our platform. That of course, we have a cloud hosted architecture. So why is it so important because we need to do integrations literally multiple times a day, right? When you are right now a system of record like an EHR, you update once a year, maybe once a quarter, we are updating a couple of times a day makes a huge difference, because we are running around 20 AP tests at every single time. And we are automatically shifting most of the traffic to the highest conversion. So typical examples of that is, of course, we all know the typical example of blue button, red button, what kind of, but it's way more complex. It's which kind of copy when we send a text message works better, which time of day that we sent a text message that works better, which kind of follow up to when we sent somebody locked into the bill but didn't pay. And then segmented by patients by balance size by what they paid already. So it sounds all very easy. But the background is actually extremely complex. And that is the magic that happens with patients. It's very easy. But the technology is extremely complicated.

Chris:

Right? Yeah, that's awesome. We have a lot of experience integrating with the EHRs and the billing systems and the like. Yeah. And I can tell you, yeah, none of it is easy. Or maybe it looks easy from afar, but it is never in practice. And I think that's amazing that you are operating exactly like let's say a groupon startup would operate, which is iterating, multiple times a day and measuring everything. And what's awesome is what you're measuring is is the patient finding it easier to do what they want to do or not, which is

Florian:

Totally obsessed by, by getting the feedback from the patients and reducing the friction in every single time. So we were getting 10s of 1000s of feedback every day. So we had data mining that and finding out where the friction points and then go literally from the highest impact to the least impact and knock out new communication methods or products that facilitate the patients through this difficult time.

Chris:

Yeah, that's incredible. And so you have all this engagement data and you are kind of getting a sense of what's needed next for Cedar. Can you share anything about Cedar’s product vision and roadmap? Maybe continuing after? The pair intelligence layer?

Florian:

Yeah, absolutely. So, the pair intelligence layer we basically just launched last week. So it is something that is much newer Highmark and Allegheny Health Network in Pennsylvania, it's in the Pittsburgh region, they started as a pilot partner with that. So building this network is extremely important. And we strongly believe that besides just offering the best billing product and best personalized experience in the market, we are literally building this network of these integrations provider to provider integrations, professional and healthcare and a hospital billing, or third party like anesthesia or emergency room billing or lab billing, we layer that on top of the other bills, so provide a provider integrations. Second, integrations are literally those that provide a pair of integrations, where I mentioned, we can put the pain intelligence layer on top of the bill. That's the EOB. Second is the accumulator status. Third is we can exchange data between provider and payer on demographics. And then the fourth thing is we can have these direct HSA FSA integration. And also we are working on the future on an integration of the support center. So when you chat, for example, with one party, that party can look in the other, which of course, it's really nice with the consent of the patient, because all of a sudden, the patient's not the ping pong ball between provider payer getting referred from one to the other. But it's more than the center of both. And both parties try to help them. We struggle with that as important. And then I think the last integration lever is basically system integration with financial services. So like, for example, I mentioned HSA FSA, that is a huge thing. So we found out that actually half of the patients that are eligible for an HSA paste with credit card, that makes no sense, right, because you've used the pre tax dollars. And why is that patients forgot that card, they forgot the access code, so they just pay quickly with a credit card. But if you have a direct integration, and the only thing is a one click to pay, you, of course use these pre tax dollars in order to pay for it.

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Chris:

Okay, yeah, that's great. Yeah, because one of the, it sounds like what you're doing is you're aggregating everything that would be needed for a consumer to know who they have to pay, and then facilitate how they pay for a particular procedure. And, you know, one of the big issues within healthcare is not knowing upfront, or even after the fact, who I have to pay or how I'm going to pay them, for example, your wife's lab example, or going in for a colonoscopy, and then it's an off to a separate diagnostic, and they turn out to be out of network. And it all just gets so jumbled up. So I'd love to unpack one of that frustration with healthcare, which is price transparency. So just knowing ahead of time, how much a procedure is going to cost me. And as someone in healthcare, it's still surprising to me how often I get surprised, and that there just doesn't seem to be a great solution for this. Now, there's something called the hospital transparency rule, which is supposed to help. But I believe Cedars research finds that nearly half 49% of US consumers haven't even heard of the rule. And those are those that are familiar, nearly a quarter don't understand it. First, in case anyone doesn't know, what is the rule?

Florian:

Yeah, so it's a very interesting question. And I think a typical example of what happens if a change is being made by the government and regulation, and not by the consumer, that really is, I think, the beneficiary of it. So basically, what the rule says is that the hospitals need to publish their price on certain procedures. So right now you have basically two groups of people before we even get to whether it's possible or not, there is a certain group of patients, we literally price price estimate doesn't make much sense. And those are though, when you don't know what will be done with you. If you go right now, I don't know to go to a hospital and you have a huge pain in your belly area. You don't know what is it might be appendicitis, it might be gallbladder, it might be peritonitis, it might be whatever, nobody will be able to tell you how much that will be. Right. But then there is I would call it the shoppable experiences and that's probably why we've we find out around 80% of the procedures where at least an estimate should be possible. Why is it so difficult to get an estimate? I mean, sounds Sounds easy, right? You basically I tell you what I need and you tell me what it cost very difficult. it because why is difficult because of the fee for service model, where literally the hospitals, or the physicians billed for every single item on a CPT or DRG code level. Secondly, often for one visit, there are different business entities involved in that. So for example, anesthesia billed separately from the physician professional side or from the inpatient side. And then on top of that, of course, comes to insurance, the insurance will tell you this, and this is my, this is the billed rate, this is the negotiated rate, we pay this and this is the deductible, and it depends on how much you have your deductible left. So, all of these things make it, of course, more complex. So if you, for example, have like, like many hospitals have it for some procedures, bundled pricing, then of course, it gets easier, if you just say a knee replacement is XYZ, right? So long story short, you asked me also on how we are going to address it, I told you about the complexities of that. And really, it is not easy. And I want to take this into consideration. Hospitals want price transparency, in general, it has just been difficult to communicate that. So we strongly believe that there are many procedures will be can give price transparency, there are some where we cannot do it, we don't focus on the ones where we cannot do it. If you just have an emergency and you come in, you don't need it. However, if they are very easy ones, for example, you just need a chest X-ray. That is the simple one. And hospitals are really, really good in estimating that the only thing we need to know right now is we are new out of pocket deductibles. When we have that information, because we have paid integration, we can tell you exactly how much it cost , pre payment of a certain rate, you're done with it very simple. And then comes the more complex visit reasons you are somewhere you know what will be done. But you don't know exactly who will be involved in how long the surgery, for example, takes which kind of material because sometimes the doctor doesn't know just an example you do, you get a hip replacement, which kind of poor thesis should be implanted until you open the body. That is literally a problem. So you cannot of course, right now give a price guarantee because you don't know which material will be inserted, or how long enough students will be basically can give an estimate. And we strongly believe that some hospitals are really good at giving estimates together with claims data, we get into a range where we can convert it from an estimate to a guarantee. And that guarantee, of course, is a game changer for price for patients. And why is that a game changer is the following. You might remember when Uber in the beginning started to charge for I think the mile and minute ride, it was terrible. It was , no idea how much it would cost, whether it was expensive, or it was cheap. I had no idea. And then they switched with an upfront guarantee price for the trip. Wasn't it beautiful? And what happened was the following, all of a sudden conversion rates went through the roof. The satisfaction of the riders went through the roof is cheaper, but you basically took away the anxiety of this entire experience. And that is something that we're doing in healthcare right now as well.

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Chris:

Yes, and one of those anxieties that you're just talking about is that element of surprise. And earlier this year, the no surprises bill went into effect. Can you talk a little bit about this ruling? And are there any different outcomes that are going to be driven by this?

Florian:

Yeah. I'm glad you asked about it. Because no surprise bill, of course, is again, one of those things nobody really wants to do. It's one of the few things actually surprise, surprise. Both parties, both political parties are agreeing. So they still have to have some of those things, because it's very tough not to agree with it. So what does that basically mean? That means basically, that you are going to an in network provider, for example a hospital. And there's, for example, a staffing company or an independent organization doing treatment for you that is out of network. And then just the unskilled CEO. Doesn't seem to be fair, because you are the patient, he has a patient who thinks you are a network provider, and you have no idea where the physicians work for. So that is not fair. So it's basically in regulation right now. We have providers that are out of network; providers have limits on what they can build. And that of course makes total sense right? They cannot just build a completely crazy amount. But even more important than that in the back end is to know it before because then all of a sudden it becomes a non issue. If you give a price guarantee for the bundle price. Then you actually don't care how the funds afterwards get distributed. Right? So that is where, of course, we are working on integrating some providers. For example, staffer plus hospital plus professional side. And that really is the game changer for the patient.

Chris:

Right? Yeah, that's amazing. Yeah, Bimal, our producer had a procedure done. And it turned out his anesthesiologist was out of network. And that was not broached to him beforehand. That was a huge part of the increase in his bill, for example. So it's a love that you're taking away that element of surprise, or at least making it someone else's problem. If that's the case, and I really appreciate that, as an industry, I guess we're starting to move in this right direction. And it's really platforms like you created in theater that are moving the needle and producing the impact for consumers that many entrepreneurs seek when we're starting a company. And a sizable segment of our audience is physician entrepreneurs that, like you, noticed a big problem in the system. And that was painful enough that they were inspired enough to stop practicing and just solve it. And you started in medicine. And before we end the podcast, I would love to love for you to give your advice for physician entrepreneurs. So what piece of advice would you like to give physicians looking to start their own venture?

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Florian:

Yeah, it's an interesting question. So I mean, first of all, I admire everybody who makes a real big change in their career. And going from being a physician to become an entrepreneur, it's not the most direct way. Then of course, let's call it the very direct ways to become an entrepreneur, just opening your own practice and you're an entrepreneur, right? 50% of the physicians are this kind of entrepreneur. But making this to do something that has nothing to do with medicine, and touches the field, of course, outside of really caring for patients, I think is very interesting. So the first thing is maybe, okay, really, no, why are you doing this? And I can maybe share why I did this. But I think the first was that I got really interested by doing different things throughout my career. And as a surgeon, you really are good if you do one thing again and again, so became a little bit boring for me. And then the second thing, why I was so excited about starting the company, was the scalability of that. So as a physician, you are of course limited, especially as a surgeon, your two hands, how fast, how good, can you make surgeries, so it's not that scalable. And starting a business like cedar right now interacting with more than 20 million patients a year. That is really exciting. So the one piece of advice that I would like to give to physicians, is actually something that's very physicians specific, and very, can be very dangerous in entrepreneurship. This is dealing with how to take risks. Because as a physician, you are trained not to take risks, which makes sense, when you are treating a patient right now, you're not wanting to take risks. When you do surgery, you go with a clinical pathway, so that prescribed for a certain procedure. When you're an entrepreneur, this doesn't exist, because by default, you're doing something new, you're breaking ground. So taking risks, they're usually not deadly. They're usually not harming anybody, when you take risks, they are usually two way doors. If you do something fails, you go back, you try again. So a very different mindset, I think, physician and starting a company.

Chris:

Yes, yes, I have to flip that mindset and hey Florian. And so as a final question, I wanted to unpack something you mentioned, which is the need to get perspectives from outside of what you've been doing. And I know, we can often learn from other industries and given your experience across other industries. What are some of the insights you've seen from your Groupon days or consumer or anything else, which you feel like for us people also trying to innovate in healthcare, that that we should borrow from those domains?

Florian:

Yeah, I think one of the most important things is to really understand where's the problem? And is that  a problem that you can solve? Is that a problem? You're not just literally obfuscating and covering? Are you really solving the problem from the ground up? That is the most important thing. So what do I mean? What do I mean by that? A lot of new ideas or companies are basically being built on things that at some point will go away anyway. Or they're just messing up incentives and healthcare. I think that is very, very bad, because at some point, those companies should go away, when the fundamental problem is basically solved. Focusing on something that is a huge suffering in the healthcare system, like in our situation, in our situation that financial experience is a huge problem. And really trying to solve that from the ground up in a very detailed way, is, in my opinion, extremely important. Because when you do that you're delivering value for every stakeholder in the systems. So like for Cedar, I cannot really tell you what the weather consumers benefit more from it. Or the providers, actually really be funky to say, right, or pay us even because we basically make contracts with providers. But in the end, we all have the same consumer. So we treat the consumer Well, providers like it. And then of course, we also grow. So in the end, it's really important with every side of life and we deliver value for all sides.

Chris:

Right, Florian, yeah, I think that's a wonderful way to summarize and I want to thank you for coming on the pod. I'm really inspired by companies like Cedar that are managing to align incentives to the end of better patient experiences or in your case, via better patient experiences. Thanks again. We'll be rooting for you.

Florian:

Wonderful talking. Thanks for having me, Chris. Thank you

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