About Michael J. Rodgers, Jr.
As the Principal and Managing Partner of Axial Benefits Group, Mr. Rodgers brings his extensive background in health and welfare plans to Axial’s clients.
He has been pioneering Healthcare Purchasing Coalitions since 2009 specializing in assisting medium and large corporations, many of whom have multi-state locations, with the development of effective health care programs. Specifically, he has designed, implemented and managed 5 successful healthcare purchasing coalitions helping hundreds of companies lower costs and stabilized renewals.
Prior to co-founding Axial Benefits Group, Mr. Rodgers founded its predecessor company, Atlantic Benefits, in 2003. He also founded The Staffing Exchange (TSE) in 2012, a successful healthcare purchasing coalition dedicated specifically to the Staffing industry. He has had over 22 years of experience and held senior consulting positions at Hays Companies, William Gallagher Associates, and Marsh & McLennan.
Mr. Rodgers is a graduate of the University of Massachusetts School of Engineering. He is a former Massachusetts high school wrestling state champion and collegiate wrestler. He is an avid national speaker on the Affordable Care Act and has become known as one of the nation’s experts on the topic of its compliance. He is the former Chairman of the Boston Board of Directors for the March of Dimes and has been involved with the development of corporate programs for the both Friends of Boston’s Homeless charity and various local Habitat for Humanity Chapters. He lives in Concord, MA with his wife and family, where he is also a town meeting member.
About Axial Benefits Group
Founded in 2004, Axial Benefits Group (ABG) is a full-service benefits company based in Boston, MA. ABG, part of The Axial Company, specializes in Healthcare Purchasing Coalitions for mid-size companies; and direct contracting with hospitals and providers to build their own HMO style products for local employers. For more information, visit: www.axialbg.com
Medical Travel Today (MTT): Give us a thumbnail sketch of your business model.
Mick Rodgers (MR): I think we’ve figured out how to aggregate risk, while this sounds really simple, what it really means is that we’ve figured out how to take small and mid-size employers all over the country, band them together and have them act like one larger company for insurance purchasing arrangements.
What everybody intuitively understands is that when you buy in bulk, you get a discount. I think that is true no matter where you make that statement.
That’s why most Americans shop at Costco or at Walmart. It’s largely because they just understand the value of bulk purchasing and how that translates into healthcare. From an underwriting perspective, it’s the stability and predictability that also comes with those larger numbers.
This proves true when you think about any of the larger companies in the U.S., such as the Fortune 100’s. I think it is pretty well known that those companies pay a lot less for their healthcare then everybody else. And the reason is that with their bulk and size, they can purchase and access insurance at a different level.
We’ve really been able to accomplish the same thing for mid-size companies. By pulling them together and creating these coalitions, we’ve given a 200, 300 or 500 employee company that same access and buying power that the Fortune 500 companies enjoy.
MTT: Tell us a little bit about the coalitions that you work with.
MR: There’s the sort of cool part – we’ve created our own coalitions.
Currently, we have three coalitions up and running. One is in an industry sector and the other two are more heterogeneous. It really doesn’t matter what industry those folks are in.
Our proprietary Health Alliance – not to be confused with the high-profile group that has four million members – is a smaller version of that model. We’ve got three coalitions that have about 10,000 employees each.
But each one of those is made up of 30 companies so that they band together and they are purchasing as one.
MTT: So, you actually create the coalitions? Are they created not only by industry sector and size but region?
MR: The answer is they can be.
Out of the three that we have up and running right now, one of them is in the Staffing Industries sector, making it industry-specific.
The other one is in New England, which is geography specific.
The third one is a wholesale network of other advisors that are building it with us. It’s broad and national.
MTT: Do you intend to add more coalitions or add on to the ones you’ve already established?
MR: Here’s the deal: these are very successful arrangements for our clients so we will probably be doing both.
We will likely be building additional coalitions, as well as adding to the existing membership that we have in all three of those.
The thing that makes these coalitions work is that we are all about the results. We are carefully bringing folks into the coalition when they are ready.
We can talk a little bit more about what that means, but the big message is that it is controlled growth that we are looking for — not growth just for sheer size.
MTT: Tell us more!
MR: There are several things that really make us unique.
As our clients band together and form these coalitions, they are paying premiums to the coalitions and the coalition is paying their claims of the overall group. What makes this unique is that if there is unused premium at the end of that year, that premium gets distributed back to the membership.
So, in 2016, one of our most successful marquis coalitions gave back $3.2M — which is about 30 cents of every reinsurance dollar that they spent. To do that, we spend a lot of time with other benefit techniques to get those groups ready to come into our coalition.
In other words, we are benefit professionals at our core. We are going to use effective techniques as needed for each client to help get their experience at a spot where they then become eligible to join one of our coalitions.
So, if you think about a purchasing spectrum of healthcare, and if you know anything about healthcare in the U.S., the far left would be a fully insured purchase and the far right would be one of our coalitions or direct contracts.
In between, there are six or seven different steps that any benefits professional can deploy. Those techniques help that employer lower their costs.
MTT: Are all the employers self-funded?
MR: Not necessarily.
That’s the typical mentality and we can use it with a lot of different funding mechanisms. But the funding mechanism is not as important as the size and stability of the company.
MTT: Are you at liberty to give some of the names of your typical companies – large or small – that belong to these coalitions?
MR: Probably not at this point.
MR: Visualize that we are unbundling the purchasing process, such as unbundling the medical costs from the pharmacy or unbundling the nurse case management from the provider.
In some cases, we are actually unbundling the networks. In some cases, we are unbundling the funding. Or, we may be unbundling the reinsurance and then we are piecing it back together in a more effective way.
MTT: How long have you been doing this?
MR: I have been doing this since 2009 with these coalitions.
MTT: After the coalitions are built or getting larger, what is your approach to the healthcare providers? How does that work? You talked about direct contracting. Tell us a little bit about that.
MR: We are using everything from program design, referenced based pricing, independent nurse case management, negotiation and direct contracting all across the country to try and create the best cost for our client’s healthcare.
So, we will go into an area like Indianapolis or Minneapolis, or sites in Missouri, and we will partner up with a hospital or a hospital system to try and create negotiated discounts up front to move away from the large national BUCA types of networks.
MTT: In addition to hospitals, do you arrange for contracts with provider owned outpatient surgery centers?
MTT: And are they only for bundled pricing? You mentioned that you are unbundling everything. But does bundled pricing work for hip replacement or other joint replacement surgery?
MR: Great question. We are just starting to get into that.
MTT: Do you see receptivity for that? CMS took away the mandate for bundled pricing but from our understanding, the commercial market is looking for bundled pricing options.
MR: I think the commercial market is extremely wedded to it and I think that is the future. I think it’s an education issue.
These bundled payments are simply the same as reference based pricing from seven years ago.
MTT: For direct contracting, are the providers strictly US-based — or are you looking at any international providers?
MR: Candidly, I think it is US based at this point. We’ve had some exposure to the international travel, but we’ve not deployed anything. That said, I think this would-be kind of cool.
MTT: We have a lot interest, particularly from Latin America. Hospitals and doctors down there want to attract US employers.
MR: I just heard from a few close peers from El Salvador facilities. They had nothing but very good things to say.
MTT: So how long typically and what are the arrangements for the employers that want to be part of your coalition? Do they pay a fee? What is it that they have to do to participate?
MR: Usually it is a one-year arrangement, but they really last much longer. Once they get into the system, our retention rate is very high because we are working with them to get results.
At the same time, we are also using a lot of performance based consulting fees so that we are putting a third of our competition at risk to prove that we can do what we are doing and showing those results year after year.
We don’t have any sort of penalties or requirements when they you come in or out, and it is usually based on the results that we are producing.
Some of our coalitions get about a third of the national benchmarks on an employee per year basis.
MTT: And the total number of lives – either by coalition or total?
MR: It is about 30,000 right now.
MTT: Over the three coalitions? And the growth rate – it is growing fast?
MR: It is growing fast and so our client base is growing at a much more rapid pace than our coalition base only because we are bringing the members to the coalition as they are ready and as they qualify.
MTT: And if somebody asked you this question, how would you compare your coalitions to what is going on at the Midwest Business Group on Health or the Texas Business Group on Health? What is the difference?
MR: I think we are doing it a lot more strategically, to be candid.
We are deploying cost controls with more of a laser focus — rather than with a blunt axe just chopping away at costs.
At the same time, everyone has their own plan design to address their own specific needs, with whatever benefits they want to have at their company.
What we are not is a public entity or public incubator. We are really trying to be way more strategic and have controlled growth so that we can continue our process — which is working.
MTT: Do you include any ERISA plans, such as Boards of Education or city municipalities?
MR: We do have several municipalities and I see that as a huge growth area going forward.
We aren’t necessarily changing what they buy, we are changing how they buy it.
MTT: And how would you compare yourself to the Health Transformation Alliance?
MR: I’d love to think that we were sort of a small version of them for the small to mid-sized employers.
I love what they are doing. We are taking the same type of approach as far as better contracting with providers. I know it’s helped them tout their pharmacy relationships, as do we.
But again, I think what we are trying to do replicate the type of bulk that they can throw around.
We have to be a little more nimble. We are probably using more cost techniques behind the scenes and again, we are not changing what people are buying, it’s how they are buying it.
MTT: And what about specialty pharmacy?
MR: I am super proud of the work we are doing with specialty pharmacy. We are using variable specialty copays.
This has been a very successful model for us.
MTT: Are you familiar with the Specialty Pharmacy programs that are now available outside the US – for example for Hepatitis C?
MR: Yes and No.
I do a lot of this work with a peer group – Next Generation Agency Masterminds. It’s a group is based out of Nashville and there’s about 30 of us all across the country. We actually just wrote a book.
MTT: Is there anything that we haven’t touched on that you think will add to this story?
Ron Carlstrom (RC): I think the biggest thing is that we are not putting people in coalitions just for the sake of putting them in and adding to the bottom line in terms of revenue and overall lives.
If someone comes to us and their experience and claims are bad, other public incubators and other brokers or advisors might throw them in a pool just for the sake of adding to the pool. Hey, why not? They’ll underwrite them at a premium and they’ll get paid.
We are the total opposite of that.
Our goals are aligned with our client’s goals and we are not putting these people in these groups just for the sake of putting them in.
We want to help them reduce their premiums, unbundle those things that we talked about earlier, and in the end, it will work out for everybody.
A badly performing group that is looking to get better will take the different steps that we facilitate on their behalf. We get them in better shape, which is exactly the type of client we are looking for.
But those that are running badly, simply broker hopping and just shopping around, are not the fit we are seeking.
MR: Yes, the one really big piece is that we are aligning incentives with everyone in the supply chain — including ourselves.
Providers are going to have some stake in the game. Doctors are going to have some stake in the game. Pharma is going to have some stake in the game. And I’m going to have stake in the game along with reinsurance. Of course, the employers have the largest stake in the game.
But if we build that system so that everyone has stake in the game, everyone has one common goal and that’s really what I think is a big broken piece in healthcare in the U.S. right now.
MTT: Spot on. Do your coalitions resemble the ole MEWAs? (Multiple Employee Welfare Arrangements)
MR: Yes, and that’s a four-letter word which we try and stay away from at all costs.
It’s a third rail word in my business, so we do it in an independent non-MEWA way which I think is a huge technique that we pioneered.
As a result, we have a lot more flexibility, state to state. That’s why we can build these national programs and not have to worry about the government MEWAs state to state.