About Doug Hetherington
Doug Hetherington is a health plan visionary, innovator, and program architect. He specializes in providing high-value, sustainable self-funded and level-funded health plan solutions to Benefit Consultants and their mid-market employer clients.
Doug started his career as a second-generation Benefits Broker over twenty years ago. As the Great Recession, Affordable Care Act and other factors eroded the value of employer health plans, Doug saw that the insurance products he was presenting to his clients had become problems rather than solutions.
Determined to fix the problems, Doug began innovating around self-funding, captives, reference-based pricing (RBP), and population management in search of viable solutions that gave his employer clients control over cost and plan design. His creativity and tenacity for change drove his development of several first-of-their-kind innovations, including RB EmCap, a national access captive program for RBP employers.
While talking with a hospital provider, the sudden realization came to Doug that Providers are the key to sustainable and meaningful health plans. This led Doug to pioneer a new type of community-based partnership between Bingham Memorial Hospital and nearby employers.
Health2Business (H2B) was founded in 2019 after years of innovation succeeded in converting Doug’s vision into proven case studies: better healthcare starts when employer groups, providers, and health systems work together at the local level through Direct Health Partnerships.
As a former Benefits Consultant, Doug has unparalleled expertise in navigating the challenges of self-funding, RBP, captives, and stop-loss. Leveraging his insight and knowledge, Doug has architected H2B programs to provide a proven solution to Benefit Consultants who share Doug’s passion for fixing employer health plan problems. An optimist by nature, Doug shares his time and expertise freely to support the Health Plan Consultant community. Doug truly believes that if we work together and combine forces, we can effect positive change in our industry.
In his free time, Doug can be found in the Idaho wilderness camping, motorcycling, or skiing with his family.
He can be reached at 208.991.2965 or [email protected]
About Health2Business
H2B’s direct contract development and administrative platform enables healthcare providers and hospital systems to offer services directly to employer health plans without going through third parties. This results in better access to care at more affordable rates.
Open and transparent direct contracts, coupled with contract administration infrastructure, form the foundation of turnkey self-funded or level funded health plan products with low out of pocket costs which align incentives across Provider, Employer, and Employee/Patient stakeholders.
H2B’s independent and agnostic solutions are a new vendor class known as Direct Contract Administration. We are not affiliated with or owned by another company. H2B partners with benefit consultants, TPAs, repricers and other vendors, health systems, providers, and employers. H2B is not an insurance carrier, TPA, benefit consultant, broker, or broker to the broker (GA or MGA).
Founded in 2019 by a former benefit advisor, H2B provides products and solutions that directly address employer pain:
- Alternatives to high-cost, low-value group medical insurance
- Turnkey self-funded and level-funded employer health plans (2 covered lives to enterprise)
- Direct contract integration into existing self-funded plans
- Community health plan build-outs
- Direct Contract Administration (payer-joinders, compliance, maintenance, claims routing, repricing, and processing)
Health2Businesses’ role:
- Offer competitive “productized” health plan options in markets where we currently have Direct Contract programs with flagship healthcare systems or layer into already established self-funded plans.
- Provide infrastructure for management of Direct Contracts (Direct Contract Administration) once a three-party open direct contract has been put in place between a provider and an employer.
- Our infrastructure provides the support for the ongoing, living management of the contract to ensure compliance, claims routing, repricing, and processing, ensuring other parties can access the contract, and ensures that the contracts are scalable and replicable.
- Build direct contract programs with flagship health care systems or for other organizations such as benefit advisors, employers or health cooperatives, where the level of complexity requires advanced expertise in direct contracting and innovative solutions.
Medical Travel & Digital Health News (MTDHN): Tell us about your background.
Doug Hetherington (DH): In 2002, I entered the business as second-generation broker. My mother, Debbie Hetherington, was considered a legend and it was inspirational to see her make an impact. Her success inspired me to be in this business. However, I realized the industry in my market just traded business back and forth between Blue Cross and Blue Shield.
I became skeptical of what was going on in the industry, especially when the recession hit, which impacted me personally. I lacked confidence in the fully insured industry because not only were they not coming up with solutions, but they were also unable to answer my questions around healthcare reform.
Often, I had been the one to study up and be further ahead than the insurance carrier. That’s when I realized they were clueless and nobody out there was trying to do anything about this.
I then became aware of group health captives and found myself in Grand Cayman in 2012. That was when I was first introduced to reference-based pricing and the idea of an employer taking control of the healthcare services they are going to pay for.
I recognized that if we could combine these changes with captive structure, the two could really start to have an impact. So, I started going out and marketing this concept.
I had a chance to speak with the CFO of a hospital who RSVP’d to an event I hosted. He expressed concern around the potential impact to his hospital so I invited him to participate in our session that day. We ended up having a great, interactive discussion around all of this, and he ultimately extended an invitation for me to sit down and learn a little bit more from one another.
That’s when my eyes began to be opened to the challenges within healthcare. I had always looked at it from the employer’s perspective, but I had never stood in the provider’s shoes. I had made a lot of assumptions, and I found that almost all of them were wrong.
The providers’ problems were just as big as the employers’. In fact, I became aware of the vicious cycle of how renewals work and my involvement in that process. It was through that experience with him that we came up with this idea that reference-based pricing doesn’t work — but some of the principles behind it are sound.
I then thought about the potential to find the middle ground. If so, could I then offer this hybrid solution to employers in the market?
I partnered with a third-party administrative organization, approached employers with a transparent contract and agreed to have further conversations about employers purchasing healthcare directly from their local providers in a transparent fashion. It was evolutionary.
As a broker, I did pretty well for a few years, until I didn’t. It came down to two things:
The first part is I had turned everyone into my competition – brokers, insurance carriers, and even other hospitals.
The second was operation challenges as it wasn’t a scalable or replicable model. It relied on me to do everything, but I couldn’t run all of these different services, develop processes and coordinate with the providers in the backend while also handling sales and coordinating with TPAs.
MTDHN: How did you get started with Health2Business?
After all my setbacks and realizations, I created Health2Business (H2B) in 2019. It was a transition for me to go from an advisor into more of a vendor-type role. We assembled a team and continued to learn, but it was very challenging because there were a lot of administrative burdens, which took time and effort on everybody’s part.
The goal of H2B was to figure out how we can embed ourselves into this access-type solution for self-funded employers and create an experience administratively that looks and feels like a network – but doesn’t have the financial long-term ramifications of one.
So, we sat down with providers and health systems that engaged in these types of initiatives and ultimately developed what we refer to as a direct contract administration platform.
What was interesting is that we weren’t the only ones that had come to this realization that this could work. There were other advisors and third-party administrators who started reaching out and asking us to come talk to them about solving their problems.
Before long, we would completely transform their vision. It would grow and expand, but they wouldn’t know what to do next and would eventually ask to hire us.
This led me to think about building a health plan which has turned into not just direct contract administration but custom networks or community-based networks. When you strategically design the benefits for the member to coincide with that high performance network, you can see significant changes in behaviors, especially when you look at this over two to three years’ time.
Most of the groups that I worked with when I was a broker are still operating in this direct environment. They would tell you that this has been completely transformational for them and that many of them are now offering zero deductible health plans.
It’s $10 or even nothing to go to any type of doctor, plus we remove prior authorization. We want these members to move right through the care continuum and ultimately develop a relationship with their provider because that’s where we’re seeing the long-term savings.
We’ve flatlined the cost trend and we can say, from over a four to five-year period, that we see absolute differences in behaviors of not only what services they’re accessing, but also where it’s not uncommon for us to have groups with 95% utilization under our direct agreements. It may only be 20 to 30% access in the market, but it’s such a different experience for the employees that, given a couple of years, they start making better decisions.
It becomes a much different purchasing experience for the employer. They’re now incentivized to work with the local provider, bring them in to educate their members and perpetuate the success that they’ve been experiencing based upon a leap of faith at the beginning, but hard work and ongoing communication afterwards.
MTDHN: Tell me about your geographic imprint. Is it national?
DH: Yes. When we started the organization, we felt that our growth would be inside out. We would start with our local, Idaho-based health system partners and move out from there. We started to work in primary care, obstetrics and other specialties, trying to create robust access.
We felt that we would naturally grow based upon where our employers were.
In terms of which states we operate in, our direct contracts are in Idaho, Washington, Oregon, and the Pacific Northwest along with early adoption in the Midwest. We have a great footprint in
Ohio and we’re very saturated in certain sections of northern Kentucky. We are hoping to start in northern Michigan as well.
Additionally, we have wonderful partnerships throughout mid-Tennessee, most of Missouri, as well as the eastern side of Kansas. It’s exciting to witness our footprint continuing to grow.
We anticipate more contracts coming on this year which could double the number of states that we’re operating in. We are also seeing growth with some of our existing health system partners that operate in multiple states across the country.
Beyond that, we offer strategies and solutions for what we think of as tier two or out of area access. Our growth continues very rapidly across the country as we become more efficient at contracting.
MTDHN: How do you handle specialty care? For example, if you had a national specialty provider in urology and kidney disease, how would you handle that?
DH: We don’t necessarily think on national terms. Our belief is that healthcare starts at the community level. About 99% of the care that we’re going to receive in our life probably takes place within 10 miles of our home.
We recognize that most employees get their health plans from their employers. Most employers are also very community based, especially on the smaller end. We think about what the needs of the community are.
If you start from the local, large, robust health system and say, “We need the facility,” we know big things are going to happen.
If a health plan is going to control expenses and become sustainable they must address large, catastrophic claims that take place primarily in hospitals. That’s why we start with the facility first. From there, we coordinate with the facility and figure out who their natural referral patterns are because we want to maintain good quality and continuity of care.
MTDHN: How do you raise value and measure quality?
DH: I can’t say with certainty how you measure quality because most of the quality metrics that are presented today are coming from the government, which means it’s based on government payment, primarily Medicare and Medicaid. I would argue that the services that are utilized, the nature of care and what’s really needed to keep this population well (in terms of commercial population versus Medicare/Medicaid), couldn’t be farther apart.
I’m excited about the transparency information that’s coming out. We’re going to start getting our heads wrapped around the value side of the equation and ask, “What is a fair market value for a procedure?” Because now, this gives the providers a reason to provide services based on cost plus a reasonable margin which is how employers operate their business.
It’s the member experience that really matters. A problem with traditional PPOs in the past is that they hide quality because you’re inviting every provider in. In our model, we don’t measure quality at all.
The way I look at it is, if the CEO of a local business that has signed a contract with the CEO of a local health system and something doesn’t go right, I expect them to get on the phone to have a discussion and dissect what happened.
Why did it happen and how can we improve this to prevent it from happening again? It also provides an opportunity to discuss what we’re doing well, and it gives employers a chance to voice what they like and what they don’t like.
I’ve spoken to a lot of these health systems and they say the services that we offer to the commercial population are based upon what insurance will pay for. That just doesn’t make sense.
Looking at bariatric services, for example, we can ask, “Is that an area where we could change the way we approach benefits and improve outcomes with people and overall quality? Did we do anything with the actual quality of healthcare? Or rather, have we just allowed people to get the services that they truly need?”
Quality is very subjective.
MTDHN: What are your thoughts on the No Surprises Act?
DH: I’m enamored by it. 99.9% of the provider community that I’ve interacted with have nothing but pure intentions at heart.
Given an appropriate way to bill for certain types of services for what is a reasonable charge, I have no doubt they will get on board with that and continue to provide a fantastic service to their patients without these levels of disruption. It isn’t necessary to legislate transparency and fairness if everyone has good intentions.
MTDHN: What is your vision for the self-insured industry?
DH: I believe it will continue to grow as we’re on a fast track toward self-funding.
From a risk standpoint, it’s made it easier for some reinsurers to work in the smaller group segments. When the benefits of ERISA are applied correctly, it can allow for a tremendous amount of innovation — which I took advantage of as a broker. Now as a vendor representing the providers out in the marketplace that want to work with self-funded employers, we’re doing the same thing but on a larger scale.
Secondly, I believe transparency laws will be evolutionary in how we look at the relative value of healthcare services. Over time, it will cause traditional payers and employers to truly understand that yes, you can get a hip surgery for $70,000 in a hospital or walk across to the street to the ASC and get it for half, or even less.
However, if your wife is pregnant with twins and they’re three months early, you’re not going to the ASC. We have to recognize that as healthcare adjusts, we must also adjust and see that all providers are not equal; neither is the cost-basis.
We shouldn’t just look at providers from a cost or quality standpoint. The way that a lot of the procedures are reported today is disadvantageous to larger health systems since they end up with some the most catastrophic patients.
I believe employers are going to scramble towards self-funding because it’s so much more transparent, allows for control, which provides opportunity. Therefore, in the future when they have big problems, they can engage in risk management strategies without being told to just accept a double-digit renewal.
MTDHN: What is the size of employers that you are typically serving?
DH: We tend to line up well with employers that have been engaging in reference-based pricing or during a large renewal.
Traditionally, we’ve seen a lot of interest in small to mid-size groups, around 50 to 75 on the low end, up to around a thousand on the high end, which is a representation of the bulk of our clients.
However, that is changing very quickly. As more and more self-funding is occurring in the small group space, we’ve been successful in embedding our direct access into several small group level funded products.
We have employers as small as two or three participants in our direct access program. Today, we also serve national employers that are beginning to engage with us and look at whether they have associates in a community or regional where we have direct contracts.
Both are evidence that shows me self-funding, direct contracting, purchasing directly will continue to be an area of interest for employers moving forward.
MTDHN: Do you do anything related to digital health or telehealth?
DH: Not currently, but we did promote it during the peak of the pandemic through our direct provider relationships. What we do now is ask our health system partners and provider partners on the front end to let us know if they have digital health solutions or not. That way we can communicate that out to any groups coming on board.
We are transparent with our contracts as required by the Transparency in Coverage act which will allow for plan members to receive estimated prices for specific procedures utilizing our contracts.