Hello, everyone. This is Jacob Emerson with the
Becker's Payer Issues podcast.
Thrilled today to be joined by Scott Burton,
who is the market president for Providence Health
Plans commercial business.
Scott, thanks so much for taking the time
to be with me on the podcast today.
Yeah, Jacob. It's great to join you. Thank
you for inviting me. Absolutely. And before we
dive into everything we wanna talk with you
about, a few timely trends going on in
the industry, can you tell us a little
bit more about yourself, your background in health
care, and what it is that you do
today at Providence Health Plan?
Sure. I've been in in health care now
about fifteen years.
This is actually my second career. I made
the intentional choice to join health care and
and certainly health insurance in in particular
after my daughter was born. I would say
it wasn't the best of experiences for our
family. And as I was looking to change
careers, I was questioning what would be my
next calling.
And, ultimately,
I wanted to make health care better for
my daughter's generation.
What could I do to have an active
seat at the table to make health care,
a different experience when she has a child
of her own?
Over the years, I've added improving the health
care experience of my parents' generation as well
as they get older.
And so as I transitioned into health care,
I came from a media background, and so
so I started through communications,
but,
ultimately worked my way over to the business
side. I was with a blues organization in
the Pacific Northwest for about thirteen years,
before transitioning to Providence Health Plan. My charge
here at Providence Health Plan is overseeing our
commercial,
business across all of our operating states.
That includes p and l accountability,
sales, account management,
working with our chief product officer on product
innovation,
and ultimately with all of our executive team
on the sustainable growth of our business.
I've been here a a little over three
and a half years and, just a a
wonderful organization, mission oriented,
and, committed to growth, across the Pacific Northwest.
Fantastic. Well, like I said, we appreciate you
taking the time to chat with us. So
you've been in the industry for a while
now. You've seen a lot of trends and
changes and evolutions over the years.
And one thing, Scott, that we've been hearing
a lot about recently, especially these last few
years, from employers
and certainly from carriers as well, is a
lot more interest
in individual coverage health reimbursement arrangements or ICRA's,
as an alternative to the traditional group model
that everybody knows and is familiar with. So
talk to us about this from your perspective.
Where is demand for this new model coming
from? How do you see it reshaping the
employer sponsored markets in the years to come?
Yeah. I've been been studying ICRS for some
time now. There's a a lot of interest
in them. And, you know, I I I
think if I step back from the product
itself and say, why is the product even
being discussed?
You know, we look at, affordability and the
percentage of an operating budget that health care
represents for employers, and it continues to grow.
It's you know, historically, we've thought about it
as amongst the top three expenses
for most employers.
You know, I think right now, it's it's,
you know, it's sitting at number two for
many employers,
taking up sometimes as upwards of 25%
of a company's operating budget.
There was a, a pretty stark,
Kaiser Family Foundation
study that was done. I I think it
was in 2024,
if I remember correctly,
where they surveyed,
financial and other executive level,
staff across employers across the nation.
And nine out of 10 said at the
time that they weren't sure if they'd be
able to afford to offer employer sponsored benefits
by 2030.
And, yeah, I think just a a bellwether
moment for the industry to say, you know,
what does that tell us about the path
that we're on, relative to sustainable costs and
and access to health care, through employers?
I spent some time at AHIP this year,
and ICRAs were a big part of the
conversation
relative to, you know, A lever, one of
many that were being discussed, but A lever
to try to create affordability
for some of those employers.
I think there's a second dynamic to it
as well.
Particularly, you know, on the smaller end, this
is where ICRA's, you know, tend to to
have most interest, small to midsize employers.
Just this notion of, you know, is is
managing benefits
really part of what I want to,
focus on as a business leader? Do I
wanna focus more on running my business, or
do I wanna focus on being in in,
you know, the benefits,
arena? And I've heard from a a lot
of folks that, you know, I'd like to
to provide some sort of funding to my
employees so that they can, you know, receive
benefits. I understand it's part of talent attraction
and retention, but I don't wanna manage a
benefits program. And so then I think there's
two paradigms depending on, how the executive leader
sees their role in benefits and their ability
to afford benefits.
And, Scott, just to give our listeners a
sense of where ICRA stands right now, what
some of the latest trends and data points,
are are showing. Can you give us a
sense of what you're seeing,
across across the marketplace there?
Jacob, there's a lot of interest in ICRA
right now for sure. A lot of folks
talking about them. I think context is important
as we think of, adoption first.
So while
the ICRA is a a big focus of
conversation right now, if we look at the
data, there are about 500,000
ICRA employees on plans right now across the
country.
In contrast,
we've got got about a 150 to a
160,000,000
employees
on those traditional group plans that we've been
operating on historically. So ICRA is point o
o 3%
right now of the nation's population. Now with
that said, that's not meant to discount
the traction and the inertia that's centered around
it. Bailey and Company, that's a Nashville,
merchant bank that's kind of focused on growth
in late stage, health care and health tech
companies,
they did an estimate recently looking at how
fast is the IPRA market growing. It's about
60% year over year. So there's a lot
of focus and attention on it, but I
think context is important.
I'm also hearing as I'm talking with,
CFOs, with IPRA vendors, with HR VPs,
There are emerging some clear pros and cons.
Yeah. I think the pros from kind of
the ICRA advocates,
they point to federal and state policies that
they feel advantage, ICRA expansion and growth. They
point to carrier and ICRA collaboration
that's increasing
specifically around technology integration
of those ICRA vendor platforms.
And then they also point to ICRA vendors
working together
to actually market and raise awareness.
Some of the cons that, let's call them
maybe skeptics are raising,
employees,
may have limited individual plan options compared to
what's available to them in small group and
large group plan offerings.
How the small group and large group rates
from, you know, the small group environment to
the indie environment
isn't always positive for employees. Take Command Health
has a great heat map tool that allows
you to look at the pricing relativities in
every state and even down to a county
level.
And then simply health plan risk. Is this
arbitrage? Are you moving revenue going from a
small group line of business or a large
group line of business
over to your individual line? And is that
financially advantageous to the business or not?
And then I think finally, the last piece
is just investment trends. Where is the money
flowing? We see venture capital and private equity
leaning into this space heavily.
Remodel Health, for example, announcing recently they've raised
more than a $100,000,000.
Fatch has raised more than $40,000,000.
But what we haven't seen yet is the
ecosystem go through any sort of consolidation
event. So a lot of companies starting up,
a lot of investment dollars coming in, At
some point, there's likely needed to be a
consolidation event
where mergers and acquisitions sunsetting of unsuccessful vendors
occurs.
That's really interesting to hear you say all
of that, Scott. It's really good context. Definitely
some cons compared to the traditional small and
and large group models.
Big inertia in this market, a lot of
money flowing in, but in the grand context
of things, still a very, very small
segment of of the overall health insurance industry.
So it's great context for our for our
listeners to have. And to your point, going
back to that KFF,
study that you cited
in terms of the unsustainability
of rising care costs for employers,
some of the most recent estimates we've seen
on our side of things is that from
employer groups,
estimating that health cost could rise as much
as 10%
next year alone. So employers see this coming
down the pipeline.
How is Provenance specifically approaching,
alternative arrangements, perhaps not even just ICRA,
to help your employer customers control these costs
while still continue to deliver that value that
the employees are going to continue to expect?
Yeah. We're we're looking at it, I think,
in in four paradigms.
We see it as an ecosystem. I don't
know that product design alone
is is going to be sufficient to address
those affordability challenges for employers.
The first arena that we're looking at is
provider contracting.
And can we
negotiate collaboratively with our provider partners, but also
firmly with our provider partners?
And that includes our own system. We're part
of an integrated delivery system as well.
Providers need to be fairly compensated for the
care that they deliver, but at the same
time, we need to advocate on behalf of
our members and our employers in the face
of these rising health care costs. And so
that's area one of focus.
Area two for us is really care claims
and payment effectiveness.
You know, our entire organization is focused on
a portfolio of work designed to ensure that
our members are getting the right care and
the right care setting at the right price,
that classic triple aim. But we're also trying
to optimize,
all of our claims and payment processes
that can lead ultimately to tens of millions
of dollars of annual savings. We're looking at
our own administrative efficiency. Are we operating as
efficiently and as lean as we can to
ensure that we're doing our own part to
to control costs and expenses?
And then finally, product innovation, determining what are
the current and future products and plan designs
that our customers could benefit from. And, you
know, I think we're seeing work being done
in all four of those areas simultaneously
to try to address these, these cost challenges
facing
employers. Got it. So a four pillar strategy
for PHP to really tackle,
what continues to be these rising costs.
Scott, if we're staying on the topic of
of rising costs and and the ACA marketplace
more broadly,
As you know, going into next year, the
the marketplace is facing some real crisis issues
in terms of affordability,
market stability. We're already seeing, major increases being
approved in states all over the country.
So how do you think that this issue
is is affecting
the health your health plan strategy as you
balance that growth and sustainability you just detailed?
Yeah. You know, as we look ahead into
2026, I don't think there's any question that
the ACA marketplace is under significant pressure. We're
seeing rising premiums, the potential exploration of those
enhanced subsidies, regulatory uncertainty.
So for PHP, you know, our focus and
strategy is about balance. We remain committed to
serving ACA members
where we can deliver value, but we're also
trying to be thoughtful about sustainability,
focusing on markets where offerings are competitive,
where, members have meaningful support. And then, certainly,
at the same time, we're preparing for growth
and we're having conversations around ICRA and and
other options.
I think we would say that we are
advocates,
for policies that preserve affordability,
that enhance product design, that, you know, expand
into models that can meet members where they
are.
But, ultimately, I think it's making sure that
we're positioned for longs, long term stability
while keeping coverage,
accessible to our members and and to the
communities that we serve.
Absolutely.
Well, Scott, before we go, you know, we've
touched on we've touched on ICRA, we've touched
on rising health costs going into next year,
and and we've touched on the instability of
the marketplace next year as well. So is
is there anything else we're missing there or
any final bits of advice you wanna offer
all the other health plan leaders that are
listening in?
Yeah. Yeah. I I think there's three things
that I'd probably leave with. One, you know,
we have to, as as an industry and
as individual companies,
always look at where we can be the
best stewards of of health care dollars. I
I think PHP has always tried to do
that, and I know we're doubling down on
that effort now.
Yeah. The the second piece is there are
pros and cons of of all of these,
you know, alternative health plans. Right? We've talked
about ICRA's.
Some have have viewed it simply as arbitrage
of moving membership from small group in in
the lower end of large group over to
the individual business.
Is that the right financial move for,
for carriers? Right? You need to to evaluate
that as well.
And I think it's also the the third
piece maybe,
really easy for any of us right now
to,
fall victim to fads,
heavy investments in marketing. You know, I I'm
approached regularly by vendors of all sorts of
different products.
And it'd be really easy to say, well,
maybe that's the silver bullet or maybe this
is the silver bullet. The bottom line right
now, there is no silver bullet. We have
to work on multiple fronts and do the
hard work right now that's required
to, help this industry and help all of
those whom we serve get to the other
side of this crisis that we face.
Fantastic. That's some great last pieces of advice
for our listeners. So, Scott, I wanna thank
you for taking the time to chat with
us and for sharing your insights with our
listeners. We really appreciate it. Absolutely. Thank you
again for the time. Yeah. And to our
listeners, if you'd like to listen to more
podcasts from Becker's, you can visit beckershospitalreview.com.