AH066 - The Evolving Health Benefits Market: Everyone is Getting Smarter, with Mike Tate

Transcript

Lightly edited for clarity.

[00:28] Justin Venneri: Hello and thank you for listening to this episode of the Astonishing Healthcare Podcast. This is Justin Venneri, your host and Senior Director of Communications at Capital Rx. And I'm excited to be sitting down with Mike Tate, one of our new colleagues on the commercial team here, who is heading up business development west of the Mississippi. And he's also coming off the Business Group on Health's annual conference where Josh Golden spoke on a panel.  

So we'll talk a little bit about that, a few different things that people are focusing on out in the field, and we'll get a download of priorities.

Mike, thanks for coming on the show with me.

[00:58] Mike Tate: Thanks, Justin. It's great to be here.

[01:00] Justin Venneri: So tell us a bit about your background and your path to Capital Rx to frame things up.

[01:04] Mike Tate: Yeah, sure. So my background, I started - a little embarrassed to even say this anymore - but over 20 years ago in the insurance business. I got into finding my way to the employee benefits business as a consultant. So, I worked for a company that was really kind of ahead of its time then. We were focused, 20 years ago, on self-funding. We were focused on delivering customer service, benefits administration through technology in a really efficient way. And that was really where I got my start, found a love for the employee benefits business. And you know, I think all of the things that can be done by a broker, by a consultant, for employers.  

We were focused on, at the time, IT outsourcing companies that were bringing employees over from other countries. And so it was a very unique marketplace, and we understood that with the high growth of those companies, with the needs of those employees that didn't necessarily understand US Healthcare, and that we were not a big company by any stretch of the imagination. We had to be really, really efficient, not only from the perspective of delivering consulting, but more so delivering an experience for their members and their employees that was able to differentiate us.  

And so kind of fast forward to today, and I'll skip over all of the chronicles, but I moved on from there. I had a fortunate opportunity to work for a large national TPA and really immersed myself into the TPA space and then went into the carrier side. So, I've seen the healthcare, US Healthcare, benefits business from every single angle. I've been a consultant, worked for TPA. I worked for two national carriers. And I think a lot of that is what has resulted in me coming to Capital Rx.  

I ask our clients all the time, what's the “why” that you want to talk to Capital Rx? Or what's the “why” that you are interested in what we have to offer? And I asked myself the same question. You know, I was talking with Kristin Begley, PharmD, our Chief Commercial Officer and a number of other people within the business about joining Capital Rx. At the time, I really had to ask myself, what's the why? And I think the why for me was a couple of things.

[03:15] Justin Venneri: Well, before you get into those, was it Kristin that hunted you down and captured you? Or AJ?

[03:20] Mike Tate: It was Kristin, yeah. I've had the fortunate opportunity to know Kristin for a really long time, but we always had this thought that we would work together. And so she reached out to me, and we started having some conversations. And then I joined in early 2025.  

It was a couple of things. One, Capital Rx's business and brand, and what Capital Rx stands for within, not just the PBM space, but the U.S. healthcare space, was something that I wanted to be a part of. I understood its values, I understood its culture, and I wanted to be a part of that. And maybe that was a big part of Kristen and I finally figuring out how to make it work.  

But two, I recognized that there was a huge opportunity in the west for Capital Rx to continue to grow. You know, as you said, kind of west of the Mississippi, I guess, but with the consultants, with the brokers here in the west, with the clients that not only want the model that we deliver in the PBM space, but also that we can see our clients that fit our model as well. And so that's been a really great experience in getting back into meeting with the consultants and the brokers around the west.  

And then the third reason, I know we're going to get into it a little bit, is with my background being on the medical side, the development of Judi Health™. The power of Judi Health is, for me, beyond exciting. It's a change maker in the market, not just for Capital Rx, but more so for employers that are facing increasingly rising healthcare costs, increasingly more complexity with their employees, with their members in how they purchase and how they use the plan, the challenges that employers have. And then the consultants and the brokers in the market across the country are facing the same complexities.

[05:12] Justin Venneri: Yeah.

[05:13] Mike Tate: And the development of Judi Health for the market, bringing together medical and pharmacy claims on one single platform, I want to be a part of that. That's a big part of my why.

[05:22] Justin Venneri: Okay. I'd like to dig into two things. The first being the west market and what's a little different about that. And the second being the challenges folks are facing that you started to unpack a little bit, maybe just starting with the west. What's unique about the west market?

[05:36] Mike Tate: Yeah, I mean the west market has historically been very slow to adopt self-funding, been very slow to adopt what I would call alternative strategies around healthcare for a very long time. And not because employers don't want to or because brokers and consultants aren't capable. They definitely are. And clients want to look at what are my options, right? How can I get my arms around my plan? How can I take more ownership of health care and how it impacts my organization?  

You know, I'll use California. I live in California. You know, California is obviously when you talk about the west, it tends to be the big one in the bucket. There is very much dominated by the HMO market. You have Kaiser, you have other HMOs across the state that have pretty significant membership. And many of the employers here, for a long time, regardless of the marketplace, whether it's tech, whether it's manufacturing, whether it's hospitality, have had some component of their population on an HMO plan. And so it was just a very slow market to adopt self-funding.  

I remember, going back to what I was saying earlier, 20 years ago, we didn't have a client in California. We were in California, but we didn't have a client in California. All of our clients were on the Midwest and on the East Coast because the Midwest and the East Coast has just been a bit more, just frankly a bit more innovative in adopting alternative funding models. There's legislation challenges on the west that make it somewhat restrictive for smaller employers. There's a landscape of things, but the west is a really cool, unique market. You have the larger consulting houses that are out here, but then you also have a very vibrant, very strong mid-tier. So I'm going to take out, let's call it the big three, and that second level of consultants where it's really strong and they do great work and really establish themselves in the marketplace of being innovative, cutting edge from a consulting and a brokerage perspective. And that makes the west unique.  

And some of those firms have started to move even east, but their businesses are based in the west and they're finding a way, they're finding a way to introduce and bring in alternative funding, self-fund their medical, carve out their pharmacy, look at other point solutions that are there. They're using and leveraging TPAs more that allow for them to do that. What does that do for us? That brings us into the conversation in a couple of different ways, which is what, again, kind of going back, that's what I'm excited about.  

We can have that conversation about our PBM capabilities that others can't. It also opens the conversation in the door for us to now say we can also do the medical side as well. We've developed a platform, the first in the market, that enables medical and pharmacy claims to be adjudicated together. So, as you're looking at making that step out of the fully insured space, out of the level funded space, here are the solutions that we can deliver alongside of partners within Judi Health. That puts Capital Rx in a position of yes, of course we want to build market share, right? We want to develop our brand within the space. But really to be what we want to be, which is an innovative partner, which is bringing healthcare to the marketplace, that allows for them to do it better, for them to have a better experience for their members at the end of the day.

Related Content

• Replay - Strategic Well-Being: Rethinking Health Benefits to Empower Employees and Drive Impact
• Capital Rx Unveils Healthcare's First Unified Pharmacy and Medical Claims Processing Platform
• Why this benefit leader switched to a more modern, transparent PBM
• AH035 - Pharmacy Benefits 101: Clinical Programs, with Bonnie Hui-Callahan, PharmD
• How to Manage Pharmacy Benefit Spend in a GLP-1 World

‍

[09:06] Justin Venneri: Okay. And as part of getting to that point, the priorities out there in the market concerns, you mentioned rising costs. It's a real issue year over year. Just compounds against everyone. What were you hearing at the conference? Is there anything new? What are the top couple of concerns, cost or otherwise, that you could share?

[09:27] Mike Tate: Yeah, I mean Business Group on Health is great conference. It's a great place to be around large employers, especially. Large employers that are looking at their health care spend in total. They're not just looking at their health care spend from the context of just medical. They're not looking at it in the old school way of just finding a pharmacy plan. Do we use the ASOs or do we go to one of the Big 3s or whatever? They are there to understand what is happening in the market that is going to allow for them to innovate their own plan. That's why we're there, right? We feel strongly that Capital Rx allows for our clients to innovate their plan, whether it's addressing the issues of GLP-1s, or addressing the issues of biosimilars in the market that have a direct impact to overall spend.  

When I started in the business 20 years ago, pharmacy was a very small, maybe one slide in a quarterly report or a monthly discussion with a client. It wasn't a key part of the conversation because at the time it wasn't a key driver. And some of that was unique to the clients that we worked with, but it just wasn't there. Everybody kind of used the carrier's pharmacy plan and pharmacy was very different. You didn't have PBMs that owned pharmacies, and you didn't have the GPOs at the time. And carriers weren't buying PBMs. It's just the model was very different then.  

Fast forward to today and you talk to consultants that are out in the market winning business, renewing their clients, working with their clients every day, and consultants are winning broker of records on the basis of we're going to do a pharmacy analysis, not a medical analysis. The pharmacy component is 20% to 40% of spend, whereas before it was a lot less, right? 5%, 10% of spend.  

And you know, there's multitudes of things that are driving that spend now, including cost of drugs, including the PBM model and the expenses built into it. You have specialty drugs and gene therapies. I mean it's just a different space than it was 20 years ago. But what that has done, and I think what we heard at Business Group on Health is employers are, and have, especially if you look at large, large employers, they tend to be the more innovative, right? They tend to have the resources, they tend to be willing to kind take that journey. They're getting very creative with how they design their plans, what they offer, what they don't, what do they carve out, how do they leverage clinical plans. And then I think in turn, I think this is a trend in the market that has been ongoing for a while now, members are far, far better consumers of healthcare today. They're far more informed, they're educated, they have tools that employers give them or that they can go find on their own to make smart decisions, whether it be in their drug costs, in their medical costs, in identifying better providers.  

But when we were working with our clients, the incidence of using the emergency room, which is super high cost from a medical claims perspective and from an Rx perspective versus using an urgent care, using a primary care -- access to primary care now is virtual in many cases. That has made the ability to use and leverage care and get really quality healthcare much cheaper. It has totally changed the market and how people use it. Covid did that. Prior to Covid, average telehealth utilization was less than 5%.

[13:00] Justin Venneri: Yeah, it was a tiny percentage of the interactions.

[13:03] Mike Tate: Today if you look at it, it's over 25% for most health plans. Employer plans can be even more, and they can design strategy around their benefit plan to drive people towards virtual care. That's a total differentiator. And so those are some of the things that we heard at Business Group on Health and you know, certainly our role in that, and what the market's role from medical and a pharmacy and point solutions and stuff like that, is all coming together.

[13:29] Justin Venneri: So the other piece of this that brought you here and that you're excited about, Judi Health -- and this might be a little bit of a curveball question because I'm not trying to be too salesy --  but this is obviously, you know, first of its kind. It's a differentiated solution. What excites you about it most?

[13:42] Mike Tate: Well, I think it totally changes how an employer understands and administers a plan.  

In a self-funded plan, the employer is the insurance company. It's their money. One of the issues and challenges from the beginning of time is why does my data not align? Think about pharmacy claims versus medical claims. Pharmacy claims happen and adjudicate almost in real time. As they happen, they get adjudicated and that claim is there. Medical claims don't. Medical claims take time. Providers may take 10, 15, 20, 30 days, 60 days, 90 days to submit a claim. So, you may not see medical claims for a few months, whereas pharmacy claims are happening in real time.  

And as an employer that is making decisions, most employers make decisions on the basis of cost. What is this costing me? How do I make changes? How do I make pivots to my benefit strategy for my members based on cost and based on utilization? And if utilization can't marry because they're two different systems, typically old school systems, and that data is not aligned, how do you make good decisions?

In any of our lives, right, if we're going to buy a tv, you're going to do some sort of analysis, and we all do it differently. You're going to do some sort of analysis to determine which one's best for you, and then you're going to make that decision, you're going to make that buy. Well, employers are doing the same. One of the things that Judi Health delivers is it doesn't change the timing of claims. Claims are going to happen in the time that they are. What it does change is it changes how they get adjudicated and where, and they're going to get adjudicated together. So when a client looks at their data, they're looking at their data in as real-time as possible for the two pathways to align, they can make good decisions. It brings efficiency to how claims are now managed. It enables clinical programs to truly work. Because in a traditional model, you have pharmacy plan on the right and medical plan on the left and they're happening in parallel to each other, but there's no alignment.  

Customer service, clinicians, account management teams, you can't capture trends or emerging trends that may be happening. And look, pharmacy claims are the number one precursor to a medical claim. In most cases, you can almost predict medical claims, especially large claims, catastrophic type of claims, that might be coming through what is being prescribed to them.  

If we can now bring that together and then allow for the ecosystem of people, technology, process, clinical program to work together to join those two, think about the impact for an employer to their plan. Think about how that impacts the cost of healthcare in the United States. Think about how that completely changes how effective and how efficient healthcare can now be in a super inefficient, noisy, ineffective market today. Right? Where all these pieces don't work together. They're there, they're great point solutions. There's great networks, there's great providers, there's great tools for members, but they don't work together.

[17:05] Justin Venneri: I'm cautiously optimistic that streamlining and aligning things would actually allow for some of these things that have had lags or created gaps in care to like shrink a little bit. Maybe it is a little faster, the turnaround time. Maybe there's a little bit less friction or burden on the provider side for their team to submit things and get things done. And so maybe everything can turn a little quicker too, which would be great to be able to analyze data and look at things in closer to real time if it's married.

[17:33] Mike Tate: Yeah. I mean, look, Justin, everybody still has to work together. Does the platform enable the plan to work together? Every employer wants to create their own ecosystem of strategy and provider and solutions that they feel aligns with their corporate culture, with their company, with their objectives, with how their members use and consume healthcare. Giving them the ability to do that is not new. TPAs, it's an unbundled open architecture platform. But having come from the TPA space, one of the things that we were always challenged with is we were totally reliant on the data coming into us, the timing of the data coming into us, to be able to administer plans. And, you know, things as simple as accumulators not being correct, that is a direct and immediate impact on a member. We can solve that problem. Little things, right? Little things that we identified through development of Judi, through delivering Judi from a PBM perspective, the results that we deliver for our clients, and identifying how can we fix those on the other side. Why isn't this together? Why hasn't this been figured out?  

And there's so many reasons for that, but the “whys” of why no one's figured it out don't matter. It's why did we develop it and how can we deliver outcomes? And that's what's so exciting and I think really is what's going to enable us to make that lasting impact on the US healthcare system that we know that we can make.

[19:08] Justin Venneri: Yeah, certainly hope so. One thing you said earlier that maybe is worth unpacking before we get to the last question. Buyers getting smarter, the plan sponsors getting smarter, but also the health care consumer getting smarter and being more educated. I mean, it's no secret, right? Everybody has access to information, supercomputers in your hand for your phone, right?  

What are one or two of the things that you're seeing that plan sponsors are trying to adapt to because their members are, are becoming smarter? And we've heard a lot about so many point solutions and point solution fatigue. Obviously, we're trying to bring things together on one platform to make it easier. But what are one or two things you've seen people do out there that are interesting because of this rise in overall healthcare IQ?

[19:46] Mike Tate: I think that's really well said. Healthcare IQ today of members, of employers, brokers consultants is so much higher than it was when I was in that space. I don't think I could have named you five TPAs in the market 15 years ago. Today, there's far more than that. I think employers are listening to their members more than they ever have. Members can go find and figure out what the cost of a knee replacement is in El Dorado Hills, California. They never did that before. They just went. They felt bad. They went to the emergency room, they got a prescription, they filled that prescription, and they took that drug, for instance. They got that knee replacement from whatever provider because it was close and it was the easiest one to go to.  

Well, now I think we're all a lot smarter with our money. When we look at the money that we have to spend, we want to do it in a highly efficient way, in a smart way. And so that has led to members are taking more control of their wellbeing. They're taking more control of their own personal financial health and health itself. And by doing that, they're forcing their employers to then say, okay, what do we need to do to ensure that the health and welfare of our members -- because at the end of the day, you're not an employer without employees, right? And setting aside payroll, benefits is the most expensive line item for any employer and that's not changing. That's going up every single year.  

So now employers are saying I can't just be not uninformed but unengaged with my spend. I need to understand what my spend is. I need to make decisions on the basis of what my members are telling me, on the basis of what my board and, you know, the company from a revenue perspective and an income and merge those two together. I think that is due to the rise of everyone being far more informed.

[21:44] Justin Venneri: All right, last question for you today, Mike, thanks so much for sharing your insights and experience with us. So, I'm sure you've seen a ton over the 20+ years you've been in the business. What's the most astonishing thing you've seen as it relates to our discussion today, that is safe to share, of course. Tell us a good story.

[21:59] Mike Tate: What's the most astonishing thing? We just talked about it, Justin. I think the evolution of healthcare. The rise in cost is not a shock, right? Our cost of everything has gone up over time. The rapid increase in what things have cost have certainly been, you know, astonishing is a fair term.  

But I think if you look at astonishing from a positive side, I think it's been the growth and the development of the member, the buyer, the consultant, the market, and their knowledge of healthcare. And that's just a small piece of solving this massive problem. And there's a lot of different moving parts, I would say, that need to come together to fix it. But if we have smart, informed buyers throughout the chain, I have no doubt that we can make an impact. Members will drive change. Employers will drive change. Companies like Capital Rx are driving change, and we're driving that through Judi Health, through Judi, through our PBM strategy.  

And you know, I'll leave a story, I tell a story a lot, and it's the one thing that has stuck with me by far and away in my career. One of our clients, when I was on the consulting side, it was a massive brand. We were very fortunate to have. And their global head of benefits -- US and mostly India, he would challenge me every single year and he would say, Mike, I know what happened this year. I want you to tell me what is my journey for the next three?  

And that term, “what was my journey for the next three” has stuck with me throughout my entire career. It'll be a basis for what I do here at Capital Rx and my hopeful lasting impact on the business. But more so, what I hope to be my lasting impact in my career is I want to help people, want to help clients, consultants understand and define their journey. Because the journey that they go on, and that they embark on, and it was always three years. Tell me what it is three years from now. If we all had crystal ball, our lives would be a lot different. It challenged me and it challenged our team to look ahead, to understand the market, to understand how the decisions that were made today impact their members down the road.  

I think that's what Capital Rx has done throughout its entire lifespan so far. I think that's what we're doing now. Go back to earlier, it's what gets me most excited is what are we going to do? What are the decisions we make today? How does that impact our clients’ journey three years from now? And when we look three years from now, we go back and we said, did we do it? But you know what we were also doing? We're also looking another three years out. And that person had the most lasting impact on me in this business. And I believe it is a foundation of who I am. It's the foundation of my why and it's what I'm excited about doing here with the Capital Rx team.  

So thank you for the time today. I appreciate you having me on.

[25:03] Justin Venneri: Oh, yeah, no, I can see why you're here and we're excited to have you, and we'll look forward to having you back on, getting some updates down the road too.  

Thank you, Mike, for joining me.

[25:11] Mike Tate: I look forward to it. Thanks, Justin.

‍

‍

‍

‍

If you would like to learn more about Capital Rx’s full-service benefit administration solutions, including our clinical programs, CLICK HERE to get in touch with our team.

‍

Want to stay apprised of the latest Capital Rx news? Sign up for our monthly newsletter!

‍

‍