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Podcast: 5 Mile Difference - Ep. 1 Tom Sondergeld (Transcript)

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Joe (00:00)

‍Hey, I'm Joe. Welcome to the Five Mile Difference.

The name comes from something that's quite close to me. I grew up in Philadelphia, where two zip codes just five miles apart, the average life expectancy difference was 20 years. And it's not rocket science why that was the case. There are a few variables that contributed to it. But one of the ones that we’re most focused on at Vitable is that there's just a lack of access to high-quality preventative care.

I'm excited to have, today, a conversation with Tom, who has seen the full scope of – has had the widest range of sort of healthcare experiences to build quite a unique perspective on both the opportunities and the challenges that we face. So, Tom, thank you for making time to speak with us today.

Tom Sondergeld (00:48)

‍Yeah, it's great to be here, Joe. Thanks for having me, and I really appreciate the opportunity to share on this very important topic.

Joe (00:55)

‍Amazing. And Tom, I came to know you after an introduction from Dan, the founder of Hinge. But in our conversations, I came to really appreciate both your passion for the employee and increasing access to high-quality care, but also your understanding of the employer, the broker, and the distribution partners. So, I would love, maybe, if you could give us just a quick background of how your career started, how you ended up in healthcare, and how your journey evolved over the years.

Tom Sondergeld (01:31)

‍Yeah. So, I actually, you know, out of college, I started as a respiratory therapist. I actually started in healthcare. I could even go back a little further than that. My father owned his own pharmacy, right? And so I worked in that pharmacy as a teenager and growing up, into college. And so I knew pharmacy pretty well. My mom was a nurse. So, healthcare has kind of always been around our family.

Right after college, I was looking for opportunities. I moved out to the West Coast to pursue a PhD, and I wound up doing respiratory care just as a side job, and started working with babies and children. And then I became an operations manager here in Chicago of a women's hospital. And I got to see that angle for about four or five years. And then I came into HR, right? About 30 years ago, I met the Senior Vice President at Northwest Memorial Hospital of HR, and he asked me to come join him. And I started learning benefits under this wonderful man who mentored me.

And I really started to understand the challenges that employers have in providing benefits to employees and their families. And the reach that the employer kind of needs to have in order to make change, because they're paying this high cost, right? Typically, it's 20 to 40 % of the revenue of a company to provide benefits to an employer population. And so I think the biggest challenge that I saw over the years was employees don't engage, right?

We don't usually typically engage in the United States in healthcare until we're ill. And so getting them to engage so that they stay well, and I always called it shifting the burden to the left, right? Keeping people well out of the right side, which is very chronic and ill, and, you know, 80 % of the spend is in that population of 20 % of people. It's really focusing on the people who are in the other 80 % of the population who are well, who need to engage so that they don't get sick and so that they're aware of their health at all times, right?

That's not the general condition of America. And so it is kind of working against what they go home to every day. So, it is incumbent upon an employer to try to engage as many people as they can in this healthcare model. And for the 30 years that I did do benefits, I learned how to provide benefits from what's called the employee back, right?

Everything we did looked at how it was going to impact the employee, right? Not necessarily the employer, although in the end, you know, cost was always a driver. We kind of looked at the two in tandem so that we never violated what the employees needed in order to function and be a part of our workforce, and focus on retention. Because you don't want an employee leaving simply because they don't like their benefits. So, that was always a big focus that companies like Aon and, Hewitt, and Walgreens, where I did this on a day-to-day basis for many, many years.

Joe (04:17)‍

And I suppose when you went from at Aon, what was the role that you played at Aon? I think Aon being one of the larger benefit consultants and then transitioning to work at a very large employer with very diverse sort of workforce. What was the role at Aon, and then how was that– what was that transition like?

Tom Sondergeld (04:40)

‍Yeah. So, you know…when I started in HR, I was at a hospital, Northwestern Memorial Hospital, here in Chicago. And so, that was an interesting place to be as a benefit provider, right? Cause you're talking to people who know healthcare very, very well. And so then I went to Hewitt associates, which would, you know, quickly became part of Aon during my tenure, and I was part of the merger team. And so working for a bunch of consultants and a bunch of people who are very focused on healthcare, but from a consultant side was brand new for me.

It was interesting to kind of lean in to some of the expertise that the workforce had around healthcare, but also to kind of bring new innovation to that. So, we did things like the private exchange at Aon, and we built that together before I left. But then the transition to Walgreens was quite interesting because going from a consultancy and a healthcare background to an organization that typically is focused on health, because they're a pharmacy.

But the predominance of the workforce is just everyday people who struggle with the same things that every American struggles with, making below $80,000. Right? So 70 % of the population were regular workers who probably had two or three jobs, who were struggling every day. And so, going to a retailer with a pharmacy kind of overhead, it was really a challenge because their margins are much smaller. The margins and all the other companies I'd worked for were very big.

And so I had a lot of money to play with. When I went to Walgreens, the 10 years I was there, everything was very focused on not only the member experience, but the cost of the benefit, right? And how to engage as many employees as we could across a lot of different services. It's why we put Hinge in place. It's why we put a bunch of other telehealth solutions like Vitable in place, because we wanted to engage as many people as we could.

My background in school, I studied behavior change under Prochaska and others. And I really believe that a lot of the challenge in healthcare is because not only are you struggling with their health condition, but you're struggling with behavior that has been learned over and over again, that contributes to the chronicness of somebody's illness, right? So if you look at diabetes, which is pretty much a man-made disease if it's type two, and it's preventable if you exercise and have the right diet. And in control of your anxiety, I think you can have a pretty good job.

But what happens over time is people learn the wrong behavior chain in eating and exercise, or not exercising, and breaking that habit takes a long time. And so I invoked a lot of behavior change methodology that I learned in college and at Aon and Hewitt to that marketplace at Walgreens and was able to kind of like transition to a benefit solution for employees that one, they appreciated, but two, controlled costs pretty significantly at Walgreens.

Joe (07:32)

‍Wow. And so you went from Aon to Walgreens, and you were there about eight or nine years. And I think you were there for quite an interesting time, too, with, in some ways, the ascendance of digital health, or like telemedicine 1.0. Almost a decade and a bit longer.

I suppose, what was the promise of digital health and telehealth 1.0 then? And how did you think about evaluating all of those vendors? You seem to have been a large consequential employer at a very interesting time in history.

Tom Sondergeld (08:19)

‍Yeah. I was fortunate to be at a company that was also focused on the health of the people it serves. So. I got to experience digital, new digital health, not only from providing benefits to the employees, but also providing services to the population that Walgreens served. So we were building a digital wellness platform for our members that now is part of the digital platform that you as a, you as a customer of Walgreens would receive.

We built that together. So a lot of this digital innovation that came about in the early 2000s, mid 2000s range pre COVID. What was amazing. Right. It was so fast and there were so many things coming our way. We took a lot of risk. Right. So we were early with hinge. We put it in place early and many digital innovations like Hinge and others that kind of were meant to be what I call point solutions that are aimed at one particular group of people or disease state.

And that was a wonderful thing because then you got to engage people where their behavior change moment was happening, right? And that's really important because when somebody's ready to make a behavior change, if you're there to catch them, they stand a much better chance of having that behavior change come forward and sustain if they continue to engage in that behavior change.

Right. And so we did that with a lot of solutions. We put in Lavango early. We were very early with Lavango. We grew that business quite a bit before it became part of Teladoc. And so we've we railroad the digital innovation wave quite aggressively. Unfortunately, I didn't get to see what happened during COVID because during COVID, digital innovation kind of went on a steroid path. I mean, they just kind of took like a rocket ship and they had to because everybody was home. People were not at work.

And, so that digital innovation, I got to experience it from the outside. I saw what happened. Employers were embracing digital innovation like crazy. I would call it 2.0 and 2.0 and 3.0, all in three years. And, so I, I do think that we were preparing ourselves for something pre-COVID because we got to kind of dip our toe in the water and digital health that allowed us to jump in the lake a lot faster.

For example, mental health – digital health prior to engagement in regular telehealth with a primary care doc prior to COVID was non-existent. It was a lot of employers dabbling in it, looking at it. They just said, our people will never use this. They don't have a phone, and all that stuff was unproven, right? No, it was all just anecdotal, but it was unproven. When COVID hit, we got to really like jump in the water, and everybody was kind of prepared because of all the sensitivity they had prior to COVID. And I think it enabled mental health and other telehealth solutions to just accelerate during COVID, because they had to, and because, you know, it was a great revenue stream.

Joe (11:15)‍

Well, so you were a very early adopter in telehealth before the rest of the world caught up. But with the benefit of hindsight, or at least data just over the last decade and a half, were some of the promises, or at least most compelling promises, of telehealth, and how has reality turned out to be?

Tom Sondergeld (11:37)

Yeah, I think the promises, at least initially in 1.0, were that they were going to deliver amazing ROI, right? And the return on investment was going to be massive promises like, you know, we'll decrease the number of diabetics in your population. We'll decrease the number of hospitalizations and ER visits because we have an onsite clinic, right? Or, a telehealth solution for a clinic, like One Medical. So there was a lot of promises prior to COVID that were untested.

There was just a lot of, hey, this is a great solution. We know we can deliver it at a lower cost at scale. So, let's look at digital innovation related to back injuries, right? Or knee injuries. Let's put in a solution for that, and we can decrease the number of people who have to have back surgeries and save you 16– to $20,000 per case. That's amazing, right?

But I think the reality was one that relies on the member engaging, right? And so you can put a solution out there and pay the price for putting it out there, per member per month, and, if nothing happens because nobody engages who needed to, typically with these solutions, when we first put them in place, like wellness programs and stuff, the well engage. And so moving the needle with a bunch of well people, while it's good, they engaged.

It doesn't really move the needle because they're not the ones who are having the critical care needs. Right. And so you really have to engage the population more, more aggressively across all of the parameters that this point solution is going after. And so in reality, what we found is that unless they engage, you're not going to get the ROI.

And so, and then proving the ROI is hard because there are so many factors that go into physical health and wellbeing that it's hard to factor some of those out with trend coming into the benefit plan and cost increases in healthcare and network changes and all these things that happen that are variables in that calculation makes it very hard to prove the ROI in the backside for a CFO who says, why are you charging everybody this, you know, why are the benefit plan paying so much for this benefit? And I'm not seeing any ROI, right? So that became the nugget from that period of time that I think we improved upon during COVID and after COVID.

Which, I think really focuses on not only engagement, but also on retention of the person in the, in the program and the level of activity that they participate in during the program. People can engage and engagement. Usually they signed up for the app, right? But the actual work they do while they're in there really matters. And that's what gets measured now alongside the ROI, which, you know, as long as I'm getting more than one to one, I'm happy.

Joe (14:30)

‍What would you rate things overall, maybe on a scale of one to 10, 10 being lived up to the promises?

Tom Sondergeld (14:38)

‍Yeah, I mean, I could go vendor by vendor, but across all those solutions that were at least released in 1.0, which was, you know, like, 2008-ish to 2019. I think that those were probably maybe a four or five, because they really struggled. I mean, it's hard and a lot of them were not good at doing risk, risk guarantee, and sharing or sharing arrangements, right? Where I don't pay you a PM.

I only pay you if you do something with my population. A lot of them weren't ready for that. They didn't have the good algorithms to get there to do that. And so I would say four to five. Whereas during COVID, I think you get up to the sevens. And now I would say a lot of the solutions that are out there, they're not out there because they're not doing something.

They're doing something. They measure it. They can report it. So if it's something you can give to the market that differentiates that has the ability to do an ROI that's measurable and reportable, then I would say, you we're probably in the eight to nine range now, because I do think that most companies that come out understand that that's what they have to provide if they're going to hit the employer market.

Joe (15:47)

‍Very interesting. I think one of the things that I think is quite unique about your experience at Walgreens, in particular, is that I believe it was about 250,000 employees…

Tom Sondergeld (15:56)

‍In the U.S.

Joe (16:08)‍

… and they [the employees] have the high-income sort of white collar workers. And at your stores, you have every sort of hourly workers, and each has unique needs and one of our focuses at Vitable is particularly on the hourly worker and the unique challenges that they face.

Where typically they'll make too much to qualify for Medicaid or right on the edge of Medicaid, but too little for the Cadillac health plan. And so they're stuck. I know it's quite a challenge for someone in your role, or at least then, to...design a program… curious how did you think about the workforce segmentation and maybe if you could set the table of like what how did you think about the vastness of the of the employees?

Tom Sondergeld (16:39)

Yeah. I mean, I think what we tried to do over the years that I was there, was to, provide, a benefit that every, everybody got the same benefits at our company. were very Walgreens was very, it doesn't matter where you are, you are part of Walgreens, right? It's very family-oriented. At least it used to be, and it was very much a cohesive group. And so everybody got the same benefits.

What I try to do is I try to differentiate the benefits while offering all of them to everybody, I tried to make sure that if you were an employee who could afford only a bronze plan, that that bronze plan had affordability and you had solutions that you could go to to help you with your healthcare or help you with your risk that would benefit you, right? So we had accident insurance, we had critical illness insurance, and they were at a low cost.

So, members could have these so that when they ran into these first-dollar issues, they could get some money right to help pay their deductible if they were in a deductible plan. So we had some high deductible plans, and we had a gold PPO plan and a platinum HMO plan. And so we tried to differentiate quite a bit for the various populations in the company, knowing that some would want some benefits and some would want others.

And in 2017, we put in an HSA because we were always challenged with HSAs because high-deductible plans with HSAs, the member has to invest, right? They have to put some money in an HSA. And the challenge we were having was that it doesn't really fit our population. And so we had a couple of plans that were HSA or HRA or health reimbursement account that wasn't, you know, as heavy. And so the employees could choose which one, they had a lot of choice in our programs. It's why we went to the private exchange in 2014, because the private exchange brought a lot of choice, right?

There were all, there were sometimes over 54 plans, and they priced those plans by region rather than having one price across all the United States. We had a price by region. And so if you were in Florida, you got a pretty high cost, but if you were in New York, you got a lower cost because the risk was lower. So that's kind of how we differentiated for the population as well, because then those folks who are lower paid still had a lot of choice, right?

But also had the underpinnings of all the point solutions and health solutions that they needed. And when they wanted to engage, they were always there. We never took them away. We kind of made sure they were always there so that when somebody's behavior change moment came, they could get, they could reach to them. So that was our philosophy. I think it worked really well. It certainly calmed down a lot of the noise that you saw out on, you know, many of the chat places where, employees can chat and within our blog, within the company, changed quite a bit when we made the change in 2013.

Joe (19:24)‍

Wow.

Tom Sondergeld (19:25)

‍And so that's one way I know we were at least touching the population we needed to, and people were pretty satisfied.

Joe (19:33)

‍And what for the, am I remembering correctly, you had about 250,000 employees at Walgreens. What was the distribution across different classes, and how did you classify the employees?

Tom Sondergeld (19:40)

Yeah, so we had, I mean, we probably had three or four different classes, right? So of the 250,000, a majority of them, 90,000 or so, were part-time; they didn't qualify for our benefits, they were variable staff. And so they didn't qualify, right? Even under the ACA, where you had to look at hours over a year, they didn't qualify. So those folks would get a different benefit package from the company benefit package; they will get voluntary benefit opportunities.

They could get some help to go buy in the exchange if they wanted to, if they weren't Medicaid eligible. And so we gave them, we gave the part-time employees at least something because they weren't getting much else. They couldn't get healthcare from us, and dental, vision, and all that. So we gave them that. And then for the 170,000 or so employees, we saw probably about a 70 % take rate in our benefit plan, which means 30 % were getting their benefits from somewhere else.

And then of those, the predominance, about 70 % again, were retail, right? Were front-of-store, were store managers, were stockers, were people working in our 17 warehouses, and so that was really important as well, that we focused on that large population that is lower paid, right? They were below $90,000 a year, certainly below, you know, the poverty line.

And so when they were making some money, but they probably had two or three jobs there, they probably were in health deserts in the country because you know, Walgreens stores are in some very urban areas and suburban areas. And so we saw that, and so we did differentiate that from the professional staff. One of the reasons we put in the HSA is because the professional staff, the pharmacists and all the senior leaders of the organization and the people in the operations areas.

We're all looking for that because they came from an employer that had an HSA. So we were trying to be sensitive to as much as we could, listened all the time, and did surveys like crazy. We did a conjoint survey in 2016 when we decided to move out of the exchange just to make sure we were looking at all of our benefit packages.

So I think there are a lot of things employers can do to be sensitive. Again, it was always from my perspective was always let's design these things from the employee back where the employee sits and make sure that all these benefits fit the needs of these various people that we have to manage across 250,000 people.

Joe (22:12)‍

Was… for the blue collar staff or those that are on the front lines, you mentioned there was even for that class of employees, 70 % uptake rate in the benefits. How did you get that? That's quite impressive.

Tom Sondergeld (22:27)

Well, you know, because we had competitive benefits. We had options people could choose from. There were four or five plans all the time that somebody could choose from. We gave them good tools to make those choices. We gave them good resources, and certainly word of mouth was huge at Walgreens. Employees knew that the benefits were, you know, pretty decent. And so I, you know, I think 70 % uptake rate for enrollment and benefits was good.

Now, engagement is another matter. People who engaged in some of our benefit programs were not as high as I wanted. I think the highest thing we had was Hinge and Lavongo. They were in the 40 % range of the people who were eligible for the products. So, you know, I think that's pretty good. Better than an EAP, I think our EAP was at like 17%. And that's pretty typical for EAPs. So I think when we look across the spectrum, we made sure we were providing the right benefits at the right time.

And we didn't pull a benefit just because enrollment was low. That's a bad thing to do when you're trying to fight behavior change. If you pull a benefit right at the moment that somebody is ready to make behavior change, you'll quash their behavior change moment, and they'll never come back. And so it's a big thing about retention as well. You want people to be satisfied with what you're bringing in. So I think we're trying to be as sensitive as we could, and we were trying to address a huge population that had a lot of different needs.

Joe (23:50)

‍Well, hearing you talk about behavior change and how important it was to how you communicated and structured the benefits package so that it was effective is quite interesting and telling of how you thought about the benefits for that field or frontline staff.

And maybe even backing up a bit, what were your objectives every year when you were thinking about what should the benefits for the following year, any changes to make?

What were you optimizing for?

Tom Sondergeld (24:21)‍

Yeah, I mean, we were always optimizing one for member experience and member need, right? We were always trying to be sensitive because these are annual benefits. The planning cycle is really tight, right? So we usually plan between January and April, and then between April and July, we're making our decisions, and between July and October, when enrollment happens, we're locking down everything, right? So it's a very short window every year we have to do this and it involves a lot of senior leadership, right?

They're very keen on making sure employees were happy. And so a lot of decisions had to go all the way up to the CEO and CFO and head of HR to make sure that we were complying with what the business was trying to do. Right. And so we were always very sensitive also about business changes. Right. So if there was a significant business change, for example, we're going to close a bunch of stores or lay off a bunch of employees. We had to be sensitive that we weren't changing the benefits too much that year so that people could not feel like we're taking everything away.

So we were very integrated with the business. That's one. Two, and sensitive to the business. Right. Two, we're sensitive to market. Right? The market kind of dictates what's out there. Like that's why the private exchange, when it came up for us, it came up for us in 2012, but we took two years to get us to a place where we pulled the button and moved everybody in. And then we moved them out in 16. So, you know, the market change really matters.

What we were sensitive to the most was the price that we're passing to the member for all the premiums they might have to pay, right? We always tried to make sure that we had a competitive price. We looked at competitive data. We looked at comparative data from pieces like Aon, Mercer, and Willis…and Watson, to make sure that we were not overpricing, that we were in the market for the price, and that we were fair, right? So while we took an internal corporate view of things and a market view of what was happening in the market, everything still came back to what is gonna happen to the employee.

How are they gonna feel about this change, right? And we tried not to make too many changes, right? Change anxiety can be a real big problem. I think when we changed to the private exchange was the biggest change I've ever done in my career. And it was huge to undertake. There was many, many communications, many, many education points that we had to do. And so change is something that I would only do maybe twice in a cycle of... 20 years or 30 years, because one employee can't take it, and two, it takes a while for people to settle down from that change and get comfortable with what you've done.

And so we've always tried to recognize that, but again, it's the business, the market, the conditions with the employee base, and what's happening with the plan designs that really matter. So we always tried to make these step approaches. And when we could give a holiday, we gave a holiday. If we weren't gonna, if we were doing well as a company, with our benefit plan because everybody engaged, then we gave that back to the employees, right?

So, instead of giving them a 5 % increase, which is pretty typical, we would give them none or one. There was one year we gave no price increase to anybody because we had done such a good job with the savings in the health plan. We were even below our budget, let alone below market, which allowed us to not have to pass along any price increase or plan design changes to members. That was the first year in my life ever that I did that, too.

So it was kind of testament to the fact that with these changes, we were able to communicate and market correctly. And the fifth consideration I would say is, are you ready to market? Because you do have to become a marketer, and you do have to kind of get these people to engage across a bunch of platforms. It's also why we put in platforms off-cycle. There were some benefits that don't have to be annually cycled.

So Hinge was put in mid-cycle, and Lavango was put in mid-cycle. Some of our telehealth was put in mid-cycle because we wanted people to experience that outside of enrollment and really dive into their engagement without having to be stressed by their annual enrollment benefit. Cause that, you know, that 20 minutes that somebody has to pay for their benefits is big for them. And so, we do that. We did that a lot. So we had a really big strategy around the marketing and the positioning of some of these solutions. And that was our fifth kind of bullet.

Joe (28:29)

‍I see. When you mentioned looking at comparable or competitive, like what competitors, what the market was doing, in my mind, I went to you were looking to make sure that you could continue to attract and retain the best talent.

Given the distribution of vastness of employees, what did you find the frontline workers cared most about that differed from maybe the professional class of employees?

Tom Sondergeld (28:58)Yeah, I think the frontline employees cared about access. Could I go to the doctor close to my home? Did I keep the same doctor? You heard that during the Obamacare ACA days a lot, but that was relevant for us every year. Two, could I afford it? Not only in premium, but in deductible and co-insurance and all the parts that make up a plan that make it effective for somebody to not avoid care.

And so I think that was number, there's their really close together those two. Like can I go to my provider, is my provider available, do I have to change, and is the price reasonable for me and my family for the diseases I'm fighting or for the surgery I might need to have. That is really big for the retail staff versus the professional staff. Professional staff have the income, they usually have the resources, they're usually buying the upper plan to insure themselves against the risk, they don't have big deductibles.

If they do, and they're smart, they're in the HSA plan and they're putting a bunch of money in their HSA and saving it for their retirement, which is what the intention of the HSA is. We try to teach out for the mid market, the mid-size employees, so the pharmacist, the pharmacy tech, people who are making over 90 that really could benefit from either side.

So we kind of had those three populations to deal with, the corporate, more provided staff, the middle staff that are kind of in that mid-career change or senior professional change and then the retail staff or the manufacturing staff that have to run our centers really matter. And we had a huge call center staff. All those many, that's why the 70 % are in that range. They really needed to be focused on cost and access.

And that was the biggest challenge. And a lot of times it was because they might be in a health desert. And how did we work with our insurance provider to make sure that they were covering that health desert, and they didn't have to go 10 miles to see a doctor. So a lot of those were the concerns of that pool.

Joe (30:51)‍

Wow, with the engagement and the enrollment and the communication strategy, which seems to have been a huge focus of yours and thinking about behavior change, how did you structure the communication strategies so that, and maybe what did you find was most effective versus what wasn't as effective as you maybe imagined?

Tom Sondergeld (31:15)

‍Yeah, I think most effective we branded our benefit plan. I mean, we called it we had a name for it. And and we kept that name and it had an image. So people knew that when they saw that name, when they saw that imagery, they knew that it was something they had to pay attention to because it was about their benefits. We did we had a drumbeat. I had a wellness person, their job was to keep the drumbeat going throughout the year. Hey, have you thought about this? This is breast health month. Have you gotten your breast exam?

This is you know, colonoscopy time, let's think about colonoscopies. This is time to think about diabetes. This is time to think about cancer. Did you get a skin screen? All these things. And here's how you get a skin screen for Fiat at Walgreens. And we had all this stuff and we had a monthly cadence that not only went out in ether into our intranet and all that stuff, because some people didn't access it, but also went out to the managers in the stores and they had a five minute meeting with all their employees.

And within that five minute meeting, there was always some benefit thing wrapped in it. Hey, think about Hinge Health this month. Here's how you access it. Hey, have you thought about investing in the FSA? Here's how you do that. All those little messages were always there because we had a constant drum beat for the marketing so that it wasn't just marketing once a year for open enrollment. It was marketing all the time.

The benefit plan stayed in their minds. think MetLife did a study a while ago that looked at how much people buy stuff, right? You spend more time buying a car or buying some shoes than you do buying your insurance from your employer, right? And so we took that to heart and we said, well, we gotta kind of increase that cadence.

I think what didn't go right is...we imposed significant changes on our population in 14 and in 16 that were because we were so focused on cost, we lost sight of the member a little bit and we shoved change down their throat a little bit too fast. And we didn't think about some of the implications of those changes and how it would impact the time that people had to think about benefits, the resources that they had at their fingertips to help them to think about benefits.

So it's why we put in navigation after 16, because we wanted to have somebody to help them with this stuff, because a lot of people aren't experts. I'm an expert, and there are some times when I get lost in the mire of all this stuff. And so it's being sensitive to that that brought us back to a much more member-focused approach.

I think we lost our member focus during those periods of time because we were so focused on cost.

Joe (33:46)‍

Wow, I think the balance between focusing on the member and cost is a hard balance to strike.

Tom Sondergeld (33:55)

It's terrible. I mean, there was one year when we faced some financial challenges due to certain things we had to do. And we were trying to buy Rite Aid, and we just came out of a big merger. And so the CEO and CFO basically came to us and said in a meeting, I need you to figure out a way to bring no cost increase, but no impact to the employees.

Joe (34:17)

‍How did it go?

Tom Sondergeld (34:19)

‍We met the challenge. It was hard. There was a lot of stuff we had to do, but we met the challenge. Some of it was restructuring some of the other supplemental benefits like PTO and, and short-term disability, that got us there. But it, you know, we look at the total package that we're providing to employees. We give them a total reward statement now, and did at the time.

So it was… I think we had a good marketing strategy that allowed us to be able to do that without making it look like we were causing a bunch of change. But we did bring about no changes to the basic structure of the medical plan and the pharmacy plan at no cost increase to the members.

Joe (34:59)

‍Wow, well, congrats.

Tom Sondergeld (35:00)‍

One year, I could never do that for multiple years. That was one year.

Joe (35:05)

‍Well, still, maybe we need you running somewhere in our government, helping reduce the year-over-year increase in costs. But actually, that leads to maybe something that I've been particularly fascinated by… I think you speak with anyone that's working within health care benefits. And there is a sort of siren song around health care is broken. Healthcare costs go up and it almost becomes a just a fact that is accepted and every solution, digital health solution is positioned against healthcare is broken, we're here to fix it. But.

From your perspective, what is broken about health care? Or maybe what are the most important areas for anyone working around health care and thinking about the problem to focus on?

Tom Sondergeld (35:58)

‍Yeah, think, you know, to me, it isn't necessarily the system. I think the system is there because of the root cause of the problem. The root cause of the problem in America, particularly America, there's other countries where it's the same issue… the root cause of the problem is that we're a sick care system. We're not a health care system. We care for the sick. We wait till you're sick until you have all these resources that wrap around you.

You know, I had cancer. You wouldn't believe the resources that were on my fingertips. But prior to that, they let me have diabetes, right? Nobody came to me and said, you should go to a gym. You should exercise more. Here's the right diet you should have because I'm surrounded by crap food, right? It's easy for me to go to McDonald's. It's easy for me to go to Burger King and Wendy's. And so why wouldn't I, right? And no one ever taught me years and years and years the right way to eat, the right way to exercise. And we don't...

do that if you look at countries like Switzerland or Sweden or Norway, they do. They're about health, they're about wellness, everything they do and everything they expose you to through life is about the right way to eat and making sure you take care of yourself so that you don't get these advanced diseases, and they don't have them. They just don't see them, and their healthcare system actually functions fine, and it's not that unstructured from ours.

And so it isn't the system. The system has been built around sickness, right? And not wellness. While we talk about wellness and wellness has been a coin word for years, we don't really do wellness. We don't pay for people to go to the gym. They have to pay $200, $300 a month to go to a gym, right? Or cheap, go to Bally's for 19 and get nothing and no support and be challenged by the bodies that are next to you that are much better than yours. That we just have the wrong image of everything related to health. They do.

So if you look at comparative countries that are doing well around this, their focus is on health and the right way to eat, and the right way to take care of your body, and the right way to exercise, and the right way to engage with your doctor. Because if you don't engage with your doctor, you lose your health care coverage. Right. So we don't do that here. We're so sensitive. We no, you can't demand somebody to go to their doctor because employers can't do that, even though they're paying the bill.

Employers can't say to somebody, if you don't go to the doctor, we're not going to cover you. We should be able to, but because of the EEOC and all these sensitivities around ADA, we can't. I'm not saying that we should not cover these people. I'm saying that people, because we don't focus on wellness, we focus on sickness, the focus is all off. Everything is out of balance then. The healthcare system, providers, who you engage with when you're sick.

When you engage with them, it's all off balance. It's all too far to what I call the right. It's too far to, uh, the, the chronic sickness people who are paying, you know, 80 to 90 % of the claims costs in this country. And so, and I'm one of them. I I'll, I'll be honest. I do think that, that we have to be challenged to be a better society about health. And when we do behaviors change and behaviors follow.

Correctly, this is not something that's going to be solved overnight because again behavior change is not just once behavior changes multiple times cigarette smoking seven to ten times You have to try to quit before you're successful because you're you can't get over the behavior change until you've repeated the behavior successfully multiple times Perchance this model right?

It's perfect for who we are if you look at that to me that is the nut of what we're dealing with in this country. And until we get to the place where we can actually stop just focusing on sickness, we have to focus on sickness, but also focusing on how we uplift the section of our people, 80 % who are well, and make sure they stay there and make sure they have the resources at their fingertips, just like I have resources at my fingertips because I'm sick.

Joe (40:03)‍

Wow, shift from sickness to real health, and the focus on the behavior change. It reminded me of a conversation I had with Dr. Regina Benjamin, who is a previous U.S. surgeon general, and she said to me that the way to fix the health care, like the challenges with health care in the U.S., is to get everyone to…

Tom Sondergeld (40:04)

‍Thank you – to real health.

Joe (40:29)

‍…you know, get out of their couch and have fun and walk. But I think what she was referring to was the behavior change that you were describing where, know, and looking at health holistically, you you describe the pain for the gym membership. I suppose maybe the question then is how do we go from the sick system, you know, a focus on preventative health, and what roles do employers have to play in that?

Tom Sondergeld (40:57)

Yeah, I mean, I think somehow we're going to need to have a conversation across the board about a national healthcare system, right? We can't have these multiple interested parties who are, a ton of financial interest in sickness. can't have them be the ones who are dictating how we go and where we go with our health, right? We have to have a system that supports this methodology.

So we have to start somewhere. I'm not saying that we take Medicare and bring it down to the population. But we do know that Medicare for that population works. It is successful. It has moved the needle. It has kept costs pretty sustainable and it has been able to pass on savings to members.

The others, the ACA, the Affordable Care Act, Obamacare, it works in several states where they are actually leaning into this process. It has been able to sustain costs and even offer richer benefits to members and there's tons of choice, right? The ACA would be a perfect platform to have a national healthcare solution.

It's gonna take time. We gotta figure out how to still engage the interested parties who are gonna have a lot of weight and a lot of say, but we've gotta get there first because unless we get there first, we're never gonna be able to impose and make the behavior change moments happen for people across the board, right? And then it's gonna be a slow crawl.

We're going to have to start thinking about early engagement in sickness. And then we're to have to start thinking about early engagement in pre-illness. And then we're going to have to think about what does your DNA say about who you are and where your family comes from and what risks you face. And then we're going to have to think about health. So there's a step process that we're going to have to follow through, but it has to start with some kind of a national healthcare system where there is some skin in the game for everybody.

And employers, employers, I just don't believe employers should be providing healthcare to their employees. I think that came out of a necessity in the sixties and it grew too fast and it turned into a big balderdash because again, one employer is one employer and they can't fight the system alone. And when they've tried to fight the system together, they can't do it either because they're bound by regulations.

And so I just don't think employers who should be focusing on their business should be focusing on healthcare costs. just, it's, don't, can't impact it. It's almost impossible and they don't have the, the, the strength and the monstrosity to fix it. So I do think, releasing them from that strain might actually let them focus on their business better and not have so many issues with cost because 30 % of your revenue going to something that you can't control is.

If I ever said that to a CFO, Hey, guess what? I have this awesome product. It's going to cost you 30 % of your revenue, and you're not going to get anything back for it. They would kick me out of their office, but yet we do it every single year, and it's not a good solution. So I know I would be pricing myself out of a job, but I do believe that the right thing is to kind of go to a national healthcare system that is something we can all live with. That's very different for the United States.

Joe (44:10)Well, and if it's quite humorous hearing you say… give the CFO example, you know, giving away 30% of their revenue, but…

Tom Sondergeld (44:20)‍

With a 7 % annual increase. With no revenue. Like if I ever came into an office, like a sales leader, and said that they would say, you're fired. What are you talking about? You're going to bring a 7 % increase in costs, but no revenue. Bye. And I would do it every year. I got to do it for 30 years. Every CFO. I'm sorry. That's what the trend is. I can't, and I can't do anything about it – well, you can…

Tom Sondergeld (44:47)

‍And, it's small measures and they're hard to sustain. Just look at Walgreens. went back to the traditional benefit structure because it's too costly. These things drive down employers so much that it just, it isn't beneficial. It's just, you know, focus on 401 (k) and retirement. Don't focus on healthcare. Give them, give employees what they really need, and let the healthcare be at the center of our government because it is a, it's not just a benefit, it's actually right.

Joe (45:17)

‍I love that. And maybe as a last two questions, think technology is uniquely positioned to increase access. We know what great care looks like. It's access that's the challenge. And going back to Philadelphia and the two zip codes just five miles apart, where the average life expectancy difference is 20 years. And this is true of most major cities in the U.S.

What can digital health companies call it virtual care 2.0 over the next decade? From your perspective, what should they be focused on to help bridge that gap?

Tom Sondergeld (45:49)

‍Yeah, or maybe four.

Yeah, I mean, I think, I think if you think about all the needs of that, that group of people that are the most difficult to reach, right? Even, even somebody who has all the tools, like if you were to look at my office, I have four computers, have two phones, I have ultimate access, right. But why am I not using, right? It's really figuring out how to break that engagement nugget, right? What is, what is the thing that you can do?

As I would say this to any point solution or any healthcare digital company that was out there, I've said it to many. What's that? What's our two or three things that you can do that are going to increase engagement and uptake of your solution in any population, right? And how do you segment the populations and how do you help employers communicate with those populations? Cause to me, it's all about marketing. It's all about how you get them involved, how you keep them involved and how you sustain their behavior change.

To me, that's the biggest focus. And I think that's what digital employers could do because I do think that there are some areas of our country that are just gonna always, especially with providers collapsing and going toward hospitals, you're gonna see more and more of those rural and urban areas that are challenged with health centers because they just don't, they're not there and access to them just doesn't exist. And so where are they gonna turn?

And you have to make it easy for them to access as well because their tools are maybe limited. They probably haven't upgraded their phone in four years or they don't have a computer. If they're lucky to have an iPad, it's probably two versions before. And so you kind of have to think about the worst case scenario and build for that so that everybody else is capable above it. think those are the things I would.

Joe (47:40)And maybe last question. Health care is quite personal, I think, for people that work within health care outside of providers, it can often become a spreadsheet exercise or sort of an academic exercise of sorts. at the core of it, to your point across our conversation, that it's really about the employee and the patient and working backwards.

Tom Sondergeld (47:44)‍

Yes.

Joe (48:04)

‍What are some of the things that you're most proud of throughout your journey that you look back and say it was worth the stress and the headaches?

Tom Sondergeld (48:14)

‍Yeah, I mean, think if I look back to my respiratory career, it's the very, very, very sick children and babies that I was able to make an impact on, right? So that's always been very passionate for me. There's one that will stick out my head forever, saved his life. He was dying of sepsis and he was only 10. So, you know, he came back to the hospital a year later after he was released after six months and he was able to walk. Those things bring joy to my mind. So the same thing in my benefits career.

Every employee that I was able to help in the many journeys that I went through and many of them reached out. Those were the ones that made a difference for me. Like even if it was just providing them a benefit that made them feel comfortable and less risky, I found that to be very engaging. So anytime we could do that, I think through the private exchange moments and through the HSA moments and through the point solutions moments, those were always wonderful because

We always caught somebody at a moment when they were desperate or when they were ready to change and they never knew they could change, right? There were people that I've saw lost hundreds of pounds, right? And got out of diabetes and turned healthy because they saw the work that we were doing. There were people we've avoided cardiac disease and because of some of the work we provided them and access we provided them.

And so, some people, a lot of people, quit smoking because we put in some really advanced digital smoking programs that they never saw before. Those all add up and just make me very proud of the work that me and the teams that have worked with me have been able to accomplish for touching multitudes of lives, right? Over the years I've worked, I've been at very large companies, very medium-sized companies, and the lives we've been able to touch, not just the employees, but their family members, right?

There were children that we helped save. There were children that suffered from many diseases and autism that we brought innovative solutions to, and women that we brought fertility to that didn't have the ability to have a baby. And all of those, I could probably write a book of the millions and millions of wonderful things that we were able to do and people we were able to touch.

To me, that's the pinnacle. The savings are the savings, right? I'm proud that we were able to bring some savings to Walgreens and to Aon when they really needed it. And we were able to bring savings to the employee. But in the end, really, because of that employee back or member back approach, everything has been about the impact that I was able to, and my team, mostly my team, were able to bring to the people that we were able to touch every single day. Pretty cool.

Joe (50:44)‍

Amazing. I know we're at time. Do you have a hard stop, Tom?

Tom Sondergeld (50:48)

‍No, I'm good if you want to keep going, so we can cut things. Yeah. Yeah.

Joe (50:50)

‍Two last questions, if you're open.

With ICHRA and a few other sorts of things that are now on the market that weren't on the market maybe even a few years ago, what innovation or…change are you most excited about in the 2020s?

Tom Sondergeld (51:13)

‍Yeah, I mean, the fact that they brought about these individual coverage health reimbursement arrangements, or ICHRAs is really cool. I was proud that they were able to do that. It had been something that many of us in this benefit world were asking for because it gave an outlet for the employer who, with ACA, was pretty strapped, right? We were stuck into a corner. We had to provide these benefits by law. We had to provide the reporting.

This gave us an avenue, right? To say, to an employee or to a group of employees, hey, we're gonna give you this money, but you're gonna get your healthcare out in the market, right? So the ICHRA is amazing. Everybody's afraid to make the move because one, competition requires, unfortunately, in this country, that you provide healthcare coverage, right?

And forcing somebody to go to a controversial care structure like the ACA or Obamacare can be especially in this world where we're very partisan can be difficult because you'll get a lot of pushback and so employers are afraid to use the ICHRA by and far. You'll see in smaller employers dabble you might see some you know tech firms do it because it's it's awesome they can give them a ton of money and they can get their health care for almost free and there is some great options out on the exchange in some states.

And that's the other problem: ICHRA, while it's wonderful, there are some states that just haven't leaned into Obamacare and don't have good options. Right. So I, if I have a fault 50 state employer, like Walgreens was, it would be hard for me to put ICHRA in everywhere because, some people wouldn't find coverage, right. And I'd feel terrible about that.

So ICHRA has some growth things that they need to work with the Obamacare or ACA to improve, but I don't know with the current environment if we're going to even have the ACA around. So ICHRA is kind of in a quagmire right now because we're waiting to see what the current administration is going to do to the Affordable Care Act, which they've said they hate. So that's a challenge.

I do think level funding is very interesting because you are starting to see a huge shift from small employers, usually below 200, who are just really a draft with the price increases they've received in the fully insured space and need to move to self-insured, but can't, you know, too risky. They can't afford the blips like some employers can. So, in cost and so level funding gives them a way for an employer to afford self-insured benefits, go to their own control of what's happening with that benefit, take it away from the insurance vendor who's just charging them triple-digit cost increases every year.

Um, and, really take control. So I think level funding is very interesting. think reference-based pricing is amazing. I think you have to hold, um, providers accountable because what's happened, the balloon has pushed itself out to the employer space, to the private space, the Medicare market, and all of the other markets that are pushing on them for lower costs, um, have pushed. And so the balloon has pushed out to employers, where employers are paying 300 to 500, 600 % of Medicare.

That's ridiculous. Um, the employer market was never meant to supply the whole market with income. So, reference-based pricing says, no, as an employer, we're only going to pay 150 % of Medicare for these procedures. And so I love reference-based pricing. think that's an amazing outcropping that's come out of these cost increases that are just ridiculous. I also think, um, that the reformations of the FSA and HSA world are good.

I think the IRS should continue to make reformations there and a lot more things bringing back, over-the-counter medications and medication coverage, and all that is good. I like that. Keep doing that. And so the more they do that, I think it makes as long as we're going to have employer benefits around. It's great. And then the pressure that's happening on PBMs is awesome. PBMs are middlemen that are sucking the middle out of the cost and just driving cost up. And they actually drive for, drug utilization and drug formularies that don't follow.

Efficacious care, but follow cost care. Right. And I don't believe in that. I think a drug that comes to market that's efficacious should be available to everybody, right. At a reasonable price. And these PBMs create structures of formularies with rebates and no rebates where a drug that could be efficacious that doesn't have a rebate doesn't get to the formulary.

And I think that's horrible. I think reform in the pharmacy benefit manager (PBM) space is necessary and will happen. don't know when, but I think it will happen and I think it has to with all everybody. It's a bipartisan issue. Everybody knows it. I think we're just waiting for the right regulations to happen. So I think those are the four I would call out.

Joe (56:03)‍

And what are your thoughts on GLP-1s?

Tom Sondergeld (56:09)

‍So again, this goes back to behavior change. I'm a big believer that GLP-1s are just targeting a lack of behavior change to get somebody to a place where they're getting using a medical reason, a medical device or medical solution to solve their problem that isn't permanent, right? GLP-1s I don't think are meant to be taken permanently, right? They're a temporary gap stop.

So that you can get some relief from your weight gain and your diabetes so that you can focus on yourself and focus on your behavior change and get to a place where you can control your own weight and diet, right? That's not happening. GLP ones are come to market en masse. If they're covered by the plan, which many are, then it is advocating against behavior change because it's saying, don't worry about what you eat and how you exercise.

Just take this drug once a week or once a day, right? And I don't believe in drug therapy over behavior change. If you're going to use drug therapy to help with behavior change, awesome. And that's what's, that's what should happen. GLP ones should be paired with adequate and responsible diet and weight loss control so that you can come off the GLP one in a reasonable period of time and have the behavior change take over and control your diet and your eating.

I'm on one of them who believes in this. I advocate this for myself. And I think we need to think about this seriously as a country because we're starting because of the development of the happen during COVID. And we learned a lot about RNA therapy. we're going to see a lot of these drugs coming to market that are going to take over behavior change moments that shouldn't. And, and the long-term impact of GLP-1s has yet to be seen. And it scares me. We could have a bunch of zombies walking around. We don't know what it's going to do.

So it worries me that we're implementing drug changes that change your body's reaction to endorphins and certain things that I don't know are natural. And the natural change is better for people than the imposed change. So I'm not a medical doctor. I'm not a pharmacist. This is just my understanding of the market, knowing behavior change, and what should be happening with people's health.

Joe (58:18)‍

And for. Right. Suppose, employers now, are sort of scrambling to figure out how to think about them.

Tom Sondergeld (58:34)

‍Yes, cover it.

Well, and now there's so many disease states that this thing originally came out for diabetes, right? Then it quickly came out for weight loss. And now it's cardiac and anxiety and all these co-morbidities to a disease that's really based on weight and diet control, right? And so I think I always go back to the heart of the matter and employers are trying to figure this out.

Plus they're constrained because the EEOC will say, you can't impose on these people who need these drugs more than you would other people who don't to receive these drugs. Fairness, right? And because diabetes is a illness covered under the ADA, there's also ADA implications, American Disabilities Act implications that you have to worry about as an employer so that you don't force somebody into something that you otherwise wouldn't give.

So now you can't make somebody use a diet and weight loss program if they're taking GLP-1s and hold that conditionally to them. You can give it to them and make it voluntary, but you can't penalize them for accessing it or not accessing it. Right. And so that's terrible. It's a double-edged sword for employers because now they're paying for a service that they can't impose on people. They're paying for a drug that they don't believe is long-term. And so now they can't really find the balance, and employers are struggling. They don't know what to do.

Joe (59:55)‍

From your perspective, what options do employers have?

Tom Sondergeld (1:00:01)

‍I think, I think the option, I mean, I think, I think they should be covered. I mean, these drugs are amazing. I know I've been on them. They can, and they do, bring a lot of control. Because behavior changes are so tough, it gives somebody a pause, so they don't have to worry about the disease. Now they can worry about their health needs. What employers can do then is provide services that complement the drug, and you can't make them mandatory, but make them reasonably easy for people to access.

And see the results. That's the biggest thing. People don't like behavior change because they don't see results. And you know, we in America, we have to see results tomorrow, right? If I join a weight loss thing, I have to see weight coming off tomorrow. And so I wouldn't say you have to be that responsive, but you have to show the member that by engaging, they will get results and they won't have to take this damn drug all the time. That could be expensive as a copay, right?

Especially if they're in a high deductible health plan. So I just think the employer has to think responsibly about the coverage of the drug, paired with the support that's needed with the drug in the right components. There are some point solutions out there that actually wrap the two together and say, you can have the drug and it's paired with this solution. And so you do them together. It's not forced, but it's implied, right? The prescription is not just for the drug.

Their prescription is for the diet and weight loss control as well. Right. And so they wrap it together, and that is probably a better way for us to think about it rather than just the medication itself. Right. So it's a, you know, holistic care kind of thing and saying, this is the holistic program that we as an employer are going to pay for. And this is how you engage to get this.

And then it's not just about the drug. It's about the full suite of care that you're going to need in order to get out of this bad behavioral situation you're in that you've learned over for years and years and most people don't find out they have type 2 diabetes until they're 30 or 40 right they've had 40 years to learn a different behavior they're not going to change that behavior overnight they'll take months and months and years and years….

Joe (1:02:10)
‍My dad is diabetic, and the behavior change is quite difficult. I think that these GLP-1s are such a powerful tool. And I appreciate your perspective around it– it's a tool to kickstart the behavior change. I suppose what impact will this have on like…

Tom Sondergeld (1:02:19)‍

Yes. Yes. Sometime.

Joe (1:02:32)

‍… health care costs or costs for the employer.

Tom Sondergeld (1:02:33)

‍Death. It's already brought a significant cost to bear. And the future costs are high. These drugs are not cheap. These GLP-1s cost a significant amount of money, three, four thousand dollars a month to the plan, right? The member may only pay 20 bucks copay. And so they don't even see the real cost. And so that four thousand bucks goes to the plan, where in the past, you're paying for metformin, which is like 20 cents, right? Nothing.

I probably don't pay anything after somebody pays their co-pay because metformin was cheap, right? And so most people are coming off metformin, but the trade-off isn't as good because now I was paying 20 cents now I'm paying $3,000. So employers are seeing this significantly, and the more diseases that this applies to, the more access that it gives, and the more struggle that employers have, and the price isn't coming down. And access has been a problem. Like a lot of these drugs, they're not available on a consistent basis.

That's been a problem, right? So somebody who's now on the drug and can't get the drug, they rebound and now they have to start all over with the, you know, when the drug becomes available. So that's not good either. So there's a lot of things happening in this area that are really challenging. I will say I am an advocate of drugs when drugs need to be done. Right. And so, for those people who really need it, if I had bad knees and needed knee surgery, Ozempic is going to help me. Right. And that's awesome.

And I shouldn't expect behavior change in that population. If somebody's 70 and they need Ozempic because that's going to save their life for a couple more years. Awesome. Have at it. I'm advocating behavior change for those that can change their behavior, right? Somebody below 60, I'm 61, I still think I'm not an old enough dog to change. So I think I could change, right?

As long as you have the behavior modification skillset, you should be able to at least engage in trying to make the behavior change moment happen. If the drug has to be there, the drug has to be there, right? I don't believe in medication, right? I take a lot of them. I think it's important, but I also believe that the right focus on care needs to be established. Like I don't think somebody who has back pain should take, you know, drugs forever. They should deal with their back pain.

So, a similar kind of scenario where I don't think just because somebody's overweight that they should take Ozempic forever if they have the ability to kind of figure out a way to get away from the medication and still be healthy and not jeopardize their bone structure or whatever they're fighting against. So, I just know I'm trying to be cautious because I don't want to make me seem like a tyrant, but I do believe that, you know, for the people that can change behavior, there should be behavior change capable solutions.

Joe (1:05:19)‍

And maybe as a quick, do you anticipate the increase in cost to be like, because of JLP wants employers to be faster in the or higher, in the upcoming year?

Tom Sondergeld (1:05:26)

‍Yes. Yes. Yes. I predict GLP-1s are going to impact pharmacy costs significantly over the next four or five years until they come off of and become generic available. Yeah. I think, you know, five or 10%.

Joe (1:05:41)

‍How much do you think?

Tom Sondergeld (1:05:45)

‍And that's a lot on drug for one drug.

That's a lot because you know, but by pharmacy costs are going up all over the place. The onset of new generic new biopharma drugs, you know, the cell and gene therapies, which are extra nominally expensive. Those are also driving up a lot of cost and kind of burying some of the GLP one cost increases because these are significant drugs. These are drugs that cost hundreds of thousands, millions of dollars.

There are some cell and gene therapies out there for MS and others that are $2 million, $3 million, $4 million to the health plan. So a lot of this is getting kind of buried underneath the total cost of pharmacy, which is just becoming exorbitant because it used to be about 20 % of the medical spend. So if you had a billion-dollar healthcare plan, it was a $200 million pharmacy plan. But now it's...upwards of 30 % climbing.

Joe (1:06:41)‍

How much was it? What was the healthcare spend at Walgreens?

Tom Sondergeld (1:06:45)

‍About a billion dollars for all the healthcare, including pharmacy... Yeah.

Joe (1:06:49)

‍Wow. Well, and I suppose part of the argument for GLP-1s is that they would, over time, reduce the total cost of caring. But what's the average tenure at an employer, like for employees, long enough for them to realize that?

Tom Sondergeld (1:06:57)

‍Yeah, by impacting.

That's the other problem. And that's why we need a national healthcare system, because the risk pool changes all the time. Because especially at a retail population where you're so variable, retention is, you know, unless you're in a corporate job and a higher-paid job, retention is really low. And you know, it's three or five years, right? And so you don't get a lot of that. And that's the way, that's changing with Gen Z, Gen Z is not staying around long, even in corporate jobs.

And so retention is a big problem in benefit plans because if I pay for something, so for example, if I pay for a gastric bypass for somebody, it's like $60,000, maybe even 120, right? But if they only stay for a year, I'm not going to see the benefits of that hundred, $120,000. That ROI flew out the window the day they left. And so you have to really think about some of this stuff because that is a challenge. That's the biggest challenge is how do I still engage these people so that the right, they feel not incumbent upon the employer, but engaged with the employer enough to stay, so that I can get some of that ROI back, so that retention really makes a difference in the benefit plan.

That's hard. That's really hard to deal with. And a lot of that happens. Like, so if I pay for GOP ones for two or three years, and then you leave me and come off them, I saw no benefit for those thousands and thousands of dollars that went out the door. Maybe, maybe some interim benefit because, you know, healthcare changes long-term, right? It's not short-term.

There are very few healthcare changes that are short-term in nature, because what may have…what might've avoided is insulin costs, which is high. We might have avoided emergency room visits, which many diabetics have to undergo. I might've avoided hospital stays. So, there's a might've avoided, but I don't know for sure. Right. Because I avoided it, but no one can really tell what somebody's three-year plan should be while they're on zip.

So there's some estimates about how much you save per year for these, but the long term is really what you're looking for. And if I can decrease or remove somebody from being a diabetic because of these drugs, then I will see benefit from it, but it's a long process.

Joe (1:09:14)‍

For the retail staff, what was the retention rate? I'm imagining it was lower.

Tom Sondergeld (1:09:18)

‍It was horrible. It was like, I mean, our turnover was in the 40-50% range; that's typical for retail.

Joe (1:09:27)

‍I suppose for that population and for those who are on the plans, given the short tenure,

How can employers think about GLP-1 coverage for them? Or is that just not on the table?

Tom Sondergeld (1:09:38)

‍You can't classify the population for access. Access has to be across the board. And so if you get, if you, if you remove it from the formulary for one, you remove it for the formulary for all. And then, unless they're in a different benefit plan, which is very hard to do, right? Cause then you get into bias and all that other stuff.

I think the challenge is to make sure that you're invoking the right solutions with the GLP-1 so that you at least get some short-term benefit, right? So if I just issue GLP-1s to everybody and say, anybody can have them. It doesn't matter what they are. It doesn't matter which ones they are. It doesn't matter how long they're on it. Everybody can have them, right? That's great.

You're going to see some benefit from it. But if you also pair it with a solution that they can engage in, if they'd like to for weight loss and diet and activity, and a navigator, and all this support, you're more likely to have better results, right? And the person might stay longer because they like to have that benefit. Because once somebody does get healthier, they feel better about where they work. And so you kind of have to look at the long-term strategy to focus on what you need to do now to keep somebody longer and see the better benefit.

Joe (1:10:47)‍

Very last question. You've spoken across, you know, throughout our conversation, at times it's felt like you needed to have quite a strong legal understanding to be effective at your role.

So compliance seems to be a big part of just what you thought about how much of your work was just thinking about compliance and, you know, we've in other conversations have heard about, especially for the know, retail staff where, you the cost of litigation can be quite high. Yeah, curious just to know how was… how did you think about compliance?

Tom Sondergeld (1:11:23)

‍Yeah. Look at the Johnson and Johnson lawsuit, right? I mean, even though they won, kind of, it was a ridiculous, I can't imagine how much it cost them to litigate this all the way up to the, to the appeal courts. I can't imagine. And so I, I, lived and breathed next to an ERISA attorney, right? And  that attorney specialized in healthcare. Everything I did went through the ERISA attorney who was paired with me, even when I was at Aon, Hewitt, Northwestern, or Walgreens, because I'm not a lawyer. I can't interpret all these laws. Certainly, I know them well enough, and I go to coalitions that teach me what they are. And I certainly know my fiduciary responsibility as a benefit leader because it is my fiduciary responsibility on behalf of the company to run that plan.

So I know my responsibility, but to know the regulations and make sure that I'm following all of them, I closely sat by, there wasn't a day that I didn't talk to my ERISA attorney at Walgreens, not a day, even on the weekends, because there was always something we were doing that I needed to vet with them to make sure we weren't going to cross the line in the future or now, right?

Decisions we would make around claims. We had a benefit committee, and the benefit committee heard every appeal and every letter that came in and responded to them appropriately, and the attorney was on that benefit committee. And if I didn't have that support, again, I said this was a team thing, this wasn't me…. If I didn't have that support, I never would have been able to make the right decisions, and never once in 30 years had to go to a court of law to substantiate a benefit change that I did, including the exchange, which made every single press outlet in the country.

We were in the Wall Street Journal, Reuters, AP, all of them. And now that change never was complained about or filed again, grievance, never had a grievance, never had a lawsuit, never had a claim that was denied, that was overturned in a court of law.

Joe (1:13:26)

‍How did that affect you working with selecting the digital health vendors?

Tom Sondergeld (1:13:32)‍

Yeah, I mean, again, always careful. We, the committee, heard that the committee was part of the selection process with procurement, and they would come in and share their products. And we even did some RFPs related to that if it was available, and we made sure that we vetted them and that legal was involved in every step of the process. How much can we push this? How much can we link it to results? How much can we make members pay for it, or not pay for it? How much can we reward them?

Incentives, all legal opinions, and every single time. And so, the best thing I ever had was that I was fortunate enough, through all my years, to have in-house legal representation from my time at Hewitt forward. I always had in-house legal representation, and they were always on my committees and everything we did, didn't matter what it was, including digital innovation, went through them to make sure that everything we were doing around design, function, and requirement was legal.

Important. Effiducity responsibility is partnered as a team, and I can't do it by myself because I can't understand all the laws that exist. They come out like crazy, and white papers come out from the IRS all the time about some of these things. And the CMS makes rules that we sometimes have to follow, even though we're a RISA plan. And so they're, they're, were in Illinois, but something might happen in California. So we got those things. I always relied on the legal team, whom I couldn't say more about, because I would never have understood some of this stuff. It's a law, right? I'd have to be a jurist doctor, and I'm not.

Joe (1:15:08)

‍That's amazing.

Well, Tom, thank you for joining us today. You've given us your experiences, just so rich and your perspective so unique. So I appreciate you making time to speak with us. For those listening who would be curious to learn more, where could they reach you?

Tom Sondergeld (1:15:12)

‍Sure. Happy. It's fun. Yeah.

Yeah. Anybody can reach me at thomas@sondergeld.org, or at my website, ts-consulting-group.com, or at my LinkedIn, either any way that somebody wants to reach me, they can usually find me.

Joe (1:15:42)‍

Amazing. Well, Tom, thank you for making time, and I hope you enjoy the rest of your week.

Tom Sondergeld (1:15:47)

‍Yeah, thank you, too. Thanks, Joe. Take care. Bye-bye. Cheers.

Joe (1:15:50)

‍Thank you.

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