122 – How Employers Are Taking Back Control of Healthcare Costs w/ Stu Clark | Premise Health

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[00:00:17] Vic: Okay. Welcome everyone to Health Further. I'm excited today to have Stu Clark, who's the CEO of Premise Health. One of the best stories that not everyone knows about. And I'm excited to have Stu on and tell the story. So Stu, thanks for doing this. Really appreciate it. 

[00:00:31] Stu Clark: Uh, Vic, thanks. I've been looking forward to it.

[00:00:33] Stu Clark: Thank you for your interest. 

[00:00:34] Vic: So as we start, um, You know, we've known each other for a while, but not everyone knows Stu Clark or Premise House, but maybe let's start with your personal background. Um, where, how did you get to Premise and where do you come from? 

[00:00:49] Stu Clark: It's a pretty boring story, Vic. I'm from West Virginia originally.

[00:00:53] Stu Clark: Uh, attended the University of Michigan probably because they hadn't admitted anybody from West Virginia in 200 years. [00:01:00] Um, and, and came out of school, uh, and joined a startup, an occupational health startup just south of Pittsburgh, and that was in 1991. Uh, that company was, was sold to a Warburg Pincus fact company here in Nashville called, uh, Meridian.

[00:01:15] Stu Clark: And so I joined the Meridian team in, in 1996. And, uh, today we're in our, we're currently in our eighth, uh, private capital investment cycle, uh, with this investment. So this is all I've done for 34 years. We love it. Um, we love who we work with, we love who we work for, and we love the difference we're making in healthcare.

[00:01:36] Vic: Excellent. Well, and then let's talk about the premise, uh, origin story. How did, how did Meridian evolve into premise? There's been, as you said, there's been several investors that have done very well and then moved on and a new investor has come in. Maybe pick up the story wherever you want. Like, how did the brand and the current iteration come together to be premised today?[00:02:00] 

[00:02:00] Stu Clark: Well, it's, it's, it's actually quite simple that when we think about the healthcare spend in this country, and, and when I say spend, I'm talking about commercial, uh, the spend that is funded by employers and by. The health and welfare funds of the taps partly unions and so spend right now is as we all know absolutely out of control It's that portion of the four and a half trillion annual spend call it two trillion Well that two trillion is growing at nine to twelve percent a year And so what's happened and it has been happening is that this is now an earnings per share concern For American companies.

[00:02:35] Stu Clark: Uh, but just as importantly, American families can no longer afford healthcare coverage. The premiums are too high, the deductibles are too high, and now we've got a third rail here. There there is a lack of access, at least to primary care. And so the convergence of these factors have really driven, uh, premise over the last five to seven years, but especially in the last three years.

[00:02:59] Vic: Yeah, [00:03:00] and so that dynamic of, um, maybe the CEO and CFO being quite concerned that probably their largest line item for expenses is after payroll is probably healthcare expense. And unfortunately, it's growing at that 9, 10, 12 percent per year in a way that the CFO has almost no control over. Um, and yet, When you're trying to attract employees, health care benefits are a huge consideration and so premise steps in and tries to solve both of those, um, aspects of the challenge with this, uh, the on premise worksite care.

[00:03:45] Vic: Um, but I'm going to call it the wrong thing. So how do you solve that sort of conundrum for a leadership team that wants to give really strong benefits and keep their employees healthy, but also wants to get some handle over this cost? Yeah, [00:04:00] 

[00:04:00] Stu Clark: I think if we back up for one moment, we have to level set with the fact that there are only three payers in this country, Vic.

[00:04:07] Stu Clark: Three. The employer, the Taft Hartley Union Fund, and the taxpayer. That's it. If there is a health plan that is underwriting risk, or if there is a hospital or an ACO model, the bottom line is if they miss that bet, if they miss that risk bet, They're going to call it back in their next premium cycle. So, at the end of the day, there are only three entities that fund health care in this country.

[00:04:32] Stu Clark: In the premise model, we focus only on the employer and the unions, as I mentioned. And these employers have said, look, the health care ecosystem and the lack of alignment Is driving us into a cost structure that is unpredictable and is ultimately making us less competitive, both domestically and internationally.

[00:04:53] Stu Clark: So what we're hearing and we're seeing is that the large employer and the union trust. [00:05:00] are saying, okay, we're now going to directly contract for care. So in your case premise, we need you to stand up eight primary care centers in Chicagoland. And we need for you to do a data analysis on what hospitals have best outcomes, what specialists have best outcomes.

[00:05:16] Stu Clark: And we want you to navigate and own that patient to navigate them to the right secondary and tertiary. Sites so that we get the best clinical outcome, which we know follows with the best financial outcome And so when we have patients attributed to our primary care teams And remember, we have almost 900 centers, 46 states, a considerable part of the Fortune 1000.

[00:05:40] Stu Clark: It's a multi time zone, cross section of American demographics. So it's not like we have a South Florida demographic or a Bay Area demographic. We have an American demographic, which means it's variable. Uh, and so what we see is that our attributed families are thousands of dollars less per year compared [00:06:00] to families at that same employer.

[00:06:02] Stu Clark: We're in that same location who are not attributed to premise. Now that is a sample size of 209, 000 patients, 27 states, 26 employers, 19 different industries, validated by Milliman. So the bottom line is the more primary care you deliver. And if you compliment that with navigation and care management, you're actually going to bend the curve downward, not just flatten it.

[00:06:27] Stu Clark: And that's what our customers have seen. 

[00:06:29] Vic: Yeah, so I want to get to the study and the details of that, because I think a lot of the audience can be really interested in sort of unpacking that study for a minute. But before we jump there. There's sort of three ways that premise works with customers. We have, um, sort of the employer who is, or, or the union that is your primary customer, but then you also have the, the employee or, you know, other, you know, other, uh, site and other.

[00:06:57] Vic: Areas, they're called a patient that that's typically [00:07:00] the same person could be a family member. 

[00:07:02] Stu Clark: It is a family member often. Yes. 

[00:07:04] Vic: And you also have the providers that you are. I think you are hiring directly. And so talk about those 3 different, um, customer stakeholders in premise and how they work together.

[00:07:18] Vic: To drive communication and sort of the best care. Yeah, and then let's get into the study in a second. But I want to make sure I let set the ground table of how it works. 

[00:07:27] Stu Clark: Well, the, the employer, uh, what we explained to the employer and is now generally accepted in our industry is that we need your, your healthcare claims and your pharmacy claims.

[00:07:35] Stu Clark: And of course, we have a big, big data shop here. Very proud of the data organization and the infrastructure that we've built, by the way. But we're able to take claims and we can very specifically recommend a staffing model, hours of operation and service offering or product offering for that particular employer in that location.

[00:07:56] Stu Clark: And so it is very much a quantitative ROI [00:08:00] driven analysis. It's not my primary care doctor is better than yours or we're going to work harder than the local community. This is a data driven exercise. And so we show the employer if we staff it this way, and if you allow us to engineer your benefit design to drive members, employees, and their families into our health centers, then you will get this financial outcome.

[00:08:22] Stu Clark: We also, I mean, we're a clinical organization, so we are monitoring clinical metrics every minute of every day. So. We know how compliant certain teams are with evidence based guidelines. We know whether our provider teams are doing, um, the appropriate cadence with follow up and with, with care navigation and referral.

[00:08:42] Stu Clark: Um, and so, again, with the employer, it's if you spend this, you will get this back. With the employee, it's if you are compliant with our, our care plan, You will get healthier, you will get off these drugs, or you will lose weight, or your hypertension will become under control. Plus, it's less expensive for [00:09:00] the family, so it's free to visit our centers, or it's a very marginal fee that is quite contrasted with what their deductible or copay would be in the community.

[00:09:09] Stu Clark: So they're financially incentivized to come to us. So, the employee and family better care, less expensive. For the provider, You know, last time I checked, doctors and nurses and pharmacists and physical therapists and everybody touch, uh, touching a patient went to school to change lives, not to optimize billing.

[00:09:30] Stu Clark: And so what we have is a healthcare ecosystem that is driven entirely by maximizing billable charges. That's what the whole game is. So the reason we don't have any primary care in this country is people who went into physicians, nurse practitioners who went into primary care. Can't earn a living because the reimbursement levels are too low.

[00:09:51] Stu Clark: Why are they too low? Because the misaligned healthcare system wants those bodies downstream in the expensive diagnostic centers, in the [00:10:00] emergency departments, and definitely in the hospital beds. Maximize reimbursement. That's the game that our customers are fighting against. 

[00:10:09] Vic: Yeah. And let's talk about the premise business model.

[00:10:13] Vic: So you are charging large employer apps And how are you charging them? And how do the incentives work like in order to get away from that incentivized to To get people into higher, you know more cases. How does premise change that so that it is all aligned? 

[00:10:31] Stu Clark: Yeah, well, uh, first of all again to my point around why people go to medical school and nursing school to help people get better We give them that environment So our mandate to the providers is spend as much time with the patient as you need Vic may be coming in for an earache But once you, uh, diagnose and prescribe a solution for Vic, what we need you to do is talk to Vic about his lifestyle and about his family history, if he knows it.

[00:10:56] Stu Clark: And let's begin to unpack what's really going on with Vic that [00:11:00] ultimately is going to cost Vic's family and Vic's employer a lot of money downstream. In the current model, there's, there's so much misalignment, there's no way for a doctor to 

[00:11:09] Vic: get there. A ten minute clinic visit, you can't, you gotta just sort of quickly get them a script and move on.

[00:11:14] Vic: You give them the time and space to have empathy for the patient and listen to what they're going through. And that might mean not, uh, much but build a relationship. It might uncover that both my parents died of heart attacks and I haven't been checked for cholesterol and I need to look at other things.

[00:11:31] Stu Clark: Exactly. Or you could have something going on from a behavioral health standpoint. You know, we have a behavioral health crisis in this country. And we know that if you have a diagnosed chronic condition, and in addition to that you are diagnosed with a behavioral health condition, your claims are likely to be 50 percent higher.

[00:11:47] Stu Clark: So what we've done is we've incorporated behavioral health into our primary care model. And so when we recognize in the exam room with Vic that he needs a referral We're actually going to walk you down the hallway or walk our [00:12:00] psychologist up the hallway Make the introduction and try to get Vic engaged, uh with his emotional and his physical health We're just simply getting better outcomes because we're spending more time Yeah, and when you think about the work we do with healthcare blue book and with cedar gate We're able to navigate within that community to the highest quality most reasonably cost Uh secondary and tertiary sites and so we're owning the whole patient end to end Again, where's the motivation the employer or the union wants that person healthier and when you do that they get less expensive I asked a bunch of ceos in health care recently.

[00:12:36] Stu Clark: I said look got four and a half trillion dollar spend in this country Let's say everybody starts eating. Well hospitals get super efficient technology and ai Take this four and a half trillion to three trillion dollars I looked around the room and I said, which one of you does well under that scenario?

[00:12:54] Stu Clark: Which one of you still has your job in three years under that scenario? The system is set up to [00:13:00] grow at nine to ten percent a year because again There are only three payers and the three payers are not in the ecosystem. They're simply writing checks 

[00:13:10] Vic: That's right, and it is unsustainable which means I think By the definition of the world word that it has to change and what I really the reason I was excited to do this conversation is.

[00:13:24] Vic: We don't have to try to figure out what to do. Premise has already created a many year, maybe decade sort of experience track record of how this works and how it could be better. Um, and what we need to do is just sort of have more people sort of coming in and adopting. Yeah, align systems like this. 

[00:13:46] Stu Clark: Yeah.

[00:13:47] Stu Clark: And so the way that's exactly right. So the way a big customer of ours, any customer thinks of it is we go to them with an annual budget and we say it's going to cost you 10 million to run three primary care centers. And here's what makes up [00:14:00] that cost pay us every month on time. And guess what they do.

[00:14:03] Stu Clark: We have no bad debt. We don't care what the reimbursement rates are coming out of Washington or help, but we don't care. We're paid directly by fortune 1000 every 30 days for operating that center. We have an incentive by showing compliance with HEDIS, evidence based guidelines, pharmaceutical adherence and compliance, and ultimately total cost of care.

[00:14:24] Stu Clark: We can earn higher incentive fees as we save them money. So it's a shared savings type of arrangement. And the way a Fortune 1000 employer thinks about this is, okay, well, if I was spending 5 million last year in the community on primary care in a network, and Premise wants me to spend 10 million for these two centers, But that 10 million is going to save me 5 percent off of my 700 million dollar American total spend.

[00:14:51] Stu Clark: No brainer. So when a CFO sees the quantitative results of what we do, we start launching sites. You know, we launched, we had our biggest year last [00:15:00] year. We launched over 130 new sites, you know, organically. We, we grew it, um, uh, gosh, 16 percent on the top line and nearly 18 percent on the bottom line. And that's on over a billion dollar base.

[00:15:13] Stu Clark: So the demand for what Premise does is unlike anything I've seen in 34 years. 

[00:15:18] Vic: Yeah, and what, I understand it because it, um, it is turning health care into a more manageable kind of department expense line item for the CFO. So like, yes, you're going to maybe reduce the cost of care, but you're also giving them more, uh, certainty.

[00:15:39] Vic: It's going to cost 10 million dollars to run these clinics. And you're going to give them monthly reports of how it's going and in return, they're going to pay you on time. And then you together are sort of working on this bigger overall health budget and trying to make savings and get better care delivered through that process.

[00:15:59] Stu Clark: That's right. [00:16:00] We are after total cost of care. We can often replace a number of the point solutions that these employers have brought on that nobody's using. There is point solution fatigue to a degree. I've never seen it. Uh, you hear CHROs talking about 20 and 30 point solutions. Well, we can immediately replace half of those just as part of our embedded primary care behavioral health, what we call advanced primary care model.

[00:16:24] Stu Clark: So they can eliminate the cost of the point solutions and they get more engagement, uh, and and it's just a better outcome. Yeah, 

[00:16:31] Vic: I'm 

[00:16:32] Stu Clark: a 

[00:16:32] Vic: VC, right? So if there is something that is a new approach, you could test it in 1 center of your 1000 centers. And then it either really improves care at lower costs, or it doesn't, and now you have a much more clinically validated decision tree to work on, as opposed to just the bright, shiny object.

[00:16:55] Vic: Let's add that to the benefit plan. Next thing you know, you have 500 different point [00:17:00] solutions. 

[00:17:00] Stu Clark: Yeah, I mean, point to a point solution for a chronic disease that's actually worked. There may be a couple, Vic, I don't know, but I haven't read a single hard quantitative ROI actuarially validated study that says for diabetics, if you use this point solution, your A1C stabilizes at eight or less for the next three years.

[00:17:21] Stu Clark: I haven't seen it. And so the large employer and union organizations are calling monkey business on all this and we're just getting back to basics. If you spend 10 on primary care, you're going to spend a lot less on your 700 of total cost of care. And no one else is doing that in the ecosystem right now.

[00:17:40] Stu Clark: It's all about how do I maximize reimbursement? 

[00:17:45] Vic: Which is, which is directly counter to what the employers and the patients and even the individual providers really want. 

[00:17:54] Stu Clark: Exactly. Well, first of all, who, you know, as I think Warren Buffett said, show me where the incentives are and I'll show you where the [00:18:00] behavior goes.

[00:18:01] Stu Clark: Well, if you don't have risk and you're making fees off of total spend, then you want total spend to go up. I don't care what your carnival barking says on stage, the bottom line is You're incentivized for your customer to spend more money. 

[00:18:16] Vic: Yeah, that's, that's the thing that no one talks about that is abundantly clear to me that you've been saying is no one takes risk more than 12 months in the future, period, in the system.

[00:18:28] Vic: There's no one that does that except for the employers and, and the government, I guess. And so what you're doing is giving is sort of aligning with those actual, um, groups that are responsible for the multi year cost of care. And then helping them navigate that starting with primary care where you can have the most influence.

[00:18:50] Stu Clark: That's right. So if you take, uh, an MSA like DFW or Orlando, and we have big customers in both of those those areas, when we tell a [00:19:00] certain hospital that we're going to move 90 percent market share of the largest employer in that area to their hospital. But here are the rules of the game. Guess how much they push back?

[00:19:12] Stu Clark: Not at all. Because they only have 10 percent of that customer's market share at the moment. So, I mean, our physician's ability to navigate is the heaviest hammer, biggest lever that there is in cost control in that local community. We simply will shut down referral to any institution or specialist that is not going to adhere to our quality requirements.

[00:19:34] Stu Clark: Our NPS requirements for our patients and ultimately our cost requirements. Yeah, and We're going to build an alternative health plan and you know, it reminds me Of saying I think gandhi said it, you know first they ignore you Uh, then they laugh at you Uh, then they fight you and then you win and so when I say premise is going to get into the health plan business They were ignoring us.

[00:19:59] Stu Clark: Now they're laughing [00:20:00] at us. What I mean by this, we have two pilots right now. Two major Fortune 1000 customers. You can have your typical buka plan, and your 300 out of pocket every paycheck, and your 7, 500 deductible. 7, 500 deductible. Or you can have the premise health plan. It's much cheaper against your, uh, uh, paychecks.

[00:20:20] Stu Clark: So call it 100 instead of 300 or 350. No copay, no coinsurance, no deductible, none, zero. And so what happens is you have to get your primary care at premise on site, near site, or virtually. And then when we refer you to that orthopedist or that neurologist, That's where you go as long as you stay in that network Which is a subset of the larger health plans network, by the way So that we're not messing up the economics And so the premise doesn't have to directly contract in every community if you stay in that network I mean instead of paying nine thousand dollars a year per family toward your 25 000 that it costs to underwrite It's it's some small [00:21:00] fraction of that.

[00:21:01] Stu Clark: So We're getting into the health plan business and, you know, it explains why we don't get holiday cards from Health Plan, Inc. and PBM, Inc. and Hospital, Inc. That's why you don't see me much. I'm actually afraid someone's going to take me down and back out. 

[00:21:14] Vic: Well, and you're actually working, delivering the value to your customers as opposed to talking about it.

[00:21:19] Vic: So, um, yeah. And then is there an opportunity to, um, have premise be my home or the employee's home for health care? And then I might switch jobs. But I could, I could stay with Premise if you're with that new employer too. Is that on the roadmap or is that a possibility? 

[00:21:39] Stu Clark: If both employers in that scenario, Vic, are participants in our health center, then absolutely.

[00:21:46] Stu Clark: What we will never do, ever, ever, ever, is bill fee for service or take some crappy primary care cap rate. That puts us into the same category as every other primary care provider, which is do as little as possible. See [00:22:00] as many people as possible. Uh, and volume, volume, volume, up, code, up, code, up, code. We're never going to play that game.

[00:22:07] Stu Clark: We're going to get paid directly by the entity at risk for the cost of our operations. And we want the ability to earn upside when we make people healthier. 

[00:22:16] Vic: Well, so let's talk about the Millman study that you did with Millman now, because I think that's a good place to go. And then my belief is that as people start realizing the savings per member per year that we'll talk about right now, and then also the, just the satisfaction levels of the patient, of the customer employee, of the doctor, that you're going to get more and more of the S& P 500 as customers, where I could then move back and forth because premises come everywhere.

[00:22:45] Vic: But before we get there, you did this study and you've done a couple of different years, but the last one got published in October and just discuss the study because it was very detailed. And I want to, you know, I have a lot of, uh, healthcare insiders that are listening. So I want to spend like [00:23:00] 10 minutes, like talking, how did you design the study?

[00:23:02] Vic: How'd you make sure you had apples to apples? And then let's talk about the results. 

[00:23:06] Stu Clark: Yeah. So we, we embarked on this particular study that, as you pointed out, was updated last October, um, I don't know, four or five years ago. And it was a result of our exhaustion with the claims out there by entities that they were saving the employer or the union's money when we knew that they weren't.

[00:23:23] Stu Clark: Just because you reduce your episodic cost does not mean you're saving them money. Just because they're avoiding cost doesn't mean you're saving money. The only way to save money in healthcare is to make the patient healthier so that they spend less money on stuff in the ecosystem. Yeah, 

[00:23:38] Vic: you need to move them to, uh, healthier living, maybe maintaining their, managing their chronic disease better, not having these, uh, adverse events because they're healthier.

[00:23:49] Vic: And then that results in less cost. 

[00:23:52] Stu Clark: Exactly. So with the Milliman study, we, we approached Milliman and said, look, we've got a significant sample size here. We've got a great cross section of the [00:24:00] U. S. We've got a great cross section of American industry. We've got the data. Um, here's our approach. And of course, we have data scientists on staff here.

[00:24:08] Stu Clark: And, you know, so we've, we've always been a quantitative shop. I mean, if you can't, you 

[00:24:13] Vic: could do it without Milliman, but, but having Milliman overlook it gives you so much more credibility. 

[00:24:18] Stu Clark: Yeah, and it separates us from the carnival barkers out there. So again, we went to Milliman and said, here's our approach.

[00:24:24] Stu Clark: They had some suggestions around risk adjusting exactly, you know, the actuarial processes. Uh, and so we went back, did the study, as you said, the most recent size was 209, 000 patients. And I think I said, 27 employers, 26 states, 19 different industries. And again, all risk adjusted good housekeeping stamp of approval.

[00:24:46] Vic: Just to repeat that 200, 000 people. This is not a cherry picked. population. It's a large, across 27 states, a huge, you know, diverse population of people. 

[00:24:56] Stu Clark: Yeah. I mean, from Manhattan to the panhandle of Oklahoma. 

[00:24:59] Vic: [00:25:00] Yeah. 

[00:25:00] Stu Clark: Um, you know, Everett, Washington to Miami, that's where our customer base lives and everywhere in between.

[00:25:06] Stu Clark: So yeah, Milliman was excited to participate just because of the cross section and the sample size. And they 

[00:25:12] Vic: love the data, sure. Yeah. 

[00:25:14] Stu Clark: And so I, Vic, I didn't believe these numbers when they were presented to me. So I was like, no, I, I want to hear from the data scientists and the actuary. So, you know, tell me when I can show up and where, but I'm just not buying what I'm looking at right here.

[00:25:25] Stu Clark: It was too good to be true. You know, when we have the 30, when we have the 30 percent of our patient population, the sickest part of our patient population. So the comorbid diseases, they've been unhealthy for a while when they are attributed. For primary care pharmacy and behavioral health and care management, meaning we tell them where to go in the community.

[00:25:46] Stu Clark: We save 8, 000 per person per year in that cohort. When I say save, that is compared to somebody who is equally as sick. Working in that same factory, or in that same [00:26:00] building, in that same town, same medical community. So it is truly an apples to apples comparison. You're either attributed to premise, or you're not.

[00:26:08] Stu Clark: And if you are, you're anywhere, and that's on the high side. Yeah, so if you're not, 

[00:26:13] Vic: you cost 45, 000 or something. And if you are, you cost 30, 000, 

[00:26:20] Stu Clark: yeah, or 5, 000, or whatever. Uh, but what we have found, so that's the sickest 30th, 30%, what we found is if healthy guys like Vic and Stu attribute to a premise primary care doc, you're going to be 2, 000 less.

[00:26:35] Stu Clark: Per year per person compared to people who also work in this building that are not attributed. Yeah So all we have to do is lay this out for this Piece 

[00:26:48] Vic: that I Am still getting my head around like the the the you know multiple chronic disease very sick very expensive I can I understand how you [00:27:00] can drive significant savings there, but the healthy People saving 2, 000 a year is a significant amount of money.

[00:27:09] Stu Clark: Well, and there's no copay or no deductible. I mean, you're actually, they're going from 9, 000 on average a year per family down to, again, in some cases, a very small fraction of that. So, you know, it's, it's one of those things where, um. C. H. R. O. S. And C. F. O. S. Have come up over the last 25 years knowing all the understanding.

[00:27:32] Stu Clark: Well, there's nothing I can do. I'm using one of the big three consultants. They're telling me I'm doing best practices. I've launched all these point solutions. I've got all these direct contracts. Okay, wham, plus 12 percent next year. 

[00:27:43] Vic: As soon as you say I'm using one of the consultants, I stop listening.

[00:27:48] Vic: Because, because that is the, uh, problem. They are paid in the wrong incentive structure, and they're not incentivized to cut your spending down dramatically with some new thing. 

[00:27:59] Stu Clark: [00:28:00] Well, I would say that's true for every piece of the ecosystem. Which one is incentivized to reduce the employer's cost? 

[00:28:08] Vic: Yeah, nobody.

[00:28:09] Stu Clark: I don't, I don't know of a single step in the ecosystem that's incentivized to do that. Because again, even the risk based contracts, they're going to retrade them next year. Right. If they lose the bet. And what's the employer going to do in Southeast Michigan? Uh, they don't have much choice. Yeah. So they're just going to pay up.

[00:28:26] Vic: Uh, no. It looked, when I read the study, and we'll link to it in the show notes so people that want to really dig into the details can actually see the, the full study. But I thought there were two really critical aspects that I want you to comment on. The first is the benefit design and sort of encouraging engagement and allowing Fremis to engage with those employees.

[00:28:46] Vic: And then the other is sort of that there's a, you talked about it, sort of the holistic care of primary behavioral pharmacy care management all wrapped together. Yeah. 

[00:28:57] Stu Clark: Yeah. And so there's a virtual and digital part [00:29:00] of this. I, what I found interesting and you and I lived through this, Vic, you know, 4 years ago, um, everything was going to be magic, you know, as a result of COVID and the relaxation of interstate practice guidelines.

[00:29:11] Stu Clark: Um, you know, didn't need humans anymore touching patients. It was just going to be magic. It was going to be data driven and it was going to be high tech and everybody was going to get healthy. Well, that ended in tears as investors, as management teams, and as patients ended in tears. What we know at premise is that there is a Goldilocks balance here between bricks and mortar on site near site in the community, but also 24 7 virtual as well as digital engagement tools to make sure Vic understands that there is a free appointment with his name on it at 2 o'clock tomorrow afternoon because you haven't had a physical in 2 days and make it super easy for you to engage with that health center.

[00:29:53] Stu Clark: digitally or or physically. And so I think what's been lost is it can't and you can't just be bricks and mortar [00:30:00] because we live in a digital and a data driven age. But there is this Goldilocks balance. And we've got a number of companies right now in this country that did this all digital play for primary care that got no good outcomes, frustrated customers, frustrated investors.

[00:30:15] Stu Clark: And now they're looking around to find some way to solve for this on the ground. Primary care access issue, because guess what? A network play doesn't work. You can't hold the doc and the providers accountable in a network. They have to be a W 2 employed employee of yours like they are here at PREMIS. So, you know, we're about ready to go through this big adjustment.

[00:30:35] Stu Clark: One last anecdote here. By 2035, there will be a deficit of 65, 000 primary care docs. So, we're not headed toward a crisis. We're in one, and it's about ready to become Armageddon because, again, you can't fix everything virtually or digitally. You've got to have a primary care provider kind of at the wheel.

[00:30:59] Vic: So, so let's [00:31:00] talk about that because that is, um, part of one of the ingredients Premise needs to grow is being able to hire enough providers. Of course, you have to get customers too, but with these, with these results, I think the customers will be. Um, you got to sell them always, but they'll be interested customers.

[00:31:17] Vic: That provider source, it takes a while to make a primary care doc, and if they're not already in the pipeline, then probably you're not going to come out before 2035. So how do you think about that, um, sort of supply of providers for what we need? 

[00:31:33] Stu Clark: Look, recruiting primary care providers right now is, is not easy by, by any measure, but I think it's easier for PREMIS.

[00:31:40] Stu Clark: If you look at our days to fill, you look at our retention rates. So, days to fill for a boarded family practice doc at PREMIS is something like 78 days. Our retention rate for all providers, so that's docs, nurses, nurse practitioners, pharmacists, physical therapists, behavioral health specialists, is under 10 percent annual [00:32:00] turnover, which is, you know, it's about 60 percent of the 

[00:32:03] Vic: rate.

[00:32:04] Vic: Right. Yeah. I mean, that's much, maybe that's way better than anyone else in the marketplace. Well, 

[00:32:08] Stu Clark: we give them an environment that they actually, You know get gratification from you know, you let them deliver empathetic care to patients Exactly and then pay them a good salary and give them some incentives for quality and and for uh health outcomes 

[00:32:22] Vic: Yeah 

[00:32:22] Stu Clark: Oh, well, so you lay that out for a doc Working for a hospital or working for a health plan or working for a large group practice where it's a treadmill And they're being measured quantitatively on volume and coding.

[00:32:35] Stu Clark: You make that offer to them and guess what? They have to think about it for two seconds. And so we're a, we successfully recruit away from the standard primary care centers, uh, in the community. 

[00:32:46] Vic: Okay. 

[00:32:46] Stu Clark: And then it's getting harder. I mean, they're just like you said, there are fewer and fewer of them out there.

[00:32:52] Vic: Yeah, and then maybe you can deliver care with a, with a, uh, a group of providers. You have a primary care doc, but you also have [00:33:00] extenders, nurses, maybe you have some behavioral health, maybe a dietician, pharmacy, a variety of clinicians that collectively can service the whole employee base or the whole customer base.

[00:33:12] Stu Clark: That's correct. The, the, the logic is simple. How big is the population that we're serving? What are the traffic patterns? Is it Manhattan or is it Wichita? Um, what do the claims indicate are the disease prevalence and acuity, uh, in, in that population? Uh, and then you design a staffing model around that which begets the physical footprint.

[00:33:32] Stu Clark: And then you look toward the future with that client and say, Look, we need to think about the roadmap over the next three to five years. Maybe we go ahead and build an extra 3, 000 square feet, you know, in case we need to extend our behavioral health or, or our MSK offerings. But yeah, of our 6, 300 employees, uh, 5, 000 are clinical.

[00:33:52] Stu Clark: And so, um, and that's obviously growing at a very fast rate as these centers come out of the ground. 

[00:33:57] Vic: Yeah. So let's, let's talk about the scale of [00:34:00] PREMIS. You're a privately held company, so, so I know it is not a lot of detail, but something like, uh, and these numbers might be dated, but 850 primary care centers and pharmacies Yeah.

[00:34:13] Vic: Not quite a thousand, but a significant number across 46 states. Something like 400 clients? Yeah. And growing, uh, it went by too quickly, growing at 15, 20 percent a year? Yeah, 

[00:34:27] Stu Clark: we're at, uh, around 16 percent on the top line and a couple points higher than that on the bottom line. We came out of, yeah, we came out of last year at a 1.

[00:34:37] Stu Clark: 5 billion run rate, revenue run rate. And we've always been profitable, Bick. I mean, why be in business if you're not profitable? This whole thing of, oh, we're going to get path to profitability on a pro forma adjusted basis three years from now. Okay. How'd that end? In tears. The way Shannon Farrington and I look at this is, it's really simple.

[00:34:54] Stu Clark: Remember, I'm from West Virginia. Cash in, good. Cash out. [00:35:00] Bad and that's how we've run this business for 30 years and we've made money every single year 

[00:35:05] Vic: Yeah, and shannon is your cfo right just for people that don't know 

[00:35:08] Stu Clark: and she's so much more than that shannon Yeah, we've been business partners since 1996 and and she's an incredibly, uh deep strategic thinker and I don't make a big decision without shannon Um, um agreeing and aligning with me on it.

[00:35:24] Stu Clark: She's been a wonderful business partner 

[00:35:26] Vic: And so as you think about where premise is headed over the next one to three years, you talked about the opportunity, whether you pick up on it or not, opportunity to do some kind of version of a premise plan, better aligned compared to plans that are out there now, where are you going to take the business?

[00:35:44] Vic: What is in the future? What you would be looking for? 

[00:35:47] Stu Clark: The advanced primary care space has a TAM of about 15 billion, according to McKinsey. I think that number is directionally right. The health plan business is a TAM that's in the hundreds of billions, [00:36:00] and that's if you look at it on a conservative basis, and so, um, our view is, we just want to erode maybe 25 or 30 percent of a 400 billion TAM, um, that's gonna keep us busy, uh, for a couple years, uh, and, you know, as it relates to capital, You know, we've got lots of fun ways, uh for use of proceeds around here So we'll see as we build out health plan as we build out more health centers We're constantly looking at you know, what requires capital.

[00:36:31] Stu Clark: Um, you know, how do we finance that but it's a very capital light model I mean remember the customer funds all of the bricks and mortar. So our capex annually is is tiny. Uh, we're not in the real estate business. That's, that's another thing that I've never quite understood. So, 

[00:36:47] Vic: yeah. And are you, so you already are managing the patient population through the primary care centers.

[00:36:54] Vic: You're already referring them to the, to the highest and best place for them to [00:37:00] go. Highest quality and lowest cost, which usually is one place in healthcare, which is great. Um, are you, do you do things like adjudicate claims and process claims or do you have to add that in order to be able to, and do you have a, have your own network or are you using the employer's network?

[00:37:16] Vic: Because that's how I think of a plan. A plan basically is the doc network and claims processing. That's kind of what they do. 

[00:37:23] Stu Clark: Yeah. Um, you know, from an RCM standpoint, we've got a full RCM department here. So we bill now. Remember, we're not collecting revenue from Buka or from PBM. We're simply logging claims, but not for reimbursement because again, we're paid directly by the employer on a monthly basis for costs.

[00:37:43] Stu Clark: Yeah. 

[00:37:44] Vic: They have an ASO in the premise. They have an 

[00:37:48] Stu Clark: ASO. And so what we will do is we will take that ASO network. We will lay on our analytics and say, okay, it's those two docs at TOA, not 20 of them, those two. It's those two docs at [00:38:00] Urology Associates, not 15 of them, those two. Babies to that hospital, hearts to that hospital.

[00:38:06] Stu Clark: And, but we keep it within that ASO network, so there's no financial penalty. Uh to the the employee and family we're just simply navigating them to the highest quality docs and that 

[00:38:17] Vic: Existing doc network that the employer has established with their aso Uh, I guess partner then you're picking out the docs within that that have the best 

[00:38:28] Stu Clark: Right.

[00:38:28] Stu Clark: So we've got a press release coming out, uh, soon, and it'll be out probably by the time this podcast publishes, uh, with a company called Centivo. And Centivo is a TPA, um, and we have launched two pilots, as I said, alternative health plan pilots with Centivo serving as that TPA. So they are doing the adjudication.

[00:38:48] Vic: Yeah, so they're bringing those assets. They're bringing the number in those assets. Yeah. 

[00:38:52] Stu Clark: And so if I imagine premise in five years, instead of 850 plus clinics, we have 2, 500 [00:39:00] or 3000. They're all exclusively dedicated to large employers and unions. And we've got a single TPA partner or several, or we go buy one.

[00:39:10] Vic: Yeah, or you've acquired one of your partners or built one. I mean, they're not impossible to build or buy. Yeah. 

[00:39:15] Stu Clark: Exactly. I'd rather buy, quite frankly, at this scale. I don't know that I have, I don't have enough years left on this planet to build one. Uh, but we can certainly go buy one and, uh, and offer a fully integrated health plan offering.

[00:39:27] Stu Clark: Again. Advanced primary care as tip of sphere. That's what this is all missing out here is there's no primary care And there's no accountability for where in the heck the patient's going. 

[00:39:37] Vic: They're 

[00:39:38] Stu Clark: on their own 

[00:39:40] Vic: Yeah, I mean it's it's incredible to me that no one else is Chasing you down and trying to compete in this space because it's so obvious that this is the best way to deliver that employer sponsored or union sponsored care.

[00:39:56] Vic: Now, government sponsored is a whole different animal. But, but this is a [00:40:00] huge, like you said, it's a, something like a 2 trillion annual spend. And it, it can be much better managed, as you've proven with your Millman study. 

[00:40:09] Stu Clark: Yeah, I mean, look, where there's chaos, there's opportunity. And if you take 2 trillion as a percent of the total GDP, we're around 10%.

[00:40:17] Stu Clark: There is absolute chaos within that 10%. All we want is 1 percent of it. That's it. That's all we ask for, uh, for the holidays, right? Is 1 percent of that. Well, so what is that? What size is premise at that level? Well, we go from 1. 5 billion to, I don't know, 10, 12. 15 billion. I mean, again, I have a pre dial election for the private capital markets.

[00:40:40] Stu Clark: I'm an introvert. I don't do well, uh, with analysts. Yeah, well, and the quarterly cycle is hard. I mean Look, I can't think in quarterly timeframes. I can't even think in one year timeframes. So, my view is, uh, as we find a need for proceeds and capital We're going to find the right capital [00:41:00] partners that are properly aligned with us and we'll keep rolling.

[00:41:02] Stu Clark: I mean, we've done this eight times in 34 years. Yeah. I'd like to do it another five times before I check out. 

[00:41:09] Vic: Okay, excellent. Well, I'm excited about that press release. Anything else that we should touch on? Maybe give people a hand up. I'll have the study in the show notes just below where you're listening right now.

[00:41:19] Vic: But should they hit the website? Is there somewhere else that you want to point people to learn more about premise? 

[00:41:24] Stu Clark: Yeah, sure. It's a website has everything on it, including the study and it is premise help one word dot com. 

[00:41:31] Vic: Uh, 

[00:41:31] Stu Clark: and there it will show you obviously where we're headed strategically and what our product and customers.

[00:41:36] Stu Clark: Yeah, 

[00:41:37] Vic: someone wants to become a customer or come to work with you or learn more. That's all on the website. They can find it 

[00:41:43] Stu Clark: on the website. Yes, we are. We are growing both customers and work. I think we have 500 open positions today, Vic, so we're in the, we're in the talent acquisition business around right now.

[00:41:55] Vic: Okay, good. Well, I think my audience, maybe we can fill three or five of those positions for you. [00:42:00] 

[00:42:00] Stu Clark: Okay, great. I look forward to it. 

[00:42:02] Vic: Okay, Stu, thanks for doing this. I know how busy you are. It's a fun time and premise and a lot of, uh, patience to help. So, uh, appreciate it. 

[00:42:09] Stu Clark: Vic, uh, I'm honored. Thank you very much for your interest.

[00:42:12] Stu Clark: Appreciate it.