Disrupting The Health Insurance Industry (with Jack Crotty)

This video provides an in-depth exploration of how Adyptation, led by Director of Business Development Jack Crotty, is disrupting the health insurance industry through innovative specialty disease management and pharmaceutical sourcing. Crotty, drawing from his decade of experience in the insurance sector, including time on the carrier and broker sides, shares his journey into the startup world, driven by a desire to bring impactful, disruptive solutions to a system he believes is "craving disruption." The discussion centers on Adyptation's unique three-pronged approach: cost-effective pharmaceutical sourcing, comprehensive clinical support, and data-driven patient engagement via wearable technology, all aimed at optimizing health outcomes and significantly reducing costs for self-funded employers.

Adyptation's core offering begins with pharmaceutical sourcing, primarily for specialty drugs from Canada, which delivers immediate, day-one savings for employers. Crotty highlights instances where this sourcing can lead to as much as a 30% reduction in total pharmacy spend. This substantial saving then strategically subsidizes the second pillar: a robust clinical platform. This platform provides personalized coaching and counseling from clinical pharmacists (Farm Ds) to members dealing with specialty diseases like Rheumatoid Arthritis. These pharmacists guide patients through their journey towards remission, focusing on medication adherence, lifestyle adjustments (e.g., diet, movement, sleep), and breaking down overwhelming health goals into manageable "baby steps."

The third crucial component is the integration of wearable technology, such as Fitbits and Oura Rings, which are provided to members at no cost. These devices track key health metrics like movement and sleep, serving as an accountability tool for both the patient and their clinical coach. The data collected allows pharmacists to have objective insights into a member's daily habits, facilitating more targeted coaching and ensuring adherence to personalized health plans. The overall model is designed to align incentives, offering zero co-pays for members on sourced drugs and free wearables, thereby encouraging engagement and fostering better health outcomes, particularly for self-funded employers with 500 or more employees. Adyptation also emphasizes strategic partnerships with pass-through PBMs to ensure seamless integration and data flow, reducing administrative burdens for brokers and employers.

Key Takeaways:

• Disruptive Business Model: Adyptation's approach to healthcare disruption combines pharmaceutical sourcing, clinical support, and data-driven engagement, challenging traditional health insurance models by reallocating value to patients and employers.
• Significant Pharmaceutical Savings: Sourcing specialty drugs, primarily from Canada, can yield substantial day-one savings for employers, with some experiencing up to a 30% reduction in total pharmacy spend.
• Strategic Funding of Clinical Care: The savings generated from pharmaceutical sourcing are strategically used to subsidize a comprehensive clinical platform, ensuring that cost reduction directly translates into enhanced patient support.
• Specialized Clinical Coaching: Clinical pharmacists (Farm Ds) provide personalized coaching for specialty disease patients, focusing on medication adherence, managing side effects, and guiding lifestyle modifications (e.g., diet, movement, sleep) to achieve remission.
• Data-Driven Patient Accountability: Wearable devices (Fitbit, Oura Ring) track objective health data (movement, sleep), which clinicians use to hold patients accountable for their health goals and provide more informed, personalized guidance.
• Incentivized Member Engagement: Patients are motivated to participate through direct financial benefits, such as zero co-pays for sourced specialty drugs and free wearable devices, removing common barriers to adherence and engagement.
• Target Market for Impact: The model is most impactful for self-funded employers with 500 or more employees, where the 1-2% of the population with specialty diseases generates enough volume for significant cost savings and clinical benefit.
• Importance of PBM Partnerships: Collaborating with pass-through PBMs that offer no-spread pricing and align with a forward-thinking approach is crucial for seamless data integration, efficient claims processing, and overall program success.
• "Robin Hood Effect" Philosophy: The company aims to shift power and financial benefits away from large corporations and back to the individuals and employers the healthcare system is meant to serve.
• Incremental Progress for Health Outcomes: Patient coaching emphasizes taking small, manageable "baby steps" towards health goals, recognizing the challenges faced by individuals with chronic conditions and promoting sustainable behavioral change.
• Broker Education and Simplification: Success in the broker channel requires clear education on the solution's value proposition and simplifying the integration process to overcome the "noise" of numerous point solutions.
• Favorable Market Timing: Current industry trends, including increased focus on transparency (e.g., CAA), fiduciary obligations, and rising healthcare costs, create a receptive environment for disruptive and cost-saving solutions like Adyptation's.

Tools/Resources Mentioned:

• Fitbit: A wearable device used for tracking activity and sleep.
• Oura Ring: A smart ring used for tracking activity and sleep.
• Apple Watch: Mentioned as a wearable device they previously used but pivoted away from.

Key Concepts:

• Specialty Disease Management: A focused approach to care for complex, chronic, or rare conditions that often require high-cost, specialized medications and ongoing support.
• Pharmaceutical Sourcing: The practice of obtaining medications from alternative, often international, suppliers to achieve cost savings, particularly for high-cost specialty drugs.
• Pass-Through PBMs: Pharmacy Benefit Managers that operate with full transparency, passing all negotiated discounts, rebates, and administrative fees directly to the client rather than retaining a "spread" on drug costs.
• Self-Funded Employers: Companies that assume the financial risk for providing healthcare benefits to their employees, paying claims directly rather than through an insurance carrier. This allows for greater flexibility in plan design and the implementation of innovative solutions.
• Clinical Pharmacists (Farm Ds): Pharmacists with advanced clinical training who provide direct patient care, including medication management, disease state management, and patient counseling, often as part of a healthcare team.
• Wearable Technology in Healthcare: The use of smart devices worn on the body to collect health-related data (e.g., activity levels, sleep patterns, heart rate) for monitoring, personalized feedback, and behavioral modification in health management.