Speaking and Communicating Podcast

The leading cause of bankruptcy in the United States is medical bills.

But here is the really profound thing, is that of those that file for bankruptcy because of medical bills, 75% of them actually have health insurance.

Welcome back to The Speaking and Communicating Podcast.

I am your host Roberta Ndlela.

If you are looking to improve your communication skills, both professionally and personally, this is the podcast you should be tuning in to.

Communication and soft skills are crucial for your career growth and leadership development.

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Now, let's get communicating.

Now, let's get communicating with our guest today coming from Florida.

His name is Donovan Pyle.

He is a health insurance whistleblower who helps executives to save their people, their businesses, and the economy.

He is here to show us how if we were to restructure the healthcare system, it will benefit not only the companies, but people as well.

And before I go any further, please help me welcome him to the show.

Hi, Donovan.

Hi, Roberta.

It's great to be here.

Thanks for having me.

My absolute pleasure.

Welcome.

Please introduce yourself to our listeners.

Sure.

So I'm Donovan Pyle.

I'm the CEO and founder of Health Compass Consulting, which is a management consulting firm that specializes in helping mid-sized businesses finance and procure healthcare more effectively for their employers.

And beyond that, I'm the author of a book that's coming out in November of 2025 called Fixing Healthcare, How Executives Can Save Their People, Their Business, and the Economy.

And then I'm also a Senior Advisor at the Validation Institute in Boston.

It's great to be here.

Thank you for being here.

Fixing Healthcare, especially in the American context.

Now that's going to be a very huge assignment.

Why out of all things you could have tackled, this is the one thing you decided was going to be your life's mission.

Really, I wasn't looking for it whatsoever.

It just kind of landed in my lap, like so many things in life tend to do.

I tell people it's kind of like the matrix.

Once you see it, you can't unsee it.

Once you see the system and all the misalignment and all of the waste and corruption, you just can't unsee it.

And so I really felt obligated to pursue this and solve these problems for employers, for employees and for communities.

So once you see it, you can't unsee it.

As a South African who has lived for a number of years in America, one of the first things I noticed was obviously the differences in how health care in America is towards people.

For instance, the cost.

I had never heard of a country where people actually filed bankruptcy because of hospital bills.

That was a first for me.

Where do you think the problem started?

Yeah, well, there's a lot to unpack there, but one note on your comments and that it's really profound that you're right.

The leading cause of bankruptcy in the United States is medical bills.

But here's the really profound thing is that of those that file for bankruptcy because of medical bills, 75% of them actually have health insurance.

What?

That's even more confusing.

Yeah, even in the Post-Affordable Care Act world, which was implemented in 2014, the notion was that, well, if everybody was just covered, then they would be able to access care and afford health care itself.

But it's really not proven out to be true.

Right now, in the current state of things, we have many employees and families who are on high deductible health plans.

And according to the latest federal reserve statistics, they're saying that I think around half the country doesn't have $1,000 in savings for an emergency.

So you have a $5,000 deductible, but you only have $800 or $1,000 in savings.

That's going to put you in a pretty bad spot.

So we need to transform how we're purchasing and financing health care in this country.

And employers actually play a really big role in doing so.

And that's really the channel that I'm trying to pursue and help with.

That whole deductible or what do they call it?

Co-pay?

Yes.

That's insurance jargon, yes.

Let me give us an African example.

One of the most popular health care companies here is Discovery.

A bit steep price-wise monthly, they'll tell you, okay, Donovan, you're going to sign up for the first six months.

You're not going to have this disease.

We're not going to cover this.

And then after six months, everything is covered.

Your hospital, you can lay there for however long, doctor, whatever chronic disease you have, everything is covered and we don't pay extra.

We already pay per month.

What's the extra?

What's the deductible?

What's the co-pay for?

Yeah, it's a fascinating thing.

It's funny how these plan designs and terms and jargon just become kind of institutionalized.

Health insurance is only 90 years old.

It doesn't have to be this way forever.

But to answer your question, why do we have out of pocket expenses in the United States?

I think the notion is that we want people to have, quote unquote, skin in the game.

We don't want people to overuse services.

There's been a lot of unintended consequences as a result of these legacy plan designs.

You don't have to use that kind of a plan design, but that's the traditional way of structuring an employee facing plan design.

Yes, I do understand the abuse part.

Like, for instance, I think ours will have a hospital portion and a GP portion, because you go to a GP if you have something not so serious that you need hospital attention.

They call that the savings portion, which means you can't go to a GP every month just because you have a headache, take an aspirin or something, because that portion, if it finishes by June, you will have to pay the general practitioner out of pocket until the end of the year, then 1st January, you have a new savings budget, so to speak, also so that you don't abuse the system.

But back to that whole thing of being on a plan.

Secondly, what I noticed in America, which was very different from here, was there's a lot of denial of claims.

Is there a reason for, I've never seen so many claims being denied.

There has to be something very serious because like I said, at the beginning, you will know the reasons when you sign up, why your claim will be denied in future.

So if you just stick to that, nobody's going to deny your claim.

Why so much of claims being denied in America?

Yeah, it's really a challenging topic.

In America, we have what I call the surrogates.

We have these insurance companies that act as a, they're kind of a surrogate in between, they're a third party in the room that kind of sits between the patient and the physician.

I think it's inherent whenever you have someone else paying for something, they're going to want to make sure that they're getting value for that payment and it's not being abused.

To some degree, it does make sense that physicians need to say, and if we're going to have this structure, that physicians need to say, okay, here's what we're doing and why.

But I think it's gone too far in that it actually undermines the health of the population.

So yes, physicians who spend 30, 40% of their week on paperwork, adjudicating and filing for prior authorization is a big part of their office's workflow.

And lots of them are delegating this to medical assistants and other office staff who, frankly, aren't always trained on how to do this properly.

And not that the insurance companies make it easy.

So what ends up happening in many cases is that, yes, you've got a medical assistant or someone in the office who does the paperwork, files for the prior authorization, but doesn't give complete enough information.

There's not enough information provided to the health insurer.

And the health insurer just says, well, we're going to deny this for now.

That doesn't mean they're denying it forever, but they're denying it for now until more information is given or they request what's called a peer-to-peer evaluation.

You know, I'm not defending the insurance companies on this, but I'm just trying to educate on how and why the reasoning exists and what's going on.

So basically, these denials are essentially to make light of it.

It's a speed bump in most cases, because if you go through, if you have the provider give more information, most of them get overturned.

For people that actually appeal them, meaning you ask your provider to go through the process and provide more information, the vast majority of those get overturned and get approved.

And that's great.

But speaking to the customer, the patient experience, it really undermines the patient experience in certain circumstances.

When time is of the essence, then yes, it can really undermine their health.

So yeah, I agree.

It is a big problem.

I'm not inclined to think that the government is always the best entity to solve these problems.

From my perspective, if looking at the history of health care in the United States, they're the ones that have actually created many of the problems that we face today.

And we can certainly go into all of that.

But prior authorizations and denials of those is absolutely a big problem.

Another challenge that we have about just a conversation about health care in America is that we have almost completely different markets.

It's a level set for your audience.

Employers cover about half the population, about 164 million Americans are covered or provided health care benefits through their employer.

So their employer has a lot to do with how these benefits are delivered, which benefits are covered, yada yada, and how much they pay for them.

But the other half of the population by and large is insured and covered by a government-sponsored plan, Medicare and Medicaid.

And the financial incentives for health insurers in Medicare and Medicaid are very different than what they are in the commercial marketplace where employers live.

In the Medicare and Medicare space, they actually do care about increasing their margins by denying care or limiting access to care.

That is a common thing, and that's why you do see those denials in Medicare populations.

And this is really counterintuitive, but in the commercial space where insurers are held to the medical loss ratio rules, which basically say, listen, you're a health insurer, you have to spend 85 cents on every premium dollar on health care itself.

The rest is for your margin and for your administrative and sales costs.

That's fine.

But you have to spend 85 cents on every premium dollar on health care itself.

And if you don't, you got to refund the difference back to the employer and employees.

On the surface, that sounds like a great consumer protection.

That, oh, these rules make sure that they're spending at least a certain amount of money on care.

But in practice, what it means is that they no longer care about the cost of the care itself, right?

How much is the health insurer paying for hospitalizations, surgeries, labs, imaging, and drugs?

And so that rule that started in 2014 through the Affordable Care Act has had some massive unattended consequences.

So one of them is that they don't care about their cost basis anymore, which means that they're not inclined or incentivized to actually negotiate down the unit costs of hospitalizations, surgeries, labs, and imaging.

And so when people are not taken care of, especially if they have a chronic illness, we always talk on this show about how people are your number one resource, your number one customer.

Yes.

And you will explain this to me.

So in South Africa, if you in a business and you have a discovery plan, if they say 2,000 runs a month, you pay 1,000, your company pays 1,000.

Is that typically how it works in American corporations?

And so would you like to talk to us about how understanding those plans, your company, what they do is you then save the money for the corporations?

Yeah.

So one of the things that we talk about, and actually the reason I wrote this book was to help employers understand what we call the brokerage blind spot.

Again, to level set for your audience, for the 164 million Americans that get health care benefits through their employer, about 81 percent of employers use a broker to help them set up and manage these plans.

And the reason that they do that is that frankly, most finance professionals and HR professionals have zero training in health care financing and procurement, and they don't understand the landscape from a regulatory perspective.

There's a whole litany of things that they just don't understand.

Just like I own a business and I don't understand US tax policy, which changes every year.

I hire a CPA to go watch my back and make sure I'm not paying more taxes than I should.

The difference, though, is that in the case of benefits brokers, which most companies use to help them maximize the return on their benefits investment, unbeknownst to the employer, benefits brokers get paid by insurers and they actually make more money when costs go up, not down.

So you've essentially got the fox guarding the hen house.

And that's why we call a blind spot.

So going back to our CPA analogy, as a business, you would never hire an outside accounting firm who got paid by the IRS behind your back.

Then it would never do that.

Yes, yes, exactly.

Inevitably, you would end up paying way more taxes than you should.

Right.

But when it comes to a business' second largest expense, which is most often health care, that's exactly what's going on.

But most employers don't know that the biggest benefits brokerage firms in the country get huge year-end bonuses from health insurers and pharmacy benefit managers.

They don't know that.

Quick question.

For us, corporate South Africa will deal directly with somebody from Discovery.

We don't have this middleman that's a broker.

Why is that necessary in the American business model?

Here's the irony is that benefits professionals are so essential.

They're so needed because the regulatory landscape alone for offering benefits, a group health plan to employees, as soon as you offer a group health plan to employees, you are subject to a number of federal and state laws.

And if you don't know those things, you're going to get in a lot of trouble.

It's just the way it is in America.

And so you have to...

Each state has its own laws.

It's like it's 50 countries in one.

Yes.

Not the same here.

Whatever national law it is, it applies everywhere, no matter where you are within our boundaries.

But yes, in America, as soon as you cross state lines, the laws are different.

Correct.

Correct.

So you have to have someone who knows all of these things to help you navigate the system and the landscape.

And that's just on the compliance front, let alone let's talk about the product front.

Let's talk about health insurance.

For the lay person, for the CFO, to read the terms and conditions of a proposal from a health insurer, they're not going to know really what to look for.

They're not going to understand the business model of the insurance company, how vertically integrated that insurance company may be, misaligned incentives and conflicts of interest that that creates.

They're not going to know how to look out for those things.

And if you don't know those things, you're going to pay what I call the ignorance tax.

And it's really steep.

You know, companies are spending $30,000, $35,000 to insure families each year.

That's a tremendous amount of money.

And so they use these intermediaries, these brokers, these middlemen, if you will, to help them maximize the return on their investment, help us get the most value for our money, help us manage it from a compliance perspective, help us with implementation.

You know, if you were to build a new house, Roberta, maybe you've done this, and maybe you're doing it in South Africa right now, the last thing you want to do is to start to build a house without a blueprint.

Right, you would end up building a house that's really ugly, probably doesn't fit your needs, and probably costs a lot.

Yeah, exactly.

Re-condition, yeah, no.

Exactly.

And so you hire an architect and a general contractor because they know they have a process.

They walk their customers through a process so that they understand we're building the right type of house for this person.

And they probably also know the regulatory landscape as far as permits and codes and all those kinds of things.

So really in an ideal world, that's the role that metaphorically speaking, benefits brokers should be playing.

Because again, the end user, the CFO, the HR professionals, they don't know these things.

Again, the challenge is that benefits brokers don't work for them.

They get paid by the carriers.

And this undermines their ability to give employers unbiased advice.

And without unbiased advice, you have no chance in changing the trajectory of what's going on with your healthcare at your organization.

You're going to continue to be subject to double-digit inflation and watering down deductibles and higher co-pays and higher this and higher that and less value for your employees.

What we like to say is that the first step in your organization's healthcare transformation is getting unbiased advice.

Without that, you don't have a chance.

But Donovan, you just said that they need these brokers for regulatory purposes.

So then where will they get this unbiased advice from?

Yeah, that's a great question.

Again, that's why I wrote my book, because there's basically two ways that an employer can go about doing this.

Large organizations have done this already.

In many cases, they will hire benefits expertise in-house.

They'll hire benefits professionals in-house so that the benefits professional works for them.

They don't have any outside conflicts of interests, and there are lines on objectives and goals.

That's great.

But, you know, if you have less than 1,000 employees, it's not going to make sense for you to hire high-quality in-house benefits expertise.

One, from a financial perspective, it might not make sense.

Two, they're very hard to find.

People that really know the technical aspects of health care financing and procurement in the US.

So what it makes more sense to do is hire a management consulting firm that specializes in health care financing and procurement and have a fractional consultant, benefits professional, works for you, gets paid by you.

They don't accept compensation from outside vendors.

And that's the other way to do that.

Just like small businesses will hire fractional CFOs, right?

I don't need a full-time CFO, but I need someone to help me with all this stuff that I don't understand as a small business.

And so that's the other solution set employers really need to start taking a hard look at.

Are they aware that management consultants exist as an alternative to the brokerage?

I would say no, they're not.

A couple of reasons for that.

So, you know, one of the things that we've done at the Validation Institute up in Boston was we recently created the guidelines to develop what we're calling a fiduciary validation for benefits firms.

And what that means is that we're basically helping employers identify these management consulting firms that serve in a fiduciary role to employers.

Employers can go on the Validation Institute's website, see a list of them, and then start their procurement and their research from there.

Without that, yes, it's very difficult.

You don't know who's who.

I mentioned the term management consultants.

Lots of people will think of Deloitte.

They'll think of McKinsey and Company.

You know, big multinational firms.

But the reality is those big multinational firms, they're in bed with the supply side of healthcare.

They don't really support the demand side.

So are they part of the conflict of interest we just talked about?

Well, I wouldn't say they're necessarily conflicted.

But from a business perspective, what they're doing makes perfect sense.

It's much easier to work with Optum, RX, you know, the pharmacy benefit manager, Optum or Express Scripts or any of the others, and help Optum increase their fees by another dollar per employee per month than it is to work with a bunch of mid-size businesses and really get your hands dirty.

Purely from a business perspective, what they're doing to maximize revenue for their firm makes a lot of sense.

It's a much easier play to support the supply side.

In fact, another thing that employers don't realize is that there's a whole industry out there that's called Revenue Cycle Management, RCM, that is solely focused on extracting as much money out of employers and patients as possible through the practice of coding.

Coding creates revenue.

So, how do we up code and leverage the coding manuals as much as possible so that we can generate the most revenue for the supply side for large health systems?

It's a billion-dollar industry that most employers don't even know it exists.

They have big conferences every year.

They all get together and talk about the latest coding techniques to bill health insurers and by proxy employers and patients as much as possible.

Yeah, because it's the ripple effect.

Once it starts with the health insurance companies, obviously, they don't want to bear the cost alone.

They're going to distribute it back to the employees and the corporations, of course.

100%.

And this is a great takeaway for your audience is that in the United States, health insurers don't actually take on any risk.

It is the employer and the patients, the employees that take on the financial risk.

Health insurers have figured out a tremendous business model here in the US where they take on hardly any risk and all the upside.

And so as an employer, you really got to understand how to navigate that environment.

And if you don't have the resources in place to help you navigate that, you're going to have runaway inflation on your second largest expense.

And it's really going to continue to undermine the financial and physical health of your organization.

It's interesting you say that because here's what I'm wondering.

Whenever we talk about corporations, everybody says, I have to report to the board.

The board of directors will ask us, why is so much money?

Why are billions being lost?

What are the boards of directors of these companies?

Obviously, the ones from health care companies are very happy.

But the boards of the companies that you consult with, who have to bear the brunt and the cost of these rising inflationary, what are they saying?

Are they even saying anything?

Are they even aware of what you've just talked about?

Roberta, it is unbelievable.

It's hardly even in the conversation.

And I think there's a very good reason for it.

The insurance industry has been masterful in lowering expectations with their clients.

So just to reframe, if you're a CFO and you've been told for decades that, hey, health care costs just go up every year, there's not a whole lot we can do about it.

And your brokers, who you rely on for expertise in this area, keep on reinforcing that mantra, you start to believe it.

And what's really happened over the past few decades of that mantra being reinforced is that as a CFO, as a CEO of a company, if you're told over and over again that there's not much you can do about this problem, you don't need to be in that meeting anymore.

HR, you go deal with it and report back to me, right?

I mean, in my house, we have a rule, we don't talk about things we can't control.

But like you said, it's also regulatory.

And I think a lot of the time, as soon as you say in America, oh, this is federal, oh, okay, I can't do anything about that.

Yeah.

At the end of the day, there are some federal rules that actually give employers the guidance that they need to combat this.

And these are the fiduciary standards, okay?

So under a federal regulation from 1974 called ERISA, it holds employers to a fiduciary standard as a plan sponsor.

And so what that means is that they are supposed to be demanding transparency with their vendors.

You know, again, knowing how their broker gets paid and by who, it means that they're supposed to be doing the best thing, making decisions that are beneficial for their stakeholders.

The irony is that these rules just haven't really been enforced in the United States on the health and welfare side of the house.

They started being enforced on the retirement side of the house about 20 years ago, and that's really helped improve the performance of retirement plans across the country.

But they're just starting to now be enforced a little bit on the health and welfare side of the house.

But unlike so many other areas of compliance where it's just an exercise and compliance, you just check the box and move on.

This is actually fundamental for solving problems, taking this fiduciary approach.

And this is why we're trying to educate the marketplace that working with a broker is actually a prohibited transaction under fiduciary rules.

You can't work with these vendors and rely on them for consulting and procurement services who are conflicted.

They make more money when your costs go up.

You can't put them in charge of negotiating on your behalf.

That doesn't make any sense.

It doesn't want higher commissions, come on.

Right, right.

And so this is the same thing that happened in the retirement space.

Like, you know, financial advisors used to sell products for a commission.

And the federal government came in and essentially said, listen, your industry has got to change.

You're completely backwards, you know, misaligned with your customer.

And so what many of them did was transition from selling products for a commission to selling services for a fee.

And you mentioned the pharmaceutical sales earlier.

It was the first time that I actually met people who say, what's your job?

Oh, I'm in pharmaceutical sales.

I recently went to a doctor.

I just felt pains in my back and it didn't turn out to be much.

But when I went to the scoped, I said, oh, that's the spot where it hurts.

And she says, okay, I'm going to give you a script.

You're going to need to go do x-rays and I'm going to give you a script for painkillers.

Nobody sells.

There's no pharmaceutical sales person who walks into her practice and goes, if you distribute this medication to your patients, we don't have that.

I just went independently with the script, got the medication prescription from the nearest pharmacy.

There's no relation.

So she's got no incentive to stuff me with more medication or more expensive version of painkillers because there's no incentive to begin with.

Why do they even have that profession in the healthcare industry in America?

Yeah.

I mean, the pharmacy space is just riddled with challenges.

And so speaking of legacy management consulting firms, one of them was named and fined for their involvement in the opioid epidemic here in the United States, where tens of thousands of people died from being over prescribed these very dangerous pain medications.

And again, it was management consulting firms, big ones that really work on the supply side, who taught the drug maker and the pharmacy benefit managers how to push these drugs into the population.

And to maximize revenue for themselves.

So yeah, absolutely criminal.

And the judge says so.

So yeah, it's just awful.

But the first step is awareness.

To fix the system, we first have to see it.

And so that's really what was the inspiration for writing my book, was that so executives could actually understand this landscape and know how to navigate it in a much more effective way.

And when will you publish your book, you said November this year?

Yeah, so I'm a first-time author.

And so the learning curve has been quite steep, as you can imagine.

Yes, we are targeting November 4th for the launch of the book.

I think that's an exciting time.

I'm actually going to be running a workshop at a pretty high-profile conference for CEOs in Austin that week.

So yeah, we're excited about it.

Excellent stuff.

And when the book is published, we'll update our show notes so that anybody who wants to purchase the book can.

So who should we say are the main target customers for it?

So it's the executives who obviously pay for employee benefits.

Yeah, it's really intended for executives at mid-size businesses.

But if you're an employee who's fed up with rising health care costs at your organization, I would encourage you to check it out as well and maybe plop it on your CFO's desk and say, hey, listen, I think there are some opportunities here.

And by the way, employers in the United States spend $1.3 trillion a year on health care.

Again, it's their second largest expense.

Here's the kicker.

25% of what they're spending is complete waste.

That is $4,000 per employee per year that is being wasted.

And that's the most conservative estimate.

The low-hanging fruit is just get unbiased advice.

If you get unbiased advice, at least you have a shot at maximizing the return on your benefits investment.

And reclaiming some or more of that $4,000 per employee per year that's currently being wasted.

Over $8 trillion.

This unbiased advice.

So before the book or even after they get hold of the book once it's published, where should they go to then change from the brokers to unbiased advice sources?

Yeah, so the best resource for all of these things is the book's website, which is fixinghealthcare.com.

Again, that's fixinghealthcare.com.

And there's going to be a plethora of resources on it.

We're just starting to build that out now.

But one of them is what we call a total benefits assessment.

So it's a quick assessment that executives can take, and it scores executives in the seven categories of benefits value so that they can become more aware of where the opportunities are in their program.

We find that many organizations don't have KPIs.

They don't have multi-year roadmaps for how they're going to improve their programs.

They're really just kind of floundering in a sea of options.

And that's a dangerous place to be.

So we developed this total benefits assessment framework to help them quantify the value equation, identify opportunities for improvement.

From there, you can set goals, develop roadmaps to achieve them, and improve your scores, and really drive more value for your organization.

So what's incredible is that health care itself is actually not that expensive in America.

It's health care administration that is super expensive.

Just to give you a concrete example of how expensive it is, on average, primary care physicians in America only receive 27 cents on every dollar spent on primary care.

27 cents actually goes to the doctor.

The other 73 cents goes to all these administrative layers that are between the doctor and the patient.

All these middlemen that we spoke of that are needed for regulatory purposes, but if that weren't the case, they wouldn't exist.

You will deal directly with the health insurance company where you file a claim.

Yeah, I mean, most of it does not provide clinical value.

So as an employer, if you can find a way to bypass all of these middle layers of administration and get more directly to the source, then you can really gain some efficiencies, improve access for your employees, and drive down costs at the same time.

We've got clients where the HR people drive more profits to the company's bottom line than their top salespeople because they've addressed their health care problems.

It really can't be fixed.

I'm not saying we can fix everything, but there's some very low hanging fruits that employers can take advantage of.

We worked with a large teachers union a couple of years ago, and they were just getting crushed by health care costs.

The broker said, no, Cigna's got the best deal, you can never leave Cigna, yada, yada, yada.

We came in and did an evaluation of what's going on, saw that they were getting crushed by pharmaceutical costs.

We said, listen, you've been with the same pharmacy benefit manager for seven years, why don't you push to get a new pharmacy benefit manager?

You know, you're with one of the worst ones, push to get a better one.

And they did that, they went through the RFP process, they had 11 pharmacy benefit managers respond.

They didn't even pick the best one from our perspective, but they picked a better one, and they saved about $3.6 million last year on drugs.

There you go, cost savings for the company, better health benefits for the employees, everybody wins.

So that is the main issue is that you have middlemen who don't look out for you based on what the business model is, then it creates that conflict of interest.

Obviously, they're not going to look out for you.

Save your business, your people and the economy by fixing healthcare with Donovan Pyle.

Thank you so much for this very necessary conversation.

Great to see you Roberta.

Take care now.

Thank you so much for being here.

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