Rosen hotel magnate aims to disrupt health care: "Millions are getting screwed"
“While the nation is crippled with health care debt, while employers are spending more and more every single year, the reality is that revenue turns into profit for insurers," Lester Morales said.
What Rosen has a difficult time understanding, however, is why the health care industry is so much less efficient than his own company.
“About 33 years ago, I was absolutely fed up with our health care program,” he said. “It was terrible — too expensive and lousy care. So I mentioned to some of our associates that we were going to do our own. They said, ‘are you (I won’t repeat the exact word) crazy?’ I said, ‘yes, but we are going to do it ourselves.’ It was a struggle, but we did it.”
The result was RosenCare, which includes an on-site primary care facility for all associates and their dependents. Today, the health plan covers 5,700 lives, who are treated by full-time physicians, nurse practitioners and physician assistants. The medical facility provides comprehensive care, including a podiatrist, nutritionist, chiropractor, basic radiology services, monthly mammograms, physical therapy department, laboratory services and small pharmacy. The cost savings have been substantial.
“Over the years, I think we have saved about $540 million, when you compare our cost per covered life with the cost per covered life nationally,” Rosen said. “That’s not small change. If you extrapolate that into the United States, the numbers are staggering. We have been able to convince some people — and they are the happiest people in the world — to adopt RosenCare. The cost for all of their associates are way down, and the quality of care has improved dramatically.”
During a February 21 live and virtual event from one of his properties, he announced an ambitious plan to share that success with others.
“Our goal now is to expand this program throughout America,” Rosen said. “Millions and millions of people (let me use a bad word) are getting screwed. They are paying too much, and they are getting lousy service. We can change that.”
If the quality of health care is to improve while costs come down, employers must take the lead, said Dr. Karen Van Caulil, president and CEO of the Florida Alliance for Healthcare Value.
“Time and time again, research has told us that employers are the stakeholder group that is most likely to fix health care in the United States,” she said. “More than 158 million Americans get their health care and health insurance from their employer, which is three-and-a-half times the number of people served by Medicare. That is a lot of leverage to drive quality, value, transparency, accountability and now, equity.”
Lester Morales, founder and CEO of Next Impact, raised the obvious question arising from RosenCare’s success.
“If you have saved $540 million, why isn’t everybody doing this?” he said. “You have zero-dollar copays, you have zero-dollar deductibles, you have free drugs, so why isn’t everybody doing this? I always say the health care system isn’t broken – it’s designed completely wrong.”
Misaligned incentives are a big reason why.
“Everybody in the system makes more money when costs go up, and this is no more evident than when you see the stock prices of the major insurance companies,” Morales said. “While the nation is crippled with health care debt, while employers are spending more and more every single year, the reality is that revenue turns into profit for insurers. Health care actually has an inverse relationship between quality and cost. The higher the quality of health care, the lower the cost.”
The same competitive forces that make Rosen Hotels & Resorts successful also can improve outcomes and lower costs in health care.
“If you are a business owner or HR person, the reality is that we need to change this conversation away from sick care to health care,” he said. “The only way you do that is when you start to think, ‘the MRI over there costs $3,000 and the MRI over here is $300. Why aren’t we helping people get the $300 one?’”
Related: Primary care disruptors: Doctors created a clinic as their former hospital struggled
Giving employees a choice can be a game changer, Morales said.
“You can go down the road of doing it the same way you have been doing it, but we already have read that book and know how that story ends,” he said. “Or you can work with an advocate who is going to help people navigate the health care system, and if they do that, health care is free – no copays, no deductibles and not out-of-pockets.”
The secret is simply comparing prices and shopping for the best value.
“How is it possible to give it away for free and still get savings?” Morales said. “The reality is that the cost of health care might be five or 10 times different from one location to another. If we can help people understand that high-quality care is lower cost and provide a platform in which those people can be navigated through the health care system, everybody saves money. The best part is that money is compounded year over year, because you are teaching people how to be better health care consumers.”
Rosen believes his health care model is a win-win solution for employers and workers alike. “My hope and my prayer is that we will work together and more and more people will hop on board and have quality care at a low cost,” he said.