Simplified Health Plan for Self-Funded Employers Leads to Better Health and Financial Outcomes

August 24th, 2020

Scott Schoenvogel is the president and founder of SimplePay Health, an alternative health plan for self-funded employers that empowers employees with high-quality care and easily understood payment structures. Prior to joining SimplePay, Schoenvogel was the founder and CEO of Compass PHS, where he created a pricing system, advanced algorithms, and a new service model to create savings and experience opportunities for employers and their employees. 

Share a little bit about your background in the industry and how SimplePay came to be.

I come from five generations of doctors, so healthcare is in my blood. I started out with a healthcare consulting company, working with large healthcare systems across the nation like Stanford, Northwestern, and Cleveland Clinic.

I then moved from consulting to the provider side. I ran financial operations for Baylor Scott & White in Texas, where I was responsible for managing $2 billion in annual cashflow within the health system.

My experience eventually led me to found Compass, a healthcare navigation company. With Compass, we built a system of data, tools, and services that connected health plan members with high-quality providers. The service supported employers’ existing health plans to lower costs and improve patient experiences. We grew Compass to almost a million employee subscribers and later sold it to Alight, the former benefits administration division for consulting firm Aon Hewitt.

Around that time, I met Wally Gomaa, CEO of ACAP Health Works and SimplePay co-founder. He shared my passion for trying to build a better healthcare model. Healthcare has a massive, complex infrastructure. With SimplePay, we wanted to take what’s good within that system and reorganize it to help create a better future.

How is SimplePay different than traditional models?

There are clues in the name. One of our core tenets is massive simplification. We believe that the most important parts of healthcare aren’t super complicated.

There are key principles that healthcare professionals ascribe to. Quality of care is a bottom-line metric. Evidence-based medicine focused on the patient leads to better health outcomes and better financial outcomes.

In that light, our goal is to make it easy for people to find and get to the very best providers. The challenge is that health plan design has gotten extremely complex. A 2016 survey revealed that only 4% of the U.S. population can define the four key health insurance terms: coinsurance, copay, deductible, and out of pocket max. And 7-9% of us work in healthcare! Something is amiss there. We knew we had to solve that.

Simplification leads to better outcomes

We realized that when we built a simpler model, it was a better, more sustainable experience. We saw an opportunity to pay for healthcare in a totally different way; to reshape the relationship between patients and providers.

With SimplePay, you don’t pay your healthcare providers, you pay your plan. Everything is consolidated into a single statement. You have financing options that protect people from payday lenders and high interest rates - that’s where our partnership with Paytient comes in. It relieves a lot of pressure from the consumer.

Health plans are supposed to be a benefit. Because they’ve gotten so complicated, they don’t feel that way to people. They often feel like a burden. At the end of the day, SimplePay makes it easy to afford and pay for healthcare.

What are the benefits of SimplePay to both the employer and the employee?

In healthcare, the highest-quality care tends to cost the least. In this way, the interests of the employee, the employer, and the provider are naturally aligned.

We work exclusively with employers with self-funded health plans. Through our partnership with Paytient and in conjunction with those employers, we pay the provider in full up front. Then the employee pays for their portion of those costs through paycheck deductions using Paytient’s structure.

All of this leads to better and more efficient care, which lowers the employer’s health plan costs over time. And the experience is simpler for the employee.

Where is SimplePay coverage geographically?

SimplePay is still a relatively young company, having launched at the beginning of 2019. However, we have nationwide coverage. We work with Aetna as our national distribution partner, and that partnership has allowed us to expand quickly and effectively.

Are you working with brokers or employers directly, or both? What are some of the challenges your team faces during initial discussions?

The largest employers have their own benefits professionals in-house, and they work with us directly. Companies with around 5,000 employees or fewer usually work with a broker.

It’s actually much easier for someone who doesn’t have a deep understanding of healthcare to “get” SimplePay’s value proposition. For HR consultants and benefits professionals who have dedicated their careers to understanding the complicated system, it can be hard to let go of that.

When we talk with leaders in a blue-collar organization who have little experience with healthcare, they often get it right away because the experience is similar to other purchasing experiences they have in their lives.

Usually, the benefits specialists want to understand how things work behind the scenes. Because we have a new model, they have to shift their paradigm. SimplePay sounds too good to be true. It’s a big leap from where the healthcare industry has been, so our challenge is to educate in that area.

Where do you see the industry going over the next 2-3 years? What trends do you think will become more pronounced?

Healthcare has changed a lot in the last 10-15 years. There’s more pressure on the system today - more government involvement. There are many unique dynamics swinging back and forth, and that has generated uncertainty in the market.

With the introduction of the Affordable Care Act, the industry took a step back to wait and see what would happen. Then some of those programs receded with the administration change, and we saw private industry leap back in as there was an opportunity to come up with something better.

Alternative health plans often create more pressure

With that, we’ve seen a rise in alternative health plans that don’t fit within the traditional structures. There are many approaches: clinical, financial, and network strategies. Unfortunately, most of them lead toward more complexity or more financial burden for the actual patient.

For a while, the industry assumed that if you put more financial responsibility on the patient, they’ll get more involved and make better consumer choices. However, that hasn’t seemed to work. The industry itself is still overwhelming and patients haven’t been able to use the information provided.

Ultimately, hospitals suffer from this cost-shifting to the patient. There’s economic pressure on providers right now, and in general, they want to get out of collections and financial management. To alleviate this, we’ll see a strong swing toward individual payment financing and fully integrative solutions like SimplePay and Paytient.

Introducing better, more sustainable payment models

In the near future, payment models in healthcare will look very different. They’ll be more sustainable. Third parties will emerge to help individuals, employers and providers figure out new ways of doing business together that work better for everyone.

Here’s a simple example. If you’ve ever had a Health Reimbursement Account, you know it’s a huge pain to submit bills and explanations of benefits. When you’re paying for all your care through SimplePay, all that documentation is in one place. You know for sure that everything is a qualified medical expense.

This was never the main goal of SimplePay - to remove the documentation requirements for reimbursement accounts. But when we built out the model, it was an added benefit that we saw for employees.

Companies like SimplePay and Paytient are integral to the emerging industry transformation. Until recently, very few people believed this kind of transformation was possible, but we’re now seeing breakthrough modeling showing that it is. Major companies are waking up to the possibilities.

What are some of the key areas employers should look at when they evaluate their health care plans?

Employers are in a tough place right now. They’re in the impossible position of balancing financial stewardship of health plans with a cultural focus on benefits and wellness in a challenging time. They need to focus on running a sustainable health plan without compromising their culture and the benefits they provide to employees. It’s more important than ever to be thoughtful.

Healthcare is all about lifestyles, behaviors, and risk. It’s how you bring those pieces together to create a more predictable and sustainable outcome. Employers should look for opportunities to simplify their approach and think holistically about how they can support a better life for their employees.

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