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A digital marketplace for healthcare

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Tune into this episode of PwC's Next in Health to hear PwC Health Research Institute's Trine Tsouderos, and Strategy& Principal, Igor Belokrinitsky, in discussion with Carrum Health’s CEO, Sachin Jain and SVP of Provider Partnerships, Christoph Dankert, on healthcare marketplace and delivery transformation, including:

  • The role of value based care and price transparency in addressing current state issues such as physician incentive misalignment
  • The impact of shifting power, behavior and quality dynamics between providers, payers, employers and consumers
  • The role of bundles, and the influence of data and technology, in driving meaningful prices, quality of care and the overall healthcare experience

Topics: price transparency, payers, providers, healthcare,quality, healthcare marketplace

Episode transcript

Find episode transcript below.

Trine Tsouderos (00:03):
Welcome to HRI's Next in Health podcast. I'm Trine Tsouderos and I lead PwC's Health Research Institute. I also lead the firm's Business Insights sectors team, which produces thought leadership on everything from financial services to energy, to technology,

Igor Belokrinitsky (00:21):
And I'm Igor Belokrinitsky, Principal with Strategy& strategy arm of PwC. And I am just thrilled today because we're joined by two of our alumni, our former colleagues, Sach Jain and Christoph Dankert. And today they work for Carrum Health. Sach Jain is the CEO and Founder of Carrum Health and Christoph is the Senior Vice President of Provider Partnerships. So welcome Sach and Christoph. It is fantastic to have you on the podcast. And maybe before we jump into questions and Trine and I have lots of questions for you. Sach, could you tell us a little bit about what Carrum Health does?

Sach Jain (00:59):
Sure. Thank you for having us on this podcast. So as we all know, fee for service is the dominant payment model for healthcare in the U.S., which had its own set of issues that are well-known, which include misaligned provider incentives and a lot of clinical and admin waste. While there is limited focus on the patient experience, we want to change it at Carrum Health. And we started the company to change the system and help it move away from fee-for-service to value-based care. And specifically on the value based care, we are focusing on one done payment, which aligned provided incentives with the quality and also needs to a lot of transparency that do not exist in the current system today. Our first focus is on surgical span, which is roughly half of the total span in healthcare. And we are focusing on self-insured employers and currently we pay for surgeries like they're buying a car part by part. Everyone is busy billing for all different parts of the car. No one is worried about whether the car actually works or if their driver has a good experience. And what we are doing at Carrum is to partner with some of the top providers in the nation that we call centers of excellence.

Sach Jain (02:12):
And we bring them on our, this bundle payment platform that is built ground up the scale this model. Then we connect these provider directly with self-insured employers using standardized bundled payment arrangements. So this is essentially like buying the whole car and car, come through the warranty. In the process we aligned provider incentives that use all that clinical and admin waste that exists in the system. And after all said and done, we bring down this surgical span by almost half while dramatically improving the patient experience. We currently are working with almost every top providers in the nation. While on the employer side, we are working with both public and private sector employers, including state governments and several fortune100 and fortune 500 companies.

Trine Tsouderos (02:59):
Sach, all of that is really fascinating, especially in light of the long history of the problem of how to pay for medical care in the United States. And I was just reading this really fascinating report put out 1932. It was the final report of the committee on the costs of medical care, which was a committee that was put together by a group of physicians and others. And the problem that they were looking at was that healthcare is expensive. Lots of people can't afford it. Fee for service is a problem. How should the nation pay for medical care? This was 1932. The report was republished in the 1960s as a novelty by an academic journal saying, look, 30 years later, we still haven't solved these problems. Here we are 90 years after the publication of that report. And we have so many of the same issues, the same issues that you guys are trying to address with Carrum Health.

Trine Tsouderos (03:54):
One thing I didn't hear you talk about was price transparency, and that has been sort of floated recently by the Trump administration carried on by the Biden administration as some kind of solution to all of this. That if only we all knew what the prices were, what the negotiated rates were that consumers would shop around, that there would be more competition that prices would come down. And that's sort of the thinking around all of this. There are even rules in effect that are forcing hospitals to publish their negotiated rates. And in the beginning of 2022, we'll have the payers having to do the same. So I wonder if you can talk a little bit about price transparency and how that might play into your business model or why it does not, why it's not sort of the silver bullet that it is portrayed as by some.

Sach Jain (04:47):
I'm happy to start. And then Christoph can actually share more details on this topic. The problem with fee-for-service as you highlighted is 90 years in making and it's continuing to get worse. And to your point, price, transparency, I will say is absolutely an essential component for any well-functioning market. And even in this phase, we are in which is self-insured employers. The first generation of the solution that came out were squarely focused on price transparency, and, you know, they had their value, but just transparency alone is not sufficient for our healthcare system to work properly until you address the underlying problem, which is misaligned provider incentives. It is very difficult to solve it, just using price transparency along and in the Carrum model. We start with the transparency because both employers and their employees need to have a very clear understanding how much they will pay for a medical procedure, but we go way, way beyond the transparency component hallway. And Christoph I'll let you chime in and take it from here.

Christoph Dankert (05:54):
Yeah. You know, I'm always reminded of examples that have existed before this price transparency rule, right? In several geographies, some states actually in the country is something similar to this. Transparency was already in effect. You know, I know Massachusetts had things like that made it, something like that, several of those states too. And so there were these websites that consumers could go to and log in and say, well, how much would I have to pay for this joint replacement surgery for this back surgery for all these other procedures, but it turns out they didn't actually meaningfully impact prices. And I think one of the reasons for that is that if I'm a patient, then I may not necessarily care that much about these really expensive procedures that are way beyond any deductible out of pocket that I may have.

Christoph Dankert (06:38):
And so that's exactly what happened these websites came about and they didn't actually have an impact. And it's partly because now who ultimately pays for care, which in this space that we work in, it is large employers, right? They pay for half of the healthcare in the country. And that patients, even though they are the decision makers, they are actually the ones who foot the entire bill. And so, unfortunately price transparency won't quite solve the problem and be very supportive of it. We think it's a good move and you need to do a lot more.

Igor Belokrinitsky  (07:06):
Sachin, Christoph. You've helped us add a lot more nuance to this picture of how the decision is being made by the consumer. It's not just a consumer staring at a price list and making health decisions, but there are other participants in this decision and the employer playing a large role. And so as we all speculate about the price transparency requirement that Trine mentioned and what impact that's going to have on the industry, you have the luxury of hindsight of having introduced more transparency in select regions with select providers and with select employers. How has that changed the behaviors of employers and consumers? What can we look forward to?

Sach Jain (07:25):
In terms of changing the behavior? The solution that we are bringing to the market, where employer has complete transparency on the prices for these specific procedures that are offered to Carrum and members typically are paying nothing. And this model where their out of pocket is set to be zero. The way in the patient and employer behavior is they're asking for the same level of transparency from their carrier. They help them. That on one side would be supposedly just on pain. Something that I'm completely aware of. It's non ahead of time, where it says rest of my spans, then it goes to the other position, PPO networks, where all those challenges of people service, PPO networks exist. So the pressure from employers on every other stakeholder in the system is increasing and demanding the same level of transparency.

Trine Tsouderos (08:43):
We've been talking about the dynamic between customers, employees, payers, employers, providers. Do you think that this dynamic between all of those different players with more information about prices makes a difference and does it play into the bundles that you guys are creating? Does that play a part in that as well?

Christoph Dankert (09:06):
Trine so really good question. The way we think about this, is that a, you know, of course price transparency is a necessary component, but then the thing that the price transparency is it can tell you, well, last year people on average paid X dollars, but it doesn't tell you is there were many, many people who paid three times that and it cannot tell you how much you are going to pay. So if I'm the consumer and then faced with this, just imagine you go to the store and on the shelf there, isn't a sign that says, this is your price. There's a sign that says, well, last year on average people paid $20 for this item. We can tell you how much it is, but why don't you check out, give us your credit card. And maybe then at some point, the data will actually tell you how much was charged to your card.

Christoph Dankert (09:49):
That's I think what you're describing. Bundling is so important because you need to make these prices actually real. We need to make them binding, you make them, actually meaningful to the patient. So that if there's a sticker that says it's going to cost X, it's going to cost X. And what we've found is that bundling is what you need to make that happen to make these prices actually stick. Otherwise, they're more of an academic nice to have exercise that doesn't unfortunately help me as a patient.

Sach Jain (10:16):
If I may to build upon what Christoph just said. And going back to my example of buying healthcare, like buying a car part by part, what some of the rules that have come out there is a step in the right direction. Don't get me wrong. But what they are doing is they are pushing providers to publish the pricing of all different parts of the car, but still leaving it, all the other issue that exist that for a consumer, I need to figure out what the price of this whole car is going to be when I assemble 14 different pieces.

Sach Jain (10:48):
And I don't even know they are going to be 40 pieces or 50 pieces. And in between a provider may decide like, well, I told you the price of this tire, but this tire will need to be imported from Italy. And so there will be a very different price for it. So until you bind providers with certain arrangement, which is what we are accomplishing, using bundled payments that put a price on the entire sort of care and made providers actually compete on that price. It is very difficult to contain this problem just through price publishing,

Igor Belokrinitsky (11:22):
Sach and Christoph. As you're describing this a world in which there's more competition between providers and these services are more shoppable, some of the competition will be on the basis of price, but price is not the only thing that we care about. What has been your experience in creating quality, transparency, or outcomes, transparency to go along with the price transparency to help make better decisions?

Christoph Dankert (11:47):
You know, and all I experienced, they actually go hand in hand. We found that in the marketed, like employer mock-ups, that covers half of the population in the country. They really care about the quality of care. And so they really searching for information on what other good providers pick any employer. They're really good at managing all other vendors that supply services and products to the company. If you're running a supermarket, you're really good at figuring out what a high quality and appropriately priced vendors that stock the things on your shelves, but in every company has that same problem. But in healthcare it's the one face of employers don't have that same visibility. And that really started that process 10 years ago. And employers really are desiring to understand how do I find high quality providers? And so a good part of our business and part of the work that I do on a day to day basis is finding those high quality providers figuring out who are the best doctors who are the best facilities for the procedures that we cover.

Christoph Dankert (12:47):
And what employers are actually looking for is not just the information on the quality that you're looking for, help sifting through because quality means many different things. You can look at hundreds and hundreds of data points and we've actually gone through the hard work of figuring out what are the data points that actually matter, how did he get the data, which by the way, it's very hidden typically. And then how can we help these employers pre-select to the high quality providers? And then we actually present the employers that mix. And so they know providers are all high quality and yeah, the cost points, and then employers can decide over those who they wanted to make available to my employees. And that's an important part of quality that I want to empathize because most of us think about quality as well. I don't want any harm done.

Christoph Dankert (13:34):
You know, if they get a surgery, I don't want things to get infected afterwards, but there's a lot more to quality. And now the really important aspect of quality is does this invasive procedure, this the surgery even have to happen in the first place. We call this appropriateness in our conversations. And that's another really important aspect for employers. How do you know that providers will be appropriately conservative and care and not just do a procedure because it gives you a lot of money. And so we have found that picking the providers that we do three out of 10 surgeries, we said, otherwise happen. Don't happen.

Trine Tsouderos (14:07):
Christoph when you're talking about quality, do you find that the providers that you've identified as high quality come back to you the next year and say, well, we're so high quality. We want to increase our prices that much more, or that they increase prices on everybody else because they've been identified as high quality, or do you find something different?

Christoph Dankert (14:26):
We've actually find something different. We've actually find that the bundle really changes the incentive for the provider, because for the first time, the way you run a good business as a healthcare company is not by performing more procedures, sending out more bills, collecting on mobiles, the way you make more business, more margin is by becoming more efficient. And that sort of very fundamental incentive shift is another important aspect of funnels. And that gives us the sweet spot of not only getting better quality, but also getting better prices makes you see prices go net downwards. In most of healthcare, most healthcare contracts have fixed inflators baked into the conflict prices, go up four and a half percent every year for no apparent reason. And in our contracts, that's not the case. Our prices stay flat. And in many cases, actually the decrease, because it's a win-win partnership for everybody, right? The high quality, highly efficient providers, they get more business through what we do. More patients come to them. Then if you get more business, you can optimize your operations. You can spread your fixed cost more, the costs go down and they can also help you put out even better prices into the market.

Igor Belokrinitsky (15:35):
It's really interesting to hear you describe the potential of bundles to make the healthcare experience more shoppable and engage the consumers, help them make better decisions. With the help from their employers. How big of a deal is this? What percentage of the overall healthcare spending and services lends itself to bundling?

Christoph Dankert (15:54):
You know, we can have a long academic discussion on this topic. The shorthand that we use as a company is about 50 to 60% of medical spend, right? As in surgeries, these big planned procedures that are the prime opportunity to apply bundles to, and I can walk you through our each and every one of them works.

Christoph Dankert (16:12):
But in reality, you can actually push this concept even further. We demonstrated for example, that the same idea of funding, also works for cancer care, for example. So if you take all of that together, I think you can make a case that maybe 60%, maybe even 80% of medical spend could throw through a model like this.

Sach Jain (16:31):
I will add traditionally, we define bundling as an episode of care, which has a fixed start date and the end date. And you put a price on that bundle. But what we are realizing is that bundle definitions are evolving, which is instead of having an episodic bundle, this could be a subscription bundle where for a set price per month, per year, a member has access to a chronic care provider or a primary care provider that they can go to. So if you look at bundling from that lens, you absolutely can increase the impact on one lane, almost 80% of the healthcare span.

Sach Jain (17:07):
And it's funny that there are a lot of battles between how bundling is evolving and how e-commerce evolved. And the retail space funded 25 years ago when e-commerce came in, it was like, it works for books, but will it work one day for me to buy my cloths online or the groceries online? No, it just wasn't thinkable. But here we are 20 years later and we are buying everything online and we believe bundled payments have the same potential that we are applying this for the low-hanging fruit of surgical episodes, but at the model deck sold, it leads to better outcomes and better experience, lower costs. We see bundled evolving beyond the traditional low-hanging fruit.

Trine Tsouderos (17:52):
Wait, so Sach, are you saying that eventually you could see a future where you could buy a bundle or a subscription for maybe a certain chronic disease that you have that a consumer could do this separately, or an employer could do this separately? Is that what you're saying?

Sach Jain (18:08):
Absolutely. And we don't have to look too far. We are already doing it in some fashion at Carrum. We recently announced a partnership with a leading digital MSK player that offers chronic pain solution. And we are bringing those chronic pain solutions on our platform in a bundled payment fashion, where employers that are already using Carrum, they are making this chronic pain solution available to their employees. If a member is going through a chronic pain episode, they can purchase that bundle to our platform, just like they are buying other surgical procedures. So the future is in some ways already here.

Igor Belokrinitsky (18:48):
That's very exciting to hear. And both of your describing this healthcare marketplace, that is going to be more transparent? That is going to be more shoppable, that it's going to be more consumer friendly, but what I'm hearing is it's not a free for all. It is curated and you're only presented options that are good quality and the best price is when you pay zero. And that's very exciting to hear the question that we ask on each episode of this podcast is what role is technology and data going to play to make this kind of a marketplace happen? And that will be or final discussion here.

Sach Jain (19:23):
Yeah, I mean, as we all know, technology has come fairly late to healthcare, but it is happening now. And it is happening very fast is given, you know, as you might track the level of financing that is going into digital health. And when we started Carrum the whole idea was to scale this model using technology for the first three years, we spend time building out this platform ground up that would make these centers of excellence programs, essentially plug and play both for employers and providers to use.

Sach Jain (19:55):
And that wanted of that also is that once they have this market maze set up on this technology platform, adding every new condition, every new bundle is very easy. And once you do it, it becomes available instantly to all the stakeholders and all the platform. So, yeah, I mean, we would not be here if we would not have scaled this model of using technology.

Christoph Dankert (20:19):
The other thing to add here, perhaps on the data side, you know, anytime you're talking about prices and about quality, it becomes a data question, right? How do you get to this data? How do you get to the data at scale? And we spend a lot of resources into figuring this out. We recently partnered with a big provider organization to allow us to get more quality data in a more scalable fashion. So I would say that technology and data are a big foundation that now makes us model the center of excellence as bundle payment model. Actually, though.

Trine Tsouderos (20:52):
it's really amazing to think that here we are, 90 years after that report, which was made with ledgers and pencils, they, you should see they're in hand drawn tables, showing differences in charge for different services and procedures and how far we've come in. Some ways with technology and data and our ability to measure quality. And then in some ways how little we've gotten with our ability to figure out how to pay for healthcare. But I think this is one piece of it that I did not see in that 1932 report. So it feels like something fresh for sure. Thank you so much for being on our podcast, Sach and Christoph, it's been a real pleasure talking to you.

Sach Jain (21:31):
Thank you Trine and Igor for inviting us, it was a pleasure to be here and we really enjoyed the conversation.

Christoph Dankert (21:37):
Yeah, thank you very much. Thanks for having us.

Igor Belokrinitsky (21:39):
For more on these topics and other health industry insights, driven by policy, innovation and care delivery changes. Please visit our website @ Until next time, this has been Next In Health.

Announcer (21:59):
Podcast is brought to you by PwC. All rights reserved PwC refers to the U,S. member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see for further details. This podcast is for general information purposes only and should not be used as a substitute for consultation with professional advisors.


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Trine K. Tsouderos

Trine K. Tsouderos

Business Insights, Sectors Leader and Health Research Institute Leader, PwC US

Tel: +1 (312) 241 3824

Igor Belokrinitsky

Igor Belokrinitsky

Principal, PwC US

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