Companies are innovating with health care to cut costs and improve recruiting and retention

Something is afoot in health care. Large companies such as General Motors are abandoning health care insurance and are directly contracting with large health care providers to reduce costs while keeping quality standards. Smaller employers are using innovative health care providers that offer health care for as low as half the cost of conventional health insurance enabling employers to provide free health care to employees and improve their ability to recruit and retain the people they need.

GM’s direct contracting of health care is part of a growing trend. Walmart, Walt Disney, Boeing, and Intel are all taking aggressive approaches to either directly contract for health care or have a health-care provider manage the care of their employees. According to the National Business Group on Health, nearly 11% of the 170 large employees they surveyed in 2018 are considering such deals, which is up from three percent in the 2017 survey.[i]

Small and mid-sized companies are also exploring innovative alternatives for health care that that substantially reduce the cost of providing health care to their employees.

Let’s look at one example.

Paul Johnson Drywall Inc. (PJD) is a construction company that employs over 1900 W-2 employees in Arizona and Nevada and has reduced its health care costs by over one-half, achieving its highest employee retention level ever. The company credits its success to Redirect Health’s affordable and unique health care model.

According to PJD’s CEO and President, Cole Johnson, their mostly male workforce is automatically enrolled in Redirect Health’s EverydayCARE™ plan for $105 a month. The company covers the total cost. EverydayCARE covers a majority of health care needs from colds and the flu to asthma and diabetes. Redirect simultaneously acts as PJD’s directed care provider dealing with worker-related first aid and injuries.

“Redirect Health provides us with health care at less than half the price and one-fifth the headaches,” Cole says. Absenteeism has decreased and morale, productivity and the ability to recruit have increased. Cole says that in 2017, the company was able to hire more than 1000 W-2 employees and another 650 in 2018, which Cole attributes to PJD’s rich  health care benefit to its craft workers on their first day of hire.

Cole reports a 98% enrollment rate with the basic EverydayCARE plan. “The requirement that everyone enrolls with Redirect Health attracts a higher quality of worker who is more conscientious and compliant in all aspects of their job,” according to Cole. Their employees may opt out of Redirect Health with proof of coverage with another health care plan. Employees have the option to add dependents and they can purchase additional catastrophic insurance offered by Redirect Health. Paul Johnson Drywall subsidizes approximately 60% of the cost of upgraded plans.

Cole says the features he loves are the concierge service and wellness benefits that are made available to all workers. “Redirect Health encourages wellness and will schedule same-day appointments and has actually brought people to our office and major worksites to do screenings and talk with my employees who struggle to take time away from work or are too intimidated to go to the doctor normally. The makes getting care very convenient for our workers.”

PJD has also achieved a massive reduction in its workers’ compensation costs by working with Redirect Health for the last five years, saving more than $900,000 annually since 2014.

Cole reports that employees who have had serious health care issues such as cancer have been successfully treated also. “If there is an emergency such as a heart attack, the person calls 911 and goes to the nearest hospital emergency room for treatment. For severe illnesses which are not immediate emergencies, they are to call the Redirect Health telephone number to coordinate their care. Employees can use their own doctor with Redirect Health.”

Redirect Health was started in 2013 by the husband and wife team of Doctors David Berg and Janice Johnston (pictured above), and Paul Johnson, the CEO of Redirect Health, former mayor of Phoenix and Chairman of the Board of Directors for Arrowhead Health Centers. It now provides health care to over 700 companies and is approaching 10,000 members in all 50 states.

According to Redirect Health Chairman of the Board, Dr. David Berg, the goal in starting Redirect Health was to “eliminate unnecessary waste and administration and streamline health care. We want to make it easily accessible and affordable to businesses who find the traditional insurance model too expensive. This includes business such as restaurants, construction companies, small consulting firms, and the hospitality industry. Our basic plan allows small and mid-sized business to provide their employees’ the first and most frequent types of health care for as low as $105 a month per employee or 61 cents per hour.”

Being self-funded with health care is the gold standard and allows companies to avoid costly community rating for the cost of health care. But usually, companies need a large workforce of over 1000 employees to absorb the risk of the illnesses and injuries that drive over 70% of health care costs, such as heart attacks, cancers, drug addiction, and premature babies. Alternatively, companies need to join a private exchange and share multiple-company workforce populations and actual health care costs.

Dr. Berg explains that the approach of Redirect Health separates health care from health insurance. “We are all accustomed to the model of health insurance for health care, but you can get excellent and affordable health care, often much cheaper than those negotiated by typical insurance plans. For example, we can get an  MRI for about $300 which would normally cost about $2,000-$4,000 in a hospital – And that’s if they only order one MRI.”

I asked him how he does it. Dr. Berg pulled out his I-phone and asked: “Hey Google, find me MRI costs in Phoenix.” Up came an ad for a $800 MRI. “Google is amazing,” he said with a smile. “We use it as a starting place to identify health care services across the country. We then follow up with other more sophisticated methods, and finish with a call to further check out the provider and to arrange services for our clients.”

But what about the quality of the MRI scan? “You are correct – there can be a difference in the resolution, and you need a trained medical expert to read and interpret the scan,” Dr. Berg explained. “In the beginning for most medical issues, most patients don’t need the most expensive scan. If the doctor sees something alarming with an initial MRI of the brain, for example, we can in the same day order a higher-resolution MRI, and add contrast, to further investigate it and see if it is cancer or another serious issue.”

The Redirect Health model uses a seven-step process to deliver affordable health care to its clients, as outlined below:

  1. Population Management – By identifying the chronic and acute disease in the company’s workforce, Redirect Health can anticipate health needs and outreach. Redirect Health can care for the most likely people to create cost in health care. Redirect Health creates programs for the company to help keep their population healthy and out of emergency rooms and expensive treatments.


  1. 24/7 Access to Care (Care Logistics) – Convenient over the phone medical support drastically reduced the need for in-person visits. This 24/7 access to care eliminates most unnecessary emergency room visits and trips to doctors for simple things like prescription refills or reviewing lab work, or because they are just worried. When members are sick or need health care advice, the 24/7 Access to Care phone number is the first number to call.


  1. In-person visits – Redirect Health removed copays and deductibles for all routine and preventive care to remove this cost barrier, this further reduces the need for expensive non-routine care.


  1. Specialists and hospital – Managing the hospital and specialist care was also an essential part of reducing costs. Berg learned that by having the proper provider-to-provider dialogues in real time, Redirect Health could not only provide excellent care, but it could also help other providers and facilities make more reasonable treatment and diagnostic decisions.


  1. Fair price –Redirect Health in the early days learned by providing health care to their own employees that the places of service matter greatly, and they could get their employees the care they needed at a fraction of the price by guiding them to the right medical facility and knowing the fair price.


For example, if an employee is sick and diagnosed through the use of telemedicine with symptoms of a sinus infection, Redirect Health will call the employee’s preferred pharmacy (or find a better priced one). When the employee shows up, they pick up their medicine and pay the fair amount, which is usually less than $10-25.


  1. Patient assistance – The Redirect Health benefit design and knowledge of patient assistance programs around the country allow Redirect Health to leverage alternative ways to fund healthcare beyond insurance for those who qualify and can’t afford insurance.


  1. Insurance – And finally, by placing insurance at the end of their seven-step process it means that insurance is rarely tapped into – Redirect Health’s insurance company for its own employees has never had to pay a claim in the ten years it had used its health care model on itself. This has resulted in low-costs and no increases, which allows Redirect Health to provide healthcare to all its own employees and their families on the first day of work at no cost to the employee.

With EverydayCARE at $105/month, there are no copays and no deductibles for its 24-hour Care logistics services, or for primary care office visits, chiropractic care visits, preventive adult visits, preventive-well child care, labs, immunizations and RX discount plans. Employees can continue to see their doctors if they want.

According to Director of Membership, Michael Bechtol, “Companies can choose to cover dependents and to offer additional insurance for catastrophic care costs, at varying levels of subsidy.”

“The final step in our model,” Dr. Berg explains, “is to help small employers recruit employees. We help our new clients recruit employees by posting a simple job posting with the headline, ‘competitive pay with free health care.’”  According to Mike Bechtol, “Redirect Health clients have seen their applications per job posting go from about 20 to 300, as an example, after offering free health care from Redirect Health.”

Redirect Health offers health care in all 50 states. In addition to offering health care to businesses, it also offers health care to families.

What is the feedback from other clients?

Clint Carlos, the Chief Revenue Officer for Soar, says that Soar “began to look for alternatives to conventional health insurance. (Soar is a Paul Allen company that offers a technical platform for professional development and coaching.) The management team’s collective experience was that health insurance companies talked a good game but then find every loophole to stick it to you.

“To be insured with the big health insurance companies,” Clint continued, “you also have to guarantee them a high percentage of your employees enroll in their plans which means you have to goad your employees to join their plans. I was a member with Redirect Health at a previous company and shared it with the team. They found Redirect Health was a better plan.”

Soar covers 100% of the cost of Redirect Health EverydayCARE for its 14 employees and their dependents and also covers upgrades to two of the “Plus” plans that provide insurance coverage for hospitalization for advanced diagnostic training and critical illness benefits for cancer and heart attack and strokes.

Clint said that “Redirect Health did a great job of educating our employees about their approach and that they could keep their primary care doctors. We also love their prevention emphasis,” Clint said. “We all travel a lot and with Redirect Health they are our partner to find us medical care wherever we are in the US, 24/7. And nobody has to worry about wasting time and money anymore.”

Clint says that one family member had cancer and that Redirect Health detected it early and in coordination with Sedera Health, which provided payment for the diagnostic and hospital costs, it was successfully treated at substantially less cost.

There is a lot afoot with health care and both large and small companies will be able to benefit. The rise of machine learning, Artificial Intelligence, and sensors will further revolutionize health care and the cost of health care.

Watch for future blogs on innovations in health care.

Victor Assad is the CEO of Victor Assad Strategic Human Resources Consulting and is a Managing Partner of InnovationOne. He consults and provide support to improve recruiting and retention, cultures of innovation, develop agile leaders and teams, integrate digital technology, and other strategic initiatives. Visit more insights and his valuable free reports.

[i] Anna Wilde Mathews (Aug. 6, 2018, 9:52 PM ET), “GM Cuts Different Type of Health-Care Deal: Auto maker aligns with Henry Ford Health System in an attempt to cut coverage costs and improve quality of care,” The Wall Street Journal. Found at

Leave a Reply

%d bloggers like this: