Fred Turner of Curative

Published May 16, 2023, 9:41 PM

Fred Turner is the Chief Executive Officer of Curative, a healthcare start-up that made a splash scaling COVID-19 testing and vaccinations during the pandemic. In this episode, join Fred and host Jeff Gourdji as they discuss Curative’s journey and some of the biggest issues in healthcare that “Curative 2.0” aims to address. 

Hello and welcome to Prophets Healthcare Changemakers podcast, where we'll be talking to leaders in healthcare who are focused on transforming their organizations to drive the next level of growth for their business and for healthcare at profit. We believe that the organizations that thrive in healthcare are those that dare to change the game, striving to improve human health, create better experiences and make the best of care and enduring and sustainable reality for all. Those that will transform health care are the changemakers. And for this podcast we want to focus on them. Our podcast dials into and recognizes the people behind the transformation and their journeys and changing the game one story at a time. Are you ready to dive in?

This is Jeff Gorgie. I'm happy to host this episode of the Health Care Changemakers podcast. With us today, we have Fred Turner, the chief executive officer of Curative. Fred, welcome.

Thanks for having me.

So, Fred, if you could tell us about yourself.

Well, I'm originally British. I grew up in the UK and moved to the US when I was 20, now based in in Austin, Texas, and actually originally started off my first foray into health care was on the lab side. My first company was working on agricultural genomics. So basically sequencing dairy cows to predict milk yield. And we raised a bit of money from Andreessen Horowitz and some other investors and basically realized that the market for testing cows is not big enough to make it a venture scale business. And so we took the underlying tech that we built and found applications for it in the human diagnostics space.

So, Fred, tell us about the founding and the initial scaling of curative through Covid and the journey that led curative to try to bring about change and how health care is paid for?

Yeah, absolutely. So when curative was first founded back in January of 2020, we actually weren't thinking about Covid at all. The entire focus of the company was actually improving sepsis outcomes. And it came from looking at this analysis of sepsis diagnostics and community hospitals versus academic centers. And it seems if you bring out a new diagnostic and an academic center, you can get better outcomes. But then when you try and apply those diagnostics in a community hospital, you don't improve outcomes at all. And so what we were trying to do is more of a kind of knowledge transfer, take the learnings out of the academic centers and allow community hospitals to be able to get better outcomes for their sepsis patients. So that was the initial pitch and we were going to basically take risk on sepsis. Patients take full risk from the hospital and manage them better. And so we set up our first clinical trial where the hospital in January of 2020, and then we got a phone call in February from this collaborator who we'd worked with a ton before. Very responsive, super nice guy, easy to work with. And we got a call from his assistant saying that he couldn't meet with us until July because the hospital was busy getting ready for this little thing called Covid. And at the time being in the news a little bit, but we hadn't really heard much about it and we were totally crap. What do we do now? We'd raised $1 million of seed money by this point, and there were expectations from investors that we would get this trial going in order to be able to raise more money and get the first customers on board. And so we as a founding team, it was myself, Isaac and Vlad had a background in lab testing and running diagnostic labs. We'd all built a lab together before, and so we thought maybe we can help with this Covid testing thing for a couple of weeks until Covid blows over and then we can go back to working on sepsis. Obviously, it lasted a little bit longer than in a few weeks. We ended up moving the company from the Bay Area down to LA. We acquired a lab in LA that we built a lot of this around and scaled up pretty rapidly. The city of LA was the first major customer and so that scaled from running one drive thru site to the Dodger Stadium testing site, which was the largest drive through testing site anywhere in the world. At its peak, it's having about 10,000 people a day go through that single testing site.

You saw that on the news, The national news.

Yep, yep. It was some great drone footage of it from above. I think it's seven lanes of traffic flowing through. It was open from 7 a.m. to 7 p.m.. Yeah, it was. It was quite an operational feat. And so we scaled up from now went from about 7 to 7000 employees in the first year. I think we did testing in every state apart from Hawaii and over 36 million tests in total and then over 2 million vaccinations as well. So really scaled up very rapidly.

So tell us about the managing it down and the transition to the business you're now in.

Yeah, the managing it down is obviously a very difficult decision to close down testing entirely at the end of last year. But I think we we came in to serve a need that the community had for rapid, high, fast turnaround testing that was accessible in the community. And that need is now passed. People can get rapid tests. Most people are vaccinated. There just isn't that need for drive through testing sites anymore. But for about the past two years now in the background, we've been working on what we call curative 2.0. So trying to figure out what comes next after after Covid testing, because obviously it's not a long term business model to continue testing for Covid. And so we did a breadth first search. Looking at where do we want to go next? And really what we're trying to find is what's something that we can work on that's actually going to move the needle on US Healthcare. We don't want to work on some esoteric corner of this system where you spend ten years working really hard and by the time you've done and you've impacted a small percentage, really small percentage of patients in a small way, we wanted to actually do something that could drive meaningful change in the system. And so we looked at a number of things that might have been more obvious pivots in the lab space. We looked with looks at competing with Quest and LabCorp, and we briefly looked at acquiring a hospital, which was certainly an interesting exercise to go through. I'm glad we didn't do it, but then we'd had a lot of experiences working with payers because doing Covid testing across almost every state we had worked with, every single payer, I think we recognize about 12,000 different health plans across the US that we've worked with every Medicaid, MCO, every Medicare Advantage plan, every large, self-funded group. 36 million tests, more than 10% of the US. We've got sort of coverage and representation seen and interacted with every corner of the payer system. And I think we saw a lot of the cracks in that system. A lot of the issues large national payers who two years into the pandemic were still trying to charge people co-pays for a Covid test and debiting it from their HSA account automatically. And we're having to go in and deal with these issues still two years in because they can't get their systems up to date or payer is sending out explanation of benefits that say that a member is going to owe $100 for their Covid test just because they haven't updated their system. Under federal law, there's no balance billing for Covid testing, so they don't owe anything but sending out these jobs that scare members and then the member doesn't go and get another test because now they're scared they might have to pay. So we're seeing a lot of these issues with the system. And it was getting to the point where we're spending a lot of time dealing with payer issues, made sense to look at. Okay, is the real problem with the US health care system and why we're not able to drive meaningful change? Is that on the payer side? And would it make more sense to actually look at building a payer that can drive preventative care, can drive long term outcomes and actually bring in and engage with new technology and use it to drive better outcomes rather than being trying to avoid anything new at all costs because it might increase spending that may be building on the payer side is what makes sense. And then obviously there's been a lot of movement on the payer side over the last 5 or 10 years of being a lot of new startups in that space, Oscar Bright Clover. And so we were very targeted about we don't want to be on the exchange, we don't want to be a Medicare Advantage plan. We don't want to be doing Medicaid. We really think the untapped space where there hasn't been really any innovation for decades is the employer market, which is how 50% of Americans get their health care.

Yeah, change makers come in different flavors from the insurgents and the revolutionaries to what your team has told us you prefer to be is the pragmatic innovators. Why does that fit what you're trying to do? It sounds like what you're trying to do to me is pretty new. You've built the premise of the challenge you're trying to address around this idea of the deferral of care. Why is the deferral of care right? Care is expensive. Why is that bad?

Yeah, it comes from this observation that the US has kind of run a natural experiment over the past 10 to 15 years with high deductible health plans. You know, 15 years ago we were at about 10% of plans. Meet the ACA definition of high deductible and today were closer to 60% of plans. Meet the high deductible health plan definition. And so there's a lot of data out there on whether that has worked. Has passing the cost onto the consumer and funding their HSA account and letting them shop and letting consumerism drive health care. Has that worked? And when you dive into the data, the answer is a resounding no. Don't shop. You can drive down the street and there'll be two gas stations selling gas at different prices and they'll both have customers at them. We're not actually great at price shopping, and people don't make rational decisions, particularly when it comes to emotional subjects such as health and their finances. People generally make fairly simplistic visions about where they go and seek care and and they really don't price shop. The other effect that is is really substantial when you increase the patient cost sharing is this deferral like you mentioned. So there's a great study. The National Bureau of Economic Research looking at a group going from almost, almost no deductible to a high deductible plan, and it's following them for three years and seeing what happens. And in the first year of increasing patient cost sharing, you get about a 12% reduction in spend. So it looks like, oh, great, we this is working. We've reduced health care spend. The problem is when you dig into what is actually happening there, it's people putting off primary care visits, putting off checkups, putting off screening tests, even though in that plan, design, colonoscopies were actually covered at $0 out of pocket. In that first year of the plan, the rate of colonoscopies went down 32%. So even though it was still free for people to go get the colonoscopy, it went down 32%. And those are indicated colonoscopies where you can tie that to a meaningful increase in the colon cancer rate in that population. And so what you're seeing is the care that gets put off is this lower acuity preventative care. It isn't the high acuity expensive items. So your $5,000 deductible doesn't stop you going to the hospital. If you have a heart attack, you're still going to go to the hospital. You're going to pay the $5,000 and your health plan is going to pay the other $495,000 at that point. Right. Right. It doesn't prevent the actual expense of spend. And for a health plan, about 50% of your spend is 2% of your members who are in those very expensive inpatient stays. What it does do is it prevents you from getting the checkup that might have avoided that hospitalization. So the fact that you have to pay out of pocket to go get that wellness check or that preventative exam that drives people to put it off and oh, I'll do it next year. Oh, I feel healthy. I'm fine. I don't need to see a doctor. And so I think the way that we're trying to look at it is approaching preventative care differently in terms of the value that we assign to it. So the typical way that an insurance plan looks at loss or medical loss right now is every dollar spent is a dollar. You spend a dollar on preventative care, you spend a dollar in the hospital. It's still just a dollar. Right. And the way that we look at it is that dollar spent on a preventative visit that could avoid inpatient stays, emergency room visits, specialty drug use, that preventative care that actually keeps people that's a dollar significantly better spent than a dollar on a preventable hospital stay. So we really want to make that investment up front, get people to engage in the care early and see that payoff downstream with lower E.R. use lower hospital use, lower specialty drug use.

So ten years, ten plus years in this natural experiment, as you described, there's some data, right? You cited first year we rack up the deductible spend goes down 12%. If you're a if you're a plan sponsor. Right. Do we what does the data tell us or does the data yet tell us how long before that reduction 12% goes the other direction? Or alternatively, by investing in that preventative care? How long till you actually see because a lot of a lot of plan sponsors have to be short term focused, right? Yeah.

Yeah. So you're basically back at baseline by the second year and you're actually above where you would have been by the third year. So if you're optimizing on a 12 month cycle, you're pretty quickly shooting yourself in the foot because this is not going to pay off by the second year and by the third year, you're in a worse situation where it's costing you more money and now you have a less healthy population that you're trying to manage and you're still trying to drive your cost down. Unfortunately, then what often happens is people say, Well, what do we do? Last time our health care costs increased. We put up the deductibles and it worked last time. So we should do that again and put them up further. And that just makes the problem worse. And you get sort of stuck in the cycle of deferred care. And so what we're trying to do is really just flip the script on that and say, if we can make it really easy for people to engage up front, make the cost sharing zero so $0 out of pocket cost, no co-pays, no deductibles to go and access care, we will have a higher spend in that first year because people will go and actually do the care that they need. But in the second year we'll get back to baseline and by the third year we'll actually be saving money because there's population will be healthier.

So so you started to get there. Tell us the curative proposition. You have this problem, preventative care, short term thinking, people making the short term choice that hurts them longer term. What is the curative proposition?

Yeah, so the curative plans designed to be very simple. As long as you engage with us in a preventative health visit, which we call the baseline within the first 120 days of signing up for the plan and you will have $0 out of pocket cost for any care, any in network care. So $0 copays, $0 deductibles, 0% coinsurance. This also includes preferred drugs. So you need to see your doctor $0. You need to go to the hospital. You have a baby or even heaven forbid, you get cancer, $0 out of pocket cost as long as you engage on this one preventative visit per year, there's no out-of-pocket cost for our members for any care. And the thing. Thing is, if you want people to actually understand where they stand with their care and what it's going to cost them to actually go and engage with care, you have to make it really simple. And the only way to make it so simple that people really understand what is it actually going to cost me to go see this particular provider for this particular service is to make it zeros across the board. Something we learned from from Covid testing is you can build a lot of trust with the community by being able to guarantee them that they're not going to have an ad pocket cost. With Covid testing, it was mandated by the Cares Act that Covid tests you can't bounce, bill, there'll be no associated fees. And we were able to build a lot of goodwill with communities by guaranteeing that we would never build them for those tests. So there's this fear that's been created in people that any engagement in care is bad because I might get a bill for it and we really have to fight that. And we think the only way to to reset and actually build that trust where people go see a doctor if they're sick or in a preventative manner to avoid becoming sick is to build that trust that it's not going to cost them to go do that. Yeah, so.

Affordability is a critical kind of plank, if you will, in this story. But as you and I have talked before, this engagement, simplicity are also critical elements about that.

So the engagement piece is really key and this is where we use that baseline visit. So it's the pact we're making with our members is we will guarantee that you will never have to pay out of pocket for care, but you need to show up once a year for preventative visit. That's the deal that we're making. If you don't show up for this baseline visit, then you'll have a $5,000 deductible and a 20 care insurance. So it's a kind of $5,000 carrot and stick to drive that one single engagement. We're getting an hour of your time and we really try and use that to to do two things. One is education. So people meet with their care navigator who is available to them. They can text, phone, email, 24 seven to help them navigate through the system, help them make appointments, help them access providers, do follow up and really be their advocate for getting the care that they need. And they meet with their navigator and they explain what is a copay, what is a deductible? What does it mean that you actually don't have any now, what does in-network mean and how do you actually figure out which doctors are and on in network, how do you use the curative pharmacy? How do you access the free 24 over seven telemedicine? When should you and shouldn't you go to the emergency room? Basic health literacy that really should be taught in high school and isn't. And most health plans don't sit you down and on board you and it also really kicks off the relationship with the member in the right way because we're sitting them down and saying, Hey, we want you to access the care that you need. Here's how to do it, and we're here to help you. And so instead of this sort of adversarial relationship that members often have with their health plan, where it's, oh, my insurance company doesn't want to cover whatever it is I want to do, we're sitting them down and saying, No, we really want to engage you in getting the care early and getting you the care you need, and we're here to support you in that. And I think that kicks off the relationship in a fundamentally different way and drives a much higher degree of engagement with the member. So we follow up this educational first 30 minutes of education with a 30 minute visit with a clinician where we're really looking for gaps in care. And what we're really targeting here is people who haven't been to see a doctor for five plus years may have multiple undiagnosed conditions or unmanaged conditions, and trying to close those gaps in care, get them into a primary care physician and make sure that those conditions are being identified early and managed early. Because if we have a prediabetic patient, we want to get them into a primary care physician who's going to manage that diabetes or even reverse it rather than letting that continue to fall on type two diabetes where if it's unmanaged, that patient is going to be showing up in the emergency room potentially with sores, with amputation, where the retinopathy is, and stage renal disease, a ton of very expensive downstream things that are bad for the health plan and bad for the member. So we use it as an opportunity to drive that engagement and look for people that just haven't engaged in the system for whatever reason. For a number of.

Years I've had a chance to see some of your kind of in-market copy and to use the the no co-pays, no deductibles, no really, right. I think that know really piece speaks to some of the potential skepticism like can they really like how does this work? I'm curious to get you to address what the consumer skepticism is, but probably more interestingly, what skepticism you may have heard from the employers, the brokers, in terms of can they really do this? And how do you address the skepticism?

Again, as part of that building trust on the consumer side is there are other plans out there that sort of tout o $0 primary care, but then you've got co-pays and deductibles if you're going into the hospital or if you need any drugs or if the doctor. Prescribes any tests. And so it's kind of where is the Asterix? Is it really zero for everything? And I think we really have to. Usually show people the table of all the services they can access and the zero against each one in the table that it is actually $0 to go and get any of these types of care. And that just takes a bit of reinforcement and kind of trust building with people in terms of brokers and employers, I think a lot of the pushback is mostly that we're new. We've been around for a little under a year, but we're definitely new to the space and they want to make sure that we're here for the long term. And alongside that, we announced another 100 million of capital infusion into the health plan to continue to support the growth.

So year one, the cost of care will go up, right? That's what the model and the task of the test tells you. But you're absorbing that, right, because you're offering competitive rates year two, year, even year three. So when does the employer benefit? Eventually you have to lower the rates for employers, right? Or otherwise, they might as well stick with the BUPA plans. Well, even if they stick.

With the Buca plans, they're offering their employees effectively a 3 to $5000 raise. Even if you don't build in any price improvement, you're basically for the same price you currently say you're offering your employees pick between a $3,000 and a $5,000 deductible plan for the same price. You could be offering them a $0. So that's particularly in the current financial climate. You're offering them a raise without having to actually spend any more money. In the longer term, we expect to be able to keep rates closer to flat by managing this care over the long term rather than the typical 10% increases you're going to get from a bucket carrier every year.

So what is it so fascinating and very powerful? What is the curative plan for what will happen over the next three years?

Yes, we're in the process of scaling across the rest of Texas, say within three years, probably be aiming to be in five plus states.

Very cool. Fred, let's end on an optimistic note. If you were speaking to to the change makers out there, what advice would you give them?

I think there's a lot of people really passionate about actually solving these problems is probably what gives me optimism. You know, I I'm part of this great Slack group called Health Tech Nerds, and that's all these startup guys running around building things, building solutions. And so I think although the problems are obviously immense, there are a ton of really smart, really passionate people just throwing themselves at solving every one of these problems may sometimes seem like the moving the the boulder of the American health care system is is impossible. But I think with a lot of dedicated, smart people chipping away at it piece by piece, we really can make substantial change.

That's great. All right. We'll leave it there. Fred Turner, the CEO of Curative, thank you for your time.

Thanks for having me on.

Thanks for listening to Prophets Healthcare Transformers Podcast. This podcast is produced by Jared Johnson and his wonderful team at Shift Forward Health and a big thank you to our hosts Priya Nasir, Lindsey Mosby, Paul Shrimp and Jeff Gordy. If you like today's episode, you can find more great content like this at profit slash thinking. I'm Anna Kuno, the senior editor of this podcast. Thank you for listening.