Banking on KC – Michael Rea
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Kelly Scanlon:
Welcome to Banking on KC. I'm your host Kelly Scanlon. Thank you for joining us. With us on this episode is Dr. Michael Rea, the Founder and CEO of Rx Savings Solutions, the Kansas City area company that offers an innovative, patented software tool that offers transparency into prescription drug options. Welcome, Michael.
Michael Rea:
Hey, Kelly, thanks for having me.
Kelly Scanlon:
When you say that you help simplify pharmacy and help members save money how do you do that?
Michael Rea:
What we're going to do in a nutshell is try to organize information in a way that consumers can understand and most importantly take action on. We do that from two angles. One is therapeutic in nature, which therapies can treat a given condition and the other is price, and that is, which pharmacy is highest cost, lowest cost. So organizing those two components we can help consumers and their health plan sponsors in a big way.
Kelly Scanlon:
Yeah, really. Everybody wins, the consumer wins because they're paying less for their prescriptions and then the healthcare plans win because there's lower cost involved. Is it as simple as that?
Michael Rea:
Yep, that's it. We're looking for win-win situations. It's not rocket science from a concept perspective it's really just trying to uncover those opportunities to save money and help members take action on them.
Kelly Scanlon:
You were a former retail pharmacist and it was your interactions with your customers that inspired you to start Rx Saving Solutions and I remember you once talking about one particular incident that specially moved you and was really the situation that became your jumping off point. Tell us about that.
Michael Rea:
As a retail pharmacist it was not uncommon to hear questions asking about prescription drug pricing and the fact that they were always on the rise, that was just commonplace daily conversation. But I had an interaction with a woman named Betty. She was diabetic, had high blood pressure and high cholesterol and she asked me one day which two of eight medication she should skip. And that got my attention in a way previous questions and inquiries weren't able to, and naturally I said, "Why do you want to knowingly make this choice? These are not nice to have medications, they're important to keep you healthy."
Kelly Scanlon:
Right. And she was wanting to stop taking a quarter of them, two of the eight, you said?
Michael Rea:
Yeah, and I think she was pretty matter-of-factly just asking for advice on which two are most important. She wasn't considering ways to try to solve the problem it was just she was between a rock and a hard place and didn't think she had any options. What I did is I naturally asked her, "Why do you want to make that choice?" And when I learned a little bit more about her situation where she was just having a tough time, she was living paycheck to paycheck and didn't have enough money to make ends meet until the next payday, it spurred me into action to say, "Look, let's try to think more creatively about what a solution might look like and let me spend some time at home to think and see if there's a better way to solve this problem."
Kelly Scanlon:
And so you went out and you actually did some research for her on her behalf?
Michael Rea:
Yeah, I did about six and a half hours of research on those eight medications. It was somewhat of an arduous painstaking process that I had to figure out one little bit by bit, but at the end of the process through the calling pharmacies, looking at online documents, trying to coordinate and piece together this really sophisticated puzzle, I was able to find what I thought was a solution that was really pretty simple in each of the eight cases. When I went through those solutions with her I tried to arm her with the information. She needed to have some conversations with her doctor. She was able to have those conversations and within 24 hours she was able to implement all the changes that I suggested and save $250 and got all eight of her medications. It was a really, really powerful moment for me and certainly for her.
Kelly Scanlon:
Oh yeah, to be able to not have to make the decision between paying rent and taking her medicine or buying groceries and taking her medicine. And that was really the final incident that spurred you to found Rx Savings Solutions. You didn't give up your day job right away, but you did, you started looking if this can help one person, could I help many people? So tell us about that and how the company has grown since then because you've got more than 200 employees today, right?
Michael Rea:
Yeah, that's right. Yeah, early on it was shocking to me that I was a pharmacist working in a retail pharmacy, educated as a pharmacist from a therapy perspective and it took me that long to piece together all the information needed just to make a better more informed decision. A lot of folks claimed they were already providing that service but it was apparent to me in that moment that while there are claims may be made, at the end of the day consumers were feeling confused. They didn't feel empowered, they didn't feel educated, informed, all the things they needed in order to make cost-conscious decisions, cost-effective decisions like we do in every other facet of our life.
Michael Rea:
That initial six and a half hour research project, if you fast forward to today, as you've mentioned we're a 200-employee company. We service about 9 million members and we have developed software that is patented. That takes all of those made process pieces from a therapy perspective and from a cost perspective and makes it into a 10th of a second decision-making process where we can help millions of people all at the same time.
Kelly Scanlon:
Talk to us about the Fortune 500 companies and the major health plans that you work with. Why was it so critical to establish those relationships and to get them on board? Because, as you said, you yourself and some other pharmacists too were dealing with individual patients. For this to really make an impact and be effective you had to get it out to the masses.
Michael Rea:
It's really a couple of factors that make it such an important way to do business. I mean, the way that we get to the market is done faster through an enterprise sale, meaning go in and sign up an entire company. And really the value proposition to the client, to the health plan or the employer is one where there's tangible hard dollar ROI. And so there's savings on behalf of the plan, on behalf of the plan sponsor or the health plan, and that is a more efficient way to try to paint a financial picture. It also is a really good way for software to scale. There's obviously different models. There's direct to consumer models and there's enterprise software models. The one that works well for us just given the way that health system is set up is to actually make those bigger sales to employers and to health plans where there's more of a concentration of members.
Kelly Scanlon:
So I'm a patient and I may be someone who is basically dependent for the long-term on a certain type of medication because I've got diabetes or some other long-term kind of issue. Or, I might be somebody who has cut my leg and now it's developed an infection so I need a course or two of antibiotics. How do I when I go to the doctor and get my prescription or if I'm a long hauler and I go to get it refilled, how do I know what is available through you? How do I even know that you exist? Is that something that my employer has already informed me about?
Michael Rea:
Yeah, it is. And so when we launch with any new employer we have a marketing campaign where we will coordinate with the health plan or the employer to communicate to members via email, via text, through whatever kind of means they typically use to communicate benefits. So we'll have that touch point right at the beginning. To call out a couple of situations, there's the acute situation where you've got an infection or maybe you had a tooth extracted where you need a pain medication or an antibiotic. You can actually come to our web app or a native app and do a price search. So you can look up drug A, you can find out all the prices at the pharmacies close to your house, through your insurance, and you can also find alternative therapies if there's another drug that does the same or very similar thing for a fraction of the cost. So you can do that proactive search.
Michael Rea:
What we also do for people that are on maintenance medications chronically is we're actually always monitoring the claims information. So we know if Kelly is on drug A every month and suddenly that price spikes, we can catch that with our algorithm. We can actually proactively send you a text message, an email, or give you a phone call and let you know that there's maybe a different therapy that you could use or a lower price pharmacy. And so we're like a monitoring service, almost always watching for any inefficiency or opportunity to save money as market conditions change.
Kelly Scanlon:
Okay. That is very easy, you're proactively doing all of this research and alerting them. And then do they need to go have a conversation with their doctor to write a different prescription or do you give them something that they can take to the pharmacy themselves?
Michael Rea:
We will actually do all of that work on behalf of our members. We'll call the doctor, we'll communicate with the pharmacy, and we've got some more efficient technology that we've set up in order to be able to accomplish that much easier and faster than a consumer doing it. We really believe that if we can serve up the savings opportunity and you want to take action, we'll do the heavy work to make that action come to fruition.
Kelly Scanlon:
You have some new functionality on your website that is making things even easier, tell us about that.
Michael Rea:
There's a couple of pieces of new functionality that I'm pretty excited about. One is a contact prescriber feature where we will actually reach out to the doctor on your behalf and coordinate any changes that might need to happen or refills that might need to be added to a prescription. The other is actually the ability within the application to order refills. One thing as a consumer I always find frustrating is if I have to call into the pharmacy, punch in a bunch of numbers, confirm it three times and then make a trip to the corner pharmacy where these days there's worry that there might be sick people in close proximity. So within the application what we allow now is actually just a one-click refill option and that medication will show up at your door.
Kelly Scanlon:
Wow.
Michael Rea:
It's not transformational in the fact that this has been happening in some regards for years but we do think it's streamlined, simple and easy to use, and it is a great time given the COVID situation that we all find ourselves in to really give consumers even more power, more choice with less touch points in the healthcare system.
Kelly Scanlon:
Right now there is some legislation that's been proposed that's pending that could impact America's 54 million Medicare recipients. What would that legislation do?
Michael Rea:
These are two bills that we're tracking very closely. One is CMS-9915 and the other was CMS-4190. And essentially what they are asking health plans and employers to do in the Medicare side of the business is to give transparency that includes therapy options and pricing information to consumers. And I think that what they are betting on is that nobody cares more about your own pocket book than you, and if you can arm consumers, specifically Medicare recipients in this case with the information that they need to make better more cost-effective decisions, they will in fact make those decisions. It won't be a demand, it will be a choice which the consumer loves because they have choice, but also drives us to think in a cost-effective cost-conscious manner. And really at the end of the day that leads to better adherence with the medications that are prescribed and at a lower cost than they are today. So we think that's going to continue to drive the market and it's going to continue to educate and empower consumers.
Kelly Scanlon:
In spite of the work that you and others are doing in this area, there's still so much more that needs to happen. I mean, you've already undertaken a huge educational transformation with the companies that you work with and the providers that you work with. In fact, you just released a consumer insights report that speaks to that, what are some of the key takeaways from that report?
Michael Rea:
There were a few things that I think we knew but it was very interesting to see the data back them up. One of those things was 70% of survey respondents don't feel like they have any control over the cost of their prescriptions. When you think about that, only 50% of people take a maintenance medication. So to think 70%, all those other folks that maybe have a tooth extraction or an infection of some type, they don't feel empowered, they don't feel they have any control over what price they pay when they get to the pharmacy counter. Pretty shocking.
Michael Rea:
Coupled with that, of the survey respondents that we got information and and responses back, 34% have seen their prescription prices increase just since last year. Those things just really show the drive in the market. Some of that is due to cost sharing, some of that is due to insurance plans, setups, deductibles, things like that, but that's just putting even more stress on the member which makes a tool like ours all the more powerful.
Kelly Scanlon:
How has COVID impacted all of this?
Michael Rea:
COVID has increased the adoption of our software tremendously. There are certain components of it like the home delivery option that we've seen just increased conversion on, where a member maybe was filling at the corner pharmacy but doesn't want to have that touch point with the rest of the healthcare ecosystem if they can avoid it, so adoption of that home delivery has been a big one. I think the other thing is consumer wallets are stretched right now, and people that may be were not as receptive to a saving suggestion in the past are rethinking that. Maybe they've had some type of financial impact. And so we've seen adoption in that regard really drive member utilization on the website. It's very unfortunate from an economic standpoint but it is something that we feel good that we can help in these times of stress, especially when it comes to something as important as prescription drugs.
Kelly Scanlon:
Small businesses, are they able to take part in this? What are their opportunities here?
Michael Rea:
Yeah. One thing that was important when we started the business was we had to get scale quickly. With the price points in the business model that we had it was important that we got some of those big Fortune 500 employers and health plans initially. What we have tried to do, especially during the COVID timeframe is actually work down market. So we are servicing customers that are 10% the size today than we could have a year. And really what that is showing is our reach down too is low as we can go at this point, which is about 500 employees. We're working and we're expanding the market that we can attack and really the places that we think we can be the most help.
Kelly Scanlon:
You continue to shake up the healthcare industry, especially the pharmaceuticals as we've talked about, but let's talk about you the businessman right now. What advice do you have for other entrepreneurs who have a disruptive idea like you had, because I know at one point your company wasn't funded, you stuck with it but you were losing a lot of money at one point.
Michael Rea:
Yeah. Yeah, I think that the key attribute that you must have is persistence. If I had a chance to say three things I'd say are passion, people, and persistence. You got to love what you're trying to do. You got to believe in it, you got to be so passionate about it that it can push you through the really tough times. On the people side you got to surround yourself with good people, whether that's friends and family to give you support in the beginning or employees and executives along the way.
Michael Rea:
But the most important part is persistence and I think that no entrepreneur's path is the same. So to say that my path is something that others can carbon-copy, it's pretty tough. I think that you got to make a lot of really gutsy decisions along the way about when to raise money, when to give away equity, when to hire people, when to make bets, and that's really the thing that at the end of the day can make all the difference. And it deserves thought, but when you make a decision you got to go with it and you got to just go find a way to make it happen.
Kelly Scanlon:
Absolutely. Michael, thank you for all that you're doing to help improve the quality of life for people, you're really making a difference.
Michael Rea:
Thanks, Kelly. I appreciate it.
Joe Close:
This is Joe Close, President of Country Club Bank. Thank you to Michael Rea for being our guest on this episode of Banking on KC. Kansas City has gained international reputation for being home to entrepreneurs and innovation. Innovation is especially powerful whenever results in the quality of life changes that Rx Savings Solutions allows. Country Club Bank is proud to have supported Michael and Rx Savings Solutions, as well as other entrepreneurs who bring game-changing solutions to the forefront. Thanks for tuning in this week. We're banking on you, Kansas City. Country Club Bank, member FDIC.