Chris Severn, Turquoise Health, on bringing price transparency to healthcare

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Chris Severn, Co-Founder and CEO of Turquoise Health

In this episode, we interview Chris Severn, the Co-Founder and CEO of Turquoise Health, a company working to bring real price transparency to healthcare. With recent and upcoming waves in pricing legislation, combined with its fundraise led by a16z earlier this year, Turquoise is tackling the transparency problem from several angles by creating new tools for patients, payers, and providers.

During this conversation Chris and I discussed:

• Recent price transparency initiatives that fueled Turquoise’s rapid growth over the last year
• The suite of Turquoise products and how they can enable improved price transparency and payer-provider rate negotiations
• How these products can work together to facilitate contracts that lower prices

Start to 13:00: Launching Turquoise

• When he was just a kid, Chris had dreams of emulating David Letterman as a late night host. At some point he realized that this might not be the right path for him, and ultimately Chris found himself in consulting.
• Specifically, his work was in revenue cycle management for hospitals, where he became privy to the secret negotiated rates between payers and providers. This served as the inspiration for the problem that Turquoise would later work on.

Editor’s note: If you’re new to this space, seeing how negotiated rates compare to cash prices (i.e. prices without insurance) can be shocking. For a glimpse into what Chris might have been looking at, the New York Times published a great piece on the crazy patterns of hospital rates in August 2021. If nothing else, it makes a strong case for why greater price transparency is important.

• Leaving consulting Chris had an itch to start something of his own. He synced up with Adam Geitgey, who had a strong software background and would later become Turquoise’s CTO, to combine their expertise to tackle price transparency.
• This was in large part fueled by a wave of price transparency initiatives on the policy side. Following an executive order from President Trump in 2018 and both bi-partisan and public support for greater price transparency, the CMS Final Rule on price transparency was released in November 2019 and, among other things, required hospitals to publish their standard charges (i.e. the pre-negotiated rates) by January 1, 2021.
• Throughout 2020 Chris and Adam followed the legal challenges and, realizing the Final Rule was here to stay, prepared for the January 1 date. By January 17, 2021 they had aggregated and published data from around 1200 hospitals.
• Turquoise did not launch with major customers. However, when organizations like the Wall Street Journal began to use it for research, Turquoise soon found itself in the “press flywheel”. The newfound fame helped the company land investment conversations and new customers shortly thereafter.

“We really rushed the punch, we were ready on New Year’s Eve with this data. We published it [around] January 17 with 1200 hospitals. So the first 17 days of January were wild, and then quickly soon after it became a big talking piece.”

• To meet the demand for this data, Turquoise rapidly expanded the people side of its business. While still lean, it started working with “real lawyers” to develop contracts and onboarding new teammates to help facilitate the sales process. Today, not long after its first anniversary, the company has 19 full-time employees and just over 40 customers.

13:00 to 40:00: Turquoise’s product offerings confront several components of price transparency problem

• Chris thinks of the company’s product strategy across two key pillars. The first is around market data and its distribution in an easy-to-use format to multiple stakeholder types, including both payers and providers.
• For patients and the general public, Turquoise maintains a searchable, public database that anyone can use to learn about a given procedure and compare pre-negotiated rates across providers in a region (here’s an example for “joint replacement of the hip or knees”). Chris acknowledges that this part of Turquoise’s offering is still incomplete without an exact rate estimate for consumers (which is coming in the future), but at the very least he hopes it encourages consumers to shop around for lower-cost, high-value providers in their area.
• The second pillar is to facilitate a platform for rate negotiations. As healthcare pricing data becomes easier to obtain and analyze, Chris believes that payers and providers will naturally begin to uncover opportunities to save money or uncover value. Since Turquoise is already invested in aggregating and distributing the underlying data, it believes it is well-positioned to create an effective platform for negotiations.

“A lot of the focus on price transparency is how does this work for patients. At Turquoise, at the start we’re focused on B2B… We’re leaning on economics to do the work for patients when we get this data in front of payers and providers.”

• To drive forward this second pillar, Turquoise is launching what it calls Clear Contracts. This can allow payers or self-insured employers to submit a bid and participate in the market negotiation process directly with providers.
• This product brings payers and providers to a single platform where they are looking at the same source of truth on benchmark rates. The product digitizes the entire contracting experience and allows both sides to actively propose edits and negotiate more efficiently.

Turquoise’s Clear Contracting platform, where payers and providers can manage, negotiate, and sign contracts. (Source: Turquoise Health)

• Clear Contracts might also lead to improved price transparency for patients. Turquoise promotes contracting approaches that simplify the reimbursement process so that it becomes easier to predict what a procedure will ultimately cost the system and the patient.
• Another element in the journey towards greater transparency is the “Turquoise Verified” badge, which is given to those providers who maintain up-to-date information on their rates and are open to receiving patients. While not all providers are verified, Chris views this as a key first step to enabling consumers to shop around for their care more easily and avoid surprise bills, which has been another big topic in the policy world recently.
• Finally, one last key piece in Turquoise’s product strategy is its Pricing API. While the company has already developed a user-friendly interface for finding and comparing rates, it also makes the underlying data available via API for third party developers who need it for their own tools. Even though some products that this powers could be potentially competitive to those made by Turquoise, Chris views the API as an essential component to the company’s broader mission and reach.

“We’d be foolish if we tried to force everything onto the Turquoise platform and Turquoise products… We love when our API just snaps into a module of someone’s interface, because there’s too many folks working on great things in healthcare to think that you’re going to be the one Messiah company that fixes it all.”

40:00 to 43:00: Looking ahead

• Chris says the company’s main focus over the next 12 months is to marry their pricing data and contracting products. Doing so could encourage contracts with lower prices.
• Specifically, Turquoise aims to bring patient cost estimates to their contracting platform. The idea is that these estimates could lead to the negotiated rates within certain contracts. As a result, Chris expects out-of-network care and patient engagement to increase since consumers can more easily shop around for what is most cost-effective.
• Asked about prescription drugs, Chris said this is an area that Turquoise does not plan to enter. He is “a big fan of GoodRx” and others addressing the challenges of that space. Turquoise only gathers data on drugs that are administered by healthcare professions in a clinical setting (e.g., many intravenous / injectable drugs, such as those commonly used in oncology), not those found in a retail pharmacy.

43:00 to end: Parting thoughts, and roles at Turquoise

• Chris is bullish on infrastructure solutions in healthcare, such as those around building better quality metrics or APIs that can support other players in the industry.
• With 2021 being another year of record-breaking investment in digital health, he encourages those considering healthcare to take the leap.
• Finally, for those looking to join Turquoise, the company’s near-term hiring is for product design and full-stack engineering. Roles for MBAs will likely become more clear in Spring 2022, but Chris encourages anyone interested to reach out to chat about how they can help have an effect on the price of healthcare.

“If ever there was a time to get into starting a healthcare business or joining an early stage startup, this feels like the time to join the healthcare bandwagon.”

To see roles Turquoise is hiring for, check out their careers site here.