Redesigning the Health Insurance Experience: An interview with Collective Health CEO Ali Diab
Ali Diab is the co-founder and CEO of Collective Health, an enterprise healthcare technology company that helps self-insured employers manage their health insurance. With more than 200,000 members and 40 enterprise clients, Collective Health is reinventing the healthcare experience for employers and their employees.
Combining four solutions—health plan, concierge support, engagement hub, and analytics—in one complete system, the Collective Health Platform gives employers the ability to simultaneously manage their healthcare investment and take better care of their people. The company has raised $230 million from investors including NEA, Founders Fund, GV, and Sun Life
Zach: Thanks for talking to me today, Ali! To start off, what were you doing before Collective Health?
Ali Diab: Of course. So, I was in consumer and ad-tech. I was the VP of Product and Business Operations at AdMob, which was the first mobile advertising network and the first company to do ads in an iPhone app. Before that, I was at Yahoo for many years where I ran large consumer product teams: mobile, search, maps, that kind of stuff. Before that, I was at Microsoft where I joined after being acqui-hired when my first company didn’t do so well. I worked on consumer stuff there: MSN mobile including Mobile Messenger and Mobile Search
And you got into Collective after leaving AdMob?
Yep. So I left AdMob and was really just on the beach, taking some time off and hanging out with my kids. I was dabbling, I started a very private photo-sharing app that was like the antithesis of Instagram. At the time, the Apple Photos app didn’t have all those features and wasn't very good at organizing pictures.
But over the course of working on that, I got sick. It was this really severe thing, and it put me in the hospital for a long time before getting better. Then I got this hospital bill, and was bewildered to discover my insurance company at the time didn't want to pay for most it.
That’s really what precipitated all of this. I reached out to Rajaie, who I’d known for years and was an expert in this stuff and a practicing physician at Stanford, where I got treated.
I said, ‘Hey dude, this is what just happened to me. What can I do? What are my options?’
I think over the course of hearing how exasperated I was, he started thinking, ‘What am I doing, I can’t just write papers on this stuff. I want to help people.’ So, six months after I was hospitalized, we decided to just quit our day jobs to go start a company. What were those first conversations like with Rajaie?
Very exploratory. We were like, ‘Let's unpack everything that's happened.’ Then we constantly asked, ‘Why does this happen?’
The thing that we kept coming back to was, the industry was not set up in a way to incentivize the actors—the hospital systems and doctors and health insurance companies—to be helpful. Whether it was regulation, whether it was perverse economic relationships, it just wasn't structured in a way to make things transparent.
So we thought, well, how do we think about building a new product? How do we create incentives, and create economic structures where people feel like it's in their best interest to be helpful?
And that's when I heard of self-insurance, we stumbled into it. Big companies pay for their employees' healthcare themselves and actually don't have an insurance company underwrite the risk.
They’re out of that weird insurance rubric and so aren’t as much an adversary with the person providing a service to you, which is good. Also, at the end of the day, they actually had an incentive to have people do healthy things. They don't want their employees to be sick: it impacts paid time off and productivity and all these other things in addition to people's health and well being.
So, then when we started to dig, we realized the same people that provide health insurance are actually the ones who are also helping organizations do self-insurance.
We thought ‘What if we built something that was devoted to this market segment?’
How did you figure out that hypothesis? Or was it intuitive?
It definitely felt intuitive and it is still is a hypothesis. But it was consistent with other markets I had worked on. Working on ad exchanges is very eye-opening.
If you're trying to send somebody a message to do something, understanding how to influence that person, even if that message is in their interest, is a huge part of what ad tech is all about.
So I brought that with me to Collective Health. That gave me the confidence to say, you know what, if you build a compelling and captivating enough user experience, and you deliver a high level of service to people, they will trust you when you make a recommendation.
‘[We aim to] make it effortless for people to understand, navigate and pay for healthcare’
It’s just like how we tend to respond to the suggestions of the best companies that we have grown to know and love as consumers. When Equinox sends me a message saying, ‘Hey you might be interested in this new class that we're offering,’ I tend to listen because I like their product. I really enjoy the service and they’re not pushing it down my throat.
A good ad network isn’t about spamming people. On the contrary, it's very finely tuned. It’s about building trust. If you hit people over the head with the same message too many times, they’ll just turn it off. Even more so if you’re sending someone a message about their health, right? It’d better be very relevant, it’d better be very specific, and it’d better be extremely actionable. How would you break down the buckets of value Collective Health provides? I think it's encapsulated in our mission statement: ‘Make it effortless for people to understand, navigate and pay for healthcare’. I think the value is in those three axis.
First and foremost our goal is to help people understand, even before they make healthcare decisions, what they're getting into. We wanted to spend a minute thinking about how to communicate the core elements of insurance and healthcare for members when they sign up. You've got to start there. If there's no understanding, then you’re toast. That's a huge part of what kind of beleaguers people in this industry: they just don't understand how to make the decision, not to mention what decision needs to be made in the first place.
Our member experience is so important because the first thing it has to convey is a sense of understanding. Then once members understand, we can help guide them in terms of what the best decision is — and that’s the navigation piece.
"I spent 600 hours on call center lines. 600 hours. That’s 14 weeks ... It was clear there was a distinct lack of design and designer consideration in my experience in health care"
We want to help members understand what their options are, whether they may be going down the wrong path, how to discern one from another, and which criteria they should use when making a decision, and do that all in a very transparent way that reinforces understanding along the way. The best types of systems reinforce understanding every time you use them. Like with a search engine you better understand how to frame your queries as you use to continue to use them.
Last but not least, a huge part of what we do is enable people to pay for healthcare. So, make that as transparent and value-creating as possible. So, before the fact: help people understand what kind of expense you should expect, and do everything we can to illuminate the cost drivers underlying why they’re paying something as an individual or a population. Then, help them understand areas where they could have been more cost-effective in their decision-making.
You went to this place for your MRI. It may be after-the-fact, you already paid for it, but if you had gone down the street you would have gotten the exact same level of service for $300 cheaper.
Or as an employer, did you know that 30% of your employees are going to this hospital for childbirth but did you know that this hospital doesn’t have a very good track record and it’s 20% more expensive. Are you sure you want to keep allowing people to go there? Or would you like suggestions on how to get people to go to another place that’s better quality and less expensive through plan design or through contracting? That’s also reinforcing the actual understanding part, which is critical.
If you’re not in insurance, plan design isn’t something people know about. Why is it so important? And how does Collective Health support it?
Plan design, if you boil it down, is just an economic arrangement which clearly delineates your responsibility as an individual with your employer or your plan. It’s turned into a kind of dark art because consultants and others use plan design as ways of discouraging or encouraging certain kinds of behaviors, and it can be actually quite effective in that respect.
But, at the end of the day, it really is just a policy to help you understand what are you on the hook for, and what the plan sponsor, your employer, is on the hook for.
I think it's a little bit heavy handed sometimes. That's where there's a lot of opportunities to use education instead of the blunt tool of not covering something. It doesn’t feel like it's the right thing to do, just using dollars, to get you to do something.
"Someone once told me: ‘You're not going to disrupt an industry or change the world and not break some glass.’"
That's what actually one of the things I find most exciting. We could grossly simplify plan designs so people don’t have to think about 50 different variables related to the type of care they’re going to get. Instead, we could actually encourage them through knowledge to see why it's in their interest to do something. Even if it might seem more frugal, It's actually better quality.
Collective Health has this service component, the Member Advocates, who play a large role in the navigation and education of patients. How did they fit in, and how did you come to the decision to invest in people as a core component of serving members?
That's a great question. I think when you address a market opportunity or consumer need, you have to be realistic in terms of what are the access methods that people use. Like it or not, as a technologist, it was immediately apparent that we couldn't just have a call center-less experience. It's just not possible. The vast majority of people call about their healthcare.
I think what we can do over time, kind of like financial institutions has done, is wean people off of that. We would limit those kinds of telephonic interactions to only the most complicated things that are difficult to encapsulate in our software, That is definitely the goal: our 20-year vision of this is that as few people as possible call. They shouldn’t need to. We hope they won’t even want to call. It’s way easier for me to check something on my Bank of America app than it is for me to drive to a branch and wait in line.
But you have to start with a baseline, and I think that's what we've done really well. I think we started with a really nice baseline and we've chipped away. There are becoming more and more areas where people just don’t need to call. It's really nice to observe that hypothesis in the data we’re actually seeing now
So I would say that it was a necessary requirement, and it will be for the foreseeable future to have that human touch.
I also think there's a certain there's level of emotional charge that people have when they're dealing with a healthcare issue. They want to talk to somebody. I was actually just talking to our creative director about that peace of mind that comes from hearing someone's voice and having them assure you to not worry. That’s very important in this kind of situation. You can't be completely dispassionate and provide them with just a UI and no phone number, even if it’s the sexiest UI on the planet.
The best consumer design and the best user experience companies recognize the realities of the markets that they've decided to enter. It's one of the reasons why Apple has stores right now: they realized stores were actually a pathway to educating customers about their products. Consumers can physically sit down at their Genius bars, and Apple employees can tell people how their phones work because they're complicated instruments, and once consumers do know, they’re addicted to it and never want to change the product.
"Healthcare isn’t one monolithic $3 trillion industry it’s many smaller sub-markets and sub-verticals: drugs on one end and hospice care on the other. There’s no one flavor of healthcare, so you have to learn a lot."
I actually viewed the call center experience in some ways as a virtuous cycle enabler. Our Member Advocates had the opportunity to reinforce that understanding with our customers, which will make them love the product even more than they already do. They’re the best salespeople for the product by saying ‘Oh do you know your plan actually offers this,’ or ‘We could also handle this on your behalf,’ or ‘You could actually just submit that right online.’
People are inherently busy and don't have the time even with all the materials to read something that is usually not going to be used unless there's a need for it. It’s different than a social product: our members aren’t going to open up our product and say ‘Oooh! I wonder what happened with my medical claims today!’ But they want the peace of mind that when they do need to call they can talk to someone and get the right answer.
How did you come about training the Member Advocates and providing them with technologies to support them?
Well, my origin story drives a lot of that. I spent 600 hours on call center lines. 600 hours. That’s 14 weeks. If I think about the cost of that time to me and the condition that I was in, that’s abominable.
So, that spirit underpins why this is such a crown jewel for us and why member Net Promoter Score is held in such high regard.
Like the best consumer companies, we’ve had to observe and learn and iterate. That is key. Those feedback cycles important. When we told people we were going to put our customer operations center here in San Francisco, next to product and engineering and design, people thought we were insane. They're like “That’s 50% more expensive than Boise, Idaho, or Albuquerque, New Mexico, what are you doing?”
But we will learn fast. If you think about what you try to optimize for as a startup in the early days, it has to be speed to learn. It’s all about calibrating and changing direction and being athletic. If your call center staff are on their own in a second office halfway across the country or outside the country, it’s really hard to learn. In general, how do you encourage the company to best iterate and learn? Do you have a philosophy about using data or other insights?
Just having data to use in a feedback loop is critical. We’re good in some areas and weak in others and we’re shoring those weak areas up. We’re being as data-driven as possible. Relying on your intuition is a fool’s errand.
In terms of actually structuring the organization, both in the early days and now we’ve tried to make it as flat as possible.
Ultimately, nothing is a better substitute for learning and evolving than getting the right people with the right mentality. We could have structured the company in two or three different ways, and probably achieved the same result. But if you have the right people in the right roles, they tend to ignore the fact that there's a demarcation line between different organizations, and just work together as if they were just part of the same team. That's also why having company OKRs and shared OKRs across different organizations is critical in breaking those walls down.
A lot of people obsess about organizational design and I think it is important to think about it. But sometimes they take it too far and think it’s the be all end all for success and it just isn’t. The personalities are just as, if not more important than the structures themselves.
Can you talk a little bit more about Design in Collective Health?
For us, design was central since the beginning. Susan Dybbs, our current VP of Design and Product, was the first non-founder.
For someone like me, with a consumer product background, it was clear there was a distinct lack of design and designer consideration in my experience in healthcare. Healthcare is a Frankenstein: it was assembled hastily, cobbled together, without really any forethought for the service experience and the user journey.
When you're planning something, first and foremost you need a blueprint, and that is effectively a design chart or design documents. When we started, we thought, okay, let's go find the best possible design person who is obsessed with this problem and can try to convince them to join us. Fortunately enough we did. Susan, obviously, is still here now running the entire product management organization on top of design. That should tell you, I think, how important design is, that she was the first person and that her mandate has grown to cover both product and design. I think great design and great product are kind of inseparable. The companies that I admire the most in the world: the Apple’s, the Nike’s etc, view them as basically the same thing.
What was building the first iteration of the technology product like?
If I had to give some advice to someone trying to enter into healthcare: First and foremost, do some reading. Actually, understand the industry you’re getting into, and if you don’t have expertise, go get some.
I was fortunate enough that Rajaie was an expert on the medical side but even he doesn’t know anything about health insurance. So, we literally spent the first three months just talking with people; any company that would be willing to talk to us. We talked to the President of Healthnet, a Chief Actuary at Blue Shield, a dozen or two dozen people at Stop Loss insurance, medical reinsurance, etc. We talked to everybody that we could get a meeting with, just to understand how does this industry work, how all of the different components function together.
I think that with web products over the last decade there’s become this fascination with rapid iteration. There’s a ‘Change a pixel here, change one there’ mentality.
Healthcare isn’t one monolithic $3 trillion industry it’s many smaller sub-markets and sub-verticals: drugs on one end to hospice care on the other. There’s no one flavor of healthcare, so you have to learn a lot. So once you did that research, were those first conversations hard?
They were really hard — They’re still hard! "Collective Who?" There were a lot of chuckles. ‘Yet another tech team trying to crack healthcare.’
The first ‘Yes’ was a company called DataSafe. It was a very interesting, meandering courtship. I had a high school friend who runs a very successful health insurance brokerage company here in the valley. A lot of the biggest tech companies were his customers.
"I tell people the best inventions are rarely revolutionary, they're evolutionary. Google wasn't the first search engine, and the iPhone was certainly not the first smartphone, and we're not the first TPA."
I said, ‘Hey, can you help us get this product out to market’. He ended up becoming a believer in our work, invested his own money in the company, and started to open some doors.
He said ‘I'm not going to give you one of my big groups first. If you screw the pooch on this, I want damage control. I'm gonna give you something that's a little bit off the beaten path.' So, he introduced us to DataSafe, a document storage and shredding company based in Brisbane.
Many of their employees drive trucks around picking up the paper boxes, but they had a forward-thinking head of HR. She basically said ‘We’re self-insured and we’re a family-run business, so we’re pretty frugal. We also manage risk well, so you don’t have to convince us of the merits of self-insurance yourself. Just convince me that you can do it better than our current vendor."
Four or five months later, after meeting her several times, she was convinced and said ‘Yes.’ That’s not like a consumer app, where you can just throw it on the App Store and do some marketing and people will try it. How would you advise someone who’s trying to sell a new solution that will be a core part of a company’s business?
I think you just said it: It’s a core part of the business.
It isn't like buying bubble gum or shampoo. This is a high-consequence purchase and the decider’s job is often on the line. Benefits people are unsung heroes, in a lot of ways. They're rarely applauded, but they're often on the hook if things don't go well.
We have to understand that that’s the position that they're coming from and so risk mitigation is a big part of their decision strategies. One of the things that I learned and I'm still learning is that, not unlike an enterprise software sale, you’ve got to really map all of the influencers in the organization and create an influence diagram. In some companies, the CFO and even the CEO are very intimately involved in this decision, and in others, the benefits team are the only people you need to convince. So, quickly being able to suss which organization you are selling into is a real advantage in terms of being successful on how you sell into this market segment because every organization is different.
You can't even characterize organizations based on their size or industry sector. I mean, they're often characterized by the personalities. Every CEO is different: Steve Jobs is very different than Larry Page, so it’s not something that you can clearly demarcate using quantitative methods.
Like a good sleuth, you have to get in there and make sure this person or that person is on board. You have to very quickly figure out who the influencers are. There’s clearly a lot going on in healthcare with the Amazon + JP Morgan + Berkshire Hathaway project and everything else. Do you have any thoughts on where healthcare is going in the next 5 years and how Collective Health will fit in there?
I think having come from the world of mobile is really helpful for me. The mobile world de-layered in a lot of ways along capability lines. I think the healthcare industry will do the same
If you think about mobile 15 years ago: You bought your plan, and you bought your cell phone, and any apps that were available you bought from the same carrier: AT&T or whoever it was. Then, along came devices like Nokia smart phones and the Blackberry and then the iPhone and it slowly became clear that there were a set of capabilities involved in making a phone that didn’t necessarily overlap with running a telecom network. I think the carriers in the telecom world quickly understood that they won’t going to own the device, or even the apps running on the device, because they just didn’t have that expertise.
I think that health insurance industry is coming to that realization. The whole notion of assembling a major network, basically just the contractual relationships between the paying entity and a hospital or doctor, is a very different skill set than building the ability to engage users, process claims, and pay for those claims, as well as run analytics on that experience.
We're seeing a kind of de-layering in the market as a result. I tell people the best inventions are rarely revolutionary, they're evolutionary. What I mean by that is, usually someone has pointed out that there's something there before the real winner comes in and takes over.
Google wasn't the first search engine, and the iPhone was certainly not the first smartphone, and we're not the first TPA. But the notion of being a TPA, the notion of being a smartphone, and the notion of a search engine existed to provide a blueprint of what could be done, and if you improved upon it, you could have real success. I think that’s the experience Collective Health has proven. There was something to this whole TPA phenomenon because the way that we consume healthcare is proliferating. It's very heterogeneous.
"Even if the incumbents tell you you're not going to succeed, you'll still ask that kind of naive question. ‘Why not?’"
You’re not going to just the doctor's office or just hospital anymore. You consume stuff digitally. There's telemedicine. There’s new-age ways to be treated for things from cognitive behavioral therapies for behavioral health issues. The notion of what healthcare is is far broader than it was 20 years ago when the first TPA’s came on the scene. Just like the capabilities of a smartphone are very different today than they were in 1995. I think that’s where the market will be, and our role in it will be to demonstrate that this delayering is actually a good thing because it allows people to specialize in the things where they can add the most value.
This also brings a level of transparency, because if you delayer things you understand how the underlying components work and how they contribute to what we want at the end of the day, which is a healthier population, and how they spend money more wisely. We spend more than any other country on healthcare and our life expectancy is declining in this country. That's pretty messed up We’re getting less for our money in terms of our health than ever before, and it’s an increasingly larger and larger part of the economy. Hopefully, we'll enable people to make better decisions about their health and therefore be healthier. Then secondly, drive costs down. That's where I think this disaggregation is useful.
What advice would you give to someone interested in entrepreneurship in healthcare technology or even more generally?
Look, at the end of the day, being an entrepreneur is really stressful. It's not glamorous by any means. For you to be comfortable shouldering that kind of responsibility, you really have to give a shit about what you're working on. You can't be casual as an entrepreneur. You can't be a tourist. You have to genuinely, genuinely give a shit about what you’re doing. And I think the best examples all demonstrate that real conviction in what they're doing: an almost maniacal resolve to see their vision out, even if it physically kills them, like Steve Jobs’ case.
You have to really, really want to see what you're working on become a reality because every great company ever looks like it was a success after the fact. Every company that was ever built was an absolute evitable success: not inevitable at all. It’s force of will.
Apple was on death's door a couple of times. Google almost didn’t make it. Facebook almost didn't make it. That kind of turbulence didn't derail any of those leaders from their self-belief. You need to have a huge amount of self-belief. At the same time, you also need to have a huge amount of self-awareness to know when you're heading down a path that’s not going to work.
If you're self-aware enough to know when you're lying to yourself, and have the conviction and the wherewithal and the metal to suffer through those difficult times then that’s the recipe for succeeding.
It’s an insane balance. You have to be able to weather so much and then just give it all away when you realize you need to.
Right — and being truthful to yourself is really helpful there. If you’re an honest person when you're ascertaining something you're actually not easily influenced by what other people say. Even if the incumbents tell you you're not going to succeed, you'll still ask that kind of naive question. ‘Why not?’
This is where I think being an outsider is actually helpful. The Elon Musk’s and Steve Jobs and Jeff Bezos of the world are right in approaching things as outsiders because they’ll demand a good reason why something can’t be done, not just because the industry hasn't done it that way.
You have to have the kind of honesty to ask ‘Why?’ repeated. Even after you're successful, you have to ask ‘Is still the right way to do things?’ You need that combination of self honesty and circumspection and self determination, then also having stamina to battle day in and day out. That's a winning combination: cutting losses quickly by saying this is not a path to success, but also being tenacious enough to know when you really need to stick with something
"It's counterintuitive but the point to me is: If it hurts, run harder."
For us, we've had a lot of inertia thrown our way from the industry, and that's impeded our ability to grow to a certain extent. It begged the question: ‘Is this the right approach to the market?’ After being honest with ourselves, we decided ‘Yes.’ We’re only feeling this slow growth because people are standing in our way, and we haven’t figured out the tactics to address this impedance. So we changed a number of things, and it was chaotic and turbulent and soul-searching and frightening, but we were honest along the way. Lo and behold, this year our growth is back to a rapid trajectory.
Someone once told me: ‘You're not going to disrupt an industry or change the world and not break some glass.’ You have to be comfortable with being unpopular and breaking glass.
You have to be ready to be uncomfortable not just in the environment that you're entering, but even internally. You’re going to face doubt from people asking ‘Are we heading down the right path?’ or ‘Am I wasting my time here?’ or ‘Are our decision-makers the right ones?’ and so there’s a lot of internal questioning and soul-seeking that you have to address as an entrepreneur. If you’re not willing to get up there and be flogged occasionally then you’re not cut out for it. Do you have any books or podcasts or readings that were impactful for you that you would suggest to others?
My wife isn’t an entrepreneur, but she’s witnessed my journey and came across this podcast by Guy Raz called ‘How I Built This’. I highly recommend people listen to some of those stories.
There's a spectrum, but I think they illuminate what I was just talking about: that struggle with being very self-aware and truthful while being very self-determined, and blocking out what the naysayers say. You have to be able to listen and discern the truth from fiction.
Listening to some of the stories with Guy Raz, you realize there’s no one path.
I often think ‘Oh my god. I would have quit WAY before that’. Listening to the episode about Dyson, I couldn’t believe it. 3 kids, $1 million in debt, how the hell did he convince his wife to let him do that? In his 40’s!
He said something in that podcast which really resonated with me. His Dad died when he was really young. His mom was a schoolteacher. She didn't make much money, but she was smart enough to know that education was the best defense for her kids. So she cobbled together money to send him to a private school as a border. Boarding school, which was tough, made him a tough, thick skinned-person. Then he ran cross country at boarding school and he remembers the saying his coach used to tell them:
“If you're in pain during a cross country race, you can kind of think one of two things.
You can think ‘I'm in pain, Oh, God, I need to stop’ or you can think ‘I'm in pain, so that means everyone else around is in pain which means I should probably run faster’. I should use this as an opportunity to create distance between me and the competition.”
I think along those lines: if this is hard for us, and we're a very capable team, I can only imagine how hard it must be for the incumbents that we're competing against. They are saddled with massive organizations and too much choice and probably a team that isn't as committed and resourceful as ours. So why don't we actually step on the gas and go even faster than we are
It's counterintuitive but the point to me is: If it hurts, run harder.
Disclosure: Zach has previously been but no longer is under the employment of Collective Health
Note: This conversation was taken from a conversation in person with slight semantic changes for readability.