The Health Management Academy
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Episode 08

Delivering a Personalized & Compassionate Payment Experience

Episode Description

In this episode, Florian Otto, Co-Founder & CEO of Cedar, sits down with Renee at The Table. As a true outsider to U.S. healthcare, Florian and his company bring a fresh approach to the uniquely American challenge of paying for care. Their conversation covers price transparency, patient engagement, digital compassion, and authentic leadership.

About Our Guest

Florian Otto, Co-Founder and CEO, Cedar

An accomplished entrepreneur and former physician, Florian now drives growth and sets overall direction across all facets of Cedar’s operations. Prior to founding Cedar, Florian was an executive at Zocdoc where he drove the commercial adoption of the platform. 


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Renee DeSilva 0:06

Welcome back to the Academy Table. I’m Renee DeSilva, CEO of The Academy and your host and we’re happy to have you back with us again. I’m excited to share this conversation with Florian Otto, the co-founder and CEO of Cedar. Cedar, as you may know, is a healthcare technology company working to transform the financial and billing experience for patients and providers. As you’ll soon hear, Florian is originally from Germany and was first trained as a dentist. As a true outsider to American healthcare, I loved his thoughts and, by extension, Cedar’s approach to solving the uniquely American challenge of paying for healthcare. A few other takeaways I’d like to bring to your attention. First, listen for how he articulates the lingering problems on price transparency as one of communication and engagement, not lack of data or interest. Next, Florian shared his insights on digital empathy and compassionate design. He shares some simple ways that providers and all of us can make the mundane feel more customized and heartfelt. Finally, I enjoyed hearing Florian’s thoughts on entrepreneurship and building a company. I’ve been struck by his deep mission orientation and also his willingness to be authentic and speak out on important issues. So with that, let’s head to The Table.

Florian, thank you so much for joining us today at The Academy Table, delighted to have you.

Florian Otto 1:40
Thanks for having me, Renee.

Renee DeSilva 1:41
I want to just jump in. One of the things that I’m struck by in your background is the international background that I know has shaped how you think about your career and your understanding of the US healthcare system. Talk a little bit more about that specifically.

Florian Otto 1:58
Yes, sure, I am very happy to talk about that. For the audience, I grew up in Germany so I spent the first 30 years of my life with the German healthcare model. I lived in Brazil for 5 years and right now for around 8 years in the United States. In Germany, of course, the healthcare system shaped me quite a bit. Quite literally the medical experience is extremely important and the financial experience is completely irrelevant because everything has been taken care of and you don’t need to pay anything for healthcare. It’s a very interesting model in Germany where I think the difference between rich and poor doesn’t make any difference in the healthcare experience, which I think is one of the important things that a healthcare system should be. Also, very little waiting time. When you look at the quality of the healthcare system, I think it is pretty good because it’s very good equity, very good on access. The average quality is fine and waiting times are not too high. It is not the most efficient healthcare system in the world, as is the case in most of the developed countries. It is still pretty expensive, not maybe as inefficient as the US, but it is still an expensive healthcare system.

Renee DeSilva 3:24
It’s interesting. I imagine you still have some family that is still in Germany, is that right?

Florian Otto 3:28
I do. Yes.

Renee DeSilva 3:29
How do you describe Cedar to them given what you mentioned? Their context is that there is not necessarily a financial experience attached to healthcare. What’s your short storyline to your family on Cedar and what problem you’re solving here?

Florian Otto 3:47
It’s a very good question. You’re right. It’s very difficult to explain that to somebody in Germany. You need to explain it as you’re going shopping but without price transparency. I think that’s the fundamental problem. Nobody has any problem with the consumer needing to pay for something, but you need to pay for something that you understand. If you understand the value, you know it before something happens. Neither of those things happens here in the healthcare payments.

Renee DeSilva 4:20
Yes. Even for those of us who have spent our career in healthcare and consider ourselves to be informed consumers of healthcare when we need care, it can still be hard to navigate it. Part of what the vision for Cedar was born out of was an experience that I believe at the time your fiance had with healthcare. Talk a little bit about how you drew inspiration from that experience?

Florian Otto 4:47
Sure. Happy to talk about that. Back in 2015 or 2016, my wife fainted here on the street right in New York and needed to go to the ER. We swiped the credit card for the copayment. We thought everything was done. Then a month later, she got some statements, literally, a stack of papers, everything in CPT codes she didn’t understand and needed to call to pay it. A month later she got the invoice from the imaging center. Half a year later a debt collector called her for a bill that she never received from the lab company. It was a bad experience for her and she said, “Never take me ever back to that healthcare system.” She lost trust in the system. She said, “Okay, if the administrative team was so unorganized, then I’m really worried about the medical quality.” It makes sense, right? As you probably know, trust is consistency over time. If it’s not a consistent experience from the beginning to the end, then you’re losing trust in the healthcare system.

Renee DeSilva 5:48
That’s right. I know that Cedar has done a lot of survey work around this and I also think that because of the COVID experience, in some ways, providers are right now experiencing higher satisfaction and deeper respect than maybe even a couple of years ago. Your point is that the care quality and the passion of the nurses and doctors come through and you may be at a high point in that experience. Then on the back end, all the administrative touchpoints, either pre or post-service are where there’s a lot of tension. I know that that’s a big part of what you’re trying to focus on.

Florian Otto 6:21
I 100% agree with you. The medical quality, especially the average one in the US, is probably increasing every single year. Most of the healthcare systems were doing a lot of advertising in the last 20-30 years with, “We have the best doctors; we have the best nurses.” This became table stakes. Especially for, let’s call it 80-90% of the doctor visits, I think the experience on the administrative side and the convenience becomes more and more important. Right now if you want to have a good entire healthcare experience, you need to have good medical experience and also a good digital experience.

Renee DeSilva 7:02
Why don’t you unpack that a bit more? Let’s talk about this notion of price transparency. There’s an issue where there is universal agreement from providers, from payers, from vendors, from partners that it’s a problem. However, there is only small or incremental progress on the solution. I wonder how your view of it has evolved since launching Cedar five years ago? As a follow-up question, when you look at folks who you work with who are getting this part of it right, what comes to mind for you? How has your understanding evolved over the last five years on price transparency and ways to solve it?

Florian Otto 7:45
Definitely what changed for me was that in the beginning my understanding was that nobody wanted to show prices — neither the providers nor the payers, nobody wanted to show prices. In the end, the patients were suffering from that. My perception of that has changed over time. Talking to a lot of healthcare leaders and payers on the provider side, they want it to be clear for the patients. Patients right now, if they don’t know their prices before or if they think that the prices were not right, are very frustrated and patient satisfaction goes down, they don’t want to come back to the doctor, and they end up missing some preventive procedures or preventive exams. This is bad for the health plans; it’s bad for the healthcare system. Overall, I strongly believe the problem is not necessarily that they don’t want it but that there’s a big technology problem. Right now, you might have the chance to somehow get the prices for something, but it’s extremely cumbersome for the patients to do that. That’s one of the reasons why I think the problem is not necessarily the willingness, but it’s just the ability with the current technology infrastructure.

Renee DeSilva 9:02
I think that’s right. I think it does go back to our first question about how if any of us were taking a blank sheet and designing the healthcare experience it would look very different. Part of what makes it hard to have clarity around pricing is that we operate with a cross-subsidy in terms of commercial subsidizing government payers. There’s a reckoning to be had around how we think about affordability in the context of that, right? How do I run this health system efficiently and then how am I able to do that in terms of the overall cost of care? It’ll be interesting to see as an industry how we reconcile with the affordability issue and the cross-subsidy economics that sometimes create some of this black box around pricing.

Florian Otto 9:52
You are 100% right, of course, on both sides. The first question is how does the healthcare system get funded? When you compare, for example, the German system with the American system, it’s extremely different. The US healthcare system is one of the only healthcare systems in the world, of at least the G8, that is linked somehow to healthcare funding through the employer, at least on the private side. The second piece which is very interesting is that healthcare costs for the poor and the rich are the same. I think the funding should also be a bit more equitable, not the same for everyone, but the same percentage of the salary for everyone. That’s how the German system is also getting the funding; it’s a certain percentage of your salary. That, of course, makes everything a little bit fairer. Higher-income individuals pay a little bit more than lower-income individuals. It’s not linked to which healthcare plan is offered by your employer.

Renee DeSilva 11:05
Interesting. One of the questions that I’ve been spending some time on with our CEOs that I talk to is this notion of, if we were to look out 10 years and write a headline on what healthcare delivery or funding or reimbursement looks like with a, call it “horizon 2030 aperture,” what would those headlines be? Let me ask you that question. If you were writing a headline in terms of what we might expect in this space of transparency, equity on funding, what do you think the headline might be if you were optimistic?

Florian Otto 11:42
I am 100% optimistic, no question on that. Let’s address the thing that is one of the most important things and it has nothing to do with just the out-of-pocket or what Cedar is addressing. The biggest problem right now in the US healthcare system is that you have a lot of non-insured, you still have them, some completely uninsured. I strongly believe that in 10 or 20 years, we’ll look back and say, “Oh my God. Were we terrible that not every single one of our fellow citizens had insurance?” That’s really where we need to get to — to have 100% of Americans insured and nobody should go into bankruptcy because of a health issue.

Renee DeSilva 12:28
I share your optimism. I’m also buoyed by the fact that when you look out or if you look back in terms of things even 20-30 years ago that didn’t feel possible, as a country, we typically get on the right side of things even if it takes us quite some time. I’m with you on that as well. I want to stay in this current state for a moment. When you think about examples, those partners that you work with that have been able to use, and I’ve heard you talk about this, some of the CMS price transparency rules, have been able to harness that for competitive advantage. What comes to mind for you as to what those health systems have figured out that maybe their peers could learn from?

Florian Otto 13:13
Sure. I’m happy to talk a bit about that. Overall, price transparency is much more of a communication problem than a real data problem. Of course, sometimes it is a data problem as well if you just get admitted to the emergency room and you don’t know what will be done with you, nobody will ever be able to tell you before what something costs. But if it is a standard procedure, you can find it out. The big problem is that it’s extremely cumbersome to find out — you probably will spend half an hour on the phone, you might need to call your insurance company to find out where you are on your deductible, then you’ll need to call the healthcare system back. Probably nobody does that. It’s not very digestible for the consumer. If it’s easy for the consumer to review that and they have that on their finger point, on, for example, an app or in a very easy-to-use web interface, then all of a sudden it becomes a huge competitive advantage. Not one single healthcare system wants to surprise the patient after the visit at any price. Nobody wants that because that decreases patient satisfaction, causes frustration, and, in the end, all these complaints will land on the online portals, Yelp or Google reviews or as complaint letters on the CEO’s desk. I strongly believe that healthcare systems want transparency, but it’s very, very difficult to execute.

Renee DeSilva 14:46
I think that’s right. You are continuing to digitize the process and have more of a seamless interaction so that it feels less transactional. In May, you announced the acquisition of OODA Health. Do you see that as a key part of the ability to make that happen?

Florian Otto 15:07
Yes, absolutely. We are extremely excited about the acquisition of OODA Health. Cedar, before the acquisition of OODA, was improving the entire billing and financial experience between the patient and the healthcare system, so the provider. We have made great strides there from going from the post-visit experience to the pre-visit experience. Not only dealing with paying, but also doing denial messaging, doing the share-to-care application, doing a lot of other workflows that reduce the burden for the patient around the visit. That was basically what we were doing and we had great success with that. However, there’s also, in terms of the healthcare experience, a very big difference. They are still getting all of these explanations of benefits from the payer. Many patients right now need to deal with either the payer or the provider and don’t understand what is going on there. The integration of the payer side solves this problem from the beginning on. It is not only about getting the explanation of benefits, but it’s also, for example, prior authorization. OODA has a very interesting product which is called OODA Optics which is a prior authorization product that helps the consumer to understand before the visit, whether they are authorized or not. After the visit, the integration of the explanation of benefits into the bill, all of a sudden makes sense. In the beginning, you probably know this, the time when you receive the EOB or the patient bill from the provider is usually very disjointed. The codes don’t match up with each other. I think in 40% of the cases, the explanation of benefits is not matching the provider bill. When these areas are very low, it erodes the trust in the entire healthcare system. With the entire healthcare system, I literally mean, the payer and the provider because the average consumer cannot understand what is the difference between both of them and very often the problem is on both sides, right?

Renee DeSilva 17:16
That’s right. There’s a ton of power in that in terms of bringing to healthcare the digital experience that we expect out of every other facet of our day-to-day lives, whether that’s buying an airplane ticket, booking a hotel, or ordering from Amazon. There’s so much power in that. You are right in that providers are aligned around wanting that and that the patient experience broadly would have a positive impact on that front and back-end cohesion. That’s great. I wish you the best with that integration.

Florian Otto 17:47
Thank you. The objective is to put the patient in the center of everything — between the provider and the payer. Most importantly, the patient can focus on getting healthy and not need to worry about all this administrative hassle that, of course, is extremely painful in the period when you need to most focus on getting healthy again.

Renee DeSilva 18:10
That’s right. On that exact point, I’ve appreciated some of the sentiments you’ve shared on compassionate technology and putting the consumer at the center of every healthcare interaction, particularly billing. Can you talk more about that?

Florian Otto 18:24
Yes, I’m excited about the opportunities that technology can bring for the consumers to be put in the center. It’s a few things. When you look at what the old technology is doing, especially on the billing experience, they’re sending the same statements after 30/60/90 days to the patients. They probably don’t understand it and it goes to collections and then their credit score is affected. That’s not very compassionate; that’s not very personalized. That’s a big gap to what the consumer is facing in these other on-demand technologies as you mentioned, the Uber, Amazon, Expedia, Netflix, and so on. All of those technologies are very personalized, they’re very immediate, they’re very transparent. They are, of course, fair. That’s what compassionate billing is all about. That is what the core value of Cedar is about. What does that mean? For example, when COVID hit we knew that a lot of patients were in hardship. We can, with our technology, change the messaging literally from one day to the other to give patients more time to pay. We called every single one of our clients and they were very, very open to extending, for example, payment plans, stopping sending people into collections, and extending the donning cycles which we really, really appreciated. Other things on compassionate billing. We, for example, reduced the frequency of how we reach out to patients. It had a very positive impact on what patients appreciated. Of course, reaching the patients where they are. It’s not only the ability to pay that is a problem for the patient, but also the convenience and the location. You probably know this, Renee. A lot of patients right now are not in their homes anymore — they are going to their parents, they’re going to other locations. Reaching them where they are with a more modern, digital technology reduces the friction and increases the patient’s feeling heard as an individual.

Renee DeSilva 20:39
That’s fantastic. When you look across the 40 health systems, 40 providers across the country, do you note that conversations with CFOs and heads of the revenue cycle are moving more naturally in this direction? Some of this, to me, feels somewhat intuitive but not at all how we’ve been wired as a provider landscape. Are you having to push and prompt on this notion of compassionate billing and compassionate technology? I’m just wondering where you’re finding leaders on this spectrum of a much more evolved, personalized experience around patient finances?

Florian Otto 21:19
Yeah, absolutely. Overall, let’s call it the healthcare system and the CFO and maybe some other leaders that might be more on patient experience or chief innovation officers. Overall, everybody agrees with that. The CFO, of course, especially in this time where a lot of healthcare systems are strained by the financial results might be, in the beginning, a little bit more skeptical to understand, okay, what does that mean to the bottom line of the healthcare system. A lot of healthcare systems are, of course, financially strained right now so having another drop in revenue somewhere would not be good for them. The interesting piece is when we explain the underlying mechanics of that and the results that when patient satisfaction is going up, the payments are also going up. It’s not that this is a zero-sum game. Reducing the friction means a higher patient satisfaction, a higher collection rate, a lower time to collect, and a lower cost to collect. Overall, the CFO is excited about this. On the other side, the marketing executives, patient experience executives, or chief innovation officers are also very excited about this because it positions the healthcare system to the next level.

Renee DeSilva 22:49
That’s right. As healthcare systems contemplate delivering care more virtually and what that means, those who are ruthlessly focused on the consumer experience from front to back will be winners. It sounds like this is an important way to think about that virtuous circle of growing through delivering great service and making sure that that doesn’t stop when you are no longer in front of your physicians. I think that’s powerful. I do want to change gears a bit. I’m privileged, given my role at The Academy to study CEOs across the broader healthcare landscape and how they show up. One of the things that I noted about you and how you show up as a leader is your comfort and commitment to using your voice and, maybe by extension, Cedar’s platform to speak on issues that you care about. So I wonder, has that always been in your DNA? Has that been something that over time you’ve had to get more comfortable with? How do you think about where and when and how you weigh in on important social issues?

Florian Otto 23:59
That’s something I’m very, very passionate about when building a company. To step back, why did I start Cedar? It was because I saw a big problem and a big opportunity to improve the healthcare system in the US. That’s my only mission. How do I do that? I do this by creating a company where we have a lot of co-workers who are doing all of the work on getting us there and excited about striving towards a common vision. To have this vision, the company also needs to be very clear in what it stands for and what it does not stand for. Right now if you are a leader who tries to be very political and always tries to do something that is the most popular opinion, I think you might not be the most trusted leader in the long run. I would rather try not to bend myself over to something that I don’t think is truly Florian, the founder and CEO of Cedar. I would rather say what I truly believe is the right thing to do. Of course, some people like it and some people also might not like it. Having an opinion and being very clear with this is extremely important. I’m totally fine if people don’t agree with my opinion. I still might respect them. As human beings, I respect their opinion but it might be very, very different from mine and they might not be that excited about Cedar. I accept that. On the other side, people who are aligned with my views, with my mission, with Cedar’s vision on where we are going are, of course, very, very excited to be part of this movement in trying to improve the world a little bit.

Renee DeSilva 25:54
A couple of things that you said landed with me. The first is drawing from your sense of authenticity, speaking to what you truly believe. You pick the issues, you don’t let the issues pick you. That’s been a guiding force for me and it sounds like you’re equally aligned on that. I may not necessarily have an opinion on everything. I may not be informed on everything, but picking my moments is a big part of showing up and being who I am. I love how you said that. I do wonder about the not everybody agreeing with you piece of it. Do you think that as a co-founder, you perhaps have a bit more latitude than a publicly-traded company or a company that is run by a non-founder CEO. Do you think because you created Cedar that gives you more agency than it would any other CEO in terms of being okay when maybe some folks are not aligned with your vision or your philosophy?

Florian Otto 26:52
I agree partially with this, but let’s unwrap that. For me, it’s a bit easier because I started the company from scratch. That means that the people I hired from the beginning who joined Cedar are aligned with a certain vision. That makes it easier. If right now I joined a company that is not aligned with my vision and I tried to be very vocal about my vision, I would speak against the current team members and that would not be good. On that face, I think it’s much easier for me. On the other hand, I think hiding desire, hiding behind something, not speaking up because maybe the shareholders don’t like that or somebody else doesn’t like it, it’s a very bad excuse. If somebody tells you to do something you are not convinced about, you should not do it. We are all free human beings here. We have the freedom of speech. We should say that. I’m very passionate that everybody should say what they think is right. They should stick to the values. It’s a little bit tougher if you join a company that is not 100% aligned with that and maybe your predecessor was not doing it in such a strong way. I don’t think that the CEOs should worry because of the board or the shareholders. I think it’s more the team members.

Renee DeSilva 28:21
I love that you made that distinction. In some of my CEO conversations, we have talked about how leaders are having to lead from the middle. They are running large organizations across different geographical boundaries. In some ways, as a country, we’ve never had more polarized views on both spectrums. It can be a challenge for people who are, particularly talking about health system leaders, having to figure out how to thread that needle and speak in a way where you’re inviting people in versus calling anybody out and having your view and having your values and your convictions, but leaving space at the table for other views as well. Trying to do that well has been interesting for me to watch to see how many of our leaders are navigating that. You’re right. It does come down to your team members and the community in which you operate and trying to create space broadly for all.

Florian Otto 29:15
100% agreed. By the way, all of this being very aligned with the vision or the mission doesn’t mean at all that we don’t have a diverse team with diverse backgrounds of people with diverse problems, problem-solving skills, opinions on certain issues. No question at all — we are an extremely diverse group but we are all looking in the same direction. There is a certain set of values. If something is against our values, we all as a company speak up on that. Otherwise, we are a non-political organization and we appreciate talking to any side of the spectrum. You know that I also have a podcast series. We have republicans there, we have democrats there, we have anybody who wants to somehow improve the political or the healthcare system in the country. We appreciate their opinion.

Renee DeSilva 30:10
Absolutely. I love that. For me, I will say it’s been a little bit of an evolution around being comfortable using my voice and speaking out. Florian, if I were to be honest about that, I do think some of that comes from awareness for me of often being either the only woman in the room or the only person of color in the room and not necessarily wanting to be the only one who is speaking truth to some issues that impact portions of our society more profoundly than others. I appreciate when leaders like yourself are actively working as an ally in creating more of these candid conversations in public settings. It goes a long way. I appreciate your voice on that for sure.

Florian Otto 30:56
We cannot change everything, but the only thing we can guarantee is that we stand up for what we think is right. I cannot even vote in the United States because I’m an immigrant. I’m probably the least political person in the country. I at least want to speak up for what I think is right.

Renee DeSilva 31:19
Really powerful. All right, I have one final question for you. We launched season two of the podcast and we’re calling it The Academy Table. If we think about where a lot of us get our joy, it’s around the table of people that we care about, sharing a good meal. If you were curating your ideal table and you could invite any two people for a conversation, who would they be and why?

Florian Otto 31:43
Oh, wow. That’s a great question. Since we’re in healthcare, I think of two individuals, one more from entrepreneurship who I admire and one more from healthcare. Let’s go over the healthcare leader first and it’s Uwe Reinhardt who was a professor at Princeton,I think one of the most thoughtful healthcare economists. I love reading his books, really deep analysis on what drives healthcare, what drives the cost. I can recommend all of his readings and I would love to have a discussion with them about what he thinks are the best ways to improve the healthcare system from an economic perspective. I would love that. The second person from an entrepreneur perspective who I am passionate about is Sam Walton, founder of Walmart. I think about how he built up something from the beginning from very easy means, the passion that he put into the business, the level of cohesion from the beginning to the end, how he was leading the company, how he interacted with his staff, and how he ultimately achieved his vision of serving the rural areas with great products and great prices was absolutely fantastic. Both of those people at a table, I would be thrilled to have them.

Renee DeSilva 33:17
That would be a delightful conversation. Florian, thank you for the time. I hope to see you in person at some point in 2021. I am always grateful for spending time with you. Thank you so much for joining us today.

Florian Otto 33:28
Thanks a lot for all you are doing.

Renee DeSilva 33:31
Thanks again for joining me at The Table. The Table is a podcast produced by The Health Management Academy. Make sure you catch future episodes by visiting our website, or by subscribing on the podcast platform of your choice. If you have suggestions for topics or guests, I’d love to hear from you. Please drop me a note at I look forward to talking with you soon.