DCG Founder Feature: Nick Soman of Decent
We’re thrilled to have participated in Decent’s Series A round. Decent offers affordable insurance to small businesses and independents. In a healthcare system where large insurers are king, this is no small feat. Decent partners with the Texas Freelance Association to allow small businesses to band together to get coverage types and rates typically available only to large employers. The company officially launched in Austin, Texas, last year.
As the COVID-19 crisis swept the US , Decent’s customer signups surged and its value proposition — aligning patient, doctor and provider incentives — came into focus. In this feature, we bring you an interview with Decent’s Founder & CEO, Nick Soman.
Tell us about your background and the problem you’re solving.
I’m a serial founder and entrepreneur, and I’m the only one in my family who’s not a doctor. My parents were both family doctors for more than 30 years, and then joined the leadership of a big HMO. We’re building “Medicare for All” because we think the government won’t. Our current healthcare system is on the brink of collapse, largely because traditional insurance companies are built on a web of perverse incentives. For their revenues to rise, they must increase their rates, and justify them with climbing care costs. That incentive-alignment problem is what we’ve set out to solve.
More than 90% of large companies follow a self-insurance model. But, until us, no one took that model — with its benefits to employers and members — and extended it to small businesses and independents. Our plans all include unlimited primary care with a personal doctor, and they’re 35% cheaper than comparable coverage.
How are you able to offer affordable plans?
When doctors conduct unnecessary tests or recommend poor value-for-money procedures, it’s because they’re incentivized to do so. At Decent, we work with independent direct primary care doctors who don’t have existing fealty to outside systems or HMOs. These are doctors who have grown so exasperated with the “fee for service” medical system that they’ve spun out their own practices and charge patients a fixed monthly fee for unlimited access. That’s the first way this model aligns incentives — our doctors want to keep their patients healthy and out of their offices.
Then, there’s the way we approach specialty care, which normally accounts for 90% of health plan costs. By giving members more primary, preemptive care, we expect to catch problems earlier, so they’re less expensive to treat later. We also control “steerage,” which is the process by which patients are referred for specialty care. We control costs by routing members to the most cost-effective solutions. That doesn’t mean pushing “cheap” treatments; it means referring members to specialist providers with demonstrated commitments to delivering high value-for-money care. Unlike traditional insurance models, that make money when care is costlier, we’re able to say, “Decent makes more money when we save people money.”
“Insurance turns out to be one of the better blockchain enterprise use cases.”
Can you tell us more about your members?
We’re currently the most affordable comprehensive option for anyone in Austin, Texas, who doesn’t get government subsidies. For our initial entry into the market, we’re serving a relatively healthy and affluent population, because the alternative was to become a traditional health company, with all those perverse incentives we set out to avoid.
“We have an opportunity to be stewards of our health in a way that’s impossible in the current adversarial system.”
What do you say to people who dismiss universal coverage as unrealistic or too expensive?
If incentives are properly aligned, it won’t be. We make money when we save members money, and we can do that in only two ways: helping them find more cost-effective healthcare or reducing overhead charges. Every incremental dollar we can squeeze out, we aim to return to the member.
The ‘blue sky’ for Decent is for people to become partial owners in the company, unlocking true incentive alignment. My hope is that, in two years, members get an email saying,“We have exciting policy changes to announce; we’re open sourcing all our pricing quality data, and if you make smart choices, we’ll reward you — not just with cash, but with ownership in Decent.” We have an opportunity to be stewards of our health in a way that’s impossible in the current adversarial system.
Is that where blockchain comes in?
Yes, in aligning interests! I was so uncool when I talked about blockchain in 2018 (seed raise) and I was uncool this time around too. In 2018, investors’ eyes glazed over when I said, “This technology can make boring back-end processes less expensive,” when other founders were pitching a new global financial system. This time, it was uncool because enterprise blockchain applications have disappointed. But we’ve actually done it! We built a system on the Ethereum blockchain that will reward users for making smart health choices. If you get a cost-effective MRI, we can give you a cut of the savings that choice generates for the system. If you complete a tutorial on our primary care model, we’ll give you $20 that can be used to pay down your premiums.
Blockchain is allowing us to build a system to transfer money when value-add conditions are met. The technology will also allow us to pay doctors faster and add price transparency to healthcare. Insurance turns out to be one of the better blockchain enterprise use cases.
Let’s discuss the COVID-19 impact on your business. What’s it been like since the news and closures set in?
Our off-cycle signups tripled when COVID-19 hit the news. People are afraid and reassessing whether they can really take the risk of being uninsured, and Texas has the largest uninsured population in the country. For context, traditional insurance companies can only sell to the public for 45 days of the year, in open enrollment periods for the individual market. There are also special enrollment periods for those who have lost jobs or moved, but outside of special enrollments, we’re the only plan people can buy year-around. That’s a function of how we’re set up; in the same way self-insured large companies can routinely add new employees to their plans, we can always onboard customers.
How have you responded to the surge in demand?
First, we recognized our responsibility to our community. We bought masks for first responders in Austin, waived COVID testing costs and extended the grace period for payments, because we’re mindful that people are hard-up right now. In terms of scaling up our operations to meet this demand— we’re hiring!
We realize that we need to scale faster than may feel comfortable. I would rather us struggle and push ourselves harder to be of service to as many people as we can at this time.
“America needs Decent. If our country doesn’t fix healthcare quickly, it gets easier to be me, in a way that should concern traditional insurers.”
How has this experience affected your vision for Decent?
I believe we’ll have an opportunity to expand across Texas and elsewhere quicker than previously anticipated. It’s certainly reinforced our model. Take telemedicine; even before this crisis, over 60% of our members chose to get most of their primary care delivered virtually, through phone or computer. This was a way for us to lower premiums, but it was also a solution for people who live far from doctors or don’t want to risk being exposed to sick people in waiting rooms. Many plans have offered telemedicine, but it’s been a cornerstone of our model since the outset.
This crisis has also magnified the sad truth, that insurance companies can’t outrun their own perverse financial incentives — which is driving the total collapse of our healthcare system. People are open to new ways of thinking and they’re not as blinded by the insurance lobby, which is the country’s second-biggest (by political spend). I used to think it would take time to prove our model and win the right to take it to more states. If the data continues to look as it does, this ought to be a model we can extend everywhere much faster. America needs Decent. If our country doesn’t fix healthcare quickly, it gets easier to be me, in a way that should concern traditional insurers.
How do you keep that fire to keep developing and innovating alive?
Innovation is valuable to the extent it helps you solve a problem. We absolutely don’t innovate for innovation sake. In fact, we fear it. We can’t afford to make mistakes with people’s health care and data. It makes sense to build things on blockchain if, and only if, it’s the most cost-effective way to deliver value back to customers. The reward service is the first blockchain element we built, and, it’s happening in the backend. Customers never see the words “blockchain” or “Ethereum”. They just know that they’re financially rewarded for making smart health choices.
What does Decent absolutely need to get right in the next quarter and year?
We need to turn stakeholders into champions. Take the doctors in our network; we’re seeing them buy Decent insurance for themselves and their families. We’re seeing our members share positive reviews online, and our Net Promoter Score is 73 vs. an industry average of 14. At the start, we were convincing people to trust this new company with no online footprint, and now, we’re seeing traction. People are valuing the experience and understanding our mission; they get why it’s important that we align incentives and commit to offering a service free from ‘dark corners’, and championing that message.
We increase our investments in companies when they do what they say they will, their prospects are strong or improved, and the growth capital will be put to good use. We’re excited to continue to back Nick and the Decent team as they work in overdrive to make the most of this opportunity to serve.
Want to learn more about Decent? Read their latest news and thinking and follow them on Twitter at @Decent.
Ready to join a team on a bold mission? Decent and 100+ other DCG companies are actively hiring. You can search open roles at jobs.dcg.co
