When an employee at Merrill Steel had a baby, the company was willing to buy the family’s diapers for an entire year. But there was a catch. To get that perk, the mother had to choose a local hospital that the company had identified as offering lower-cost and higher-quality maternity care.
The incentive worked. After all, American families can spend, on average, $1,000 on diapers every year.
At one point, Merrill Steel’s then-HR vice president Matt Ohrt tracked that roughly 18 babies were born to families on their company health plan––and all 18 families chose the hospital offering better value.
“When you’re leading people through that change, you don’t want to strong-arm them, or you don’t want to push them in a corner,” Ohrt told IW Features. “You just give them options and then align the incentives.”
Merrill Steel’s approach at incentivization is a small example of a much bigger problem Ohrt feels compelled to solve, and he has spent the last decade working on it. Americans spend exorbitant amounts of money on healthcare, he said, but the system treats them more like captive audiences than consumers.
For women particularly, who are often the ones making medical decisions not only for themselves but also for their entire family, that looks like navigating a complex maze of premiums, deductibles, hospital networks, claim rejections, medical bills, and shockingly little information about what anything actually costs.
But Ohrt believes there’s another way forward. Today, he leads the Free Market Medical Association (FMMA), which is a national organization that advocates for direct care, transparent prices, and competition in healthcare.
But unlike many others in the free market medicine movement, Ohrt didn’t come to this issue as a physician or even a policy wonk. He was simply an employer trying to solve a benefits problem.
Ohrt had spent over two decades in human resources, including at Toyota Motor Manufacturing, before becoming vice president of HR at Merrill Steel in 2016. Shortly after arriving, one of the company’s owners presented him with a challenge.
“‘We’re already self-funded, but our healthcare has been going up 10% a year, and we’ve been absorbing that, but we can’t keep doing that,’” Ohrt recalled her saying. “‘Do you know a way to change that trend?’”
He didn’t, but he started digging. This benefits project then became a six-year overhaul of the way Merrill Steel purchased healthcare.
“Something just sparked in me, and I started talking to … people,” he said. “And the more I learned, the more I became passionate about not so much benefits, but the chance to fix the healthcare piece, which is the broken piece, perhaps by design.”
Instead of responding by simply raising employees’ premiums or deductibles, Ohrt went back to basics and asked: What if the company shopped for healthcare?
So Merrill Steel began directing more care toward providers who offered better prices and quality. At the same time, they expanded the range of services employees could easily access. The company eventually offered onsite primary care and physical therapy, along with free chiropractic care and even certain surgeries.
Around a year into this overhaul, Ohrt said Merrill Steel was saving roughly $1 million annually on what had previously been a $5.5 million healthcare spend. Most importantly, “we weren’t cutting the care or making the care less accessible,” he said, “we were improving the care and making it highly accessible.”
This experience led him to conclude that healthcare behaves very differently from almost every other part of the American economy, because the person receiving services often has little to no idea what it actually costs. His favorite analogy is a grocery store.
“If you had one kind of grocery store in town and they were monopolistic and their prices kept rising because the owner knew that there was nowhere else to go, the solution is not hoping the owner will change because he’s winning big time,” he said. “We believe an entrepreneur opening another grocery store to have seller competition would force that monopolistic seller to either compete or be gone. And that’s the natural economics of the free market that we tap into.”
At Merrill Steel, Ohrt discovered that making a healthcare market work also meant ensuring the people actually making healthcare decisions understood their options. That often meant talking to women.
Merrill Steel had a heavily male workforce, but Ohrt noticed something when the company’s welders and other employees received information about their health benefits: “They’d grab that packet, and they’d go hand it to their wife,” he said.
So Ohrt started bringing wives into the conversation. The company invited spouses to benefits meetings and recorded presentations, too, so they could learn how the plan worked from home. The goal went beyond simply teaching families how to use an insurance plan––he wanted to give them enough information to make choices about where their healthcare dollars went.
When employees started having babies, Ohrt had to consider how the cost of maternity care could be dramatically different from hospital to hospital. At the time, he said one local hospital had a strong NICU and relatively lower costs, while another hospital served up bills as high as $35,000 for what would be considered an uncomplicated delivery.
Rather than mandating that his employees use the first hospital, Merrill Steel gave the mothers a choice and made the better-value option worth considering.
“The company will buy the first year of diapers for your baby for free if you go to this hospital,” Ohrt recalled. “And by the way, we think this hospital’s better. It’s not just some discount crap we’re offering. We think this hospital is far more solid in delivering your baby safely and having a NICU right there if needed, and so forth.”
One pregnant mother initially wanted to stay with a physician affiliated with the other hospital, however.
“‘You can do that, we support you,’” Ohrt remembered telling her. “‘We just find that this other hospital is frankly better, but their prices are better too. And so whatever you decide, we support you. Only one of them has free diapers.’”
To Ohrt, that’s what a functioning healthcare market should look like. Employers shouldn’t dictate where a woman gives birth, and patients shouldn’t blindly choose from an insurance network. Rather, consumers should receive information, have an incentive to consider the better value option, and ultimately make the decision themselves.
Another piece of the equation for Ohrt is direct primary care, or DPC. DPC typically allows patients or employers to pay a physician a flat monthly membership fee rather than bill insurance per every office visit. Ohrt explained that memberships generally run about $50 to $100 per month, depending on the practice and market. The result is reminiscent of the old-fashioned relationships physicians once had with their patients. Ohrt called it “innovating back to 1960.”
“This is new in a sense, but it’s really just relationship-oriented care,” he explained. “Typically, the two options are 30 minutes or 60 minutes. And you can text your doctor, you can get in on a day’s notice. And when you do interact with them, it’s not rushed. You can actually just sit down and talk.”
And because independent physicians don’t offer identical products, patients can shop between practices based on their individual needs. For women, that could mean choosing a primary care physician with additional experience in women’s health. Some direct-care practices specialize further in areas like hormone care, Orht clarified, and he even knows some DPC physicians whose training allows them to deliver babies.
Ohrt’s focus on families goes beyond his work in the world of healthcare advocacy. He and his wife of three decades have four older children, but have also spent nearly a decade as licensed foster parents caring for more than 30 children––including eight newborns. They adopted one son after bringing him home at just nine days, and when Ohrt spoke with IW Features, two more children they had cared for since early infancy were on track for adoption. Their house is quite full––Ohrt jokingly called it “our circus”––but he noted that the motivation behind his work and his unique family life are one and the same.
“We just have a heart to help these kids,” he said.
And to Ohrt, one of the best ways to help the next generation is to ensure their access to great care.
The way to do so is simple, he said: if you give patients choices, show them what those choices cost, and let providers compete for their business, you get better results.
