Ali is the CEO and Co-Founder of Collective Health, a modern health benefit plan TPA integrating plan administration, analytics, navigation, and advocacy. Since its founding, Collective Health has grown to serve three-quarters of a million members and over 75 enterprise clients nationwide. As a pioneer in the digital health space, Collective Health brings together an ecosystem of 140+ partners to serve their clients.

Ali Diab, CEO and Co-Founder of Collective Health

The Pulse: Can you share the story of what led to you founding Collective Health, and some of the major milestones of the company’s evolution thus far?

Ali Diab: It’s a very personal story to me. In the summer of 2013, I was hospitalized for an emergency surgery to remove a blockage in my small intestine, and was in the hospital for almost three weeks. After being discharged, I was surprised to learn that half of my hospital charges, which amounted to hundreds of thousands of dollars, were denied by my insurance. I spent about 150 hours on various call center lines trying to get basic questions answered. This experience of trying to understand why my hospital bill was denied led me, quite naively, to want to start Collective Health with my co-founder, Rajaie Batniji, and make the experience better for people who go through situations like this. There will be about a half a million bankruptcies this year. Almost two out of three of those will be directly as the result of an underinsured health event. That’s too many people. This, very simply, is why I started the company.

In terms of milestones, Collective Health has served a lot of people. We’re approaching three quarters of a million members, and we’ve had almost two million people on our health plans since the company’s inception. Even more important for me are the impact milestones. We’ve been obsessed with delivering an exceptional customer experience from the very beginning, and that’s reflected in our Net Promoter Score, which has always been above 70, versus the industry average of 9.

More recently, we’ve accumulated data on the financial impact that plan sponsors and members are seeing through what we call our Guide Plans™. We save plans about $1,000 per covered employee per year versus our control, which is almost 10% savings. Even more important, members on those plans see 50% lower patient contributions than comparable PPO plans. Cost and quality are always highly correlated in health care, and we’re starting to show that transparent information allows members to act like consumers and make good decisions, which results in better cost and care outcomes.

The Pulse: Helping patients navigate health care involves a high level of personalization, which can be challenging to scale. What strategies have worked for Collective Health to efficiently provide targeted guidance to patients?

AD: Absolutely, it must be personalized. Sure, there are standard courses of treatment and standards of care, but the experience has to be personalized.

The way that we do that is through a combination of machine-based and human-based techniques. We have navigation capabilities that use machine-driven personalized care recommendations that function like ads and are self-service for the member. Instead of loading the ads with consumer and retail type of data and information, we load it with the member’s history, claims, and other relevant information. This helps us to establish a profile on that person, which we then use to inform them that, for example, they’re coming up on their 45th or 50th birthday and should go get a colonoscopy. Human beings intervene at some point in that pathway, when it’s required, to help nudge that person so that they can get the care that they need.

So, it’s a combination of machine-based and human-based techniques. We’re starting to also employ more modern predictive techniques as well, but we’re already using machine learning-based technologies to efficiently drive personalized health care experiences.

The Pulse: Given the increased scrutiny of health plans and the lack of transparency, what metrics would you encourage employers to track to see how their health plan is performing?

AD: The most basic thing employers should be looking at is the trend in cost and the trend in disease burden in their population. Ideally, both of those things should either be going down or growing as slowly as possible. It’s not rocket science in terms of the metrics that we should be looking at. What’s challenging is that very powerful intermediaries in our health care value chain dominate the market, making it difficult to move the needle on the underlying factors influencing these metrics.

Mark Cuban obviously has made a huge amount of noise around this, but drug costs are a great example. There are three or four large health insurance companies in the country that also own the three or four biggest drug distribution companies or PBMs. In my opinion, it’s a moral hazard that they’re meant to manage health care spending, while at the same time, they’re making money by inflating that health care spending. If you can keep a fixed percentage of something, in this case the total cost of health care spending, you’re going to try to make that underlying thing as expensive as you can. That’s just rational.

We can improve on this by making the unit cost of health care spending transparent. Everyone knows what Medicare pricing is and how reimbursement scales with star ratings. There’s nothing that’s opaque, but everything is opaque in private health insurance since pricing is hidden behind contracts. This is a problem. The public needs to know the underlying unit cost.

The Pulse: Collective Health is a hub for many partnerships across the health care ecosystem. What role have partnerships played for Collective Health in building a product that’s sustainable and enduring?

AD: Collective Health is a platform company. Our approach is to enable an ecosystem within health care that’s innovative and thriving. We want our employers to be able to select the best option for them that’s available in the market. That’s why we have hundreds of program partners and dozens of medical, pharmacy, vision, dental, and other network partners, because we believe it should be an ecosystem that we enable.

As a platform company, we have to be great at partnerships and integration because in many ways, our value is in being a super integrator of all the different options that are out there in the market.

Our approach is at odds with how the industry traditionally operates though, especially in the insurance segment. Big insurance companies aren’t very good at partnering since they like owning everything. They want to own the network, the PBM, the administration, care management, and they want to own all the point solutions that they sell you. We believe this approach hinders the speed at which new technologies and services can get to members.

The Pulse: What is your advice for those that want to follow a similar path as yours, particularly for those interested in health care entrepreneurship geared toward employer clients?

AD: It’s not any different than advice I’d have generally for someone who wants to start a company. Number one, make sure there’s a real problem that you’re solving, and that you aren’t just manufacturing a problem. I see a lot of companies today where it’s technology in search of a problem, not a problem being directly solved by the technology. There are scale problems, quality problems, and in my case, I was solving a user experience problem.

The second piece of advice would be to make sure that you’re starting something that’s of interest and is authentic to you. You’ll hear a lot of no’s and have to walk through a lot of walls in this process. You need to have a lot of determination, and it needs to be fueled by something. In my case, I had a lot of motivation after going through a near death experience and nearly having to declare bankruptcy to afford the subsequent care. It’s why I’ve stuck with it for so long.

Lastly, do your homework, particularly if you want to start a company in health care. It’s a highly regulated industry, and in ways, idiosyncratic. You can’t be a tourist. I was fortunate to have a co-founder who has an MD/PhD with vast knowledge in health care, and another co-founder who has a JD/MBA with significant legal expertise. As a startup founder, it’s crucial to get as smart as possible on the market you want to enter and to clearly and succinctly identify one problem to solve in that market. On our product team, we say slow upfront leads to fast later. All of this work will save you a lot of headache of having to pivot later down the road because you do your homework beforehand. And, ultimately, that helps you scale faster and with greater confidence.

Interviewed by Lindsey Mattila, January 7, 2025.