How to Operationalize Direct Contracting and Bundled Payments, With Dr. Stan Schwartz of ZERO.health

A 23-year-old roofing laborer paid $125 for a comprehensive metabolic panel — a test available directly for $6.52. That is not a healthcare problem. That is a pricing failure. And it is the origin story of ZERO.health, a direct contracting platform that gets plan members access to high-quality providers for $0 out of pocket using bundled payments. In this episode, Stacey Richter speaks with Dr. Stan Schwartz, MD, co-founder of ZERO.health, who has been building and operationalizing direct contracting arrangements since 2014, about how bundled payments actually work in practice — what providers get, what employers get, what members get, and specifically how to solve the logistics problems that have sunk other direct contracting attempts. WHAT YOU'LL LEARN ✅ How ZERO's bundled payment model works: a five-star Medicare hospital in Tulsa performs outpatient gallbladder surgery for $5,641 all-in — covering anesthesia, surgeon, hospital, and recovery room — compared to roughly $8,000–$10,000 through a typical claims process, with the employer covering 100% so the member pays zero ✅ Why Dr. Schwartz's mantra is "if you can schedule it, you can put a price on it" — and how this applies not just to major surgeries but to lab tests, imaging, and routine services where spread pricing adds unnecessary cost on top of already inflated prices ✅ Why the utilization concern is asking the wrong question: good evidence shows that prior authorization impedes necessary care more often than unnecessary care — and the greater financial risk for most plans is members not getting care they need, not members overconsumption ✅ How ZERO solves the double-billing and administrative chaos problem: everything is pre-arranged through personal health assistants, providers send a simple invoice or claim directly to ZERO, the member pays nothing at point of service, and double billing is easy to catch because members know they should owe zero ✅ Why Surgery Center of Oklahoma, one of ZERO's earliest providers, runs at a 10-to-1 clinical-to-administrative staff ratio versus the industry average of 2-to-1 — because bundled, direct-paid care eliminates collections, accounts receivable, and coding complexity ✅ How ZERO tracks utilization and improves it over time: in year one, roughly 30% of ZERO-eligible services actually go through the ZERO program; by years two and three, the best-performing companies reach 70% — and the gap is monitored through ongoing claims review and targeted member outreach WHY THIS MATTERS So much of what we call healthcare expense is pricing failure — something that should cost $7 is billed at $100, spread through an insurance mechanism, and processed with administrative overhead that can reach 30% of total plan spend. Direct contracting with bundled payments is not a new idea, but operationalizing it — training providers, educating members off open enrollment cycle, tracking missed opportunities in real time — is where most attempts fall apart. Dr. Schwartz has been doing this for over a decade. This episode is the how. === LINKS === 🔗 Show Notes with all mentioned links: https://relentlesshealthvalue.com/episodes ✉️ Enjoy this podcast? Subscribe to the free weekly newsletter: https://relentlesshealthvalue.com/join-the-relentless-tribe 🫙 Support the podcast with a small donation to the Tip Jar: https://relentlesshealthvalue.com/join-the-relentless-tribe 🎤 Listen on Apple Podcasts https://podcasts.apple.com/us/podcast/feed/id892082003?ls=1 🎤 Listen on Spotify https://open.spotify.com/show/6UjgzI7bScDrWvZEk2f46b 📺 Subscribe to our YouTube channel https://www.youtube.com/@RelentlessHealthValue === CONNECT WITH THE RHV TEAM === ✭ LinkedIn https://www.linkedin.com/company/relentless-health-value/ ✭ Threads https://www.threads.net/@relentlesshealthvalue/ ✭ Bluesky https://bsky.app/profile/relentleshealth.bsky.social ✭ X https://twitter.com/relentleshealth/ 07:59 How did ZERO.health start? 10:38 EP480 with Kimberly Carleson. 11:04 Why does the emotional energy behind understanding how the problem of healthcare affects individuals matter in changing healthcare? 12:45 "If you can schedule it, you can put a price on it." 15:32 EP420 with Ge Bai, PhD, CPA. 16:38 EP436 with Elizabeth Mitchell. 18:21 How do employers ensure that patients and clinicians are coordinated and on board with direct contracting within their health plans? 20:26 EP475 with Peter Hayes. 22:52 Why is it important that this direct contracting system isn't mandatory for health plan members? 24:50 How does direct contracting affect excessive utilization? 26:41 EP477 (Through Line Show) with Stacey. 27:29 Why is it important that your plan benefits benefit health? 29:39 Why is it important to educate not only members but also providers who agree to participate in the program? 31:06 "It's all about simplicity." 33:11 How do you ensure plan members use the service after it is installed?