Mark Cuban has a blunt message for hospital CFOs: Stop letting insurers and benefits administrators dictate the terms of the deal and start using AI to uncover where hospitals may be overpaying.
The billionaire entrepreneur and co-founder of Cost Plus Drugs urged hospital finance leaders to take a more aggressive approach to managing healthcare costs, scrutinizing payer contracts and challenging the status quo during a Nov. 5 fireside chat at Becker’s CEO+CFO Roundtable with Scott Becker, JD, founder and chief content officer, Becker’s Healthcare.
His first piece of advice? Put every healthcare-related contract through AI and ask a simple question: “Where are they ripping me off?”
“This is your second largest ongoing expense after payroll,” Mr. Cuban said, referring to employee healthcare benefits. “Making a decision to hire somebody now involves not just how much you pay them, but what the insurance benefits are going to be, because if it’s going to be $35,000 for a family of four, that’s a lot of money.”
Put AI to work
Mr. Cuban argued that hospitals and other large employers routinely sign complex contracts with insurers, pharmacy benefit managers and third-party administrators without fully understanding the financial implications.
He pointed to contracts that can run hundreds or even more than 1,000 pages, with provisions that allow insurers and pharmacy benefit managers to retain certain rebates, redefine specialty drugs or restrict employers’ ability to audit their agreements.
“There’s no group of humans, and there’s not enough coffee on the planet to be able to read all that,” he said. “You have to run these things through AI.”
Mr. Cuban said he uses AI agents to request publicly available contracts from government entities, then analyzes those agreements to identify unfavorable terms, inconsistencies and potential opportunities to negotiate better deals.
He encouraged hospital CFOs to apply the same approach to their own agreements.
“Run every single healthcare-related contract through AI. That’s number one,” he said. “Where are they ripping me off? What control can I have?”
The technology can expose discrepancies and contractual provisions that might otherwise go unnoticed, giving executives more information to challenge their existing arrangements, he said.
Rewrite the rules
Beyond identifying unfavorable contract terms, Mr. Cuban said hospital CFOs should use their negotiating leverage to change how employee healthcare spending is handled.
One recommendation involves requiring third-party administrators to credit employees toward their deductibles and out-of-pocket maximums when they find care or medications at prices below what their insurance coverage would otherwise cost them or their employer.
Under such an arrangement, employees would not lose credit toward their insurance benefits simply because they found a less expensive option outside the traditional insurance purchasing process.
“If you do just those two things in your negotiations, you win,” Mr. Cuban said, referring to using AI to analyze contracts and negotiating the deductible provision.
He also criticized employers for relying too heavily on insurance brokers and consultants without independently evaluating whether their recommendations deliver meaningful savings.
Mr. Cuban shared an example from his ownership of the Dallas Mavericks. After reviewing generic drug purchases over an 18-month period, he found the organization had spent $169,000 on medications he said would have cost $19,000 through Cost Plus Drugs.
“My guy is no longer my guy,” he said, referring to the broker he had relied on. “But all it took was me looking, and it changed it completely.”
Know your numbers
Mr. Cuban reserved some of his sharpest criticism for hospitals themselves, arguing that many health systems fail to apply basic business principles to their own employee health plans and payer relationships.
He questioned why self-insured hospitals would allow third-party administrators to steer employees toward outside providers when their own facilities could deliver the same care more cost-effectively. He also described situations in which hospitals may be charged more through their employee health plans for services delivered at their own facilities than the hospitals ultimately receive in reimbursement.
“You would think that hospitals that self-insure — which is almost all of them — would hire TPAs that send care to the hospital itself, as opposed to their own network where they make more money? No,” Mr. Cuban said. “You would think that if hospital does a hip replacement, and the TPA for the employee who’s getting the hip replacement — they would know, the hospital would know, that the amount they charged the insurance plan was the amount they were paid. Meaning, we should be paid $25,000. Did we get paid $25,000? No. They get overcharged for their own care that they offer, and they don’t even know what to do about it.”
Beyond employee benefits, Mr. Cuban said hospital executives often lack a clear understanding of which insurance contracts are profitable and which major employers generate the most patient volume.
“When I talk to them about whether or not they’re profitable with certain insurance companies or plans. Maybe two have ever said ‘yes,'” Mr. Cuban said. “The rest have said, ‘I don’t know.'”
For Mr. Cuban, these blind spots represent opportunities for hospital leaders to improve their financial performance without necessarily increasing patient volumes.
He urged executives to examine their claims data, identify major sources of business and negotiate directly with employers when possible.
Hospitals, he argued, have more leverage than they realize but often fail to use it because they are consumed by the demands of running complex healthcare organizations.
“Every salesperson that’s worth a nickel knows to go to [their] current customer base and see if they can get more business, right? But that’s not how hospitals think; they don’t do the basic blocking and tackling that every business should do,” he said. “You have to think like an entrepreneur at some level. You have to think like a real CEO.”
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