Historically the healthcare model in the United States has been such that the total cost of care is generally not known until after the medical services have been rendered. Aside from having no knowledge of the cost, the insurance plans are looked upon as a primary source responsible for paying the healthcare bills. Although this model has been the status quo, the new healthcare trends are about to change everything.
High deductibles, HSA & ACA
There has been an increase in the use of high deductible plans and Health Savings Accounts. Moreover, the regulations from the Affordable Care Act (ACA) are forcing consumers to play a more active role in paying for their healthcare costs. In turn, for consumers having this responsibility means paying attention to the cost and quality of care. And this is where Price Transparency tools come in.
Price Transparency tools help consumers understand and shop for quality care at reasonable prices. There are actually several companies working on this initiative and (in no time) will become an integral part of our health care system.
How it will affect Care Providers
There is some resistance present among hospitals and physician offices towards the price transparency. They fear that transparency tools will create a race towards the bottom where doctors will compete on who is the cheapest. While it is true that cheapest is not always the best deal, the truth is that when we buy things, one of the most important factors is the cost. In the long run the Price Transparency tool will shift the market in different ways:
- It will bring the cost of care down by forcing hospitals and physicians to become lean and cut waste
- It will force insurance plans to provide better insights to their members for effective decision making
- Quality ratings and user reviews will actually matter and in some cases will drive healthcare providers out of business (the ones with poor ratings)
- It will affect the medical tourism industry as more and more Americans will be able to find affordable prices at home
An Opportunity for Startups
Many transparency apps are still in their infancy and their use by the general public is growing at a small pace. This is the prime time for entrepreneurs to enter this market and bring their products to the market. The coming age will be the age of Data and Transparency will be a big part of it.
An effective transparency tool will allow for the following functions:
- Expedia-like interface for users to search and shop through
- Obtain cost information on different medical procedures (prior to a visit)
- Display quality of service on different doctors
- Display reviews on services offered by different doctors (like Amazon)
Companies working on Price Transparency
Here are some of the key players in the arena:
Healthcare Blue Book
The Healthcare Blue Book is designed by CareOperative LLC and allows users to search for medical procedures and view prices. The results can be narrowed down by zip codes. Folks at Care Operative raised $7 million from a single investor in the seeding round. What makes Healthcare Blue Book stand out is its ability to provide “fair price” for different medical procedures.
HealthSparq is owned by Cambia health and is a web based pricing tool. It collaborates with local health plans and uses their accumulator data to show realistic out of pocket prices to the members.
United Health Care
myEasyBook is a web based system developed by United Health Care. United offers this to its members and allows them to calculate costs especially in cases of high deductible plans. The software also does other things such as appointment scheduling with providers.
Castlight is one of the major players in the transparency market. It offers both a web based and mobile based app for medical service searching and cost comparison. Castlight combines quality of service, cost of service and reviews of service into a single system. Some of the businesses using Castlight are CVS Caremark, Liberty Mutual Insurance and Kraft Foods.
PokitDok (Pocket Dock) is a service which offers users to search for physicians and their services. If a certain physician is not in its database, users can fill out a request form and PokitDok coordinates the cost request with the physician.
HealthinReach is a web based application which contains information on approximately 50,000 medical procedures in its database. Users can compare prices, schedule appointments and get discount offers from doctors in the area.
GoodRx is just like any other transparency tool except it is designed for pharmaceutical medications instead of medical procedures. It was developed by using API and drug data from Aetna.
Users basically enter the drug name and a zip code and can see prices offered at various drug stores. The app also offers other functions such as medication reminders and price alerts.
Healthcare has been one of the few industries in United States where we don’t know the cost of service before we buy it. Knowing the cost of medical procedures beforehand will help Americans make better decisions. It is a change that is inevitable and there is no running from it.