If you need to pay out of pocket for a medical procedure—whether it's an allergy shot or liver biopsy—how do you know if you're getting a good deal? Are you be prepared for additional costs, like blood tests and hospital administrative fees?
With that in mind, Paul Ketchel, a former Capitol Hill lobbyist and technology systems administrator for Tennessee Senator Bill Frist, founded the Nashville-based start-up MDSave in 2011.
The company's site officially launched in 2013 and functions like a healthcare version of Expedia, letting patients comparison shop for medical procedures and guaranteeing nearly immediate payment for providers. All a patient has to do is enter their location, search for the treatment they need, and pick the one that suits them best based on price, proximity, and doctors' ratings. To keep it simple, all of the costs are bundled together so patients won't receive numerous bills that include surprise fees.
High medical bills are a growing concern for millions of Americans. As of January 2014, 17.4 million were on high-deductible plans, meaning they'd have to pay up to $6,300 for care before their insurance kicked in, according to a recent report from America’s Health Insurance Plans (AHIP), a national trade association that represents the health insurance industry. Meanwhile, as of early 2015 an estimated 38 million citizens didn't have any insurance coverage.
While the Affordable Care Act, a.k.a Obamacare, helped cover millions without coverage, it did nothing to lower the costs of medical procedures. Additionally, the act also led to more employers switching to high-deductible plans to lower premiums, leaving many unable to afford the care they need.
A 2015 study by the Commonwealth Fund found that 44% of "underinsured" people—a number determined by expenses and/or deductibles compared to annual household income—don't see a doctor, fill a prescription, or undergo further testing because they couldn't afford the pre-deductible fees.
"A simple bundle might be something like an MRI. It will include the physical MRI itself and then the interpretive read done by the radiologist," says Ketchel. "A complex bundle could be something like a gastric sleeve, which is like gastric bypass surgery [but also] might include a patient consultation, psychiatric evaluation and counseling session. Then it will include a facility fee, which is the hospital's fee, an anesthesia fee, an imaging or radiology fee, a lab fee for pathology, and then maybe be physical therapy sessions after the surgery."
Once a patient makes his or her decision, they buy a voucher for the full bundle using PayPal, a credit card, or by working out a financing plan with MDSave. At the appointment, they hand over the voucher to the provider, who is then paid in full in six days or less by MDSave. Prices for procedures can fluctuate by up to 770% depending on the markets and available providers, which the company views as a win for all parties involved, says Ketchel.
"Our average consumer is saving about 40% to 60%. An MRI might cost you $2,500 on the healthcare exchange, but we can get you the same MRI from the same provider, same facility for maybe $500. People are getting some of the lower-level care they need sooner and not showing up at the emergency room where things are really expensive. At the same time, our healthcare providers are netting about 10 to 15% more per transaction, with no claims to file. We're eliminating all these middle men that are typically in the transaction: claims processing companies, debt collectors, billing companies, the coding people [involved in] each claim."
On average, Ketchel says, doctors usually get paid 90 to 180 days after a procedure, and thanks to all the red tape, 80% of medical bills often contain errors that leads to further delays. "In our markets, we're seeing providers start to move to a middle price. In cities where we have multiple systems competing, you're seeing out-of-pocket prices merge in the middle somewhere through us. At the end of the day, there's a free market where there's a price someone will pay and a price someone will accept. You're cutting out all these layers, which, in my opinion, have crippled our healthcare system for the last 30 years."
Currently in place in 24 states and having recently raised $14 million in funding, MDSave is aiming to expand aggressively throughout the country, especially in the Northeast. "That's been our slowest place of entry," he explains. "The difference there is the majority of healthcare systems are not-for-profit systems," for example faith-based healthcare systems that encompass a number of hospitals. They generally charge higher rates for paying customers in order to provide cheaper or free healthcare for the poor, and many have such outdated technology that MDSave's engineers have to recode entire sections of the website in order to make everything compatible.
Ketchel says that MDSave has already inked deals with wide-ranging systems such as Dignity Health, Catholic Health Initiatives, Community Health Systems, and Tenet Healthcare. Of course, there are also skeptics. "The second biggest hurdle is the concept that people can see prices. The providers were initially afraid. They operated in a world where nobody was allowed to see the prices. What we're starting to see is, in every large system in the country, there's some type of consumerism or transparency committee. We're coming in and giving them a shrink-wrapped solution that they can deploy, so we're not really running into too much resistance," he says. "Some say, 'we know this is coming and right now we still have some really high rates and we maybe want to hang on for one more year,' but the majority of them are moving pretty quickly to adopt it. It's an issue everyone's having to deal with now."
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