In the quickly evolving world of value-based healthcare, one company is taking cost transparency to the next level. Meet MDsave, a web-based company offering self-pay patients and those with high deductible insurance plans an online resource to compare and save on healthcare-related expenses.
It’s the brainchild of Clyde Spencer and Paul Ketchel, industry veteran and former healthcare lobbyist. “I read one of the first Affordable Care Act drafts and saw the additional pay requirements and knew it would cause premiums to increase to cover costs,” Ketchel said of the company’s inception. “As premiums increased, we believed a majority of employers would move to a high deductible health plan option, and that for the first time Americans would become concerned with costs as they’d have to pay a substantial amount out-of-pocket before benefits kicked in.”
Ketchel then approached former U.S. Senate Majority Leader Bill Frist, MD, with the idea to utilize e-commerce to bundle otherwise pricey services. Today, MDsave includes a patented process that bundles services, segments payments and offer consumers one easy-to-understand price – all with a 100 percent money back guarantee.
How MDsave Works
In a nutshell, healthcare providers post medical services with the total price they charge directly on the website. Patients enter the name of the procedure and their zip code and can then easily search, compare and purchase those services with complete privacy. After a purchase is made, the customer is provided a medical voucher for the service, and the physician's appointment desk is notified. Today, the website offers nearly 7,000 services in 100 markets across 22 states. Headquartered in Brentwood, MDsave also operates a San Francisco office for its engineering and web development team.
Benefit to Providers
“Physicians reap the biggest benefit because a lot of patients can’t afford service, and they want to help their patients,” said Ketchel, who serves as the company’s CEO. “Now they can give patients a rate they can afford and a better one than they can find on their own.”
Case in point: A patient walks in to his orthopaedist with a knee problem and learns an MRI will cost $2,500 out-of-pocket so he doesn’t get it, Ketchel explained. Not only does the hospital lose the MRI, the patient doesn’t get diagnosed. “We’re helping patients get an early level of care leading to faster surgical treatment,” he said.
On average, patients save 40-60 percent and providers generally net 10-15 percent more than with traditional reimbursement. Prepaid services mean patients have no bad debt, offices see zero claims processing, and providers are paid in six days or less. “What’s happening is that we’re wringing 30-40 percent of waste out of the system because of increased efficiency,” Ketchel said.
Shopping Around
Typically, MDsave sales are over $500 each and include services ranging from a few hundred dollars to those topping $20-30,000 like bariatric surgery. GI scopes, orthopaedic implants, advanced imaging and even cardiac cath procedures are all available with additional services and markets being regularly added.
“The healthcare community underestimated the ability of the patient to shop around,” Ketchel said. “That may have been true three or four years ago, but today when they (patients) call us, they’re extremely educated. They’ve already seen a doctor; they know exactly what they need; and they’re looking to find the best rate.”
Ketchel said many consumers purchase from providers they would have gone to anyway. “A service could be $5,000 here or $15,000 somewhere else so we’re giving them access to care with plans they just don’t have,” he said.
In fact, more than 70 percent of MDsave patients have insurance and still file, making their deductible dollars go further. Ketchel said insurance companies also like the model as it helps patients get the care they need sooner, preventing more complicated diagnoses and pricy ER visits down the line. Patient satisfaction is near 100 percent, and two-thirds of patients are referred to the site by their doctors.
For providers, the cost to participate depends on the size of the hospital or ambulatory center and can range from $5,000 to $12,000 per month. “Many hospitals have never had to think of patients this way before,” Ketchel said of the competitive, retail-driven model. “We help them know what to charge in their market and create bundles, while our Internet team in San Francisco says, ‘here’s what consumers are looking for and how to attract them.’”
Gaining Support
In May 2015, MDsave announced its first institutional investment of $12 million from New York-based MTS Health Investors. The board, which includes Sen. Bill Frist and [recently added] MTS partner Oliver Moses, raised a total of $14.1 million in this round of financing.
"It's truly a win/win for patients and providers," Moses said in a company-issued release. "The MDsave team's extensive healthcare knowledge and Silicon Valley technology innovation gives providers a platform to drive down costs, increase patient volume and pass savings on to patients.”
