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state that price, and our job from the beginning was to collect enough of that pricing data to create a market. Once seen, it can’t be unseen, and it will drive true market pricing.
What providers can’t do is quote a cash price lower than what CMS [the Centers for Medicare and Medicaid Services] will reimburse, because then they won’t qualify for Medicare payments.
X: Can you get similar pricing data from hospitals?
LM: We have not entered into hospital care, except that we have some groups that are willing to post a bundled price for a surgery or a procedure that might include some time or space in a hospital. Right now, it’s for quality-of-life things that are either primary-care or elective in nature. Those are our targets initially, and I think that’s where we will help to define the marketplace. It can evolve from there.
X: How many people are going to be in this position of wanting or needing to pay cash for medical services in the future?
LM: For a lot of people, it’s just going to happen to them. Whether they like it or not, they are going to be moved to high-deductible plans and HSAs [health spending accounts], because it’s the only choice available or the only choice they can afford. Then they will be forced to optimize the return on their HSA to make sure it covers everything they want.
X: What elements go into building a user-friendly healthcare marketplace, from a product design and development perspective?
LM: We bring deep experience, from semantic search to machine learning to data mining, to ultimately establishing this arbitraged marketplace in health. It’s deceptive that we are taking such as simple approach in the beginning, and we intend to keep it simple for consumers and providers, but also return to them extraordinarily powerful metrics, and the ability to recommend and model pricing. So a lot of it is under the hood, and a lot of it you can’t see yet.
I hired away the creative director for all health products at Frog Design, because part our initial goal was to make sure it was easy and efficient for the providers to get their information out there, and on the consumer side, that there were super simple ways to digest this information. When we show up at Zappos, we are pretty sure that we want a pair of shoes. But 80 percent of the time, people show up to the doctor not really knowing what’s wrong. So there are a lot of reasons why a healthcare marketplace can’t just be a directory. We started out with a very content-rich, Pinterest-like approach to the decision process of what you need to do and who you need to do it with. In the beginning, that aspect of our product was very similar to what Ron Gutman is doing at HealthTap. But we took it out just to streamline the process of choosing a doctor, choosing a treatment, seeing a price, and paying for it.
It’s interesting to think about how we might work with some of those companies that are triaging individuals, whether it’s American Well or Ringadoc or HealthTap. There is always going to be a large population that needs assistance figuring out what’s wrong, but once you figure that out, you really want to understand what your options are for services and what it’s going to cost. That’s us.
X: Can you walk me through an example of how a consumer would use PokitDok?
LM: A classic one that I just went through myself is, I wanted to have a mole checked. I moved to Menlo Park a year and a half ago, and I have not established a dermatologist in the area. I wanted to understand what it was going to cost before I went. I wanted to know who is close by, who has been used by others, and how much it would cost to have a cursory mole scan. So I went on to PokitDok and searched, and it showed me all the dermatologists close to me both at home and where I work, so I could choose what was most convenient. Then I could request a quote directly, and tell them my budget and what I was looking for. They could either respond and say, “Yeah, I’ll do it for your budget,” or they could say, “We’d like to ask you some questions, can you give us a call.”
I can get comparisons across a few different providers. And a really important part of this is that the dermatologist who ultimately gets my business is probably the one I am going to stay with. I have gone through the effort of getting some initial information, understanding who is convenient and who is willing to respond to me. So it’s about me, the consumer, finding what I want, but it’s also about giving the provider the tools to win my business and do it cost-effectively.
X: You’re able to see the prices that doctors are quoting to prospective patients, and presumably you can see the final price that the patient paid. So as a company, you must be developing a good sense of the actual retail prices for various issues and procedures.
LM: Yes, but let me be clear—we don’t think there should be just one price for something like a knee replacement. As a consumer, I want there to be several prices, and I want to understand how they differ, and I would like to understand what goes into those differences, and I would like people to market to me based on what those differences are. If I’m going to charge $300 to set your broken arm, maybe you get a foot rub too, to be a little facetious. We are collecting data to inform price points starting with the top 50 procedures, and making sure that the consumer has the information they need to make some comparisons, and that the provider has some basis of comparison as they are figuring out what kind of care they want to do.
So the data has already become very useful. It’s funny to me—I will show some of the pricing we have from a local ambulatory surgical center to a center from another part of the country, and they will be like, “We can do better than that!” And I will say, “Not if you aren’t posting your prices!”
I keep using Zappos as an example, not because I think healthcare is as simple as shoes, but because sometimes we prevent ourselves from exploring new models in health because we treat it as too precious, instead of just thinking about it as something we have to purchase. We have to have information about it in order to make smart choices. If we quit being so precious about it, we could just start. That is what we did at PokitDok.
X: I’m sorry, my head is spinning a little bit. It’s just so strange to think of healthcare as a real marketplace where we can make decisions based on price.
LM: Yes, it’s so such a no-brainer, and yet it sounds so crazy. It’s a real mind-bender for people. It makes us realize that somewhere along the way, we as consumers bought into some brainwashing—into a way of experiencing healthcare that isn’t really doing us any good. We demand less from our healthcare system than we do from our cars, or from Zappos. “It’s too complicated” is not an excuse.
X: How does your business work? Are you charging for access to the marketplace, or do you collect a commission for referrals?
LM: It’s not a referral model, but yes, there will be an associated fee. If you get paid, we will process that payment, and take enough to cover our costs. We have a full financial backbone behind the site. Providers list their treatments and services for sale on PokitDok, and the consumer can purchase it directly, right there, often for the greatest savings. If you put in a credit card and say, “I’ll pre-pay for my mole exam and I’ll come in tomorrow,” that gets you the lowest price.
We aren’t looking to take a big slice. Our objective is to grow the volume of transactions, not to take money out of doctors’ pockets just when they’ve finally got some there. It’s very important to us that they not view it as a commission. It’s the cost of processing the payment, because we are hosting all of this—their site, their content, the whole marketplace—for free.
X: How is the creation of the new healthcare exchanges under the Affordable Care Act affecting your business?
LM: It’s a great thing for us. One of the reasons we chose to build PokitDok was that even way back in 2010, when we saw the way employers and insurers were preparing for the eventuality of 2014 and beyond, they were already saying, “We have to put more of the cost onto the employee.” Payers knew that they had to be creating more high-deductible products with attached HSA accounts, because that was going to be presented as the lowest-cost option in these exchanges, or presented by employers as the preferred choice.
So we knew those consumers needed a way to find the right choices for them. Whether they liked it or not, they were going to be in the position of having to make their HSA dollars meet their goals. They might never hit their deductible in a given year, and all of a sudden their focus would be on, “How can I maintain my health and take care of my family but keep my costs affordable?”
On the flip side, there’s what I would call insurance reform—reimbursement rates are going down. So where are the revenues going to come from for doctors? Are they positioned to compete for these out-of-pocket dollars? Definitely not.
Healthcare reform provided a situation where these two groups were seeking each other out. But there was no forum online where they could connect and do business. That is what PokitDok is about. We have been heading toward this point for a while, but the Affordable Care Act really crystallized that market force of rising out-of-pocket spending and falling reimbursement rates.
[The above conversation took place in late July 2013; for the final question, below, I checked back in with Maki via e-mail last week.—WR]
X: Any recent developments to share?
LM: We are finding great traction with payor and provider enterprise customers who desire a way for their members and employees to shop for and purchase non-acute healthcare treatments and services based on the highest value for cash vs insurance. For those customers, we improve the quality and value of health provider referrals by combining provider profiles with local market pricing. On the provider side of the market we are being engaged by health providers to grown their qualified patient acquisition, diversify their revenue stream (cash), and reduce the cost of collecting payments, both cash and reimbursements via our platform. We are seeing sustained growth in both interest in an open market for non-acute care and for PokitDok as a true marketplace where consumers and enterprise customers can shop for that care. We will start displaying national price data we’ve collected starting next week in time for CES.
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