UsableMarkets

In the healthcare services market change comes slowly. An incredible amount of innovative thinking, and technical blood, sweat and tears, have been put into improving our healthcare experience over the past two decades, yet in many ways very little has changed. Still, after all these years, getting accurate prices for basic procedures is like climbing Mount Everest.

OutOfPocket.com is a new website hoping to speed up the pace of change using the power of online communities. It’s a great way to illustrate how the power of the internet can potentially have impact on a recalcitrant marketplace. After all, what does an MRI cost? Not an easy question to answer, as Mona found out. Please, read on to find out more.

UsableMarkets: Please describe OutOfPocket.com. How is it intended to work, and how is it supposed to help people?
Mona Lori: OutOfPocket.com is a social-networking site to help consumers find the best value for routine health care services. The OutOfPocket.com database contains the true price of services based on actual visits by individual consumers. The contents of the site are contributed by consumers to share with other consumers. The website invites everyone to contribute, including the insured and insured, by anonymously posting prices they paid for routine health care services (such as MRIs, mammograms, x-rays, CT scans, vaccinations, office visits, dental and vision) along with their personal recommendations on the provider.

UM: What market opportunity did you see that made you think OutOfPocket.com was a good idea?
ML: The inspiration for OutOfPocket.com started with a personal experience. Several years ago, I was trying to determine what my out of pocket cost would be for an MRI with my high-deductible insurance plan. Since it was high-deductible plan, I knew I would pay 100% of the MRI cost. I searched through my insurance plan’s website. I networked with friends. I even called local providers directly and asked for pricing. In the end, I found it was not possible for me to determine the price of the MRI. Essentially, I discovered the only way to find out the price was to go ahead get the MRI and wait for the bill.

So why is it so difficult to find prices? There are many reasons:

- Healthcare pricing is complex. For many consumers (and even some providers) pricing is too complex to grasp. It is easier just to submit the bill and see what comes back.

- Reimbursement rates are negotiated between payers and providers and are considered confidential.

- Shopping for prices is new. Traditionally, health care pricing information wasn’t necessary because insurance plans paid most or all of the costs.

As a result, insurance companies and providers cannot or will not provide consumers with meaningful price data.

This is just so wrong! As a country, if we do not want to move to universal healthcare, we need an open marketplace for healthcare. And an open marketplace cannot have secret pricing! If consumers cannot make informed decisions about purchasing health care services, it’s no surprise that health care costs are spiraling out of control.

After reflecting on this experience, I conceived of a solution to enable consumers to share prices they paid for health care services using social networking. This was something that could be accomplished without waiting for legislation to pass, complicated programs to be initiated, or the country to decide how to reform our health care system.

We all benefit by exposing health care prices. Consumers are able to save money by shopping for the best value, health care costs are lower when consumers spend wisely, competition will drive down prices and improve services, and insurance companies will be able to reduce their costs by eliminating wasteful spending on unnecessary procedures and overpriced services.

If OutOfPocket.com achieves critical mass, and enough consumers participate to share prices – consumers will have a powerful tool to make healthcare purchasing decisions and, as a popular healthcare website, OutOfPocket.com will be a high-value targeted advertising space for advertisers.

UM: How do you see OutOfPocket.com fitting into the healthcare marketplace? In other words, how will it make the healthcare market in the United States work better?
ML: A health care market that openly discloses prices will have a positive influence on our health care system.

(1) Educating consumers so they can find the best value for services
(2) Creating a “consumer awareness” of the true cost of health care services
(3) Encourage healthy competition in the industry and as a result improve services and reduce costs

I see OutOfPocket.com as bridge to reforming our current health care system. Whether it will be a universal health care system, or a market driven solution where individuals are responsible for purchasing their own health insurance, reducing cost and eliminating waste is big part of the overall solution.

UM: Your site relies on user participation to a large degree. What risks does that expose you to, and how do you hope to mitigate them?
ML: A recent Forrester Research survey reported that 60% of consumers use “word of mouth” to evaluate the quality of health care providers. Consumers trust other consumers to share what they know. This has already been proven with the rise and success in health care social networking.

The data in the OutOfPocket.com directory is entered by consumers to share with other consumers. We do not validate any of this information. We have found that most consumers are very happy to share this information to benefit other consumers. They have no desire and there is no benefit to misrepresent the information. The information provided on OutofPocket.com is not intended to be a substitute for professional advice. We cannot guarantee that all the information provided on this site is accurate or complete. Moreover, changes in information resulting from ongoing research and price changes may affect the timeliness of the information provided.

As always with user generated content, some of the data will be less valuable than other data. Our rating tools will help weed this out by prompting users to rank the search results. Less desirable search results will appear lower in the results list.

UM: The cost of healthcare is large topic of discussion in the United States (as you no doubt know). How do you hope OutOfPocket.com will impact that conversation?
ML: Our current health care system is unsustainable and costs are spiraling out of control. Legislation will take time to sort out. In the meantime, OutOfPocket.com is something that can be started today to make a difference and try to control health care spending. OutOfPocket.com also benefits the 44.8 million uninsured that are charged inflated prices for the same services insured consumers receive at a discounted price. We know that knowledge is power and consumers can benefit from knowing the true price for a service.

UM: Finally, there is a lot of discussion about healthcare in the 2008 US presidential race. Which candidate’s healthcare plan would have the best impact on OutOfPocket.com? Which one would have the worst? And why?
ML: Without going into the specifics of each of the candidate’s positions, OutOfPocket.com presumes a marketplace for healthcare as opposed to a Universal Health Care plan and OutOfPocket.com would compliment candidates proposing market driven plans.

Interestingly enough, OutOfPocket.com may benefit from candidates with the most comprehensive plans, since any sweeping reforms are likely to get bogged down while OutOfPocket.com moves ahead.

UM: Thanks Mona, and good luck with OutOfPocket.com

And, as always, thanks for listening.
~alex