These Start-Ups Can Help You Reduce Health Care Costs

According to a new report by PricewaterhouseCoopers (PwC), health care costs will increase 7.5% next year, compared to 9.6% in 2009, when the recession kicked in. PwC identifies as the main drivers behind this slowdown a reduction in medical equipment costs, the shift in doctor compensation from fee-for-service to one based on a patient’s outcome, the use of generics as more drugs lose their patents, and price transparency. “What surprised me most when we talked to health plans in particular, is that many were able to explain why health care costs increases came down, but few could say why they could see a resurgence next year; the trend for going back up is not very strong,” says Mike Thompson, the study’s primary author.

Economists are pondering whether the slowdown in health care costs ushers in a permanent shift in the way patients consume health care, but it is highly unlikely that the trend will reverse. The reason: consumers are increasingly paying out-of-pocket for health care in the form of higher deductibles and premiums. In PwC’s survey of 1,400 employers, more than half plan to increase their employees’ share of health care costs.

As consumers start bearing the brunt of costs, they are going to shop around and push for greater price transparency. Prices for medical procedures and tests are mostly based on negotiations between health care providers and health insurers, and are kept confidential. As a result, prices can vary widely. In San Francisco, for example, the price of a cholesterol test ranges from $11 to $150. Used to having their employer pick up most of the tab, patients are now shocked to discover those price discrepancies. As reported in the Los Angeles Times, a woman who paid $2,236 for a CT scan at a Long Beach Calif. hospital sued her health plan, when she found out that it cost $1,054 if she hadn’t used her insurance. More startling, the cash price for a CT scan at a nearby medical center was only $250.

Patients will be battling with health care providers and insurance companies–some more enlightened than others, for their right to know how much medical services cost, before they pay for them. It won’t be easy. As health care investment analyst Avik Roy pointed out in his Forbes blog, an Arizona state senator tried in vain to pass a bill which would have required health care providers to post direct pay prices for common procedures. She blamed “swarms of lobbyists” for the bill’s failure to pass.

In the meantime, start-ups have spotted an opportunity to help patients reduce their health care costs, either by providing more clarity on prices, or rewarding healthy behavior by reducing out-of-pocket expenses. Here are a few:

1-     Castlight Health: Allows employees of self-insured companies to compare prices for medical procedures and tests. Customers include Honeywell, Life Technologies, and Willis North America.

2-     GoodRx: The insured and uninsured can shop around for the cheapest drug price. In my neighborhood, thirty 10 mg tablets of the generic version of cholesterol drug Lipitor cost between $76.20 for a mail order from FamilyMeds (free shipping) and $102.27 at Rite-Aid.

3-     SeeChange Health: Members lower out-of-pocket expenses by taking preventive steps, such as check-ups and basic blood tests. Health plans are available in California, and roll out in Colorado next month.

4-     EveryMove: Health plan members who register accumulate points for engaging in physical activities, such as jogging, walking, or gardening. Those points translate into rewards in the form of lower out-of-pocket expenses. Launches this September with Premera Blue Cross in Washington; expects to sign up four plans next year.

View the original article here

Health Start-Ups Like ZocDoc Should Dial Back The Hype

I like health Web sites and tech start-ups. I think the democratization of medical information is a beautiful thing. It’s a cliche that you can find out more about a hotel than a doctor with a few Google searches. I love how that’s starting to change. I also think that electronic medical records will improve health care over the long haul.

But I am also cynical about the idea that technology is some sort of panacea all that ails the sector. I read Michael Lewis’s book The New New Thing when it came out in 1999. There’s a great anecdote in it about Netscape founder Jim Clark. He was looking for another big challenge and decided–this was 1996–that all that was missing from health care was good software. So he started Healtheon. To Clark it was just a matter of writing some really good code and all the inefficiencies and paperwork that bedeviled the industry would go away. His business plan was a flow chart showing how software cuts out paperwork. It was simple.

Flash forward and Healtheon is buried somewhere deep inside WebMD. There’s still a lot of waste and paperwork that hasn’t gone away.

Since Clark there has been a parade of other ambitious health-tech entrepreneurs. Do you remember the search engine Wondir? Or the comparison-shopping site Vimo? Or Carol.com? How about Steve Case‘s modestly named Revolution Health? What about Subimo?

Just like Healtheon they all failed to catch on, much less “fix health care.” Castlight is a more recently hyped entry in the field. Another is John Doerr‘s company Essence Healthcare. HealthTap is another one that’s gotten buzz.

Though people keep trying, the track record of trying to “solve” health care the Silicon Valley way is fairly uninspiring.

That’s why I cringed this week when I saw another company–and another reporter–fall into the “if we Webify health care we can fix it” trap. The Times profiled ZocDoc, a New York start-up that has raised over $90 million from big names like Amazon’s Jeff Bezos. Its business is an interesting one. It’s like OpenTable, but instead of helping you get a restaurant reservation, you use it to get an appointment with a doctor.

But here’s the money quote from the article that made me shake my head:

“We’re one of the companies that can help fix the health care system,” said Dr. Kharraz, a physician and ZocDoc’s chief operating officer. “We’re making doctors more efficient and helping patients find the hidden supply of health care.”

Uh oh. Why go there?

ZocDoc has a cool service that’s attracting doctors. It will hopefully make some money for its investors. But why does it also have to “fix the health care system?”

There are lots of interesting debates about whether our health system is broken, if so why, and how to make it higher quality, lower cost, less wasteful, and so on. But I promise you that nobody having these debates has pinpointed the inability to get a doctor’s appointment as part of the problem.

So why do start-ups fall into this trap of promising to fix health care? I have a couple theories.

The Apple Effect There’s an unofficial requirement that tech companies can’t just build a great product. They also have to make the world a better place. Remember how Steve Jobs recruited John Sculley from Pepsi by asking if he wanted to spend his life “selling sugared water? Or did he want to come with me and change the world?” The punch line, of course, is that Apple has changed the world. But that kind swagger has also raised the bar. Every other tech company must act like it’s doing something more than just engineering a cool product.

Everybody In The Industry Must Be A Reformer When you’re in health care, changing the world means “fixing it.” I’m someone who thinks that our country’s health care system works better than any other and that the crisis has been vastly overstated. But I’m in the minority. We wouldn’t have just passed a $1 trillion health reform bill. So if you are an entrepreneur it’s tempting not just to “change the world” by making doctors offices run a bit better. You shoot higher. You will fix the world! Apply the same rhetoric to OpenTable and the food business and it sounds kind of silly.

Overzealous Tech Reporters Usually technology reporters, not health care reporters, write these hyped up stories. They need a hook for why the company will be the next Facebook or Google. Health reform is staring right at them. They may get the quote simply by asking over and over again the “fixing health care” question. And for whatever reason, there’s little effort to hold previous companies accountable that had the same ambition.

Health Care Is Analogue Medicine is easy to diss for being a Luddite field. Doctors don’t use email like other professionals. The paperwork is out of control. Hospitals are big, messy service businesses. There’s a feeling that any service can be better with technology.

This diagnosis is true. But the cure is not necessarily as simple as adding software. (Although that is happening with the widespread implementation of electronic medical records.) What’s harder to grasp is that health care is not just a service. It’s an experience. And while many services can be replicated online, human experiences can not. There’s no real electronic replacement for being seen by your doctor. When you take a pill you can’t do it over the Internet. You obviously can’t get virtual surgery.

So it’s true that you can point a finger at health care and say it lacks tech. But it’s not because the technology doesn’t exist. It may be that technology doesn’t really fit. To make a comparison to another “experience sector”: the Web also can’t replace a vacation. It can enhance it, perhaps. But it’s a human experience existing in three-dimensional space.

Going After Bricks & Mortar Many of these health-tech start-ups have looked at a big hospital, or a doctor’s office, the same way Amazon.com once looked at Barnes & Noble. Make the industry faster, chaper, more transparent and disaggregate the market–and you’ll win. (I’m in favor of all those things, by the way.) But in health care it hasn’t been an easy road. Just ask Google, which had to shut down its Google Health product last year after nobody found much utility in storing their health information online. Microsoft HealthVault may be next.

If I were working at one of these health start-ups I’d be careful not to over-hype what I’m doing. (And not just because I’m a superstitious, jinx-minded guy.) I think health care needs more entrepreneurs. But a team of engineers coding all night, no matter how smart they are, how well they’re funded, how much publicity they get from the tech press, or how high their ambitions–is not going to “fix” health care anytime soon.

Matthew Holt, who hosts the Health 2.0 conference and has followed this space more comprehensively and for much longer than I have, makes a similar point in an article he wrote this week on The Health Care Blog.

He was taken aback recently by the hype surrounding a start-up called CareZone. It appears to be a private Facebook for people taking care of sick loved ones to store information. It also has a certain hubris and a big-name founder from the software industry. It might turn out to be great. But as Holt writes convincingly: don’t act like this kind of thing hasn’t been tried before.

Follow @WhelanHealth on Twitter

View the original article here

Health Start-Ups Like ZocDoc Should Dial Back The Hype

I like health Web sites and tech start-ups. I think the democratization of medical information is a beautiful thing. It’s a cliche that you can find out more about a hotel than a doctor with a few Google searches. I love how that’s starting to change. I also think that electronic medical records will improve health care over the long haul.

But I am also cynical about the idea that technology is some sort of panacea for all that ails the sector. I read Michael Lewis’s book The New New Thing when it came out in 1999. There’s a great anecdote in it about Netscape founder Jim Clark. He was looking for another big challenge and decided–this was 1996–that all that was missing from health care was good software. So he started Healtheon. To Clark it was just a matter of writing some really good code and all the inefficiencies and paperwork that bedevil the industry would go away. His business plan was a flow chart showing how software cuts out paperwork. It was simple.

Flash forward and Healtheon is buried somewhere deep inside WebMD. Certainly there’s still a lot of waste and paperwork that hasn’t gone away.

Since Clark there has been a parade of similarly ambitious health-tech entrepreneurs. Do you remember the search engine Wondir? Or the comparison-shopping site Vimo? Or Carol.com? How about Steve Case‘s modestly named Revolution Health? What about Subimo?

Just like Healtheon they all failed to catch on in a big way, much less “fix health care.” Castlight, a well-funded start-up, is a more recently hyped entry in the field. Another is John Doerr‘s company Essence Healthcare. HealthTap is another one that’s gotten buzz.

Though people keep trying, the track record of trying to “solve” health care the Silicon Valley way is fairly uninspiring.

That’s why I cringed this week when I saw another company–and another reporter–fall into the “if we Webify health care we can fix it” trap. The Times profiled ZocDoc, a New York start-up that has raised over $90 million from big names like Amazon’s Jeff Bezos. It’s business is actually an interesting one. It’s like OpenTable, but instead of helping you get a restaurant reservation, you use it to get an appointment with a doctor.

But here’s the money quote from the article that made me shake my head:

“We’re one of the companies that can help fix the health care system,” said Dr. Kharraz, a physician and ZocDoc’s chief operating officer. “We’re making doctors more efficient and helping patients find the hidden supply of health care.”

Uh oh. Why go there?

ZocDoc has a cool service, is signing up doctors, and will hopefully make some money for its investors. But why does it also have to “fix the health care system?”

There are lots of interesting debates about whether our health system is broken, if so why, and how to make it higher quality, lower cost, less wasteful, and so on. But I promise you that nobody having these debates has pinpointed the inability to get a doctor’s appointment as part of the problem.

So why do start-ups fall into this trap of promising to fix health care? I have a couple theories.

The Apple Effect There’s an unofficial requirement that tech companies can’t just build a great product. They also have to make the world a better place. Remember how Steve Jobs recruited John Sculley from Pepsi by asking if he wanted to spend his life “selling sugared water? Or did he want to come with me and change the world?” The punch line, of course, is that Apple has changed the world. But that kind swagger has also raised the bar. Every other tech company must act like it’s doing something more than just engineering a cool product.

Everybody In The Industry Must Be A Reformer When you’re in health care, changing the world means “fixing it.” I’m one of those people who thinks that our country’s health care system works better than any other and that the crisis has been vastly overstated. But I’m in the minority. We wouldn’t have just passed a $1 trillion health reform bill if there weren’t a lot of people who think that we have a big problem that needs fixing. So if you are an entrepreneur it’s tempting not just to “change the world” by making doctors offices run a bit better. You shoot higher. You will fix the world! Apply the same rhetoric to OpenTable and the food business and it sounds kind of silly.

Overzealous Tech Reporters Usually technology reporters, not health care reporters, write these hyped up stories. They need a hook for why the company will be the next Facebook or Google. Health reform is staring right at them. They may get the quote simply by asking over an over again the “fixing health care” question. And for whatever reason, there’s little effort to hold previous companies accountable that had the same ambition.

Health Care Is Analogue Medicine is easy to diss for being a bit of a Luddite field. Doctors don’t use email like other professionals do. The paperwork is out of control. Hospitals are big, messy service businesses. There’s a feeling that any service business can be better with technology.

This diagnosis is true. But the cure is not necessarily so simple as adding a bit of software. (Although that is happening with the widespread implementation of electronic medical records.) What’s harder to grasp is that health care is not just a service. It’s an experience. And while many services can be replicated online, human experiences can not. There’s no real electronic replacement for being seen by your doctor. When you take a pill you can’t do it over the Internet. You obviously can’t get virtual surgery.

So it’s true that you can point a finger at health care and say it lacks tech. But it’s not because the technology doesn’t exist. It may be that technology doesn’t really fit. To make a comparison to another “experience sector” as opposed to a service sector: The Web also can’t replace a vacation. It can enhance it, perhaps. But it’s a human experience existing in three-dimensional space.

Going After Bricks & Mortar One reason why so many of these health-tech start-ups have come and gone is that they look at a big hospital, or a doctor’s office, the same way Amazon.com once looked at Barnes & Noble. Make the industry faster, chaper, more transparent and disaggregate the market–and you’ll win. (I’m in favor of all those things, by the way.) But in health care it hasn’t been an easy road. Just ask Google, which had to shut down its Google Health product last year after nobody found much utility in storing their health information online. Microsoft HealthVault may be next.

If I were working at one of these health start-ups I’d be careful not to over-hype what I’m doing. (And not just because I’m a superstitious jinx-minded guy.) I think health care needs more entrepreneurs. But a team of engineers coding all night, no matter how smart they are, how well they’re funded, how much publicity they get from the tech press, or how high their ambitions–is not going to “fix” health care anytime soon.

Matthew Holt, who hosts the Health 2.0 conference and has followed the health start-up world more comprehensively and for much longer than I have, makes a similar point in an article he wrote this week on The Health Care Blog. He was taken aback recently by the hype surrounding a start-up called CareZone. It appears to be a private Facebook for people taking care of sick loved ones to store information. It also has a certain hubris and a big-name founder from the software industry. It might turn out to be great. But as Holt writes convincingly: don’t act like this kind of thing hasn’t been tried before.

Follow @WhelanHealth on Twitter

View the original article here