At first, consumers weren’t bothered by the steep climb in healthcare costs, because their employers were covering their services. If they needed emergency care, all they had to do was meet their $500 deductible and their employer-provided health care plan would take care of the rest.
Now, however, the cost of medical care is sky-high, and employers are shrugging off the burden onto the backs of their employees. As those consumers take on more and more of the responsibility for their costs, they’re noticing for the first time. When your deductible is $5,000, you kind of have to pay attention.
Most people don’t have a spare thousand dollars sitting around for an unexpected medical test or procedure, so they must spend and save their healthcare dollars strategically. As consumers venture into this brave new world on their own, they are looking for ways to spend less without sacrificing quality of care.
Matchmakers ZendyHealth and Alegeus independently set out to provide consumers with a tool kit to help them make those hard decisions – and fund them, too. Now, the companies have joined forces to make it even easier to find the right care at the right price.
In this week’s Matchmakers discussion, Dr. Vish Banthia, founder of ZendyHealth, and Steve Auerbach, CEO of Alegeus, told Karen Webster what their partnership means for the healthcare marketplace – and how it could force prices back down in the long run.
How They Met
ZendyHealth allows consumers to name their price and the service they need, and matches them with a provider who can give them the service at that price. Webster called it “the Priceline for finding healthcare providers.” Providers in the network are rigorously vetted to ensure quality of service.
Alegeus gives consumers control over how their healthcare dollars will be spent by integrating their medical finances onto a single platform, including flexible spending accounts (FSAs), health savings accounts (HSAs), incentives and any other relevant financial capabilities the customer may have.
Furthermore, Alegeus believes in educating customers on how to navigate the complex healthcare system, a goal which Auerbach noted ZendyHealth could help it achieve. Alegeus brings 30 million customers to the table as the matchmakers’ user bases begin to cross-pollinate.
Banthia said he’d observed at his own practice how customers were struggling to meet their rising deductibles. It was also common for patients to call before a procedure to ask about pricing – or after a procedure to negotiate the price down. ZendyHealth sought a way to make these tasks a little easier.
“Tools like ours empower consumers to shop in a better way,” Banthia said. “They can access care at a lower cost without sacrificing quality. It’s a way for them to find top-tier care for less. And this is already existing behavior; we’re just facilitating the process.”
The Power of HSA
Most people are familiar with the concept of an FSA. It’s a tax-free account containing funds that the customer is free to use anytime throughout the next calendar year.
Fewer, however, are familiar with the concept of an HSA – and that is to their detriment, Auerbach said. An HSA holds their money in a separate account, beyond the calendar year and even if the consumer changes employers.
“Many consumers don’t understand that an HSA is more powerful than a 401K,” Auerbach said, adding that many employers offer a match like they do with a 401K. Plus, when consumers spend the funds, it’s tax-free – “even better than a 401K!”
This is just one of many tools about which Auerbach said consumers need to be educated. The more they know, the more they can take control of their own care and costs, he pointed out.
Banthia added that customers are ready for the types of tools ZendyHealth and Alegeus are offering, having demonstrated with their HSAs that they are interested in managing their healthcare dollars more efficiently and stretching them as far as possible.
A Lens Into Pricing
At a hospital system, Banthia said, an MRI can cost several thousand dollars. However, it’s often possible to go down the street and get the same test for a few hundred dollars instead. Data from ZendyHealth and others shows that the quality of care at such outpatient centers is comparable to what patients could receive at a hospital – pricing, said Banthia, does not always correlate to quality.
In any other industry, this would not be possible; people simply wouldn’t choose the more expensive option. But in healthcare, where price transparency is lacking, providers have been able to get away with it, because what other choice do patients have?
Auerbach noted, however, that patients have caught on to some of the discrepancies – and that’s why many are now beginning to take control of their own healthcare journeys and spending.
“We’re past the pivot point where consumers are starting to accept this accountability and responsibility and are actively seeking tools to help them understand it,” Auerbach said.
Driving Down Prices
In the past, said Banthia, patients haven’t had the tools to get pricing transparency and data to inform their purchasing decisions. Sure, they know enough to get a second opinion if they feel they’re being ripped off, but the ability to shop around for the best price is new – introducing an element of competition to the healthcare provider space.
Competition forces like marketplaces could help drive down costs, Banthia said. Providers are seeing insurance reimbursements come down, and are recognizing the need for more efficiency on their side of the equation. People will learn to value shop for the service they need at the price that’s right, he said.
People buy cars online. Is it such a stretch to think they could one day buy their healthcare the same way? Banthia and Auerbach agree it’s no stretch at all, and by coming together, they believe they can bring efficiency to an inefficient system – and thus deliver a tailwind into further marketplace capabilities.