Build­ing bun­dles for self-pay pa­tients

Modern Healthcare - - INNOVATIONS - By Beth Kutscher

The pro­lif­er­a­tion of high-de­ductible plans is mak­ing con­sumers more price sen­si­tive. Pay­ing $1,000 or more out of pocket en­cour­ages peo­ple to shop for health­care ser­vices, whether it’s an elec­tive pro­ce­dure or rou­tine care.

Hos­pi­tals are still fig­ur­ing out how to com­pete for this self-pay busi­ness. Post­ing prices is a start. But today’s tech-savvy pa­tients also want to shop on­line—whether it’s to com­pare prices and qual­ity or to make the pur­chase.

One prob­lem for health­care providers is that they send mul­ti­ple bills for a sin­gle episode of self-pay care. MDSave, which has its roots in Nashville but hires its de­vel­op­ers in Sil­i­con Val­ley, of­fers providers a way to pack­age their ser­vices into a sin­gle bun­dle for pur­chase on­line. The com­pany’s clients in­clude Catholic Health Ini­tia­tives, As­cen­sion Health and Com­mu­nity Health Sys­tems.

The com­pany’s tech­nol­ogy draws from Medi­care billing codes and pro­ce­dural codes to cre­ate an ap­pro­pri­ate rate to charge for a sin­gle episode of care or bun­dled ser­vice. The bun­dle com­bines the fees for the spe­cial­ist per­form­ing the pro­ce­dure, the fa­cil­ity and all re­lated ser­vices such as anes­the­si­ol­ogy and ra­di­ol­ogy.

Health sys­tems can list pro­ce­dures on MDSave’s pub­lic web­site, which pro­vides an on­line health­care mar­ket­place for pa­tients to com­pare prices as well as ex­e­cute the pur­chase. MDSave col­lects pay­ments be­fore the pro­ce­dure and dis­burses the rev­enue to the in­di­vid­ual providers in­volved in the pa­tient’s care.

“They had no way to bun­dle those episodes of care,” said Paul Ketchel, the com­pany’s CEO and co-founder. “We looked at the pieces that were im­ped­ing the health­care sys­tem. We made health­care bun­dles scal­able.”

Pa­tients can shop on MDSave for hun­dreds of pro­ce­dures, in­clud­ing ap­pen­dec­tomies, mam­mo­grams and even sleep stud­ies. About 24% of the pa­tient vol­ume comes from sur­gi­cal pro­ce­dures, its fastest-grow­ing seg­ment, Ketchel said. “The user of MDSave is any­one with an out-of-pocket med­i­cal ex­pense,” he said.

Dr. Ti­mothy Hug­gins, a gas­troen­terol­o­gist in Weather­ford, Texas, has been work­ing with MDSave to of­fer colono­scopies and en­do­scopies to unin­sured pa­tients, more than 20% of his prac­tice. Pa­tients with wor­ri­some symp­toms such as rec­tal bleed­ing were wait­ing six or even 12 months be­fore un­der­go­ing the pro­ce­dure be­cause they were wor­ried about how to pay, said Charita Gar­ner, prac­tice ad­min­is­tra­tor.

Now Hug­gins treats at least three pa­tients a month who have pre­paid for an episode of care. They pay a dis­counted bun­dled price of $2,100 for a colonoscopy that used to cost $8,000 for self-pay pa­tients at Weather­ford Re­gional Med­i­cal Cen­ter af­ter in­clud­ing sep­a­rate fees for pathol­ogy, anes­the­si­ol­ogy, the physi­cian and the fa­cil­ity.

The up­front pay­ments have al­lowed the prac­tice to save on billing and col­lec­tion costs, Gar­ner said. More­over, pa­tients who pay up­front are more likely to sched­ule fol­low-up vis­its be­cause they don’t have an un­paid bill hang­ing over their heads.

MDSave works mostly with large hospital groups and am­bu­la­tory sur­gi­cal cen­ters. It al­ready has a pres­ence in 24 states and 120 mar­kets, Ketchel said. It is grow­ing at a rate of 20% month over month.

MDSave has dis­cov­ered that pa­tients aren’t nec­es­sar­ily look­ing for the lowest-cost providers. “I don’t think it’s re­ally a race to the bot­tom,” Ketchel said. “It’s more a race to the mid­dle. Peo­ple will choose providers if they’re within 20% to 25% of each other. What mat­ters most is see­ing a well-known sys­tem.”

Al­though providers can set their own rates, MDSave’s data sug­gest con­sumers are will­ing to pay about 120% to 145% of what Medi­care pays, Ketchel said. For con­sumers, buy­ing a bun­dle of ser­vices can mean sav­ings of about 40% to 60% in out-of-pocket costs. The ben­e­fit for providers is an in­crease in col­lec­tions. “We’re guar­an­tee­ing zero bad debt be­cause those claims are filed up­front,” he said.

MDSave also has rolled out a health­care mar­ket­place called MDSave Plus, which is geared to­ward em­ploy­ers. MDSave ne­go­ti­ates prices with providers and then passes the sav­ings along to em­ploy­ees, who can save up to 60% on their med­i­cal costs.

The Brent­wood, Tenn.-based com­pany, which has an of­fice in San Fran­cisco, has raised more than $14 mil­lion from in­vestors, in­clud­ing MTS Health Part­ners. Its board of direc­tors in­cludes for­mer Se­nate Ma­jor­ity Leader Dr. Bill Frist. It is pro­ject­ing more than $15 mil­lion in rev­enue this year, af­ter earn­ing $5 mil­lion last year.

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