May 23, 2014

Answer the following: Which industry has experienced such transformational change in the last 20 years that an entire profession was nearly wiped out? The advent of the internet made price and quality comparison easier than ever; consumers, who in the past relied on experts to drive their purchasing decision, now have transparent data, easily available, to make these decisions on their own.

Sounds like healthcare? Think again. It’s travel.

For travel industry veterans, the advent of the internet meant major changes to business as usual. As pricing and consumer reviews became more transparent and easy to find, travelers could make decisions on their own — with no more need for travel agents to carry out laborious price and quality comparisons.

The internet was disruption stage 1.0 for the travel world, but that was just the beginning. Disrupters, version 2.0, such as travel bidding sites like, soon emerged.

Providers, beware. The same concept is coming to healthcare.

If you haven’t used Priceline, potential travelers select a city and star rating (i.e., quality level) and enter in a price they’re willing to pay per night. Hotels view the bid, and those under-capacity can choose to accept the bid (which usually represents a steep discount on regular rates).

Healthcare consultant Ralph F. Weber, who works with both employers and policy makers, has brought the same concept to healthcare.

He came up with the idea while working with Canadians who were seeking treatment in the U.S. due to long wait times for care in their country’s public system. He would call U.S. providers for pricing estimates, negotiate with a select few and eventually arrive at a deal for the patient. There needed to be an easier way, he thought.

Enter Medibid. Launched in 2010, the website lets healthcare providers bid on healthcare services sought by consumers.

Consumers enter what type of service they’re seeking, be it primary care services for a year or a joint replacement, and providers across the country and throughout the world can bid. The consumer reviews the bids and the providers’ profiles — which include information on experience, training and outcomes — and can schedule the service if one seems a good fit.

The consumer then pays the provider directly. Under Medibid’s business model, the consumer pays a fee to place a call for bids ($25 for one-time use or $4.95 a month) and the provider pays an annual fee for the opportunity to place bids. Many employers also use Medibid to accept global bids for preferred provider status or to provide access to the service for individual employees.

More than 6,000 providers use the site, and the number is growing, says Mr. Weber.

The most popular services up for bid are elective procedures, including joint replacements and colonoscopies. Users can expect to receive steep discounts on pricing. A study performed by the company found rates booked through the site were, on average, 80 percent less than chargemaster rates and 50 percent less than payer-contracted rates.

Despite concerns that such a site would only reward the lowest-cost provider, Mr. Weber says this isn’t the case. “The people that use Medibid are not necessarily just looking for the lowest price,” he says, explaining that Priceline users don’t only book at Motel 6 or Microtel. Instead, their seeking value — their desired level of quality at the lowest possible price.

Medibid users can include preferences, such as how far they’ll travel for a procedure. However, any provider on Medibid still has the opportunity to answer the call for bids — a function that turned out to be a benefit for George Law, a Chicagoan who had opted to go without health insurance but needed a colonoscopy.

Using Medibid, he told providers what he was looking for, and noted he’d prefer an Illinois provider. When he received a big from a gastroenterologist in Portland, Oregon, for $800, his travel distance became more flexible. With the going rate for a colonoscopy in the Chicago area at $3,500, Mr. Law was able to fly to Oregon, stay in a hotel, rent a car, pay for the procedure and still save roughly half, compared to what the procedure would have cost him in Chicago, according to a KATU news report.

For patients, Medibid offers the same benefits Priceline does for travelers: steep discounts, with easy comparison of quality and cost.

For providers who offer a good value, Medibid could be yet another way to attract patients. For those who haven’t yet mastered the value equation, the growth in sites like Medibid could me trouble ahead.


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