It is not lost on David Goldhill that three of the biggest, smartest and most powerful companies in the world have disbanded their efforts to collectively fix the healthcare system.
But that’s what happened recently as Haven — the healthcare venture between Amazon, Berkshire Hathaway and J.P. Morgan Chase — disbanded.
Goldhill, CEO and co-founder of direct-to-patient healthcare platform Sesame, said he understands the complexity of the system and the unique place it holds in the U.S. consumer’s life. They pay a lot of money for it but lack understanding of exactly what they’re buying. It’s a reality that Goldhill said makes it easy for prices in healthcare to keep rising. If consumers don’t know what they’re paying for, they don’t understand why prices keep rising and how they can consider new options.
“Over the course of your lifetime, you’re really on a treadmill because that lack of exposure to the price means there’s no one exercising discipline on price,” Goldhill told PYMNTS CEO Karen Webster. “And so, prices go up a lot. Insurance is this sort of negative cycle of keeping more people unexposed to the cost of their care, which lets the health industry raise the price.”
In other competitive industries, increasing productivity through technological advancements drives prices down. It’s why a consumer can pick up a laptop at Costco for $300 instead of for the $1 million it would have cost them 40 years ago.
From that perspective, it doesn’t make sense that in medicine, the same productivity enhancing technological tools are driving the cost of care up. And it is becoming understood by consumers that something is badly broken in the cost of healthcare.
What people don’t understand, Goldhill told Webster, is that there is no massive step forward to actually fix it. There is a tendency to grossly misunderstand where the power in the segment lies, or where the efforts at rebuilding have to commence.
Why Employers Aren’t The Place To Start
It is not illogical, Goldhill said, to look to employers to try to disrupt the healthcare cost treadmill operating today. They are the entities “shoveling” over $1 trillion a year into it, and so it seems plausible enough that they have the power to disrupt it. But Goldhill said that this point of view overlooks some critical facts.
The first, he said, is that healthcare in the U.S. is entirely provisioned and administered locally. No matter how large a firm is, its workforce is dispersed across scores of individual healthcare markets, meaning their actual leverage is far less than most people assume.
“The idea that just because a company is gigantic it has leverage misunderstands how this is actually done,” Goldhill said.
Second, he said, insurance becomes part of an employer’s compensation package to their employees. This means they choose a provider with a lot of mixed incentives in making their decision that play off and against each other in unpredictable ways.
“They want a happy workforce,” he said. “They want a healthy workforce. They want a well-compensated workforce. They want an efficient healthcare system. Sometimes those things can conflict with each other.”
Finally, he said, there is the transparency issue. For the most part, healthcare and insurance pricing is invisible to the consumer, regardless of who their employer is.
Appealing To The ‘Convenience User’
Consumers as patients, he said, aren’t running around getting random and expensive medical procedures just to fulfill their deductible. In fact, in a high-deductible world, most people without a persistent and expensive chronic condition like diabetes probably won’t crack their $5,000-$10,000 deductible with routine care. Large, unexpected and sudden onset accidents and emergencies do happen, he said, but in actual terms, they are very rare. The average healthy human adult in their working years paying for insurance doesn’t go through that much care.
What consumers need, he said, is to start demanding a clearer window into their care because in a highly deductible world, they will still mostly be paying out of pocket after going through a complicated and unpleasant process with their insurance company first.
A large share of Sesame’s customer base on its platform, he said, are convenience users who have insurance but would rather pay out of pocket for low-cost telemedicine visits that provide access to practicing physicians in their local market that can happen immediately, than wade through their insurance. The benefit of such an approach, Goldhill said, is there is an opportunity for that patient to develop a longer-term relationship with that healthcare provider should they need or want to; they’re only an office visit away.
Sesame’s solution, he said, was built to be simple. Customers can find the procedure they need with a price listed. Getting care through the platform is like anything else, customers click “buy” and purchase their procedure. Goldhill said he believes the system works well for cash-paying healthcare customers who have no plan and for high-deductible insurance customers looking for a more cost-effective way of navigating the system and the aforementioned convenience.
And given the scale of the problem in the system, and the frequency with which attempts at big swings at it often miss, the solutions at this point might just mean starting small. Before the system can change, he said, the consumers have to change. And transparency in the pricing is a solid place to start.
“We have a solution that’s simple,” he said. “We hope as people gravitate towards the simple approach that it can help create a guide for how to change the way they think about healthcare. Sesame is trying to give a very simple answer that won’t immediately work for everybody but works for enough people to create enough scale that the next time the Berkshires, J.P. Morgans and Amazons take on the employer market, there are interesting tools in the consumer market that it may make sense for them to adopt.”
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