Analysis: Groupon for healthcare services fills a void for consumer-focused pricing

• The use of Groupon and other pricing tools is symptomatic of a healthcare market where patients desperately want a deal, according to a Kaiser Health News article.
• What’s driving consumers to use such pricing tools for healthcare services is the high cost of care (and high cost sharing for those who are insured) coupled with the lack of price transparency that enables patients to shop for scheduled elective services.
• Hospitals and health systems interested in becoming more consumer-friendly should download HFMA’s Dollars and Sense report, which provides a path for improving their patients’ financial experience of care.

Kaiser Health News is reporting: “The use of Groupon and other pricing tools is symptomatic of a health care market where patients desperately want a deal — or at least tools that better nail down their costs before they get care.”

“By offering an upfront cost on a coupon site like Groupon, [Steven] Howard, [who runs Saint Louis University’s health administration program], argued, medical companies are meeting people where they are,” said the News. “It helps drive prices down, he said, all while marketing the medical businesses.”

MDsave, a site that contracts with providers to offer discount-priced vouchers on bundled medical treatments and services, offers deals at over 250 hospitals across the country, selling vouchers for anything from MRIs to back surgery, according to the News piece. “It has experienced rapid growth and expansion in the several years since its launch,” the article said.

“[Paul] Ketchel, [CEO and founder of MDsave,] attributes that growth to the general lack of price transparency in the U.S. health care industry amid rising costs to consumers,” according to the News article.

Takeaway

For some reason, I don’t share many of the article’s commentators’ sense of shock at the idea of a Groupon for medical treatment.

And I fully agree with Paul Ketchel’s observation that what’s driving this is the high cost of care (and high cost sharing for those who are insured) coupled with the lack of price transparency that enables patients to shop for scheduled elective services.

To date, some hospitals and health systems have not done a good job of providing consumers with estimates of their out-of-pocket responsibility. So, Groupon is filling a void in the market. It’s offering patients a guaranteed rate (at a lower cost than what they may have access to if they have a HDHP) and providing more entrepreneurial-thinking provider groups with a way to better market their services.

The concern about overutilization of tests and radiation has some merit. I think the article overplays it. Groupon in some instances can cause people to buy things they don’t need/use. But I’m far less likely to impulse buy an MRI than I am 10,000 range balls from a golf course on the other side of the opposite side of D.C. from where I live. And I suspect those who would impulse-buy medical services from Groupon are a limited set of individuals.

For hospitals and health systems interested in becoming more consumer-friendly, HFMA’s Dollars and Sense report provides a path for improving their patients’ financial experience of care.