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 Paul
Ketchel
CEO
MDsave Incorporated
www.Mdsave.com
Interview conducted by:
Lynn Fosse, Senior Editor, CEOCFO Magazine, Published – June 8, 2015
CEOCFO:
Mr. Ketchel, what is the concept for MDsave?
Mr. Ketchel: MDsave is the first open healthcare marketplace.
It allows patients to shop, compare and purchase healthcare services and
receive a savings of somewhere between 40% and 60%, based on paying for
those services upfront.
CEOCFO:
Has this been tried before? How is this the first open healthcare
marketplace?
Mr. Ketchel: One it has not been tried before, in a sense that
we are the first company that offers fully bundled healthcare services. What
I mean by that is any service that we offer is fully comprehensive. You will
not see bills for that service. In addition, it is the first time that
patients can see the price of a healthcare service and actually access that
price in real-time. Therefore, it is the first of its type. Think of us
almost like Expedia or Travelocity for healthcare services.
CEOCFO:
Would you tell us about the challenges of putting your system together
and getting the participation to make it viable today?
Mr. Ketchel: One of the first challenges was that when we got
into the market with the concept, very few healthcare providers even
understood what their own pricing was. They did not even know what they
should charge and they had no idea what to charge for services that they may
have been providing for several years, because of the insurance process that
has been typical in the country. Therefore, the first thing was developing
accurate data that gave them localized pricing information that made it
efficient for them to be able to add in most services. The second challenge
was to give a value proposition where they understand that yes, they might
be offering these services for less money upfront, but at the end of the day
they will get paid much faster. In addition, they can pass the savings on to
their patients that they receive by actually netting more on a transaction
because they have eliminated much of the inefficiencies in a normal
healthcare claim.
CEOCFO:
Did it surprise you that doctors needed convincing?
Mr. Ketchel: It did not surprise us at all. If someone was
trying to get this concept off the ground five years ago I do not think that
it would have taken off. However, what is happening now is that we are in a
world post healthcare reform, so you have a great deal of insurance plans
where patients have an out of pocket deductible that is pretty high for the
patient. Therefore, what is happening is that for the first time patients
are having to pay for that first $3,000to $5,000 of their healthcare out of
their own pocket, so they are shopping around and comparing. They are
looking at what these costs are, because it is really their own dollars.
They are not just paying some insurance co-pay. The old system used to
revolve around the idea that a person would have insurance and go to the
doctor anytime I want. Now that has changed dramatically in the last three
years. We saw it and initially had to convince the providers that this was
going happen. However, once these changes went into place, providers have
become much faster to adapting the concept, because they are seeing the
financial pain that their own patients are experiencing when they need a
service and they do not have the cash to cover those very high expenses.
CEOCFO:
Are we talking primarily high-end procedures, such as surgery or any
medical need?
Mr. Ketchel: It includes any procedure needed. Our consumers
purchase everything from flu shots to cardiac procedures.
CEOCFO:
How is a doctor able to come up with a full pricing and give a quote
when they have not see a patients records?
Mr. Ketchel: There are some services that will never be
purchased this way because they are so incredibly complex, so that has been
a pricing model that is focused around insurance and the insurance
reimbursement. What we are asking the provider is to figure out what they
need to make on an average transaction to feel comfortable with their
pricing and run their practice. Then provide us with the rate that the
patient has to pay. They are looking at all of their patients as a whole and
averaging a net transaction that they would like to net on each patient
visit or procedure, and that is where they are setting the price. The
understand that there will be some patients that might cost them a little
more or take more time and that there will be some patients that are less
complex and the will get through faster. Therefore, they are looking at an
average of where they need to be and it is helping them to set that price
where the provider knows that they are going to be in good shape financially
and the patient is still going to get a better value than what they
typically can obtain on their own.
CEOCFO:
How long has MDsave been available?
Mr. Ketchel: The launched our first market in about May 2012,
and today we are in over 24 states in 100 plus markets today.
CEOCFO:
Are there any licensing or regulatory issues in the various states
that you would be of concern to you?
Mr. Ketchel: There are no regulatory or licensing concerns for
us. It is the providers that are providing the service and we are really a
channel for them to list and bundle healthcare services and process the
payments for them. We are not an insurance company, we are not a physical
healthcare provider ourselves. We are a technology solution platform that
allows providers to improve their patient relationships.
CEOCFO:
Would you tell us about your background, how you got started with
MDsave and how your experience has helped to create a successful company?
Mr. Ketchel: I started out in healthcare policy, so I worked
on Capitol Hill as an Aid to a US Senator. After that I was involved with
some biotech pharmaceutical companies and following that I was a federal
healthcare lobbyist for eight years. In that capacity I worked for large
healthcare companies, from pharmaceuticals to medical device companies. In
that area there was a great deal of reimbursement issues, so I got to
understand how reimbursement was working in the United States. Then when the
first draft of the Affordable Care Act started to circulate, our company saw
one of the first drafts and we saw that there was a great deal of additional
mandated coverage provisions that were going to be contained. Therefore,
with those provisions we realized that in order to pay for these additional
claims and provisions, you were more likely to see a significant premium
increase in traditional health plans. This meant that in our view, the
majority of employers who provide insurance in the US, would move to a
higher deductible plan to keep their insurance costs down. That was really
the genesis for MDsave, because we realized that once patients become
responsible for those out of pocket expenses, they would become a great deal
more cost sensitive about what those prices are for those services than they
have been. Therefore, they really needed a technology solution and an easy
way to shop, compare and use those types of services.
CEOCFO:
Will this affect the doctor/patient relationship or will cost be the
deciding factor?
Mr. Ketchel: I think that money will be the deciding factor,
because we often see that our lowest providers are not necessarily our
highest volume providers. A provider who is known in the community and has a
good reputation often does well. What we are seeing is that there is a big
change in the United States taking place right now between the
patient/provider relationship. Part of that is because you have insurance
networks that are narrowing, so patients are losing the primary care
provider that they have had for ten years. We are also having doctors
retiring along with many other things. Therefore, what is happening today is
that about 40% of Americans no longer has a primary care physician and that
physician has traditionally been the entry point into a healthcare referral
funnel for a patient. When a patient loses their provider, it is generally
that the first step for a person today is to go to the Internet and Google
to try to find where they should go next.
CEOCFO:
How are you attracting both doctors and patients to MDsave?
Mr. Ketchel: We have large contracts with major healthcare
systems and chains, which employ a significant number of physicians in the
United States, so we are bringing in providers in that way. With regard to
the patients, about two thirds of our patients are provider referred. This
means that they have seen a doctor and the doctor knows that the patient
needs something that they are going to have a hard time paying, so they send
them directly to us. We also do traditional marketing, so in our markets we
do TV advertising, online advertising with Google Adwords, social
advertising, as well as radio and print media. It is different in each
market depending on the location of the facilities and the available media
channels.
CEOCFO:
How are you able to help in the area of patient financing?
Mr. Ketchel: We have a patient financing partner that we have
worked with and it has been great. It allows patient if they do not have a
way to pay, to be able to do an online pre-approval in about 30 seconds to
see where they are and what they might qualify for. Then within 24 hours
they can have a full approval. They will send the patient an ACH transfer to
their checking account and then they can come back in and approach us. The
financing arm that we are using we feel is superior to some of the other
products that are out there with regard to being able to go down to a lower
credit score and it has better rates than many of the traditional healthcare
financing pieces.
CEOCFO:
it seems you would like to be the Amazon of healthcare services. How
do you facilitate ease of use on your website, so that people will come back
for each and every procedure?
Mr. Ketchel: That is a great question and you are on the right
track with the Amazon analogy. When we started, we believed that in order to
make this really efficient for a consumer we needed to get away from the way
that the healthcare consumer experience has been and really mimic the
experience that consumers have had with other large, successful online
ecommerce brands. Therefore, we have a Silicon Valley based engineering
team. We have engineers and our COO who have come from that environment and
have built big national digital brands. We think that is important, so if
you look at our site and walk through it, it feels much more like an
e-Commerce site than a traditional healthcare site. We have done this in a
way that consumers are used to using. They have the same engagement tools on
an Amazon or one of these other sites. When it comes to fulfillment and
taking appointment, we have built really sophisticated software on our
backend, so that when a patient makes a purchase it notifies them with an
email of a copy of their voucher. If an appointment is not made we have a
full support service in-house where we do online chat support and phone
support for our patients. However, when a patient has prepaid, you would be
surprised how much easier it is to get their appointment and move through
the process. Then, as soon as the patient is seen by the provider we
transmit the payment to the provider. We typically pay the provider within
six days or less with an ACH transfer and no claims to file. Therefore, we
are helping the provider get paid much faster than they would through
traditional insurance channels. They really want to get that revenue in
their accounts, so our patients get a priority because they know that they
will be paid very fast.
CEOCFO:
A big change from the usual process!
Mr. Ketchel:
There are so many middlemen in the healthcare payment system that it has
added a great deal of frustration to the consumer. At the end of the day
healthcare is not that complicated. You have a patient needing a service and
you have a provider wanting to provide that service. All we need to do is
link those two together with modern technology and let it happen.
CEOCFO:
What are your next steps? Are you looking at growth geographically?
Mr. Ketchel: We grew out initially ion the South East and the
South West. New we are expanding rapidly to the West Coast. In the next 90
days we will have systems all the way across the west from San Diego to
Seattle. The next step is that we have some proprietary software that is
helping hospitals become more efficient in their other practices, so we are
also providing that to our customers.
CEOCFO:
How do you cut through the noise when you are approaching a hospital
or a provider?
Mr. Ketchel: We have to go straight to a CEO or CFO. This is a
very big problem as they are experiencing a big change from the way that
they have traditionally been paid. The out of pocket responsibilities of the
patients have really been impacting their businesses. It is already in
discussion what is going on in all of these facilities and they are looking
for a solution. Therefore, if we can just get to them and show them the ROI
metrics that they can have, how the program works and the patient’s
satisfaction, it moves pretty quickly. However, we do have to get to someone
who understands what is going on with the healthcare system on a financial
level.
CEOCFO:
You had a recent funding. How will you be using the money?
Mr. Ketchel: The primary goal for the funding is for rapid
expansion. We are growing really fast and the company has been increasing
transactional volume at about 20% to 30% month-over-month. Therefore, we
want to accelerate the model for the consumer that is out there and continue
growth.
CEOCFO:
What are the barriers to entry from a potential competitor and do you
have exclusive agreements with your providers?
Mr. Ketchel: In most places we do not have an exclusive
agreement, because we want to have a free open market for the consumer to
use, so that they can trust the brand. With regard to the barriers to entry,
there is a software component that needs to be designed to make the product
work. Secondly, and a bigger barrier to entry is that there is a great
amount of understanding of the healthcare industry that we have, also
proprietary data that we have developed over the last few years. We also
have some significant patents that have issued in our favor around using
these types of technologies to facilitate healthcare based transactions.
Therefore, we think the barrier to entry is fairly high around the
competition.
CEOCFO:
Why does MDsave standout?
Mr. Ketchel:
If you are a consumer in America, about 110 million people now fall into a
use case for a consumer that has a use for MDsave. Therefore, the simplest
reason for people to pay attention is that it is their money that is at
stake. We usually say that the consumer will get the same level of quality,
yet pay 40% to 60% less that you would using a different channel, so it is
the personal savings. |
“When it comes to your medical care, which is more important: the
doctor-patient relationship or how much it costs?”
- Paul Ketchel
MDsave Incorporated
www.Mdsave.com
Contact:
Calvin Magee
844-MDSAVE
calvin@mdsave.com
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