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When Health Care Providers Compete

An online company allows doctors and facilities to bid for patients' business. Is that good news for consumers?

Getting Bids from Doctors for Surgical Procedures, Medibid

Jason Schneider

Providing competition among health care providers, lets doctors bid for patients.

En español l After four debilitating months on crutches, Vicki Burns knew she needed a total hip replacement.

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Because she didn't have health insurance, the 62-year-old resident of Mesilla Park, N.M., also knew she'd have to be resourceful.

She called a local orthopedic surgeon to ask his cash price for the procedure and received a "reasonable" quote for her orthopedic surgery, she says. But when a hospital quoted her a $45,000 cash price for a two-day stay in a room and no other services, she balked.

Then Vicki's husband, Jim, a retired chiropractor, found, an online service where doctors and facilities can bid for a patient's business. Patients pay $25 for one medical "request" or can make unlimited requests for $4.95 per month during a 12-month period.

Burns submitted her private and secure "request for care" and within 24 hours got two responses: one from a surgeon in India and one from Jaron Andersen, M.D., of Glendale, Calif. After reviewing Andersen's qualifications and experience on the site, Burns accepted his hip surgery bid, prepared especially for her, of $13,490. The cost included the surgery center, anesthesiologist, lab tests, X-rays and even house calls at the extended-stay hotel where Burns recuperated for two weeks.

"He treated us like family," Burns says. She also says she'd do it all again.

The time has come

"Businesses worldwide use a request for proposal or request for quote to source services and get maximum value for their purchasing dollar," says Chris Hobbs, MediBid CFO. "When patients start to behave like consumers, prices come down. They're used to asking doctors, 'Are you in network?' but not about how much a procedure costs."

The company is small but "growing exponentially" since being founded in 2010, says Hobbs. "It's a good idea that should have happened a long time ago and didn't, possibly because a number of players in health care profit from lack of transparency and maintenance of the status quo. Any consumer who's paying cash can do what we do — call physicians and facilities and get prices — but we make it easier."

Cash is also king for Keith Smith, M.D., the medical director of the self-described "free market-loving, price-displaying, state-of-the-art, accredited, doctor-owned multispecialty" Surgery Center of Oklahoma. He posts prices online for all to see and also participates on MediBid. He thinks its time has come, along with consumer-based health care.

"We're going to see a huge demand for this," he says. "As people who are uninsured or who have high deductibles spend more money, you're darn right they'll ask up front about prices as they learn to recognize value in a physician and a hospital. MediBid opens people's eyes and shows it's time to compete and demonstrate value with the right combination of price and quality."

Those two factors will continue to be hot health care topics, says Robert S. Huckman, professor of business administration at Harvard Business School and an expert on the health care delivery system. "The theory behind models like MediBid and the Affordable Care Act is that we need more competition among health care providers."

Although consumer decisions may boil down to price, quality is critically important to patients, he says, and, at least initially, conveying information about quality online may be more difficult.

The Affordable Care Act encourages overall integration of care by providers to better manage the cost of that care and avoid duplication, he says. In contrast, patients obtaining bids for individual services from different providers may "cut care into little bits and pieces." Additionally, this type of system may put focus more on procedures than preventive care, with a focus on the latter being a hallmark of the ACA.

Competition writes the script

Another company taking advantage of online possibilities is Founded in 2007, the company is the only service of its kind that provides what its partner calls "an open, competitive and transparent marketplace with an instantaneous auction system." Consumers benefit from "head-to-head competition" between thousands of pharmacies and between pharmaceutical companies, says Tom Kellenberger, Pharm.D.

"BidRx not only helps people get informed about drug prices from competitive pharmacies, it also informs them about alternative drugs in the same class that we believe will produce the same outcome as the drug that was entered online," Kellenberger says.

Stephanie Stephens is a freelance writer for AARP Media.

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