What Venture Capital has to Offer in the new Health Care System

Healthcare is too expensive in the U.S. because of a lack of consumer shopping for best price and a lack of transparency that is needed for shopping.

Regardless of whether you’re a fan of Obamacare or Trump/Ryancare or something else, you’re probably upset about who is paying for what and who has access to what healthcare options at what price. Those arguments will be worked out over time, but they are all missing the main point:

Way before Obamacare came along, we set ourselves up for failure by creating a system where consumers make some of the most costly consumer choices of their lives accounting for 18% of GDP without any care about what the price tag is. Even if someone did care, it is next to impossible to find out the cost of a procedure before you have it because of a lack of transparency in medical care costs. 

It’s basic economics that consumers make choices to consume goods and services at the greatest value to them. Value may be entirely price oriented, and it may include other issues such as quality, convenience, prestige, etc. In the U.S. HealthCare system consumers don’t know the price of healthcare, and they don’t directly pay the costs, so they don’t care. If you have a market where the consumers don’t care about the prices, then the natural shift for the demand curve will be to the right. Consumers will continue to buy even when prices get higher and higher.

NONE OF THE PROPOSALS FOR THE NEW HEALTHCARE PLAN TAKE CONSUMER CHOICE INTO ACCOUNT.

Venture Capitalists who have been in the life science and healthcare investment sphere for the past few years have seen incredible innovations in this space. These innovations bring new levels of consumer choice to healthcare consumption and have designed behavioral models that reward healthcare consumers for shopping for the best price. 

Here are just a few examples of innovative companies that can help change the face of healthcare in the U.S.

Spoke Health, for example, offers consumers an option to use whatever provider they choose, but rewards them for using lower cost providers. Consumers who choose the Spoke Health provider pay no co-pay and may even receive a cash rebate for having the procedure done at the preferred provider vs. more expensive alternatives. The system further rewards the payers by pre-purchasing surgical procedures at low cash prices. Spoke Health insures transparent pricing and rewards consumers for making economical choices in a market where price has been shown to have no relation to quality.

Test Appropriate cuts billions from health care spending by using a digital healthcare technology solution to limit the amount of needless tests performed by hospitals and doctors.

Orderly Health is another company that provides transparency to consumers and informs them about their coverage, authorized procedures and the lowest cost providers, which results in lower co-pays for consumers and drastically reduced costs for payers.

Blast Resolve is a telemedicine company that is helping to reduce massive costs to stroke patients by making diagnosis of strokes possible in the field or in an ambulance, reducing time to care in the critical moments when blood is not flowing to the brain. Delayed treatment for stroke costs U.S. patients over $70 Billion

CirrusMD gives consumers fast, high quality care through a text, voice and video telemedicine system. Providers can diagnose and treat many healthcare issues remotely, thus keeping patients out of the emergency room which is the most expensive point of care. For just a few dollars per patient per month, CirrusMD saves healthcare systems millions every year. Just like we’ve all become used to buying products online at Amazon and others, we’ll soon come to think of telemedicine solutions as the preferred medium for our healthcare interactions.

There are hundreds of other companies who are solving problems in healthcare and reducing costs. Congress would do well to learn from them and build some of the following solutions into the new healthcare bill:

1)     Require complete transparency for all medical procedures from providers who accept insurance.

2)     Create economic incentives to consumers to choose lower cost providers.

3)     Incentivize the use of telemedicine to speed up time to treatment and reduce costs.

There are dozens of other recommendations that could come from healthcare startups. Overall, a great strategy for congress would be to increase funding for startups that can show dramatic healthcare cost reductions.