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Commentary

Two New Ventures Simplify Consumer-Driven Health Care


     
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A friend of mine who made a lot of money use to tease me when I (constantly) expressed shock at how simple so many successful business ideas are. “All great businesses are simple,” he said. Here are two in the healthcare space: Bloom Health and ZocDoc.

Although disrupting different parts of the value chain, the two ventures have some similarities. First, each just received a big chunk of capital. Bloom Health, initially funded by VCs in 2009, was taken over by WellPoint, Inc., and two other (non-profit) Blue Cross Blue Shield license-holders. ZocDoc just raised Series C funding from Goldman Sachs, having raised a total of $95 million.

Second, both websites have soft edges, and easy-to-follow explanations of what they do. What? You don’t think that’s a big deal? In health care, it sure is. Both ventures are providing services that longstanding intermediaries should have started offering a long time ago.

Bloom Health allows individuals to select a health plan by answering an online survey that is so simple that a twelve-year old could probably answer it. The survey then presents the choices of coverage that make most sense for each individual. (This simple survey is doubtless the front end of a razor-sharp underwriting program.)

But the individual himself is not the customer. An industry insider told me that Bloom Health’s actual target market is large employers who self-insure via the Employee Retirement Income Security Act (ERISA), which is not obvious from the website. (The best known online vendor of health plans, eHealthInsurance.com, focuses on individual and small-group policies.) Having each employee go directly to the benefits administrator’s website to make his choice of coverage is an important innovation. Through Bloom Health, the employer makes a defined contribution to each employee’s coverage, plus extra cash that the employee can use for out-of-pocket health spending.

ZocDoc addresses a need on the provider side: It allows online booking of appointments. How simple is that? And how overdue? According to spokesperson Allison Braley, the business grew out of one of the founder’s frustrations with trying to get an urgent appointment for a burst eardrum. The advantages of online booking include being open 24/7 and being able to make an appointment without the embarassment of having your office-mates overhearing where that rash is breaking out.

Free to patients, Braley explains that the $250 fee monthly that ZocDoc charges physicians is covered with just two appointments. (Skeptical investors initially thought that physicians would not pay for the service.) ZocDoc also offers a white-label version for provider groups who want to brand their own online booking service. So, why haven’t health plans, which negotiate provider networks, provided this service already? My health plan has a list of in-network physicians, but no way to make appointments online.

One interesting feature of both businesses is that they are poised to succeed whether Obamacare is repealed or not. If millions of people lose their employer-based health benefits and are forced to chose benefits from Health Benefits Exchanges, a consumer-friendly service like Bloom Health’s might ease the pain. As ZocDoc’s Braley notes, Massachusetts’ 2006 reform (Romneycare) resulted in lengthy waiting lists. A service that can identify open appointments quickly will be in high demand when the entire nation is forced to hustle for a limited number of slots.

But if and when Obamacare is defeated and replaced with a consumer-directed health system where individuals and families own their own coverage, people will value these services even more.


John R. Graham is Senior Fellow at The Independent Institute.






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