Healthcare Panel Discusses How Blockchain Can Cut Out the Middleman and Costs – ESG News
Adam Russo, Co-founder/CEO of Phia Group, Vincent Esposito, CSO of S&S Healthcare Strategies, and Jerry Beinhauer, CEO of Apaly Health discuss Telehealth and Blockchain at the Converge2xcelerate Conference (Boston, MA)
(ESG News) – You have more information at your disposal when shopping for a TV than you do when searching for a pediatrician to care for your child. Think about it, Adam Russo, Co-Founder/CEO of Phia Group, said during the Converge2Xcelerate Conference in Boston. When researching TVs, you can call up reviews, specification comparisons, pricing and other shopping tools, he said. When searching for a doctor, you often just have a list of in-network names provided by your insurance company.
“They want you to assume that every provider in that book is already vetted,” Russo said during the panel discussion on National Scale Decentralized Contracting Between Employees and Providers, which was filmed live by the Traders Network Show, hosted by Matt Bird.
In reality, said Russo, whose consulting firm specializes in healthcare cost containment, those doctors are only in-network because they have agreed to the payment structure established by the insurance company. But consumers are not empowered to shop around. What if that changed? What if through technology such as blockchain, consumers could find information on care providers around the world—including information on what procedures actually cost before the bill balloons with administrative fees?
As Russo put it, then you’d have a revolution. This dramatic change to the American healthcare payment model was the focus of the panel discussion, which also featured Vincent Esposito, CSO of S&S Healthcare Strategies, and Jerry Beinhauer, CEO of Apaly Health. The panelists discussed how removing the middleman and educating consumers could drastically reduce healthcare costs and, frankly, lead to better services.
In our current payment model, the panel explained, most employers lease a network of healthcare providers from commercial insurers. This is supposed to cut costs for the consumer because, through insurers, providers are theoretically offering their services at a discount, since that network of insured patients gives providers a broad client base that will regularly need care.
“You might be believing you are getting a discount off of something,” said Esposito. But how can you be sure you’re getting a discount if you don’t know what something actually costs? “The reality is you don’t know where that number starts. That elevated unknown is a number that you have never been exposed to in your life.”
Russo gave the example of an MRI, which could cost a patient $500 if she paid for it on her own, but could result in a $5,000 bill if paid for through insurance. Most people simply aren’t aware of this discrepancy, the panelists said.
In addition, the insurance brokers that many employers rely on to negotiate contracts with health insurance companies have no incentive to tell employers that care could be available more cheaply.
“The way brokers are paid, typically, is a commission from the large insurance carriers,” said Russo. “Their commission is based on premiums. Therefore, as insurance rates continue to go up, they make more money. So they are disincentivized to actually help employers reduce the cost of care.”
If healthcare consumers could negotiate directly with healthcare providers, costs would go down, the panelists said, because administrative fees would all-but disappear and the actual price of various services would be transparent.
“By driving more tools into the marketplace, it will equip consumers to make better choices over time,” said Esposito.
The problem, the panelists agreed, is that no wide-scale system currently exists to allow consumers to communicate directly with hospitals and clinics. Sure, companies can make arrangements with specific facilities, but it’s a labor-intensive process that becomes exponentially more difficult the more locations and employees a company has. Say a business operates in 12 cities. Then it needs to have contracts in place with care centers in each of those cities. That means managing at least a dozen contracts—and likely many more—as opposed to streamlining the process through an insurance company.
“There really isn’t a scalable way to change the dynamic of health care,” Beinhauer said. His firm is working on remedying this. By using blockchain technology, Apaly Health gives healthcare consumers the ability to access information on providers anywhere in the world, rather than relying on a small subset of doctors in their insurance network.
“By removing that middleman and establishing that peer-to-peer relationship, that’s cutting costs,” Beinhauer said. “On average, nationally, it’s about $300 billion a year to the cost of employer-provided healthcare that’s added just by the carrier being in the middle, so it’s a huge amount of money we are talking about.”
Russo asked the audience to think about what happens if they need a hip replacement surgery. The patient is referred to a surgeon by their primary care doctor without knowing the skill of the surgeon or the cost of the procedure.
“All he knows is somebody told him to go to that doctor,” Russo said.
What if, instead, that person in need of hip surgery could look up doctors anywhere in the country, read patient reviews and see the history of what doctors have charged for past procedures?
“The problem that we have as an industry is that information is not widespread where the employee can actually see the quality and the cost of any particular physician,” Russo said.
Building infrastructure that arms consumers with this kind of information—whether through blockchain or some other kind of technology—could lead to a groundswell of support, forcing the current payment model to change, the panelists said.
As Russo noted: “The status quo stays as it is, because you as consumers, even employers, have no idea.”