MDSave capitalizes on health care consumerism

Marketplace model appeals to cost-sensitive patients

As patients bear more of their health care costs, entrepreneurs in Nashville and beyond are exploring new ways to make finding and paying for health care services easier and more efficient. Employers are shifting from offering traditional insurance plans to health savings accounts, defined contributions and high-deductible plans, and with more of their own dollars on the line, patients are viewing the doctor's office through a consumer's lens.

While traditional retail establishments, like pharmacies and grocery stores, seem poised to capitalize on the trend, other ventures see potential in the online market. One of the latter is Nashville-based MDSave, which contracts directly with physicians to market more than 400 medical services that can be booked and paid for online.

Appealing to cash-pay patients — who might be self-insured, under-insured or on a high-deductible plan — MDSave offers fixed prices for health care services like office visits, surgeries, x-rays and pharmaceuticals at a lower rate than patients could negotiate on their own. Patients pay up front and the physicians receive their payment within six days of the procedure, notably shrinking the billing cycle.

The company recently announced a pilot program with St. Thomas Medical Group Endoscopy Center and Associated Endoscopy in Hermitage to offer a bundled price for a colonoscopy, an important preventative care procedure often neglected by patients due to cost. In a release, MDSave said the average price of a colonoscopy in Nashville is $5,000 for uninsured patients and $3,000 for those with a high-deductible plan. Through the partnership with MDSave, St. Thomas' endoscopy center and Associated Endoscopy offer the procedure for $1,795.

The bundled price covers all the individual aspects of a colonoscopy, such as the procedure, anesthesia, lab work and a potential biopsy — bills that traditionally would all be paid separately. While the Centers for Medicare and Medicaid Services and commercial insurance companies also are exploring bundled payment models, MDSave's model is innovative because of its accessibility. Anyone can benefit from bundled payment savings regardless of insurance status.

According to MDSave CEO Paul Ketchel, pictured here, cutting inefficiencies out of the system allows his company to slash costs for patients up to 60 percent. Though physicians agree to a lower reimbursement rate than they might get from an insurance company, they are paid within a week compared to the several months it takes in the traditional billing cycle. Additionally, Ketchel says MDSave reduces a practice's bad debt ratios, because patients pay in full up front.

"Physicians look at collections really closely," Ketchel said. "They realize even though their prices may have been much higher, they weren't really getting that in reality. It took them 10 months to collect, they had to pay a collections agency and there was cost time tied up in billing and processing claims. So the physicians are netting about the same. They're reducing their bad debt ratios and they can tack those savings onto the patient."

MDSave is the brainchild of Ketchel and Clyde Spencer, both formerly execs with Brentwood-based Diagnostix Network Alliance. The company has raised $7 million since June 2013, mostly recently announcing $2 million in debt financing to support expansion into 22 new markets.

"This seems like a really simple idea," Ketchel said. "But it's pretty innovative for health care."