The lure of the Internet is its ability to offer consumers direct access to information, goods and services.
Several new e-health companies hope to capitalize on that appeal by offering consumers online healthcare purchasing power. Vivius and HealtheCare, both based in Minneapolis, and Portland, Ore.-based MyHealthBank are poised to bring online defined contribution plans to consumers in the next few months.
The companies are stacked with veteran managed care and technology executives and are backed by substantial venture capital.
Although virtually no employer offers defined contribution healthcare plans, the new companies believe the Internet has the power to finally speed the concept, in which employers give employees a fixed amount of money that they use to buy insurance and pay providers directly.
Providers will have the opportunity to set their own rates and market themselves directly to patients. As consumers become more selective and cost-conscious, advocates say, prices will become more competitive and the healthcare market will regulate itself.
"The Internet gives you a chance to empower consumers with information they need to navigate the healthcare world," says Tomas Valdivia, M.D., HealtheCare's chief medical officer.
Employees deposit the money into an account established and maintained by the e-companies where it sits until they need it to pay providers for a visit. The funds are then automatically transferred to the provider with no insurance claims or managed care companies to deal with. Employees also use the money to purchase catastrophic coverage.
HealtheCare launched its site in April, after securing $23 million in private financing and forming several strategic alliances, including one with PricewaterhouseCoopers for technical services. It will launch a test site in Minneapolis this fall and will roll out to employers nationwide in January 2001.
Employees will use the HealtheCare Web site to shop for physicians and will be able to view provider-specific cost, quality and patient satisfaction information. HealtheCare has partnered with an e-health company that will read claim streams, lab results and patient histories to generate quality reports on participating providers.
MyHealthBank, which announced its arrival last month by securing $3 million in its first round of financing, allows employees to supplement their employers' fixed contribution with contributions of their own.
Dave Sanders, M.D., MyHealthBank founder and CEO, says physicians will have an opportunity to market themselves more effectively than in the past. An internist who has an interest in treating low back pain, for example, could market himself just that way.
"What doctors want is a direct relationship with their patient," he says. "When the patient becomes the payer, you become highly incentivized to serve the consumer."
Vivius, which launched its site last month after securing $11.5 million in venture capital, requires enrollees to establish a personal provider panel made up of a personal physician, 20 specialists, a hospital, medical lab, radiology clinic and pharmacy network.
The Vivius Web site calculates annual costs for the employee based on the physicians they have chosen. An employee who doesn't expect to use many healthcare services might decide to select physicians with low monthly fees, choose a high co-payment level and have money remaining in the healthcare account to pay for such items as contact lenses.
Although physicians receive a monthly payment for each enrolled patient, physicians should not confuse the plan with capitation, says Lee Newcomer, M.D., Vivius executive vice president and chief medical officer. "They're setting the rates; it's not some third-party rate. And they're not pooled with anybody and they're not accountable for any other physicians, hospital costs or pharmacy costs," he says.
The company will begin enrolling physicians in its network July 1 and will launch a test pilot in Kansas City, Mo., in September. Vivius hopes to enroll 100,000 consumers in 2001.
Signing up a large number of providers is crucial to the success of all three companies, as their revenue comes from taking a portion of payments to providers. All three say they have had discussions with a number of employers.
John Erb, vice president with the insurance brokerage and consulting firm Arthur J. Gallagher in Boca Raton, Fla., says a number of his clients are thinking about defined contribution, but it is unlikely any will make a move until the economy takes a downward turn.
"I don't think the market is right for it right now," he says. "It's hard to whine and complain about healthcare costs when companies are making record earnings."