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Pricing strategy · Healthcare

How can you find hospital pricing information ?

Julie Tittler CEO & Founder of Semafores, Inc.

April 13th, 2015

My company is creating a mobile social platform for family caregiving. We want to market it to medical groups and ACOs since they are the ones who feel the pain in penalties and fees from payers and the ACA if patients are readmitted for certain chronic conditions within a certain period of time.

I'm trying desperately to create my pricing model to do some financial projections. I have doctors who are very interested. They said they could see my product replacing many of those 3rd party follow up calls they spend tons on to try to get improved patient compliance. But every doctor or hospital administrator I have talked to is unwilling to give me a general idea of what those penalties and fees are on average per patient for any condition. I understand that costs are variable and negotiated between providers and payers and that is confidential. I don't want figures for their specific practices, just in general so I can calculate a monetary value proposition. No one is willing to go there. I have done extensive online research and am only able to find statistics like fees Y% of the original cost of care for X condition. This isn't very useful.

Can anyone help shed some light onto how I can find this kind of info? If not, does anyone have any idea how I can figure out what my product would be worth to them? The standard tack of cost to produce and run ops multiplied a certain amount just don't cut it for a mobile, cloud based subscription service.

Lucas E Wall

April 13th, 2015

We struggled with a similar challenge where establishing a price was not an easy task. We solved it by proposing an estimated price to interviewees while showing a prototype. We reasoned with them: "the solution solves this problem and creates this value by potentially giving extra revenues of this much: $xxxxx." Then we added: "when talking to your peers, $yyyyy per year came as a price they are willing to pay to have access to this solution." And we close it by asking indirectly: "What type of organization makes an investment like this to create that value mentioned before?" With that we gave them a way to easily reject the price if needed by mentioning other organizations, not theirs, or accept the price as the cost to capture the value. To our surprise the first interviewee accepted the value and price without hesitation. We have a ratio of 10:1 in value:price. The reason the interviewee accepted is he is paying something similar for another solution that allows him to do something complementary. Next interview we doubled the amount and got strong rejection. We don't think we found the exact price that will be charged, but we have a ball-park. We can now study this complementary solution and understand their value:price proposition and refine ours.

Karl Schulmeisters Founder ExStreamVR

April 13th, 2015

Julie is this a Health It solution? Are you going down the full regulatory path for that?


The regulatory issues may be part of what's going on here 

Stuart Long CEO - Progressive Leader & Growth Catalyst

April 13th, 2015

Hi Julie,

I've spent the last 4 years across two companies trying to crack this as well. Basically, anything you are able to hang you hat on would be directly related to preventing the penalty OR helping to achieve the incentive. (I'm probably telling you something you already know). If you're able to directly increase patient compliance for their own self care after discharge, you'll want to look at the % of patient population you're serving and their disease conditions. You'll only really be able to make any kind of claim for those disease conditions being penalized. Example is that diabetes with complications are #4 on the list of readmission at just over 20% readmission rate. Yet, all the penalties for readmission are not specific to diabetes. They are to cardiac and pulmonary disease, which diabetes is the leading cause of many of these conditions, yet good luck trying to make and financial argument because its not 'specifically' called out in the penalties. Also, the readmission only really matters to the hospital, its their money that is really at stake. Much of the readmission problems are being solved with people and telephones and this meets the safety and clinical measures for most hospitals. If you can demonstrate that you can eliminate a number of re-admissions specific to penalized disease conditions and then that amount must enough to hit the CFO's radar (typically greater than 1% penalty). This is typically in your smaller to medium size hospitals and patient mix has a large impact. I have extensive information in this area, yet across two companies I've abandoned trying to put an ROI on readmission's. I currently have a very quantifiable and clinically validated ROI with multiple trials and even with this kind of data, healthcare is still hesitant to accept it. My underlying hypothesis is that many facilities outside of a 'sentinel or never event' do not like to admit they have problems. Competing for patients is big business. If you'd like to discuss over the phone, I'm happy to share more detail.

Sara Hammes Leading Companies into New and Emerging Markets

April 13th, 2015

I worked with a start up in the rehabilitation area with a similar premise. Another tactic to take is just to price based on your cost and profit model and determine what the market will bear. This is very new and so you can be in the driver's seat on this.

Manav Chaudhary Healthcare | Consumer Experiences & Journeys | Analytics | Start-ups | Mentor

April 13th, 2015

Julie, There could be many ways to approach this. As shared by fellow members, there are very neat ways how you can go about it, test the waters and refine the pricing strategy for newer / existing clients as you grow and secure new clients. You might already be aware of this but I'd encourage you to look at the pricing strategy for two major avenues
- Savings from penalties (short-term / tangible)
- Revenue generation from the potential clients / families which are more engaged with your clients; resulting in becoming customer advocates and improved market perception - top line growth

In the long term, gains are significant from option # 2 but to reach that stage, you would need to rely heavily on pricing model based on # 1. To start with, look what alternatives options are charging to your prospective clients (as indicated in your note), and try and understand the impact they have on clinical practices. This should be fairly easy to get. For e.g. for $10K, clinical practice is able to keep the penalties down to $500K / 100 cases (some random numbers). So with you application, if you are able to bring down the penalties to under $200K / 30 cases, you can certainly charge your clients in the range of $50K - $75K. (these are some random numbers to show how one can do some pricing / value proposition calculation). 

 If you are confident that your product will deliver the results, why not get into some outcome based pricing model which will give you more premium and confidence to your clients to test the product. 

Keith CHC Attorney, Healthcare Finance & Compliance Expert, Author, Public Speaker, and Entrepreneur

April 14th, 2015

I have worked with several large integrated healthcare providers and insurers to create an online tool which does something very similar to what you describe.   The information you seek is in fact proprietary and in a lot of instances closely guarded.  There are a few ways to work around this obstacle.  Contact me directly and I'm happy to share what I know with you.  

Julie Tittler CEO & Founder of Semafores, Inc.

April 16th, 2015

Well, at least I don't feel so bad about the brick wall I've been hitting when trying to get this data. Let's try a different tack. Those follow up calls from centers to patients to check to see how they are feeling and if they've been taking their meds or following their plans...What is that service called so I can research that industry and try to find what they charge per patient or call. Somehow, that has also been a brick wall when I try to talk to people. I wouldn't expect them to tell me what they are charged for those services, but you'd figure they'd at least tell me what industry it is. My doctor's medical group say they hire a 3rd party service for this. It's that whole quality of care thing. They are trying to prevent penalties from payers. Are these case managers? I've gotten these calls myself. They seem more like nursing telephony. Case managers imply more.

Stuart Long CEO - Progressive Leader & Growth Catalyst

April 16th, 2015

Its long been known as Chronic Disease Management, Today's it's being labeled within or as parts of population health, patient engagement and health engagement  to name a few. 

Google Chronic Disease Management companies





Anonymous

April 17th, 2015

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