Businesses can bid on health care

Associated Press

CONCORD, N.H.

Self-insured businesses looking to cut out the middleman when it comes to health care have a new way to solicit bids directly from doctors or hospitals.

Created by a doctor, a lawyer and a former benefits manager, Open Health Market is an online matchmaker of sorts: Employers submit requests for proposals for a category of medical services and procedures. Health-care providers then submit competing bids, which are then evaluated by the employer.

If an employer accepts a bid, the savings could then be passed along to employees in the form of incentives to go with the new provider, such as a waived deductible, said Don Crandlemire, the Concord lawyer who created the site along with Dr. Leonard Fromer of Los Angeles and Peter Hayes, former benefits manager at Scarborough, Maine-based Hannaford Bros. supermarkets.

Crandlemire and his partners won’t get involved in structuring any deals; they just handle the introductions. The employer decides whether to pursue negotiations with any of the bidders.

Nearly 60 percent of U.S. workers who have health insurance are covered by employer-funded plans, according to the Kaiser Family Foundation. In general, workers in large companies are more likely to be in a self-funded plan: 93 percent of covered workers in firms with 5,000 or more workers are in self-funded plans. Under such an arrangement, an employer assumes responsibility for the costs of employees’ medical claims, typically contracting with an insurer or third-party administrator to administer the claims.

Those large companies represent an enormous, untapped power to change a health-care system that rewards volume over value, Crandlemire said.

“If that group started saying, ‘We want the provider who delivers the most value to us, and we’re going to have you providers start competing for the opportunity to start serving our population,’ they could effect profound change in the market,” he said. “We think the only thing that’s really going transform the system is the power of the market, and these companies that spend $1 trillion saying, ‘We want something different, and we’re going to demand something different.’”

Open Health Market officials say quality, patient satisfaction and convenience also would be part of the negotiations between employers and providers, who would have to meet the same accreditation standards set by the federal Medicare system in order to join the site.