Introduction

Healthcare in the United States is the most expensive in the world and despite their investment, Americans are less healthy than citizens in other advanced economies. In addition to major financial struggles stemming from healthcare payments, Americans have far poorer-than-expected health outcomes in terms of quality of life and life expectancy. The reasons for these problems are numerous, and the sector’s opacity and complexity are major contributors. Without a paradigm shift, most indicators suggest that the problem will only get worse in coming years as Americans continue to pay more and receive less.

SeeThru seeks to fix healthcare through the development and implementation of an ecosystem that will foster better care, lower costs, and increased transparency, resulting in a more equitable and higher quality environment for patients, providers, and payors. To do this, SeeThru will need to enlist the participation of all involved stakeholders and seek to create value through efficiency.

SeeThru is a blockchain-enabled platform that prioritizes price transparency in order to change the world of healthcare payments. Our ecosystem brings patients the sorely needed value-based consumer experience found in every other service industry. SeeThru utilizes smart contracts for direct pricing with providers. In doing so, SeeThru removes third parties, which drives down patient costs, increases provider revenue, and improves access to care around the world.

The Problem(s)

For Patients According to the Centers for Medicare and Medicaid Services (CMS), the US spent $3.3 trillion on healthcare in 2016, over $10,000 per capita. This number, representing 17.9% of GDP, is expected to rise both absolutely as well as a share of the economy and could reach 20% of GDP by 2020 as the population gets older and sicker. This expenditure dwarfs every other advanced economy and is 2.5 times the OECD average. Despite this massive investment, Americans have significantly worse outcomes and shorter life expectancies than many of these other countries.

The problem is multi-faceted and can be attributed to a number of causes including culture, geography, disparities in healthcare accessibility, and the antiquity of the principles governing the healthcare market. This last one in particular introduces global inefficiencies and raises costs for all involved parties. The healthcare sector, more than any other in the economy, resembles its 20th century model. It is opaque, it is needlessly complicated, and it is nearly impossible to penetrate for even well educated patients.

To patients, navigating the healthcare space represents a harsh departure from the Amazon experience to which they’ve become accustomed. Whereas consumers are capable of searching and filtering for nearly any retail product based on any number of criteria, from price to shipping speed, it is impossible to achieve anything resembling this in healthcare. For example, there is no efficient way to proactively filter physicians based on quality, location relative to patient, and cost. In other words, value shopping is impossible in healthcare. There is no practical reason for the absence in capability. The technology is proven--indeed needed--yet it has never been successfully applied to the healthcare sector.

Heightening the necessity of such an advancement is the complexity of healthcare. Were it only for the aforementioned variables of quality, location, and cost, it would be relatively easy to solve. Yet, because of the complex interplay between patients, providers, and payors (the 3 Ps) - the stakeholders that dominate the healthcare landscape - it becomes even more crucial to put into play an actionable solution.

Consider the inherent conflicts and competing interests that often characterize these relationships: Patients want good care, at an affordable price, conveyed to them in a humanistic, delightful environment. All providers, whether they be individual physicians, practices, or systems, want to provide quality care for their patients while at the same time being compensated fairly for their work. Payors want good health outcomes for their customers but at a cost structure that allows for predictable profit streams. The fact that incentives inside the ecosystem are often misaligned has created an environment where healthcare decisions have grown increasingly complex. Now patients must take into account a multitude of variables such as in-network versus out-of-network coverage, pricing, and appointment availability, sometimes without regard for or understanding of provider quality.

The problem for patients has become more acute in recent years as cost of care (i.e., financial burden) falls increasingly onto them. As part of the mandate for required health insurance governed by the Affordable Care Act (ACA), many Americans chose to enroll in high deductible healthcare plans (HDHPs), i.e. plans with relatively low recurring premiums but high deductibles. Put another way, HDHPs may require low monthly payments to the insurance companies, but by definition nearly always require an out of pocket payment as a result of the service. For many, such as those who are young and healthy, these plans represent an attractive option and serve primarily as “catastrophic” protection. These HDHPs encompass a sizable portion of all out-of-pocket spending (OOPS), with total OOPS reaching nearly $500 billion in 2016 and is expected to grow 6.1% annually through 2021.

For Providers The transition by patients toward HDHPs has also created unique challenges for providers. As more and more payments are made by the patient, and fewer by traditional payors such as insurance companies, revenue cycle management (RCM), already a major source of lost income, has become even more complicated and ineffective. Per a 2013 McKinsey report entitled Hospital revenue cycle operations: Opportunities created by the ACA, a full 15% of all healthcare revenue, now totalling over $400 billion goes to “claims processing, payments, billing, revenue cycle management (RCM), and bad debt—in part, because half of all payor-provider transactions involve outdated manual methods, such as phone calls, fax, and mailings.”

In particular, providers have trouble efficiently collecting directly from patients. Despite HDHPs seemingly being designed for point of service out of pocket payments, a 2009 Medical Group Management Association (MGMA) study showed that 60.1% of practice administrators considered “collecting from self-pay, high-deductible health plan [HDHP], and/or health savings account patients” to be a considerable or extreme challenge. Per the MGMA, this is due to a combination of practices not wanting to confront patients on their obligations and patients not being fully aware of their payment obligations. The MGMA survey further elucidated the following issues:

  • 30% of patients walk out of a practice’s door without paying anything.
  • An average of 3.3 billing statements are sent before a patient’s outstanding balance is paid in full.
  • Practices recover just $15.77 for every $100 owed once a patient’s bad debt is turned over to collections. The message is clear: healthcare RCM, already an expensive and inefficient endeavor, is being made more difficult as the reliance on out of pocket patient payment increases. HDHPs, a structure built on patients paying at their time of treatment, have not helped shorten RCM. The longer it takes to collect, the less likely anything is to be collected at all.

For Payors The issues extend to payors (healthcare insurance companies) as well. Their profitability centers on maximizing premiums and minimizing payouts. Payors’ primary motivation is to provide adequate care for their customers, i.e. patients or consumers, while maintaining predictable profits and maximizing value. In order to accomplish this, payors - private insurance companies and CMS - have struck large scale deals with healthcare practices and systems whereby the payor funnels patients toward those practices on the condition that those practices provide their services at a discounted rate.

Under the traditional insurance model this made sense: patients paid high premiums and low copays to receive care. Insurance company profit, contingent on maintaining healthy margins, relied on these large “in network” agreements for favorable rates. Additionally, by forging working relationships with just a few larger systems, insurance companies were able to expedite billing and payment with these providers. It was in their interest to keep patients in network. Patients were allowed to travel out of network, as long as they took on the additional associated cost, which were generally out of pocket. Having a patient switch to a second provider, for example, meant that the payors were compelled to manage two different sets of medical coding, two different forms of payment, and two different electronic medical records (EMR) systems, in turn, justifying the additional cost incurred by the patient.

With the advent of HDHPs, however, this model is decreasingly logical. If patients are the ones bearing the onus for service payment anyways, shouldn’t they be empowered to choose their providers? Payors simply have no incentive to keep patients in network if those patients are the ones paying for the service.

The Solution

SeeThru to transparent healthcare in two primary modules: 1) marketplace 2) payment processing

Marketplace Module In the context of a domestic healthcare system that has increasingly migrated towards HDHPs, price sensitivity has grown even without a vehicle for consistent price discovery. In other words, while patients have increasingly borne the onus of healthcare payment, the marketplace’s ability to deliver pricing information and agency has not kept pace. SeeThru seeks to change this through the development and implementation of a healthcare marketplace that puts price transparency at the core of everything it does. By contracting directly with providers, SeeThru aggregates provider schedules, service listings, and cash prices, making near-real-time cost available for any kind of health-related service. Leveraging the platform from their side, patient-consumers can now search healthcare services by various criteria, including location, price, and quality, in order to choose the right provider for a specific interaction. They can also learn what precisely is (and is not) included for any service offered in the marketplace.

The incumbent model for healthcare payments often shows little relationship between the price charged for a specific medical service/procedure and the value of that service. The culprit again is revenue cycle management, which has had the perverse effect of inflating the headline price to counter the fact that the net average realization per bill is only 30-40% of the amount billed. Parsing the numbers, SeeThru believes that the successful implementation of its marketplace will result in patient-consumers finding savings ranging between 10% to 50% per service interaction (relative to their traditional OOPS for the same service), while providers may realize:

  • net revenue improvements per transaction of 10-25%, and
  • a dramatic improvement in working capital efficiency as practitioners are paid within an hour of the provider signing off on the interaction (versus receivables that can regularly exceed 80 to 120 days).

Additionally, the SeeThru marketplace enables consumers to find the “slack” in the healthcare system and consume if shown the right value proposition. On the supply side, providers can use up (or, alternatively, if entrepreneurially inclined, create) excess capacity. As a result of the SeeThru platform, providers will have the ability to dynamically adjust their cash prices to encourage greater transaction velocity and become more in sync with the elasticity of the pricing decisions with which increasing consumers are tasked.

How will this be accomplished? Current centralized payment systems have limitations that create additional costs as transactions become larger and/or more complex. In the conventional payment processing world, any significant transaction requires experts such as lawyers, bankers, accountants, software developers, and in the case of healthcare, insurance companies and medical coders in order to ensure error-free and reliable methodology is followed through the entire lifecycle of the transaction. We believe blockchain, and specifically smart contracts, will change all of this. At a most basic level, blockchain technology will overhaul the way many industries can transact regardless of whether or not a crypto-coin is involved because of the technology’s unique ability to instill trust in an otherwise trustless system.

SeeThru Payment System SeeThru’s payment system relies on the establishment of an escrow. This provides confidence to all involved parties and guarantees immediate payment once services are provided. As mentioned above, the objective is to eliminate the need for experts such as lawyers, bankers, and coders from the healthcare payment process. Square Cash will initially facilitate the escrow. Removing the middlemen of receivables, collection agencies, and credit cards represents a major improvement over current processes but is still a half step towards SeeThru’s ultimate solution.

Cryptocurrency A fundamental advantage of cryptocurrencies over paper money is the ability to utilize smart contracts: effectively a pre-governed function agreed upon by all involved parties using if/then actions. For example, an electric company may use smart contracts to deliver a predetermined amount of power once an agreed upon payment is made. The applications are nearly infinite and we expect this functionality to permeate many industries within the next few years.

In our specific use case, the use of cryptocurrency enables us to create a smart contract that behaves like an escrow effectively creating a smart escrow.

Smart Escrow A smart escrow is a multi-signature wallet. Traditional cryptocurrency wallets rely on a single signature to access. This signature allows access to the wallet and signifies ownership of the funds within that wallet. Employing multiple signatures will allow for enhanced mutual access between the patient and the provider. Practically, a patient will send funds to the smart escrow where it is held and locked under contract. The funds are sent to the wallet of the provider only after the patient notifies the system that service has been provided. The provider can then access the funds using their proprietary signature.

This smart escrow design effectively removes the need for the middlemen mentioned above but introduces its own set of problems. For example, how are disputes moderated between provider and patient? In a situation where a provider cannot fulfill the service requested by the patient, the provider can choose to refund the payment.

What happens if the provider does not comply? In this case, the transaction would be disputed and an arbiter associated with the smart escrow (and at least initially employed by SeeThru) would have the responsibility of dispute resolution, being able to refund any value to the patient that they deemed appropriate. The arbiter does not have access to the funds and merely has the power to determine the direction and amount of money being refunded during a dispute.

Situations could conceivably arise where both the provider AND the patient deserve some amount of refund. In this situation, the amount being refunded could actually be MORE than what is allocated in the smart escrow. To resolve this case and ensure that all parties are satisfied by the arbiter’s resolution, SeeThru will ensure that some amount of every network transaction goes towards a reserve fund, which could be used to pay for extraordinary circumstances and allow for every arbitration scenario to be properly fulfilled. In addition, this reserve fund may one day be used to help fund those who cannot afford healthcare themselves.

Conclusion

The SeeThru platform is designed to minimize the role of intermediaries in healthcare services and return lost value to patients and providers. This marketplace has the ability to transform healthcare worldwide. By bringing price transparency with a free market approach to the forefront of care, SeeThru can refocus health as a patient-centered, delightful customer experience, accessible to all. In so doing, SeeThru will change the way healthcare is sold, purchased, and practiced, allowing patients and providers to reclaim healthcare. Ultimately, using the blockchain infrastructure set forth in the SeeThru ecosystem, SeeThru will know no borders and will be able to provide high-value healthcare offerings and transactions around the globe.

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