PokitDok, a Menlo Park, Calif.-based startup trying to encourage a new era of consumerism in healthcare, has raised $4 million in a Series A round of funding.
Lisa Maki, the company’s co-founder and CEO, told me that the round, which follows $1.35 million raised last year, included New Atlantic Ventures and Rogers Venture Partners. With the funding, the 11-person company plans to grow its teams in Silicon Valley and Charleston, S.C., with engineering, business development and marketing hires, and it intends to build relationships with new distribution channel partners.
Launched in beta last year, the company provides a marketplace of health and wellness services spanning a range of specialties, from primary care and surgery to acupuncture and optometry. Through the web site and mobile app, consumers can compare options and get price quotes directly from physicians, massage therapists, dentists and other specialists. For healthcare providers, it serves as a marketing platform for potentially reaching a new group of patients.
PokitDok may be most beneficial to people with high-deductible plans or no insurance coverage, but those with insurance and lower deductibles could be helped as well. It’s a way to find the best prices on services your insurance may not cover or that you plan to pay for with a health savings account (HAS) or flexible spending account (FSA).
The upside for healthcare providers is access to a group of patients who are willing to pay upfront and avoid the mountains of paperwork and insurance claims processing that can lead to payment delays and other billing-related costs.
“We really see this as exactly the kind of tool patients need,” Maki said. “They’re trying to stretch their dollars as [much] as possible, in terms of the lowest overall cost, which includes premiums and their out-of-pocket costs. And it’s good for insurance companies and employers because they want to reduce their claims cost.”
How to bring more transparency to healthcare?
Transparency in healthcare is an incredibly hot topic right now – in March, Steven Brill wrote an epic story in Time on the murky business of healthcare and the government has started to release more data revealing hospital charges. Companies like Castlight Health and ClearCostHealth use claims data to arm employees with the information they may need to make health-related decisions, and HealthInReach and Brighter (which focuses only on dentists) broker special prices for their customers.
Maki said PokitDok wants to bring a free-market approach to healthcare. “Each provider gets their own storefront in the market to set their prices directly with the consumer,” she said. “Our belief is that in a free market, providers will discount in order to compete.”
When we last talked to Maki back in December (when the company launched its mobile app) the company’s plan was to market directly to consumers. But in the past six months, the company has shifted its model to reach consumers through employers, unions and health insurance. In addition to enabling the company to reach more consumers, the goal is that these distribution channels will help calm consumer concerns around how buying services through a marketplace could interfere with their health benefits. The company declined to share user numbers but said it had signed more than 1,000 practices nationwide.
As with any marketplace, growing its inventory of services and convincing a critical mass of doctors to build storefronts and compete on its site will be a challenge. But John Backus, founder and managing partner at New Atlantic Ventures, said specialists in orthodontia, cosmetic dentistry, dermatology and other areas already look outside the insurance system for much of their business. And, he said, as the Accountable Care Act changes the relationship between employers (and employees) and health insurance, more providers will do that.
“All of these doctors out there have been stuck in the insurance hamster cage but now they’re trying to figure out new ways to bring cash into the system,” he said.