Castlight aims to turns patients into informed consumers
March 5, 2012 in health care costs
Who is going to create the model for how we consumers shop for health care? At WBUR, we’ve looked at many of the models, but the buzz now is with Castlight Health. investors are betting on the firm, and it keeping turning up on “best of” lists. Castlight lead The Wall Street Journal’s top 50 Venture-Backed Companies for 2011. It’s one of Dow Jones’ 50 Most Investment-Worthy Technology Start-Ups, and is on Fast Company’s list of the world’s most innovative companies.
Castlight is an online tool that gives patients cost and quality information for doctors, hospitals and specific procedures. The costs are based on your individual insurance plan. It is only available through employers who contract with the company. There is a demo on the company’s homepage. We have one review and will post more as we get them.
We got on the phone with co-founder and CEO Dr. Giovanni Colella, to talk about who is using Castlight and why. Chief Marketing Officer Peter Isaacson contributed to some of these responses.
Who are your customers?
They are all over the map, some Fortune 500, some smaller, We started with the big companies because they have more market power, but it really spans around all types of customers.
What percentage of employees who have access to Castlight are using the site to compare the costs and quality of a doctor or test or procedure?
The engagement rate is in the 60% range and we are committed to getting to 70%. By engagement, I mean the percentage of employees who sign up to use the site. The return rate, the rate at which people come back to the site within a quarter, is 40-45%.
Do you use incentives to entice employees to sign up for or use the site?
That varies. A minority of employers have incentives, say up to $50 sign up. The money goes into your health savings account, or some customers offer dollar coupons. We are putting more incentives in place to get to 70% engagement.
What are the most common reasons that members use Castlight?
A first user search is typically to compare the cost and quality of their primary care doctor. The costs can range from $80-$250. Those searches alone are generating savings. That’s give or take, what happens in the first search, but keep in mind that our oldest client has only been with us for a year, so we are really just starting to analyze all of this.
So members are not as likely to look for who offers the lowest cost and best quality test or procedure?
It’s a little bit of all of this. Some patients are searching for information about hip and knee replacements. They look for quality measures on the best hospitals. The office visit, the lab test, and imaging, these are all shoppable procedures and they are the ones people search for the most.
Who are the early adopters?
Patients with the highest annual spend are the most frequent users, so the top 10%, who generate 50% of the spend, are the ones using Castlight. In fact they are using it at about twice the rate of the average user. These are the patients who need us most so this is great news for us.
Many of these patients have a chronic condition. We don’t know which chronic conditions are most searched, but we’re launching now groupings: pregnancy, hypertension, diabetes, for example. So we’ll see a lot of shopping in those categories.
Do patients continue to use the site once they’ve met their deductible or exhausted their health savings account?
Yes, the frequent users keep using Castlight even when they have met their deductible and after they exceed their out of pocket maximum.
Some health economists predict that when patients shop for care and become aware of the costs, they will use less care. But does that assumption fit here where your main customers are patients who need a lot of care?
What we’re seeing is not that patients are getting less care. But they are getting more cost-efficient care, so they end up spending less. We don’t find that people decide not to get care. If anything, I would argue that now that people understand how to buy care based on value, they won’t skip on what they need, but they will shop for it.
What type of employers are most interested in Castlight?
We’re seeing interest from all types of employers, but especially those benefit managers who want to empower employees. People that gravitate towards us are those with the thinnest margins, so every saving goes right to the bottom line. For example, one of our customers, their health care expenses equals their net income. So every dollar that we save them on health care hits their bottom line right away.
You guarantee that using Castlight will reduce costs for employers. What, specifically, do you promise?
We have a pre-sale analytics that is very detailed. At the heart we’re a data company, 90% of our employees are in product engineering. We get a sample of claims from prospective customers, and we create a pre-sale analytic from which we estimate what the company’s savings could be. We offer different contract options. One is a straight fee based on a per member per month (pmpm) charge. The second is a lower pmpm and risk sharing on the savings.
The options companies choose are all over the map. I just spoke to a benefit manager who said, I can’t do risk sharing, because based on what I estimate you can save, there’s no way I could go to my boss at the end of the year and say, we have to cut a check for $12-15 million to Castlight. But we are willing to share the risk with our clients. Our philosophy is that we want to partner with our customers, whatever works with them. We need to guarantee savings, otherwise people should not buy our services.
Where are the main gaps in information that you want to give people so they can make the most informed decisions?
If you ask me what’s the biggest challenge we face, it’s the status quo. It’s impacting the change in consumer behavior. I’m a doctor and I ask my friends in medicine to make informed decisions and they say they don’t know how to shop for better health care. They’ve never had access to cost and quality information.
So we are creating a whole new behavioral industry here.
When I present and show slides on the wide discrepancy in prices for procedures, people are so shocked, their behavior starts changing. First they don’t believe it, then they get angry — one day I’ll write the book about the five phases — then they have a tool where they can start shopping. That’s the biggest challenge, to get people to realize that they can shop for health care.
Can you get meaningful quality measures? Is anyone measuring and revealing, for example, data on who has the safest colonoscopies?
Is it hard to get quality measures, absolutely. There is more data than what you think, but it is far from perfect. That said, we have seven full-time physicians, we work really hard on quality data. We get the claims and get the prices, the technical piece is all solvable. Again, the biggest challenge is changing consumer behavior. So we live or die by engagement. We need to show that we get people to use Castlight. We might show savings, but we want the tool to be used. We have 250,000 lives, want to get a million. Right now we are seeing people modify their behavior.