Comparison sites, a threat or opportunity?

Some of the medical price comparison sites are small, but some of these have big backers. There are venture capitalists, e-commerce wizards and others with investment money to spare that are always looking for the next big consumer trend. An analyst looking at the rise of price comparison sites estimates that there are up to fifty major investors who have or who are talking to new or potential medical price comparison sites; and these are not punters with a few dollars to spend, but people who have made millions from spotting, investing in, and often selling a raft of e-commerce based initiatives.

So my message to those in medical tourism, who may dismiss price comparison sites as not relevant to how they do business, is that with big money investors involved, watch this space. The difference between you and I and the e-commerce investors who have made several fortunes, is that they can throw serious money at an idea. If it works they make money; if it fails it is a tax write off and lessons are learned for the next time around.

The parallels with personal insurance

Once upon a time, before computers and when few people had a telephone at home, home and motor insurance was sold by salesmen going door to door and often collecting premiums weekly, or by customers going into or writing to insurance companies at their many branch offices. Once price fixing tariffs had vanished, brokers opened to help customers find the best policy and price; mostly having a high street shop. As telephones became popular, customers could phone brokers, but everything was still paper based.

Computers were introduced into businesses and insurers dealing directly by phone revolutionised insurance by enabling people to phone up and get an instant quotation and instant cover. History tells us that Direct Line was the first direct insurer in the world, but history lies as there were others before it. The legend arose because Direct Line was a huge success and put many insurers out of business, despite brokers saying it would never work… as what customers needed and wanted was advice.

As computers became more advanced, other insurers launched direct insurer subsidiaries, banks bought up insurers, and brokers computerised. The next step was the Internet that allowed customers to get quotes and cover online. Brokers too went online.

So, if you wanted a car or home insurance price, the telephone directory had hundreds of adverts from brokers, agents, insurers, banks and others all screaming “ cheapest price, save hundreds”. Sound familiar to medical tourism?

Consumers found that they could get quotes but that meant giving the same long details by phone or online to half a dozen companies, and if you were lucky you did not get cut off halfway through. In reality, consumers picked names who had spent huge sums advertising, or where the name sounded right.

By now, most insurers had bought price comparison engines where they could put in sample quotes and find out where they were in the market, and do what-if exercises on price rises and cuts to target the most profitable customers.

As insurer and broker systems became more sophisticated, one bright spark decided to use the backroom systems designed for the industry to create a consumer site.  This enabled consumers to put their information into the site and to allow the site to trawl every possible insurer and broker on the system to instantly get the best price.

At first many direct insurers refused to link their quote engines to the increasing number of price comparison sites, but soon found they were losing business.

In the UK, over 80% of all new private motor insurance, and over 50% of home insurance business comes through these sites, making fortunes from some of the comparison site backers. Only one insurer refuses to play ball now, but it has to spend millions every year to get new business.

Beginning with motor insurance these price comparison sites have moved into many forms of insurance, electricity, gas and a host of other consumer products.

Medical price comparison sites

The older breed of comparison sites often started as simple tools to find local doctors and hospitals, and just like many medical tourism portals, left the quotations and contact to be direct between customer and clinic. The newer breed of medical comparison sites enable consumers to find clinics by location or by specialty or by lowest price – and offer an instant price comparison.

In some ways they are mirroring hotel and holiday sites as they are also including consumer reviews, background information, and more.

They are in three groupings – the UK, USA and Asia.

A typical price comparison site

The ultimate goal is to connect patients with trusted medical specialists. Every clinic or medical facility receives a free basic profile on the site, with the option to upgrade to a premium account that allows them to better showcase their services and engage with users.

It begins in one country and within a year has over a thousand clinics offering information and customer feedback for clinics in more than 20 categories including, cardiology, dental services, fertility, eye care, physiotherapy, chiropractic, orthopedics and cosmetic surgery. Within two years it has launched in half a dozen countries, and offers cross-country links so customers can get quotes both at home and abroad.

So far this seems little different from existing medical tourism portals. But most of the 20 known e-clinic sites are changing or will change the game plan so that consumers can get an instant price, rather than waiting for their chosen clinics to get back to them. To move from an information site to a price site there needs to be a body of clinics on the site to cover many places and many treatments.

Winners

What is crystal clear from comparing my 2014 and 2008 reports is that some countries have stayed on top, others have reached a plateau, and others are declining; these made the mistake of assuming that they had to do little to do to stay on top.

Even the leading countries have to look at new markets, new opportunities and new ways to connect with potential customers. Some have started to use social media; any that ignore this trend will get a nasty shock five years down the line as communication moves to social and mobile from web and pc.

More than half of the top ten medical tourism destinations do not compete on price. They promote quality, real customer care, specialised knowledge and comfort with their culture. A few have started to promote luxury medical tourism… 6 or 7 star hotels being a world away from the “come to me for 70% saving” brigade.

Most, but not all of the leading countries that have succeeded in increasing business in both numbers and revenue have strong government support.

The future

Looking at how price comparison sites have evolved into price/cover/information sites, I see no future for any site that charges consumer’s access in any way. Some sites will continue to charge clinics for advertising. Others argue that this is short term and after a while clinics getting no business stop paying.

So the next generation sees that it is vital to have thousands of clinics, and that they offer free detailed entries, which effectively gives them free advertising. Unlike many medical tourism sites, the sites primarily target clinics in the home country of the customer; the cross-border aspect comes when they have several linked country sites.

And unlike many medical tourism sites, every one of them knows that most new business is not coming from computers, but from tablets and i-phones, so having a mobile app for iPhones free for patients is key.

What is crucial for medical price comparison sites to work is that clinics/hospitals must not only have price lists but that they make them available to the site. This does not mean publishing prices online- but just like insurance sites, the price information is only in the backroom engine.

For clinics this offers an extra source of income, and also something very new-the ability to tweak prices to attract particular consumer segments, including flash sales and other devices. Unlike furniture sales, the clinic can slash prices and even offer different prices on different comparison sites, without competitors knowing.

Medical tourism

As these sites open globally, what they will do is allow customers to do what is virtually impossible now in most countries – find prices of treatment at home online and be able to immediately book online with perhaps a guaranteed price package. So, medical tourism agencies and others promoting dubious country price comparisons will have to mend their ways, or risk being prosecuted by advertising regulators in the country of those they target.

My personal view is that just as with insurance, the first and long tail effect of having several price comparison sites is that overall prices are driven down and kept down, particularly in countries where prices vary hugely between clinics.

If prices are driven down at home for cosmetic surgery, dental treatment and simple surgeries, then those promoting medical tourism will have to work harder. Cross-border price comparison sites will cut directly across the business of many, often already struggling, medical tourism agencies.

Critics of price comparison sites will argue that their medical expertise is vital in advising customers. Many insurance intermediaries argued the same thing, but in the end most found they could only survive by also being part of the site, and offering deals different to what a customer could get by going to an insurer.

My message may not be popular with some in the industry, and may go against much of what I have written about price. Comparison sites do commoditise the business and you can argue until blue in the face that customers will prefer quality to price.

There is a glimmer of hope. The better insurance comparison sites have moved from just comparing price to comparing price and cover and offering customer reviews on service.

So, I think that medical price comparison sites will compare basic prices, offer price information on add-ons, provide customer feedback/reviews and other information so – just like holiday sites – customers can review all aspects and compare on all aspects.

Another spin off from this development is that clinics, agencies and hospitals will have to take customer reviews seriously; insurance comparison sites can be ruthless in kicking off providers who get too many complaints, and we all know what happens to hotels that get lots of bad reviews, bookings tumble .So medical price comparison sites cannot afford to do business with clinics that charge customers more than they quoted or offer poor service

The timescale for all this… two to five years.