Is WellOne’s business model the solution to rising healthcare costs in Australia?

- July 23, 2015 4 MIN READ

Melbourne-based startup WellOne believes its healthcare membership system will alleviate the pressure on Australia’s public healthcare system and decrease instances where people neglect their health for financial reasons.

Australia has one of the most complex and advanced healthcare systems in the world. Although a significant portion of our healthcare costs are covered by the state-run healthcare scheme Medicare, which is funded mainly through income tax, the current spend on healthcare in Australia has been deemed unsustainable by the government. The cost of healthcare in Australia is increasing at 5.4 percent per year compared to annual GDP growth of around 3.1 percent, according to Professor Stephen Duckett, Director of the Health Program at Grattan Institute. Expenditure on health in Australia was estimated to be $147.4 billion in 2012-2013, which makes up about 9.5 percent of Australia’s GDP. To address this, the government announced a $50 billion cut in hospital funding over the next decade, and also made changes to the tax structure to encourage people to take out some form of private health insurance.

However, for many Australians, private health insurance is not a financially sensible solution. In fact, one in 16 Australians delay seeking healthcare due to cost, according to the Australian Bureau of Statistics. Given the public healthcare sector is in a state of flux, there are a number of startups in the private sector hoping to play a significant and constructive role in health management and promotion.

Launched last week in Melbourne, WellOne is hoping its business model will plug the giant hole created by rising healthcare costs and expensive private health insurance.

Founded by Hew Gibbs, Neill Cullen and Chris Bates, WellOne offers discounted access to treatments with partnered healthcare providers in dental, physiotherapy, chiropractic care, optical, osteopathy, podiatry, massage, myotherapy and orthodontics.

For an annual fee of $79 (singles), $89 (couples and single parents), or $99 (families), members have access to all treatments with no limits or waiting periods. Members receive up to 40 percent off on all initial treatments at partnered healthcare providers and 15 percent off on subsequent visits; and members are expected to save five to 10 times the cost of membership every year.

Instead of waiting for a membership card to arrive in the mail, WellOne members just download an app – available on Google Play and iTunes – and present the app as well as photo identification during visits. The mobile app has limited functionality at the moment; it’s mainly for identification purposes and also has a basic search feature that allows users to find their nearest practice.

Gibbs said that in the future, they would like users to have the ability to filter their search based on price, appointment availability and parking availability.

On the web app, users can also calculate how much they could save on healthcare. The estimates provided by WellOne are in real-time and based on the prices and discounts offered by partnered healthcare practices.

While WellOne is not an alternative to private health insurance, in that it doesn’t cover hospital and ambulance, it does provide an option for families and individuals who normally wouldn’t be able to afford health insurance or who find the cost of allied healthcare too high. WellOne can also be used in conjunction with health insurance; members can receive the WellOne discount off the usual practice fees, and still claim a private health insurance rebate.

“Healthcare costs continue to grow faster than incomes. Sadly, even people who actually have health insurance increasingly face affordability problems when it comes to paying for healthcare, which leads them to also cut back on care. What ends up happening is that a health issue which may have been prevented or cured at the outset becomes a more serious problem for the patient both health and cost wise,” said Cullen, who has worked in dentistry for the past 15 years.

“There is a chasm between the health care needs of people without health insurance and access to the relevant health care services. I personally do not want to see people skip a recommended medical test or treatment, or decide against seeing a health practitioner because the cost is prohibitive.”

Gibbs, who has practiced physiotherapy for over 12 years and helped Gippsland Physiotherapy Group expand from five to 21 locations, said the biggest distraction for healthcare professionals is marketing.

“There are tens of thousands of practitioners running businesses and struggling with the dichotomy between being a clinician and running a business. You’ve got to generate new patients and grow the business. But marketing is time consuming, expensive and unpredictable. The results are inconsistent, and if you don’t have a background in marketing, often you don’t know where to start,” said Gibbs.

“So we basically do the marketing for them, we generate the leads; and in exchange, they give our members discounts. This  actually costs less than it would for practices to attract leads through other means. If you can take back some of those marketing dollars in exchange for a discount, you’re no worse off dollar-for-dollar as a practitioner. Members get to experience the benefits and we make a small margin off the cost of members joining.”

WellOne is currently only operating in Melbourne and has signed up 70 practices, which have over 100 practitioners. The startup plans on expanding to Sydney over the next six months or so, and other cities thereafter.

Gibbs said the WellOne team is working feverishly on growing its practice base in Melbourne and diversifying the practices its members have access to. He said the membership price will remain the same, but the value of WellOne’s offering will increase as the company signs on more practices.

Although the WellOne team has discussed international expansion, Gibbs said Australia is a large enough market for a company like WellOne, at least for the time being.

“We’ve got 23 million Australians who can join WellOne first, and then we can re-evaluate,” said Gibbs.

He added that there are similar models to WellOne offered in the US and UK, but not in Southeast Asia and New Zealand, so if the startup was to expand internationally, it would target the Asia Pacific region. But Gibbs pointed out, however, that things move fast in the tech world and local versions will likely pop up before the company gets the chance to explore new markets.

“The real goal for us is to establish ourselves as the market leader,” said Gibbs, who is unfazed by competitors emerging in the marketplace.

“Whenever there’s an opportunity, whenever there’s a need, people are always going to move fast to fulfil that. We’re confident that we’ve got the industry knowledge to make WellOne a success. The founding team is made up of healthcare professionals and marketing professionals. We’re quite confident that we’ve got a deep understanding of patients and what they’re looking for, as well as healthcare practitioners and what makes them tick.”

Now that WellOne has launched, the focus for the company will be on validating the business model and fine-tuning the product based on customer feedback.

Featured image: Hew Gibbs, co-founder of WellOne. Source: Provided.