Angie's List explores rating doctors

January 22, 2007

Rapidly growing Angie's List is preparing to bring its patented dose of consumer empowerment to your local doctor's office.

The Web-based rating service--which started 2007 by expanding into 30 more cities--hopes to end the year by launching a pilot program in Indianapolis that rates doctors, insurers or "just about anybody who provides service in health care," as CEO Bill Oesterle put it.

He said the still-evolving plan aims to provide the kind of consumer reviews Angie's List already offers for hundreds of services, along with supplemental data, most likely culled from government services.

An expansion into health care would mark a major shift for the 11-year-old company--which generates revenue primarily through advertising in its newsletter and by charging customers $4.95 a month, or $47 annually, to access its information.

"Our members have been requesting information on health care providers, doctors and facilities probably going back seven or eight years," Oesterle said.

Angie's List is one of a growing number of firms nationally hoping to get a foothold in the emerging field. For years, health care providers and insurers have analyzed reams of data, primarily for their own use. Private companies increasingly are jumping into the fray to provide easy-to-understand data consumers can use to make wise health care spending choices.

Not everyone is confident of the firms' ability to do so, however.

"You can put a ton of data out there, but whether it's useful or whether it tells the person using it good information is not a foregone conclusion, that's for sure," said Ice Miller health care lawyer Gregory Pemberton said. "This is hard stuff; this is very complex stuff.

"I just hope they're realistic about what they're soliciting from people and what they're putting out."

Oesterle, 41, said Angie's List intends to be. Reports will include a disclaimer noting the opinions on care are coming from a layperson. But he also thinks the average patient has useful information to share.

"Consumers are generally considerably smarter about health care issues than they are given credit for," said Oesterle, Angie's List's co-founder and CEO.

Chasing more growth

Indianapolis-based Angie's List has grown plenty without venturing into a big endeavor like health care. It expanded into about 75 cities last year, including big markets like New York and Miami.

Its 500,000-plus members receive a newsletter and access, via phone or the Internet, to a list of consumer reports covering about 400 services.

Namesake and Chief Marketing Officer Angie Hicks, now 34, co-founded the business with Oesterle in 1995 in Columbus, Ohio. A year later, it moved to Indianapolis and expanded by purchasing longtime local consumer-referral service Unified Neighbors. Over the past five years, revenue has grown 700 percent, reaching about $14 million in 2006.

The company declined to disclose its investment in the health care venture, and Oesterle said he wasn't sure how many members the push might add.

Angie's List might charge a separate fee for access to its health care data, spokesman Jonathan Swain said, emphasizing that the idea is still "very much in a formative stage."

Company officials are laying the groundwork now to launch a pilot study by the end of this year.

"We're going to do everything we can to get this accomplished," Oesterle said.

Then the company will determine how far it will expand the service.

'Good market'

Angie's List built its reputation by rating providers like mechanics and plumbers. But Oesterle said company leaders have had the health care venture in the back of their minds for a while, and he believes the company's business is mature enough to handle the expansion.

"We think it can be a good market for us and a good extension of our brand," he said, noting that the company's customer base is filled with upper-middle-class people who use lots of health care.

But whether such customers are qualified to grade health care is another question, said Dr. Gregory Larkin, president of the Indianapolis Medical Society and director of corporate health services for Eli Lilly and Co.

He said most patients don't understand what goes on "behind the scenes for their clinical care.

"What a patient may feel is important to them may not be good clinical care," said Larkin, who also is chairman of The Employers Forum of Indiana, which is working with the not-for-profit Indiana Health Information Exchange to develop a separate evaluation program. (See story, page 7.)

Ice Miller's Pemberton thinks a patient's evaluation can be influenced by customer service that doesn't necessarily reflect the quality of care.

"I know doctors that are really good, but they tend to be really busy, so their patients sometimes wait longer than they should," he said.

However, Clarian Health Partners CEO Dan Evans thinks patients can glean plenty from how they're treated as customers.

"I believe that the doctor's office or the hospital or the clinic that says ... 'Is there anything else I can do for you?' is more likely to do a better job on the substantive end," said Evans, head of the largest hospital network in Indiana.

An official with WellPoint Inc., the nation's biggest health insurer, wasn't familiar with Angie's List's plans, but said the company supports efforts that help consumers assess care.

"Overall, we believe the more information consumers have about their health and health care options, the better decisions they can make about their overall well-being," spokesman Jim Kappel said.

Oesterle acknowledged that his company will have to give its customers evaluation criteria that's "dramatically different" from what they're used to.

"It's a far more difficult proposition than the standard services that we rate," he said. But he also thinks customers are capable of rating their entire health care experience, not just how they're treated in the waiting room.

"They absolutely have something to add to this discussion," he said. "More information is better, and consumers are generally pretty smart."

He said he's heard from health care providers who worry that evaluations will be hurt by a bad outcome. They note that some people have serious conditions that aren't treatable, regardless of the quality of care.

"I think consumers can calibrate that," he said. "My own personal experience is reflected in my dad. He died of leukemia, and I thought his physician was fantastic."'

Angie's List subscribers will issue their reports and grade their health care, just as they would any other service.

But health care also will pose unique challenges. Patient confidentiality restrictions, for instance, raise a question of fairness.

Customers will be free to discuss their own medical cases when offering feedback on a doctor. But federal privacy laws will limit what a doctor can say in rebuttal, Oesterle noted.

Angie's List might supplement the consumer ratings with other information, like efficacy data collected by the federal government. Oesterle said he intends the new venture to be a "clearinghouse on quality" for consumers.

A popular market

But Angie's List by no means will have the market to itself. Competitors will include the still-developing Indiana Health Information Exchange program, which will provide free reports for consumers. The U.S. Centers for Medicare and Medicaid Service also provides free ratings.

One of the more established companies in the sector is Colorado-based Health Grades Inc., which offers hospital and nursing home ratings as well as doctor reports. The company has customers in every state. It rates every non-federal hospital in the country and offers background reports on every practicing physician, spokesman Scott Shapiro said.

A public company, Health Grades raked in nearly $21 million in revenue in 2005 and cleared a $4 million profit.

Oesterle, however, sees room for growth in the health care ratings market.

"There's no leader in this industry by any means," he said. "Nobody has any decent market penetration."

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