Digital health start-up Zocdoc is wrestling with a price change that could cripple doctors

When Peter Chien opened Lumos Dermatology in New York in 2014, he turned over patient booking to Zocdoc, the website used by seemingly every doctor in the area to attract new patients.

Chien spends $3,600 a year per doctor for the service so his skin care practice can be discovered by consumers who count on Zocdoc’s site or mobile app for last-minute appointments, similar to how restaurant reservations are made on OpenTable. But as Zocdoc, which is used by over six million U.S. patients a month and was valued in 2015 at about $2 billion, looks to fuel its growth, doctors like Chien are being put in a potentially untenable position.

The company had been planning to roll out a pricing change starting Oct. 1, lowering the annual charge while adding a booking fee for every new customer, even those that end up canceling. The model was piloted recently with some physicians in New York and, according to a document seen by CNBC, certain doctors in Washington, D.C., were informed of a pricing change starting July 1.

For Chien, the change would multiply his Zocdoc bill by more than seven-fold, an increase his low-margin business would be unable to absorb. Beyond that, the booking fee would put doctors in a legal gray area, because of state and federal laws that prevent physicians from paying third parties for referrals.

“Zocdoc is basically forcing doctors to engage in professional misconduct,” Chien, 43, said in an interview.

So Chien helped launch a public campaign on Facebook and through a petition, which now has more than 100 signatures, to rally support from doctors and keep Zocdoc from moving forward with its proposal. It’s having an impact. Late last week, Zocdoc told the Medical Society of the State of New York that it was putting the plan on pause and started informing some of its customers that it “will slow down to take the time to listen and consider the feedback.”

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Zocdoc, which is backed by some of the biggest names in tech, including Jeff Bezos, Marc Benioff and Peter Thiel’s Founders Fund, is the latest highly-valued software start-up that’s found it difficult to find sustainable growth in health care. In January, electronic health records provider Practice Fusion was acquired by AllScripts for $100 million, a fraction of its earlier valuation, and in May the board of HealthTap, a struggling medical advice app, fired the founder and CEO after concerning reports about his conduct.


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