Answer extracted from the Proven Podcast — listen to the full episode below.
How Sesame Brings Real Price Competition to Healthcare
Sesame operates a marketplace where physicians, clinics, and hospitals list consultations, appointments, procedures, labs, and diagnostics at cash prices set directly by the providers themselves. These prices undercut insurer-negotiated rates dramatically because providers attract patients through competitive pricing—introducing normal market capitalism to healthcare where it barely exists.
How Market Competition Drives Down Healthcare Prices
The core insight is simple but radical in healthcare: providers have no economic incentive to lower prices inside the insurance system. When insurers negotiate bulk rates, providers get paid through a Byzantine billing infrastructure. But when patients shop directly on Sesame's marketplace, providers compete on price to win their business.
Sesame customers pay cash upfront—no insurance claims, no payment processing delays, no administrative overhead. This transparency forces providers to price competitively because they can't hide behind insurer negotiations or pass costs to a third party. The result is a 60% price reduction compared to what insurers pay, with patients accessing the same doctors and the same quality of care.
As David Goldhill explains in the episode, this model works because it removes the perverse incentives baked into employer-based insurance. Providers aren't trying to maximize what insurers reimburse them—they're trying to maximize patient volume through better pricing.
"Nobody in the healthcare system can make more money, can be more profitable by lowering their prices."
David Goldhill — Founder and CEO of Sesame, a marketplace for healthcare services. Previously, Goldhill had a long career as an entertainment executive, running television at Universal Studios, managing the Game Show Network, building a television network in Russia, and helping operate a movie theater chain before turning his focus to disrupting broken healthcare economics.
The United States pays 40% of the world's healthcare bill while representing only 3% of the global population. Part of that premium stems from the fact that insurers can extract margin without competition because employers—not patients—choose the coverage. Sesame inverts this by putting pricing directly in patients' hands, forcing providers to compete on visibility and value instead of lobbying insurers for reimbursement rates.
The marketplace covers everything from primary care visits to major procedures. A patient can check exact prices upfront on Sesame, compare across nearby providers, and book directly—a transparent process discussed in depth in the full episode that contrasts sharply with the hidden-rate opacity of insurer networks.
Why This Works When Insurance-Based Healthcare Doesn't
The insurance-based system broke price discovery decades ago. Employers subsidize premiums, patients don't see the full cost, and insurers negotiate rates in private agreements. No one with skin in the game can see what anything actually costs, so providers never compete on price—they compete on insurance network inclusion.
Sesame restores the basic economic law: when buyers see prices and can compare, sellers lower them to win customers. Patients who use Sesame directly report paying fractions of what they would have paid as insured patients facing deductibles and co-pays, a pattern Goldhill details across multiple examples in the conversation.
Key takeaways
- Sesame lists all healthcare services at transparent cash prices set directly by providers, eliminating the hidden-rate opacity of insurer negotiations.
- Providers lower prices on the Sesame marketplace to compete for patient volume, whereas the insurance system gives them no incentive to reduce costs.
- Patients access the same doctors and facilities but pay 60% less because they bypass insurer markup and administrative overhead.
- This model introduces normal market competition to an industry where price discovery has been broken for decades by the employer-insurance-provider triad.
See also
What is the actual cost of innovation in pharmaceutical development and how does competition affect pricing once drugs are established?
The first pill to get approval costs $9 million because it requires all the research, studies, and regulatory testing. The second pill costs a penny to produce, demonstrating how competition and scale dramatically reduce costs across the healthcare ecosystem.
How much of healthcare spending goes directly to administrative costs of the payment system rather than actual medical care?
Administrative costs for the payment system account for somewhere between 10% and 15% directly of the cost of care, translating to thousands of dollars per family annually that never reaches actual treatment.
What is the lifetime cost burden for an average American employee and their family participating in the healthcare system?
In 2012, when looking at what an employee would put into the healthcare system over her lifetime including employee premiums, employer premiums, and Medicare taxes, the average lifetime healthcare cost was calculated at $1.2 million.