Zocdoc defends new pricing model as necessary for expansion, some New York doctors criticize changes

Starting July 1, a new pricing model took effect for physicians in New York that use Zocdoc, a booking app that lets patients schedule appointments—a change that some doctors aren’t happy about.

Some doctors and medical groups are speaking out over the changes Zocdoc made to how it charges for its services, according to Crain’s New York Business.

In New York, the company lowered its subscription fee but started charging for a patient’s initial booking, which means some doctors and practices who get a lot of new patients through Zocdoc will end up paying more. The digital platform connects patients with doctors and enables them to instantly book appointments online.

Zocdoc said the change in its pricing model is necessary to allow the company to expand to providers in suburban, rural and specialty practices that wouldn’t attract enough new patients to justify paying a flat annual fee of roughly $3,000.

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“Our new pricing model, which was designed to bring more providers on to our marketplace, is working exactly as intended,” Oliver Kharraz, M.D., Zocdoc founder and CEO, said in a statement to FierceHealthcare.

“Since July 1, we’ve already grown total participating providers in New York by the hundreds. Today there are more New Yorkers booking appointments and more New York providers participating in Zocdoc’s marketplace than ever before. This transition continues to be the right decision for our business, our providers and the millions of New Yorkers we serve,” he said.

But Dan Arick, M.D., an ear, nose and throat doctor with offices in New York City, told Crain’s he was not happy about Zocdoc cutting into his profit margin.

"They're basically taking a piece of my practice," Arick said. He has opted to change his contract with Zocdoc so when new patients use the link on his website, he doesn’t get hit with a $60 booking fee. New patients trying to book an appointment on Zocdoc's website are told he doesn't have availability.

One doctor told Crain’s he has stuck with Zocdoc because there isn’t an alternative. Andras Fenyves, M.D., a primary care doctor who owns Prominis Medical Services, which has 12 offices in New York, said he may drop the company in the future.

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"I don't blame them from the business perspective. Right now they don't have a good competitor. If there's anyone that wants to compete with them, I will sign up immediately,” he told Crain’s.

Some major medical groups, including NYU Langone and ENT & Allergy Associates, the largest ENT practice in the U.S., both of which have hundreds of doctors, have dropped their contracts, Crain’s reported. An NYU Langone spokeswoman told Crain’s its contract with Zocdoc had ended, and it decided not to renew because it has its own online scheduling system.

What's happened in New York

Zocdoc announced in January that it would change its pricing model and start charging a per-patient fee in New York. At the time, the company said it was updating pricing on a state-by-state basis.

The changes in New York took effect April 1—however, physicians were allowed to remain on their existing plans until their contract was up for renewal or until July 1. The company said it estimated that half of participating providers will pay the same or less under the new pricing model but acknowledged on its website that “a small subset of practices, those who have historically received the largest share of bookings, may experience significant price increases.”

How the New York medical community reacts to the pricing change could be pivotal for Zocdoc, which since its 2007 founding has raised $223 million from such investors as Salesforce CEO Marc Benioff, Amazon CEO Jeff Bezos, Goldman Sachs and Khosla Ventures, according to Crain’s New York Business.

A Zocdoc spokesperson said the company has retained the overwhelming majority of its existing New York practices. It has already grown provider participation by roughly 5%, with even more providers committed to joining. Additionally, hundreds of providers in New York who previously left the online service when it was a subscription model have rejoined Zocdoc under the new pricing model, because it makes more sense for their business, the company said.

“We’re aware that there’s a vocal minority of providers who continue to publicly voice concerns about our new model,” said the company spokesperson, adding that most had a good deal under the old pricing model and are upset their prices may now increase.

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Under the change, physicians now pay an annual licensing fee that starts at $299, which covers account setup and maintenance, rather than the previous price of $3,000 a year for a flat subscription fee. But now they also pay a charge for new patients booking through Zocdoc that ranges from $35 to $110 based on their specialty.

Primary care doctors pay less than high-priced specialists. The fee applies to new patients and all existing patient bookings on Zocdoc’s marketplace are included in the annual license fee, Zocdoc said. The company says it used a third-party valuation firm to determine the value range of the per-booking fees by state and specialty.

The company is counting on the pricing change to allow it to expand its business, particularly beyond major metropolitan areas. It is now successfully operating with the new pricing model in eight states: Georgia, Colorado, Washington, Pennsylvania, Connecticut, New York, New Jersey and Indiana. “The results have far exceeded our expectations,” said the spokesperson.

The company says the pricing model significantly lowers the financial barrier to use the scheduling platform for more providers.

Zocdoc first transitioned to the new pricing model in Georgia in April 2018. The company said it has grown overall provider participation on its platform by about 100%, giving patients more choice of physicians and access to care.