PROVIDENCE – For Dr. Johnny Luo, the president of the startup Rhode Island firm, Doctors Choice, the potential target audience for his products and services is huge: anyone who is turning 65 and is attempting to figure out what Medicare plan will be the right fit.

With some 10,000 Baby Boomers turning 65 every day, the aging demographics offer a promising opportunity for the firm to scale up to a regional and national market.

As Luo explained to ConvergenceRI in a recent interview at the Starbucks in Wayland Square, sandwiched between a one-on-one consultation with a client and then a group presentation at Brown University to more than 50 potential retirees in a session arranged by the school, his goal is ambitious: “I want to deliver my education to a million people in 2020.”

What Luo and his team do is to provide free individual consultation, in a neutral fashion, without pushing any specific product, without a specific link to a particular health insurer or financial firm.

The goal is to find the best-fitting plan to meet the individual needs of the client, cutting through what Luo calls the large amount of noise in the marketplace.

The approach, as described on the firm’s website, goes like this: “Doctor’s Choice operates as a ‘choice model,’ meaning we're not tied to any particular insurance company. Our mission is to offer numerous competitive Medicare Health Plan options and the guidance to help you decide which option is most suitable for you.”

The description on the website continues: “We’re paid a fee from the insurance companies we work with to help you with the enrollment process and our consultation is always free of charge. If you’re approaching Medicare Health Plan eligibility, give us a call and see why 90 percent of our clients give us hugs!”

ConvergenceRI readers may recall that Luo served as the emcee at the Aging 2.0 startup pitch event in Providence at the Social Enterprise Greenhouse. [See link to ConvergenceRI story below.]

Luo, who received an undergraduate degree from Brown University in Commerce, Organizations and Entrepreneurship as well as medical degree from the Alpert Medical School at Brown, developed the idea for Doctor’s Choice while finishing his clinical training after being asked numerous questions about Medicare health plans by his patients and uncovering the apparent lack of clear of educational resources to help individuals make an educated decision about Medicare plans.

Most people spend about 40 hours trying to figure out what the best Medicare plans are before throwing in the towel in frustration, Luo said. With Doctor’s Choice, Luo and his team have figured out the methodology to be able to make a good decision in less than two hours.

Here is the ConvergrenceRI interview with Johnny Luo, M.D., president of Doctor’s Choice, on the verge of scaling up his company to compete in the regional and national markets.

ConvergenceRI: At Doctor’s Choice, you appear to be on the verge of scaling up your enterprise. Can you talk about the success of your business model? And, why launching the company in Rhode Island was an advantage?
LUO: Going to Brown as an undergraduate and being part of the entrepreneurship program, it’s called Commerce, Organizations and Entrepreneurship, you’re taught the venture model, where you have an idea, you have to raise the money, build the prototype and test the prototype, and make more money, and so forth.

So, you end up getting into the mindset that [raising venture capital] is the best way to go.

For most companies out there, it’s just not true. For most start up companies, it’s finding those first 10 customers. And, I think that Rhode Island is probably one of the easier places to get to those first 10 customers.

If you can get a few, decent-sized contracts, then you can go ahead and hire and scale up, and then, go out and raise the capital, if you need the capital, to grow on a more regional, national and international scale.

ConvergenceRI: How does philosophy fit in with the recent Aging 2.0 startup pitch event in Providence, where startup firms were competing for the opportunity to present their ideas at the Aging 2.0 event in San Francisco?
LUO: When you look at this opportunity, a lot of these companies came out of the woodwork to present. There were many people with deep pockets in the room, including some of the insurance companies.

Unfortunately, the providers are strapped for capital. The hospitals have worse margins than grocery stores. The insurance companies, even though they’ll tell you that they are losing money on claims, they’ll say they really don’t have the money, but these are the folks who can actually pay for pilots.

Many providers in the health care field will agree to do a pilot, but everything has to be free, you’ve got to do the work and do it for free [to prove the concept].

Shape Up Rhode Island started with a couple of customers, it all started locally, with CVS and Blue Cross.

So, I really think that it’s about getting those startups their first 10 customers here in Rhode Island.

ConvergenceRI: Are you planning to scale up now? Will it be focused regionally or nationally?
LUO: When I first started in this business, there was no lack of information out there. I wanted to create concise information for an individual.

I think that choosing a Medicare plan, it’s just that there is so much noise out there you have to listen to.

As a consumer, n=1.

What I learned was there was an overwhelming amount of demand for our educational services, even though there is a lot of competition to provide Medicare services.

The insurance companies are doing it; financial advisors are doing it. There are a lot of people who dabble in it. But there are not as many companies that are just focused on Medicare.

A lot of companies use Medicare as a way to generate business leads for financial services, to other types of services.

I think that’s a real turn-off to the demographic that we really cater to: one in five Baby Boomers are still working after 65.

For employers, that can be an issue, not in terms of keeping them on board, but in terms of keeping these folks, when they do transition out of the organization, with [the right benefits].

Many employers are paternalistic in a good way; they want to take care of their employees.

However, a lot of the big benefits companies that are administering their health benefits are not equipped to have a Medicare conversation, because it’s really an individual conversation, versus a b-to-b conversation.

So, Doctor’s Choice is looking at how we deliver out education, because that’s where we stand out.

Our education focuses on the big decisions you have to make with Medicare. We help to narrow down your options, from three to five checkmarks to one or two options.

And, we stay with you, year after year, to make sure that you’re in the right place, as your health changes, and you need someone to help you navigate through it.

Our plans to scale up include that we’re going to be offering a lot more education through online channels, through webinars.

ConvergenceRI: You are on your way to Brown after the interview. How does that work?
LUO: This morning, we’re going up to Brown; there are about 50 employees that have signed up to listen to a Medicare seminar. It’s a well-attended event.

They have invited us a few times this year already to come in and talk to their potential retirees.

It’s the employer who has vetted us out, to say: these guys are unbiased, they are able to walk you through a longitudinal perspective.

ConvergenceRI: It says something very positive that the people at Brown have selected you to participate in the process.
LUO: It’s a niche.

ConvergenceRI: Who pays for your services? How does your model work?
LUO: We actually have two models. One is called “Doctor’s Choice University.”

It’s free to the employer and to the employee. The insurance companies pay us, similar to the way that they pay an insurance agent, to help people choose a Medicare plan.

The key is that we’re not tied to one insurance company. Our promise to our clients is that we’ll find the best option for you.

In Massachusetts, we do a lot of pro bono work, because with one of the more competitive plans, unfortunately, we don’t have a contract.

In every state but in Massachusetts, we’re able to offer the most competitive options, in terms of pricing, in terms of plan design, we can readily say: this is a really great option for you. We really work for the individual, not the insurance company.

ConvergenceRI: Health care is very personal; as you said, it’s often a one-on-one conversation. How does your model develop efficiencies in sharing the information needed to make good decisions?
LUO: Health care is very personal; every person takes different drugs, they go to different doctors. Over time, however, what has ended up happening, is that we’re starting to see trends.

When we first started, it was purely one-on-one, we sat down with you, on a completely customized basis.

Then I began to realize that there were buckets that most people fell into, since the products are pretty standardized.

We want to make sure that everyone gets an individualized consultation; and in the Medicare space, there is a lot of noise.

But, there may be two to three plans that make the most sense out of the 50 that are out there from the criteria that we use, which is based upon satisfaction from a customer about their network: are they able to see their doctor? Are they going to have their prescriptions covered? What are the out-of-pocket costs for hospitalization?

Even though it’s a very customized process to choose a plan in the Medicare space, there are only a narrow number of plans that make sense.

ConvergenceRI: It sounds like you have created an algorithm, if that’s the right term, to put people in the right bucket, for what will work best for them, depending on their financial circumstances.
LUO: Exactly. There’s so much that goes into the back end of this calculation. Making sure that your doctors are covered, so that there is continuity of care, making sure that your prescriptions are covered, so that there are no surprises when you go to the pharmacy.

And, that the Medicare plan you choose reflects your lifestyle and your risk tolerance. I can then recommend plans with different levels of co-pays, because from a financial perspective, there are a lot of people who are living on fixed incomes. They have to plan on spending a set dollar amount each month.

ConvergenceRI: What made Rhode Island a great market to start your company, besides its rapidly growing demographic of aging residents?What made it an attractive place to start the business?
LUO: When we first started, and we were based out of Rhode Island, we were trying to figure it out. [What we discovered was] because of how small Rhode Island is, it made it very accessible in terms of meeting with decision-makers at companies.

In the beginning, there were a lot of insurance companies that may not have wanted to work with us, because we were so small, we didn’t have any experience, and we didn’t have a strong team.

Yet, we were able to get meetings with UnitedHealthcare and Blue Cross, which are the two big players in Medicare in Rhode Island. And, we were able to get contracts with them, so that we were able to get paid to do these consultations and contracts on an unbiased basis.

We were really fortunate to be able to do that.

ConvergenceRI: Now that you’re planning to scale up, are you going to bring in investors? Are you going to borrow the money yourself?
LUO: It depends on the mindset of the founders, how much you believe in committing as you grow.

A lot of my advisors have helped me think through this process by asking: what is your end goal? What’s the impact that you want to make?

And my impact is this: I want to deliver my education on Medicare to a million people in 2020. But if you have a really good product, and a really good service, and if you don’t tell enough people about it, you’re robbing other people of the opportunity to value from it.

The average person spends about 40 hours researching Medicare on their own, before they throw in the towel, or just kind of say: I’m going to go with something.

With our process, we’ve narrowed that down to, on average, about two hours. It’s at no cost to them, so the price is exactly the same.

It’s about what do we have to do in order to deliver the product [to a larger audience].

Do we need a bigger team? Do we need a better understanding of the psychology? Do we need to set up experiments? How much do the experiments cost? Can we fund those experiments ourselves?

If those expenses are too big, do we need to find outside capital?

Then the question is: whom do we raise the capital from? It’s like getting married; those people are going to be part of your team.

It’s not a clear answer.

ConvergenceRI: What are the key factors to your success moving forward?
LUO: Ideas are a dime a dozen. It’s the energy required to break through all of the noise. It’s hard to get people’s attention.

It’s the determination to push through all of that noise that is often the determining factor in whether somebody is successful or not.

In the beginning it’s got to be you as a founder, you as the person who believes in the vision, you as the person who’s going to make it happen.

ConvergenceRI: Anything I haven’t asked that I should have asked? That you would like to talk about?
LUO: Doctor’s Choice is about being able to do good by doing well. There’s often a divide between nonprofits and profits about this.

One of the things that I’ve always thought about, from a philosophical perspective, is: what does it take to start a company? Is it purely about building a sustainable business model?

When we first started, I wanted to start a nonprofit, because I thought: we plan to provide advanced education for free.

What ended up happening is that we got nowhere. What we are doing is altruistic; it’s about finding out the real problems, and then developing the solutions.

One of the things that kept me going is that the goal was big enough to keep me going; you need to have pressure in you to serve. That’s what gets me up in the morning – that and my one-year-old.

We have a new generation of entrepreneurs. They all want to do something meaningful and have a good lifestyle.