Platform corporations – these whose merchandise get pleasure from community results – haven’t solely modified the best way we reside, however have upended industries, opened new markets, and utterly revolutionized how enterprise will get completed. Nearly all of the highest valued corporations worldwide are platforms.
And now, the “Platform Revolution” has lastly began to drive change throughout the healthcare business, the place there’s great alternative to leverage platform ideas to carry an antiquated business into the digital age and remedy a few of healthcare’s largest challenges.
The potential for platforms to unleash their energy and enhance a fragmented, damaged healthcare system is undeniably nice. However bringing their advantages to fruition depends on reaching virtuous community results and overcoming the “chilly begin drawback.”
Community Results: Why Platforms Are Changing into The Preeminent Enterprise Mannequin In Healthcare
Digital well being platforms have been catching hearth for years now and funding has exploded in sort. Digital well being platform funding hit practically $12B in 2021, outpacing all digital well being investments (platforms and non-platforms) simply two years prior in 2019 ($8B).
What’s driving this unimaginable uptick and market curiosity is the truth that platforms are uniquely well-suited to repair critical issues which have plagued the healthcare business for years– from extra successfully matching provide and demand for healthcare options and providers, to reducing transaction prices and lowering data asymmetry. Platforms have additionally confirmed to be a valuation darling, rising and scaling sooner than their non-platform counterparts and in the end delivering extra worth and profitability to buyers.
The valuation premium that platforms obtain is defined by community results. Community results are used to explain a state of affairs during which the worth of a platform in the end is dependent upon the variety of people or events utilizing it; the larger the variety of customers on both aspect of a community, the larger the community impact and worth it delivers. The final word aim for any platform is to attain the “flywheel impact,” the place virtuous community results alone are sufficient to maintain a community’s development at a gentle or accelerating price.
Getting so far, nevertheless, is not any simple process. Community results could clarify why platform corporations are in a position to get so highly effective, useful and worthwhile as soon as they obtain the “flywheel impact”, however it’s additionally what leads them fail at 2x the speed of their non-platform counterparts early on: the absence of a vital mass of different customers can deter adoption. Reaching virtuous community results requires that platforms overcome this “chilly begin drawback,” and discover artistic methods to take action.
Overcoming The “Chilly Begin Downside” In Healthcare
In his guide, The Cold Start Problem: How you can Begin and Scale Community Results, Andrew Chen – common accomplice at Andreessen Horowitz and former Uber govt in the course of the firm’s high-growth, pre-IPO years— explores how a few of right now’s largest platforms overcame the “chilly begin drawback” by utilizing community results to launch and in the end scale to billions of customers.
Nearly all of Chen’s suggestions are from platforms serving B2C constituents, or these that may faucet into product-led development – during which people or departments begin utilizing a product – to function a wedge into enterprise income.
Sadly, healthcare is a special beast, which suggests whereas lots of Chen’s suggestions maintain water as-is, others have to be reconsidered. As an illustration, as healthcare will not be a standard “good”, shoppers usually don’t make choices in a vacuum; ideally, they make choices with their suppliers. As well as, the regulatory atmosphere and real-time medical penalties imply there’s much less alternative for particular person procurement choices in an organizational context, so product-led development could also be harder. And due to regulatory situations, the interconnectedness of gamers, and incumbent inertia, we don’t see many examples of “virality”, and markets don’t tip as rapidly.
Briefly, overcoming the chilly begin drawback and reaching community results will be extremely tough.
That stated, there are network-effects-building techniques from Chen’s guide and past that digital well being platform leaders ought to take note of their quest to beat the chilly begin, obtain the flywheel, and ship outsized returns:
1. Begin with transactions that remedy issues for each events: For a platform to resolve an integration or frequent transaction drawback, it wants to resolve an issue for either side of a business transaction. Ideon (previously Vericred), for instance, connects medical insurance and advantages carriers with insurtech corporations by way of its reusable APIs for simpler information trade at scale with a number of companions. Ideon’s single integration level permits all sides (medical insurance provider and insurtech) to focus extra on their core companies, and fewer on integration efforts.
2. Embrace the “Mechanical Turk”, i.e., “Flinstoning”: The thought behind Chen’s time period “Flinstoning” suggests a bit smoke and mirrors. In different phrases, if the product doesn’t have all of the options automated that customers would possibly want, have workers present a few of these options behind the scenes. Take CoverMyMeds, for instance. Earlier than the corporate was in a position to digitally join docs with PBMs to completely automate by way of electronically course of prior authorizations (PAs) for medicine, it used a mix of back-end faxing to PBMs and a big staffed help heart, the place workers had been truly manually processing the faxed types on the backend. This was all masked to the clinician customers, who merely interacted with CoverMyMeds’ web site.
This was after all not a sustainable strategy and is now not the case right now, however the consumer expertise CoverMyMeds was in a position to ship to start with gained out. The web site and phantasm of a seamless digital transaction stored present customers on the platform and introduced others to it, which helped the corporate obtain community results, show out its idea, and concurrently construct out the platform as meant.
3. Create (or leverage) a way of exclusivity: One other strategy that Andrew Chen mentions in his guide is utilizing an invite-only strategy to create a way of consumer exclusivity and thus shortage and platform demand. Whereas that’s usually not going to be a profitable strategy in healthcare, platform corporations which have same-side community results can profit from it. Doximity, a doc-to-doc skilled networking website, and Sufferers Like Me, a platform neighborhood of sufferers with uncommon ailments, are each use-case targeted and cater to particular teams, which helped to domesticate the consumer bases for every.
Importantly, any platform in a position to domesticate same-side community results can improve the worth of its product/service to customers, will possible see sooner development of its consumer base, and expertise excessive community defensibility, given same-side community results are so onerous to copy.
4. Begin small and concentrate on “atomic networks”: Chen additionally writes about beginning small and constructing atomic networks first. If platforms begin small and with fewer sides, they will higher determine stakeholder pursuits, develop options that map to these pursuits, and work out the workflow orchestration to make sure each (or all) sides obtain actual worth. Beginning out smaller, and narrower reduces the variety of potential failure factors. A superb instance (and maybe solely instance) in interoperability is e-prescribing.
E-prescribing was Surescripts’ first use-case on its well being data community. It labored nicely early on as a result of it was a selected set of transactions with clearly outlined companions, concrete transaction workflow orchestration between these events, and a community operator to supply technical help to every aspect. Right this moment, the community processes the vast majority of e-prescriptions within the nation, along with quite a lot of different healthcare transactions between/amongst suppliers, pharmacies and PBMs.
5. Leverage “operational virality”: Viral user-led development usually doesn’t occur in healthcare, given shoppers don’t behave the identical approach and choices aren’t made in the identical approach or as rapidly. Nevertheless, there are methods to faucet into viral audience-development ideas for healthcare at an operational stage – by leveraging day-to-day relationships with different stakeholders to assist steer curiosity.
CoverMyMeds completed this after they noticed stalled doctor adoption on their PA platform. The corporate realized that it might develop its consumer base by going to pharmacies first, which is the place most medicine prior authorization complications begin. By providing pharmacies a free platform integration, with the promise of getting PAs resolved faster, the pharmacies then pointed docs to the location. And it worked – CoverMyMeds’ community grew each in variety of customers and kind of customers. What’s good for the goose was good for the gander.
6. Deal with aligning stakeholder incentives: Misaligned incentives plague the healthcare business, one of the highly-governed industries within the nation. The platform corporations which are prone to make the largest distinction are those that may discover the factors the place pursuits align. Sempre Well being, a platform that permits behavior-based, dynamic medicine pricing, has completed a fantastic job at aligning incentives to repair a longstanding business challenge.
Sempre Well being’s two sides usually have conflicting pursuits – pharmaceutical producers on one aspect (with an incentive to get sufferers on sure therapies) and well being plans on one other (simply attempting to handle prices).
By growing a market that connects usually “combative” events, and agreeing on the principles of engagement, Sempre has been in a position to align competing pursuits and enhance a market deficiency that advantages a number of stakeholders. Pharma shoppers win as a result of the platform helps to get sufferers on therapies; well being plans win as a result of they will select what they wish to supply members; and sufferers win as a result of they’ve elevated entry to therapies.
7. Piggybacking off of current networks: Maybe essentially the most well-known instance of 1 community piggybacking off of one other is PayPal piggybacking off of eBay, whereby eBay transactions had been made primarily via PayPal’s integration into eBay’s platform. By tapping into an current fee platform, eBay was in a position to remedy an issue for each patrons and sellers, which ended up being one of many causes eBay acquired PayPal.
In healthcare, a fantastic instance of piggybacking is Well being Gorilla, an information aggregator platform that normalizes and standardizes healthcare information. Well being Gorilla improves information entry and helps to resolve for well being information interoperability, by serving because the first connector between CommonWell and Care Equality.
8. “Come for the instrument, keep for the community”: Chen’s instance right here is likely one of the greatest recognized shopper platforms: Instagram, which offered a useful image modifying and posting instrument, and grew its community of customers – and worth of its community and sure makes use of (influencers) – from there.
One firm taking this strategy to community constructing and worth technology is Zus Well being, which has created an infrastructure for digital well being corporations to assist them enhance pace to market. The extra shoppers that Zus Well being will get, the extra engaging its information sources turn into. Zus can be constructing out useful instruments for its shoppers, and the worth of such instruments will solely turn into extra highly effective as they turn into a part of requirements improvement.
9. Construct the killer app (or get it federally backed): The instance Chen makes use of in his guide for the “killer app” is Zoom, however the studying will be utilized in healthcare. If an organization can construct a killer app, it could actually all the time be transitioned right into a platform construction, as long as different events discover worth in interacting with the platform’s customers (or the information they generate) and there’s a option to stability the pursuits of the unique set of customers with these of the brand new occasion.
Digital well being data (EHR) distributors characterize healthcare’s largest unmet alternative for platformization on this approach. Though they actually aren’t the “killer app”, EHRs that benefited from federal subsidies and now have a big market footprint are nicely positioned to shift to a platform technique; if not, they’re prone to fade away into additional irrelevance.
10. Create FOMO with a “Large Bang” of PR and communications actions: Digital well being platforms mustn’t overlook or underestimate the significance of doing PR and comms proper on the outset to create FOMO (concern of lacking out) and the curiosity that comes with it. Having a nicely thought-out and orchestrated PR and comms launch technique might help drum up early curiosity and network-building momentum, together with actions like collaborating with marquee shoppers on bulletins, talking alternatives or different thought management initiatives. There may be, nevertheless, a draw back to this strategy: if there aren’t sufficient current community customers on the platform, then new adopters could also be dismayed by the shortage of worth, and drop off the platform shortly after becoming a member of.
Past The Chilly Begin
Healthcare platforms are solely as profitable because the community results they can obtain. Overcoming the chilly begin takes a stage of scrappiness, creativity, and enterprise acumen that not all platform corporations will be capable to ship, particularly in as advanced and fragmented an business as healthcare. However for those that push the envelope and try to get it proper, the community results and business affect will be extremely virtuous.
Keep updated on the most recent platform ideas and evolving business imperatives by registering for The Platform Revolution Comes to Healthcare: A Deep Dive at the 2022 MIT Platform Strategy Summit and particularly the “Worth Creation from Information” at 3:20pm ET on July 13, 2022, with panelists:
- Micky Tripathi – Nationwide Coordinator, Workplace of the Nationwide Coordinator for Well being IT for Well being IT
- Michael Byczkowski – World Head of Healthcare, SAP
- Christian Howell – Vice President & Common Supervisor, Medical Gadget and Diagnostic Group, Aetion
- Suchi Saria – Founder and CEO, Bayesian Well being & Director of the Machine Studying, AI and Healthcare Lab, Johns Hopkins College