Overcoming The “Cold Start” Problem in Healthcare

Platform firms – these whose merchandise get pleasure from community results – haven’t solely modified the way in which we dwell, however have upended industries, opened new markets, and utterly revolutionized how enterprise will get completed. The vast majority of the highest valued firms worldwide are platforms.

And now, the “Platform Revolution” has lastly began to drive change throughout the healthcare trade, the place there may be super alternative to leverage platform ideas to convey an antiquated trade into the digital age and clear up a few of healthcare’s greatest 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 attaining 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 fireplace 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 unbelievable uptick and market curiosity is the truth that platforms are uniquely well-suited to repair critical issues which have plagued the healthcare trade 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 finally 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 scenario by which the worth of a platform finally depends upon the variety of people or events utilizing it; the higher the variety of customers on both facet of a community, the higher the community impact and worth it delivers. The final word objective for any platform is to realize the “flywheel impact,” the place virtuous community results alone are sufficient to maintain a community’s development at a gradual or accelerating charge.

Getting up to now, nevertheless, isn’t any simple activity. Community results could clarify why platform firms are in a position to get so highly effective, beneficial and worthwhile as soon as they obtain the “flywheel impact”, but it surely’s additionally what leads them fail at 2x the speed of their non-platform counterparts early on: the absence of a crucial 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 Drawback” In Healthcare

In his guide, The Cold Start Problem: Methods to 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 at this time’s greatest platforms overcame the “chilly begin drawback” by utilizing community results to launch and finally scale to billions of customers.

The vast majority of Chen’s suggestions are from platforms serving B2C constituents, or these that may faucet into product-led development – by which people or departments begin utilizing a product – to function a wedge into enterprise income.

Sadly, healthcare is a distinct beast, which suggests whereas lots of Chen’s suggestions maintain water as-is, others should be reconsidered. As an illustration, as healthcare is just not a traditional “good”, shoppers typically don’t make selections in a vacuum; ideally, they make selections with their suppliers. As well as, the regulatory setting and real-time scientific penalties imply there may be much less alternative for particular person procurement selections in an organizational context, so product-led development could also be tougher. And due to regulatory circumstances, the interconnectedness of gamers, and incumbent inertia, we don’t see many examples of “virality”, and markets don’t tip as shortly.

Briefly, overcoming the chilly begin drawback and attaining community results could be extremely tough.

That mentioned, there are network-effects-building techniques from Chen’s guide and past that digital well being platform leaders ought to have in mind of their quest to beat the chilly begin, obtain the flywheel, and ship outsized returns:

1. Begin with transactions that clear up issues for each events: For a platform to unravel an integration or widespread transaction drawback, it wants to unravel an issue for each side of a industrial transaction. Ideon (previously Vericred), for instance, connects medical insurance and advantages carriers with insurtech firms through its reusable APIs for more practical information trade at scale with a number of companions. Ideon’s single integration level permits both 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 little bit smoke and mirrors. In different phrases, if the product doesn’t have all of the options automated that customers would possibly want, have staff present a few of these options behind the scenes. Take CoverMyMeds, for instance. Earlier than the corporate was in a position to digitally join medical doctors with PBMs to completely automate through electronically course of prior authorizations (PAs) for treatment, it used a mixture of back-end faxing to PBMs and a big staffed help heart, the place staff have been truly manually processing the faxed kinds on the backend. This was all masked to the clinician customers, who merely interacted with CoverMyMeds’ web site.

This was in fact not a sustainable method and is now not the case at this time, however the person 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 supposed.

3. Create (or leverage) a way of exclusivity: One other method that Andrew Chen mentions in his guide is utilizing an invite-only method to create a way of person exclusivity and thus shortage and platform demand. Whereas that’s typically not going to be a profitable method in healthcare, platform firms which have same-side community results can profit from it. Doximity, a doc-to-doc skilled networking web site, and Sufferers Like Me, a platform group of sufferers with uncommon illnesses, are each use-case centered and cater to particular teams, which helped to domesticate the person 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 probably see sooner development of its person base, and expertise excessive community defensibility, given same-side community results are so laborious to duplicate.

4. Begin small and deal with “atomic networks”: Chen additionally writes about beginning small and constructing atomic networks first. If platforms begin small and with fewer sides, they will higher establish stakeholder pursuits, develop options that map to these pursuits, and determine 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 particular set of transactions with clearly outlined companions, concrete transaction workflow orchestration between these events, and a community operator to offer technical help to every facet. As we speak, the community processes the vast majority of e-prescriptions within the nation, along with plenty 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 means and selections aren’t made in the identical means or as shortly. Nonetheless, 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 achieved this once they noticed stalled doctor adoption on their PA platform. The corporate realized that it may develop its person base by going to pharmacies first, which is the place most treatment prior authorization complications begin. By providing pharmacies a free platform integration, with the promise of getting PAs resolved faster, the pharmacies then pointed medical doctors to the positioning. 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. Give attention to aligning stakeholder incentives: Misaligned incentives plague the healthcare trade, some of the highly-governed industries within the nation. The platform firms which can be prone to make the largest distinction are those that may discover the factors the place pursuits align. Sempre Well being, a platform that allows behavior-based, dynamic treatment pricing, has completed an important job at aligning incentives to repair a longstanding trade situation.

Sempre Well being’s two sides usually have conflicting pursuits – pharmaceutical producers on one facet (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 purchasers 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 provide members; and sufferers win as a result of they’ve elevated entry to therapies.

7. Piggybacking off of present 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 have been made primarily by means of PayPal’s integration into eBay’s platform. By tapping into an present fee platform, eBay was in a position to clear up an issue for each consumers and sellers, which ended up being one of many causes eBay acquired PayPal.

In healthcare, an important 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 unravel for well being information interoperability, by serving because the first connector between CommonWell and Care Equality.

8. “Come for the software, keep for the community”: Chen’s instance right here is without doubt one of the finest recognized client platforms: Instagram, which supplied a beneficial image enhancing and posting software, and grew its community of customers – and worth of its community and sure makes use of (influencers) – from there.

One firm taking this method to community constructing and worth technology is Zus Well being, which has created an infrastructure for digital well being firms to assist them enhance pace to market. The extra purchasers that Zus Well being will get, the extra engaging its information sources turn into. Zus can also be constructing out beneficial instruments for its purchasers, 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 could be utilized in healthcare. If an organization can construct a killer app, it could actually at all times 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 solution to steadiness the pursuits of the unique set of customers with these of the brand new celebration.

Digital well being information (EHR) distributors characterize healthcare’s greatest unmet alternative for platformization on this means. Though they definitely 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 (worry of lacking out) and the curiosity that comes with it. Having a nicely thought-out and orchestrated PR and comms launch technique can assist drum up early curiosity and network-building momentum, together with actions like collaborating with marquee purchasers on bulletins, talking alternatives or different thought management initiatives. There may be, nevertheless, a draw back to this method: if there aren’t sufficient present community customers on the platform, then new adopters could also be dismayed by the dearth 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 firms will have the ability to ship, particularly in as advanced and fragmented an trade as healthcare. However for those that push the envelope and try to get it proper, the community results and trade impression could be extremely virtuous.

Keep updated on the most recent platform ideas and evolving trade 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 Knowledge” 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 – International Head of Healthcare, SAP
• Christian Howell – Vice President & Basic 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