Healthcare disruption – players and plays to make patients as consumers

Most discussions on the topic of ‘patient as a consumer’ happen through the lens of a person seeking healthcare services to treat their sickness. Much of the debate and research on this topic surrounds transparency on cost, value and to some extent patient experience when seeking acute care services.

The healthcare industry has seen unprecedented interest and investment from venture-backed healthcare technology startups, and health system sponsored venture funds with an aim to transform the way health care is delivered in America. 2018 has already seen an onslaught of nontraditional players with core competencies in consumer value creation and innovation enter the fray. The underlying premise of most of these moves are to capture the triple aim: to improve patient experience; to improve population health; and to reduce per capita cost of healthcare. But do these solutions share a common context and paradigm of the patient as a consumer?

I believe the paradigm for seeing patients as a consumer entails a focus on total health and wellbeing, a composite experience that is relevant to all stages of a person’s life (not just episodes), and one that creates value on a day-to-day basis. True industry disruption or transformation will occur only when healthcare systems create a simplified and integrated personal health ecosystem where focus on health and wellbeing and is hard-wired to daily living.

Unfortunately, the healthcare industry is constrained by fragmentation and specialization in such a way that it is not natural for any of the players to perceive, afford or build a holistic health ecosystem as the above paradigm suggests. For example, if we look at the traditional players - commercial insurers, acute care hospitals, and post-acute skilled nursing facilities, they each have ‘1 to n’ relationships. Each of the ‘1 to n’ participants in this care continuum have varied technologies, protocols and standards of care that frequently get in the way of attempts to streamline consumer experience across the care continuum. Hence, most players are doing what they can do, within their fragment of care!

So what are the odds of disrupting the industry for the ‘patient as a consumer’ and how are the new ventures’ products and services fitting into the industry transformation? I have adopted the classic strategic planning tool Ansoff Matrix along with a bit of inspiration from Frog Design’s venture design approach, to understand the plays and players to cause an industry transformation.

Market Penetration Plays: When using existing offerings in existing markets, players pursue a market penetration strategy. In general, acute-care centric healthcare systems are vigorously pursuing a patient centered agenda through access and experience strategies such as: Asian/ Hispanic/ LGBTW outreach, service excellence and patient experience models. Typically healthcare systems use existing clinical services and offerings in their existing markets to enhance market penetration and consumer retention.

Market Development Plays: When using existing offerings in a market that a player is not presently in, they are pursuing a market development strategy. The healthcare industry has seen the raise of concierge medicine/ elective surgery bundles, retail clinic programs and warranty programs in recent years. Generally speaking, these programs are tailored to bring incremental access to consumers outside of a healthcare provider’s natural markets.

Product Development Plays: When using new offerings in existing markets, players are pursuing a product development strategy. The industry witnessed the evolutionary partnerships between new digital health solution providers and large health systems in the space of virtual visit technologies, transparency solutions, social health network solutions, and care improvement technologies. This is a product development play where health systems started offering ‘new value’ to current consumers and retain/ cultivate long term relationships. Binary Fountain, Castlight Health, Loyal Health, HealthSparq, and Collective Medical Technologies are examples of digital health players in this space.

Diversification Plays: When presenting new offerings in a market that a player is not presently in, they are pursuing a diversification strategy. This space has seen the most traction with venture backed digital innovation products, services as well as emergence of new business models. In addition to private equity firms and venture funds that specialize in healthcare industry, the key catalyst to the evolution of this diversification play comes from forward-leaning health system sponsored venture funds. Notable among the mature players in the space include UPMC Enterprises, Kaiser Permanente Ventures, Ascension Ventures. Providence Ventures, Spectrum Ventures, Geisinger Ventures, to name just a few.

The diversification strategy offers new products and services such as on-demand access solutions, targeted chronic condition management solutions, and life style management solutions in a market agnostic manner. One Medical, Village MD, Zoc Doc, Curavi Health are examples of the emergence of new business models that empowers patients as consumers and provide on demand services. Quartet Health, Lantern, IRIS, LYRA, xG Health Solutions, ALung, RxAnte, Livongo are examples of services and solutions targeted to seamlessly manage chronic medical conditions. Omada, Sqord, Welltok, Medisafe, ayogo, Zest Health are examples of digital health solutions that provide life style management platforms.

Catalyze and Curate Plays: As the industry moves beyond market development to market innovation, and beyond product development to product innovation, and ultimately towards industry disruption, traditional and nontraditional players alike need to develop new organizational competencies, culture, structure and decision making capabilities to scale and sustain transformation efforts. Players like Avia Health Innovation offer a unique platform and business model for forward leaning traditional players, nontraditional players and digital innovation companies to collaborate, mitigate risks associated with product and market innovation efforts, and accelerate their transformation.

I am most hopeful that the confluence of interests and non traditional business models can bring the requisite vision, core competencies and culture to create a simplified and integrated personal health ecosystem where focus on health and wellbeing is hard wired to daily living. UnitedHealth Group’s UHC, Optum Health Services platform; Apple’s healthcare play beyond apps and devices; Amazon’s play beyond hospital supply chain and OTC business are to watch for as they leverage their for-profit core competencies in consumer value creation and innovation.

About the Author: Naren Balasubramaniam is a thought leader and healthcare industry executive with a focus on transformation.

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