Uber’s 3 innovation lessons for healthcare

If you near a large metropolitan area, you’ve no doubt heard a lot about Uber, the ride sharing/taxi competitor, recently. Uber, which launched in 2010 in San Francisco, allows users to book a private — “black,” the terminology used by the company — car through a smartphone app. In 2012, it began to allow users to book taxis through the app, and in 2013, it launched uberX, which lets users to book rides from regular Joes and Janes in Joe and Jane’s personal vehicles (they’ve been pre-screened by the company). The taxi industry hasn’t been the same since.
Uber is significantly changing the market, with users in major cities flocking to the app for its lower prices and convenience (no waiting on the corner to hail or cab). In fact, CNBC named the company as one of the top 50 Disruptors in 2014. Cabbies and other opponents to the service argue the company circumvents taxi regulations, and cities and states across the country and globe are looking to ban Uber, and its competitor Lyft, from operating within their boundaries. In June, Virginia regulators sent cease and desist letters to the two companies alleging they were violating state motor vehicle laws, and taxi drivers in Boston, London and Barcelona have balked, in some cases even going on strike, over the app’s alleged ignoring of transport laws. In response, Uber has cut its fares in these cities to further drive use of the app.Some governments have been more supportive. Colorado formally authorized ride sharing services but did so with certain regulations to protect users included. Here in Chicago, similar regulations have been advanced by City Council, though Uber supporters say they are too strict — for example, the companies would need to obtain city approval for driver training, and drivers with over 20 hours worked per week would need to obtain chauffeur’s licenses, according to a Chicago Tribune report. Don’t call Uber a “disruptor”But, is Uber really a disruptor?
I’ve done a fair amount of writing on the topic of disruption vs. adaptation recently (see “Steve Jobs didn’t disrupt, he adapted. So should healthcare“), and I’ve come to the conclusion that Uber isn’t really the disruptor everyone claims it to be.Certainly it is disrupting the taxi industry, but its disruptive effects are byproducts (largely unintentional) of how it has adapted to competitors and other market forces.  Take, for instance, that its initial launch wasn’t all that disruptive: It created an on-demand app to connect chauffeurs with customers. It simply improved on the current way to book car service, using technology. In its next iteration, it merely expanded who could use the app to accept rides, extending it to cab drivers. Enter disruption, and it’s name is LyftAt roughly the same time San-Francisco start-up Lyft created a ridesharing app to allow non-professional drivers to connect with city residents in need of a ride. In return, the rider could give a driver a “donation” for their services through the app. This was disruptive. The trouble was — at least for Lyft — Uber quickly adapted, launching its ridesharing service a year later. For Uber, it’s didn’t hurt too badly not to be the first ridesharing service on the scene. Instead, it lucked out by having an established network of drivers, brand recognition and a growing user base that Lyft struggled to find in cities outside San Fran. To wit, Uber was recently valued at $18.2 billion, while Lyft is valued at $3.5 billion.How is Uber winning the rideshare — not to mention, transportation war — without being truly disruptive? [tweet this]
3 lessons for healthcareThere are three key reasons, each of which can serve as lessons to the healthcare industry — another industry ripe for disruption.

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By: Staff

Uber improved a stagnant industry that didn’t value customer service. While there are certainly truly exemplary cab drivers, anyone who has hailed a cab knows how un-customer-centric the ride can be. Last week, I waited as three lights-on, empty cabs zipped by me. My assumption they were avoiding me because I had luggage and didn’t want an airport trip (though technically illegal) was proven right when I yelled at the next one going by that I wasn’t going to the airport (office now, airport later). He pulled over. I’ve had numerous drivers treat me rudely for attempting to pay with a debit card, even though city regulations provide this as a “passenger’s right.” And I don’t even need to mention the smoking, talking on cell phones and crazy driving that so many of us are familiar with.

With Uber, I can get a ride easily, track it on its way to me, and I’ve been amazed with the level of service. In one instance, a driver waited patiently as a loaded a trunk full of boxes I need to get to an event across town.

The lesson for healthcare? For most people, receiving healthcare in America today feels a lot more like taking a cab than ride sharing. If we don’t actively improve it, disruptors will. We’ll be forced to quickly adapt or perish.  

Uber prices competitively and sensibly. Despite the ability to up-charge for a superior product, Uber prices are very competitive. UberX rates in Chicago are roughly half those of taxi’s, and black cars are just 20 percent more. The company went even further this summer by slashing its standard rates by 25 percent in order to drive new (and repeat) users to the app. In order to keep drivers happy at such low rates, the company is paying drivers 80 percent of the standard rate (and assumedly absorbing the 5 percent loss), according to Forbes. Plus, it offers drivers guaranteed hourly earnings for certain days and times when demand is expected to be greater. It’s willing to take the loss, one reasons, because all the new customers flocking to the app won’t return if they aren’t actually able to hitch a ride.

The lesson for healthcare? Sometimes significant price reductions are needed to attract a large customer base. While most health systems won’t be able to sustain a loss, more efficient operations could greatly reduce their cost of operations and allow for more attractive pricing. Some health systems will remain competitive on factors other than pricing, all but the most advanced, brand-name systems will eventually be operating in world driven by managing population health. And in that world, systems with a larger population to manage have more revenue, and a greater ability to carry out their missions.

Uber values transparency in cost, quality. While Uber’s base rates are competitive, it isn’t afraid to charge customers more when demand is high. The company has been highly criticized for its “surge” pricing, including $82/mile for New Year’s Eve rides and fares of more than $400 for those recently leaving the San Francisco music festival Outside Lands.

However, it’s prices are clearly marked, and users are informed and must agree to surge pricing before booking during peak times.

Uber is all about transparency when it comes to cost and quality data. Users can review user-generated ratings of each driver, and provide their own feedback after a trip. Drivers rate riders as well, though that information is available only to other drivers.

The lesson for healthcare? Notoriously known for a lack of transparency in pricing and billing, healthcare systems could learn a lot from a company whose pricing is clear, actively encourages users to rate service providers and their experience, and makes this data publicly available. While hospitals want our ratings, very few of them make this data publicly available on their own websites.

Uber for healthcare?
Healthcare is not transportation. It’s highly personal and encompasses a lot more than getting from point A to point B. However, the experience of healthcare today isn’t all that different from the world of a taxi rides: We pay more than it’s probably worth for so-so service because it’s our only option. Taxi drivers in cities around the world are up in arms because their model has been disrupted by someone doing it better and cheaper. Healthcare will soon face the same. Will you be ready to respond?

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