Is it time to rethink the healthcare marketplace model?

By Angela, August 15, 2016

It’s been a year since we published our series on digital healthcare which I co-wrote with Jonathan Libov of Union Square Ventures. The reception was overwhelmingly positive (we’re thankful to all of you who gave us feedback) and opened up the floodgates to patients, medical professionals, entrepreneurs, and investors who still reach out to us with their pains, thoughts, experiences, and goals for the healthcare system.

As you’d imagine, these conversations continuously inform our thesis on healthcare… yet, since investing in Figure 1 in August 2013, we haven’t pulled the trigger on a second investment in this space. Why not? Aren’t there network effects in healthcare that we get excited about?

Back in 2014, we wrote about our interest in patient-doctor networks and patient health data. This still holds true today, but we’ve learned a lot over the past few years.

We’ve seen social and crowd-sourced communities like HealthTap that enable patients to receive opinions free-of-charge from doctors who are happy to share their knowledge for both altruistic and lead generation purposes. We’ve also seen marketplaces that can help you find a doctor and schedule an appointment (i.e. Zocdoc); provide house calls (i.e. Pager); and immediately connect you with a medical professional via telemedicine (i.e. Doctor on Demand).

And while these networks, services, and products are helpful to patients, we as investors can’t help but ask if we can do more beyond solving the “efficiency problem.” What new value can be created?

A new thesis for healthcare marketplaces

As we survey the current healthcare marketplace landscape, we see the limitations. Today’s networks focus on connecting patients and doctors, with the hope of capturing data from the interactions between members. However, most of these companies have similar challenges:

  • There is low frequency and high unpredictability of use because thankfully, we’re not always sick.
  • People typically prefer a monogamous relationship with their doctors, meaning once they find a doctor, there’s little reason to return to a marketplace.
  • Many transactions are still offline so that data is not captured by the marketplace, leading it and potential insights to stay siloed with doctors or clinics.
  • And in those cases where patients don’t mind “playing the field” and finding a new doctor, the transaction is often very simple (acute) and any engagement is ephemeral.

It’s hard to build a true marketplace against all these factors. So perhaps the answer is to flip the model. Instead of focusing on making connections first with the hope of then capturing data from interactions, healthcare marketplaces and social platforms should first engage individuals with their health (find a daily use case) and then offer the network as an additional service to that daily use case.

So, the question is… what is the daily use case? I’m not sure, but we’ve met with founders working to break down the silos of data through the aggregation of EMRs and medical devices (i.e. BloomAPI, HumanAPI, Validic). In addition, Apple has HealthKit and Google has rolled out a new symptom-related search engine. As all these pipes and infrastructure are laid down, and knowledge is being highly curated, I’m curious what healthcare app layer will emerge to keep people engaged with their health.

If you had access to all this health data, what would you do with it?  I imagine a world where we solve the efficiency problem (e.g. use machine learning to take care of simple cases or offer pricing transparency), which in turn, allows doctors to spend their time on the most important cases where they can provide the most value.

In short, we’re excited about companies who can flip the model around. It’s not just about matching patients with doctors. Instead, we should be capitalizing on all the health data already collected and aggregated by others, to build apps that keep us engaged daily, or at least weekly. Then, once you have the daily use case down, you can build networks that people will naturally go to.

  • BenSears01730

    “I imagine a world where we solve the efficiency problem (e.g. use machine learning to take care of simple cases or offer pricing transparency)…”

    i think you’re right, angela…not sure that matching patients with physicians can become a meaningful business. to your point about machine learning, arterys is using ML for medical imaging purposes. grail, omicia and others are targeting interesting opportunities as well.

    perhaps instead of focusing on patients, more companies should develop solutions for physicians, nurses and medical scientists?

  • BenSears01730

    just fyi, here’s a relevant post from a pediatric emergency medicine fellow: http://www.kevinmd.com/blog/2016/08/time-disrupt-basic-communications-hospitals-heres-one-idea.html

  • atkingyens

    Thanks, Ben! I don’t disagree that we should develop solutions for medical professionals… the challenge being that many of them overestimate the short-term cost of adopting new tech despite the long-term productivity gains :-/

  • Daniel Ketter

    Amazingly, you just described COLLABO Health. The timing of this article couldn’t be more relevant. And yes, focusing on the medical professionals is a dead end that has been tried and found lacking. Focusing on patient engagement, education and data ownership is the missing gap in the care continuum.

  • bwertz

    Looking forward to learning more in our call soon!

  • Pingback: Tracxn Weekend Reads – August 19, 2016 | Tracxn Blog()

  • Daniel Ketter

    “In short, we’re excited about companies who can flip the model around. It’s not just about matching patients with doctors. Instead, we should be capitalizing on all the health data already collected and aggregated by others, to build apps that keep us engaged daily, or at least weekly. Then, once you have the daily use case down, you can build networks that people will naturally go to.”

    I totally agree and hope you will be a part of making this a reality for millions of sufferers.

  • Pingback: Tracxn Weekend Reads – August 19th, 2016 | Tracxn Blog()

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