Vignesh Ravikumar~quoteblock
My belief is that online health care will mirror the real world: it will look localized and specialized. If a patient is receiving primary care it will be within driving distance. If care is non-urgent, patients will want to be able to see their physician and seek follow-up services remotely.
The data shows that most patients don’t go to big providers, but to smaller clinics and community-based practices. Patients trust these providers and they will retain a large share of the market for digitally-enabled healthcare.
This creates an opportunity for companies to help smaller family- and community-based health practices, along with locally-relevant specialists, to provide a modern and online patient experience. Moving operations online not only improves patient experience, it also helps smaller practices and specialists increase revenue resilience and productivity. With telemedicine, physicians can leverage data better, record conversations, and automate note taking. There isn’t anyone in the space offering an all-in-one software platform for this market right now.
The key to the viability of this market is its breadth and depth. A majority of physicians still work at smaller practices of less than 25 doctors, according to the AMA. Community-based and family clinics, along with specialist practices, all have similar needs. Big healthcare providers, by contrast, aren’t an optimal target for this kind of technology, as they will likely create their own platforms in-house.
A: "We’ve seen companies taking a few different approaches. One approach that I have liked is to go after employers that are contracting directly with primary-care providers. These buyers are not tied down to insurance and are themselves pushing their primary-care providers to provide better experiences for the employees.
Another interesting approach is going after community health centers, as there are big deals to be had and these centers are facing pressure, both from big health systems and revenue loss during COVID. In general it comes down to going after clients that are big enough — but not the biggest in the market.
Platforms that prioritize seamless integration and show that their software will drive revenue will have the easiest sell to tech-resistant healthcare clinics."
A: "The medical field is relatively slow to adapt to newer technologies, but there are many historical parallels between the two trends. Think about early e-commerce as a market — obviously Amazon was the big home-run winner. However, in the early days there were many other e-commerce plays that were being funded. Over time people realized that e-commerce is not a great direct venture investment because you end up funding startups to do customer acquisition. That’s never a good idea in a low-margin business like retail because it encourages a transactional approach, with resources going to optimizing Facebook and search ads. But soon, e-commerce big-box retailers realized that e-commerce is a necessity because it gives you more access to more customers, who are looking for a modern online experience. So did small businesses. The latter is what Shopify tapped into.
Something similar is playing out in healthcare. For the most part, to-date we’ve seen relatively transactional platforms. Most of the direct-to-consumer and telemedicine plays are using venture dollars to acquire users, and then they go out and raise more money. In the long term this doesn’t scale. Covid was a watershed moment as patient expectations changed and practices realized they needed alternatives to in-office visits. Today, your patients want to have a modern online experience. Community clinics and small practices are trying to evolve the way they provide care, and there really isn’t a platform for them yet."
Vignesh Ravikumar~quoteblock
A: "Many practices today are still using fax machines to communicate information, says Ravikumar. But that has started to change: “Within the past five years, a lot of the underlying components needed to create healthcare-provider platforms have been built out. Interoperability issues in healthcare have been addressed with a growing, rich ecosystem of APIs that support video calling, verifying doctor credentials, EHR data exchanges, medication prescription, and more. For example, when patients visit certain healthcare providers like Walgreens and Walmart, these companies use services like Pluto to access patient data without the patient having to do any work. This new layer of infrastructure is enabling next-gen provider platforms to be built on top."
There are additional monetization opportunities besides software-subscription revenue, starting with group buying. “There may be more opportunities to monetize once you have a large number of offices on a platform,” says Ravikumar. “For example, practices already buy from what are called Group Repurchasing Organizations. When a critical mass of providers are on the same platform, referrals can also be much easier than they are currently. Ultimately you will need to have a large customer base to build these features out, but these are examples of other modules you can offer on top of a core platform to deliver care.”
Success will depend on the healthcare sector’s embrace of new tech-led interoperability infrastructure and underlying regulation. “To the extent that these interoperability issues continue to be solved, these companies will benefit,” says Ravikumar.
Watch for adjacent healthcare-provider categories with a big footprint, such as hospice care or physical therapy, to also embrace these new platforms and further expand the market. “I think there are expansion opportunities," he says. “At this point it is not clear how fast everyone in this ecosystem is going to move. What is clear is that all of these healthcare categories are going to want to move online at some point.”
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