Three ways legacy healthcare providers can act like healthcare startups
New entrants to healthcare are influencing the business model and industry behaviors. Amazon is expanding into digital pharmacy, CVS Health is growing their Health Hubs, and other large retailers are also becoming healthcare providers. Consumers and healthcare executives alike are taking note of these new entrants: chief innovation and digital officers at hospitals across the United States named Amazon, Walmart, Best Buy and other retailers as among the biggest disruptors to healthcare.
Large retailers have powerful advantages that they can leverage in any space they choose to enter, including healthcare: access to massive amounts of consumer data, a clear understanding of the consumer experience, large scale and an enviable physical retail footprint in close proximity to millions of Americans. And there is an opportunity for providers to learn from a small-but-growing number of consumer-focused healthcare startup companies that are poised to challenge assumptions and existing business models and care models. Relatively small companies like Ro, Tend and Parsley Health are merging digital and physical experiences, using retail to bolster their business, and adopting a mindset of whole-person care, to name a few examples of the insight they are bringing to the healthcare market.
The business practices of smaller upstarts in the healthcare space demonstrate key patient and consumer trends that healthcare delivery organizations can understand and adopt to improve their competitive position.
The pervasive consumer health and wellness trend is great news for healthcare providers who can capitalize on patients’ desire to live a healthy life, and their willingness to spend money to do so. Parsley Health bills itself as a holistic medicine provider, focused on primary care for patients with “persistent symptoms,” chronic illness or specific health goals. To be sure, this model is expensive (Parsley Health members pay upwards of $150 per month), but the focus on whole-person care has earned them a loyal patient base, as well as sizeable investment: in October 2019, the company raised a series B investment of $26 million.
Taking the platform approach of whole-person care also gives non-primary care providers the opportunity to integrate their specialty care into a more integrative model of health and healthcare. Ro, for example, started as Roman, a sexual health company for men, offering telehealth consultations with physicians and offering prescriptions where appropriate. They have since expanded their focus to more features of a healthy life, including smoking cessation, dietary supplementation, generic prescriptions and more.
Large healthcare providers are well-positioned to implement the whole-person care models into their practice. Simple operational improvements that make same-day bloodwork easier for patients to access onsite could ensure that more patients get their recommended lab work, to name one example. Providers can adapt the way they manage patients’ health to consider the whole-person impact of their condition, rather than a single clinical area.
Connect digital & physical experiences
The digital-physical divide is acute in healthcare, where many patients feel that they must be examined in-person to receive the correct diagnosis and treatment. In response to COVID-19, patients, providers and payers have embraced telehealth, with nearly half of Medicare primary care visits conducted via telehealth platform by April 2020. In the context of a pandemic, patients have become more comfortable with the concept of telehealth, reporting that their telehealth experience was comparable to that of an in-person visit.
Healthcare startups have merged their digital and physical patient experiences, offering new efficiencies and the opportunity for patients and providers to go longer between visits while maintaining continuity of care. As integrated health systems have pursued a single health record across their specialty organizations, telehealth encounters can and should be recorded and accessed in the same location. The digital care experience can and should go beyond telehealth consultation, incorporating improved communications with patients, a central digital location where patients can access their own medical records and seek care in other specialties. Remote monitoring and digital capabilities enable providers to use patient-reported data to support patient care across their patient panels, identifying trends and best practices.
Adopt retail fundamentals
Many consumer-focused healthcare startups use retail to serve their patients and consumers, offering both a digital and physical retail experience in many cases. Warby Parker started as a retail eyeglasses company, but now offers optometry consultations at their in-store locations. Healthcare organizations have the advantage of already providing healthcare services and can take on the relatively easier task of adding retail to the business model.
Providers could also experiment with retail partnerships that offer products or services that complement retailers’ or brands’ existing business models. For example, Walgreens has partnered with Illinois-based provider group Advocate Aurora to manage their onsite clinics. As primary or urgent care is increasingly delivered in non-traditional settings like retail pharmacies and grocery stores, providers can offer their expertise as partners to these organizations, both increasing patients’ access to care and expanding their footprints.
Furthermore, many large provider organizations have external-focused venture or innovation groups that can be engaged to establish partnerships with startup companies. These partnerships can take different forms, from investments or collaborative go-to-market strategies, and potentially including acquisitions. These partnerships can offer financial returns and strategic learning opportunities for large legacy providers, allowing them to enhance their operating model or experiments with new strategies. Adding new revenue streams may be particularly compelling given the external pressure from disruptive organizations that is challenging providers’ standard operating model.
Rather than trying to become a big retailer, healthcare providers can look to consumer-focused healthcare companies for important learnings on how the industry is changing. Adopting tactics of digital experience and retail fundamentals alongside a mindset shift to treating patients from a whole-person perspective can drive growth, even where a competitive threat is approaching.
Jenna Phillips is a healthcare expert at PA Consulting.
Robotics in care: how robotic technology can transform global social care delivery