Series: “The rise of healthcare platforms”
This is an excerpt of the publication “The rise of healthcare platforms”, focusing with the title above, focusing on the topic in question.
Peter Choueiri, Morris Hosseini , Thilo Kaltenbach, Ulrich Kleipass, Karsten Neumann and Oliver Rong
September, 2020
Our recommendations
HEALTHCARE PLAYERS MUST PREPARE FOR THE NEXT NORMAL
As platformization begins to transform the healthcare sector, players of all types, be they health insurance companies or hospitals, pharmaceutical concerns or medtech startups, must carefully consider their response.
The next normal, when we have learned to control Covid-19, will see the dramatic restructuring of the economic and social order in which business and society have traditionally operated.
How can healthcare players prepare for this radical transformation?
Here is what we recommend.
- FINE-TUNE YOUR TREND RADAR
- SELECT YOUR PLAYGROUND
- CHOOSE YOUR ROLE
- FIND YOUR ENTRY POINT
- STRENGTHEN YOUR COLLABORATIVE IQ
#1 FINE-TUNE YOUR TREND RADAR
Players must sharpen their ability to spot key trends, such as those developments that will hit the industry next or have the biggest impact on their own business model. To do this they should fine-tune their “trend radar”.
We identify two major trends in the healthcare landscape at present.
First is the tendency towards the integration of online and offline worlds.
Companies will need to ensure a smooth journey for healthcare consumers across the digital and physical realms.
This was reflected in the survey, where almost all respondents predicted growth of platforms combining virtual and real-world services, as discussed above.
Second, players may initially become strong in one sector and later expand into upstream or downstream stages of the value chain.
- For example, a telemedicine provider may start out offering video consultation technology and then progress to employing physicians to provide direct diagnostic services, ultimately developing into a “digital hospital”.
- Likewise, an AI based diagnostics platform may enter into cooperation with a telemedicine provider and an online pharmacy and start prescribing drugs.
Given the variety of trends in existence, each potentially pulling the industry in a different direction, players would be well advised to employ a scenario-based strategic planning approach.
This involves developing multiple scenarios and strategic options.
It stimulates companies to take a step back from their familiar environment and more traditional ways of thinking, and to reflect creatively.
In so doing it helps them reconceptualize their vision of the future, identifying new opportunities, counteracting volatility and ensuring that they are receptive to any upcoming changes.
Amazon, as one specific example, has already fully embraced this principle.
By partnering with the IT company Cerner, Amazon has gained access to health data from 200 million patients.
Similarly, in the United Kingdom it receives data from the National Health Service.
This way Amazon will be able to develop its AI-driven Alexa into a voice-controlled health advisor bringing its advice to individuals and families at home.
It could also act as a decision-support tool for doctors and, thus, establish itself at the point of care.
#2 SELECT YOUR PLAYGROUND
Having pinpointed the key trends shaping the healthcare industry and identified which scenarios may play out in the future, players need to define an appropriate strategy for their own business.
The healthcare sector is a highly complex and fragmented industry with many different stakeholders, markets, and different niches within markets.
It varies widely from country to country and branch to branch. Companies may need to reinvent themselves entirely in line with their new strategy.
If they decide to create their own platform, they will need to decide how it can integrate different solutions and connect many different users.
If they decide not to develop a platform themselves, they will need to define their place in the platform ecosystem, potentially forming partnerships with other players.
#3 CHOOSE YOUR ROLE
A shift in strategy such as that described above may mean a player moving beyond its traditional core business. That can bring new challenges.
The company must now assume a role that differs from its traditional image, in other words, how it is perceived by the general public and other industry players.
For example, a firm that is perceived by the market purely as a payor will be fighting an uphill battle if it tries to position itself as a high-quality healthcare provider.
Our survey confirmed this, revealing significant differences between the way stakeholders see themselves and how they are seen by others.
Players who wish to shift their role within the healthcare industry need to ask themselves how they can influence how they are perceived by the market.
They must review their own positioning from a variety of perspectives and on this basis develop a fitting strategy.
One possible solution is to foster new partnerships or broaden their key competencies by means of mergers and acquisitions.
If they choose this strategy, they must make it a priority to remain credible in the eyes of the public and their potential customers.
One example of a company that has successfully influenced the way it is perceived by the market is AXA in its operations in Mexico.
By teaming up with a hospital group to build a new hospital, AXA acquired credibility as a provider as well as as a payor.
#4 FIND YOUR ENTRY POINT
Finding the right entry point, or combination of entry points, is essential.
Companies need to devise a strategy that offers solutions for both the sick and the healthy, attracting customers and quickly achieving critical mass.
Human beings pass through different life stages in which they need to access health services: parenthood, employment, aging, acute or chronic illness.
To gain access to working individuals, some large tech companies have established prevention centers in offices.
Similarly, through its purchase of Fitbit, Google can access the user data of people wanting to improve their fitness levels.
A strategy that addresses both sick and healthy individuals must form part of a more general population health strategy.
By collecting data on healthy people, players can help them to stay healthy and at the same time potentially act with them to change their lifestyles, avoiding chronic diseases (or at least delaying their onset).
With the right data, companies can divide up the population and identify which segments may change their fitness habits due to their higher risk of developing chronic conditions.
On this basis they can define the right strategy.
Healthcare players can theoretically enter the game at any point in individuals’ evolution from healthy to sick, and back to healthy — or, in the case of non-communicable diseases, at any point in the journey to proper management of the disease.
But identifying precisely the right point at which to enter is today more challenging than ever.
Digitalization has empowered patients, giving them access to massive amounts of information about treatments and therapies.
Patients are becoming better educated as a result, and the traditional asymmetry between patients and physicians is disappearing.
Healthcare players must bear in mind this new balance of power when seeking to engage with their customers.
Whatever your current role, be it insurer, hospital, pharmaceutical company or medtech startup, it is time to define your platform strategy. As yet, no clear winner is visible. There is everything to play for.
#5 STRENGTHEN YOUR COLLABORATIVE IQ
You do not need to do everything yourself.
Players need to expand their networks and form alliances with partners operating in adjacent parts of the healthcare value chain, that is to say, areas just upstream or downstream from themselves.
Given the fragmentation of the market, access to a strong network of different platforms will be a key success factor in the period to 2025.
Players need to rethink their own business or platform model and build innovative business models that incorporate other parts of their network.
Strong relationships with partners are essential for an efficient healthcare ecosystem or “network of networks”.
To successfully develop their networks, companies need to improve the skills required to fill partnerships with life. In other words, they must strengthen their “collaborative IQ”.
In the past, companies built partnerships with the aim of maximizing the benefits for themselves; today, they need to establish a system of cooperation in which all partners are winners.
This calls for a cultural change — a fundamentally different way of thinking.
Conclusion
Healthcare platforms are set to become part of the next normal, acting as both gatekeeper and driver of future health markets.
The option for players of creating or joining a platform will change the healthcare market beyond recognition, lowering entry barriers for tech companies and startups, empowering providers and consumers, and redefining roles for insurers.
Sectors that are currently distinct — payors, inpatient and outpatient care, services for healthy people and the chronically ill, appointments, consultations, diagnosis and drug prescription — will become increasingly integrated.
In the drive to ensure a seamless customer journey, it is likely that different platforms will cooperate more and more closely with each other.
This may lead to the development of “platforms of platforms” or “platform networks”.
Within this complex landscape, players that succeed in owning the customer interface will be at an enormous competitive advantage.
The message for healthcare players?
Whatever your current role, be it insurer, hospital, pharmaceutical company or medtech startup, it is time to define your platform strategy. As yet, no clear winner is visible. There is everything to play for.
As yet, no clear winner is visible. There is everything to play for.
