Debate — Forward: “A new kind of health membership”
Kevin and I (Joe) debate healthcare topics, a lot. We generally do it via Twitter, but that doesn’t give us much room to truly and utterly destroy the other’s point of view. Ok, not really. We enjoy spirited debates, and we can both generally take either side of an argument. Given that, we decided to start a blog where we can capture some of these debates.
The format of our blog will be:
- Every few weeks we will pick a new healthcare start-up to discuss
- We’ll debate whether or not we believe that start-up will be successful (would we invest in that start-up)
- We’re forcing ourselves to keep our argument to 600 words or less (or close to it)
- The side of the debate (for or against) is assigned arbitrarily — we’ll force one person to play the devil’s advocate, even if we both agree or disagree that the company will be successful
We’ll be testing this out and hopefully making it better as we go. Without further ado, here is our first debate.
Why we chose this company: The company was founded by an ex-Googler and has reportedly pulled in $30M in funding. Kevin and I both have experience with direct primary care models, therefore it seemed like a logical place to start.
Yes — I would invest in Forward (Joe)
“Imagine a doctor’s office that feels more like an Apple Store”
While this perspective is kind of a cliché, which I feel like I’ve heard in some form or another by each concierge healthcare company, I still believe there is a big opportunity to take this perspective and change what people expect from healthcare.
There are a few fundamental items I believe, which make me optimistic that a company like Forward can make a significant impact in the healthcare space. First, primary care, when delivered the right way, can have a significant impact on healthcare quality and costs. See here, here, or here. However, the current Primary Care model is broken. Doctor burnout is real, especially for PCPs– We’re continually asking PCPs to do MORE, with less time and less compensation. PCPs in one study received an average of 77 notifications per day. PCPs spend over an hour per day responding to EHR alerts (which aren’t smart alerts). There’s also a lack of incentives for primary care n- lowest paid physicians, with limited incentives in place to address the amount of time physicians spend (or want to spend) actually building relationships and caring for members long-term.
So, given that I believe strongly in the space and opportunity for impact, I’ll break down why I think Forward can be successful in this space. I ask myself a few questions when looking at a company like Forward: Are they addressing the real heart of the issue? Will they make money selling the product? Will they be profitable?
Specifically for Forward. First, I believe they are addressing many aspects at the core of why current primary care models aren’t working. Given the current market and structural challenges for PCPs noted above, I like how Forward is building their platform from the ground up to address the legacy issues with billing, EMR data, lack of time for providers, analytics, connectivity, etc. There are obviously more items to address (proactive population management, managing complex conditions, building referral networks), but, Forward is starting out focused on the right items, and I believe the focus on the platform will help them get smarter in these areas over time.
Will they make money? My hope/assumption is that Forward is not trying to build 300 primary care practices around the country… To me, that would be a losing strategy. With that in mind, I believe Forward is using their initial practices to test and refine their technology, so that they can scale this across the healthcare market. Work out the kinks with a premium product (Tesla Model S) to figure out how to deliver the core value proposition at scale (Model 3) — Sidebar — Forward’s CEO used this analogy as well. While the EMR and Population Health Management technology markets are extremely competitive, most existing EMR and PHM tools are built with existing market constraints (billing focused, legacy data integration, not patient or provider experience focused). Therefore, if Forward can build out their tech platform and demonstrate significant value, they can be a strong platform as healthcare continues to evolve.
Will they be profitable? I don’t believe concierge healthcare ($149/month, direct primary care) will be profitable. Michael Coren’s Quartz article references Forward’s intention of managing 10,000 patients/practice. Is the intention that every patient is seen at least once for 30 minutes? The number of hours just for first visits would be extremely high: 10,000 patients * 30 minutes for initial visits = 300,000 minutes of initial visits. Divided by 60 minutes / hour and 8 hours a day for operations = 625 office days just for initial visits (with 30 minutes back to back just doing initial visits). Even if you have 3 doctors / practice, that’s 208 office days / doc just for first time visits. Hard to make 10,000 patients/practice work, in my opinion. However, Forward can win and be profitable long-term (or have a positive exit) if Forward becomes the technology platform to enable PCPs to move towards a DPC-like model (regardless of who is paying).
Forward will be successful as their technology becomes smarter and enables PCPs to better manage populations and shift to value-based care models. I don’t believe we’ll have (or need) Forward clinics in every city in the US, but this technology will provide a good foundation for an Oscar + Forward (Insurance + Care) solution that has the potential to be very disruptive.
Well, At Least It’s Not Backward (Don’t Invest, by Kevin)
I am a big fan of innovative primary care models. I think there’s a lot of opportunity to improve the system by emphasizing preventative, lower cost care to prevent downstream issues. It just makes sense. Lots of companies — Iora Health, CareMore, Qliance, Aledade, Sherpaa, Oak Street, and now Cityblock — are doing interesting things in this space for some time now.
So, conceptually, I have no argument with trying to innovate and improve primary care. The more smart people we have working on this problem, the better.
That said, I think Forward’s approach (and general public-facing hubris about what is already out there) has some fundamental flaws. They seem to think they are healthcare’s version of Elon Musk, glossing over the fact that delivering good primary care isn’t a new idea (although it is a good idea). It sounds an awful lot like they’re building a tech heavy version of One Medical, with a long-term vision to have an Oscar-like telehealth app; a next-generation EMR like Iora, Oscar, and others are building; and Higi-style health stations scattered about.
None of that is necessarily bad — but it seems like they are ignoring the lessons they could have already learned from others in the space. Direct primary care is a market that doesn’t exist yet in the consumer world. Raising a lot of money to make a big splash and grow fast creates a real problem when you’re trying to solve a problem consumers don’t know they have (See for example this article on Sherpaa’s VC experience).
Yet, that is exactly what Forward is doing. Raising $30 million from Google creates a strong incentive to grow quickly, along with the associated press tour. The CEO’s hints at expansion to other cities in the near future points to this aspiration too. The problem with this is that Silicon Valley millennials who aren’t sick generally don’t care about access to primary care. Forward is going to need to create the problem and awareness of the solution for potential customers. That is hard to do, particularly when you’re burning through cash.
My best guess on what will happen: Forward will grow slowly for the next 12 months, attracting a few thousand members in San Francisco (same for whatever other cities they’re in). Their cash burn will be enormous while operating under-capacity health centers and building a tech platform.
That cash burn will cause them to look at tangential business models. First they’ll look at lowering the price of the DPC model and create different tiered pricing structures. That still won’t attract interest — it isn’t price that prevents people from signing up for this stuff, it’s that they don’t know they need it. Next, they’ll begin exploring other partnerships. Employers will come to them as a cool new primary care platform. Every large employer wants an on-site clinic for their employees. They’re probably also talking to CVS and other companies with large consumer footprints to offer primary care in their stores (some version of Minuteclinic or Higi stations). They’ll ink some of these partnerships and eventually fizzle out.
The flaw in the approach is that it’s not actually solving a problem for people who need it. It’s providing concierge medicine for a small group of people in Silicon Valley who geek out over their health and will pay for it.
Forward will carve out a niche in concierge medicine as a tech-forward version of One Medical, eventually struggle with the pressure of the amount of capital raised, and sell to a large insurer or provider.