Start-ups are finally hacking healthcare
by Tim Chang
New companies are going around the traditional “front door” of FDA approval, insurers and healthcare institutions by launching ‘Healthcare 2.0’ companies that target consumers and self-insured employers, upending the health sector through the use of innovative digital and social technologies.
At a recent forum we hosted for founders and leading industry execs playing in Healthcare 2.0, we compared notes and debated which startup business models and go-to-market-strategies have the best shot at permanently disrupting the healthcare business.
This next generation of healthcare startup is first and foremost adopting a business to consumer model that can lead to business-to-business monetization. Successful companies are also combining premium services with extreme convenience, engaging social networks and communities, and experimenting with information coming from the proliferation of wearable devices that are beginning to penetrate consumer markets.
B2C Adoption Leads To B2B Monetization
In the self-directed Obamacare era, consumers are willing to take charge of their own wellness by managing their own data & health.
Companies such as Audax Health (engaging health assessments), Brighter (affordable & quality dental care), Castlight Health (small and medium-sized business focused healthcare management services), Jiff (digital health marketplace) and Omada Health (digital therapeutics), have shown that reaching consumers through social and business-to-consumer web-based models can be followed by building links to the business side of the healthcare industry — insurers, payers, hospitals, and claims companies.
The challenge is determining which partners you need and their motivations, because their non-transparent business models and closed-systems can be tricky to understand. But proving organic consumer adoption and engagement first will naturally pull in the interest of enterprises, payers, insurers, and institutions — they’ll see market demand from end users; which mitigates the risk of roll-outs into their own populations.
One short cut might be for healthcare entrepreneurs to target self-insured employers first as a faster-moving and more forward-thinking channel to reach consumers, and to innovate on business models and incentive alignment — trying things like “freemium” SaaS, or engagement-based billing and payment.
Radical Convenience + Premium Experience
In the era of the “outsourced life” where mobile-first, on-demand services offer rides, food delivery, laundry, petcare and more, it may be easy to imagine the dental truck or “Uber of Doctors” coming to you with the press of a button on your smartphone.
Companies like our portfolio investment in the Q&A network, Healthtap, make finding and consulting with health practitioners easier through mobile and web apps. We have seen that users are even willing to pay out of pocket for concierge medical services like GoodRX for prescription drugs, One Medical for doctor visits or Zocdoc for appointment scheduling. These services are convenient, premium in experience and instantly gratifying.
As the healthcare market begins to resemble the e-commerce industry, I’m interested in seeing what the Yelp, TripAdvisor, Kayak, OpenTable, Priceline, Groupon, or RetailMeNot of healthcare services would look like.
People care deeply about their health, but it’s also deeply personal. They won’t always be willing to share details with social networks like Facebook or Twitter, but are keen to connect with others who can relate to their journey and experience. That’s an opportunity for vertical networks to arise — where it’s safe for users to tell their stories, ask for help, and learn from others.
Consumers also seek expert advice, coaching and personalized help through direct relationships with real doctors, therapists, coaches and trainers. Experts care deeply what other experts think about them, and also seek connections with their peers.
We believe that apps, machine learning/AI, and algorithmically curated content are not enough to change behaviors and affect outcomes. Coaches and cohorts are critical to get people to stick with anything — especially in health and wellness.
Companies that are solving the motivation challenge through people-to-people connections, and using technology to scale include: Fitmob (group fitness marketplace), Doximity (aka the LinkedIn for doctors), Health Equity Labs (developer of the first FICO score for health), Retrofit (personalized coaching for weight loss), and ThriveOn ( personalized coaching for mental health).
Whither the Wearables?
Wearables have taken off — first in the fitness space with step trackers and pulse readers, but those are examples of the very beginning of a health-and-fitness wearables revolution that will extend far beyond quantified self geeks and early adopters. We believe that within the next few years, we’ll see wearables expand to track continuous health data — heart rate, blood sugar, blood pressure, stress levels, respiration, brainwaves, posture, and even muscle activity.
These trackers will also evolve from one-way passive reading to two-way reading and “writing,” where these wearables will be able to stimulate neural connections through electricity and ultrasound to write new code for the brain. Picture a device that includes data and expands to appliances and fixtures in the home, adding sensors, getting connected to the cloud, and opening up stores for apps with data-driven value-added services. That’s coming, too.
Further, these devices will interact with other wearable devices used by healthcare professionals and health services providers to provide intelligence around reminders and tips for how to stay healthy.
When this networked transformation happens, the power of the system will far exceed that of isolated wearables operating independently. Over time, this data can also be combined with confidential health record data to provide truly personalized medical updates and a comprehensive view of your health and habits (filling in all the gaps between medical checkups and doctor visits).
As a result, insights over the continuous long view will start to catch systemic changes and pattern shifts long before problems become acute. Companies innovating with this model include Basis and Fitbit health trackers, InteraXon and Halo Neuroscience brainwave sensing and boosting, and the OMsignal line of biometric smartwear.
Disrupting the healthcare industry is as difficult as ever, but entrepreneurs and investors are becoming more bullish given the size of the opportunity and with the recognition of patterns and a playbook that is beginning to work. Startups should simultaneously address both consumer-facing and business-to-business models, but often must begin by building up a strong consumer user base. That means curating a quality network of experts, coaches, and providers; launching on-demand, highly convenient offerings; and employing state of the art social, mobile and eCommerce practices.
This post originally appeared on TechCrunch
Read more from this author, Mayfield Managing Director, Tim Chang.