How to Launch Digital Health Services Within a Hospital Network
For the last decade, hospital networks have tried, and failed, to launch digital health delivery services, such as video visits with doctors. None have gotten traction. In fact, they’ve failed miserably. Let’s analyze why and then propose a strategy that will actually work.
Why the failure?
It’s considered tech, not a consumer experience
The predominant offering has been video visits. A hospital network will sign a multi-million dollar deal (think ~$10M) with a video visit-based “technology solution” company. The sales process began ~3 years prior and conversations between a video visit company and a hospital network have gone through many phases. Hospitals don’t move fast and it’s hard to maintain passion/momentum over the course of 3 years. Hospital employees change positions and folks in new hospital roles often inherit these conversations and relationships. Finally, after 3 years, the contract is signed. The contracts are typically signed by the CTO of the hospital network. They think they’re buying technology, when in fact, they’re buying a customer experience. It’s as if Starbucks is purchasing the espresso maker thinking all they have to do is buy an espresso maker and a Starbucks will magically appear. The espresso maker is one critical part, but holy hell it’s just one of many components of a delightful consumer experience that a patient will trust, use, and love. Unfortunately, hospitals typically don’t have a Department of Design and Consumer Experience. When it’s considered tech, an engineer’s mind is determining the specs, not a design, marketing, and consumer experience team all acting in the best interest of the consumer user. Because it’s the CTO leading the implementation, the tech must meet a certain set of criteria, like integration with the hospital system’s electronic medical record. It’s thought of as an add-on to the current tech they use to power the hospital system. The video visit companies are happy about this, because this means they can charge millions to customize an integration, even when many hospitals are powered by Epic and a few others. Except Epic has customized the platform for their clients. This is the justification for the $10M contracts.
Patients aren’t interested in the service and are turned off by the tech
Healthcare is always two decades behind other consumer industries. If people wanted to chat with strangers via video to solve problems, Apple would have implemented this years ago when you’re talking online with an Apple Genius trying to fix your MacBook. Video visits are a top-down healthcare invention trying to force a tech solution into the confines of the ultra-conservative state medical boards and traditional health insurance billing codes. A 10 minute video visit isn’t a far stretch from a 10 minute office visit. Except nobody asked the patient if that's what they wanted. As proof of this, TelaDoc delivered roughly 200,000 visits last quarter with 17.1 million members, a quarterly usage of ~1.1%. When given the option, TelaDoc appeals to ~1% of people. The vast majority of people don’t want to video or phone chat with a stranger. TelaDoc is the largest of the video visit companies, and via extrapolation, they’ll deliver 800,000 video/phone visits per year. In America, there are ~1.1 billion doctor visits per year so they do 0.07% of all doctor visits in America. It’s not nothing, but after 12 years of operating, they do 0.07% of all visits in America. If I’m a hospital system, I’d look at this and think, after 12 years of implementation, I can expect 0.07% of all my hospital’s visits to be done via phone or video. Is this something I’d like to invest $10M in?
Doctors aren’t interested in the service and staffing is expensive
In terms of complexity and capability, video visits with random doctors and random people lie just above nurse triage lines. Short video or phone calls without the ability to follow up or order tests are limited to simple things like pink eye and sniffles. This is mind-numbing to doctors. They didn’t go to medical school to be a nurse. So it’s hard for hospital systems to get doctors who want to act like nurse triage lines. So hospital systems often ask ER doctors working in their ERs or urgent care centers to be “on call” for a video or phone visit request from a patient. When a call comes in, the doctor has to interrupt their in-person patients and find the dedicated video visit room to take the call. The video visit room was built by the hospital to be quiet, decorated nicely, and well lit. When a service requires a real-time conversation, it’s by nature interrupting. And when a service is poorly utilized, it’s expensive to hire and devote expensive doctor time to it, especially when the service is a price-disrupting service that’s designed to undercut the cost of the ER or urgent care center visit — the same ER or urgent care center the doctor is taking the call from. A hospital has very little tolerance to pay a doctor a full-time salary to take a call or two a day at $49 a call.
The Health IT Industry only offers tech, not a service
If you go to the big health IT conference called HIMSS with ~60,000 attendees and football fields after football fields of vendor booths all selling some sort of customizable software to health systems, you’ll quickly see that they’re framing the problem as a tech problem, not a consumer experience problem. In fact, Obamacare in many ways created this dilemma by injecting $40B into the industry to transition it from paper to digital.
What’s the ROI?
After investing $10M in a tech solution, launching it, and then evaluating the number of video visits from the first 12 months, it’s absurdly hard to ask hospital leadership to continue to support or throw any extra money at the service. First year usage is literally in the ballpark of a few hundred patients. After investing ten million dollars. So let’s say 500 people spent $49 a visit and the hospital system took in $25k in revenue. This is real life and this is what happens. Remember, video visits only appeal to ~1% of people and represent 0.07% of doctor visits.
So what’s the solution?
Acknowledge this is a financial & political problem
When any sort of new thing is rolled out by a hospital system that impacts the primary care department (think urgent care centers), the primary care department feels threatened. They inevitably say:
So I get paid a lot for UTIs and pink eye, almost as much as a complicated diabetic. I can whip through a ton of UTIs a day and make good money. I lose money on the complicated patients. If you’re trying to siphon off the less complicated issues, I’m going to lose money.
They’re not only afraid of losing money, they’re afraid of being “specialists for only complicated primary care patients.” That’s a ridiculously tough life and they still get a ton of professional satisfaction from treating a healthy patient who’s sick and quickly returning them back to health. Treating hard, chronic issues is a grind with very few happy outcomes.
The reality is there are things that are ripe for disruption if, and only if, the hospital system believes that patients come first. If traditional primary care won’t reinvent itself and make itself markedly more convenient and patient-centric, well, traditional primary care is setting itself up to lose. And online scheduling isn’t an innovation. OpenTable has been doing this for almost 20 years. As the world changes, we all must change. It’s a reality. If primary care wants to lead the charge, innovate, and then primary care leadership gets to define the future they believe is best.
Deliver a service that people actually want
Normal people don’t use video to talk with strangers. In fact, they don’t even use real-time conversations. Normal tech adopters don’t like to pick up the phone and especially don’t like to pick up the occasional butt-dialed FaceTime request. They send messages and don’t expect a real-time response. This is Facebook, iMessage, WhatsApp, WeChat, Instagram, Snapchat, and literally every single communication platform out there…except healthcare. Forcing people to engage in a behavior they’ve loudly refused to do is a losing battle. There’s a very good reason why ChatRoulette is dead and WhatsApp won.
Reframe the problem as a consumer experience, not a tech problem
Like I stated earlier, buying an espresso machine doesn’t make a Starbucks. Instead of spending $10M on a contract for technology, spend that money on marketing that changes consumer behavior. The behavior you want is “get care online, before you get care in person.” Luckily, other industries have led the way for us. Pick up your smartphone and request an Uber or order food for delivery on Seamless. The behavior you want your local customers to engage in is pick up their smartphone, get care. It’s that simple. But this is going to take a local, super savvy marketing campaign.
Have a new conversation with customers
I think of most hospital systems as a complicated, unfriendly hassle with bad smells and memories of grandma’s last days. It’s the same way I think of Microsoft Office. But XBox is cool. It’s still Microsoft, but it’s a cool, fun brand that gets me and offers me an experience that I respect and want. So many hospital systems have launched services like “Video Visits from the Hospital where Grandma died.” It’s innately uncool from a place with a very poor track record for making me happy. Keep in mind, you’re trying to reach the early adopters who want cool, hip, new, and better. Think of this as an opportunity to create a new brand, a new promise, and connect with the younger generation that’s going to soon be the main source of your future revenue. Creating a hip new brand definitely won’t come from the IT department. Spend that money on marketing, not IT. Because honestly, you probably underestimate what early adopters think of your hospital system’s brand.
Outsource, outsource, outsource
Launching a digital health service has a big chicken and egg problem. You’ve got to staff the service with expensive doctors but the service has no patients at launch and, because of the trust and word-of-mouth nature of health services, they must grow slowly and organically over time. But when you bought the technology, that’s what you’ve got to do. That’s why you shouldn’t buy the technology. You should outsource the service to doctors who do this every day, all day for the past 5 years for thousands of patients. You could purchase years and years of doctor staffing for the $10M that was wasted on buying your own tech and integrating it into your own platform. And instead of wasting all that money on tech, invest a good chunk of it on an ongoing hip advertising campaign that changes patient behavior (remember the XBox of healthcare: “Simply go online first, get care.”). Concurrently, form partnerships with the service so the patients are referred into your hospital system when in-person care is necessary.
