Healthcare providers seem to have natural moats against digital disruption. After all, how does a person download care? As it turns out, by smartphone, tablet, PC or wearable. A clinician may be accessing the care under supervision of a central monitoring hub, or a consumer may be consulting a physician over the internet. Either scenario disrupts traditional models of care — and healthcare provider value propositions.
We’ve been predicting the industry’s shift toward a radically transformed consumer-to-business (C2B) on-demand healthcare platform model. These platforms will offer consumers a wide range of healthcare services from a variety of service providers. Instead of health plans or providers directing their care, consumers will use C2B platforms to create their own “customized to me” systems of care. They’ll select services based on quality, cost and convenience, guided by artificial intelligence (AI) and machine-learning agents.
Healthcare providers will not be shielded from this disruption. In fact, some have been taking incremental steps toward adapting to new delivery models. Now is the time to accelerate those efforts. Based on our research and work with leading providers, we see the following five business models as natural outgrowths of industry trends.
Many healthcare systems are investing in software, technology and solutions. But current platforms are complex and tightly integrated vs. driven by application programming interfaces (API) for plug-and-play openness. Providers could leverage these investments and adopt APIs to take the lead on the C2B platform trend. Providers have the deep clinical expertise necessary to vet healthcare services to aggregate on an open consumer-facing platform. Potential technology partners such as Apple, Google, Amazon and Microsoft would offer complementary speed, innovation and price transparency.
Telehealth, telepresence and virtual care attracted more than $700 million in venture capital in the first quarter of 2019 alone. The investment recipients range from consumer-oriented services to large institutions that offer clinical expertise to smaller providers. Anytime, anywhere care is the natural expansion of telemedicine, combined with the globalization of healthcare resources and the advent of AI agents. In this model, healthcare is unattached to any address as providers guide consumers to more convenient and cheaper care options with on-demand access, tailored services and concierge models.
Healthcare delivery is one of the few areas of the U.S. economy that is not dominated by a handful of national brands. The sector is still relatively fragmented, comprised mainly of regional or community players. That is changing as digital technologies and ubiquitous data are removing the “moats” that have protected smaller local players. We see the emergence of McHealth models: nationally branded, geographically ubiquitous, one-stop, high-quality and predictable primary care delivered at excellent value. To succeed with this model, providers must develop highly standardized, efficient care delivery models to achieve economies of scale that drive down costs. They must also ensure the standardization delivers high-quality care across locations.
With the expansion of retail clinics and telemedicine services that redirect patients to lower-cost care options, some health systems are responding by offering their expertise to smaller or less well-equipped provider systems. These include Mercy Virtual’s remote monitoring and in-home services to 43 hospitals and patients across five states, and UPMC’s array of clinical telehealth services offered to other providers, such as ICU monitoring and stroke patient assessment.
This tactic can be expanded into a “hospital as a service” business model, especially as 5G and other broadband networks expand connectivity, network speed and capacity. A provider-run central hub could offer services to facilities and individuals on a subscription or consumption-based model. That would expand the reach, affordability and accessibility of care in underserved locations. It would also enable healthcare systems to get more return on their current investments in applications, facilities and expertise.
Many academic medical centers and very large health systems conduct research, develop medical technology and train clinicians in addition to delivering care. Their expenses tend to be high because often they also are de facto community health systems that care for very sick and low-income patients. Site-neutral, value-based payment models could put further financial pressure on these systems.
These centers can redouble their strengths to become clinical powerhouses. Systems renowned for trauma, cardio, cancer, chronic disease and other specialized care may create national or international brands based on best-in-class care delivery. Then they can export care to other parts of the country or world via telemedicine and virtualization tools. By creating patient care regimens based on outcomes research, these institutions can streamline their care models and reduce costs even as they grow patient bases beyond their immediate geographies.
Few providers will focus exclusively on a single business model. More often they will create a hybrid business model, such as being a clinical powerhouse delivering hospital-as-a-service, that will help them diversify revenue streams, capture synergies from their existing expertise, gain scale and reach a variety of healthcare consumers.
Ensuring patient care is not disrupted will be the major challenge as providers transition to on-demand care. As shown in Figure 1, we’ve identified a range of “no regrets” investments healthcare systems can make to evolve toward new business models while gaining new abilities to meet immediate clinical and business priorities.
The three key areas for no-regrets investment are optimizing infrastructure, streamlining administrative and clerical processes, and developing new ways to interact with healthcare consumers. Legacy systems don’t easily support modern technology that drives new business and operating models. Modernizing systems enables new synergies between IT and business processes to improve workflows — and makes it easier and more cost-effective to introduce new technology and models for interacting with healthcare consumers.
In addition, providers must begin to invest in and experiment with the “second stack” of technologies that build on social, mobile, analytics and cloud (SMAC). SMAC capabilities are baseline technologies for competing in today’s economy. New technologies that complement these capabilities, and that will help power new provider business models, include:
The platform economy has trained consumers to expect low costs, high quality and the ability to do business whenever and with whomever they choose. Healthcare systems that recognize this shift and how it erodes their traditional value propositions can accelerate their response. They can create new models of care built on their existing expertise, amplified with digital capabilities, that can ensure their health and vitality in the new C2B on-demand healthcare economy.