By Rick Froehlich, Chief Executive Officer at ClearDATA
Modern healthcare is ripe for innovation — especially in the form of platform businesses.
So, what is the platform business model exactly, and what lessons can business leaders learn from already successful healthcare platform businesses? And most importantly, as many healthcare executives are asking themselves, do platform businesses have the power to transform the healthcare system?
What is a platform business model—and what could one look like in healthcare?
First, most healthcare businesses are not platforms. Most are just apps. However, in the platform business model, a central infrastructure facilitates the creation and exchange of value between parties outside the company. In essence, the platform connects buyers and sellers of goods and services so they can transact—without necessarily owning the goods or services being transacted. To be successful, a platform business has to become the hub of attention and traffic, and facilitate smooth, frictionless transactions.
Many of the world’s most valuable companies are platform businesses. Think Uber, Airbnb and Amazon. Uber is the world’s most valuable transportation company but doesn’t own their own vehicles. Airbnb is one of the most valuable lodging companies, but doesn’t own their own properties. And Amazon generates immense value by connecting buyers and sellers on their platform, without necessarily owning inventory for this business unit.
A healthcare platform business could operate with similar infrastructure. They could help patients immediately receive healthcare services on demand, as needed. Many times, this could be through digital devices like smartphones connecting consumers. Or, a business could connect B2B stakeholders of the healthcare industry to improve transactions across the board through increased connectivity—for example, allowing physicians and pharmacists to coordinate the care of patients.
Who’s already doing this well in the healthcare space?
Athenahealth is a good example of a successful healthcare platform business. The healthcare system is made up of a complex network of healthcare providers and care delivery organizations. Athenahealth’s platform provides valuable SaaS solutions across this spectrum of primary and community care providers and helps them deliver care services to consumers via improved interoperability on a singular, common platform. Patients, labs, pharmacies and other healthcare companies can seamlessly share information on Athenahealth’s platform and pool large amounts of healthcare data.
Athenahealth’s aggregated data pool is valuable as well. Healthcare organizations can analyze this data to proactively develop and provide better care pathways for their patients. By connecting each vertical of the healthcare industry on a single platform and facilitating easy transactions, Athenahealth helps improve healthcare outcomes for the entire industry.
What do healthcare companies need to do to become successful platforms?
Many healthcare companies are vying to be platforms. But to truly be a platform and transform the system, they need to achieve three things.
The first is to successfully operate across a regulated domain. Healthcare companies must be able to quickly interpret healthcare regulations and continuously apply changes to their platform so they can always remain compliant and, at the same time, greatly reduce their risk of cyberattack. A healthcare platform business must be agile in responding to new or fluid regulations so their members can safely transact.
The second requirement is to overcome the “cold start problem” to create a valuable network. A network is only valuable once it reaches a critical mass of buyers and sellers transacting. Before that critical mass, there’s not enough value for buyers to seek out sellers and vice versa. Successful healthcare platform businesses of the future must create an ecosystem with enough depth to attract new producers and consumers to fuel growth.
The third requirement is to maximize the customer experience. In a recent study from Roland Berger, healthcare industry leaders say they believe customer experience, not perceived health benefits, will be the number one success factor for platform businesses. Friction at any point in the process will result in lost customers. To become the top-performing platform business, you must make the customer experience as seamless as possible.
Ultimately, healthcare platform businesses have the power to transform the industry. But, to achieve this reality, companies must embrace the vital role of digital health technologies. There is value available for healthcare companies to capture if they can connect multiple parties in the ecosystem to easily do business together. The more transactions a platform facilitates, the more data they gather to improve the platform, and so the flywheel accelerates.