Digital healthcare has been a rising space in the last few years, but while the structural and cultural change in the healthtech industry is moving toward B2C, where companies sell directly to the consumer, we're still in a B2B2C world, where an insurance company, or an employer, still stands in between.
This topic was brought up multiple times during Vator's Splash Health event on Tuesday.
It came up in a panel called Telemedicine and Patient-Engagement, Moderated by Roman Arzhintar (Managing Director, Vator Investment Club) with panelists Chris Hogg (COO, Propeller Health), Rick Altinger (CEO, Glooko), Lina Nilsson, (Vice President of Strategy and Operations, Enlitic) and Julie Papanek (Healthcare Investor, Canaan Partners)
"For the companies that ask the patients to adopt a service, or the app, directly, how do you get patients to do that given the very low engagement rates you see recorded in the industry? And if you're going direct to the employer, whats the pitch to the employer?" Arzhintar asked.
While Hogg said that going direct to consumer "is probably one of the biggest opportunities out there right now, in terms of digital health," actually getting patients to enroll is very difficult.
"The traditional players in the industry aren't super good at direct to consumer marketing and branding so we focus a lot on being very consumer focused, very user focused, in our branding, then developing direct to consumer marketing efforts to be able to go out and acquire them," he said.
"So we can take a list from an employer, or a payer, or a health plan, and do that work on our own to make it very frictionless for them. We have to rely on the customer to help us enroll, it really adds a lot of friction, so getting good at that adds a tremendous value."
For Glooko, there are two dynamics at play for getting consumers to sign up, Altinger said, the first being incentives for good behavior, from either an employer or from payers.
"We're involved with a program right now where, the average co-payment for employees with diabetes at this employer is $550. And the employer is saying, 'If you participate in this diabetes measurement program I will waive your pharmacy co-pays.' So the pharmacy spend is obviously going up, but they have proof that, if you comply with the program, the overall spent, the number of emergency room visits, the number of complications goes down, and so there's a clear return on investment. So a little bit of incentive goes a long way."
The other important thing is the trusted relationship that exists between a patient and a doctor. Learning about a new technology from a doctor means the patient will be more likely to adopt it.
"Knowing that they are monitoring you, is key, we found, to getting people to engage and and to drive the behavior change that, ultimately, is going to result in better outcomes," said Altinger, who noted that Glooko actually got rid of its B2C service two years ago, before bringing it back after outcry from its customers.
"I really don't encourage, here in the U.S., anyone to try to build a big business direct to consumer in the chronic disease management arena," he said.
"The road is paved with dead digital health companies trying to get people to pay for things, they're used to other people paying for," said Hogg.
Perhaps the real problem lies in the American healthcare system, though. When Arzhintar asked if anyone on stage had seen pitches or portfolio companies where the patient was able to drive doctor adoption, rather than the other way around, the consensus was no, at least not in this country.
"I don't necessarily think that patients are going draw in enterprise solutions in the same way that you see with Dropbox and Box with employers and I think it's a pretty different hierarchical relationship and really different, asymmetrical sets of information. So I haven't seen that as much," said Papanek.
"For Elitic, with our direct to consumer product, we still have patients contacting hospitals in Australia, one of our first markets, I think in part because the radiology products are products often used with patients who suspect they might have cancer or a serious illness and this is the first entry point into treatment. There's a lot of pressure and anxiety around treatment options," Nilsson said.
"In other countries, we've had some patients, small numbers, literally measured on my fingers and toes, in India that would get our product, pay direct to consumer, and we've had some physicians contact us and say, 'Yeah, a patient brought this in, we think it's really cool.' So in other countries, like India, there's a clear direct to consumer opportunity," said Altinger.
The topic of direct to consumer healthcare came up again during a fireside chat between Cory Johnson (Anchor, Bloomberg West TV) and Lynne Chou (Partner, Kleiner Perkins).
"This notion of you're an entrepreneur of a company, you've invented a solution to a problem so that a consumer can get the benefit of it. But you have this notion that it's not B2C, its B2B2C, and if you're the first B, you need to be thinking about the second, even bigger, B," Johnson said to Chou.
"I like to say that it's like shopping on Amazon, and we've seen that it's not that today. It is a very opaque system, where who's paying, who's receiving the services, and who's getting the services, are all different ecosystem partners. So when you see that reality, that reality will change over time, but today we're really in a business to business to consumer business model," said Chou.
"So we frequently see entrepreneurs who come in, wanting to do a B2C approach, and then a year later, understanding that, to really get true volume of patients and consumers and providers on the system, you really have to go to a more B2B2C approach."
There will be more B2C companies in the future, "as we roll forward with more high deductible plans," she said, "but we're not there yet."
"In that type of framework, it's really important for those entrepreneurs, who are out there creating digital health business models, to think about your business model much earlier than you thought before. And think about who's paying for healthcare, which is the government, employers. We have a lot of portfolio companies that look to employers as payers. Really think through that model of who's getting the value and who's going to paying for it. There will always be iterations through your companies, but I think starting from that base is always important. I think gone are days of, 'This is great technology.' It really has to be an end-to-end business model that works in healthcare. I think that's a really important framework from which to start. As we move healthcare, and the structure of healthcare changes, we will become a more B2C model over time."
Are people ready to be the CEOs of their healthcare?
Part of the reason that it's so hard to do direct to consumer healthcare is that people really are not ready to be the CEOs of their healhcare, according to a survey commissioned by Accolade, an on-demand healthcare concierge.
In all, 1,536 American adults with health insurance were polled, and nearly one third, 32 percent, said that they are uncomfortable with their personal knowledge and skills navigating their medical benefits and the healthcare system.
More than half of people said they were concerned about having to coordinate all the different aspects of benefits and healthcare, as well as selecting and understanding benefits.
But 80 percent said it would be valuable to have "a single trusted person/resource to help with all of their healthcare needs – such as selecting and using benefits, understanding treatment options, finding providers and coordinating care."
Interestingly, only 24 percent said that wellness tools and condition management programs would help, while 47 percent wanted that single person to help them.