On March 18th 1970, over 200,000 United States Postal Service (USPS) workers from across the country walked off the job. At the time, this wildcat strike was the largest in American history. Relevant to healthcare at the time: nearly all medical claims in the nation were delivered by post.
Now, 54 years later, the recent cyberattack on Change Healthcare is wreaking similar havoc on the economic infrastructure of the healthcare system.
1970 witnessed a U.S. postal strike, which disrupted medical claims. In 2024, a cyber attack on ... [+]
Postal systems like the USPS, and claims clearinghouses like Change Healthcare, are examples of national networks, underpinned by the same fundamental business model as modern platform giants, from Amazon to Uber to Airbnb: they reduce systemic transaction costs by providing a one-to-many connection, and grow in value as the network of users grows.
And while, as recent history shows, these networked modes are not immune to disruption, they have been imperative to the ongoing modernization of our healthcare system - and society as a whole. The foregoing alternative: point-to-point claim submission via carrier pigeon.
If anything, the cataclysm that has ensued with the shutdown of Change Healthcare is a testament to just how powerful and transformative networked business models can and should be for healthcare. And, of course, how secure technology can play a role in helping to scale networked solutions.
On The Eve Of A Platform Revolution?
As a highly regulated, services-heavy, data-fragmented industry with highly entrenched incumbents and antiquated technology, it’s perhaps not overly surprising that the platform revolution has been slower to take root in healthcare.
However, if healthcare is typically twenty years behind other industries in technology adoption, we might expect to begin seeing the wave of platform innovation that began in B2C around twenty years ago. Twenty years ago Google went public and Facebook was founded. A few years later, Airbnb and Uber were founded.
There are many reasons to believe we’re on a similar precipice in healthcare now. Over 90% of doctors have electronic medical records. Similarly, nine-in-ten consumers have a smartphone. And the federal government is requiring providers and their IT systems to “open up” access to share health records with consumers and their apps. The environment is digitally primed for platforms.
The challenge is no longer building software or apps for individuals. The opportunity now lies in connecting those individuals, and their systems, to facilitate new or more efficient interactions. The delivery of care is incredibly dependent on coordination, communication and collaboration amongst stakeholders. Medical claims, prescriptions, prior authorizations, referrals, care visits, medical data sharing, and so on. These transactions are the blood vessels coursing through in the veins and arteries of the health system, keeping it alive.
A Match Made For Healthcare
While platform businesses have made a more gradual entry into healthcare, it is perhaps the industry with the greatest need, fit and potential for platform technologies. Healthcare is plagued by siloed information, unaligned stakeholders, and distrust—all problems that networked platforms are uniquely positioned to solve.
Carl Byers is Partner at F Prime
“Healthcare is naturally suited for network effects and platforms,” said Carl Byers, Partner at F-Prime Capital, in a discussion about platforms in healthcare. “There are just so many disconnected constituents. And so much disconnected data.”
Christina Lemke is Cofounder and CEO of Evidation Health
One company seeking to connect formerly siloed individuals in healthcare is Evidation Health. Speaking with Evidation’s co-founder and CEO Christine Lemke, she said, “traditional approaches to health research and data collection are often slow, expensive, and inadequate in representing diverse populations. Our platform connects two critical stakeholders: individuals and researchers.” By directly connecting these groups without the need for traditional intermediaries, Evidation is enhancing the efficiency and equity of clinical research.
Marta-Gaia Zanchi is Founder and Managing Partner at Nina Capital
There are few industries where trust is so paramount, and yet distrust is so rampant between stakeholders. This creates opportunities for businesses that can figure out a way to create mechanisms to address trust between constituents, and to do so at scale. “There is a long history of mistrust in healthcare between stakeholders,” said Marta Gaia Zanchi, Founder and Managing Partner of Nina Capital. “Between payers and providers, patients and payers, patients and pharmaceutical companies, even patients and providers. As platforms bring these different stakeholders together, building trust is key for a platform’s success - and for better patient care.”
Teresa Lee is Managing Director, Growth Equity at OMERS
This distrust in healthcare often stems from misaligned motivations of stakeholders. “In healthcare, there are often conflicting and unintended incentives between constituents,” said Teresa Lee, Managing Partner at OMERS Growth Equity. “But if there is engagement with momentum by various parties in a [platform] offering…that can be very compelling.”
Doug Hirsch is Cofounder and Chief Mission Officer at GoodRx
Take for example, one of the pioneer platforms in healthcare: GoodRx. By bringing together pharmacies and PBMs, who typically have competing priorities and needs, GoodRx has been able to create a network that has saved patients over $65 billion in prescription costs, while driving business for pharmacies and PBMs. “We want to be Switzerland. We need to be neutral,” said Doug Hirsch, co-founder and Chief Mission Officer at GoodRx. “Ultimately, we need peace; this creates the greatest benefits for all parties on the network.
The Future Is Looking Bright
While many platform companies are just getting started in healthcare, there is early evidence to support the tremendous potential of platforms in healthcare. A little over twenty years ago, Surescripts was founded to reduce inefficiencies in the prescription process by connecting doctors and pharmacies and allowing them to transact in real time. Today over 90% of prescriptions now are routed electronically between doctors and pharmacies via its national e-prescribing platform. A little under 15 years ago, Doximity was launched. Today over 80% of doctors in the US connect through its professional network platform. And according to a 2023 Deloitte report, eight of the top ten later-stage digital health companies are platform businesses. Further, many of the most valuable digital health companies in the public market are platforms, including Doximity, Progyny, Aligon Health, Accolade and GoodRx. Platforms are gaining momentum in healthcare. There’s no ignoring it.
What is likely to separate the winners from the losers over the next twenty years in healthcare are four things. First, the speed with and extent to which organizations embrace platform thinking.Second, their effectiveness in developing and executing platform business strategy, which requires a markedly different paradigm from most healthcare organizations’ historical pipeline thinking. Third, the extent to which they can leverage modern technology to solve constituent needs at scale on a use case by use case basis. And fourth and perhaps most important, the degree to which companies build trust with all parties from the beginning: by aligning stakeholder interests where they can, establishing clear rules of the road for how to handle divergent or conflicting interests, and baking in security and privacy in a way that gives confidence to all.
The Change Healthcare crisis has made it plain: networked businesses are vital to the operation of our healthcare system, but modern technology and larger scale platform innovation and adoption is required to usher in the next epoch of healthcare.
We had the paper age, then the digital age, and now we are entering the platform age.
