Acquiring new patients: Insights from the last 10 years of building physical and online practices

In 2007, I started my first practice, simply called jayparkinsonmd.com soon after finishing my last residency at Johns Hopkins. It was a website telling the world who I am and what I offered. I didn’t have a physical store front practice. It was entirely virtual and I saw patients via house calls. Here’s how it worked:

  • People would navigate to my site, read up on me
  • They’d click on make an appointment which would bring up my google calendar
  • They’d choose a time, tell me their symptoms and their address
  • I’d get an alert on my iPhone that I had a new patient (the first iPhone was just released two months prior)
  • I’d do a housecall (only people from certain zipcodes in Williamsburg or Greenpoint could schedule a housecall)
  • We’d follow-up on email and they’d pay me $100 via PayPal

In the first month, I got 7 million unique hits on my website due to press in Gawker, Seth Godin’s blog, local and national Fox News, CNN, NY Post, etc.

The vast majority of those visitors were from outside my housecall area. While the press was great for a fluffy news story that a young housecall doctor in Brooklyn was using the internet to power his practice, it wasn’t like my practice was immediately full. Many folks in the neighborhood knew me (“hey that’s that internet doctor”) and I’d get the random “Hey doc!” as I walked down the sidewalk on Bedford Ave in Williamsburg, but that didn’t mean they paid me for my services. They became aware of me, remained aware of me, but their awareness didn’t match up with their need. People in the working age demographic use a doctor’s services ~2.7 times a year. The funnel looked like this:

  • 7 million visitors to my site from all over the world
  • Population of Williamsburg and Greenpoint: 172,000
  • Population of Williamsburg and Greenpoint that saw press about me: Guesstimate is 3%
  • Population in the neighborhood that became aware of me and then would potentially use this new online housecall doctor: Guesstimate is 10% (~5,000)
  • Population that was aware of me, into my service, and needed a doctor in the month (based on the 2.7 times per year) after seeing the media blitz: ~62

So from 7 million to 62 in-need potential patients per month. That seems about right to me. The practice was severely limited in catchment area and capability.

Hello Health

In 2008, I started Hello Health as an evolution of my house call practice. Instead of doing house calls, we built two internet-enabled brick and mortar practices in Williamsburg and the West Village (it’s nice to be flush with VC cash isn’t it?).

Those practices were powered by the EMR we built from scratch:

We weren’t fortunate enough to get the free 7 million uniques media blitz of my first practice but were able to get enough tech, design, and healthcare national press that many people in the tech and healthcare space had heard of us. But we needed patients in Williamsburg and the West Village, so all that national press had a negligible effect on our revenue. To that end, we advertised in the Bedford Ave subway stop and I do have to say it was pretty genius, thanks to the minds at The Barbarian Group:

Within minutes, the ad did its job, engaging the local community:

A week or so after installing this first ad we got a call from the MTA and CBS saying we had to take the ad down because “it encouraged graffiti.” Of course! That was the point! So we called the local news and pitched them on a story about how the MTA and CBS is censoring our ads. We got on the local nightly news and drove about 100,000 new visitors to the Hello Health site based on the press around this “controversy.” We eventually replaced the ad with this one:

Because we had a storefront, because we had subway ads, because we created a controversy, and because we got regular press, some local people knew about us.

We also peppered the neighborhood with smaller postcard-sized ads and offered flu shots as an incentive to learn more about Sherpaa:

The practice grew probably about double the rate of a traditional doctor practice. And this is despite the business model we chose at the time: $35 a month to simply join the Hello Health practice. Then we’d give you a receipt you could submit to your insurance company to get them to reimburse you.

So what does growth look like in this kind of practice?

First of all, investing in subway ads doesn’t mean you’ve gained the trust of potential patients and the investment surely doesn’t pay off in terms of how quickly the practice grows. Another example of this is Pager’s months long subway campaign from 2 or 3 years ago plastered all over the subway system to attempt to drive patients to their app-enabled house call practice. Flush with VC cash, that spend surely didn’t solidify Pager’s ongoing service as they’ve since pivoted away.

Traditionally, and with an online practice, the first day a doctor opens their door, they can expect zero patients. The second day, zero. The third, maybe one. By the end of the month, they’ve seen probably 30 patients. But, fast forward about 18–24 months and the practice is full (25 patients a day per doctor) due to word of mouth and people simply walking by the storefront and becoming aware of the practice. This is the reason why it’s so damn hard to start a practice from scratch. Revenue from the first two years is abysmally slow. It picks up, but those first few years are hard.

Increasing the velocity of a practice’s growth depends on:

  • Offering an exceptional service (convenient location, personality of the doc, doctor credentials, streamlined office operations, takes a lot of insurance, etc.)
  • People trying it and recommending an exceptional service to friends and family (but this means a lot of time from when the recommender needed a service to when they identify someone else needs a service, which is likely over 6 months)
  • Increasing the catchment area of potential patients (opening up more practices but each practice grows at the same velocity)
  • Increasing sickness in the local population (kidding! nobody would ever do that!)
  • Identifying the right neighborhood with the right demographic who would be most into a certain kind of practice (Williamsburg is a classic example of an early adopter neighborhood)

While Hello Health is charging forward 9 years later, the two practices in NYC were shuttered as the company transitioned from brick and mortar practices to becoming exclusively an EMR. That was around the same time I decided to move on.

Sherpaa

In early 2012, we launched Sherpaa, an exclusively online medical practice.

At the time, I was convinced that the way to scale a healthcare service and meet VC-expected growth was exclusively through employers. Tumblr was our first client. Sign up one company and you get hundreds or thousands of patients! That’s not easy either. Focusing exclusively on employers was a huge mistake that I regret. I wish we always had a direct to individual channel open from day one so anyone anywhere could sign up when they read about us or when they switched jobs and had the option of continuing with Sherpaa as their PCPS. So, about 11 months ago, we opened up Sherpaa to individuals. Sherpaa means any individual has 24/7/365 access to the same small group of physicians (continuity and relationships are everything) at any time from most everywhere in America. Our service is exceptional and ~96% of people rate the Sherpaa experience as exceptional (a human-powered service is impossible to get to 100%!). We’re also effective and diagnose and treat ~70% of all primary care issues and coordinate care most appropriately for the other 30% that need an in-person visit.

Compared to a traditional practice, here’s what Sherpaa has:

  • 24/7/365 convenient, online doctor care
  • A massive catchment area: 48 states

Here’s what Sherpaa doesn’t have:

  • A brick and mortar storefront to promote daily awareness as you walk or drive by
  • A traditional “you know what you’re going to get” doctor office visit

So, we must depend on:

  • digital awareness (press, Facebook and Google ads)
  • trust (this is new and weird and has a different cost than I’m used to…should I use it?)
  • word of mouth

Over the course of the last 10 years of my career, I’ve been experimenting and observing. I’ve learned a ton about how to design and build a service that:

  • people use
  • makes them happy
  • delivers care effectively in an innovative new way
  • offers diagnosis and treatment to a nation rather than a neighborhood

This is the next phase of Sherpaa— marketing a new service in an online (and maybe offline?) way that gains the trust of potential patients and encourages them to recommend Sherpaa to their family, friends, and online followers. And because we’re a doctor’s practice that’s not tied to your neighborhood (people move all the time), nor your employer (people change jobs all the time), nor your insurance (change every 2 years..sorry Oscar), nor where you travel, Sherpaa is very sticky after people realize they’ve found they can have the same group of doctors for life. In our last 6 years of Sherpaa, we’ve never had a doctor leave Sherpaa. Based on the last 11 months of data, we have a very good estimate about the lifetime value of a customer and therefore know what the cost of acquiring new customers should be.

Side note, I went out to lunch with Seth Godin about two months ago and he told me the story about how Jeff Bezos calculated the estimated lifetime value of an Amazon customer in the very early days of Amazon as $33. He then gave anyone who could drive a customer Amazon’s way for $30 or less free reign to do so. Well, Bezos miscalculated because today’s lifetime value estimate is ~$900.

Sherpaa’s practice over the last 11 months has grown as expected and we’ve only spent a total of $1,000 (why?) on basic experiments on Facebook and Google.

Here’s what we need to build:

“I know about Sherpaa, I trust in the quality and effectiveness of their care, and I need a doctor now.” So…

  • Investing in advertising: matching awareness with near immediate intent/need to use doctors
  • Engendering trust in potential patients

Once we’ve figured out the most cost-effective way to increase the rate of growth of the practice, the size of the practice is limitless due to the catchment area of the entire United States. As patients join, we simply hire more doctors. No need to build expensive physical infrastructure to reach a new neighborhood. It’s just a slow and steady data-driven growth.