A few weeks ago, I was invited to meet with the CEO of one of the largest hospital systems in the south to talk about their digital health service initiatives and introduce him to Sherpaa. There were three people present in the meeting: the CEO, the CIO, and me. We talked for an hour and a half. I love these conversations, especially when the CEO has a vision and appetite to get things done. We were talking about how his system rolled out video visits with their doctors about a year prior. And then he asked me:
“Why don’t people use digital health services?”
Some people are going to say, “people DO use digital health services!” Yes, that’s true. But healthcare has been left in the dust by other industries. In just a few years, we’ve seen Facebook, Google, Uber, Amazon, etc. disrupt and own entire industries, but we have not seen anywhere near a small disruptor in healthcare. There’s simply no comparison.
For the last 11 years, I’ve been building digital health services, both in-person services augmented by digital tools (my house call practice and Hello Health) and digital health services that are human-powered, but virtual (Sherpaa). Throughout this time, I’ve also been obsessed with the industry and what’s worked and what hasn’t. It hasn’t truly taken off, despite billions of dollars invested and thousands and thousands of people spending every day of their lives building digital health tools. And, trust me, I don’t think any of us, especially myself, have cracked this nut. So, here’s my answer to him:
Ultimately, I think there’s a perfect storm in our culture driven by all the various verticals’ incentives that actually work symbiotically together to discourage digital health adoption. It has very little to do with tech.
All of these are generalizations, so of course there are exceptions. But here goes:
Insurance doesn’t cover shiny new things.
People want their health insurance to cover everything medical. They don’t realize that insurance only pays for very conservative, traditional services or services that were hyped up as innovative 15-20 years ago. They see some cool new service and their first question is “does my insurance cover this?” They don’t realize that insurance companies are the laggards. And if insurance doesn’t cover some cool new service, potential users might then think “well it must not be any good if my insurance doesn’t even cover it.” And with rising premiums, I’m now paying $1200 per month for health insurance, so I expect my insurance to bring me more everyday value. Unlike other industries, paying more for health insurance doesn’t increase its value.
Traditional services are “good enough,” “covered by my insurance” and the devil you know.
When you walk into an urgent care center, you know what you’re going to get and you know how to use them. It’s an upgrade from the two week wait to get into some random PCP. You think you need a Z-Pack? Great, there’s an urgent care center in your neighborhood. You just pay your co-pay and get the $300 bill later. In fact, a co-pay is just a trick to get you in and deal with the unknown costs later. If you only need care 2 or 3 times a year, this is a perfectly good enough quick fix to your problem and it only costs you $700 a year to get the twice a year quick fix.
Insurance companies have created a confusing game you can’t win so we’ve all just given up on figuring out how to be smart.
Health insurance is predicting next year’s expenses and adjusting premiums accordingly. To predict next year’s expenses, you need data. Keeping everyone’s claims within processes insurer’s control ensures the cleanest data. Even when an in-network MRI will cost you, the patient, $3,000, it’s in the insurer’s best interest to confuse you with co-pays, deductibles, and co-insurance so you don’t pay $800 in cash to an out of network imaging center. Going out of network creates messy complexity and adds to an insurer’s time and costs. The same goes for PCP visits, urgent care centers, and ERs. Co-pays, deductibles, co-insurance and not giving folks an immediate way to understand where they are in their spend nor how much something will or should cost keeps all healthcare users in the dark. This forces a learned helplessness upon people and they reluctantly enter the industry for care knowing it’s a losing battle.
The industry is viewed as technologically disabled.
It’s 2018. After filling out the same form on a clipboard over and over and then having the nurse and then the doctor re-ask the same questions from the form, our culture has learned that everyday tech, like Uber, works like magic, but their healthcare is still back in 1998. Or when someone needs to transfer their medical records from one institution to another and they get a stack of paper. Imagine Facebook sending all of your data as a stack of paper. This colors their trust and appetite to try new healthcare things.
Innovative health services are designed to fit into the traditional industry, instead of meeting actual needs people have.
A video chat with a stranger to solve one of your problems is a thing that only occurs in healthcare— and, well, porn. That’s because a video visit is just an office conversation, via video. Insurers and hospitals speak the 10 minute visit language. It’s not much of a conceptual stretch for the industry. But if everyday people wanted to video chat with strangers to solve their problems, don’t you think every single consumer-obsessed company in other industries would have been doing this for the last 10 years? And don’t you think ChatRoulette would have taken off instead of Apple’s Messages, Facebook Messenger, WhatsApp and literally all the other communication apps out there. Also, this.
The App Store has conditioned us to think getting life done is free or almost free.
Over the years we’ve seen App developers experiment with the price of their apps and, for the vast majority of apps, they’re priced at free, but occasionally you’ll see one for $3.99. Facebook is free, always. Uber is free, then it’s pay as you go. If you’re savvy, when you want to go somewhere, you’ll launch Uber, Lyft, Juno, and Via, just to check their prices. Because the internet is a race to the bottom, it’s just so easy to shop for the best deal. Many of us have fired up Ticketmaster and bought tickets and spent $150 on a ridiculously fun experience. Or we’ve launched Amazon and bought that new bike for $800. And we’ve also taken uber to the airport and on a bad day it’s gonna run $79 or so. But most of the time our bill is $15 or so for a quick ride. And most of the time, it costs us nothing to run our life via a suite of free apps. The App Store and the ad-supported free internet has conditioned us to expect free, or nearly free. When we do spend real money via our phones, it’s for a real guy to drive us around in-person. Because you’ve ridden in taxis all your lives, you know what you’re going to get— a real guy to spend his time to take you from point A to point B. So, then, you stumble upon digital health in the most common form, a video visit. Download the app for free and it’s $79 per visit. Besides that one long taxi trip, that’ll definitely be the most expensive service you’ll buy that year via your phone. And then you think, “but how much can some random video doctor actually do for me?” I’ve never done this before. If I spend this $79 and they can’t solve my problem, I’ve got to also spend on an urgent care visit. Wait, how much is my urgent care co-pay again? $30!? Done. App deleted.
Innovative health services lack usefulness and breadth
Ten minute video visits can only diagnose and treat ~30 simple conditions, but traditional PCPs and urgent care centers treat ~1,500 conditions. People have to be educated about how to use these services and what they can and can’t be used for. If they use these services incorrectly, it’s not only a letdown, it’s a fleecing. If you pay for a video visit and the doctor says you have to be seen in-person after you paid for the service, you’ll pay twice to get your problem solved. And there are far more than 30 real-life health issues.
It’s unclear how to access digital health services offered by a hospital network
Healthcare has always been hyperlocal because people don’t travel too far for care. There’s a deeply ingrained behavior to get care from your local institution or doctor.
But I’m driving around town and see all the billboards on the local highways where the local hospital network excitedly announces that “video visits are here” so I go to the hospital website and there’s no mention of it anywhere. The funnel from billboard to care is completely broken. I don’t even know where to start. Then, once I find it, how confusing is it to get care? How many clicks? How do you register? Do you have to register with the patient portal first? It’s not like downloading uber, entering your payment information, and summoning a ride. I think I’ll just take an uber to the local urgent care center instead.
Innovative health services choose, dare I say it, the “wrong” target market for massive digital health service adoption.
Innovative health services flush with VC money are often targeted at the Medicare Advantage population (Aledade, Devoted Health, etc.). Medicare folks aren’t the early adopter types, despite lots of money being invested in the space. There’s a reason why the iPhone, Uber, Facebook, and all the other fast-growing companies target early adopters. Targeting the 75 year olds with fancy new tech has very little precedent for massive adoption.
Other innovative health services with VC investments target the very small “I want to spend $1,500+ on access to a super tech savvy primary care team.”
These are companies like Forward or Parsley that offer a service at a price point way out of reach and way out of value for most everyone. This demographic is very, very tiny. The vast majority of people just don’t have that kind of money nor do they value doctors to that extent. This demographic has few ongoing health problems and mostly just have acute, urgent needs. These companies “revolutionizing primary care” are really just premium services for folks looking to spend money on anything that makes them feel like they’ve got a premium experience.
People are totally uneducated about how to spend on healthcare.
Here’s a real conversation that happens every day.
Cost-savvy doctor: “An ultrasound will only be $150 if you just pay the radiology facility directly, but it will be almost $1200 if you use your health insurance.”
Patient: “Well I think I’d rather pay the $1,200 and get credit toward my deductible.”
Unless it is a guarantee you’ll spend your deductible due to having some expensive condition, most people don’t spend their entire deductible. In that case, paying out of pocket outside of the System is shockingly more affordable. That means paying directly for your ultrasound or joining Sherpaa for $270 to get unlimited yearly primary care for a fixed price is a logical no-brainer. But healthcare is so confusing, even for very smart people, they just bend over and follow the System’s rules even though that might mean not going on vacation for a few years.
The traditional players (both insurers and hospital systems) pay lip service to innovation, but actually antagonize it.
There’s a lot of money in the status quo. Why break it? Especially when shareholders expect more value. So, they have three year sales conversations and then decide against innovation and finally land on paying millions to purchase the software that powers video visits that nobody uses, mostly because, again, the customer engagement funnel is broken. Not to go all conspiracy theory on anyone, but that funnel might be intentionally broken. The world is littered with 2002-level patient portals and video visit services with cobwebs and crickets. But there’s 20% of our nation’s GDP flowing through all the traditional office visits and procedures.
And, finally, potential customer awareness is severely lacking.
If the average person needs a health service 2 to 3 times a year, it’s hard to get the awareness timing right. Google ads are great for “I think I need antibiotics for a UTI.” Facebook is decent for reminding folks that your health service exists. And, the holy grail of your friend hyping up this new digital health service they tried is the holy grail, but that’s a slow, organic growth in a population with infrequent need (and this type of growth doesn’t fit in well to the Snapchat-level hyper-growth VC’s want to support). A potential patient may come across a really helpful innovative digital health service while perusing the internet, but at the time they become aware, they’re not in need. Then, it’s a matter of how sticky that service is in the mind of the potential customer. In six months, are they going to remember the name of the service? Healthcare is notoriously unsexy and uncool and good, memorable, sticky advertising for a very infrequent need is extremely hard.
The jobs consumers hire health tech for solves a tiny sliver of their problems and they’re all disconnected and not talking to each other nor looping in a professional.
“I need to feel better fast” is by far the most common problem early adopters have. In the under-50 early adopter category, they have more acute rather than chronic issues. The kinds of issues they have look more like pediatrics than geriatrics. But “feeling better fast” still to this day requires an in-person visit for the vast majority of things because the breadth and scope of today’s most well-known digital health services (video visits) are so limited. The innovation for this common problem is “book an appointment online” (ZocDoc). Once the appointment is booked, and they show up at the doctor’s office, a consumer still faces a litany of old-fashioned nonsense. Online booking is just one tiny solution for a much bigger set of problems. My app to view my test results is a totally separate app from my app to get a refill on my medication or my app to help manage my asthma…and a doctor can’t see any of the data or activity.
Notice none of these reasons have anything to do with an app’s features or tech design.
It’s not a shortage of ideas nor is it a shortage of digital health apps or the funding they receive. We’re a few months shy of the 10th anniversary of the Apple App Store— there’s been plenty of time to revolutionize all the other industries. It’s truly about the structure and financial incentives found in our healthcare “System.” It reminds me a bit of how the music industry reacted to Napster. They sabotaged the free movement of music. Finally, over a decade later, Spotify and Apple Music appeared and now it’s all easy and you don’t have to think about it. I assume the same thing will eventually happen in healthcare. But the Napster of healthcare is nowhere to be found. And if Napster hasn’t yet appeared, the Spotify and Apple Music of healthcare is quite a long way off. Hopefully that’ll happen soon.