For the last decade, hospital networks have tried, and been seriously challenged, when rolling out digital health delivery services like telehealth. None of these services have gotten serious traction. In fact, many would argue they’ve failed. Let’s analyze why and then propose a strategy that we believe will actually work.
First, why the failure?
It’s considered tech, not a consumer experience
The predominant offering has been video visits. A hospital network will sign a multi-million dollar deal (think ~$10M) with a video visit-based “technology solution” company. The contracts are typically signed by the CTO of the hospital network who thinks they’re buying technology, when in fact, they’re buying a customer experience. It’s as if Starbucks is purchasing the espresso maker thinking all they have to do is buy an espresso maker and they’ll have a Starbucks. The espresso maker is one critical part, but it’s just one of many components of a delightful consumer experience that a patient will trust, use, and love. When it’s considered tech, an engineer’s mind is determining the specs, not a design, marketing, and consumer experience team all acting in the best interest of the consumer user. Because it’s often the tech team leading the implementation, the tech must meet a certain set of technical criteria, like integration with the hospital system’s electronic medical record. In reality, a consumer is just interested in getting their problems solved as quickly as possible from their own competent doctor. And the standard they’re used to is paper clipboards. The bar is low, so it’s easy to just get started and integrate over time.
Ten minute video/phone transactions with random doctors can’t do much more than a nurse triage line, so a patient’s first interaction with them is more often than not a letdown when it’s anything more complicated than pink eye.
Video visits are a top-down healthcare invention trying to force a tech solution into the confines of traditional health insurance billing codes. A 10 minute video visit isn’t a far stretch from a 10 minute office visit and doctors and insurers both know what a 10 minute visit is. If the first interaction with a new kind of service is a let down, this will affect consumers’ appetites for all digital health innovations. And if the consumer paid for it on their own, it’s doubly worse. These are all main reasons why video/phone transactions with random doctors get such low usage. As proof of this, TelaDoc delivered roughly 200,000 visits last quarter with 17.1 million members, a quarterly usage of ~1.1%. When given the option, TelaDoc appeals to ~1% of people. The vast majority of people don’t want to video or phone chat with a stranger. TelaDoc is the largest of the video visit companies, and via extrapolation, they’ll deliver 800,000 video/phone visits per year. In America, there are ~1.1 billion doctor visits per year so they do 0.07% of all doctor visits in America. It’s not nothing, but after 12 years of operating, they do 0.07% of all visits in America. If I’m a hospital system, I’d look at this and think, after 12 years of implementation, I can expect 0.07% of all my hospital’s visits to be done via phone or video. Is this something I’d like to invest $10M in?
Many traditional doctors want to continue doing what they’ve always done and staffing is expensive
Treating pink eye all day is mind-numbing to doctors. They didn’t go to medical school to be a nurse. So it’s hard for hospital systems to get doctors who want to act like nurse triage lines. So hospital systems often ask ER doctors working in their ERs or urgent care centers to be “on call” for a video or phone visit request from a patient. When a call comes in, the doctor has to interrupt their in-person patients and find the dedicated video visit room to take the call. The video visit room was built by the hospital to be quiet, decorated nicely, and well lit. When a service requires a real-time conversation, it’s by nature interrupting. And when a service is poorly utilized, it’s expensive to hire and devote expensive doctor time to it, especially when the service is a price-disrupting service that’s designed to undercut the cost of the ER or urgent care center visit — the same ER or urgent care center the doctor is taking the call from. A hospital has very little tolerance to pay a doctor a full-time salary to take a call or two a day at $49 a call.
The Health IT Industry only offers tech, not a service
If you go to the big health IT conference called HIMSS with ~60,000 attendees and football fields after football fields of vendor booths all selling some sort of customizable software to health systems, you’ll quickly see that they’re framing the problem as a tech problem, not a consumer experience problem. A tech-enabled service is a rare and mostly unheard of in the health IT space.
What’s the ROI?
After investing $10M in a tech solution, launching it, and then evaluating the number of video visits from the first 12 months, it’s absurdly hard to ask hospital leadership to continue to support or throw any extra money at the service. First year usage is literally in the ballpark of a few hundred patients. After investing ten million dollars. So let’s say 500 people spent $49 a visit and the hospital system took in $25k in revenue. This is real life and this is what happens. Remember, video visits only appeal to ~1% of people and represent 0.07% of doctor visits.
So what’s the solution?
Acknowledge this is a financial & political problem
When any sort of new thing is rolled out by a hospital system that impacts the primary care department (think urgent care centers), the primary care department feels threatened.
The reality is there are things that are ripe for disruption if, and only if, the hospital system believes that patients come first. If traditional primary care won’t reinvent itself and make itself markedly more convenient and patient-centric, we’ll probably see more innovations like urgent care that evolve to carve out the traditional inaccessible primary care doctor. As the world changes, we all must change.
Deliver a service that people actually want
If a person uses a traditional video visit with a random doctor for anything other than the 30 simple things they can safely diagnose and treat, they’ll discover these services are extremely limited in scope. Honestly, they’d be better off seeing a nurse practitioner in a Walgreens clinic since they can manage more than what a video doctor can do. Even worse, they’ll have taken a chance on trying something new only to be let down and also charged for the visit. This will flavor their appetite toward trying anything new in the future. Any new innovation is an opportunity to earn trust and inspire early adopters. Video visits are too limited and they won’t do that. Second, normal people don’t use video to talk with strangers. In fact, they don’t even use real-time conversations. Today’s tech adopters don’t like to pick up the phone. They send messages and don’t expect a real-time response. This is Facebook, iMessage, WhatsApp, WeChat, Instagram, Snapchat, and literally every single communication platform out there…except healthcare. Video has only caught on for conversations with friends and family. We can’t force people to engage in a behavior they’re not used to doing.
Reframe the problem as a consumer experience, not a tech problem
Instead of spending $10M on a contract for technology, spend that money on marketing that changes consumer behavior. The behavior you want is “get care online, before you get care in person.” Luckily, other industries have led the way for us. Pick up your smartphone and request an Uber or order food for delivery on Seamless. The behavior you want your local customers to engage in is pick up their smartphone, get care. It’s that simple. But this is going to take a local, super savvy marketing campaign.
Create a new conversation with customers
Most people think of hospital systems as a complicated, unfriendly hassle with bad smells and memories of grandma’s last days. It’s the same way I think of Microsoft Office. But XBox is cool. It’s still Microsoft, but it’s a cool, fun brand that gets me and offers me an experience that I respect and want. Keep in mind, you’re trying to reach the early adopters who want cool, hip, new, and better. Think of this as an opportunity to create a new brand, a new promise, and connect with the younger generation that’s going to soon be the main source of your future revenue. Creating a hip new brand probably won’t come from the IT department. Spend that money on marketing, not IT.
Outsource, outsource, outsource
Launching a digital health service has a big chicken and egg problem. You’ve got to staff the service with expensive doctors but the service has no patients at launch and, because of the trust and word-of-mouth nature of health services, they must grow slowly and organically over time. But when you bought the technology, that’s what you’ve got to do. That’s why you shouldn’t buy the technology. You should outsource the service to doctors who do this every day, all day for the past 7 years for tens of thousands of patients. You could purchase years and years of doctor staffing for the $10M that was wasted on buying your own tech and integrating it into your own platform. And instead of wasting all that money on tech, invest a good chunk of it on an ongoing hip advertising campaign that changes patient behavior (remember the XBox of healthcare: “Simply go online first, get care.”). Concurrently, form partnerships with the service so the patients are referred into your hospital system when in-person care is necessary.
Use Virtual Primary Care to drive patients to the most appropriate specialists and facilities in your network
Primary care is a loss leader for specialist visits, procedures, and more complicated in-house services. Give it away so local patients view your hospital system as a patient-friendly brand that truly makes their lives easier.