New Business Models For The Emerging Consumer-Driven On-Demand Healthcare Economy

By Patricia Birch, Senior Vice-President, Cognizant Consulting’s Healthcare Practice; William Shea, Vice-President, Cognizant Consulting’s Healthcare Practice

Convenience, simplicity, speed and immediate satisfaction are the hallmarks of the on-demand economy. Broadly defined as business activity created by technology platforms that fulfill consumer demand via the immediate provisioning of goods and services, the on-demand economy has disrupted virtually every industry. Healthcare tends to think of itself as unique—and immune–but the platform economy is already at work in the industry. The platforms powering on-demand everything transcend business-to-business (B2C) and business-to-consumer models: new, consumer-to-business (C2B) platforms will empower consumers to build their own systems of care.

With apps, sensors and smart devices enabling a wide range of care to be delivered outside of traditional health channels, consumers increasingly will shop for competitively priced wellness and medical services offered by primary care providers, specialists and ancillary service providers choosing to practice healthcare via C2B on-demand platforms. This scenario is becoming fact: services such as Doctor on Demand, HealthTap, American Well and Teladoc are already enabling hundreds of thousands of con­sumers to consult physicians in real-time via mobile apps, while Pager and Heal provide in-person physician house calls on-demand.

As the C2B healthcare economy disrupts traditional business value propositions, healthcare organizations must develop new capabilities and operating models to compete successfully as consumers gain more power over their healthcare spending. Four core business models are likely to emerge over the next three to five years; organizations may blend these to create unique models that suit their specific strengths and markets.

Business Model Archetype 1: Become An On-Demand C2B Healthcare Platform Provider

Healthcare organizations could leverage their existing investments in digital technology assets and platforms to create a game-changing on-demand platform. The platform would connect producers – app and device creators and healthcare providers – to consumers in the new digital healthcare marketplace.

Rather than a single dominant platform emerging, like an Airbnb, it’s more likely that a set of winning platforms will coexist and address specific domains, such as virtual care, decision support, consumer engagement and information aggregation and sharing. Platform providers who make it easy for solution providers to integrate with their platforms will have more to offer consumers, a definite advantage in the on-demand health economy.

Business Model Archetype 2: Insurance Powerhouse – Back To The Future

Health plans should consider returning to their pre-managed care origins to purse a classic insurance model of benefit design, risk management and underwriting. Some organizations could become a one-stop shop for every insurance need. These entities will serve consumers and businesses with bundled and unbundled offerings for life, property, health, auto, long-term care and other insurance needs. These diversified insurance players will have the economies of scale necessary to better manage profit and loss across multiple lines of business and to take creative approaches to health-related insurance, such as offering personalized policies targeted to very specific market segments.

Emerging Business Model Archetype 3: Integrated Delivery Model At Scale

As consumers select health services on demand, they essentially will create their own systems of care, rather than relying on a third party. The impact of these changes likely means integrated delivery systems (IDS) must focus on providing on-demand healthcare and do so on a large scale. These systems can point to the proven value of offering a vetted and curated set of cost-effective providers and coordinating care to deliver better cost and quality outcomes.

Emerging Business Model Archetype 4: Health, Wealth And Lifestyle Management

Cheaper, quicker and more convenient care delivery will turn healthcare into “life care.” Artificial intelligence innovations will provide consumers with new tools for lifestyle management, personal health monitoring and related financial planning. Demand for disease prevention, stress reduction, optimized health and quality-of-life enhancements will grow. Healthcare organizations can tap their expertise to become trusted advisors in this space.

Making ’No-Regrets’ Investments

Migrating toward any of these business models will require investments in new technology and capabilities. Given the pressure to “get it right” with the industry’s constant financial pressures, the effective strategy is one of “no-regrets” investing. That is, identify the capabilities and characteristics required for success in the emerging C2B on-demand economy that will also serve the business well today and invest accordingly. These capabilities include:

• Mobile first. All offerings must be optimized for use via smartphones—at least until some other ubiquitous intelligent device supplants them.
• Minimize, simplify and modernize IT assets. Use public, private or hybrid cloud services to modernize IT capabilities cost effectively and with minimal capital investment.
• Invest in artificial intelligence. “Applied,” or narrow AI, already can automate specific tasks and enable healthcare organizations to begin delivering better experiences while reducing expenses.
• Collaborate across payer, provider and pharma value chains. Greater collaboration, such as more clinical data sharing, would likely enable analytics tools to distill more meaningful insights to collect evidence, refine therapies, improve adherence, etc., for better outcomes.
• Enable real-time transactions. Healthcare organizations must emulate Uber-like clear, up-to-the-minute pricing and consumer review features.

While strategizing how best to embrace the C2B on-demand healthcare economy, organizations can make these investments and begin transforming service and delivery systems to meet consumer demand. Those actions will help free up resources for new investments and provide experience that will help clarify which business model or blend of models is worth pursuing. A “watch and wait” approach often works in healthcare but the on-demand economy requires more aggressive, even experimental, intervention for a successful outcome.