The first wave of healthcare innovators (the likes of Omada, Iora, and Oak Street) had to build a majority of their tech stack in-house.
Why? Though costly 💰 and time intensive ⏱️, this was the only way these forward-thinking companies could provide the modern experiences they wanted to offer. It was also how value accretion worked during the nascent phases of digital health tech.
⌛ 10+ years later, this has all changed - this is a good thing!
- The industry has matured & there are many more companies delivering modern care; as a result, there's an market of infrastructure vendors to support these companies
- Digital health companies can (and should) focus on "What it takes to Win" and aggregate third-party vendors for the rest
- Founders and the Venture Market have evolved their perspective on what successful companies in Care Delivery look like
Let's dive in:
At the time those ‘first-wave’ companies were making core infrastructure decisions, there were few off-the-shelf tools that those companies could leverage. For example:
1. Traditional EHR platforms like AthenaHealth wouldn’t work.
🏥 These EHRs had been designed for one-time episodic, physician-only, in-person-only care that didn’t reflect the collaborative, virtual-first nature of what these companies were offering.
Note: These EHR platforms were also not API-first, which would handicap the extensibility of using these tools.
2. Existing technology was not built to support the recurring consumer experience, which is core to care delivery.
👥 These innovative companies focused on establishing recurring relationships with their members. These B2B2C innovators knew that member experience would be a differentiator and competitive advantage to their offering.
3. Off-the-shelf point solutions were not HIPAA Compliant.
💬 Consumer-friendly LMS platforms, chat APIs, or intake form systems weren’t able to offer the security & privacy infrastructure that is table stakes for anything that touches health care delivery.
4. Virtual Care was not “baked in” to the offering.
🔩 Many of these legacy EHR systems bolted on Patient Portals after core product principles had been established. As a result, the consumer-friendly experience was not built-in.
The floodgates of innovative care delivery have opened
🏠 Companies like One Medical and Iora famously had to pour millions into their own proprietary in-house platforms. While this certainly worked for them (re: successful company exits), it took a high amount of capital investment and frictional pain, before they reached escape velocity, to get these off the ground.
🌊 The mentality of health tech has shifted considerably in the past 2 years. The floodgates have opened, ushering in a new, overdue wave of healthcare innovation in care delivery, and as a byproduct, infrastructure companies.
This Fierce Health article predicting investing trends for 2023 and beyond lays it out well:
“As valuations level off and funding continues to cool off, there will be more focus on digital health startups that show a measurable return on investment (ROI) and clinical validation of the technology's platform, according to the surveyed VCs. ROI was deemed "important" or "very important" to the success of digital health companies by more than 94% of investor respondents … In the current environment, purchasers prioritize their spending on solutions with the strongest value proposition”
True to this sentiment, we’re seeing hundreds of companies emerge that are providing modern, virtual-first solutions with higher ROI for startups 💪
As a result, infrastructure vendors are supporting the rapidly scaling Next Gen Healthcare companies
🚀 Infrastructure companies like Healthie can help accelerate the pace of innovation, by reducing the time and money required to launch and scale innovative care delivery. We’re seeing the virtuous cycle emerge.
As infrastructure companies scale and mature, so too can digital healthcare delivery companies at unprecedented speed and scale; this is bolstered by a VC ecosystem that wants to see this kind of change occur.
The timing makes sense: prior to COVID-19, the industry wouldn’t have been able to support API-first infrastructure companies for health tech; the market simply wasn’t large enough for API-first solutions.
Behind-the-scenes infrastructure is no longer a differentiator for health tech companies.
The narrative amongst the venture and PE health tech community has shifted substantively in the past 12 months, to the tune of:
Companies should focus on their core competencies and not build “everything”.
🏗️ For example, care delivery companies should not focus on building undifferentiated, back-end technology, when their core “product” is clinical care. This analogy even applies to infrastructure companies - for example, Healthie uses Stripe to collect payments, versus Healthie building a payment processor in-house.
Examples of core infrastructure companies are outsourcing to vendor partners:
- 📋 EHR: The ability to chart, send out intake forms, and tie charting to important capabilities like billing and reporting; may want to customize the UI, which is where the concept of Headless EHR is compelling.
- 📅 Scheduling: Provider utilization planning, scheduling widgets for patients to book , tie-ins to matchmaking between providers and patients, and more, are crucial for an organization to be able to customize - handling timezone back-end logic isn’t!
- 🙋 Engagement: Organizations need the ability to customize the engagement experience as well as the modality of that experience.
- 🔗 Workflow Tooling Automation: Companies need the ability to customize clinician workflows, tasks, and the overall connectivity of their systems ; but, they don’t need to build the underlying pipes for this.
- 🌱 Interoperability: Companies need the capability to do so, but don’t need to build direct integrations to CommonWell/CareQuality, etc.
And many more! Much has been written about the components of the modern health tech stack, Here’s an example market map.
Now, companies can focus on "What it Takes to Win"
🔒 As companies scale, the investments in security, optimizations for speed as well as stability, become increasingly complex and important to get right. Healthie works with hundreds of Next-Gen Healthcare companies, of all sizes, pre-seed to Post IPO. From our analysis, leveraging Healthie allows companies to focus on building “What it takes to Win.”
API-first companies like Healthie empower companies to focus on building toward an innovative, effective care paradigm without having to reinvent the wheel 🎡. Review our customer stories here to see details on how Next Gen Health Tech is leveraging Healthie.
A Rising Tide Lifts All Boats
🖥️ We’ve seen this analogy play out in other industries, as healthcare is following in the footsteps of FinTech & Consumer Tech. For example, Shopify serving as core infrastructure for merchants ushered in an era of unprecedented online commerce, which has been a good thing for Retail overall.
✉️ The same movement is happening in healthcare - next gen infrastructure companies will accelerate the pace of innovation and push the envelope forward on what healthcare experiences will look like for consumers, and force the system overall to re-think care delivery and care outcomes with the end patient in mind. This is exactly what our industry needs.
Towards the future
🙅Traditional healthcare is broken for many reasons, and next generation healthcare builders are challenging it all - access to data (read: Epic’s gated approach), partnerships and collaboration, care experiences over a period of time, and more.
🏠 It is our fervent belief that Next Gen Healthcare companies should rarely exclusively build in house We say this at Healthie all the time, and share it with the companies we speak with - even if you don’t use Healthie, find the infrastructure that will work for you, so you can focus on building the differentiating parts of your technology, and finding a sustainable, scalable pathway to distribution.
Learn more about Healthie’s API-first platform, which allows next gen healthcare to buy off-the-shelf fundamentals, and focus resources on the business differentiating parts of their care delivery. Healthie is used by thousands of organizations across millions of patient lives.
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