The health care industry stands at a pivotal juncture, grappling with escalating costs, labor shortages, and a dissatisfied consumer base. The conventional paradigms governing health care delivery and financing are being shattered, requiring a fundamental change—inspired by platforms and personalization. Explore how the unbundling and rebundling of health care services can help align to the growing demands of customers.
Much like the transformative shifts observed in industries such as television, banking, and transportation, the health system is due to undergo massive changes. This likely requires a fundamental unbundling and rebundling of the health value chain in new ways; unbundling—unpacking a provider’s full range of services; and rebundling—identifying customized options based on a patient’s medical needs.
This shift is essential to not only align with the evolving demands of consumers, but also to help yield desired outcomes and establish a sustainable framework for potentially substantial cost reduction. In our 2021 paper The power of networked ecosystems: How platforms can be a force-multiplier in health, we demonstrated how new business models like platforms can cocreate goods and services, enable wider customer reach, provide access to new capabilities, and help increase revenue.
Figure 1: Platform business journey
But how can established players—the incumbents—benefit from their core while preparing for the newly emerging market?
From pipelines to platforms: How empowered consumers have driven unbundling and rebundling—and what it means for health care
What is the impact of "empowered consumers" on business? Understanding it is crucial, because when they emerge, entire industries are often rewired to satisfy their idiosyncratic needs.
Digital technologies have enabled the unbundling of information and content and, the formation of new bundles to create value for the consumer—rebundling. The same change is taking place in health care. Companies that can cater or "bundle" their products or services to fragmented communities have prospered. Consider Amazon with its "people like you" algorithms, or Airbnb with homes that fit your aesthetic.
COVID-19 accelerated the change of existing care models that were "one size fits all" (e.g., primary care). These newer care models consider the needs of underrepresented populations and reimagined the services to provide them to all populations. However, health care is different in that the consumer is not the sole buyer of health services. Thus, platform businesses in health should align to the dynamics of the industry.
Enter 'reassembly'—the formation of partnerships between the innovators who have customer loyalty and digitally enabled products, and the incumbents who have scale and expertise in the delivery of complex care.
Similar to what we've seen in media and retail, the reassembly of the health care industry is being catalyzed by a different business model: the platform business. But historically, companies have been organized as pipeline business models, delivering value in a linear fashion from the production of a good or service to the delivery of that good or service to the consumer. Pipelines seek to own all parts of the value chain. But in contrast, a platform business can be non-linear; it has the infrastructure to facilitate the exchange of information, services, or goods (figure 2).
Figure 2: Platform business models are rewiring the value chain
Primary care needs an overhaul to align to the demands of diverse communities
Health systems have historically employed a one-size-fits-all care model, using the same care model for all patients regardless of population.
But literature demonstrates that the availability and quality of primary care is associated with higher health status; every additional 10 primary care physicians (PCPs) were linked to an increased life expectancy of 51.5 days1.
Different components of primary care and how it can be unbundled and rebundled to create value for consumers:
The race to build platforms in health care
A platform mindset in health means:
Platforms need a plug-and-play technology architecture
Traditional companies are often constrained by scarce resources, while platform companies are typically better positioned to amplify their potential by convening an ecosystem of partners.
This calls for a significant adjustment in technology architecture. The architecture should include the following features:
Fundamentally, a platform businesses partner with an ecosystem of innovators to help achieve network effects, and this is powered by a plug-and-play infrastructure to allow integration into diverse partner tech stacks.
A plug-and-play platform should have the following components:
A stepwise approach to a plug-and-play architecture is possible and requires careful calibration of the partners and use cases (areas for focus) to help generate adoption and quick wins that build support for catalyzing the flywheel effect. User adoption is critical to unlock the ambitions of a platform business.
The reassembly of care poses existential questions for the industry
Companies across the industry—plans, providers, medical device, and health tech companies—should seek to answer questions to help define their role in a network of ecosystems.
Answers to these questions will require experimentation. One can test whether their offering is viable in an ecosystem through a curated set of partners called a minimal viable ecosystem. A concerted strategy, a reliable set of partners, and a deliberate technology stack can help secure one's positioning in the ongoing reassembly of health care.
Endnote:
1Beth Duff-Brown, "More primary care physicians leads to longer life spans," Stanford Medicine News Center, May 18, 2019.