It’s Not Easy Being Kermit. Or Standing up a Multi-Sided Platform in Healthcare.
CoverMyMeds, Surescripts, GoodRx, and Flatiron Health are all examples of successful multi-sided platforms (and networks) in healthcare. By bringing together different healthcare stakeholders into one digital forum, these companies facilitate dramatically faster, more efficient, and lower-cost communication of health information. Whether it’s resolving prior authorizations in minutes (compared with days), getting prescription costs and alternatives information to doctors in real-time (versus not at all), or providing access to clinical data from cancer researchers, these companies are delivering tremendous value to the healthcare system today and have become platforms for innovation.
How did they build such successful platforms? While each one had its own business challenges to overcome along the way, there are some common problems they had to solve.
Like Kermit said about being green, it’s not easy standing up a multi-sided platform in healthcare.
The Challenges of Standing up an MSP in Healthcare
MSPs face a variety of challenges, but there are five in particular that are common pitfalls:
Chicken and egg adoption problem: user acquisition is difficult for any new venture, but for multi-sided platforms, it can seem like a Sisyphean task: while there may be some enthusiastic early adopters, in general users on one side will want to wait to adopt until other users are on board. This hurdle can be especially painful if there is up front investment required. In healthcare, this frequently is the case, as many markets (pharmacy, payer, physician, health system, lab, PBM) already have technology that they will want a new solution to integrate with.
Managing quality (on both sides): once a platform has acquired users, it faces a user experience challenge with respect to quality. Unlike vendors or merchants (who have control of the quality of their product or inventory), MSPs by their nature tend to have less control over the quality of what is being exchanged, by whom, how many times, and how end users perceive the quality of those exchanges. Consider for instance an oft-cited challenge with the Direct project: users and EHRs seeking to send messages each structure their documents in different ways and use the same document to relay different types of clinical messages; the resulting receiving user has little expectation of what type of message s/he is receiving. Such an experience, when repeated many times, decreases the value of the network (or platform), and may turn the user off.
Governance and trust: For MSPs and MSNs that bring together a variety of healthcare constituents in a digital forum to exchange products, services, or patient information, trust is paramount. Physicians, for instance, must have complete faith that other physicians on the platform are, in fact, credentialed physicians and have been identity proofed; furthermore, they must have faith in the integrity of patient information that they have received. For MSNs and MSPs, it is important to establish rules of the road – who can join the platform, what provisions are in place to ensure they are who they say they are, what can they do with the information shared, etc. — and to be transparent and consistent in the application of the rules of the road.
Business model and pricing: MSPs must determine how — and from whom — they will make money. Unlike traditional software (license or SaaS models) that may operate in multiple verticals but whose users are their paying customers, MSPs may have two, three, or more “customers”, all of whom may be an important user. Given that (i) bringing users and users from multiple sides onto a platform will increase the value of that platform to its users and (ii) price may serve as a barrier to adoption, MSPs face a thorny task in trying to build their platform’s value proposition while at the same time becoming financially sustainable.
Network stickiness: Even if MSPs can achieve rapid growth and offer attractive economies of scale, they also can be incredibly disappointing to shareholders if the platform’s users also use multiple other platforms. In order to create substantial economic value for shareholders, MSP managers must find ways to create compelling value for platform participants to use their platform and their platform alone. Network stickiness may be a result of the number of users a platform has, the quality of the users on a platform (marquee users), or due to other features or platform functions the MSP offers. Figuring this out early, especially if facing competition from other MSPs, is critical for what often turns out to either (i) a be a winner-take-all market or (ii) a highly standardized and commoditized low-margin business.
Not Easy, But Worth It
“But green’s the color of spring, and green can be cool and friendly-like… or important like a mountain.” (From “It’s not easy bein’ green”, by Kermit the Frog)
Standing up a multi-sided platform isn’t easy either, but it is worth it. Redox, for instance, is building a novel two-sided network of transformative digital companies and those health care organizations who want to innovate. A platform for those who want to be able to reach new customers, and for those customers to be able to test out new digital solutions in a rapid, consistent, repeatable manner? That is worth it.
Helping MSPs to Transform Healthcare
At Summit Health, we have spent close to a decade as strategists and operators at the intersection of healthcare and of multi-sided platforms. We have done more than study multi-sided platforms; we have planned and executed commercial and market strategies, and helped develop new MSP products and scale them successfully. We are passionate about solving inefficiencies in the healthcare system, and believe MSPs offer tremendous potential to improve quality of care, reduce costs, and improve patient access to care.
If you are building a technology platform or network to bring together different healthcare stakeholders to interact with each other and break through opaque and inefficient processes, we’d love to hear from you — please comment or contact us!
Continue the conversation with Seth Joseph at seth@summithealth.io
