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The Patient-Funded Practice


While the digital health industry continues to explode, there are significant barriers to widespread adoption. One formidable obstacle for private practitioners is creating a business model deploying digital health that creates a profit and delivers improved quality of outcomes.

In a previous article, I outlined the 10 Rules of Othercare. They are:

1. Practice state-of-the-art medicine

2. Consolidate to garner market power

3. Use innovative care delivery models incorporating validated digital health technologies

4. Improve patient communication portals

5. Dominate on service and experience, not quality

6. Measure everything

7. Adopt an entrepreneurial mindset

8. Maximize practice management efficiencies and efficacies

9. Lead

10. Fail early, cheaply and often with new product line offerings

Digital health is the application of information and communications technologies to improve health. There are several categories of digital health products and services and they include telemedicine, remote sensing and wearables, predictive analytics, disease management, -omics and bioinformatics, social media, patient portals, mobile medical apps, and more.

Unfortunately, while the digital health industry continues to explode, there are significant barriers to widespread adoption and penetration, given the present regulatory, intellectual property, and reimbursement ecosystem. One formidable obstacle for private practitioners is creating a business model deploying digital health that creates a profit and delivers improved quality of outcomes, reduced per capita costs, and a better patient experience and does not interfere with workflow of doctors and their already overworked employees. In addition, clinicians are looking for business plan B, i.e. extricating themselves from being dependent on third-party intermediaries and payers with resultant increases in cost, administrative overhead and decreasing revenue due to dropping reimbursements. Consider patient-funded business models.

A business model describes the rationale of how an organization creates, delivers and captures value. Lean startup gurus like to describe 9 elements of the business model canvas. These are hypotheses that need to be tested and validated so you can create a model that will scale. Parts of the model include 1) key partners, 2) key activities, 3) key resources, 4) the value proposition, 5) customer relationships, 6) channels, 7) customer segments, 8) cost structure and 9) revenue streams.

An alternative to the third-party payer model is the patient-funded business model. London Business School entrepreneurship professor John Mullins describes 5 models of customer-funded businesses in his new book, “The Customer Funded Business.” Mullins exhorts readers to look to customers for funding new businesses, not investors, since they are the “smartest money,” those who will validate your model and give you the money you need to thrive. The models are matchmaker models (eBay), pay-in-advance models (Costco), subscription models (Netflix), Scarcity-based models (Zara), and service-to-product models (SaaS and Microsoft).

If you want to get out from under the thumb of third-party payers, consider creating, validating, and deploying patient funded care models. For example, what if you created:

  • Digital health software as a service: Suppose you create an iPhone app or remote sensing technology that you could then scale and sell as a service. What about web-based health and wellness tools, education, and information?
  • Retainer concierge practice models on steroids: Ask patients to pay in advance to have access to discounted services. Target and Kaiser recently announced a partnership to provide customers with expanded in-store healthcare services and products. Will Costco or another disruptor be far behind, offering wholesale durable medical products and services to those who pay a membership fee?
  • Scarcity model for scarce or unique services: Offering patients with orphan or rare diseases products or services they can’t find anywhere else.
  • Matchmaking services for patients seeking care, information, and education: The Texas Transplant Association recently launched a Transplant Library, a database developed to provide easy access to the best available, evidence-based publications in transplant medicine.

As more and more patients pay more and more out of pocket for care, there are opportunities for private practitioners to pursue them. Deploying digital health, mHealth, and eCare technologies as part of a digical (digital and physical, brick and mortar care channels) presence using patient-funded models might set you free.

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