Bits and pieces
The anatomy of digital healthcare ecosystems
Latest thinking on healthcare innovation spotlights the notion of health ecosystems and their evolution in line with the sector’s new reality and needs. Although current healthcare players and big technology companies will all take part in these developing communities, it is likely to be new and emerging actors that take some of the most innovative roles, integrating data and engagement, and convening participant.
The concept of ecosystems has become increasingly common in business. It refers, much like its precursor in the natural world, to interacting and co-evolving communities of different agents, companies and services, connected by an underlying infrastructure – which these days is often digital. Connected ecosystems in the form of digital platforms have had a huge impact on many industries over the past decades. They can address inefficiencies between demand and supply, generate – and prosper from – huge quantities of data, and benefit from network effects, by which the value of a service increases according to the number of people using it. They have yet to take much of a hold in healthcare – but that looks set to change.
Ecosystems of some kind have actually existed in healthcare for a while: the diverse interacting figures of patients, healthcare professionals, clinics, payers, regulators, pharmaceutical companies and so on, connected (not always very efficiently) by information flows, processes and control.
Now however, both business and academia is starting to conceive of the future of the healthcare industry in terms of digitally connected ecosystems. This perspective is apposite for various reasons. The increasing prevalence of chronic disease and the related problem of affordability, alongside growing decentralization of services, mean that the healthcare challenges for the 21st century and beyond are too complex to be solved by one player alone. Accelerating technological innovation, the rise of AI and big data, and the availability of investment capital for innovative ideas, mean that a plethora of players of all sizes are entering the healthcare arena: from the big technology firms, leveraging their dominant user bases to impose common standards to existing workflows to enterprising startups revolutionizing the space with novel specialist offerings. According to James Moore, who first coined the term, “business ecosystems” are necessary when the solution to a need requires “the participation of dozens or even hundreds of contributors, each of which is master of fast-moving, complex and subtle developments in its own domain”.
Literature on the subject has started to provide frameworks to conceptualize digitally enabled healthcare ecosystems and a taxonomy of its potential players. A recent paper on healthcare innovation by McKinsey and Company imagines the patient at the center, interacting with different players and services, including “traditional care” such as doctors and pharmacies, but also home and self-care such as remote monitoring devices, social and community support services, financing support and their daily life activities and habits. Like all good frameworks, these find ways to simplify a potentially nebulous concept into something more accessible and useable. McKinsey’s paper for example deciphers the healthcare ecosystem into three layers: an infrastructure layer over which data is captured, stored, managed and shared; an intelligence layer, where this data is turned into useful information using advanced analytics; and the engagement layer, the point of interaction with patients and consumers, through tools and services such as wearables and mobile applications.
A significant question is exactly who the main players in each of these layers might be. It seems likely that three big technology companies, Google, Microsoft and Amazon, already dominant at the infrastructure level, will consolidate their power further here. What is less clear is where else these companies, and other big tech players like Apple, will focus. Will they use their experience in both the engagement and intelligence layers, to accelerate consolidation there, or even start to curate their own ecosystems? Apple and Google are highly active in consumer applications, and big tech companies are throwing huge amounts of money and talent into data analytics, machine learning and artificial learning (70% of AI experts in the US work for Google, Facebook, Microsoft or Amazon). However, the complexity and specificity of chronic disease and data analytics mean that neither the engagement nor the intelligence layers are likely to present a “winner takes all” market, but rather one that will continue to include multiple and diverse players. It is also worth remembering that most of that AI expertise in big tech has come through acquisition of innovative startups, and that the power wielded by these companies is slowly starting to generate a backlash from both public and politicians.
Other players that may take an important role in new health ecosystems include payers and insurers, who have a privileged position given their access to patient and HCP data and their understanding of local regulation. Providers such as hospitals or clinics already have multiple touchpoints with chronic disease sufferers and so might become key players in ecosystems built around incurable illness. There is no doubt that established pharmaceutical and life sciences companies will take a role somewhere.
However, while these established actors will all have a place in digital health ecosystems, it seems unlikely that they will take on the really innovative roles – working across different layers. Multilayer players, who can integrate and maximize the activity carried out at the infrastructure, integration and engagement levels – and beyond – will be the ones who generate new, real value out of health ecosystems.
The likes of Apple and Google would need to overcome significant structural obstacles to do this, not least the navigation of strict and shifting regulatory landscapes. Big pharmaceutical companies face multiple conflicts of interest that make it tricky to work multilayer. And payers and insurers, outside of a few extremely integrated healthcare systems such as the UK and some other European countries, are just too fragmented to be able to generate the critical mass that a digitally-enabled ecosystem requires.
The multilayer actors are likely to be new players, who combine a specialist understanding of the industry with an agility around technology. And in fact, we are already seeing them start to appear. Teladoc, the telemedicine leader, and Glooko, the diabetes management platform, move nimbly between engagement and intelligence layers, with easy to use interfaces and intelligent analytics. These in turn may expand internationally, or, in an industry that differs hugely across geographies, become a model to follow by local players in different regions.
Digitally-enabled ecosystems cannot survive without the role of the convenor or curator – the entity that brings together diverse specialist actors to enable the design of effective care programs according to the population, while creating and maintaining the governance to ensure that the system works for the good of the patient. Once again, it is likely that this role is taken by new or emerging actors. The convenor or curator role, by its very nature, needs to be impartial or agnostic towards specific solutions. The curator needs to ensure conditions in which all players can thrive and co-evolve: prioritization or favoritism removes these conditions.
Another reason behind the likely emergence of new, specialist actors in healthcare ecosystems is that interaction will not be purely with the “consumers” that tech companies are used to dealing with. Putting the patient at the center of the healthcare of the future, as various authors do, seems logical, very much in the spirit of patient empowerment and resonating with the “customer centric” model used by consumer tech companies. The problem is that things are more complex in healthcare.
A patient-centric vision reflects the large and growing number of tools and services that patients have at their disposal to manage their condition. However, it also supposes that they have both the motivation and the expertise to use these tools to their benefit - two very big demands to make of anyone. As analytics grow in complexity, ecosystems will likely move from being connected, as they are today, to smart, and eventually to intelligent – at which point the analytic tools will actually be able to suggest courses of therapy. But if this innovation is going to be converted into improved clinical outcomes, it will need interpretation and decision making.
In the patient-centric ecosystem, the physician is relegated to a secondary role, one of multiple players in orbit around the patient. However, an alternative vision of digitally enabled healthcare ecosystems put the HCP at the center. Centering the ecosystem around the doctor, or the doctor and patient simultaneously, is potentially a far more powerful model, as it provides that missing interpretation and decision making. It also draws on two of the strengths of the doctor-patient relationship. One is the years of expertise that a doctor brings to interpret information and convert it into decisions to improve clinical outcomes for the patient. The other is the impact that the doctor-patient has been proven to have on patient adherence, helping to solve the problem around motivation to actively use the different tools and services on offer (see our own take on this on “Axenya: An App A Day”).
Another alternative vision puts the payer in the center, with a different focus again. In fact, the model could have three alternative centers – the patient, HCP and payer. This in turn would imply different and more complex interactions and thus potentially the addition of more layers to the ecosystem. For example, an administrative layer (that handles among other things, payment and reimbursement), and a supply layer, are critical for interaction between physicians and payers, and an overall communication layer would also become a key layer between these three centers.
According to this model, current and new healthcare players will need to make the decision on where to play not only taking into account the layer or layers in which they wish to work (infrastructure, intelligence, engagement, communication, payment and reimbursement and supply), but also around which center or centers. Different players will likely focus their offerings on working at the interface between two of these centers, prioritizing the interaction between doctors and patients, or doctors and payers (what could be referred to as “U-plays”) or even all three (“W”-plays). How they focus will depend on their core competency, and also on the reality of healthcare in their geography – very different between for example the US, Europe and Latin America.
As Exhibit 1 shows, Right now, we can see a “U”-play in Glooko, used by patients and health-care providers. Another classic “U” play is in the archetypal “telemedicine” player that connects patients to physicians through the communications layer, or online pharmacies that do a similar thing through the “supply” layer. A slightly different version of a “U”-play is Omada, which connects patients, employers and health plans in the diabetes, hypertension and mental health ecosystems. The recent acquisition of Livongo, a platform for chronic disease sufferers and payers, by Teladoc, the telehealth company connecting patients and physicians through virtual appointments, shows a potential combination of “U plays” (or a “W” play), that brings even more pieces of the puzzle together. As Glen Tullman, Livongo’s founder said on news of the acquisition, “Consumers [sic] don’t want to go to four different places, they want to go to one place”
It is clear that the healthcare ecosystems of the future will need a combination of competencies, including highly specialized expertise, nimble innovation and the heft to process enormous quantities of data; as well as the ability to answer the needs of patients, physicians and payers. As we have seen when industry has been disrupted elsewhere, it is likely to be new and emerging players who are able to take advantage of shifts in the system and become some of the key players of tomorrow. In healthcare, these are likely to be the actors who work across levels or convene new digitally enabled ecosystems. Whether these will be companies we’ve already seen emerging or others yet to emerge is unclear. Much is being written on the subject. But the script isn’t finished quite yet.