Why are you still on Facebook? And multi sided platforms in healthcare
Are you still on Facebook? Despite its many flaws (and the media making sure we know of its many, many blemishes), the answer for most of us is yes, simply because most of our friends and family are still on it and find some modicum of value in being connected to those of us on it.
Facebook is just one of many other high-growth technology firms that have disrupted industries and created tremendous value for their customers and suppliers (and shareholders) by serving as multi sided platforms (MSPs). MSPs (and multi sided networks or MSNs) bring together two or more groups, often different markets, to transact or exchange information. What is unique about MSPs is their tendency to be self-perpetuating or self-defeating: the importance of “network effects”, in which the value of the platform to its users tends to grow with the number of users.
A combination of (i) network effects, (ii) the rapid growth as a result of these network effects, and (iii) the value that a multi sided platform can charge to outsiders who want to access its users, has led these companies to become among the most highly valued in the world.
Is there a place for MSPs in healthcare? Are there any successful examples?
There are in fact several examples of successful MSPs and MSNs, including:
Surescripts, founded in 2001 to digitize electronic prescribing, has brought together electronic health record vendors (EHRs) representing office-based prescribers, and connected them to retail pharmacies. In 2017, Surescripts processed 1.7 billion prescriptions across its multi sided network, representing more than 75% of all prescriptions written in the U.S.
CoverMyMeds has created an electronic platform used by physicians, pharmacies and pharmacy benefit managers (PBMs) to more efficiently process prior authorization requests for medications. More than 300,000 providers used CoverMyMeds to submit a prior authorization for a specialty medication.
Flatiron Health was acquired in early 2018 after build out an oncology EHR platform that had highly valuable data that life sciences firms use for a variety of purposes. (Here is an excellent write up on Flatiron and its unique MSP approach).
GoodRx appears to be building a successful platform in which it aggregates prescription discount offers (from discount card companies, patient assistance programs, pharmacy generic offers, etc) and presents those prices to consumers, allowing them to price-shop for their prescriptions.
It’s Not Facebook, it’s What Facebook Figured Out
Facebook’s product isn’t terribly unique; rather, it is Facebook’s user base that is. Facebook figured out very early on how to quickly work through some of the thorniest problems facing MSPs. In doing so, they built a tremendously powerful platform, one with many problems but also substantial benefits to its users.
Building MSPs in healthcare adds several additional layers of complexity, but there is massive potential to transform healthcare in ways we are only beginning to imagine. There are exciting firms out there who have identified highly inefficient, opaque, and redundant processes between various different healthcare organizations that add time, waste and cost to the system. They are applying technology and MSP concepts to bring radical transparency, efficiency and lower costs to healthcare. These firms, their founders, employees and investors the represent the vanguard in healthcare.
The benefits that MSPs can bring to healthcare is not conjecture: GoodRx reported saving Americans $5 billion as of April 2018; research by Surescripts showed savings of $14 billion per year; and CoverMyMeds reports increasing speed to therapy for patients facing prior authorizations.
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!