27 September 2019
Top 10 healthcare platforms with potential to win in transformation
With more than 270 individual software vendors serving the doctor community in Australia it’s not all that surprising that there is a lot of discontinuity in how our healthcare system is wired together. GP and specialists are relatively computerised, but only with deskbound systems relying on local servers or offsite managed servers for one location. There is virtually no real connectivity like you see in other digitally transformed markets, or an internet sharing layer – yet.
At the last Wild Health Summit in Sydney, one of Australia’s most influential and powerful digital health system brokers, Dr Zoran Bolevich, CEO and CIO of eHealth NSW, sent an interesting message to strategists, software system vendors and providers.
“In a lot of other industries you get a product full of open APIs, often standards based, or sometimes proprietary, but either way you can do all sorts of things with these products and platforms. This is why the world is moving more towards such platforms, “ he told the Wild Health Audience .
“You can augment them, you can put innovative ecosystems around them, and so on. We don’t see that in health yet….I’d like to see a lot more open APIs in everything”
Dr Bolevich believes that healthcare’s lag in developing open systems and APIs, is now holding the sector back. He said that systems that weren’t open and interoperable, are by their nature unsafe, and his department now worked carefully via procurement and commissioning to encourage their vendors to move faster towards developing open interoperable systems.
The irony is that Dr Bolevich works at the top end of town, where the big global EMR vendors such as Cerner, Epic, DXC and Allscripts play. These big EMR systems and their related admin systems, have a long history of information blocking in the US, a term that refers to vendors surreptitiously maintaining systems that lock of up patient data within their proprietary environment. In this world, even data using the same vendor in two different hospitals won’t talk to each other well.
The problem became so big in the US that the government ended up introducing legislation forcing major vendors to look forward and open up their systems to a degree. Most recently the US government has proposed mandating that each vendor and each provider be FHIR capable in order to create the efficiency of a common approach to interoperability in that country over time.
The flow on effect for Australia in terms of interoperability has so far been fairly thin on the ground. Companies like Cerner and Epic, realising that they had to hedge their bets embraced open systems architecture to some degree, developing an interoperability conscience, and incorporating FHIR interfaces into some of their products as a statement, more or less, of their intent over time. But ‘over time’ might be translated as in ‘their own good time’. Moving away from ‘blocking’ is a business model change that as commercial entities they will want to control very carefully.
In Australia Cerner introduced Argonaut and FHIR last year via their big EMR hospital products. The Argonaut Project is an implementation community of leading technology vendors such as Apple, Cerner and Epic, and provider organizations, formed to accelerate the use of FHIR and open healthcare information exchanges.
HL7 Australia launched a project to ensure local vendors and providers are able to tap into Argonaut, by developing some local context for the protocol, and some vendors already have incorporated this localized interpretation of the resource.
Ultimately Argonaut (and via it,FHIR) is designed so it can be implanted in lots of e-health record systems and potentially allow much freer flow of atomized data and better access control of what patients want and don’t want.
Cerner is mainly a hospital EMR vendor, so Argonaut and FHIR inside Cerner, will, theory, begin to spot FHIR capability inside hospitals all over the country in the coming years. That might make it feasible for hospitals to talk much more easily to each other, and perhaps most importantly, to the patient management systems of GPs and specialists.
But Argonaut and FHIR are now being tested and implemented in some of our major primary care and specialist EHRs, including Medical Director, Best Practice and Genie. The Australian Digital Health Agency has also acknowledged the importance of FHIR and Argonaut, supporting tests of FHIR interfaces in its interoperability project, providing developer resources to support FHIR and creating a FHIR gateway for the My Health Record (MHR).
In Austraila there is still a lot of uncertainty around how FHIR will actually work, and how our current major vendors – hospital, primary care and specialist – might actually migrate their old architectures into open, web and FHIR based platforms, that hold the potential of revolutionising interoperability, eventually.
But if you look at most other markets that have embraced open systems, open APIs, cloud delivery, the dynamics at play from a business perspective are very different to what went before. By its nature, connected, interoperable platforms tend towards what is termed network effects, where the more data and customers they get, the better they are, and so markets rationalize towards fewer, larger, more effective and powerful platforms.
The bigger the platform the more efficient. And the more powerful. Citing examples of other markets which might be relevant to healthcare is fraught, because healthcare is inordinately more complex than other markets that have beaten it to digital transformation. But if you think of Google, Facebook, Amazon and Microsoft, you will get some idea of the sort of dynamics which could potentially unfold, albeit in a smaller defined market. Maybe think Xero and accounting instead.
If this is going to happen, out of the current crop of candidates of EMRs, patient side platforms, and vendors, which ones have the best credentials to make it big in a digitally transformed healthcare system?
The following list isn’t exactly scientific but it’s not without some organized thought about how and why one vendor or another might succeed in this game. It’s based on a scoring system out of 100, and what the author knows about each of these vendors, which I will admit is not going to be evenly balanced between each vendor. It weights 20 points to each of the following characteristics of a platform/vendor.
- Existing brand/platform footprint and distribution (patient and doctor side)
- Product (characteristics, especially its open systems capabilities and development)
- Management Capability
- Other individual factors
We are going to count backwards for a bit of suspense over our next four irregular insights newsletters but somewhat oddly – we have a reason – we are starting with numbers 7 and 8.
No 8 HealthEngine
At one stage in the not too distant past HealthEngine was a market darling being spruiked as the connected healthcare platform of the future in Australia. Whereas many had thought that the hub of useful data transaction probably sat around the clinical side EMRs like Best Practice, Medical Director and Genie or perhaps even some hospital systems, the founder of HealthEngine decided that if you captured the patient channel, you could rule healthcare from a data and information perspective.
HealthEngine did very well in early days, with something north of two million patients downloading its app and more than one million using the app, mainly for appointments. The appointments channel also gave HealthEngine the opportunity to be in all the GP, specialist and allied health practices around the country, as each of these groups assessed the relative merits of adding appointment functionality to their practices patient experience.
HealthEngine’s business model centres around charging a fee for acquiring ‘new patients’ to a practice. It also has a small base fee per practice but it doesn’t generally charge for each appointment which sets it apart from its major competitor Hotdoc.
In order to make this model work the history and infrastructure of HealthEngine has been heavily weighted to generatimg as much traffic on its consumer portal as possible, and subsequently, to get as many patients using its app as it can. Playing in the domain of Google, and now Facebook even, turns out to be pretty hard and expensive. These global digital data imperial monoliths don’t like having anyone between them and a dollar. That’s likely to stalled some growth for HealthEngine.
HealthEngine is thought to have about 12500 bookable GPs on their system and a lot more practices if you count allied health and specialist practices. If you add them all up they are market leaders. But in GPs its likely they’ve been headed now by a competitor.
Last year, HealthEngine had a Facebook like privacy crisis when it was revealed that their system of rating medical practices was was commercially favouring the organization. They also got accused of selling patient data to insurance companies and law firms. To be clear, HealthEngine maintains that they always made it clear that the information they gathered would be used by third parties, but the ACCC earlier this year disagreed and is taking them court to settle the matter.
Quite apart from the scandals of the last year or so, and the issues of playing in search and directories, the bigger question in the context of the question this article has for HealthEngine is, are they doing enough to entice enough patients onto their platform, to give them enough data power, to be ‘the’ healthcare platform of the future?.
Probably not is our assessment, at least at this stage. The company has stalled at about two million app downloads, and with competitor Hotdoc hot hard on their heels, it feels like the group needs something a bit more compelling than appointments and the odd other functionality feature to get the sort of momentum they originally desired to dominate the market (you can get to you’re My Health Record through the app apparently). They are likely to start adding some third party functionality which may help, like payments, but so is everyone else now.
The company, despite its beating at the hands of their bad PR and an ACCC case, is fundamentally still a good one and is likely to stay part of the connected platform scene for some time. But at this stage, the betting is probably more on them being an adjunct partner or platform to the major winner(s).Or, they could get their mojo back. They have a smart and determined founder in Dr Marcus Tan, and probably the second best capital backing of any group in this top 10.
- Largest patient side distribution and footprint to date
- Well backed and long history – lots of capital left
- Top 2 appointment engine in the country
- Privacy and ratings scandal effect on brand
- Single focus functionality on appointments and if they add now, as they must, they are in a race with other groups
- No real doctor side platform access. Although the GP and specialist PMSs connect, they can disconnect if they want and that would be ruinous
Existing brand/platform footprint and distribution
- So far the best patient side footprint and distribution in the country but others are hot on their heels now and they have slowed down
- Brand integrity has taken a big hit with ratings and privacy scandal and an ACCC case that is yet to run
Product (esp interoperability and open system capability)
- HealthEngine is a cloud based play so will be able to talk to anything moving forward in the patient management systems side of the market as they move to cloud
- Probably one of the two best appointment engines in terms of functionality but appointments is not the be all and end all of the distribution game. They need significant new USPs in the near future if they are to be attractive enough to maintain their lead in patient footprint
- Until recently you might have said that the management team was one of the best in Australia. But the ratings and privacy scandal have dented that reputation, at least from a PR and marketing capability perspective
- Little doubt that the group has been well led in terms of technical development, especially in its early days. The issue moving forward is can the management pivot their patient side footprint into other attractive functionalities that will renew their patient app growth and their positioning.
- HealthEngine has owners ranging from Telstra and Channel 7 through to global VC behemoth Sequoia Capital. It’s not likely the first two of these owners help much these days if they ever did.
- In the latest funding round, HealthEngine got $27m from Sequoia, which by far is the largest single funding round for any Australian health tech company. They’ve likely got a lot of that left still and Sequoia have smarts which unlike Telstra and Seven are likely to be helpful.
- The founder is smart and determined and Sequoia do not mess around.
- There is a way for HealthEngine to run yet.
No 7 Hotdoc
If you asked one of Hotdoc’ss four founders and their CEO, Ben Hurst, if his company should even be on this list I think he’d probably say no in an abrupt manner. He’s not about ruling the world, he’s about securing his niche, and his niche, for now at least, is appointments, and then, when he is ready, other major patient functionality. They are on the list because that patient side focus, might just one day have them move a long way up this list.
Hotdoc’s major competitor is HealthEngine but if you look at the paths the two groups have taken to being the top two appointment offerings in the country, you see major differences in funding, management style, technology and objectives.
From a funding and management perspective, Hotdoc has managed itself from a start up to the leader in at least GP appointments in just six years, with a lot less money than HealthEngine had. It is estimated that they have over 13500 bookable GPs, more now than HealthEngine but HealthEngine probably has more bookable healthcare practices still if you count specialists and allied health.
To look around their offices and chat to their CEO founder, you get the feeling that this is more a modern open systems tech company in the mold of a Xero, Canva or Tyro. It’s not like any other major medical software vendor company in Australia in how it feels
That’s probably because they are a much younger company than HealthEngine (6 years old versus 13 years for HealthEngine), have four young founders all with some technical bent and are backed by Airtree ventures, which is one of Australia’s smartest VCs.
It may not be right to say, but Hotdoc feels more like a technology company and HealthEngine a healthcare company. And in case you think one is better than the other, that’s not the case necessarily, even in healthcare where you’d think the inside knowledge would put you ahead. Both sides of this equation are important these days. For instance, a healthcare company sometimes will be stuck in the past in the manner they look at a patient. A tech company, that knows a lot of about user experience and design of consumer experience, can bring a lot of utility to a situation like healthcare.
From a funding perspective backing for HealthEngine in its time is nearly $38m whereas Hotdoc has been around half the time, with only about $8m in backing, and has gotten itself to a leading position, at least in the all important GP market.
Hotdoc not surprisingly, has a different business model from HealthEngine. In essence they charge a license fee per doctor (about $75). HealthEngine’s main income is from acquiring new patients for a practice (at about $9 per new patient). In a way the two groups complement each other, although when you look at their market share maps, they don’t have a lot of overlap between who uses them.
Hotdoc don’t have a giant portal so aren’t contending all day with the vagaries of Google and search, which you could envisage is a big distraction for HealthEngine, but they do have a patient app which is growing rapidly, and their system can talk to other systems to deliver appointments.
- Singularity of focus of management and quality of tech prowess
- Well backed with lots of smart advice
- Top 2 appointment engine in the country
- Maniacal patient side user experience focus
- For the purposes of this article, they aren’t aiming to rule the distribution world in health – just appointments for now and as they move along that path the next big thing in patient experience. Maybe that actually isn’t a con at all though?
- Although they are symbiotic to the major patient management systems, if one of the bigger systems wanted to cut them off they could. Eg, imagine if Best Practice and their new app went viral and they decided they didn’t need a third party appointments technology provider any more
Existing brand/platform footprint and distribution
- According to Hotdoc up to 50,000 patients per day are booking using their app and they process around one million bookings per month for their practices.
- If there are 100 million appointments per year then perhaps their footprint with patients is 12%?
Product (esp interoperability and open system capability)
- Modern web and cloud architecture with open APIs
- Functionally they have led the way in recent years on some important improvements to patient experience. Eg, SMS appointment reminders
- Four founders, all with a technology background or knowledge, and at least one doctor in there.
- Well advised and backed by one of Australia’s and most savvy VCs
- Modern and young…understand millenials and how they engaged with technology
- Ownership structure isn’t known but we do know they are mainly backed by Airtree Ventures, so presumably the founders aren’t the ones in control
- About $8m in funding so far, and very solid revenues and revenue growth, so likely to be able to attract more funding if required
- The management team is young, smart and in far more in the mold of successful start ups we’ve already seen in other markets
- Hotdoc has just done a deal with the market leading specialist software group Genie Solutions which gives it massive potential for expansion beyond its current GP base of 13,500 doctors. Through Genie they have access to another 10,00o or so doctors. For the next few years they are going to grow, and capture patient data from both patients who use both specialists and patients. That might be very interesting data.
Next newsletter : Numbers 9 and 10…stay tuned