The Great Consolidation, Part 1: The Employer Health Platform Wars

Fueled by COVID-related demand for virtual care technologies, the growth in digital health funding has been nothing short of spectacular. According to sources, total funding for “digital health” venture capital, debt, and public market financing reached $21.6 billion in 2020, an increase of an amazing 103% from the $10.6 billion raised in 2019. This has resulted, as I’ve written before, in an increasingly confusing cacophony of provider- and patient-focused applications or services that target narrow slices of the health continua, leaving the job of knitting these together to the harried buyer (employer-payers, insurers, and CMS) and the increasingly frustrated users (overworked providers and overwhelmed consumers). What’s worse, the empty calories of some of the cotton candy solutions are leaving plenty of people with more than “sticky fingers” (and rashes and burns as well!). 

Within this broader trend, however, there is a new development—the race to invest in and build the platform that can become home to a true Full Stack Primary Health offering. The promise of Full Stack Primary Health is that it will bring together not just the best of the various point solutions, but also an entirely new framework in which payers, providers, and patients can maximize value. I actually wrote  about the promise and potential of Full Stack Primary Health over two years ago. And, for the record, my general enthusiasm for a digital-first and integrated care delivery platform remains extremely high. As I’ve said before, it’s a key part of how healthcare is going to move out of its inefficient, largely ineffective, and excessively costly current state.

Julie Yoo deserves a shoutout for being early to identify this trend as well as document the bundling/unbundling concept in primary care as well as the notion of the need for a new “care operating system”. As a partner at Andreessen Horowitz, she claims to have documented over 1,000 Full Stack digital health companies that have launched in the last three years. Let that contradiction sink in—1,000 companies vying to be THE “operating system” from which all the various solutions will operate with and within. As we learned from the original desktop/operating system platform wars (remember Microsoft vs. Sun vs. IBM vs. Apple vs. Linux?) there will only be a few winners and the rest will be kicked to the innovation dustbin.  

Other relevant examples come immediately to mind like the phone OS battles. Imagine a world where there are 1,000 different operating systems for mobile phones. This would create incredible “frictional costs,” like trying to get phone OS-A to communicate effectively with phone OS-B, not to mention trying to get designers to design for apps on both systems, reinventing physical hardware (cords, plugs, chargers, etc.), and myriad other issues which would prevent the network from creating the value described in Metcalfe’s Law.  Within the healthcare sphere, we can look at the ambulatory EMR market with which I am personally very familiar. In 2006, there were over 1,000 ambulatory EMRs vying for market share (and government “Meaningful Use ” handouts). Fast forward 15 years and we find that Epic has 30% of the enterprise market, the top five vendors account for 80% of the sales, and the next five count for the next 8.5%. The long tail (or last 10%) includes another 200 or so who are fighting for the scraps like crabs in a bucket. 

So, just like other “networks,” I envision that the market for employer health services will also go through its own Great Consolidation. And, it has already started with the first salvo coming from Teladoc/Livongo, followed by Grand Rounds/Doctors on Demand, followed by Accolade/SecondMD/PlushCare, and soon to be followed by many others, I am sure. Each of these entities has realized that they have tapped the virtual urgent care market as much as they can, and that to be viable in a world that expects more comprehensive solutions, they need to create more value, be more capable, and have more impact. Rando doctors taking 10 minutes to treat “30 simple things,” or simple second opinions, or even care navigation as a single service doesn’t a dent in healthcare make. 

I expect the same Great Consolidation to happen within Full Stack Primary Health with increasing velocity in the back half of 2021. Many of the ambitions of Full Stack center around the vertical integration between virtual care and physical care delivery, as well as horizontal capabilities, adding mental health, physical medicine, care navigation bases, and related services. Full Stack starts to get interesting when you begin to add remote monitoring, testing, and related health monitoring services, along with wraparound capabilities that augment high-cost services, centers of excellence, condition- or segment-specific services (fertility, LGBTQ, etc.), and other consumer targeted services. Of course the 1,000 flowers of digital health point solutions must fit in here somewhere as well . . .

. . . which leads us back to the platform (and associated operating system) that will power the Full Stack Primary Health vision. I believe that Crossover Health represents a new type of technology-enabled medical group that is powering not just a differentiated member experience, but more importantly, is both architected for and constructed to achieve the Triple Aim (lower cost, higher quality, and increased engagement). Thanks to our population health focus, our embedded care navigation, and incentives and payment model, Crossover is designed to be aligned to deliver the results our employer clients pay for. I believe that a technology enabled medical group with both horizontal and vertical capabilities will be the platform that wins out in the coming Great Consolidation and will push us forward with Great Expectations into a new Era of Health that is not just unbundled but also unbounded. 

Health and care, as it should be!

In Part 2, we explore the Four Pillars of Full Stack Primary Health, in Part 3, we re-examine the three “Centers of Gravity” for Employer Ecosystems, and in Part 4 we bank on the currency of Trust.