Subscription-based software-as-a-service (SaaS) is virtually a standard in the tech world.
Healthcare-as-a-subscription may be the future standard for healthcare.
According to the American Hospital Association, companies that drive the post-pandemic economy will be looking beyond transactional, episodic relationships with patients and may instead focus on subscription-based programs.
Patients are demanding change. According to the PYMNTS and CareCredit study “ConnectedEconomy™: Omnichannel Healthcare Takes Center Stage,” U.S. consumers began using digital channels to connect with their healthcare providers, and they have been using patient portals, telemedicine technologies and mobile apps to connect with their providers ever since. Forty-six percent of them — a projected 119 million — now use a mix of both traditional in-person healthcare options and digital options to access healthcare services.
And the subscription business model holds the potential to offer those options at an attractive price. As new entrants continue to encroach on the healthcare market, expect them to apply the subscription business model to how they organize and deliver services. They may connect with consumers in ways that are so convenient we cannot yet imagine them. And they will use the subscription model to build a loyal customer base and steady cash flow.
An Evolution, not a Revolution
For their part payers, including those in the public sector, are yearning for a solution that simplifies healthcare delivery and finance and enables ubiquitous yet affordable access. And the trend has been years in the making.
The subscription model has its origins in the health maintenance organization (HMO) concept, pioneered by Kaiser Permanente in the 1970s and 1980s. The model became popular among corporations seeking stable, predictable employee healthcare costs. But workers balked at the limited choice of providers, therapies, and treatments, and the model morphed into the Preferred Provider Organization (PPO) concept, which allows patients to choose providers outside of their plan’s network, albeit incurring higher out-of-pocket costs.
A relatively recent model for primary care is called concierge care. In this model, patients pay a monthly, quarterly, or annual fee for unlimited access to a primary care physician. This typically includes relatively unhindered telehealth access. This model hasn’t caught on with employee benefit packages.
Tech has its eyes on the prize of healthcare, which constitutes almost 20% of U.S. GDP. Amazon, for one, appears to be intensifying its push into healthcare. The eCommerce giant recently announced plans to acquire primary care company One Medical.
The goal is to offer more convenient and affordable health care both in-person and virtually, the companies said. The two aim to combine One Medical’s technology and team with “Amazon’s customer obsession, history of invention, and willingness to invest in the long-term,” One Medical CEO Amir Dan Rubin said in a statement.
One Medical offers telehealth visits, and also provides in-person care in more than a dozen locations across the country. An early purveyor of tech-enhanced health care, the company boasts online booking for appointments and text-messaging with doctors, as well as a homegrown health record software that it says is more convenient for clinicians and patients.
Primary care is just one aspect of healthcare, and Amazon is seeking to horizontally integrate the entire spectrum. The company launched Amazon Pharmacy in 2020.
The company is also vying with Big Tech competitors like Google and Microsoft for cloud business, signing IT contracts with major health systems like Geisinger.
What the Future Holds
The big question is whether Amazon and other entrants can use the data they obtain from these arrangements to innovate in the space. For example, it may be able to use AI and ML to identify better ways to treat diseases. The more data it has access to, the better insights it can obtain in theory.
A broader issue for tech companies is the entrenched position of incumbents, with strong brands and trusted relationships with patients. Corporations that have had success in rolling up what was once a cottage industry have done so by acquiring hospitals and physician practices.
Leading with tech has been far less successful. Much of healthcare happens face to face and involves far greater consequences than mere commercial transactions.