Big Tech Is Rewiring Healthcare in the Platform Revolution

The healthcare industry will consolidate around a small number of platforms

Published: Thursday, May 21, 2020 - 12:02

The digitization of patient data and the adoption of cloud-based healthcare management systems have created efficiencies and new business models across the value chain. Advancements in AI provide superior decision support systems to doctors, while connected devices enable the remote delivery of care and monitoring. 

But the most important transformation in healthcare is only just beginning to take shape. Digitization of healthcare demand and supply will eventually lead to the creation of large platforms that aggregate industrywide demand and supply, and orchestrate interactions between producers and consumers of healthcare. 

Sensing this opportunity, big tech firms from Tencent and Alibaba to Amazon and Google, as well as industry incumbents like Philips and UnitedHealthcare, have been moving toward platform models. To understand the importance of platforms in healthcare, we need to start with the forces driving the digitization of demand and supply in healthcare: the digitization of patient data and provider workflows. 

From personal gadgets to the cloud

First, the digitization of patient data digitizes the demand side of healthcare delivery. Electronic health records (EHR) digitize patient information, while the introduction of sensors in medical equipment enables the digitization of clinical test data, particularly medical imaging data. Furthermore, the uptake in the use of consumer activity trackers (like step counters) is powering digitization of consumer health data outside the confines of traditional care. 

Next, companies across the healthcare value chain have been transitioning their workflows to the cloud. Originally, it was about reducing costs, but it has simultaneously led to the digitization of the processes and workflows of these companies, thereby digitizing the supply of healthcare. Application programming interface (API) enables connectivity between these increasingly cloud-based services and results in the creation of a connected platform ecosystem. 

These factors are driving the rise of platform business models centered around the patient. However, poor interoperability and the fragmentation of patient data across health systems make it difficult to create a comprehensive view of the patient across the continuum of care. 

The rise of mega-platforms

Many companies from diverse industries are seeking to capture this patient data and build their own ecosystems. Healthcare tech manufacturer Philips is in the process of building HealthSuite, a data analytics platform centered around device-captured data. The digitization of sales receipts is allowing pharmacies such as Walgreens to create patient profiles. Tech giants such as Google and Amazon are repurposing their abundant user-data to enter the healthcare industry. EHR data are being used by care providers as the core of their platform efforts. Insurance companies are also moving from servicing claims toward creating ecosystems based on a continuous stream of patient data captured using sensors and connected services. 

Regardless of the starting point of the company, these various players across the value chain are all aiming to build a patient-centric ecosystem. As firms invest across the value chain, we will see the rise of healthcare mega-platforms.

Tencent is one pioneer. Tencent’s WeChat Intelligent Healthcare platform allows the use of WeChat public accounts to book appointments and payments. In collaboration with insurance firm Taikang, Tencent also offers WeSure, a medical insurance that offers money back based on WeChat users’ step-count data. Also included in Tencent’s mega-platform is the AI Medical Innovation System (AIMIS), a widely used imaging service in hospitals. The Chinese government ratified AIMIS as the national AI diagnostic medical imaging service in November 2017. 

The importance of alliances

Another mega-platform in China, Alibaba, is pursuing strategic partnerships to create its own platform-enabled ecosystem. Central to this ecosystem is Alibaba Health’s partnership with Carestream Health to create a medical image management cloud platform. The Alibaba Health platform benefits from Carestream’s image management capabilities. Alibaba also leverages its strategic alliance with pharmaceutical company GSK Consumer Healthcare to facilitate appointment booking and telemedicine services. Pharmaceutical firm Merck is another strategic partnership for the Alibaba Health ecosystem, which also includes Allergan for medical aesthetics and Bayer for self-care products. 

One of the largest telehealth platforms in the world, Ping An Good Doctor, has more than 200 million registered users. This healthcare provider-patient interaction platform captures data from patient interactions to train its learning models, which increasingly support provider decision making. Other participants in this ecosystem feature insurance firms and healthcare administrators. Ping An has also invested in TytoCare, a platform that allows patients to measure their vital functions remotely using a smartphone. It also allows doctors to perform remote tests on their patients. Ping An Good Doctor and Grab have also formed a joint venture to carry the platform to Southeast Asia. Grab’s digital wallet, GrabPay, will be leveraged as a payment provider for these services. A platform itself, Grab will act as a capability provider and distribution channel. 

Amazon’s acquisition of mail-order pharmacy PillPack for $753 million puts the firm squarely in the pharmaceutical distribution space. There are key synergies between PillPack’s prescription management platform, PharmacyOS, and Fulfillment by Amazon. Using PharmacyOS, PillPack will conduct the dispensing and monitoring of medication as well as providing customer support. It also provides a pharmacy-delivery application programming interface for manufacturers and new companies to plug into. Moreover, Amazon Web Services gives Amazon the advantage of readily creating a healthcare cloud service, combined with its infrastructure capabilities. 

Tracking interaction across the healthcare value chain

Device-generated data are enabling manufacturers like Philips and Medtronic to create their own platforms. Both companies are moving away from their device-driven origins and toward a data-driven model of value, featuring a common data platform for their connected devices and applications. 

Philips HealthSuite provides a digital platform for partners to work with, including a range of services and devices across the healthcare value chain. Philips’ own devices are integrated into this platform and created the initial consumer pull, which in turn, is expected to attract more partners on the platform with complementary solutions. The platform integrates multiple devices and applications across the Philips portfolio, ranging from baby care to medical imaging and eldercare solutions. 

Finally, the shift of global healthcare regulation to a value-based model will drive the adoption of platform business models, which track interactions across the healthcare value chain and can reliably quantify results. Coupled with the digitization of patient data and provider workflows, this regulatory shift will increasingly enable platforms across the healthcare value chain. The digitization of patient data and provider workflows will grant these platforms access to the essential data for connecting patients to specialized healthcare services. Ultimately, the industry will consolidate around a small number of platforms that best harness these connections and orchestrate ecosystem interactions. 

First published April 15, 2020, on INSEAD’s Knowledge blog.

About The Author

Sangeet Paul Choudary

Sangeet is an INSEAD Entrepreneur-in-Residence and the Founder & CEO of Platformation Labs. He is also the co-author of Platform Revolution and is on the 2016 Thinkers50 Radar, a global ranking of management thinkers. Sangeet is also an advisor and executive educator to Fortune 1000 CXOs and high-growth start-up founders across multiple industries. He has been selected as a Young Global Leader by the World Economic Forum and is a working group chair at the WEF’s Global Future Council on Platforms and Systems. His work on platforms has been selected by Harvard Business Review as one of the top 10 management ideas globally for the year 2016-17. Sangeet is the co-chair of the MIT Platform Strategy Summit at the MIT Media Labs.