What the rise in consumer subscription services could mean for digital health
This article was written in collaboration with Dr. Clayton McCook.
The economics of healthcare is a convoluted mess for many Americans. We pay too much for our monthly healthcare premiums and then even more for co-pays and OOP expenses. We are motivated by fear and loss aversion to pay, and what we pay for is protection from bankruptcy and access to doctors for an unknown, possibly affordable, price. We don’t know exactly how much health care will cost, until it does. Hence the rise of price transparency tools like Castlight and WellMatch. Price transparency is one very important, long overdue step towards a better healthcare experience that is fraught with challenges.
The limited number of and size of American healthcare companies give them enormous power so healthcare in the U.S. “has become less like a market and more like a protection racket.” These companies have a long history of business profit, which comes at an increasingly greater cost to patients. As Lloyd Dean, CEO of Dignity Health said at the recent Becker’s Hospital Review gathering, “I worry that millions of people wake up and aren’t sure about where, when, and how they should access healthcare.”
A beacon of hope
There is hope for better healthcare economics with the rising popularity of digital subscription services. Think Netflix or Amazon Prime. Did you know half of all U.S. households are now Amazon Prime subscribers? To put a dollar amount to that growth, between 2010 and last year “Amazon’s sales in North America quintupled from $16 billion to $80 billion. Sears’ revenue last year was about $22 billion, so you could say Amazon has grown by three Sears in six years.”
We’ve subscribed to health insurance companies for years, however, this experience is drastically unlike the modern consumer subscription experience. We don’t have much, if any, say in what we receive. We give money to a company that is supposed to meet our needs, protect us and give us access. How much protection and how much access to what and who at what total cost is often unknown until it happens. Or after it happens when we receive the bill. The experience is confusing and overwhelming. But when we subscribe to Netflix, we can easily access, discover, select, question, and learn to make an informed decision about our spend. We pay money to a company that cares about our experience — they design to win our business. And therein lies the opportunity. When you “treat digital health as a service, not a technology, everyone wins. You save money.”
Implications for digital health
Some economists say we are closing in on a global Subscription Economy. There certainly seems to be a subscription landgrab upon us, and such a world doesn’t seem that far off. Amazon, Netflix, and others are paving the consumer SaaS (software as a service) behavioral path for us. Subscription services are becoming the norm.
That means, too, consumer threshold will rise: “consumers will have an upper tolerance for what they subscribe to, and will become increasingly reluctant to sign-up to any and every long term commitment they see” because “there is a finite capacity both of people’s attention and their disposable income to sustain the number of businesses that are turning to the model” and as we see more subscription analysis services like Trim in use, consumers are going to become more aware and sensitive to the money they spend on subscriptions. Services have to up their game in terms of quality; consumers are arriving with expectations.
The healthcare market is ready. “Patients are looking to healthcare to provide the same highly personalized level of customer service that is provided by retailers + banks.” According to this CNBC report, “people are trying to think about how to do health care in a way that will give them more freedom.” This is not to say that all of healthcare is appropriate for subscription models. Nor is it appropriate to say healthcare should be just like Netflix. We are learning from digital health companies like Better; as the numbers show, the current digital health market is an “environment for discretion and focus,” and unlike Netflix, healthcare is a multi-player system that struggles with direct-to-consumer strategies for unique reasons.
So how can digital health win? Where can we draw inspiration for strategies that will trigger a consumer to say “yes” to a digital health subscription?
Consumer digital health SaaS guidelines ‘FTW’
Be customer centered. Amazon’s number one principle is customer obsession. According to Jeff Bezos, a “customer-obsessed culture best creates the conditions where [success can happen]. No customer ever asked Amazon to create the Prime membership program, but it sure turns out they wanted it.” Healthcare must be customer centered. We must deliver customized services people actually need and want.
Some healthcare sectors are doing this brilliantly in the form of participatory design.
The Nightscout Project is a technology system for people with type 1 diabetes that “was created by patients for patients and was rapidly scaled to a US and global population within a relatively short period.” Says father to a daughter with type 1 diabetes, Dr. Clayton McCook, “Since our family became involved with the Nightscout movement, we have seen our ability to care for our daughter expand exponentially.” There are many ways to do customer centered design. Digital health services, for example, should do the math for their target customers up front in order to communicate that they understand the finances. The reality is there are things that are ripe for disruption if, and only if, the …system believes that patients come first.
Design around already established motivation & behaviors. Learn from customers who already pay — design so they shift their spend toward higher quality, cost-effective options. For instance, menstruating women who want a monthly service that delivers tampons. Or people suffering from chronic pain who need multi-modal programs. Or people living with type 1 diabetes who want a comprehensive solution. Look at One Drop and Bigfoot Biomedical. Bigfoot is designing so people with insulin-dependent diabetes can receive the care they need “accessed with a single prescription and reimbursed as a service for a monthly fee” versus the multiple endocrinology, pharmacy, durable medical supplies touchpoints, and additional time it takes to navigate the health insurance system.
Jeffrey Brewer, Bigfoot Biomedical President & CEO, stated “When we look at a strategic view of where healthcare is headed, what could make prescribing our service easier, including enabling a primary care doctor to prescribe our service, and how we could meet the needs of payers in both measuring and reducing the total cost of care, a bundled monthly subscription service met all of these needs. It simplifies access by having one prescription for a provider (as compared to 8–10 prescriptions today), one copay for patients (as compared to a bewildering set of co-pays for durable medical equipment, medical benefits and pharmacy benefits that patients experience today), and one electronically adjudicated payment for payers (as compared to mixture of electronic adjudication and paper-based processing today).”
Hopeful Bigfoot customer McCook said, “I’m banking on the success of Bigfoot. Such a service would be an absolute dream come true and make caring for our daughter so much easier. If we could get her insulin, pump supplies, and CGM supplies from one place, and if we could get the prescription for said supplies from our GP, it would make a huge difference. Their goal is to create a system that is not only practical and reliable for patients and caregivers, but that is also affordable and accessible to as many people as possible, and that gives me tremendous hope. Of all the companies and all the products currently available or planned, Bigfoot has the most potential to ease the burden on my daughter and allow her to manage her type 1 diabetes in ways we never dreamed possible when she was diagnosed over 5 years ago.”
Use positive reinforcement. Positive experiences lead to long-term engagement, according to the top behavioral scientists behind the “Making Behavior Change Stick” program. They partner with consumer facing companies that care about customer satisfaction so their participants “get the most out of the program and are happy, because being happy has a lot to do with long-term change.” Some research indicates punishment produces immediate behavioral outcomes, but that is a conflicting strategy for retention.
Imagine if your gym positively reinforced your exercise goals. You might be better at exercising. You pay for the gym to feel better; and the most common behavioral pattern is to remain active for 6–8 weeks, then fall off. Gyms rarely do anything specific to prevent that attrition because a large part of their revenue depends on members paying and not showing up. That is not a business interested in your success. If you join a gym to feel better and fail to regularly attend, then you’re probably not feeling very good about yourself. In the land of Netflix and Amazon, when a customer goes silent, the company reaches out. Successful consumer SaaS companies prioritize positive customer experienes.
Build trust, fast. There’s no quicker way to lose a customer than to lose their trust. This is especially true in digital health. That means regularly communicating with, knowing, honoring, and advocating for your customers and their needs. New digital health subscription startup Onward does this -their program monitors ongoing user behavior and holds users accountable.
In a trial of 1,400 porn overusers during a 4-month period, Onward deployed a chatbot driven, predictive model to learn when a user might act up in order to serve a just-in-time, clinically validated intervention. Use of a Smart Filter to track user habits enabled a machine learning algorithm to establish the right timing of an intervention for each user. The program also checked in on a daily basis with members.
Trial results were promising: Participants reduced usage by 88%; 51% of participants stopped using porn entirely; and 65% of participants who felt triggered to use did not use. “We advocate for the user,” said Onward CEO Gabe Zichermann.
Prioritize habits. Design so your customers create a habit with your offering as quickly as possible, then help them maintain that habit. Leverage new behavioral models for technology engagement. Nir Eyal’s Hooked model explains how to design habit forming consumer technologies, and the new Sepah Model for Behavior Change offers insights into which type of technologies work for health habits when and why. Subscription success requires returning customers — gone are the days of depending on customers who forget. Use behavioral science, data, and machine learning to figure out the optimal time and price to prompt customers.
Believe that everyone needs healthcare at some point. Everyone. An example of a digital health company founded on this belief is Sherpaa. They know that health care is a “when” not “if” and “one size does not fit all” scenario. Sherpaa provides tiered subscription options for both employers and individual consumers. Different from so many subscription services, Sherpaa requires no commitment and makes every part of the membership experience easy, including cancelling if needed: “There is no commitment with Sherpaa’s membership. With our monthly fees, we’re doing our best to make healthcare as easy and affordable for you. Honestly, we lose money when people cancel their membership after each use. But we’re quite confident people will immediately see the value of our doctors and want to continue being a member. It truly does make healthcare so much better and less stressful.” Sherpaa is how healthcare should be.
When it happens
Digital health subscription wins will mean quality customization, met needs, positive outcomes and experiences, and efficient finances. Josh Elman, Partner at Greylock Partners wrote about the consumer subscription trend: it means that there will “either be a lot more than users subscribe to today or bundles will aggregate a lot of this up.” Meaning, he predicts it’s going to happen.