What Is the One Thing Missing From Most Health Tech Business Models? Human Beings.
Written by Esther Dyson, Executive Founder of Wellville, for the StartUp Health Magazine.
Disclosure: Some of the companies mentioned here are in the StartUp Health Academy or in my portfolio of angel investments, or both.
In other words, I believe my own advice!
→ What is the best model for a consumer health startup? “Uber for X” is passé. So is “AI-enhanced” (though the reality is still worth working on). Then there’s blockchain for health, with its many modern iterations and mostly unclear benefits. Though there’s no one best business model for everything, there is a common ingredient often missing from many startups’ models, especially those focused on consumer behavior. Too often they miss the very necessary human, local element. They add information — often with trackers — but forget that information alone is rarely enough to cause behavior change. Health startups would be wise to remember precision in motivation and in time, and how information is exchanged between humans.
Precision Motivation
One way or another, your health app/service needs to know its customer, both medically/physically and motivationally. That is, it should know not just the individual’s physical makeup and their (perceived) health problems, but the individual’s “precision motivation.” Do they want material success? Do they want other people’s approval? Are they “doing it for the kids,” or to win their parents’ approval? Do they want to be part of a team or to individually beat the other guys? Are they afraid of being old and sick, or do they want to look good at the office tomorrow and at the bar next weekend? It’s amazing how much you can find out just by asking . . . or you can have an AI monitor the user’s reaction to the app’s behavior, and improve the performance of both the app and the user over time.
You can also use personality assessments like those offered by Frame Health, an Los Angeles-based company that has licensed the Hogan personality assessment tool for healthcare use. MotiSpark, also in Los Angeles, lets the user select their own motivational video clips; who knows users better than the users themselves?
Next, you need to understand how things are changing over time. Wearables are perhaps the most exciting development since sliced brea . . . I mean, the weight scale. For most people, seeing a line go up and down over time in an app — whether it’s weight (outcome) or steps (input), is a huge improvement over numbers scratched on a sheet of paper, point-in-time PDFs and faxes from a lab, or even those same PDFs in a patient portal.
The next exciting development in public health (not just around time) also focuses on tracking over time: continuous glucose monitoring (CGM). It’s becoming cheaper, less invasive, more convenient and FDA-cleared. Right now CGM is limited for practical purposes (cost and convenience, mostly) to people with diabetes, but over time I’d love to see every second grader spend a couple of weeks with a CGM as part of a required grade school curriculum that would show, not teach, the real-time impact of sugar and other macronutrients. For adults, it would make the science they may or may not know feel real and personal.
Whether it’s CGM for diabetes, Oxitone for pulse oximetry or Oura/Whoop/SleepScore et al. for monitoring sleep, or one of many commodity wearables for monitoring activity, real-time feedback helps users monitor both their behavior and its impact. For some people, it’s enough to see the information for themselves. For others, sharing it is a key driver.
Other People
The role of “other people” in your startup’s business model cannot be overstated. These other people can be the user’s own contacts — family, caregivers, friends — or strangers with whom they might find it easier to be candid or people with a similar condition who can actually share their experiences, as with Curatio, PatientsLikeMe or Supportiv. In addition, the peer groups can be enhanced with trained/paid online moderators (PLM and Supportiv). Or the “others” can be paid/trained experts (but without the peers), such as Fit4D’s remote clinical diabetes experts and Vida Health’s broader range of experts/coaches. Both of these companies sell both to consumers directly and to employers, take care of the backend billing — both to pay the experts and to charge insurance providers when possible.
Yet the best apps will have some kind of real-world component, whether that’s relationships with health clubs or tie-ins with retailers that want to increase traffic to their (healthy) food aisles. Sure, that costs more to scale, and grows more slowly, but it also delivers more value and creates a competitive differentiation. Perhaps the startup ends up being acquired not by Humana or ShareCare, but by Starbucks or Uber.
The ultimate health tech business model is likely to be much closer to retail and franchising than it is to the current app offerings or to traditional clinical care, which just aren’t that effective at behavior change for many people. I suspect that most apps will become commodities unless they have value added through some kind of local distribution or presence. For example, that could be a diabetes prevention app distributed by the YMCA along with its DPP program that offers group training in local places.
We’re starting to see these novel business models with local tie-ins. We’ve got nutrition programs that link patients to registered dietitians who could be paid by Medicare/ Medicaid/insurance with the startup getting a cut (e.g. MealShare). Others add value by training and providing tools for a latent workforce, whether dietitians or nurses/ clinicians (see Hawthorne Effect). Startups are bringing people together to re-weave the social fabric, using trained/ paid moderators to facilitate face-to-face group sessions for seniors (Wider Circles).
Another take on this in-real-place paradigm is Boulder Care, which is developing an integrated combination of an app for users/caregivers and a dashboard and training for healthcare providers, focused on making Medication Assisted Treatment for substance abuse more scalable and accessible.
Overall, I love the franchise model, combining software with scalable organizations that provide training and quality control of people who interact directly with consumers. My hope for the future of digital health is that app vendors would add in the people component, both online and off, in cooperation with multi-location entities such as MeetUp/WeWork, health club chains and enlightened retailers, or nonprofit services like the Nurse-Family Partnership.
In this kind of partnership, they could craft curricula or protocols to create tightly quality controlled but more scalable versions that combine intense training of care providers with apps for both paid nurses/caregivers/coaches and the users and their families.
There are so many healthcare apps today, yet the market is still fragmented and the tools often ineffective in reaching beyond a few dedicated super users. What is the magic missing ingredient to reach a broader, needier population? One way or another, it’s real people, in real places.
