Shopify for Digital Health
Who will build the integration platform to power digital health practices?
Thanks to Samuel Wu, Peter MacRobert, Rik Renard, Brendan Keeler, Ben Lee, and Saharsh Patel for the comments & editing - it got so much better with your input!
If you wanted to sell stuff online in 2006, you had to bring quite some technical knowledge to the table. You had to know how to set up a scalable web server, build a front-end, and cobble together different e-commerce & payment solutions tools. A group of friends running a snowboard shop in Canada didn't like any of the tools out there for their online shop, so they started to build their own shop system. 15 years later, their e-commerce platform is a $100bn company with 1m+ businesses using their platform, and yeah you guessed it, it's called Shopify.
In 2022, digital health is similar - setting up a digital health practice requires quite some technical knowledge. The situation is not as dire as for e-commerce 15 years ago, as many great stand-alone solutions are emerging and embraced by digital health startups. I've written previously about some of the infrastructure solutions out there:
on-demand services for various parts of the care delivery chain,
cloud-based EHRs, digital front doors, etc., etc.
But with these ever-expanding options of point solutions, there is a need to combine these point solutions into a seamless patient and doctor experience. Digital health startups often have to hire developer teams to do the plumbing between solutions, or they fall back to write data from one system to another manually. This integration step might slow startups down significantly in a world where time to market is critical. And if they ignore the integration task, the manual swivel-chairing might prevent their business from scaling to more users than their manual processes can support. So, who will build the platform that will enable digital health startups to go to market faster and scale more easily with their number of patients?
What does Shopify do?
When I asked Twitter, "Who is building Shopify for digital health?" people had many different opinions on which companies would fall into that category.
To set the stage, let's clarify the different dimensions that a "Shopify for digital health" would need to cover:
Setting up a front-end for patients and providers: Shopify is probably best known for allowing non-technical users to set up a nicely designed online store. They can upload photos of their products, set prices, and quickly set up a checkout experience that accepts most payment types. The equivalent for health care would be a platform that provides an easy way to set up provider scheduling, patient intake, and other patient-facing journeys. The key here is that the digital provider could brand their patient experience without hiring a full-stack developer team.
Taking care of operational & clinical workflows: But Shopify is not only a no-code front-end builder. It also takes care of many backend services, such as order fulfillment and invoicing automation. Some of these tools are Shopify's own services and building blocks, but Shopify also partners with a range of third-party integrations. For health care, many of these third-party infrastructure (insurance billing, credentialing, etc.) and on-demand service (labs, home visits, etc.) service providers already exist and would need to have easy integration into the platform.
Integrate point solutions into workflows: Quite a few workflows need to span multiple point solutions in health care. For example, setting up proper referral management would be a combination of e-consult services, making a referral decision, transferring patient data, and closing the loop with the referred provider after the visit. Point solutions exist for each step (i.e., RubiconMD, Ribbon Health, Health Gorilla), but they will need to be put together into an end-to-end workflow. The same can be said about revenue cycle management (i.e., insurance billing), which often involves working with several point solutions and clinical workflows.
Enable workflows between organizations: The holy grail of health care is reaching true interoperability and building cross-organizational workflows, like discharge management and other care coordination tasks. For this to work, organizations must speak the same language, i.e., use the same data schema and exchange protocols. Achieving this is not an easy task. This usually succeeds if an established organization or the government pushes a certain standard. A great (non-medical) example is Skywise, an aviation data platform that Airbus developed and promoted throughout the airline industry. With 100+ airlines on the platform, Skywise became the de-facto standard for data exchange between airlines, Airbus, and manufacturers.
With these requirements in mind, we can look at the current market of companies playing in the "Shopify for digital health" category. There were a few debates about where to put each company on the chart, and I have to admit that the lines are not as clear cut as they seem in this chart, but this is my current assessment:
In my opinion, no market player is currently offering a solution for all functions Shopify provides, but many are seeking to. But health care is also different than e-commerce, so here are a few potential futures on how these integration platforms will evolve.
Future 1: (Closed) Full-Stack Solutions
The first scenario is less of a future than a description of the present. Traditional health care technology providers have chosen a very closed approach. Companies like Epic or Kareo provide a suite of tools that integrate well with their primary system. These legacy players also make it easy for organizations to collaborate if they use the same system. However, there are quite some restrictions on what type of integrations they allow. Also, these vendors usually don't serve the requirements of modern health care organizations and digital health startups. Still, Epic & co are so ingrained in the hospital sector that I don't see this change anytime soon.
I don't think this future is very desirable, as innovators are at the will of the closed platforms. Startups will have to give up a significant revenue share, and they have to accept long time-to-market when their offers have to go through inefficient approval processes with the legacy vendors. I heard that integration with App Orchard from Epic could take up to 6 months.
Future 2: Frontend RPA & Backend RPA
Because most legacy systems are closed and don't have a great way to integrate via API, many organizations fell back to a very clunky but effective technology called Robotic Process Automation. RPA is a click-bot that can help automate processes from one front-end into another. The advantage of this solution to bring together systems is that it almost works with any interface. Still, the significant disadvantage is that it is not scalable at all - anytime there is a slight change in the UI, the bot might break and needs to be updated. Olive has identified that generalist RPA companies such as Automation Anywhere and UiPath don't have much health care integration knowledge, so they became the market leader for health care RPA.
Automation gets more interesting when applied in the backend, so it is not subject to frequent front-end changes. A great non-healthcare example here is Zapier. It allows users to automate tasks between different systems. Zapier does not currently sign a BAA, and thus, it is not HIPAA compliant and can't be used for patient data. Also, clinical workflows need to be 100% reliable, and there should be alerts if backend automation is failing - something that Zapier currently does not focus on. Examples of companies trying to be the Zapier for digital health are Tellescope and Phase Zero. Another exciting player here is Awell from Europe, offering a visual interface to orchestrate different health care APIs. Olive is also planning to enter this space and migrate RPA-Bots to more seamless integration solutions that are more maintainable and can be stand-alone products.
Future 3: EHR as the integration platform
The EHR is traditionally the point where all clinical information is captured, and it is the workhorse for the provider. However, the EHR does not need to be restricted just for a subset of clinical and reimbursement workflows. The EHR could expand its functionality beyond the traditional system functions and include CRM functionalities and more operational workflows like supply chain and staffing. Brendan wrote a great take on this future with his headless EHR piece.
Modern EHRs are morphing into practice management systems. We could already observe this happening with athenahealth. Canvas is an exciting new player in this market, allowing easy backend workflow integration with their EHR platform. For example, when a provider orders a lab, Canvas enables them to easily connect their order via API to a home-health service provider like Axle or Workpath. It is easy to imagine that EHR platforms can include CRM functions that track non-clinical touchpoints with the patients or take care of other practice management functions.
Jonathan Bush's Zus is expanding this EHR platform vision. The Zus EHR platform not only enables workflows within provider organizations but also wants to allow workflows across organizations.
Future 4: Orchestrators & Wrapped Solutions
Moving from a legacy EHR to a more modern EHR platform that expands its functionality might still not work for every provider. They might want to choose something more flexible and not be locked in with one vendor that takes care of all their workflows. These providers might look for modular workflow solutions and then choose a platform to orchestrate all these modules. In this world, the EHR will be one module among others and not the integration platform.
Combining infrastructure pieces into wrapped solutions
This future opens up the possibility for wrapped solutions, which I define as modules that provide utilities into plug-and-play end-to-end solutions. An example of an wrapped solution would be an end-to-end insurance billing solution, which would cover insurance enrollment, claims coding, claims submission, and payment processing. On the back end, this solution would probably leverage a few other API utilities, such as Change Healthcare, Eligible, and Stripe. Wrapped solutions open some exciting opportunities for a range of new analytics products, which have faced many barriers for easy adoption in health care.
Orchestrators
Wrapped solutions are one way to combine different infrastructure services into plug-and-play solutions. But then these solutions also need to be connected with other solutions. This is where solution agnostic orchestrators come into play. A good orchestration framework provides a way to mix-and-match different solutions into one framework to seamlessly manage a digital health practice. Orchestration frameworks differ from back-end automation. They impose a data schema and connect applications more tightly - they are not point-to-point automation solutions but work like a bus everything connects to. The closest company building this out is Capable Health. They provide a framework and data model that enables providers to combine different out-of-the-box solutions. For example, they could use IntakeQ as a patient intake form, Square as payment solution, and Elation as EHR, and then put it all together using the Capable platform.
Closing thoughts
As always, here are some closing thoughts:
Who would use the Shopify for digital health?: The main value proposition of Shopify is to enable SMBs to launch their own e-commerce shop. I am not sure whether we will see this anytime soon for brick-and-mortar practices as, unlike retailers, they don't struggle with falling demand. It's quite the opposite, as staffing shortages and physician burnout strain doctors' supply. On the other hand, about 7000 digital health startups are pushing into the market, and all of them will need infrastructure to build their business on.
Is integration on top of mind for digital health providers?: When digital health companies start, they probably do not care much about integration. In a world where speed-to-market and iteration velocity is critical, they might be perfectly fine with juggling several point solutions. Other more pressing issues, like getting labs to work or becoming part of a health plan network, are more important for digital health to solve right now. Once digital health companies reach maturity, this will become more relevant, as integration and automation are essential for scaling.
Is building on the Shopify for digital health a defensible strategy?: Keep in mind that many digital health companies strive for tech valuations - for this to be true, they will need to develop defensible and scalable tech and migrate away from any platform solutions. If they don't, they will essentially be a tech-enabled services business that scales linearly with the number of physicians they employ. If the Shopify for digital health becomes real, digital health providers might have the same fate as many e-commerce shops: they might be good businesses but rarely unicorns. Let me know in the comments or reach out if you agree or disagree with this assessment!
Wrapped Solutions - the future?: Instead of integrating everything, the next evolution step for digital health infrastructure might be wrapped solutions, i.e., end-to-end workflows that help the provider solve a specific problem. We will probably see more M&A between companies that offer point solutions, as we have already seen with Ro buying Kit.com & Workpath. However, one concern with wrapped solutions is that they might not be very defensible. If they rely a lot on other providers, they have a lot of points of failure, and if they work, one of their suppliers might move up the stack and starts competing with them.
Great article! It is amazing to me how quickly ideas like this have gone from totally niche to generally accepted among health tech people. I think a lot of it is the general community being a lot more optimistic now. A few years ago entrepreneurs/investors would look at many of the companies you mention and see fairly slow growth.
The idea of aggregators isn't novel, but the idea that there is a vibrant market for them is.
solid work! inspired me to write this https://xprimarycare.substack.com/p/builders-of-health-tech-interoperability