Trend Spotting: Health Systems Unite to Build Collaborative Platforms (Part II)

by Vince Kuraitis, JD and Randall Williams, MD

In Part I, we profiled three recently formed, provider sponsored platforms: Truveta, Xealth, and Graphite Health. These platforms are backed by multiple health systems (ranging from 3 to 20) and have ambitious plans for national expansion.

In Part II, we comment on the “why” — describing market forces leading to provider sponsored collaborative platforms. We then discuss some provider platform challenges.

Why are Providers Collaborating in Platform Development?

There are diverse reasons why provider platform collaboration makes sense.

Lack of Integration and Interoperability Across Vendors. Local care providers are approached by hundreds of vendors offering point solutions. They struggle with the fragmented, non-standardized and often proprietary nature of the current health technology vendor market.  This manifests in unnecessary complexity and cost across functions of purchasing, systems integration, implementation, and clinical workflow integration

The Need for Scale. Platform technologies bring the potential to build rapidly and massively scaleable organizations. Individual health systems — even the largest ones — don’t have the resources or experience of Big Tech companies that have been expanding their platforms for decades.

Big Tech & Retail can attract top employee talent and 3rd party developers. Even the largest health systems will struggle to compete for top talent in fields such as artificial intelligence, machine learning, analytics, and platform strategy.

Retaining Control. We’ve each been around local delivery systems for over 30 years. While providers are historically viewed as the gatekeepers of the patient relationship, this position has led to a culture of protectiveness, skepticism and control.

It’s understandable that health systems want to control their own destinies.  As we’ll discuss below, this culture of controlling isn’t necessarily a good thing.

Patient Demands. Patients are not standing pat content with the status quo. Accelerated by the pandemic, patients are demanding greater responsiveness from providers, including user friendly access to care, and more rational approaches to their time, money, and data. Patients increasingly expect healthcare experiences that are on par with other consumer experiences. Many are willing to switch providers to meet these perceived needs.

Attention to Patient Privacy. In 2019 Ascension health system found itself in the hotseat. The Wall Street Journal broke an investigative article describing Ascension’s deal with Google’s Project Nightingale — one that gave Google access to personally identifiable patient information on millions of Ascension’s patients.  A range of repercussions followed: fallout in the press and from privacy advocates; scolding statements expressing privacy concerns from at least four members of Congress; an investigation by the federal Health and Human Services Office of Civil Rights regarding possible HIPAA violations.

These new provider platforms are demonstrating a heightened concern for privacy. Truveta’s Approach to Protecting Patient Privacy describes its “distributed approach to federated learning”. Graphite Health’s Digital Hippocratic Oath puts the “privacy and trust of patients and providers first”.

Provider Platform Challenges

Collaborative provider platforms will face a fragmented and crowded market.

Will Providers “Get” Platform Thinking? Traditional “pipeline” businesses create value by controlling a linear series of activities — the classic value-chain model.  Platforms create value differently — they connect producers and consumers and allow them to interact in various ways.

In short — success with platforms requires a different way of thinking about the world. It’s the difference between a pipeline that creates value internally vs. platforms that enable others to create value externally, i.e., outside the organization.

Traditional hierarchical management approaches also are ill suited for platforms. Success with platforms requires more orchestration than command and control. Can traditional provider organizations succeed at the cultural and organizational changes needed in order to leverage the efficiencies to be gained by platform transformation? TBD.

We’ll be writing more about “platform thinking” in the future.

Achieving Sufficient Scale. We noted in the introduction to Part I that the scale of these new provider platforms goes beyond anything seen today in local health care markets:

Truveta’s providers represent more than 16% of all U.S. patient care. Xealth is available to more than 100,000 physicians. Graphite Health serves more than 30 million patients.

But is this enough?

In a digital world, geographic boundaries of the past no longer apply. Organizing supply side fragmentation will mean overcoming an “all healthcare is local” mindset and beginning to view healthcare data as not only portable, but fluid across and between silos. The healthcare market to be tapped is a national — and even global — opportunity.

These new provider platforms must achieve and maintain critical mass — network effects that drive scalability.

Market Competition. Platform technologies and business models allow for relatively easy expansion into adjacent and new markets, i.e., they have economies of scope.  Amazon started as an online bookstore; Facebook started as a tool for Harvard students to connect.

This creates both opportunity and challenge for provider sponsored platforms. Provider platforms will have leeway to expand into adjacent or new markets…and new competitors that can emerge from left field.

These new provider platforms will be competing head on with well-funded Big Tech and Big Retail initiatives. Investment funding has been readily available for thousands of digital health companies, e.g., the Commure platform has attracted $542 million investment. The provider sponsored platforms also could be competing with each other.

Competition for Talent and Developers. We need to discuss at least two other types of competition. First, can provider platforms compete for top tier employee talent? This is an unknown.

Second, can provider platforms compete for developers? Due to steep learning curves, most developers prefer to develop on as few platforms as possible — ideally one or two.

The battle for healthcare developers is just beginning — and it will be across diverse healthcare platforms. Graphite Health is creating an app marketplace and it will have to attract developers. While Graphite Health has 30 million patients that are cared for by its current sponsors, more than 250 million patients have an electronic record in the Epic EHR platform. Virtual care platform provider Amwell also is opening an app store.

Coopetition with EHR Platforms. Will major EHR vendors view provider platforms as complementary or competitive? The provider sponsored platforms will have to navigate ongoing coopetition with EHR vendors.

There are many ways in which the provider platforms are potentially competitive with EHRs. It’s not hard to imagine that much of the functionality of these provider platforms could be provided in an EHR platform. Similar to Truveta, Epic and Cerner also have their own clinical database initiatives. Xealth has become an app in Epic and Cerner’s app stores; this EHR connection facilitates clinicians’ integration of Xealth into their workflow, and in turn makes Xealth dependent on continued connectivity with EHRs. As noted previously, Graphite Health is building its own app store.

Closing Comments

We anticipate that collaborative provider platforms will be strong competitors in their respective markets. Collaborative platforms are a viable way for providers to do collectively what would be almost impossible individually. We expect to see more collaborative provider platforms emerge in the near future.