Why Healthcare Organizations are Prioritizing Digital Marketplaces

Joel FrenchMarch 10, 2021

Digital Front Door / Digital Marketplace Image

“Platforms are eating the world,” asserts Alex Moazed in his book, Modern Monopolies. What was a radical disruption a few years ago is now the accepted ecommerce business model most understand through examples like Amazon and eBay. We now understand how Amazon changed consumer expectations for shopping experiences by transforming every aspect of online retail from ordering and payment to fulfillment through shipping and returns. At the same time, their platform gave millions of small businesses the means to cost-effectively establish and operate a virtual storefront and gain access to new customers. It’s clear that Amazon’s platform benefits all the mutually dependent parties it connects. And the more buyers and sellers that participate in this digital marketplace, the more everyone, especially consumers, benefit – resulting in ever growing network effects.

The healthcare industry is undergoing its own transformation. For many years, health systems have invested considerable time and money building their provider networks, negotiating favorable contracts with health plans, implementing core EHR systems, establishing market affiliations (labs, ambulatory surgery centers, etc.), and creating clinically integrated networks (CINs) and Accountable Care Organizations (ACOs). Add to that the push to provide convenient, consumer-facing experiences. Yet these investments often overlook the impact of the foundational clinical, financial and administrative processes, which are commonly disjointed and inefficient. Hence, the economic benefit of these investments has been inconsistent at best. As healthcare pursues its digital transformation, will platforms and the digital marketplaces they enable eat away at the current business model, leading to the kinds of benefits companies like Amazon have achieved?


Removing Friction from Consumer and Patient Experiences

A key characteristic that makes the platform model so powerful is its ability to shield consumers from the underlying complexity. Healthcare’s complex processes create multiple well-known friction points for consumers that expose many inefficiencies. For example, when a patient wants to schedule a visit with a provider, why do they need to make multiple phone calls or wait on hold? When a primary care physician decides to order a diagnostic imaging test or specialist consult, why does the process rely on faxed and hand-carried paper orders? Why do patients often have to wait weeks to receive prior authorization from their health plan? When a patient arrives for their visit, why do they have to fill out forms on a clipboard in the waiting room – especially when they filled out the same forms at their last visit? And when it comes to payment, why doesn’t the patient know up front what it will cost, and why is their final out-of-pocket cost ever a surprise?

In the same way that Amazon systematically removed the friction points from retail shopping – think about how easy returns are today – healthcare can use a platform approach to rectify the inefficiencies and insulate consumers from the inherent complexity. And given that consumer expectations have already been set by other industries, smoothing out the interactions highlighted above is a critical path to fostering stronger relationships. As competition for consumer attention and patient loyalty increases, the financial impact of those relationships is high, given a patient's average lifetime value to a health system is $1.4M.


Making Interactions Easier for Referring Providers

Referring providers also experience friction as they seek healthcare services for their patients, such as imaging and consultations with specialists. Again, why are orders and referrals so dependent upon paper, fax and phone communications? Why do referring providers experience the “black hole,” never knowing if their patient received the services requested? Why do they continue to bear much of the burden of predominantly manual administrative processes, like coordinating insurance authorizations?

Just as Amazon’s platform made everything easier for consumers, it also made conducting business easier for its merchants. Health systems have that same opportunity with their digital marketplaces. By removing the friction points for referring providers, whether they are employed or independent, health systems make it more appealing to do business with them. Given that 62% of health systems are losing 10-20% or more of revenue to leakage, strengthening connections and building loyalty with all providers in their market has powerful financial implications.


A Platform Approach Goes Beyond Patient Experience 

Making these common interactions with consumers, patients and referring providers smoother and easier is no small challenge. While the processes that underpin retail are not comparable to healthcare, retail shopping has still set the bar high for everyone’s expectations for digital experiences. As organizations consider a digital healthcare marketplace, it’s important to address the needs of the many constituents we have discussed. What are the best ways to remove friction for consumers, patients and providers? And how can well-orchestrated processes enable these interactions while reducing workloads and optimizing resource utilization throughout the organization? To learn more about how to achieve these objectives, read our new white paper, “Establishing a Digital Marketplace: Five Building Blocks that Drive Competitive Advantage Through Consumer and Provider Engagement.”

As healthcare proceeds in its digital transformation, the good news is that the power behind the platform approach is its ability to absorb the complexity of the relationships among health systems, owned and affiliated providers, private and public payers, and consumers. By complementing and augmenting existing infrastructure, a platform enables a digital healthcare marketplace that can expertly match the supply of healthcare services with demand from consumers and patients – as well as the employed and independent providers who refer them for care.


Embracing that platforms will transform the healthcare industry presents an opportunity for health systems to finally realize the economic value of their business relationships and infrastructure investments.


Ultimately, health systems utilizing platform-enabled digital marketplaces, such as R1 Entri™, the intelligent patient access solution, can succeed in shielding consumers from the complexity underpinning our current US healthcare business model, while connecting all the dots within their organization with optimized underlying processes. A holistic platform technology and services approach makes it possible to thoughtfully interact with key constituents using digital tools that attract consumers and provider referrals, convert them to new patients, and continue to engage them effectively over time. And as more participants use the digital marketplace, its value to all participants continues to increase, leading to growing network effects and a long-term competitive advantage.



Digital Marketplace Whitepaper

Download our new whitepaper, "Establishing a Digital Marketplace," to understand the five building blocks that drive competitive advantage through consumer and provider engagement.

Author Bio: Joel French is the Executive Advisor for R1. He was most recently the Chief Executive Officer of SCI Solutions, which was acquired by R1. Joel has more than 25 years’ experience in technology company leadership, having founded, led, or provided consulting on behalf of various publicly traded and privately held technology firms serving health systems, health plans and life sciences companies.