One Medical wins at digital health
By applying a technology business model to the healthcare industry, One Medical has successfully aligned incentives of different parties to become a clear winner in digital health.
One Medical is a prime example of a digital technology disrupting a traditional industry.
The process of receiving healthcare has always been very cumbersome and is generally a terrible customer experience. Especially when you are sick, you do not want to be dealing with calling to make an appointment, traveling whatever distance to the doctor’s office, idling in the waiting room for the inevitable delay after delay, and then get hit with a shockingly large bill. It not only is such a terrible experience but also the bad taste left in people’s mouths about their past experiences tend to steer them away from wanting to go to the doctor at all and can often lead people to not getting the preventative or early enough care that they need.
One Medical has been a winner in digital innovation because they were able to disrupt this healthcare industry. I define a winner in digital innovation as those who use digital technology to create more coordination of different parties and information between them to create benefits such as more efficiency, convenience and access. One Medical checks all those boxes for me.
One Medical’s major product offering is their digital health technology platform that gives people 24/7 access to digital health care services. Coupled with 70+ doctor office locations (Onemedical.com, 2020), they provide the blended and seamless online and offline experience for its consumers, allowing them to use the technology to organize their healthcare information (such as managing lab results and prescriptions) but easily schedule time at convenient locations for in-person visits.
While the process before was cumbersome, now with One Medical, a patient could just easily log into the app and immediately reach a healthcare provider – through text or even a video call – to talk through their current ailments and next steps. Without even having to leave their home, they can be prescribed a treatment without having to drudge out to a faraway doctor’s office. The human centric design of their technology brings some life into this industry that has been seen in the past as relatively cold, impersonal and impossible to manage.
But what has been particularly interesting to follow in One Medical’s story is how they were able to incentivize more than just the patients to buy into this technology. Its business model is fascinating because it is purposefully built to align the incentives of each party in the healthcare industry.
Similar to other technology (or software as a service) businesses – but unlike the typical healthcare providers in the past – One Medical charges an annual membership. This simple fee structure therefore encourages patients to use its technology and providers for more preventative care earlier in sickness – leading to hopefully a healthier patient base.
While One Medical tried in the beginning to go direct to consumer, the company found that the membership fee was hard to stomach by their average consumer and instead pivoted to have employers pay for this service as a benefit. In return, employers are now able to have a healthcare product that their employees actually want to have, data from One Medical on likely outcomes of their employee population and a generally healthier employee base. And you can see this in the results too – with emergency visits reduced by 41% and employer healthcare costs lowered by 8%+ (Forbes.com, 2020). With a 97% retention rate and 6,000 enterprise clients (Forbes.com, 2020), this strategy is clearly working and resonating with employers.
The company also pays its doctors an annual salary, which is also different from others in the industry who are paid on a visit basis. This payment structure incentivizes doctors to not churn through patients, but really make sure the patients at least feel like they are getting the most high quality care. One Medical is also able to cut down on administrative costs for providers given its technology program, allowing for not just less cash costs, but also less time and headache focused on the more menial tasks.
What I have always found troublesome with digital innovation is that even with an amazing digital product, it can be difficult to motivate the different parties to adopt it because it could be costly and their incentives are generally not aligned. While it may have taken One Medical some time and pivots to get there, their current business model both creates and captures value for each of the different parties.
Student comments on One Medical wins at digital health
Genevieve, this is a very interesting post and One Medical certainly has a brilliant offering. As with any telehealth consultation platform, it offers convenience that the average busy working person desires. As you said, when sick, the last thing you want to do is travel to the doctor’s office. Telehealth and other digital health platforms are fantastic for these reasons. Having said that, my major qualm with platforms such as One Medical, Babylon, etc. is the depersonalization of Medicine. A medical history over a video consultation can only give a clinician so much information. Many chronic conditions and acute issues require a thorough physical examination and further diagnostic investigations. And while I appreciate One Medical offer the option to schedule in-person visits with physicians, I would still be curious and somewhat concerned about the number of missed pathologies that go unnoticed due to the lack of traditional consults.
Great post! I really admire the One Medical model and it seems like a perfect alignment of incentives. Our healthcare industry has a long way to go in terms of improving quality of care and experience, and One Medical appears to be an impressive step forward. I’d be interested to learn a bit more about the user experience from the patient side – are they able to reach a doctor in a timely manner; do they end up on “hold” on a call for long periods of time; do they doctors have access to prior medical records to ensure consistency; are patients choosing to forgo annual check-ups with comprehensive blood tests and physical examinations?
I’ve used a similar app in California that is provided from the Palo Alto medical foundation and basically offers everything that One Medical does but only for their company. Luckily the foundation is so large and has offices all over northern California so there are several location and doctor choices available at any point of time.
I am very happy that services like this exist but there is a long way to go for the healthcare industry. My main problem (which I hope One Medical hopefully is working on a solution for it) is the medical records. I’ve moved a lot so my records are all over the world, non transferable digitally scattered across many doctors and institutions. I am not able to have a track record on my health over the last decade. If this becomes possible it will be the ultimate healthcare digitalization.
Thanks for sharing! As a One Medical member myself, I love the benefits I get from One Medical. From easy appointment scheduling online to video visits with providers, I have been consistently impressed by how much One Medical’s digital offerings improve my health care experience.
I have been particularly interested in One Medical’s recent IPO. While its IPO has been very successful in its initial days, I am personally concerned that One Medical is incurring such significant losses. It is costly to hire and retain physicians and it appears that One Medical’s low membership fee may not be enough to cover their expenses, considering their net loss of $45.5M in 2018 and $34.2M in the first nine months of 2018 (https://www.healthcaredive.com/news/primary-care-chain-one-medical-files-to-go-public/569822/). As an avid One Medical advocate, I truly hope that they are able to sustain their business model and I am very curious to see how they are able to expand and hopefully become profitable.
Great post! One additional thing to consider is the scalability of this platform to additional patient populations. This business model, by nature likely attracts young, healthy patients, and I hope they can take learnings and develop products, tools, interaction models etc. that work for the masses.
Additionally, to Kendra’s point about physician retention, I am worried about the quality of the physicians that are drawn to this type of work and their engagement over the long-term. Without meaningful, ongoing patient interactions, I wonder what the draw of being a PCP really is.