Walmart, Doctor On Demand, and consumer health product company RB recently announced a seriously creative effort to intercept consumers before they reach legacy healthcare organizations.
Here is how the pilot program works. Walmart customers who purchase over-the-counter medicines from any of four popular name brands produced by RB are eligible for a no-cost video consultation from Doctor On Demand.
On the surface, this arrangement may seem relatively modest. The brand names involved—Mucinex, Delsym, Airborne, and Digestive Advantage—are medicines intended for people with minor problems like colds or indigestion. However, the arrangement is a powerful example of how well-capitalized, technologically savvy companies can use the principles of the Internet economy to insert themselves between consumers and traditional hospitals and health systems.
One principle of the Internet economy is the ecosystem. A company like Apple creates a closed environment in which consumers use an Apple technology platform—the iPhone—to access a range of products and services within a tightly controlled sales platform. The convenience of this closed system develops highly loyal customers, and additional products and services over time drive additional traffic and loyalty. Amazon Prime also acts as an ecosystem, using discounts and no-extra-charge services to add members, who become the most loyal and profitable customers.
A key concept of the ecosystem is the preference of long-term traffic and loyalty over short-term profitability. Amazon, for example, is happy to forego shipping charges for Prime customers in order to draw more long-term customers into the ecosystem. Amazon uses its algorithms to highlight low-price products for the same reason: to increase the volume of traffic and degree of loyalty.
The fuel of the ecosystem is data: Companies learn about the buying behaviors of those within the ecosystem and use that information to present them with relevant and desirable products and services.
All these factors allow the ecosystem to succeed in its core intent: to draw consumers away from traditional companies—not once or twice, but permanently.
The Walmart-Doctor On Demand-RB initiative is an example of how the Internet-economy ecosystem can be adapted to healthcare.
Walmart’s 5,000 stores constitute the physical and data foundation for this ecosystem. Ninety percent of Americans live within 10 miles of a Walmart. Data from the NPD Group’s Checkout Tracking Service showed that a mind-boggling 95 percent of Americans spent money at Walmart in 2016. It is hard to imagine a more convenient point of interaction for the majority of American consumers, a better source of data about consumer behavior, or a more powerful conduit to contact potential healthcare consumers.
Products from the four brand names manufactured by RB, a $15 billion U.K. company, are the initial triggers to action in this ecosystem. Customers buying these products are in essence self-identifying as suffering from a malady that they would like relieved. When people purchase these products, Walmart can identify in real time a population actively seeking a solution to their immediate health problem.
Doctor On Demand is the provider network in this ecosystem. Like an Uber for primary care, Doctor On Demand is a digital platform that connects consumers for video visits. As a digital platform, it can serve a far greater number of patients than any network of physical clinics, and it transcends typical geographic borders—all without the fixed costs of buildings and equipment.
All this is very smart, but the genius of the arrangement, and what makes it function like other Internet-economy ecosystems, is that consumers can access these video visits at no charge.
The no-charge feature shows that these companies are thinking about the long game. They would forego revenue from the initial infusion of volume in favor of having a growing number of ecosystem participants who trust this group of companies to deliver convenient, inexpensive healthcare. This growing number of consumers will provide these companies with opportunities to add more and more services over time, enhancing the ecosystem, driving more traffic, and further developing a loyal population to serve. The long-term revenue model could develop in numerous ways—as fees for specific services, as a subscription for a package of services (like Amazon Prime), or as a low-cost healthcare model sold to large employers or insurers—or a combination of all three.
This Walmart-Doctor On Demand-RB ecosystem is pure Internet-economy thinking brought to traditional healthcare. It combines national reach, big data, and a digital platform to bring people into the ecosystem. Long-term relationships are prioritized ahead of short-term profit. And, if the companies continue the collaboration, they have the size and scale to make this system work on a national basis.
By definition, ecosystems are designed to expand. In healthcare, emerging ecosystems already are encroaching on low-intensity services, care for people with chronic conditions, occupational health, blood testing, diagnostic imaging, and routine surgery. We can expect that encroachment to stop at only one place: the door of the hospital itself, with its high fixed costs, payment pressures, and web of regulations.
For executives of traditional healthcare organizations, the order of the day is to recognize how the principles of the Internet economy are being used to come between legacy providers and their consumers, and to define a role that will ensure continued relevance within this new economy.
In announcing this initiative, a Walmart executive said, “We believe that this collaboration will be a tremendous step forward in improving access to healthcare, during a time when people face challenges in getting the right treatment at the right time.” Make no mistake: That statement is directed toward America’s traditional healthcare provider organizations. The question is how those organizations will respond.