Why Hasn't Big Tech and Retail Advanced Faster in Healthcare?

Remember my prediction a decade ago about big tech revolutionizing healthcare? Lower costs, better experiences – it all seemed inevitable. But where are the Amazons and Googles clinics today? The reality is, big tech has struggled to make a significant dent in this complex industry. One of the reasons is a virus.

The COVID-19 pandemic did spur a surge in telehealth usage, turning it into a commodity. Contrary to believe this shift has complicated the landscape for Big Tech. The struggle of new entrants is closely tied to this commoditization of telehealth.

Understanding Commoditisation Strategies The strategy of "commoditize your complement," coined by Joel Spolsky in 2002, involves reducing the price of complementary products or services to boost demand for your main offerings.

Consider Microsoft's decision with MS-DOS. By licensing it broadly, Microsoft commoditized the PC market. Lower PC prices increased demand for MS-DOS, boosting Microsoft's revenue. Similarly, Google invests heavily to dominate search on Apple devices, not profiting from Android itself but ensuring its search engine remains dominant. Intel supports open-source systems like Linux to standardize operating systems, enhancing the appeal of its profitable processors. Without this investment, Windows would dominate the market.

Implications for providers Healthcare providers have adopted telehealth services. Maybe they will also invest in high-speed internet and telemedicine infrastructure, especially in rural or underserved areas. This way they lower barriers to access, increase patient engagement, and reduce operational costs. This investment also deters new competitors from entering the market.

Another example is investing in partnerships with ride-sharing companies or creating a subsidized transportation programs which can significantly reduce no-show rates, improve continuity of care and make it more difficult for new entrants. This strategy can be particularly effective for patients with chronic conditions or those living in remote areas.

Expanding Commoditization in Healthcare

1. Health Education and Preventive Care: Offering free or low-cost health seminars, online courses, and screenings can empower patients to manage their health proactively. This not only improves outcomes but reduces the burden on healthcare facilities. Preventive care minimizes the need for expensive treatments, enhancing healthcare efficiency and deterring new entrants.
2. Pharmaceutical Partnerships: Collaborating with pharmaceutical companies to offer lower-cost medications or establishing in-house pharmacies focusing on generics can reduce patient costs. Affordable medications lead to better adherence and improved health outcomes, reducing hospital readmissions, without leaving a profit margin for newcomers.
3. Wearable Health Technology: Providing affordable or subsidized wearable health tech for continuous monitoring can detect health issues early. This data integration into healthcare systems allows for personalized, timely interventions, improving disease management, reducing costs, and raising the bar for companies offering similar services.

Conclusion Implementing these strategies means identifying key complements to healthcare services and innovatively reducing their costs or increasing accessibility. This approach can drive demand for primary healthcare services, improve patient outcomes, and enhance healthcare system efficiency, making it challenging for Big Tech and Retail to overtake the market.