“At the heart of the subscription economy is the idea that customers are happier subscribing to the outcomes they want, when they want them, rather than purchasing a product with the burden of ownership.” –Tien Tzuo, Zuora
This was a quote shared with the audience by Ravi Ganesan, the Chief Executive Officer of Core Solutions, in his session, Digital Healthcare In A Subscription-Based Economy, on the opening day of The 2018 OPEN MINDS Strategy & Innovation Institute. The subscription economy concept has been around a long time (think newspapers), but has gained new life as the internet has offered a platform for companies to sell just about anything by subscriptions—from information, to music, to movies, to dog treats, to cars. (If you aren’t convinced of that last one, check out Drive Lots Of BMWs? Subscription Program Will Let You Do It.) And this subscription market is growing, increasing over 100% a year over the past five years. The largest organizations in this subscription market segment are upward of $2.6 billion in sales (see The State Of The Subscription Economy, 2018).
Mr. Ganesan shared several examples of a growing subscription market in health care. His first was the growing number of tech-enabled health services available by subscription. He gave the example of Boston-based Iora Health where consumers pay a flat fee-between $60 and $200 per month for a health coach. Another example is TalkSpace, which provides different plans (with different levels of service) based on a weekly subscription (the base plan starts at $49 per week, and includes unlimited messaging therapy).
His second example of a subscription-based approach was the changing primary care market. New direct primary care (DPC) models provide consumers with access to primary care services for a flat fee. Gold Standard Pediatrics, in South Carolina, is an example of this model directed at serving children for monthly membership fees of $70 (birth to two years), $45 (2 to 12 years), and $35 (12 to 18 years).
If you are an executive at a specialty provider organization, you may be asking yourself, should my organization consider offering a subscription-based service? And, if so, should that service be focused on-the direct-to-consumer market or the payer/health plan market? The subscription-based approach addresses a number of trends in the health and human service market; whether a direct-to-consumer or payer-based model, subscription services provide a transparent value proposition for consumers with the service provider organization accepting the financial risk for the volume of utilization. And, increasingly, the value proposition is focused on the consumer-both reducing out-of-pocket payments (Incorporating Innovation Into Everyday Operations: The Strategy For Sustainability) and improving the consumer experience in terms of access and convenience (see What ‘Performance’ Should Your Team Care About? Look At Your Health Plan’s Contract and Using Technology To Improve Consumer Access: Optum California’s Investment In Telemental Health Initiatives).
From Mr. Ganesan’s perspective, the future of subscription-based services is tied to the concept of “on-demand fulfillment” – a convenient, anytime, anywhere model of service. (For a look at some of the big disruptors proliferating this approach in health care, see Invaders At The Gate and Don’t Let The Big Disruptors Out Of Your Sight.) And, to make the subscription model and the desired consumer experience happen, the service provider organization needs to invest in technologies that provide a superior consumer experience-including consumer self-service technologies and technologies that streamline administrative functions (and reduce their costs).
My take? Whether an executive team opts to offer a “subscription model” or not, the expectations for “on demand” services can’t help but spill over. Those next generation technologies-for streamlined administrative process and consumer self-service-will soon move from “nice to have”, to “must have” functionality.
For more on consumerism, join OPEN MINDS Senior Associate Darryl Donlin on October 22 for his Executive Summit session, Digital Treatment In The Era of Consumerism & Value-Based Care, for The 2018 OPEN MINDS Technology & Informatics Institute.