Addressing the healthcare “Cold Start” Problem with true Platform Business Models
July 25, 2023 / Share:
In this episode of Friends of Project Healthcare…
Host Eric Thrailkill and Project Healthcare colleague Lauren Hatcher, are joined by Seth Joseph, Founder and Managing Director of Summit Health Advisors, to discuss how his background as a strategy officer and involvement in building a two-sided marketplace in healthcare has enabled him to continue to provide support services in a boutique category of platform business models.
With more than a decade leading strategy for innovative digital health companies, including CVS Health and Surescripts, Seth founded Summit Health Advisors in 2018 with a goal to make it easier for digital health companies, hospitals, and investors to find a true strategic partner.
“Many of the problems in healthcare are due to fragmentation and information asymmetry,” Joseph shares. “Markets that were unattractive or had long tails in unattractive unit economics, I think, can be really effectively solved creatively, using platforms, business models, marketplaces, approaches, and network effects.”
Summit Health Advisors is a healthcare consulting firm focused on helping early stage firms working in the digital health and innovation space, especially those specializing in helping multi-sided platforms succeed and scale.
“We work with firms to help them explore how they can either bring a platform business to market successfully while avoiding some of the pitfalls,” Joseph explains.
“They’re driving some level of adoption and use, and yet they’re starting to realize their entire model is suboptimal and their entire model is suboptimal,” he explains. “It may be an issue with the business model. It may be because they’re not solving the core problem. It may be because they simply haven’t contemplated what it means to add a second or a third side to the business. And yet, as they start to do so, doors start to open and opportunity starts to expand.”
One of the major challenges Joseph believes two-sided network marketplaces in healthcare face right now is the “chicken and egg” or “cold start” problem, and the complex nuances involved.
“I asked a client early on, which is the more important side of your network? And he gave the best answer ever. It was, that’s like asking what side of the scissors cuts,” Joseph adds. “By the end of our time together, I think I convinced him that there was a more important, or at least a harder side. But thinking deeply about that question is really important because it does start to answer the question, how should I think about resource allocation? Which side is more strategic? Which side do I really need to be more concerned with building out satisfaction and stickiness with?”
According to Joseph, Summit Health will help determine which side of the platform business to focus on first to get to market faster, optimize resources, create value, and keep that flywheel spinning. Without giving away their “secret sauce,” Joseph does believe he’s identified the “harder side” in healthcare.
“I would say it tends to be the case that the harder side in healthcare is the side that’s closest to the patient and is dealing with the most complex real world everyday environment.”
Joseph’s passion remains to help investors and healthcare operators leverage multi-sided platforms to help physicians and care extenders improve the quality and cost of care.
But one of the challenges he believes is still on the horizon is the limitation of current interoperability standards. “We’re getting awfully close to every doctor and every health system having an EHR in place,” Joseph shares.
“The question becomes how do you free up that data? How do you extract that data to start to make it usable, while very importantly, putting boundaries and putting safeguards in place? What measures does the business need to take to ensure trust in the system and transparency around what the data might be used for? Who can access it under what conditions, how frequently, what they can do with it?” he adds.
“These are all really in many respects, exciting questions to ask because I think quite frankly, the medical research, medical discovery in the future is gonna look dramatically different from how it does today.”
This conversation was captured at the 2023 ViVE Conference in Nashville. Stay tuned for more exciting interviews from the event.
About Seth Joseph: Seth Joseph, Founder and Managing Director of Summit Health Advisors, spent more than 10 years leading strategy for innovative digital health companies including CVS Health and Surescripts – the first true network effects-driven healthcare platform. Seth has extensive experience in healthcare and platform business straegy and founded Summit in 2018 to make it easier for digital health companies, hospitals, and investors to find a true strategic partner. Seth graduated from the University of Wisconsin with a degree in political science and then achieved a masters in business administration, with a concentration in strategy and entrepreneurship from Boston University. Seth is a frequent contributor to Forbes, and is a frequent speaker and moderator.
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