Platform domination is a fully-established feature of a number of sectors, particularly those where a winner-takes-all outcome is possible—such as with Amazon and e-commerce, Facebook and social media, or Google and search. Increasingly, leading incumbent firms have embarked on developing their own platforms in order to curb disruptive innovation. For example, consulting firm McKinsey found that a single digital platform ends up dominating about three-quarters of the time in developed economies, pointing to Unilever, Nike and Daimler as examples.
So will healthcare ever see the same platform-dominated digital business model that has become standard in so many other industries?
Certainly, a number of big tech firms including Google, Microsoft and Salesforce have announced healthcare-focused, cloud-based digital platforms in recent years that seek to emulate the winner-take-all models more common in other industries. However, as McKinsey’s report noted, industries that have lower digital maturity—including pharmaceuticals and healthcare in general—see less prevalence of platforms due to a lack of network effects.
Why exactly has healthcare lagged in the platform technology revolution? There are several possible reasons.
First, regardless of sector, most platforms fail. For every success story like Uber or Airbnb, there are many that can’t make it to the fifth anniversary. There are many potential reasons for such failures, but perhaps the one most salient to healthcare is lack of trust. The adversarial relationships between payers, providers and pharmaceutical companies undermine the necessary collaboration required for a platform to succeed.
Second, users have so far been slow to adopt digital health platforms. For any platform economy to be successful, consumers need to actually use the platforms. Even telehealth platforms—which have been widely hailed as a transformative and disruptive means of delivering healthcare—have seen fairly sluggish adoption rate among American physicians due to issues of reimbursement and coverage. In other words, it appears there’s a huge gap between big tech firms looking to spend billions building healthcare-focused platforms and the market’s actual readiness for such platforms.
Lastly, data ownership plays a big role in blocking platform domination. Healthcare consumers are generally wary of sharing their personal medical data, a big hurdle for big tech firms to overcome. What’s more, the sharing of data necessary for a platform to truly innovate is hindered by the lack of a universal patient identifier.
In short, platforms in the healthcare sector are just starting to take hold, and it may be several years until we see a true success story.