#americanwell

It was fascinating for me to read this week’s case on American Well. I cannot help but reflect on Doctor’s Operation, an online medical consultation start-up that my ex-colleague is currently working on in China. Similar to American Well that needs to decide whether to implement the Team Edition, Doctor’s Operation, an online innovative platform that connects patients with doctors in their specialized fields in China, also faced a decision to make on whether to launch a second-generation product in allocating patients and doctors to hospitals that were underutilized to reduce the surgical wait-time.

The medical resource in China is extremely imbalanced. The inefficient geographical allocation of the doctors is an acute problem in China. 90% of the very best doctors in the country are based either in Shanghai or Beijing, which means patients with uncommon infections/incurable diseases will have to travel to those two cities to get medical consultation. As a result, people started to queue up in front of the hospitals at 3am every day in hope of getting their designated doctor’s appointment. The technological innovation allows the patients to access the doctors online without having to make the trip and queue up in front of the hospital. However, the model was not extremely effectively, as it realized the key challenge is not in making the appointment with the doctors but in the longwinded surgical wait time in the hospital due to lack of beds, nurses and equipment. Once the patient has been diagnosed, he/she typically has to wait between six to twelve months to receive a surgical operation in those major, high demand hospitals. In order for Doctor’s Operation to scale up and to make the real impact, the company realized that it needs to find a solution to reduce the wait-time between doctor’s diagnosis and the surgery. One of the most effective ways to tackle the problem is to dispatch patients and doctors to hospitals in suburbs and somewhat remote locations where the demand is not excessive. Similar to the decision that American Well had to take on implementing Team Edition, Doctor’s Operation had to decide if it wants to commit resources to developing and marketing its second-generation product, which reduces the wait-time between doctor’s diagnosis and the surgery by connecting excess demand (surgical operations) with excess supply (hospitals in the remote locations).

There were tremendous barriers involved in disrupting an already established industry, including managing interests from different stakeholders, complying with regulations, sorting out with insurance companies and payments and etc. VC investors and a few key management were also concerned that it would be too soon to launch a major new undertaking that would complicate the business model and involve additional marketing and re-branding. It would also require additional hiring and securing additional funding just like what American Well had to do back in 2013.

I had the chance to talk to my ex-colleague, the CEO, of what he was thinking of back then. “Sean, you have to think about what the problem is that you are trying to solve and what the best solution that would be, not what the easiest solution that would be. It was a move that we had to make. The company would only succeed if it can identity and solve the pain points for its clients. The existing model back then did not tackle the economic problem of matching excessive demand with excessive supply. We can make a much larger impact if we could help matching those patients with underutilized hospitals to reduce surgical wait-time – it saves lives. If we can evolve from a facilitator to a problem solver, the operational obstacles would only be secondary.” Ultimately, the new product launch came out extremely successful as it re-pivoted the direction of its corporate strategy and matched over 200,000 surgeries over the past two years – making an impact on the lives of many.  

Today’s task, by and large, is to help American Well identify its next strategic marketing move among a number of options - the development of the “Team Edition” product, entering different markets along the value chain, and international expansion among them. Since this assignment feels particularly integrative (bringing together various lessons from previous classes), I’m going to do what I would perhaps do in a marketer’s position and create - and apply - a framework such that my decision making is less about intuition and more about deliberate judgment.

First and foremost, I have to make a strategic decision regarding whether to continue focusing on the buildout of the existing product or simultaneously expanding into a new product category. In order to do this, I would examine the existing product based on Roger’s Five Forces, thus deciding if the nascent brand would be sufficient to grow on its own/stand on its own feet, or if another product marketed in parallel would help it overcome deficiencies:

- Relative advantage: based on a B2B model, where the primary buyer is the insurer (payer) and the end user is the patient, I believe this provides a clear relative advantage over the existing system. It saves both payer and patient two things it greatly values - time and money - in exponential ways. Very high marks.

- Compatibility: this will be one of the company’s greatest challenges, as patients are not used to the idea of not seeing a doctor physically. Marketing spend should focus heavily on consumer education, both directly to the patient and providing consistent messaging materials through each of its client payers. Low marks.

- Complexity: it appears that the product is easy for consumers to use, and in fact resembles elements of the freelancer/sharing economy we see today by absorbing and effectively redistributing slack bandwidth (doctors waiting around while others experience high demand). High marks (meaning low complexity)

- Trialibilaity: with almost no commitment from the patient, who will be responsible for the resulting utilization, there is high trainability; payers will have certain sunk costs related to the initial number of addressable lives they purchase, but a large portion of the investment is related to annual, recurring costs - which would disappear if they were to abandon the product. This also gets high marks.

- Observability: it is not immediately observable if you are tele-medicining, though word of mouth value may be high. People may “see” you “using” the existing system - attending the doctor’s office - but the existing system would not benefit from observability any more than American Well. Thus, moderate marks.

With this analysis in hand, I would immediately discard the idea of trying to expand into a new product at the moment. There are clear synergies between the two, but while the temptation of the firm is to expand quickly and ruthlessly, they risk overshooting their resources and overextending their brand by moving too far, too fast. I feel they should only engage in Team Edition if their core product is otherwise insufficient as a standalone, but this is clearly not the case. They should not enter the Team Edition product category.

Looking, then, at market opportunities, I would be most concerned with the following elements:

Credibility: since Compatibility with existing processes is markedly low, our brand is very new, and the brand is attempting to change major elements of consumer behavior, I think that the brand should focus heavily on what markets will bolster its credibility among consumers. Not least because medical care is involved, Trust - by patients, payers, and providers alike - will be a bedrock element of building this brand.

Lateralism: having already begun to convince insurers of American Well’s value proposition, moves into new markets should happen in ways that are already closely connected to existing customer base (payers). This way, we avoid marketing mission creep and brand dilution, keeping our embodied value and exchange values alike consistent and ensuring curation of a brand that does not yet have substantial brand equity.

End User Awareness Development: I would want to see the “franchise” built out in ways that get users interacting with the product more frequently in places where they would have traditionally accessed the existing healthcare delivery system. This will position the brand for future forays into DTC, which could be a much larger market (eventually).

Regulatory Complexity Avoidance: at this stage, it is about rapid growth; being burdened by trying to learn and navigate new regulatory regimes is incompatible with trying to reach scale quickly, for the time being. This effectively mollifies any international expansion for the time being. 

Limited Stakeholder Resistance: since Compatibility is already low, American Well will want to limit the number of other stakeholders who might resist our entry until we are able to develop more brand influence and product inertia. 

Reflecting on the American Well case, it seemed like a great idea to provide online appointments with doctors. Busy people could more easily consult a qualified medical professional, and the cost of a consultation would go down broadening access to medical care.

Indeed, 3 of 4 top reasons given by respondents for wanting email access to their doctor were time-motivated, so an online consultation would surely be a bigger hit, right? The question is: who are the doctors motivated to join American Well, and can an online consultation replace an in-person one?

A consistent and high quality user experience is the priority for American Well, yet it expects to attract doctors “working as usual, but on the weekend will be able to make additional money” and those “able to add a second shift in the evening time”. Maybe I’d be OK with those docs checking out my dog, but personally I’d prefer a well-rested and focused doctor.

Traditional doctor appointments also allow us to develop a history with our PCP and it’s (usually) easier to build trust in a physical domain. Despite the waiting times, in-person meetings generally result in high quality outcomes, hence expectations for American Well will already be high, and judgement is likely to be swift and brutal.

Let me draw a parallel with another trend for in-person ‘intimate’ liaisons that has gone online... dating.

Apps like Tinder and Bumble enable men and women to meet potential partners online, saving time and broadening access to a wider market. Eventually the time comes when a couple must meet in person and test their chemistry, and it’s at this point we can make a true judgement about the other person.

Online medical consultations - like initial chats with a date prospect - can help solve basic concerns and allow an initial screening for an ailment or disease. American Well has a mountain to climb building trust between its user base however, and the online dating scene is all too aware of that issue!