The concept of connected care has created integrated platforms that house software-based products, offerings and services related to healthcare. The aim is to keep people healthy through predictive diagnoses, to optimise the delivery of patient care through offerings that show a clear benefit, and to respond to growing demands for cost saving solutions. So what factors do digital health platforms need to consider to create value in the mid-to long-term?

To better understand opportunities within this industry, GLG’s Mintoi Chessa spoke with industry expert Bob Verhagen, the founding owner of Buurtdokters, a chain of GP practices in the Netherlands that utilises scale to drive innovation in primary care. Before this, he held various senior positions at companies that specialize in healthcare information technology, including as Head Strategy and Innovation at Heart for Health, Strategy and Innovation at Cardiologie Centra Nederland, and Business Development at DC Klinieken.

How do key trends shaping the health tech landscape influence the competitive dynamics among market players?

It’s very clear to most of our listeners that healthcare is under pressure. There’s an increasing demand in healthcare because of the drives of consumerization and aging populations, and there are rising shortages of doctors, of nurses, and of other caregivers. Around that, is the fact that the healthcare system, including hospitals, specifically in the Netherlands, are partially being funded by a government, so there’s increasing pressure on budgets from a government perspective. This relates to the fact that, for example, hospitals haven’t been doing very well financially lately and therefore are lowering their budgets for new IT investments. Their infrastructure isn’t being hit that much, but their new investments into IT are being hit.

This pressures providers to move care towards cheaper places. For example, a patient being at their own home, also, cheaper providers, for example, moving care from the secondary perspective to the primary care perspective. And so, we are under this pressure of a shortage of caregivers. I foresee that we are optimising more and more on doctors rather than optimising care around patients, because our caregivers are becoming the one to optimise on. I think this trend ultimately drives the digitalisation of healthcare, which means that we are increasingly using healthcare data.

We are using this data, for example, to monitor chronic patients. We started to do this increasingly and more continuously, but also to have more remote contact, for example, video call contact with the patient rather than always seeing the patient in the doctor’s office. To be able to actually do this, we need to exchange the medical data from one provider to the other, to as a doctor be able to determine the right diagnosis and the right treatment path.

The position of patients is also increasing because patients want to be involved in their care pathway. They want to be involved and know what they actually have, which is why we have the patient portals, and we need to add more functionality to these patient portals to not only explain to the patient their diagnoses and treatment, but also to focus more on prevention, primary and secondary prevention.

This ultimately, if you think about multiple caregivers around chronic patients, means that we see increased data from the coordination of care. A dietitian working together with the primary care physician, or a primary care physician working together with a cardiologist. This means that data has to go back and forth between the primary care provider as well as the cardiologist to determine what’s going on with the patient, what happened to their latest blood pressure measurement, how do we assess the measurement, and who has to handle based on that.

Can you speak about infrastructure functions and how platforms integrate various software-based products?

If you look at the challenges of an infrastructure player, like mostly Enovation is doing, the challenges and opportunities are around reliability, security, and privacy. So you have to ensure that your systems are behaving very well and invest in those, which means it becomes a much higher barrier to entry for a new player to come in. And I think the second one is that there’s a huge network effect. This network effect of an infrastructure player means that once you have added all the hospitals in a certain country for your medical data or for your secure email, it makes much more sense for any new player that as a provider comes to the market to join the existing network.

And this means that you have a big lock in, you have pricing power, you have all sorts of powers coming with this big network effect. And that means that if you come back to the type of functionality which is really core infrastructure, exchange of medical data, exchange of imaging, and secure email, this all comes down to existing integrations. The more integrations you have, the more power you have. And I think on top of this infrastructure, there are other modules, for example, around chat, video calling, and chatbots, which are much more like modules that a software provider and sometimes a healthcare provider with their own IT department can use to support their own way of working, their own system. So whereas there’s a huge power in this network for the infrastructure functions, other functions which relate a bit more to the chat, to the video chat, to the chatbot, rely a little bit more on just being included as modules.

Let’s talk about building value through organic and inorganic growth. Can you highlight ways to build value?

For organic growth, starting off there, the strength of the network determines how easy it becomes to grow, but also how big the lock-in actually is that you have. So if you have an infrastructure functionality like the secure email that Enovation has, like the exchange of medical data, or the exchange of imaging, there will be a big lock in. It will be easy to add existing providers within a certain country to your network, but it will also be quite hard to just expand that network to a different country. You would have to buy, on the inorganic side, a completely new infrastructure platform to use again in a new country because there’s no value to new care providers moving to a network that they don’t really communicate with.

So on the organic side, it’s obviously the network that you have, and then a big part of that becomes upselling of extra services. Then the question really is, if you’re on the one hand providing an infrastructure, and on the other hand providing some modules which can be used within other systems or in combination with your infrastructure, how big is the opportunity for cross-selling? I think the fact that there’s a very high barrier to entry, and the fact that as a company you are able to show that you are doing well on privacy, security, and reliability is a big plus for being able to cross-sell. If you are a provider and considering what to do and what to buy for new modules, then you’re looking at players who already have an integration with the systems that you’re using, and they will have a big advantage. But if none of your players already has an integration set, then this just becomes more about who has the best proposal, rather than who already has these integrations.

And then if we move back to the inorganic side, if you start to expand the network and move to other geographies, you can buy extra platform functionality, which is the infrastructure that you move into in a new country, so infrastructure around medical data, medical imaging, secure email, secure communication. You can add surfaces or functionalities like portals, chats, and video chats to your infrastructure, and start to cross-sell that into your existing network in the infrastructure.

But I think that there are two trends which are working within the infrastructure part, and in those modules. Within the infrastructure part, we see a move away from just point to point connections, like one hospital exchanging smoking data with the other hospital, towards more integrated networks where we already have all these connections preset. So, for example, a new app on diabetes can much more easily integrate into different hospitals, rather than needing to have a point-to-point connection for every different hospital that you go to because they have their own data modelling. I think that’s where we see a move within infrastructure, specifically for medical data, from just point-to-point connections.

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About Bob Verhagen

Bob Verhagen is Founder and owner of Buurtdokters (2020 to present) a chain of GP practices in the Netherlands that utilises scale to drive innovation in primary care. Before this, he held various senior positions at companies that specialize in healthcare information technology, including as Head Strategy & Innovation at Heart for Health (2018 to 2020), Strategy and Innovation at Cardiologie Centra Nederland (2017 to 2020), and Business Development at DC Klinieken (2017 to 2019). Bob was also Strategy Consultant at Bain & Co. (2016 to 2017) where he specialised in healthcare provision and digital healthcare products and markets in Europe.

This article is adapted from the GLG Teleconference “Digital Health Platforms Buy and Build” hosted on February 14, 2024. If you would like access to this event or would like to speak with experts like Bob Verhagen, please contact us below.