Operational Priorities for Platform-Based Internet Hospitals: A Focus on Network Effects, Doctor Engagement, and Patient Experience

Editor’s Note: This article is shared from “Xiangyun Manbi” (WeChat Official Account ID: LuckCloudsnotes), and has been republished by VCBeat with authorization.

In the second half of 2019, China’s healthcare industry will witness a surge in the development of internet hospitals. Platform enterprises building internet hospitals need to refine their operations in which areas to enhance user acquisition and retention? In the future competition among internet hospitals, which aspects, if strengthened, are more likely to help them stand out? This article examines and discusses these issues from three perspectives: network effects, physician users, and patient users.

The purpose of operating an internet hospital for chronic diseases is to (1) leverage operational capabilities to convert a portion of chronic disease medical expenses into chronic disease management fees, and (2) harness operational capabilities to realize the platform’s network effect value and commercial potential.

According to relevant data released by the National Health Commission, China's total health expenditure has shown a rapid growth trend in recent years, reaching RMB 5.2598 trillion in 2017. Among this, expenditures on chronic diseases accounted for approximately 70% of the total health expenditure. If 10% of these funds could be redirected toward chronic disease management in the future, the market size would approach RMB 400 billion, indicating substantial development potential.[1]

Internet hospitals exhibit strong cross-side network effects and weak same-side network effects. Cross-side network effects refer to the network effects generated by interactions between doctors and patients, as well as between doctors/patients and other sides of extended business services. Same-side network effects refer to the network effects formed through interactions among doctors and among patients.

By leveraging features and services tailored to both physicians and patients, we stimulate cross-side network effects within the physician-patient ecosystem. Through technical support, revenue-sharing models, and value-added services, we simultaneously cater to both sides of this two-sided market, thereby achieving commercial monetization.

Deeply explore the vertical service chain for single diseases and establish a complete closed-loop chronic disease management system—by integrating smart devices (such as smart blood pressure monitors and glucose meters), charitable drug donation programs, and commercial insurance, penetrate third- and fourth-party markets, concentrate medical resources in a targeted manner, and enrich the dimensions of multi-sided network effects.

For instance, continuous blood pressure monitoring data can be obtained via smart sphygmomanometers, providing data support for the research and development of new drugs or for precision marketing of pharmaceuticals. Furthermore, pharmaceutical companies can be guided to transition from product-centric marketing to service-oriented marketing. By leveraging patient-physician behavioral data generated through these services, precise and effective data analysis can be conducted, thereby empowering physicians, patients, and pharmaceutical marketing alike—a process encapsulated as “digitizing business operations and operationalizing data assets.” By leveraging information technology, supply chain capabilities, and big data analytics, platforms can achieve intelligent business models.

Although internet hospitals exhibit weak same-side network effects due to their platform nature, offering extended services can strengthen these effects, thereby increasing user switching costs and enhancing user stickiness. Examples include opportunities for peer-to-peer communication among medical experts, access to professional communities, remote expert consultations, and continuing education programs. Same-side network effects among patients are relatively weaker; however, in specific age groups with certain diseases, there is a demand for patient support communities. Whether the platform should establish such patient communities requires research through interviews and observation of patient behavior to confirm that patients genuinely need this feature.

The core of managing and operating an internet hospital lies in the management and operation of physicians. Platform enterprises all face the same challenges in this regard: How to attract a large number of physician users? How to regulate physician behavior to ensure medical quality? How to retain high-quality physician users and encourage them to spend more time on their platform rather than on competing platforms?

Platform enterprises need to study doctors’ online behavioral patterns. Reports indicate that doctors spend 16 hours per week online engaging in medicine-related activities [2]. During their internet usage, the primary content they browse falls into seven categories: acquiring medical professional knowledge and information, searching for medical literature/data, using medical professional tools, participating in continuing medical education, communicating with industry peers, interacting with patients, and managing compliant income (“sunshine income”). Platform enterprises should consciously design user interfaces tailored to physicians, configuring functions and content specifically around their needs.

Position the internet hospital as a career development partner for outstanding physicians in specific specialties across China, and define the platform as a compliant, high-quality online practice environment that helps doctors manage their practices by providing documentation and expedited channels for multi-site practice. Align interests between both parties through models such as physician groups and partnership systems. For mid-career and young experts, assist in establishing studios that extend online, enabling integrated online-offline diagnosis and treatment of complex cases. For the broad base of attending-level physicians, offer premium continuing medical education courses, opportunities for peer exchange with industry experts, or access to professional communities; empower physicians through software technology by providing convenient patient management tools and health education content.

The platform boasts a larger roster of renowned medical experts, signifying greater prestige, stronger academic influence, more high-quality medical resources, and a more sustainable and vibrant professional community.

When inviting physicians, emphasize the meticulousness and professionalism of the engagement process to establish initial trust. While training physicians on how to use the platform, inform them of the negative list during the trial period, the concept of collaborative co-construction among peers, and the long-term value they will derive as platform users.

Screening and cultivating a cohort of physicians who possess both strong service orientation and professional competence is a task that demands sustained patience. The operations team should prioritize the sharing of best practices and the quantifiable execution of tasks. If the platform pursues user growth by onboarding physicians with poor service awareness and inadequate professional skills, it will suffer significant reputational and financial losses. For physician users, quality matters far more than quantity.

If a physician practices at multiple locations and simultaneously uses several internet hospital platforms, the physician will inevitably form distinct positional impressions of each platform (two physician friends of mine both hold different subjective perceptions of various internet hospital apps). Based on positioning theory, platform enterprises should leverage their own resources and advantages, along with the underlying philosophy of their internet hospital construction, to cultivate a unique positional impression among physicians. Furthermore, platform operations and brand promotion should be dynamically adjusted to support this positioning.

Physicians’ expectations for compensation vary by region, professional title, and hospital tier. Reports indicate that average monthly income from such sources accounts for 20%–30% of their fixed salary, with RMB 126 per hour considered a reasonable rate by physicians.

Internet hospitals face challenges in controlling the quality of medical services. In response, every province in China has established an “Internet Hospital Supervision Platform” to implement automated, intelligent oversight of corporate internet hospitals. Therefore, it is essential to strictly manage the targeted recruitment of physicians by establishing a robust physician screening mechanism, defining clear selection criteria and evaluation systems, and clearly informing physicians that they bear responsibility for the services they provide.

The online team is responsible for platform operations and maintenance; the offline team handles physician user acquisition and contracting, essential patient management, and supply chain management.

Theoretically, internet hospitals should deliver patient-centric services, with online care serving as a continuous supplement and standardized reconstruction of offline medical services, ultimately forming a closed loop. However, in practice, “gaps” and discontinuities exist in the transition between online and offline care across various stages of healthcare delivery, and building and optimizing these systems requires time and accumulated experience.

For patient users, what are the most critical areas internet hospitals should prioritize to attract and retain patients, and where lie the “low-hanging fruits”?

In the course of medical service delivery, patients have traditionally been in a passive position. In conventional hospital settings, constraints of physical space and time make it difficult for physicians to thoroughly explain all relevant details. However, in online environments, features such as hyperlinks and rich media empower doctors to provide information to patients more conveniently. Patients can also access their examination records and electronic health records (EHRs) at any time. Furthermore, patient tags can be intelligently matched with corresponding health education materials and public welfare programs. These technological means can significantly enhance patients’ sense of gain and control over their healthcare experience, making improvements in patients’ perception of medical services a “low-hanging fruit.”

Patients access services on the platform, including physician consultations, e-prescriptions, in-store medication pickup, follow-up management, and health education. Displaying process progress and providing warm, helpful tips to inform patients of their current stage in the medical service workflow and upcoming steps would significantly enhance their experience.

When doctors issue electronic prescriptions via internet hospitals, if the system provides patients with information such as nearby pharmacies with stock availability, distances, and medical insurance reimbursement details, patients will have greater trust in and reliance on the platform’s services.

Securely connecting to open platforms such as WeChat significantly lowers the barrier to use for patients. Professor Erica Spatz, a cardiologist at Yale University, stated, “In China, WeChat has become a promising and highly influential health strategy, capable of reaching all patients and their families beyond the doctor’s office.”

The platform can also display medical resources from various regions and collaborate with additional payers, such as commercial health insurance for patients with pre-existing conditions. By intelligently presenting health education content and public welfare projects to patients based on disease-specific matching, rather than displaying them to all patients indiscriminately, the platform will enhance patients’ experience of medical services.

Patients with chronic diseases require frequent medical consultations, may need lifelong medication, and must undergo regular monitoring of physiological data. In response to this situation, internet hospitals for chronic disease management can visualize patients’ long-term examination results and medication adherence, while highlighting the benefits of high adherence and the risks of low adherence, thereby improving persistence in these repetitive health management tasks.

Leveraging the characteristics of long-term duration and repetitiveness, we adopt a health management approach to design functionalities that intervene in patients’ lifestyles, thereby reducing the probability of complications and mortality, lowering subsequent treatment costs, and alleviating the medical burden. This design philosophy and its benefits are continuously communicated to patients.

Report data indicates that Chinese patients spend an average of 26 hours per week online, with 7 hours dedicated to medical-related activities, accounting for 29% of their total internet time—a 3 percentage point increase from 2017. These 7 hours of medical-related engagement are distributed across ten categories, including medical/disease education, medication assistance/reference, and online consultations. Notably, information on and purchase of commercial health insurance entered the top ten rankings for the first time this year.[2]

Patients are becoming increasingly “knowledgeable,” with 34% proactively requesting prescription medications from their physicians, and 29% of such requests being fulfilled.

As patients access more medical information through digital platforms, their willingness to participate in treatment planning has increased. The model of shared decision-making between doctors and patients is becoming increasingly common. Data shows that decisions made solely by physicians account for 47%, shared decision-making accounts for 31%, and decisions made solely by patients account for 21%. However, in oncology, patients rarely engage in shared decision-making with their physicians; 81% of treatment decisions are made solely by physicians.

In the new era of consumption, users are inclined to explore a wider range of options: they may use this platform or others; they can opt for online consultations or visit hospitals in person; they can choose community health centers or tertiary Grade A hospitals. The essence of healthcare lies in service, and services come with expectations. Users are willing to pay more for better quality service, which aligns with fundamental consumer behavior. In this new consumption era, users have the right to pay a higher premium in exchange for superior services.

References:

VCBeat 2018 Internet Hospital Report: The Time to Act Is Now

2. VCBeat 2018 Report on the Digital Lives of Doctors and Patients