Doximity: The Leading Digital Platform for U.S. Physicians Files IPO

By Wu Yuan

As far as VCBeat is aware, in the field of internet healthcare startups, physician-facing apps have drawn particular attention due to their impact on physicians, a key stakeholder in the ecosystem. Doximity, the largest online professional network for physicians in the United States, has long been cited by Chinese investors and entrepreneurs as a model to emulate. However, there has yet to be any public research or reporting that systematically dissects what Doximity has done, how it has done it, and what business logic and revenue model it has built. Following our previous introduction ofHealthTap、Dexcom、Castlight Health、Welldoc、AliveCorAfter reviewing outstanding overseas entrepreneurial projects and products, VCBeat’s Internet Healthcare Research Institute conducted a detailed analysis of Doximity’s development trajectory.

Doximity is often referred to as the “LinkedIn for physicians.” It provides healthcare professionals with a secure platform for professional networking, information exchange, and medical collaboration. From its inception to the end of 2014, Doximity’s membership grew to 400,000 in just three years, meaning that more than half of all U.S. physicians had joined the network. During this period, physicians established over 20 million professional connections on Doximity, equivalent to an average of 53 directly connected colleagues per member. Every day, physicians send more than 20,000 encrypted messages through the platform. Over the course of more than three years, nearly 215,000 job opportunities were made available to members via Doximity. The company has also attracted significant interest from venture capital firms. After three rounds of financing, Doximity raised a total of $81.8 million, making it the most heavily funded social networking site in the healthcare industry. However, Doximity stated that by early 2014, the company’s cash flow had begun to grow, so it was in no hurry to spend the $54 million obtained in its latest funding round. By any measure, Doximity can be considered a successful model for the development of vertical social networks. Let us now examine what makes Doximity distinctive.

Closed Social Networks

Social networks such as Facebook and LinkedIn boast massive user bases, but these mainstream platforms are not suitable for healthcare professionals, including physicians, who bear responsibilities for protecting patient privacy. How can physicians fully leverage the advantages of social networking without violating the U.S. Health Insurance Portability and Accountability Act (hereinafter referred to as HIPAA)? Doximity offers an effective solution.

Unlike the open-access models of LinkedIn and Facebook, Doximity is exclusively available to healthcare professionals, including general practitioners, specialists, registered nurses, and physician assistants. This robust, closed social network is built upon comprehensive physician data. Doximity deeply integrates 21 public databases, including the National Provider Identifier (NPI) database and the Centers for Medicare & Medicaid Services (CMS) database, as well as physician directories from medical schools, hospitals, medical imaging centers, pharmacies, and other healthcare institutions. Consequently, Doximity maintains public profiles for nearly all physicians in the United States. Physicians can locate their Doximity profile by entering their name and practice location and answering a few identity verification questions. These profiles include public information such as the physician’s address, practice area, specialties, and published academic articles. Physicians must complete a three-step identity verification process to finalize their Doximity account registration and gain ownership of their profile. Once logged into the Doximity platform, physicians can update and supplement their practice information, upload and modify their resumes, and exchange private messages with selected colleagues.

Doximity’s closed nature ensures the privacy and security of this social networking platform, while also providing a communication channel that is compliant with HIPAA regulations.Here, physicians can share their professional experiences under their real names and verified identities, engaging in high-level professional exchanges and collaborative case diagnoses. For specialists, the Doximity platform helps bolster their professional reputation, strengthen peer connections, and enhance clinical expertise. Meanwhile, primary care physicians and other healthcare professionals leverage Doximity’s powerful internal search engine to locate referral specialists, diagnostic facilities, pharmacies, and other resources. Tasks that once required significant time investment are now simple, routine operations on Doximity.

HIPAA-Compliant Mobile Communication Methods

In accordance with HIPAA requirements, physicians in the United States are prohibited from using email and SMS for work-related communications to prevent the leakage of patients' protected health information. Consequently, traditional telephone calls and faxes remain their most frequently used communication tools in clinical practice. Surveys indicate that U.S. physicians spend an average of 40 minutes per day contacting colleagues by phone. The U.S. healthcare system generates up to 150 million fax pages annually, with an average transmission time of 15 minutes per medical record. Although the widespread adoption of electronic health records (EHRs) has significantly improved the efficiency of medical communication, 86% of EHR systems do not support external sharing. Poor communication among healthcare professionals can easily lead to delays in patient treatment. According to statistics from The Joint Commission on Accreditation of Healthcare Organizations, 65% of medical errors stem from communication failures among healthcare providers.

Doximity is the first social network to adopt HIPAA-compliant communication methods.Initially, Doximity members could communicate via a specially encrypted, HIPAA-compliant SMS system. This feature has now been integrated into Amion, a standalone iPhone application that utilizes the Doximity user interface. The SMS product within Doximity has been upgraded to DocMail. Physicians can use DocMail to send richer, larger-capacity messages, such as high-resolution photos and multi-page test reports. These messages can be sent via either secure or non-secure methods. Secure messages require recipients to enter a personal identification number (PIN) to view them, while there are no strict restrictions on receiving non-secure messages.

While providing HIPAA-compliant SMS and email services, Doximity does not force physicians to change their long-established work habits. DocFax is one of Doximity’s most popular products. Every user registered with Doximity receives a private fax number. Anyone, regardless of whether they are part of the Doximity network, can send faxes directly to this number. Physicians can use the Doximity application on smartphones, tablets, and desktop computers to reply to, store, sign, forward, or print these faxes. Once a fax is received by the recipient, the system sends a confirmation receipt back to the sender.

Although all the aforementioned communication tools have desktop versions, they are primarily designed for mobile devices such as smartphones and tablets to ensure that physicians can stay connected with colleagues at any time, whether in the office, ward, laboratory, or while on house calls. This reflects Doximity’s design philosophy of prioritizing mobility as the foremost principle in product development.

Doximity's Business Model

The founders of Doximity mentioned three potential sources of profit when discussing the company’s business model.

1. Doximity’s various products will continue to be offered free of charge to individual users, while hospitals can pay for enhanced communication tools and other additional features.

2. Another potential revenue stream is physician surveys. Medical research institutions can leverage Doximity to invite physicians to participate in paid questionnaires or consulting engagements related to healthcare.

3. Of course, a more significant revenue stream for Doximity is facilitating physician recruitment. The shortage of physicians in the United States is becoming increasingly severe, making physician recruitment an industry with annual profits exceeding $70 million. Doximity assists human resources firms and various healthcare organizations in recruiting physicians with specific professional backgrounds and specialized skills, as well as individuals engaged in consulting, locum tenens work, and international relief efforts.Recruitment intermediaries remain the primary revenue source for professional networking platforms such as LinkedIn and Doximity.

To enhance the efficiency of physician recruitment and help Doximity members secure suitable job opportunities, Doximity integrated and upgraded the recruitment features from its earlier versions, launching the Talent Finder product. Talent Finder functions similarly to a recruitment matching service. By using Talent Finder, Doximity’s physician members can share their professional profiles and resumes with hospitals, health systems, and other potential employers. They can also specify job preferences such as desired location, salary, work shifts, and schedules. Through Talent Finder, recruiters can quickly search the Doximity network based on criteria such as location, educational background, and specialty to identify qualified candidates and contact them via DocMail. This service significantly ensures that physicians are not disturbed by irrelevant job postings, while also achieving a much higher success rate in recruitment activities compared to traditional physician hiring methods.

In the long run, Doximity has additional opportunities to profit from deeper penetration into niche markets. Although its physician user base is not large in size, it wields substantial purchasing decision-making power. Targeted advertising and sponsored events by medical device manufacturers and pharmaceutical companies could well become Doximity’s next gold mine. The founding team at Doximity may have recognized these opportunities, but so far they have made no significant moves in offering advertising services.They must ensure that the pursuit of commercial interests does not compromise the user experience of healthcare professionals.After all, it is the high market share and deep penetration in this specialized market that constitute the root of Doximity’s dominance in its niche segment and the foundation for all its future profitability.

Business Strategies for Increasing Market Share

Given the critical importance of high market share to Doximity’s profitability, the Doximity team has rolled out a series of feature-rich products over the past three years to enhance member value and improve user experience, with the aim of attracting more physicians to join the platform and boosting network engagement among existing users.

VCBeat has created the following product family map of Doximity, illustrating the multidimensional connectivity centered around the physician community.

In 2012, Doximity launched iRounds, the first HIPAA-compliant encrypted physician forum.

Soon after, the DocNews product was launched. Doximity integrated RSS feeds from hundreds of professional journals and enabled the delivery of customized news, allowing physicians to stay abreast of industry developments amidst their busy schedules.

In May 2013, Doximity and Cleveland Clinic collaborated to develop a new Continuing Medical Education (CME) system. This innovative educational model shifted CME from traditional conference halls and seminars to personalized online spaces. Doximity members no longer need to leave their practices and patients to attend distant academic conferences; instead, they can engage in online learning and discuss cutting-edge medical research via mobile devices during breaks, thereby earning CME credits.

In September 2013, the Doximity API was launched. Physicians can log in to multiple health and medical websites and apps using their Doximity credentials.

In early 2015, Doximity launched the Career Navigator tool. This interactive compensation map includes salary trends across various regions of the United States for 48 medical specialties, helping physicians better plan their careers and negotiate salaries.

Doximity Creates Physician Compensation Map

In addition to launching the aforementioned products that meet the needs of its physician user base, Doximity has also pursued strategic partnerships to attract new users. The most significant of these is its collaboration with U.S. News & World Report.

This media company is the publisher of rankings for the Best Hospitals, Best Medical Schools, and Best Health Insurance Plans in the United States. To compile the Best Hospitals rankings, the company conducts annual surveys of physicians. Physicians’ opinions carry significant weight in these rankings. Following the partnership between U.S. News & World Report and Doximity, all physician surveys can be completed through the Doximity platform. Although Doximity has not explicitly disclosed how this partnership has affected its user base, it is certain that a considerable number of healthcare institutions have encouraged their staff to join the Doximity network and complete the surveys online.

Similarly, Doximity partnered with U.S. News to launch Residency Navigator. Doximity members can use this tool to search for the top residency programs in the United States. Following the launch of this tool, the proportion of senior medical students joining Doximity rose from 12% to 40% of the total student population, and these future physicians are not included in the existing base of 400,000 professional Doximity members.

The launch of Doximity’s suite of products and collaborative initiatives has had a significant impact on increasing its market share. The steady and continuous growth in its total user base demonstrates Doximity’s solid market position and strong profitability potential, with the company’s cash flow registering growth for the first time in January 2014.

All these achievements are inseparable from the hard work of Doximity’s founding team. Doximity’s founder, Jeff Tangney, is also the founder of Epocrates, the world’s first publicly listed mobile health company, and he led Epocrates through its initial public offering (IPO). Co-founder Nate Gross not only holds a medical degree but also co-founded a seed fund focused on the pharmaceutical and healthcare sectors. Konstantin Guericke, co-founder of LinkedIn, joined Doximity’s board of directors in 2012. As the co-founder of the world’s largest professional networking platform, he clearly brings extensive experience in user acquisition and rapidly building large-scale social networks. In addition, some members of Doximity’s team come from Epocrates’ original founding team, and nearly 10% of its employees have a physician background. Doximity organizes physician gatherings of varying scales on a monthly and annual basis to solicit doctors’ feedback on product design. The company has made considerable efforts to deeply understand the needs of its customer base. As Jeff Tangney once stated, “Doximity is an app designed by physicians, for physicians.”

Doximity Sees Membership Growth with New Product Launch

Financing Status and Future Development

In recent years, investor interest in vertical social networks has surged. Several newly launched niche-focused social platforms have attracted investments amounting to millions. Investors firmly believe that these startups can generate substantial profits from recruiters and marketers. Doximity is also a beneficiary of this trend. Its strong profit potential and the founding team’s extensive entrepreneurial background have undoubtedly drawn greater attention from investors.

Doximity has completed three rounds of financing. In March 2011, it raised $10.8 million in Series A funding from InterWest Partners and Emergence Capital Partners. In September 2012, it secured $17 million in Series B funding from Morgenthaler Ventures, Emergence Capital Partners, and InterWest Partners. In April 2014, the company raised $54 million in Series C funding from Emergence Capital Partners, Morgan Stanley Investment Management, T. Rowe Price, and Draper Fisher Jurvetson (DFJ). Over a span of just three years, Doximity attracted a total of $81 million in investment. Two of the six investors participated in multiple rounds, underscoring their confidence in Doximity’s business prospects. Notably, Doximity’s investor base comprises both venture capitalists specializing in early-stage investments and late-stage investment experts who typically engage closer to a company’s initial public offering (IPO). Although the valuation was not disclosed in the most recent funding round, industry experts estimate that Doximity’s value will soon reach $1 billion. While Doximity ultimately plans to go public, CEO Jeff Tangney believes that although some late-stage investors may push for an earlier IPO, companies with continuously growing value like Doximity should expect a longer waiting period for investor liquidity events.

Implications of Doximity’s Development for Healthcare Website Startups in China

1. When a company’s profit-seeking activities may conflict with user interests, entrepreneurs must exercise extreme caution in their business actions. Undermining the user base for the sake of short-term profits can make it highly unlikely for the company to achieve its more important long-term profitability goals. Domestic startup teams focusing on physician-facing platforms have consistently assumed that revenue would primarily come from marketing collaborations with pharmaceutical companies; however, this is not the case for Doximity.

2. Given the limited size of niche markets in the healthcare sector, new entrants must rapidly increase their market share and sustain a high level of penetration within a specific timeframe to seize first-mover advantages and solidify their market position. Achieving this goal hinges on a deep understanding of user behavior patterns and needs within the niche segment, as well as the ability to swiftly launch products that align with market demands. Meanwhile, leveraging strategic partnerships can also yield unexpected and significant results.

3. Although the use of patient information is restricted by HIPAA, Doximity has spared no effort in data analysis and mining in areas such as physician recruitment and compensation, while effectively leveraging data visualization tools. It is indeed apt to describe Doximity as the “LinkedIn for physicians.” This also demonstrates that beyond privacy-sensitive data, there remains significant untapped data value in this field.

4. Startups must clearly identify their business model and conduct their commercial activities primarily around it. This approach helps prevent reckless “cash burning” after securing investment. Startups that not only have sufficient capital to support subsequent growth but also allocate funds strategically are more likely to earn investors’ trust and acclaim, thereby paving the way for future fundraising.