Network effects and healthcare

Missing from most healthcare companies is an ability to build network effects into their services. Despite the healthcare industry’s lack of network effects, it is perhaps the industry that can benefit most from them. As the industry is currently set up, the more people who utilize healthcare services, the slower and more expensive those services become. Network effects can reverse this paradox. Building network effects into healthcare is the solution to really make a positive change in the affordability of care, improve patient experiences, and increase access to care that drives positive outcomes.

First, let’s refresh what we mean by “network effects.” The term network effect is mostly used when discussing social networks such as Facebook, Twitter, or one of the many Silicon Valley consumers startups. The term is used to describe when a product or service increases in value to each consumer as the system grows in popularity (i.e. the more other people use the product). Mostly it is thought of as a way to get consumer app users to invite their friends onto a platform, but the more important impact is that each person makes the product better. Because each new user makes the product better, there are incentives for the community as a whole to invite their friends to the platform as a side effect to the network effect. For example, Apple’s iMessage app has added features when you are chatting with friends who are also using iMessage. The more people use iMessage over other messaging platforms, the better the experience. Thus, people are quick to shame their friends who are not using iMessage.

The network effect isn’t limited to social apps either. Companies like Tesla also benefit from network effects. The more people who drive a Tesla, the more data the company is able to process from the cars’ sensors that are collecting real world data. The more data processed, the better the self-driving capabilities become. Crowdsourcing traffic conditions and even available charging stations also improve with each added Tesla driver. Every new Tesla owner generates more data that Tesla models use to train, thus making its models even better. These models in turn make the entire Tesla platform even better for consumers. This encourages new consumers to buy Teslas, which adds to the value of owning a Tesla for everyone. The cycle continues until the switching costs are too high for anyone to fathom buying another company’s car.

Healthcare on the other hand has a lot of “Negative Network Externalities”

Overuse of the healthcare system unfortunately results in the opposite of network effects. These are called negative network externalities. In most cases in healthcare, the more patients use a service, the less valuable that service becomes for the other patients, and providers become overworked. If there were network effects, there would be an incentive for me to encourage more of my friends and family to get care at my provider. But there isn’t. In fact, I don’t know if any of my friends have the same healthcare provider as I do. Not only is there little to no reason for me to want more people to have the same doctor as I do, the opposite incentive is baked into the system. A popular provider’s office means my doctor might spend less time with me and might not have the time to understand my health concerns. Nurses answering triage phone lines who are hours behind on patient callback queues become stressed out and end up spending less time with their patients. These experiences matter in healthcare just as much as they matter in all other industries.

Nurse-1-1 brings network effects to our partnering clinics

Providers who manage multiple clinics should be taking advantage of these network effects. As we evolve Nurse-1-1 to partner with the existing healthcare players, we are also building in the ability for our partners to benefit from the network effects that Nurse-1-1 naturally creates. 70% of nurses who have joined Nurse-1-1 came from referrals by nurses who had already signed up for the platform. Nurses don’t just add value for the patients who use Nurse-1-1. Each nurse on Nurse-1-1 improves the experience for the other nurses working patient triage at the partnering clinic. In addition, when providers have more than one clinic location, each new location they add to Nurse-1-1 provides new nurses. Each location provides additional benefits to the others because of smart location routing features built into the Nurse-1-1 platform. In other words, Nurse-1-1 has network effects for nurses as well as clinic locations. Providers are incentivized to add all of their clinics onto Nurse-1-1. Patients, nurses, and patients all benefit. The network effects built into Nurse-1-1 can provide value for providers that makes them unmatched in a highly demanding industry.

Patient engagement and proper utilization of healthcare is a huge pain point for clinics. Waiting rooms are full of patients who probably don’t need to be seen by a provider, while another clinic in the network is having a slow night. Overutilization of healthcare (going to the doctors when you shouldn’t) and the confusion patients have about which service to use and when tend to bog down providers from the most critical patients who truly need care. Time consuming phone calls from patients that could better be answered by a text hamper the workflow of clinic’s nurses as they play phone tag and update patient charts after a basic phone call. As one of our clients describes, “I need to help my patients realize that they shouldn’t think they need to come into our office to ask about their newborn’s belly button, nor should they be waiting around if their kid’s appendix is about to burst”.

Nurse-1-1 solves these issues as a stand-alone service for a single clinic to better connect their nurses with their patients. In addition, network effects created by a provider’s network of clinics add more value that makes Nurse-1-1 something our partners won’t be able to live without. Truly leveraging a provider’s own network of clinics is a clear way for clinics to make a positive change in the affordability of care, improve patient experience, and increase access to care that drives positive outcomes.