Holistic care vs. point solutions and the rise of “one-stop shop” health
In the news
Last month, VillageMD, which is majority owned by Walgreens Boots Alliance, acquired Summit Health-CityMD for ~$9 billion. Days later, Amazon announced that it had launched Amazon Clinic.
The clinic will offer users access to telehealth providers and treatment for common conditions such as allergies, hair loss, skin issues, smoking cessation, etc., for a small out-of-pocket cost. Insurance is currently not accepted.
Amazon Clinic’s introduction to the consumer healthcare ecosystem comes off the heels of the company announcing that it would wind down Amazon Care. It is clear that Amazon is experimenting to see what sticks, and the consumer vs. employer-focused strategy might be the more defensive bet, especially as it considers complementary services to Amazon Pharmacy and One Medical.
My take: VCs invest in lines, not dots
Early-stage digital health investors would be wise to pay attention to these deals and think about what they mean for the broader healthcare landscape, specifically for private companies.
Amazon’s investments and acquisitions, along with those made by Walgreens, CVS, Walmart, Google, etc., are starting to signal a bigger shift. Perhaps these industry events (dots) are starting to form a trend (line) around the consumer preference for more holistic care. In other words: a desire for “one-stop shop” solutions for health and wellness needs.
Over the past few years, the VC industry has borne witness to a myriad of point solutions across health verticals (i.e., dermatology, nutrition, physical therapy, mental health, menopause, etc.). While these businesses typically offer elegant solutions to pervasive issues, the secondary problem they can create is an even more fragmented healthcare system.
A lack of integration between platforms could lead to unnecessary care, duplicate services, wasteful spending, and an overall disjointed experience for patients.
For example, many people struggle with obesity because of underlying mental health issues, but most of the weight management companies that cross my desk are focused solely on nutrition and exercise. Big tech companies and pharmacy giants don’t have all the answers, but they seem to be catching onto the idea that holistic health and — more importantly — a single destination where it can be achieved, might be the ultimate stickiness factor down the line.
Only time will tell.
Until then, I am beginning to ask tough questions about the broader healthcare landscape when speaking with founders, investors, and practitioners in the space. Some questions that often come up include:
- Why does this area of medicine warrant a specific point solution? (e.g. lactation consulting vs. multidisciplinary maternal/postpartum care)?
- How does your tech stack account for interoperability between providers, if at all?
- Does your solution represent the first of many adjacent healthcare services that will roll out in the future? What are your plans for product/service expansion?
- What is your ideal exit scenario? If M&A, which enterprise targets do you think would be a fit? Why?
- What is stopping a big tech competitor from doing what you’re doing? Or perhaps, why would a big tech/pharmacy company or healthcare system acquire your business instead of building a similar solution of its own?
- Why would hospital systems or clinics use this service to supplement their current-state solution or refer patients without any financial incentive? In other words, what is wrong with the current system?
So, holistic care vs. point solutions — which wins?
The answer isn’t so black and white. At the end of the day, I believe point solutions and holistic care platforms are two sides of the same coin. Point solutions are necessary components of more robust care platforms, so they make for easy acquisition targets/potential customers of larger, more established players.
From a VC’s perspective, the bigger question is: Do you believe there is an argument to be made for investing early in businesses that focus on solving one issue incredibly well? In most cases (across categories), focus allows businesses to earn the trust and loyalty of users, leading to organic growth and natural product expansion. However, it’s important that investors do the work to understand why certain health conditions over others have historically been difficult to treat, monitor, afford, or access — those will be the point solutions worth investing in.
Regardless of where you stand on the debate between holistic care vs. point solutions, increased innovation around both is a good indicator of progress for the healthcare industry overall and a positive signal that exit opportunities and partnership prospects are palpable.
If you’ve been paying attention to big tech’s continued foray into healthcare and the heated competition between pharmacy chains and tech giants, I’d love to hear your thoughts. What “dots” have you seen to support (or disprove) the trend of holistic care vs. point solutions? What other lines are you watching? Let’s keep the conversation going.
All opinions and views expressed are my own and are current as of the date of this writing. My content is for informational purposes only, and does not constitute or imply endorsement of any third party’s products or services, nor should it be considered investment advice.
