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Saul Marquez:
Hey, everybody! Saul Marquez with the Outcomes Rocket. I want to welcome you back to The Future of Health series, where we’re working with Deloitte to unfold what The Future of Health looks like. And today, I have the privilege of hosting Boris Kheyn-Kheyfets to the podcast. He is the Life Sciences, Healthcare Platforms, and Ecosystems leader at Deloitte. He has over 12 years of experience in growth strategy, advising the largest plans providers and life science companies. Boris works routinely with the leading health tech companies, both private and public, to alleviate the unmet needs of his clients. Most recently, he’s worked with national health plans and major health systems to launch new platform businesses and formulate partnerships across the system. Prior to Deloitte, Boris worked in venture capital and startups evaluating investment opportunities in digital health, and I’m so excited to have him here on the podcast. Today, we’re going to be covering new business models in healthcare-building, platform-enabled healthcare ecosystems. Boris, thanks for joining us.
Boris Kheyn-Kheyfets:
Saul, great to be with you. Really excited for our conversation today.
Saul Marquez:
Same here, same here. I’d definitely like to start with kind of the why. For you, Boris, what is it that got you into the work that we do?
Boris Kheyn-Kheyfets:
Yeah, that’s a fabulous question. I find the complexity of healthcare so interesting. There are so many opportunities. And then I think the second thing, for me that’s a draw, is that it’s actually quite humbling. We’ve been through so many different stages of changes and transformation within the industry, and we’re constantly humbled by our assumptions. One day we think an ingestible sensor is going to solve medication adherence, and then we find out, guess what? People are really complex, and there’s a bunch of multifactorial reasons they don’t take drugs. And so the complexity is super interesting, and the humility that comes along with that drew me to this profession.
Saul Marquez:
Yeah, that’s fantastic, Boris, well said. And it’s definitely one of those industries that really does force you to stay humble, and it is complex. And speaking of complexity, the ecosystems and platforms topic is like at the heart of it. It’s at the heart of it, so I’m glad you’re here to share with us some of the insights on The Future of Health series today. Many healthcare organizations are increasingly turning to and creating ecosystems to acquire capabilities as opposed to the traditional M&A route. Could you explain what an ecosystem is and how a platform works, just to level set with the listeners on some of these terms?
Boris Kheyn-Kheyfets:
Absolutely, Saul, and I’m really glad we’re defining it because platforms have become a buzzword. Every tech company I’m speaking with talks about having a platform, but they mostly talk about it within the context of technology, so it’s a base where you can build additional applications on top of, and that’s actually not enough to make a platform business. A platform business is also a business model choice. And I think the most elegant definition came from the book Platform Revolution, and it classifies businesses into two categories: pipeline and platform. Pipeline businesses represent the majority of companies today; a pipeline company follows a linear value chain, so they manufacture the product, logistics delivers it, marketing pushes it, and consumers buy it, and they normally compete on cost, quality, and breadth. And importantly, when they want to grow, a really common path was M&A, and some form of vertical integration. Platforms are a radical departure from that. They say, hey, I don’t need to own everything. Instead, why don’t I try to outsource key parts of the value chain to the ecosystem? And the most iconic companies of today are platform businesses. They find an underutilized asset and they delegate production of that underutilized asset to an ecosystem. And so, to answer your question around M&A, I do believe platform businesses are an alternative to M&A instead of growing vertically, right? They delegate parts of that value chain to an ecosystem. And so they can manifest in different ways in healthcare, so you might have a platform business that’s effectively an MSO that provides tools and services to physicians to manage risk. You might have a virtual care platform business where you aggregate clinicians that you don’t necessarily own or employ, as the underutilized asset is clinician availability. The ecosystem is the periphery of that platform, it represents the partners that transact on that platform. I think a really interesting sort of dynamic is that, yes, platforms are an alternative to M&A, but building a platform business is difficult. And so, you might pursue M&A to build your capability set as a platform business so that you can offer something compelling to the ecosystem.
Saul Marquez:
That’s great, yeah, great level set there. And just M&A as a capability-building opportunity, delegating parts of the value chain is fundamental. Really, it comes down to that delegation of production of a particular service or value add. You spend a lot of time with companies, organizations, payers, providers, all the verticals. How are you seeing shifts from pipeline business to platform business manifest in the industry?
Boris Kheyn-Kheyfets:
Yeah, it’s been really interesting watching, observing this really for the last decade. And I think, when we think about why first, like why are they shifting to it? The fundamental answer is economics. That’s the catalyst, right? So in the wake of the Affordable Care Act, health plans effectively became utilities, right? Their margins were capped, and so they’re publicly traded companies that had to look for new opportunities for growth. And they, many of the nationals, what they did is they grew in unregulated parts of the value chain: care delivery, analytics, and they set up new businesses, and they largely set up platforms around this. And an example would be Elevance National Plan. Their platform business is Carelon. Carelon provides tools and services to other risk-bearing providers and plans out there in the ecosystem. Now for health systems, I would argue health systems have been slower in their response to the dynamics of platforms. However, in recent years we have seen platform businesses being spun out of health systems. Primarily it’s national health systems, some academic medical centers who are, again, observing that economics, I’ve got reimbursement pressures, I’ve got utilization declines, got inflation, I’ve got investment losses, my core business might be struggling. How do I commercialize some of the assets that I really prize, or how do I monetize the things that I’m really good at? And you saw some of the national health systems spin-off of new MSOs to help independent physicians transition to, these are platform businesses. You saw Mayo Clinic launch a Mayo Clinic platform business to scale some of the things that they do really well and sell that to other providers out in the ecosystem.
Saul Marquez:
Yeah, these are great examples, and I’ve noticed it too, Boris, like there’s been a slower uptake from the provider organizations, but it seems like they’re catching up.
Boris Kheyn-Kheyfets:
Yeah, yeah, they’re approaching a little bit differently, but they are, yeah.
Saul Marquez:
Yeah, okay, great discussion. What steps should an organization take, right? They’re listening to this right now, and they’re looking inside, and they’re like, oh man, what am I doing with my business? If they’re interested in building an ecosystem, what should they do?
Boris Kheyn-Kheyfets:
Yeah, it certainly, it’s a really complex undertaking. I want to be sober about that. But the first thing you need to do is reflect and ask yourself, what are you good at today, and where can you apply some of your expertise or prized assets? And make some of those assets more accessible in the marketplace. So if you’re really good at population health, as an example, can you provide tools and services and analytics to independent physicians to transition them into risk-based agreements, right? So the first thing you need to do is just be honest with yourself. What are you good at, right? And what assets do you prize that, you know, might be made more accessible in the market? Second, you need to understand the economics here. What is the economic value created of making that asset more accessible? What’s the willingness to pay there? And it’s really important that this is a platform-backed ecosystem, so it’s not just for yourself, right? It’s for the ecosystem of partners out there, right? And then the third thing you need to do is, and this is probably the hardest thing for health organizations, and this is where other industries have a leg up, is you need to really think through what is the tech stack necessary and the capabilities to power your platform business. So, you know, in media and retail, we’ve seen digital-native platforms emerge that are very good at identifying relationships between disparate assets as consumers move in their journeys and ultimately unlocking network effects. That requires a sophisticated tech stack that might not be in place today at a lot of health companies. If I’m a provider or a plan, I got to think through, okay, where can I kind of procure this in the marketplace? You know, what do I need to build on my own to keep that strategic, and who do I have to hire to go ahead and maintain and operate this?
Saul Marquez:
Some great steps there. And really, as folks are thinking about their strategy and what they’re going to do in the future, a lot of the things that you mentioned, Boris, could be a good guide. Could anybody be a platform business? What are the different roles in an ecosystem?
Boris Kheyn-Kheyfets:
I don’t think anyone can be a platform business. I think there’s kind of two main roles, I would say, in a platform-backed ecosystem. There’s the convener, right, who large probably owns the technology and is creating the infrastructure and ability for other partners in the ecosystem to transact. That is the convener, okay? Then there are the participants around there, the ecosystem that choose to transact on the convener’s infrastructure and technology.. The conveners are organizations that are really good at certain things or have a prized asset that they can make more accessible, like my example, around population health. Or maybe it’s a medical device company that wants to be a convener in care in the home, right? Maybe it has the technology and assets to go ahead and do that, but you can be a participant in the ecosystem, and that’s a very viable business as well. And in many cases, what we’ve seen is you can be a convener in one ecosystem and a participant in another ecosystem.
Saul Marquez:
Yeah, that’s really great, Boris.
Boris Kheyn-Kheyfets:
I was just going to say, this is certainly a very complex topic, but what we found success in is taking a thin-slice approach, ultimately. There are ways to test this out, and we often refer to minimal viable ecosystems. So an example would be if you believe you can go ahead and set up a platform in navigation, that you can match a patient to the appropriate digital therapeutic, right? Because there’s been $40 billion in venture capital finance in the last couple of years, you’ve got all these different point solutions, right? All these different virtual care providers, all these different digital therapeutics. If you think you could create a platform to match a patient with the appropriate digital therapeutic, right, you can test that out on a handful of partners. There is a minimal viable approach to this. And what we found in each type of platform business, whether it’s provider enablement, whether it’s data and analytics, whether it’s a marketplace type like I just described, there’s always a minimal viable version of it that you could test and evaluate.
Saul Marquez:
That’s a great call and certainly something for everybody listening to think about. There’s a way for you to test this. And so, as we think about ecosystems and platforms, let’s hit rewind on this because Boris added some major value in some of the discussion that we shared today. One of the things that we have to think about as we build out ecosystems and platforms is also health equity. And so, as part of this series, we’re going to be touching on the next podcast, Health Equity with Jen Radin. What, any thoughts from your side, Boris, on health equity and how it relates to our topic today?
Boris Kheyn-Kheyfets:
Absolutely. Jen Radin has a lot of rich commentary, you know, that I’m excited for you to sit down with her and for others to listen to. Just thinking through like the transition between platform-backed ecosystems and health equity, we’ve seen as an example, right, so much promise from matching patients and consumers to the right community-based organizations as an example, right? Incorporating social drivers of health. And so platform-backed ecosystems have emerged to go ahead and match the, certain patients to the appropriate community-based organization, whether it’s in housing or employment assistance That is an example of a platform-backed ecosystem, and it requires a sophisticated tech stack to go ahead and do that. It requires data on the patient and SDOH information to go ahead and create that rich profile. So I’m really excited for you to sit down with Jen and continue the conversation.
Saul Marquez:
Thank you for that, Boris. And so folks, lots of takeaways here. Make sure you reference the show notes on today’s podcast. Huge opportunity to think strategically around platforms and ecosystems. Boris, I can’t thank you enough for the time we spent today.
Boris Kheyn-Kheyfets:
Thank you, Saul. Great talking to you.
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