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Can subscription models disrupt the healthcare industry?


The healthcare sector is perfectly poised for subscriptions, and there is plenty of room for growth among the different areas of the industry. Faisal Hasan examines the reasons why subscriptions are a natural fit for the healthcare industry and looks at some successful examples.

Over the past few years, digital transformation has revolutionised the healthcare industry in significant ways, including electronic health records, robotic surgery and other smart care mechanisms. Robust technologies are not only improving patient outcomes, but also helping healthcare organisations to manage key operational processes such as inventory and billing.

One of the innovations which promises a lot for the industry is recurring billing. Subscription business models have managed to permeate the medical space through concepts such as concierge medicine and direct primary care in the US. However, there is still huge potential to explore the use of subscription models in other business areas and geographies.


The Subscription Revolution

To understand the opportunity, we first have to take a step back and see the change in consumer behaviour patterns. Just a decade ago, it would have been an absurd idea to buy groceries, book tickets and order pizzas using smartphones. And yet today, the apps which enable these have become so embedded in our daily lives that we now take them for granted. Subscription-based businesses have also been boosted by the rise of smartphone apps, with services such as Netflix, Spotify and Amazon Prime amongst the most successful brands today.

Subscription-based models allow customers to hop-on and hop-off a service anytime they want. It gives them the flexibility to try out new products and services, and easily switch services if it suits them better. It is also a customer-first business model which allows users to pay a small amount to try out a new product or service, instead of a significant upfront amount for something which they may not even use after a while. It also brings customer loyalty and predictable revenues to service providers which helps them to sustain their business without compromising on customer experience. It is a positive sum game where both parties benefit out of the arrangement.

Now, let’s apply this idea to the healthcare industry. Subscriptions allow patients to access healthcare services at affordable rates by paying recurring fees every month, every quarter or every year depending on their preferences. They might also get preferred access to their healthcare providers and are protected against any spike in medical bills arising due to a sudden condition.

Care providers  on the other hand, are guaranteed recurring income every month helping them to focus on healthcare delivery, instead of worrying about their revenues. They can give patients more quality time and establish patient loyalty which will be better for their business in the long term.


The current state of subscriptions in the healthcare industry

Concierge medicine, direct primary care and healthcare insurance are just some of the different types of subscription models that are being embraced in the healthcare sector and many businesses are now seeing positive results.

Notable examples include:

  • Global healthcare company Falck offers subscription services which cover doctor visits, emergency medical services, discounted speciality visits and value-added services such as vaccinations, baby healthcare and rehabilitation.
  • Iora Health, which offers subscription-based primary care services in the US, has reduced hospitalisations by 40% and ER visits by 20% compared with the industry average.
  • MediCover, a Poland-based company, has subscription packages ranging from basic healthcare and prevention, to speciality consultations, advanced diagnostics, dental services and rehabilitation, along with comprehensive hospital care. These subscriptions start from as low as 1 PLN per day.
  • SevaMob, a company based in India, is helping families with low incomes through a cost-effective subscription-based model which provides healthcare services at their doorstep.
  • Another Indian company, Practo, offers a common platform for doctors, clinics, hospitals and patients to interact with each other. Their healthcare app offers several subscription services to cater to the needs of the different stakeholders involved.
  • UK-based Babylon offers telemedicine services which include access to doctors, health monitoring and advice.
  • Talkspace is another innovative healthcare business in the US, providing access to therapists and mental health counsellors through flexible payment options.

These different businesses have demonstrated that subscription-based models can be applied across a range of healthcare services. In fact, direct primary care is being touted as the ‘future of medicine’ in some circles where instead of insurance covering routine visits and medicines, a recurring membership fee covers the needs of the patients.

Apart from increasing healthcare access, these different types of subscriptions create a more economical, reliable and sustainable solution for both patients and doctors in the long run.


The road ahead...

It’s time for the healthcare industry to take the plunge and make subscriptions the default model rather than the exception. When you think of the healthcare industry, you tend to think of curative healthcare. However, a big part of the industry also includes preventive healthcare such as routine check-ups, scans and nutrition, all of which are well suited to the subscription billing model. Many different subscription plans can be offered around preventive medical solutions with built-in incentives to foster healthy living. For instance, UK-based health insurance provider Vitality provides rewards in the form of discounts, cashbacks and freebies for their physically active customers.

Furthermore, the latest medical devices, equipment and support systems can be inaccessible to cash-strapped hospitals when provided on a product/CAPEX basis. By adopting recurring revenue models, industry suppliers can start offering service-based models with monthly subscription fees giving hospitals access to the latest healthcare technology.

A lot of software companies also use the subscription pricing model to offer Software as a Service (SaaS) in the healthcare sector. For example, nFant Labs, a US-based medical device and digital health company, offers a system which monitors and tracks infant feeding patterns through Artificial Intelligence and Machine Learning and sends the data to mobile devices which help the doctors and clinicians to decide on the most appropriate care. Furthermore, healthcare wearables is another front where subscriptions are driving more profits for companies rather than relying on standalone device sales. There are many such use cases where subscription models can easily blend in to ease the cost of healthcare access as well as simplify business processes.

We have always said that subscription models follow a customer-first mindset, and the medical industry is no different. With interest in subscription businesses growing 800% from 2014 to 2017, the time has come for mass adoption of the model in the healthcare sector as well. So, who will become the ‘Netflix’ of medicine? Only time will tell.

About the author

Faisal Hasan

Content Marketer, Cerillion

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