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After experiencing a wave of concentrated traffic and user growth, Internet medical treatment has to face the problem of monetization. The industry tone for 2020 is the former, and 2021 is the latter.
Since the development of Internet medical care, it has been confirmed that single-time, low-frequency consultation services cannot fully meet the needs of users, and it is more difficult to support enterprises to achieve large-scale revenue. At the same time, the monetization logic of Internet medical care is also very different from other Internet industries, after all, even if you have users, it is impossible to always motivate users to see a doctor.
Looking at the current development of the industry in 2021, in addition to the clear model of drug sales, enterprises mainly try to realize the path through integrated medical services, hoping to create real value for multiple users under the same system and obtain income.
The six major payers other than "selling medicines"
Internet medical care has become the "top stream" of online services during the epidemic, but after this, the industry's business model has been tried and verified for many years to a certain stage, and in 2021, the revenue growth problem faced by the industry is more urgent.
It can be seen from the companies that have published business data that drug sales are indeed the most direct way to achieve large-scale revenue and even profitability, but companies have never stopped exploring other payment methods. Since the way of drug sales and personal payment for medical services has been well known in the industry, the monetization model sorted out in this article mainly refers to the types outside of this, and is divided by the payer.
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Previously, some Internet hospitals under WeDoctor, Ping An Health, Medical Union and other companies have realized medical insurance co-ordination account payment. In 2021, the new medical insurance payment of the Internet hospital affiliated to the enterprise is not much, and it is mainly the head enterprise.
In March 2021, Yinchuan Magic Hand Internet Hospital, a subsidiary of Yuanxin Technology Group, was officially included in the list of medical insurance fixed-point payment institutions. By the end of 2021, WeDoctor has a total of 18 Internet hospitals connected to medical insurance payments.
Some Internet hospitals that are included in or online medical insurance payments in 2021, source: Yinchuan Municipal Government official website, public reports
Unlike the rapid realization of medical insurance payment in public Internet hospitals in Beijing, Shanghai and other places, medical insurance has not achieved large-scale coverage in the Internet hospitals to which the enterprise belongs, and the possibility of rapid connection in the short term is unlikely. The above medical insurance payments are almost all chronic disease follow-up fees and drug reimbursement, all of which are paid by project, and the medical insurance department's consideration of fund security and the risk of insurance fraud will naturally be very heavy. In addition, the medical insurance payment of Internet medical care is applied for through the entity medical institutions on which it relies, which is essentially a part of the offline reimbursement transferred to the online, and on the whole, it belongs to the "stock space" of medical insurance reimbursement, rather than "incremental". Therefore, for Internet medical enterprises, the significance of realizing medical insurance reimbursement for chronic diseases is more to attract patients to use the platform more frequently and obtain disease management income.
In 2021, WeDoctor tried a pay-as-you-go payment method in Tianjin. Led by Tianjin WeDoctor Internet Hospital, the Tianjin Grassroots Digital Health Community deploys digital chronic disease management services to provide management services for nearly 400,000 diabetic patients in the city, explore payment methods such as medical insurance "by disease type, package by head", and implement the incentive and constraint mechanism of "saving balance retention, overspending and not making up" according to the results of medical and health management quality assessment.
At present, a few months after the implementation of per capita payment, the medical insurance balance rate of the grass-roots medical institutions that have been implemented has reached 16%-31%.
In this model, Internet medical companies bear the pressure of medical insurance control costs, and have the motivation to control medical and drug costs under the premise of managing patients. Judging from the published health insurance balance rate, it can have an effect, but how much money can be saved? Is the savings enough to support the company's operating costs? It also needs to go through a longer cycle of practice and be represented by more data.
>>>> Commercial Insurance Payments: Direct Claims Payment and Health Management Coverage Expanded
Like medical insurance payments, commercial insurance payments have also been given high hopes in the Internet medical industry.
In 2020, Arterial Network published in the "Four Possibilities of Internet Medical + Commercial Insurance, Commercial Insurance Compensation Is Expected to Account for 10% of Online Medical Payments?" In the article, the situation of commercial insurance paying for Internet medical patient-side services was sorted out, and there were fewer enterprises involved at that time.
By 2021, the head enterprises are improving the payment channels of commercial insurance, mainly including two models: one is Internet outpatient insurance, which directly pays the Internet outpatient consultation fee and drug cost; the other is the medical insurance health management, which includes Internet medical services.
Some commercial insurance products related to Internet medical services in 2021, source: public reports
In terms of outpatient insurance, JD Health, Chunyu Doctor and other companies have cooperated with external partners to launch outpatient insurance covering the whole process of medical, pharmaceutical and insurance services, and pay compensation within the directory and within the limit for online consultation and drug purchase.
Since Internet outpatient insurance is almost all jointly developed by Internet medical companies, insurance companies, insurance technology companies and other parties, product design and operation simultaneously consider factors such as data interconnection and claim process, so almost all of them can realize direct compensation during online treatment. In the offline medical treatment scenario, the degree of information exchange between insurance companies and medical institutions is low, and often requires complex data collection and reimbursement processes. In this regard, Internet outpatient insurance has significant advantages.
In 2021, Ping An Health also cooperated with Ping An Health Insurance to launch a new function of direct payment for Internet hospital commercial insurance to realize the connection between commercial insurance and Internet medical care. Users of insurance-related insurance products can not only consult and purchase drugs through the Ping An Health APP, but also enjoy the convenience of zero settlement, and the consultation services and drug costs within the responsibility are directly settled by the platform and the insurance company, so as to realize direct compensation for commercial insurance.
In terms of health management, Ping An Health, Ali Health, JD Health and other companies have layouts.
In 2021, Ping An Health will add the "ZhenXiang RUN" series of services to Ping An Life Critical Illness Insurance policies, so that policy users can enjoy corresponding health value-added services after purchasing major critical illness products.
Alibaba Health and ZhongAn Insurance jointly launched the "Family Insurance" family million medical insurance, which integrates into Internet medical services, and also launched a million medical insurance for hepatitis B patients, connecting the health management of liver disease patients including screening, diagnosis, treatment drugs and insurance payment.
JD Health, Fosun United Health, JD Allianz Insurance and other insurance companies jointly launched the "Home Medical Insurance" managed health insurance service, combining health insurance with JD Health's medical services and health management capabilities. On the basis of the anti-disease risk protection products provided by the insurance company, "Home Medical Insurance" integrates the housekeeper-style health management service of "Jingdong Family Doctor" to intervene before the disease of family members occurs; through health promotion, health management services and medical intervention programs, reduce the risk of disease occurrence and delay the progression of the disease, thereby protecting the health of the whole family.
The above products are launched in 2021, and Arterial Network has not yet obtained comprehensive sales data from enterprises. However, some trends can be seen in the past data.
In 2020, after ZhongAn Online tried the Internet outpatient insurance "ZhongAn Privilege e-Sheng 2020 (Outpatient Emergency Edition)" and the Internet medical and health management product "ZhongAn Medical Butler", it will fully integrate Internet hospital services with more medical insurance products in 2021. According to ZhongAn Online's 2021 semi-annual report, as of June 2021, more than 6 million health ecological users have included Internet hospital rights and interests in their insurance policies, with a penetration rate of about 42%, and it is believed that this change is produced after the positive impact of the combination of Internet medical and health insurance, and commercial insurance payment may be an optimistic direction.
>>>> pharmaceutical companies pay: digital marketing becomes a high-margin business
Internet medical care directly connects doctors and patients, and under the influence of policies such as drug collection and medical insurance negotiations, it has become a channel for pharmaceutical companies to reach doctors and patients and carry out digital marketing. At present, in addition to companies such as Good Doctor Online, which completely guide the demand for drug purchases to third parties, most of the head Internet medical companies are involved in the digital marketing of pharmaceutical companies. In particular, companies with a range of service channels from consultation to pharmaceutical supply chain have obvious advantages.
In October 2021, Alibaba Health Pharmacy released the "New Drug Launch Support Plan" to provide pharmaceutical companies with a breakthrough in the out-of-hospital market. In 2021, a number of large pharmaceutical companies such as Roche and BeiGene have launched the original drug products for the first time in Alibaba Health's self-operated pharmacies. In addition, Alibaba Health has also formed in-depth cooperation with hundreds of well-known pharmaceutical companies such as Eisai China and Ogallon to help pharmaceutical companies reach users through professional digital marketing capabilities.
Yuanxin Technology, which will apply for listing in 2021, disclosed in the prospectus that it can provide innovative marketing services to pharmaceutical companies. In 2021, Lilac Garden will operate its digital marketing service for enterprises as an independent brand, named dmc (DXY Marketing Center), nicknamed "Barley Tea".
In terms of revenue, JD Health's 2021 semi-annual report shows that online platforms, digital marketing and other services were 1.9 billion yuan, an increase of 73% year-on-year, and the increase in digital marketing service fees was mainly due to the increase in the number of advertisers on the platform.
According to the prospectus of Zhiyun Health, it can provide digital marketing services for pharmaceutical companies for drugs related to chronic disease management, help pharmaceutical companies promote drugs to hospitals and doctors, and charge a certain percentage of service fees from the sales revenue of pharmaceutical companies. As of March 31, 2021, Zhiyun Health has signed contracts with 15 pharmaceutical companies, and digital marketing revenue is also on the rise.
The growth of digital marketing revenue of pharmaceutical companies of Zhiyun Health, source: prospectus
The prospectus also explains that from 2019 to 2020, the gross profit margin of Zhiyun Health increased from 11.7% to 27.7%, one of the reasons for the increase was the gross margin growth of in-hospital solutions, while the gross margin growth of in-hospital solutions was "mainly due to the continuous transformation of revenue structure, that is, the proportion of revenue from digital marketing services with relatively high profit margins increased".
Under the premise that Internet medical companies already have a certain number of doctors and user resources, digital marketing of pharmaceutical companies is a relatively low cost, and the cost is mainly the development and use of online technical functions, without the need for offline heavy asset investment, so the profit margin is high and it is also widely carried out in Internet medical enterprises.
However, it is worth mentioning that in 2021, the "Measures for the Administration of Internet Diagnosis and Treatment (Draft for Comments)" was introduced, prohibiting the unified party and prohibiting drug rebates. In the process of reaching doctors and promoting drug sales, digital marketing also needs to strictly adhere to the policy bottom line.
>>>> enterprises pay: insufficient usage habits and are in the initial stage of experimentation
Here, enterprise payment refers to the model in which enterprises purchase Internet medical services to provide benefits to employees or customers.
According to Ping An Health's financial report, as of June 2021, the company's product package has served more than 3,800 enterprise customers, covering nearly one million enterprise employees, providing customized health management solutions for employees.
In 2021, weDoctor submitted a prospectus showing that it cooperated with large commercial banks to promote health management services to credit card customers, and also cooperated with corporate customers to develop employee health management plans, and enterprises paid membership fees every year. By the end of 2020, WeDoctor has served more than 200 enterprises.
In addition, Good Doctor Online has also launched a membership service package and sold it to banks and insurance companies as employee benefits.
At present, corporate health benefits have not yet formed a wide range of usage habits, and service providers are required to have sufficient service capabilities, and are in the initial stage of trial.
>>>> individual payment: develop and sell health products, extending to the consumer sector
Internet medical treatment usually provides medical science information, and popular science content will inevitably involve health advice, and it is easy to form a appeal to users. Therefore, the Internet medical platform has invisibly played the role of "carrying goods" and even invested in the development and sales of health products.
The lilac garden is a typical case. Lilac Garden positions a healthy lifestyle as the "upstream" of the disease and focuses on solving the "upstream" needs, such as: cooperating with the grain mill to launch healthy food, and introducing nose paper for rhinitis patients to improve the "red nose". In 2021, the skin care brand "Yan Finger Patch" was also launched.
In 2021, Dr. Chunyu also explored in dermatology, pediatrics, nutrition, gynecology and psychology: dermatologists cooperated with the Genetic and Pharmaceutical Engineering Center of Jinan University to develop medical-grade skin care products, and nutritionists and New Hope Group jointly recommended new yogurts for intestinal probiotics.
These health products are based on the precipitation of knowledge such as medicine and nutrition, with strong consumption attributes, the scale of users is much larger than that of the patients themselves, and the frequency of user use is also higher than that of medical services. However, the influence of the Internet medical platform on the C-end is also relatively high, and the product itself needs to be more competitive than the same type of pure consumer products.
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This article mainly refers to the procurement of Internet medical related public services from government departments or medical institutions from enterprises. In addition, there are also models of government or medical institutions purchasing Internet medical systems from enterprises, which are essentially information project procurement, and the model is relatively mature, and this article will not focus on them.
The former, for example, WeDoctor's "mobile hospital", integrates public health examination vehicles, inspection and inspection equipment, and Internet hospital platforms, which are procured by county-level health departments or grass-roots medical institutions for primary medical and health services. According to the announcement of the Chinese government procurement network, the price of a "mobile hospital" car is about 1 million. As of December 2020, the "mobile hospital" has covered 69 counties.
However, WeDoctor and its prospectus have not yet announced the specific number of "mobile hospital" vehicles, so it is impossible to calculate the revenue from this business.
A search on the Chinese government procurement network also found that in addition to WeDoctor, few Internet medical companies are involved in government procurement services. For WeDoctor, "mobile hospitals" are not the main source of income, and they also assume the role of primary medical services in the strategy of WeDoctor Digital Health Community.
For the above types of payers, it is still difficult to accurately grasp the comprehensive revenue situation. But what is certain is that it is difficult to form a scale of services for a certain payer, and enterprises usually serve multiple payers, building systematic services behind them.
Systematic layout of integrated medical services
In 2021, Internet medical care will focus on integrated medical services, reflecting the systematization of services to support various payment methods. That is, according to the needs of patients or users, integrate various medical and health services such as health promotion, disease prevention, diagnosis and treatment, nursing and rehabilitation, and their management, and coordinate various types of medical and health institutions at all levels to provide lifelong and consistent services for patients or users. According to the main service objects, it can be divided into three types.
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In the early days of the development of Internet healthcare, the health maintenance model (HMO) was noticed by the industry and as an innovation goal. However, the HMO model needs to build a certain quantity and quality of medical, pharmaceutical, and insurance resources, attract sufficient user participation, and achieve data interoperability in order to form a closed loop of mutual restrictions. In 2021, on the basis of the laying of basic resources in the early stage, the health maintenance model of some enterprises is more formed.
As of November 2021, more than 230 primary medical and health institutions in Tianjin have achieved digital upgrading, serving more than 210,000 patients; medical, pharmaceutical, insurance resources and large-scale user numbers and data interconnection have been realized, the payment mechanism has been formed, and the elements required for the HMO model have been clearer.
In 2021, Ping An Health proposed to provide high-value medical and health management services for users of payer channels such as commercial insurance, medical insurance, enterprises, and individuals in the industry under the HMO model. Ping An Health originally relied on the resources of Ping An Group as a commercial insurance payer, after several years of accumulation, as of September 2021, it has established an own medical team of 2,000 people and 46,500 external contracted doctors, and combined the two into a medical service system of internal and external collaboration, experts and general doctors; in addition, it has also built an online drug mall and a drug supply system of 189,000 offline cooperative pharmacies.
>>>> Internet chronic disease management mainly targeting patients with chronic diseases
The population of chronic disease patients is large, the course of illness is long, and the burden of disease is heavy, and chronic disease management has become a must for Internet medical enterprises. In addition to WeDoctor and Ping An Health involving chronic disease management in their HMO service system, there are also some companies that take chronic disease management as their main business or accelerate their layout.
In 2021, Zhiyun Health submitted a listing application, disclosing its chronic disease management model. That is, around the management of chronic diseases, to provide medical products and SaaS for hospitals and pharmacies, to provide digital marketing services for pharmaceutical companies, and in the individual-oriented solution, Zhiyun Health realizes out-of-hospital monitoring, consultation and prescription for patients.
In 2021, Fangzhou Jianke launched the special chronic disease management health science popularization platform "Ark Medical Chat" to create brand doctors, conduct science education for patients, solve the problem of information asymmetry, and enrich its Internet chronic disease management dimension.
In 2021, Alibaba Health has set up 12 major health care centers around neurological, cardiovascular, oncology, immunity and other diseases, and expanded Internet chronic disease management services mainly at the grassroots level, as of September 2021, the number of chronic disease users has increased by 170% year-on-year, and patients can obtain chronic disease management services such as drugs, medication follow-up, user education, and exclusive doctors.
At the same time, the spiritual and psychological field, which is mainly based on chronic disease management, has a strong momentum of development in 2021. Good mood and Zhaoyang Health have obtained large amounts of financing and continue to expand the scale of business. Internet mental health service platforms such as Simple Psychology and Yidian Ling not only obtain financing, but also lay out Internet hospitals to supplement the medical service links in their overall business. In the field of spiritual psychology, the dividing line between Internet health services and Internet medical services is getting weaker and weaker.
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This model is characterized by the in-depth cooperation between Internet companies and hospitals, online and offline patients divert each other, and the services are complementary, focusing on the intervention of pre-hospital preparation and post-hospital rehabilitation of patients.
Internet whole course management was launched in 2015 by Xiangya Hospital of Central South University, and the hospital still operates the whole course management service together with the third-party company Zhiyi Online. According to public information, as of 2021, the hospital has set up more than 100 special disease management teams, participated in 2 projects, published more than 20 papers, and formulated single-disease operation instructions, single-disease full-course management paths, and case management training programs.
Micromaul is one of the practitioners who intervened in the management of the whole course of the Internet in the early stage. Since 2017, MicroMain has cooperated with many hospitals across the country to create a full-course specialty innovation management platform for multiple key departments such as pregnancy, obstetrics, gynecology, pediatrics, oncology, cardiovascular, etc., and organized a multidisciplinary team led by the doctor in charge and assisted by a case manager/course manager to provide patients with higher quality and more continuous services, and comprehensively support the whole course management service through Neumann AI artificial intelligence technology. The development of managed medical organizations (MCOs) with Chinese characteristics is the direction of micromain innovation. Micromain continues to practice DTx (digital therapy) based on EMR (electronic medical record) + RWD (real-world data), and is being clinically validated in the fields of autism family intervention, tumor complication management, and Alzheimer's disease intervention. At present, MicroMain has cooperated with hundreds of public hospitals across the country to carry out Internet full-course management services around more than 1,000 subdivided diseases.
Circle Center Technology also launched the Internet full course management in 2021. According to its prospectus, the company works with hospitals to provide patients with a variety of course management services tailored to individual diseases and patient conditions. At present, the center of the whole course management platform has developed and operated more than 200 disease management paths, and promoted in various departments of dozens of hospitals across the country.
In 2021, the medical federation will expand the original chronic disease management to the whole process management of diseases, and improve the cloud infrastructure capabilities such as cloud inspection, cloud imaging, cloud pharmacy, and cloud medical insurance, and work with a number of industry-leading partners to create cloud inspection integration service solutions, as well as out-of-hospital imaging medical ecosystems, etc., increase resource supply, and strive to build a closed loop of disease management covering "prevention, diagnosis, treatment, and rehabilitation". At the same time, after the integration of future doctors into the Medical Federation, its more than 70 general practice clinics, specialist clinics and day surgery centers covering 16 cities across the country will provide more powerful offline support for the online disease management system of the Medical Federation. On the whole, the medical federation also has the characteristics of Internet full course management.
Although the above three models have different emphases on people and service content, there is still overlap. For example, the proportion of patients with chronic diseases is already high, so the health maintenance model will also target patients with chronic diseases; at the same time, patients with chronic diseases may also be hospitalized due to complications and become the service objects of Internet full-course management. Therefore, the three models are relatively differentiated, not absolute, and the significance of the division lies in the analysis of the strategic priorities of each enterprise, and we can also see the commonality of its construction of integrated medical services and systematic layout.
Challenges after the heat of capital has subsided
In terms of capital, there were 18 financings in the primary market of Internet medical care in 2021, with a total financing amount of 9.7 billion yuan; there is a certain gap with 16 cases and 16.7 billion yuan in 2020.
In 2021, four companies, WeDoctor, Zhiyun Health, Dingdang Fast Medicine, and Yuanxin Technology, have submitted prospectuses to the Hong Kong Stock Exchange to apply for listing, but there is no certainty news of listing.
Financing of Internet medical enterprises in 2021 (based on the statistics of the platform that has built its own Internet hospital), data source: Arterial Orange
In addition, the performance of the three Internet medical companies in Hong Kong stocks was not satisfactory, and their stock prices fell. This is not only a challenge for the three companies, but also a huge challenge for the industry.
Industry insiders believe that investors' expectations for digital health are quite high, and they believe that these companies will have a disruptive impact in the future, so they give them a higher valuation. However, from the perspective of the situation in the capital market in 2021, investors' attitude towards Internet medical treatment has gradually returned to rationality.
So, what should the "disruptive impact" look like? There has also been a debate in the industry about whether the Internet can "disrupt" medical services. Since Internet medical care emphasizes the word "medicine", answering this question needs to stand on the overall trend of the current medical and health system, rather than only from the technical level to explore whether it can be "subverted".
At present, the burden of diseases brought about by aging and chronic diseases is heavy, and the pressure on various payers is large; the total amount of medical resources is insufficient and unevenly distributed, and in the future, it is necessary to achieve the equalization of public services, including medical services. The way to achieve this is: the prevention and control of the source of the disease, the relative availability of medical resources, and the control of all parties' costs. Whether it is technological innovation or model innovation, Internet medical care should talk about "subversion" under the premise of being consistent with macro trends.
As the content of this article is sorted out, Internet medical care has a systematic layout in terms of service model, payer, etc., can it be integrated into a model that conforms to the general trend? It is a problem that still needs to be faced.