Sramana: When did you establish American Well?
Ido Schoenberg: American Well was founded 7 years ago.
Sramana: What was the market situation like, and what gaps did you identify to start American Well?
Ido Schoenberg: After Roy and I sold CareKey, we knew we wanted to do something else. This time we looked for a problem and started there. We wrote down all of the challenges in healthcare IT that required solutions, and we tried to rank those problems. When it was all said and done, it was apparent that the biggest challenge was quality, affordable care. It takes too long and costs too much for a patient to see a doctor. It is a tremendous hassle.
We tried to think about ways to fix this dilemma. When we looked at the healthcare system, we realized the entire system was based on destinations. When you go to a hospital, you will see that it is location based. When an institution is built, you have to pay for it. Those dynamics have not changed for thousands of years.
When we look at any other industry or sophisticated marketplace, we see that they all operate in a different way. The doors are open for competition and choice. We asked ourselves what it would take for healthcare to behave that way. We envisioned the solutions that we are offering today and wrote them on the whiteboard. We then wrote down all of the barriers for this to happen. It actually took us several walls to outline all of the issues.
There were serious regulatory issues. We had to figure out how to create a platform that could create a brokerage system on a many-to-many basis to consumers and providers. How do we do that without increasing fragmentation in the system? How do we protect the relationship between a patient and a doctor? How do you do that in a way that offers services in an affordable manner? How do we get insurance companies to pay for it? How do you create awareness of the offering online and get people to trust the delivery method? How do we ensure that the clinical services we provide meet regulatory statutes and are clinically effective?
Our goal was never to replace a physical visit. We were looking for opportunities to leverage online communication when it is effective in solving certain problems. There are healthcare cases where out model does not fit, and we never have tried to overextend our reach. We can address anywhere from 15% to 20% of clinical encounters.
In order to address all the potential roadblocks, we had to engineer very deep technology. We also had to create a national network of providers to serve the technology. We also had to develop the business practices to ensure that when the product was available, we could create awareness so that people could use the services. We had to figure out the right business model to ensure we would get a return on our huge investment.
We knew from the get-go that our concept was going to take many years and would cost a lot of money. We had to make sure that we could create value we could monetize. Our goal was fairly simple. When our system was in steady state and operating, then all of the players in the ecosystem would have some level of motivation to participate. Consumers gain access to healthcare that is very convenient and affordable. Insurers benefit because our office visits are far less expensive, and this lowers their overall cost.