The majority of health tech firms use the traditional point-of-care billing process where they charge a patient to use their product whenever they wish to.
This leads to one large upfront cost, which can isolate some consumers.
In 2007 two businessmen discussed the idea of changing this, moving towards delivering services rather than products.
They went on to found Zuora and from this the Subscription Economy was born.
This phrase was coined by the company themselves and it is making waves in the healthcare industry as companies look to increase productivity while looking for new forms of revenue.
The method looks to build long-term relationships between consumers and brands, rather than just one off purchases.
In terms of healthcare it gives patients access to the latest technologies and pharmaceuticals at their leisure.
Consumers can subscribe and unsubscribe to a health solution, paying a small fee to access a product or service instead of a large outright sum.
This of course makes health care much more accessible to everyone.
John Phillips of Zuora spoke about how the company has helped pioneer this new way of helping customers across multiple industries.
“Zuora powers the world’s Subscription Economy,” he said. “We invented a subscription management platform that functions as the foundation for any company – regardless of industry – to launch, manage and scale subscription business operations.
“Our technology streamlines the complexity of managing and operating a subscription business – from the initial order a customer makes all the way to the way a company recognises its revenue.
“Since its inception, Zuora has grown to serve more than 1,000 of the best subscription companies globally including Zoom, Ford, Fender, Siemens Healthineers, Schneider Electric, The Guardian and more.”
John has been at the company for seven years now and in that time he has seen the benefits a subscription economy can bring to healthcare providers.
This is particularly the case for Siemens Healthineers – part of the Siemens Group – which aims to accelerate the development of the latest prevention and diagnostic technologies.
As a leader in the health tech space the company is also actively developing digital services and looking at the latest innovations to improve patients experience.
Before both companies came together, Siemens had multiple products that could benefit from a subscription-based payment system but the companies IT infrastructure did not support this.
Enter Zuora, whose Billing and Revenue software allowed them to automate this subscription model.
John explained more about why the firm needed to shift to this method.
“Historically, Siemens Healthineers operated via a transactional business model,” he said. “With one-off sales, selling both hardware and on-premise software.
“But with advances in cloud computing and AI, along with a shift in their customer’s preferences, they saw a new opportunity emerging.
“In order to capitalise on this, the team introduced several digital health offerings such as a teamplay digital health platform, which enables healthcare providers’ digital transformation through AI RAD Companion, an AI-based software facilitating personalised and standardised diagnosis and treatment decisions.
“However, as Siemens Healthineers launched these new subscription-based products driven by the cloud and AI, the existing IT infrastructure (built for one-time transactions) didn’t have the capabilities to support a subscription business model with multiple customer touch points.
“Therefore, the company was unable to fully monetise these new products and unlock the true patient value.”
Like most companies that switch to this business model Siemens began to see an increase in productivity as well as being more customer focused.
“From the perspective of Siemens Healthineers, subscriptions mean new revenue streams, increased productivity and significantly less processing time – for example bill run time was reduced by about 75%.
“But, more importantly, this new model drives the company to focus on the customer relationship, with both hospitals and other healthcare providers, and how to provide value – on a continuously evolving journey.
“This is the true power of subscriptions. Zuora’s technology essentially serves as the agility backbone to automate the entire order-to-revenues process.
“It powers back-office operations like tax calculation, accounting, invoicing, and license management.
“It has also enabled the company to institute new leading KPIs, such as the number of active users, premium conversion rates, and churn rates.”
The improvements that companies like Siemens are seeing from adopting this model will likely inspire others to do the same.
“It’s definitely something that other health tech companies could emulate,” John said. “Regardless of industry, at their core, subscription business models are all about increasing access and improving outcomes.
“If there is one outcome that we are all striving for at the moment, it’s a healthy population.”
This is certainly a result subscription models can bring to the health tech industry, as accessibility for all patients is at the heart of it.
Amy Konary, also of Zuora, echoed this when writing for Health Tech World recently.
She said the problem with how healthcare is distributed currently is not the price, but the pricing model.
Healthcare companies should have the same goal as governments and patients – to promote and provide a health population.
However the current pay-per-product model often does not support this, as individuals struggle to afford the latest drugs or technologies if they are paying per use.
Zuora’s system allows patients to effectively share the cost, paying smaller sums for the opportunity to use this healthcare if needed.
“A subscription-based pricing model focused on providing wider and more affordable access to disease-curing medicines could help to achieve this goal,” John said. “As long as it provides cost savings for healthcare providers, and enough revenue for pharmaceutical companies to continue their innovative work.
“Subscriptions could also help to improve the patient experience; thanks to the substantial amount of data that they collect.
“Health tech providers and companies can use this data to give customers what they want, adjusting their services to match demand and encouraging longer term commitment.
“Providers of healthcare services could even use this information to personalise their offerings and ensure patients are receiving the best treatment possible.”
The last year has caused a huge acceleration of change in the health sector, with the normalisation of things like online appointments and telemedicine.
Companies have been forced to embrace these shifts across all parts of the business, which is why John thinks innovative ideas like a subscription pricing model could take off.
“Despite the challenges faced by many healthcare providers over the last year, subscription growth has remained stable,” he said. “In fact, in many areas, necessary changes brought by the pandemic have driven adoption.”
“For the healthcare industry specifically, it suggests that subscription models are empowering providers to continue to be resilient and adapt in the face of change.
“Healthcare companies utilising subscription services also saw higher levels of usage-based billing than any other sector.
“The goal is to let customers pay only for the services they need. Incorporating it makes it easier for healthcare providers to align and grow with customer needs – making them both more appealing and more profitable.”
Used correctly subscriptions could help both companies and consumers survive the current uncertain climate.
Giving the patient more control over their health and what services they can access only benefits their relationship with health tech firms.
These relationships will be vital when it comes to dealing with the sector’s future challenges.
“Ultimately, if subscriptions are delivered with the right blend of flexibility, convenience and customisation, they could prove to be a sustainable solution, enabling the healthcare industry to survive the current climate of uncertainty and thrive in the future.”