Zocdoc: A Credible Teladoc Competitor?
I share Coffee Can portfolios periodically on my Scorecard. Here is what performance has been like so far.
Earlier I shared my thoughts on Teladoc.
One of the things I brushed over was Competition.
My viewpoint has been that the Telemedicine market is likely to have multiple winners. A big reason for that is the belief that Patient Demand Aggregation in Healthcare will be difficult to pull off. After thinking about this some more, I am now starting to question this assumption.
This is where Zocdoc comes in. Zocdoc was created to help patients book doctor appointments online. Zocdoc allows users to search according to their symptoms or desired specialist type, location and insurance plan. Search results include ratings for each doctor based on reviews, which are verified to have come from actual patients. Users can select an available time slot, book an appointment and simply show up. In May they announced a Telemedicine service, and it seems like early adoption has been good for them.
I used Zocdoc five years ago, when I had first moved to Silicon Valley. Before doing so I had asked some colleagues for dentist referrals. But one day I just pulled up Zocdoc because I wanted to find a dentist closer to home. The experience was super easy, and ultimately, I ended up going to that dentist for 3 years.
“If people are already going to Zocdoc to find a doctor, having them seamlessly book a virtual visit is a no-brainer. This reduces significant friction in the ultimate user-goal: seeing the doctor.
Could appointment booking therefore be the Killer App that enables a company to ultimately aggregate telemedicine patient demand?”
It remains to be seen whether patient demand will get aggregated. But if it does, it raises some important questions:
Does that mean the supply will easily follow?
Could this then create winner take-all dynamics?
Will the company that successfully does this then exhibit enough market power to influence pricing in any meaningful way?
The Internet has proven that the best consumer experience often wins. If a company can build this experience, and create an exclusive relationship with consumers at scale, that can in turn commoditize suppliers.
It’s unclear whether that dynamic will play out in Healthcare. Insurers are very powerful constituents. Industry structure and entrenched interests may not allow it. And unlike other industries, healthcare is one that sometimes behooves logic. We’ll have to wait and see.
Zocdoc’s Consumer Experience
In a consumer product, it is very important to get the user to experience the “Ah-Ha Moment” right away.
After spending just a couple of mins on Zocdoc.com, it’s obvious that they care about user experience and design.
The company’s value proposition stares us right in the face on the homepage. (See image)
Clicking the “Book a Video Visit” call to action takes you directly into the search experience.
Followed by a list of doctor recommendations, including ratings and reviews.
This reputation system is important because (a) it helps reduce the fear, uncertainty and doubt of visiting a doctor that didn’t come via a personal recommendation and (b) it also likely creates an incentive to keep the quality of care high over time.
Teladoc’s consumer experience, on the other hand, forces account creation right upfront. This is a gate. Instead of having the experience itself be a commitment device for the potential patient, Teladoc creates friction. This feels a little odd to me. I wonder whether they have tested this workflow? It will be interesting to see how the experience evolves.
Does This Mean Teladoc is Toast?
No, of course not.
Teladoc is still the leader in Telemedicine. Teladoc has been innovating in this market their whole life (since 2002). Zocdoc on the other hand either just woke up to this opportunity, or it has taken them a very long time to bring their telemedicine product to market.
Teladoc has tremendous reach, with a presence in more than 175 countries and 40 languages. Zocdoc, it seems, is only available in the US today.
Teladoc’s brand represents telemedicine while Zocdoc’s brand represents appointment bookings (at least today). There’s a difference.
Although Zocdoc has A-class investors, this is a company that’s been private for 13 years. Do the investors still have enough patience remaining to now invest in Telemedicine? If Zocdoc goes public, would that create misaligned incentives?
Over time Teladoc has amassed significant relationships and system integrations with key market constituents like insurers and health systems. During this time, they have also navigated several regulatory and compliance challenges creating resilience in their business. This is no small feat. Also, unlike Zocdoc, Teladoc owns its doctor network today. All of these are a big part of Teladoc’s moat. And now Teladoc is trying to expand this moat by further building its brand.
Zooming out a little, Teladoc expects 8-9 million virtual visits this year, that’s 8-9X since 2016! So clearly it’s doing something right.
Net-Net
At the end of the day, Teladoc wins if they can do the following well:
Provide High Quality Care, and
Build Technology, Operations and Infrastructure to deliver this care at scale
(1) seems to be going well. They have NPS scores in the mid 70s which is very good, and they were voted the best consumer healthcare experience by JD Power last year. It will be important for the company to monitor patient care carefully, and keep in place good incentives and guardrails for all constituents to continue providing good care.
(2) Although there is always more to do, this was a prerequisite for the scale they’ve already amassed. They wouldn’t have gotten this far without it.
We’ll see whether my concerns about patient demand aggregation amass to anything tangible. For now, we must simply watch the market develop.
What do you think?
Will the early bird (i.e Teladoc) get the worm?
Or will the second mouse (Zocdoc or someone else) get the cheese?
Do you work in Telemedicine? Or an adjacent Industry?
If yes, I’d love to speak with you to hear your take. Do please get in touch.
Email me or DM me on Twitter: @mrjivraj. Thank you