Many industries have the potential to streamline processes and contribute significantly to the ecosystem, and healthcare is undoubtedly one of them. It is widely acknowledged that healthcare is a pivotal sector that has the power to revolutionize human living standards profoundly.
However, the healthcare system in India is currently fragmented and disorganized, making it one of the most challenging sectors for companies to break into.
Fortunately, with the rise of the digital era, there is hope for the healthcare industry to capitalize on technology and make a significant impact. Several technology companies have attempted to enter this sector, and one such company that has made a significant impact on this ecosystem is Practo.
In this curated case study, I am going to share my learnings about this company and how it charted its growth trajectory.
Practo (valued at ~$ 500 MM) is a health tech company that has revolutionized healthcare by enabling consumers to find the best doctors, book online appointments, buy medicines, and make better health decisions.
https://www.crunchbase.com/organization/practo
Many of us can relate to the difficulties of booking a doctor’s appointment a decade ago. I still remember those days when we had to physically roam around in search of a good doctor in the locality, visit the clinic register the name in the clinic register inform the receptionist, and then wait for hours for our turn. However, Practo has revolutionized the process to a significant extent, if not entirely.
Let’s deep dive to see how Practo could make a significant impact in this space.
Firstly, it is interesting to note that Practo began as a B2B company to solve primarily the pain points of the Doctors and Clinics and not the patients. It largely addressed two pain points.
- The Medical practitioner’s appointment taking was so inefficient with a receptionist or assistant managing everything – Booking, Billing, etc that was error-prone, disorganized, and not sustainable manual practice.
- In the fragmented ecosystem, the Medical practitioners/Clinics wanted to make themselves more visible to attract patients and increase footfalls.
Practo’s growth trajectory can be logically split into 3 major phases. Let’s take a look at those one by one.
1st Phase of Growth:
In the initial phase of its growth, Practo tackled the aforementioned issues by launching Practo Ray – a B2B clinic management software. This was a Software as a Service (SaaS) product with both basic and premium plans. Practo Ray was a game changer for the company as it pushed a significant number of clinics and doctors onto the digital platform.
But how did the company manage to convince the Clinics/Doctors to adopt the platform?
It adopted a strategy called – Feet on Street Acquisition Strategy. You can read a lot more interesting things about this on google.
It simply means that there is a team of Sales folks on the ground visiting every clinic explaining their compelling proposition and the benefits of using the platform. This strategy is known for its high acquisition costs, which is why many startups avoid it.
However, Practo continued to employ the strategy as there was no other means to sell to the otherwise busy Doctors/Clinics. Just imagine how even today the Doctors treat the Medical reps when they physically meet them to talk about their Pharma products.
During the exercise, the company identified and eliminated unqualified practitioners and clinics that were operating outside of medical rules. This resulted in the creation of a high-quality and verified database of clinics and doctors in the region.
At the time, there was no proper directory of clinics and doctors available, making this database a valuable resource for the company. It was one of the primary reasons why the company garnered trust from its users for the listings on its platform.
This acquisition strategy turned out to be highly effective as word-of-mouth referrals and networking efforts resulted in the onboarding of hundreds of practitioners and clinics onto the platform.
2nd Phase of Growth:
In the first phase of growth, the focus was on solving the supply-side pain points. The second phase of growth shifted towards the demand side, which involves customers or patients. Now, let’s take a closer look at the pain points of the patient persona.
- One of the major pain points that patients face is finding a good, reliable, and trustworthy doctor who can effectively treat their medical condition.
- Another issue is finding a reputed clinic in or around their location.
Since the supply-side pain points have been addressed, reputed clinics and practitioners have already been onboarded onto the platform. As a result, their regular patients have started using the platform, which has led to word-of-mouth promotion of the platform among patients.
As more clinics started joining the platform, more patients also began to sign up due to the availability of reputable and verified clinics. This created a virtuous cycle of two-sided network effects that resulted in exponential growth.
But how did Practo earn money from Patients in the 2nd phase of Growth?
Did Practo charge commission on the Patient transactions? No.
The company had the foresight to make its platform free for consumers as a means to incentivizing them to stay on the platform after finding the doctor or clinic they needed.
For instance, if I were to locate the right doctors in my area through the platform and then realize that the platform charged a commission on every transaction, I would most likely choose to contact the identified clinic directly to avoid the commissions.
Therefore, the company made a smart move by offering the platform for free usage, which ultimately created product stickiness and hooked consumers to the platform. The revenue in the 2nd leg of growth still came from the supply side rather than the demand side.
3rd Phase of Growth:
As discussed earlier, in the second phase of growth, the focus shifted towards consumers. Consequently, the B2C platform was developed to cater to the consumer side of the ecosystem.
A closer look at the consumer offerings in this phase reveals a significant emphasis on appointment booking, which is a curative health offering. However, when considering the total addressable market, preventive health is a much larger segment than curative health. Preventive health includes buying medicines, periodic proactive health checkups, and self-medical assessments.
Therefore, the company is expanding its offerings to include preventive health to explore the next phase of growth. You can see the app offering a lot more offerings on the preventive side already. There are lot more products today on the platform on both Demand and supply side.