Free isn’t Free 3/27/12

There’s been a lot of recent scrutiny on the concept of ”free” as it relates to apps and technology services. It’s fueled by incredibly crazy valuations for companies like Facebook and newly discovered data access strategies for free apps such as Path. And most recently, there is anger as people apparently finally realize that Twitter might try to make money by selling user data to marketers.

In healthcare, we’re seeing more and more funded companies launching free services, apps, and networks. Some examples include Jiff (patient-centered care platform), HealthTap (social Q&A), Doximity (Facebook/LinkedIn for docs), ShareCare (interactive health network and social Q&A), DocBookMD (secure doc communications), TigerText (secure doc communications), PracticeFusion (ad-supported EMR), DrChrono (iPad EMR), MS HealthVault (PHR), Kareo (for basic PM service), and GoodRx (drug price lookups).

Some of these companies, like GoodRx, are obviously going to make money by helping consumers find products and enabling the transactions. I’m good with that model, though my bet is that eventually GoodRx will start doing more than this. Other companies, like ShareCare, will sell data and intelligence to brands. Still others, presumably Doximity, DocBookMD, PracticeFusion, and HealthTap, will make money from a combination of ads and selling data. I don’t think we’re empowering patients or doctors by putting brands and pharma in the middle of their interactions.

Part of my problem is the lack of transparency into how these companies will actually make money. Maybe it will be ads or maybe data mining, but some companies are still growing and haven’t determined how they will do it yet. As a current or potential user of these services, that’s concerning.

I don’t have a fundamental problem with companies selling my data, but please at least tell me what you’re going to sell. Or tell me that I can expect to start seeing ads at some point. Or tell me I’m going to have to start paying at some point. If you don’t know — or aren’t willing to tell me — how you’ll make money and are focused only on growing the network or user base, then I’ll pass.

I think (or hope) we are reaching the end of expecting everything for free, at least outside of healthcare. I’m willing – in fact, I prefer — to pay for apps and technology that I use and value. Dropbox is a great example. I started using the service for free several years ago. It’s evolved into my main storage and I now happily pay for the space that I need. There are a slew of other apps that are now collecting anywhere from $2-$20/month from me.

The one thing all of my paid services have in common is that they are relatively cheap subscription services. I’m more than happy to pay because pricing is transparent and, although my privacy is not assured just because I pay a subscription, I feel a lot better footing some or all of my own bill and not forcing companies to sell access to somebody trying to capitalize on me.

The potential problem for this cheap subscription model in healthcare is that the number of users is likely a lot smaller than a typical consumer service like Dropbox. There is a finite number of doctors and patients that will use these services, and maybe subscription fees would have to be prohibitively high to get investors their desired ROI. One of the major concerns with funded startups, especially in healthcare, is that investors will drive the revenue generation discussions.

Does anybody else worry about the growth of free-to-the-user models in healthcare? Any other good examples?

Travis Good is an MD/MBA involved with health IT startups. More about me.

  • We have a problem with companies that offer a free product and them data mine claims data. That data is typically sold to carriers thatn use it to decide how they will deny claims. That just seems wrong to us because carriers have an advantage of turning up edits to deny more claims at any given time. We realize the data are also used to identify questionable or fraudulent billing patterns and we don’t have an issue with that, but they most often use it to identify services or trends they want to deny now or in the future. If they shared that information openly with doctors, it would seem more fair, especially since it was the doctor’s data in the first place. Thanks for writing about this issue. It is a big concern that needs to be more transparent.

  • Margalit Gur-Arie

    I am not concerned with ads displayed in free apps in an open and transparent manner, and I do like apps that have a minimalistic free version, with a more comprehensive version which is not free, like Dropbox. I use those a lot. It seems to me that the former are like billboards on the Internet highway and although ugly, it’s one way to bring services to those that can’t afford them otherwise.

    What I don’t like is apps that access the content of the app and tailor the ads to the user circumstances, usually in a pernicious way, such as showing you a coupon for Lexapro if your blog content seems a bit under the weather.

    What I absolutely hate, is apps that charge you full subscription pricing and also sell your data without your knowledge, usually framed in some nebulous contractual term. My current assumption is that wherever you enter any data in an Internet application, sooner or later, it will find its way out of the company servers, with very few exceptions.
    The only way to stop this is to modernize privacy statutes to fit modern technology, but considering the incredible amounts of money involved, I am not holding my breath.

  • First we all must agree that nothing is truly “free”. Someone had to pay for this product to be designed. The *motive* for the app provider to provide it free of “charge” to the consumer is what is under consideration here. That motive is a function of what is it’s intrinsic and extrinsic value as compared to the overall cost of producing that app. Every app has costs for development, marketing, deployment and maintenance. These costs can be measured in paid labor in terms of a programmer’s time to code, a software QA engineers time to test and verify, a data/application management analyst time to configure and store to upload, an alpha/beta tester(s) time to validate, a marketer’s time to promote. Also to include in that cost is the incremental storage/power to deliver and sustain the application over time. Throwing in the general consumption of time of a potential client’s time to download and use the application and you can forecast the cost can start to escalate quick.

    How to calculate the two forms of value, ‘Intrinsic’ and ‘Extrinsic’, to offset those costs is a complex thing. Intrinsic value is pretty easy to understand but difficult to measure. In the case of a healthcare app, it simply is determining how care was improved as measured in terms of quality, cost to the consumer/insurance company, or delivery (i.e. better, cheaper, faster).

    Extrinsic value is even more challenging as this tend to be subjective and not clearly communicated which Travis touches on in his suggestion that the product managers of these ‘free Apps’ should disclose more openly. Unlike Travis, I’m not ready to throw out a promising start-up company who has a business model of creating a user base before figuring out how to make money with it, because innovation is often done at the initial investors (Venture Capitalists, Angel Investors, etc.) expense and thus their risk financially not mine. My only investment is my time to upload, learn and use the app. If the start-up never makes it, the investor who knew the risk loses out for the most part. Those who got the product for “free” only have the trouble of finding a new ‘free’ app to use. If one doesn’t trust what the start-up will do with their information, then they can choose not to download the product which will work as a strategy until almost all your competitors or colleagues are using the ‘free’ thing you refuse to trust. This is true whether we are talking about Facebook or the Bible, both free to those who want to use either and similarly popular references but with clearly much different goals and outcomes typically.

    So… to answer Travis’ question, “Does anybody else worry about the growth of free-to-the-user models in healthcare?” Yes, I would say the majority of today’s discriminating consumers of free apps worry about this model as it is used in healthcare as we once did about “free” Internet access, and later other “free” web/network distributed systems later like Facebook, Twitter, LinkedIn and other social networking sites. However, we don’t worry as much now about the Internet or these other free networked resources under management like for use in our homes for things like our investment accounts, bank accounts or pictures of our family. It’s just a matter of time until we feel the same way about our healthcare information. To overstate the security concerns or malicious behavior on the internet to point of not using or shutting these sites down is akin to being a Luddite.

    The question I would pose to this same audience is what is the cost of *NOT* making these applications free to the consumer of healthcare and are we, the Healthcare IT community, ready to deal with the consequences of that decision. Maybe one should consider that we have already paying for that consequence in the lack of informed decision making in healthcare by consumers increasingly more reliant on themselves or their loved ones to make care decisions in the later stages of their lives as they age beyond the capacity/ability to digest the flood of data available to them. Making this a cost to the consumer will not necessarily make the information better and could possibly delay the benefits seen with other free application access seen on the world wide web.

    In sum, I’m not a proponent of free healthcare access just free knowledge on what you are paying for or have paid for. Really this discussion should be about how to avoid the premature use of healthcare resources and not about whether we should pay for access to the details of its delivery once we do in fact legitimately need it. At that point, I want as much knowledge as possible so I make an informed decision about my own heath, and hope those in the business of delivering it don’t hold the information regarding MY care hostage until I “pay” for it. doesn’t charge me for the privilege of knowing what I bought previously, how much I spent on their site, what my buying preferences tend to be or what I might still want to buy, why should a healthcare service provider?

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