The Search for Physician Search

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It was almost three years ago that I wrote my first post on ZocDoc as a model of "consumer health success." At the time, I was writing a series of posts about companies that were having success engaging consumers directly. I discussed what ZocDoc was doing and how they’d gotten out in front of other companies with appointment scheduling.

Appointment scheduling is a huge opportunity. People want it and are used to the concept from other industries. It’s also helping to solve the problem of long waits for appointments, which apparently is not isolated to the VA.

Since that post, we’ve reported on various news from ZocDoc, much of it related to fundraising (ZocDoc has raised close to $100 million). I predicted three years ago that ZocDoc would venture into other areas beyond appointment scheduling. It has tested services like Q&A and most recently premium accounts for business. I thought ZocDoc would move more towards price transparency, but that hasn’t happened.

In that post from three years ago, I mentioned several competitors to ZocDoc. I think two out of the four are still alive and kicking, but aren’t really ZocDoc competitors. Today I would name its competitors as DocASAP, Vitals, and BetterDoctor. I wouldn’t list PatientFusion from PracticeFusion, but I don’t have any great numbers to justify my list, so take that with a grain of salt.

The point is more that ZocDoc has survived while others have not. It has survived long enough to have a new group of competitors. It’s not that other companies haven’t tried to keep up, it’s that they haven’t been able to raise the huge amounts of money required to grow a business like ZocDoc.

BetterDoctor announced another $10 million in funding this week. BetterDoctor takes a different approach to ZocDoc by aggregating different sources of public and private data about physicians to so it has a complete listings of providers in all areas, even if you can’t schedule appointments with all of them directly on the BetterDoctor site. It works well because it’s not even just listings in all areas, but information about providers from Medicare and from sites like Doximity.

I tried BetterDoctor today and it’s a cool service. For each physician, I was able to see the number of procedures performed on Medicare patients as well as the number of referrals from different providers (I was looking up specialists). I don’t know if other people care about that data, but I thought it was interesting. It may not be all that useful to know how many of each procedure a provider performed in 2012, but consumers can use the additional data points if they want. BetterDoctor also has a different listing of providers than ZocDoc in the areas and specialties I searched.

BetterDoctor is just one example of a current ZocDoc competitor. There are others, current and potential, since it’s hard to grow and maintain that business. ZocDoc has made its money by charging providers a subscription fee to join and list appointments on the site. It’s moving into premium services for employers, but that’s a new area and not bread and butter for ZocDoc.

The physician subscription model — signing up providers and getting them to pay — is an expensive endeavor. It must be hard to retain providers. I’ve heard unverified ZocDoc churn numbers and would ne interesting in learning more.

ZocDoc’s model has another challenge on the consumer side. It’s expensive to manage search engine optimization and local marketing, which are essential in establishing the brand when people search for local providers. Also, few of the doctors I know are familiar with ZocDoc.

The best comparison to ZocDoc outside of healthcare is probably OpenTable, a comparison that’s been made since ZocDoc launched. OpenTable became the national brand for booking restaurant reservations and was acquired by Priceline last month for $2.6 billion.

Another comparable example for ZocDoc is GrubHub, which does food delivery from restaurants. GrubHub is publicly traded with a hefty market cap, but it is not dominant in all markets. Despite being the category leader and brand, it is not the only large food delivery service. Competitors like EatStreet have picked up tens of thousands of restaurants in specific geographies where it beats GrubHub. Food ordering, like physician appointments, is localized. Companies like EatStreet have realized that and are focusing on specific locations in building both sides of the market.

That can and will happen with physician searching. I’m actually surprised that it hasn’t happened yet with physician appointment and booking services targeting mid-markets and avoiding the large  coastal cities. Ari Tulla, co-founder and CEO of BetterDoctor, is quoted in the funding announcement as, “You’re looking at a funnel here that is $800 billion a year. There’s no one company that will own that market.”

I couldn’t agree more. I just didn’t expect competition to chip away at ZocDoc in major markets like New York and Los Angeles. I expected to see more mid-market ZocDocs.

TGphoto

Travis Good is an MD/MBA and co-founder of Catalyze. More about me.

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