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Overcoming the Fear of Doing Something Different (04:53)

New entrants face substantial barriers to success, so how have Iora Health and American Well made the cut? What are the biggest barriers they’ve faced, and how have they overcome them?

One of the barriers, says Iora Health CEO Rushika Fernandopulle, is simply the fear of people doing something different. Another barrier is the intermediary: because Iora can’t go straight to the consumer, it needs an intermediary, but intermediaries are big institutions that move slowly.

“One of the issues as a new entrant is, time is your enemy. You’ve got to fix burn, you can raise only so much funding, you need things to happen quickly, and I think what happens to the rest of the world is they just play stall ball, knowing if they stall long enough, you’ll go away,” says Fernandopulle.

As for how the payers respond, Fernandopulle explains that you first start with the innovators. Iora Health’s first sponsor who paid attention, he says, was Jim Kim. “Dartmouth College President, Harvard MD/PhD, MacArthur Genius award winner, now running the World Bank before he was 50 — not a normal guy,” Fernandopulle says. Then came Tony Hsieh: “CEO of Zappos, billionaire before he was 40, not a normal guy. What we end up doing is getting the visionary to start,” notes Fernandopulle. “Then we get some data, then you finally get the health plans to pay attention — the progressive ones.”

Consumer adoption might be considered a barrier for some new entrants, but it’s not the biggest driver of success for American Well, according to SVP Jeff Kosowsky. “You do have to obviously delight the consumer, but luckily we’re not competing against an excellent consumer experience,” he says. “We do believe that providers have a lot of leverage to deliver care and to drive adoption, because they’re the ones in short supply, they’re the ones being sought out. So if a provider and provider systems push toward care to the home, that’s going to be very powerful.”

One barrier American Well did address was the possibility of having patients in one state and their providers in another. “We’ve solved that problem in the near-term by multi-state licensing physicians,” say Kosowsky. “That ends up being a competitive advantage.” In early 2017, multi-state compacts will simplify reciprocity of licensure, he explains, making the crossing of state lines even less of an issue.

From the NEJM Catalyst event New Risk, New Business Models held in Boston, October 6, 2016.

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