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New Entrants: Friends or Foes? (04:17)

New entrants to health care often say to incumbents, “We’re friends, not foes. We’re partners. We’re complements.” But incumbents don’t always view them that way. New Marketplace Theme Leader Leemore Dafny asks leaders from primary care provider Iora Health and telemedicine provider American Well to share how they’ve handled incumbent responses to their organizations.

Iora Health has had a number of conversations with incumbent health systems in an effort to find a way to work together, says CEO Rushika Fernandopulle. “It’s a little like the stages of grief,” he says, describing the typical responses of incumbent leaders before they might agree to work with Iora Health. These are:

  1. Why should we work with you? What’s wrong with the way we do things now?
  2. We’re already doing what you propose. We’re a level-three medical home.
  3. We could do it ourselves.

“Well, I could be an Olympic athlete,” jokes Fernandopulle, noting that this is neither a false nor true statement.

The reality however, is that working with incumbents can be difficult. “Typically the story is that you get the CEOs or someone in the C-suite who really gets it — we need to catalyze moving to this new world of volume, and we need to be more consumer centric, so let’s work with someone else,” explains Fernandopulle. “And then, unfortunately, there’s this big voltage gap where you go down the organization and people see you as a threat, largely because their incentives haven’t changed.”

For telehealth, the situation is different. “For us, it’s probably much more about being the evangelist, about trying to make the case that now is the time and that all the pieces are in place to adopt at full scale,” says Jeffrey Kosowsky, American Well’s Senior VP of Corporate and Business Development.

Health care incumbents may disagree on prioritization of telemedicine within their organization, the percentage of care that is appropriate, and pricing, for example. “Also there are ones who might say they want to be their own Olympic athletes and build it themselves,” notes Kosowsky, but these are unlikely to actually do so.

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

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