Why is vertical integration a signal in digital health?
Most of the health care industry is vertically integrating to some degree. Digital technology is a crucial component of this integration process from the digital infrastructure needed to tie together newfound assets to the virtual care services themselves.
Organizations looking to vertically integrate will increasingly rely on digital health to strengthen their assets, engage consumers, and create differentiated offerings—making vertical integration inseparable from digital health.
What are examples of vertically assembled organizations?
Amazon: Bringing extensive experience in digital consumerism to health care
Amazon’s vertical integration strategy hinges on its ability to monetize its expertise in digital consumer experience. By capturing more touchpoints (and revenue) from the health care journey, Amazon can ultimately build more entry points into their consumer ecosystem. That said, Amazon’s acquisitions are not only for capabilities but also data. With the right data, Amazon can iterate on their existing health care portfolio and better position itself as a partner to patients and health care organizations going forward.
UnitedHealth Group: Amassing digital capabilities to stay ahead of the industry
UnitedHealth Group (UHG) has leveraged digital technology and vertical integration as a tool to force almost all industry stakeholders to work through some part of their business—making them both a partner and competitor within the industry. UHG’s strategy appears to be “bet everywhere with the hope of winning somewhere.” By building or buying for any potential need or gap in the market (e.g., analytics capability, technology service), UHG has positioned itself to compete or dominate whenever or wherever the industry shifts.
CVS: Moving into digital health to round out health care portfolio
CVS was the first major health care company to combine drugstores, insurance, and pharmacy-benefits management (PBM). To integrate and generate more value from these assets, CVS must adopt a more digitally robust infrastructure to deliver on the promise of an omnichannel retail health experience and retain patients in a world of “everywhere care.” As CVS attempts to connect digital health to their physical footprint, they will need to capitalize on their existing customer relationships and health care portfolio to increase patient “stickiness” across the care journey.