The income comes from selling software to doctors and filling out prescriptions at Ro Pharmacy
It is said that healthcare is slowly changing due to the sheer size of the space, which is nearly 18% of GDP, not to mention how important it is to so many people. However, there have been some real, profound changes in recent years, including the shift from the fee for service to value-based care, and the rise of telemedicine and the social determinants of health that have broadened the definition of what health care is even.
Perhaps the most important change, however, is the shift towards patient care thanks to the rise of digital health with apps and wearables.
This is part of the idea of Ro, a telemedicine startup that runs digital health clinics for the health of men and women in addition to smoking cessation. The idea was to build a new type of healthcare system, one that would be patient-centered and give them back control of their health.
The company started out as a novel with its first product, focusing on men’s health and erectile dysfunction in particular, before expanding to 25 different conditions. Rory also kicked off women’s health and smoking cessation with the launch of Zero in 2018.
The company has now recorded over 6 million digital health visits and has 46 million patient contact points.
A patient-oriented service
As part of its patient-centered philosophy, Ro does not take out insurance; Instead, it charges patients a fee of $ 15 per visit.
“If you look at the healthcare industry today, people generally don’t pay for their health care directly, but rather indirectly, either through taxes or through their employers. The result is that when you go to a doctor’s office or pharmacy, you … be the patient, but you are not really the customer, because the customer is the insurance company, “said Saman Rahmanian, co-founder and chief product officer of Ro, recently on a podcast with VatorNews.
This leads to a situation where patients have a terrible experience and can return to the same place just a few weeks later, something that no other industry does. Health services have no incentive to innovate or improve something for the patient.
“The downside to Ro is that cash is an important feature of a patient-centered healthcare system. The reason for this is that when patient and customer are one and the same, these are the right structures and incentives, ”he said.
“If the patient had a bad experience, he wouldn’t come to us. We’d stop running a business. But if he had a great experience, we would continue to value and build on our patients.”
(On July 14th, Vator is hosting an event on the topic, specifically related to mental health, with K Health, Bind, BetterHelp, and JustAnswer. Register and get tickets here.)
How does Ro make money?
However, Ro does not take any of the $ 15 the patient pays; the entire amount minus credit card transaction fees goes directly to the doctor or his practice.
Instead, Ro’s revenue comes from two different sources: First, by providing software and administrative services to vendors.
Medical offices pay to use Ro’s software, which collects information about a patient’s medical history and symptoms, as well as their medication, recent physical symptoms, and allergies. This also includes patient information and patient images, which are saved and forwarded to their doctor.
The software analyzes patient reactions in real time, highlights important information, identifies potential risk factors and then pings a national third-party database to obtain additional information about this patient and his medication. All of this is then handed over to the doctor.
“With this software, providers can offer high-quality care via telemedicine. Ro also takes on other non-medical, administrative tasks that make their lives easier – e.g. mediation of malpractice insurance, “wrote Zachariah Reitano, co-founder and CEO of Ro, in a blog post.
“Essentially, Ro offers the providers the backend operations for the operation of a digital health clinic ‘as a service’.”
The second way Ro makes money is by fulfilling patients’ prescriptions if they choose the Ro Pharmacy Network, which sends prescriptions to members.
For example, on Roman, patients can pay for ED medication; generic Viagra costs $ 34 while brand name Viagra costs $ 70. Finasteride and minoxidil, which are used to treat hair loss, cost $ 35 a month together. At Rory, treating hot flashes can cost $ 30 or $ 35, while treating a cold sore outbreak can cost $ 14, or $ 48 if suppressive therapy is required. The company currently offers over 1,000 generics.
While most members choose the Ro Pharmacy Network “because it is often cheaper, gives patients complete control over scheduling, is discreet, and it is convenient to have their medication delivered to their door,” wrote Reitano, members You can also choose to send your prescription to another pharmacy, such as CVS, Walgreens, or Walmart. Patients can also switch from Ro Apotheke to another pharmacy if they so wish.
The fact that Ro doesn’t get paid when their patients go to another pharmacy gives Ro an incentive to pursue the kind of innovation and patient-centered quality that healthcare providers often lack.
“Ro has to compete with every single pharmacy across the country on quality, convenience and price. It is up to us to make sure we always provide value to our members. We have to earn their business every day.”
In total, Ro is said to have made $ 230 million in sales in 2020.
The company recently raised a $ 500 million round of funding, bringing total fundraising to $ 876 million. When the company embarked on a $ 200 million round in July 2020, it was reportedly valued at $ 1.5 billion; It is now said to be valued at $ 5 billion.
(Image source: ro.co)