Sierra Venture’s Vignesh Ravikumar: The drivers and opportunity for ‘Shopifying Healthcare’
Thesis BriefsHealthcareDigital HealthTelemedicineVignesh RavikumarSierra VenturesEVC List 2022Axel HealthButterfly HealthMedallionPlutoTruePillWheel

Terra Nova Insights Team,

Sierra Venture’s Vignesh Ravikumar: The drivers and opportunity for ‘Shopifying Healthcare’



Vignesh Ravikumar, partner at Sierra Ventures, believes software will help community-based and family health clinics digitize their front offices and offer online services such as telemedicine. Just as Shopify leveled the e-commerce playing field for “mom-and-pop” retailers, these new provider platforms will empower the majority of US physicians who still work at smaller medical practices.


Why is Shopifying Healthcare such an important category moving forward?

  • Covid taught the massive long-tail of healthcare providers in the US a valuable lesson: they were too dependent on a fragile business model that scales poorly, i.e. in-person services. “Covid was a watershed moment for healthcare,” says Ravikumar, with many practices seeing steep revenue declines. “Community-health centers and small practices realized that they need to have resilient revenue, and in order to do that they need to be able to offer services online.”
  • Covid also shifted consumers' expectations. He adds: “Patients now want to have a modern, internet-supported experience while receiving care and during follow-ups.” So, in the same way that Shopify enabled  “mom-and-pop” retailers to offer slick e-commerce experiences to their customers, new software products will allow small- and medium-sized medical practices to offer telemedicine and a digitally-enabled front office.
  • The underlying infrastructure needed to support next-gen healthcare platforms for these smaller providers has been built out in the last few years. The building blocks are there to provide comprehensive care online. Most meaningfully, argues Ravikumar, interoperability issues in healthcare are being addressed with a growing, rich ecosystem of software and APIs that support patient services and exchange of data. These include at-home health (Axle Health), at-home lab testing (Butterfly Health), pharmacy-as-an-API (TruePill), credentialing-as-an API (Medallion), staffing-as-an-API (Wheel), and more.

After COVID, community-health centers and small practices realized that they need resilient revenue, and to do that they need to be able to offer services online.

Vignesh Ravikumar~quoteblock

What are the business models that might be attached to this category?

  • The primary model is a SaaS platform that enables a holistic, patient-friendly front-office experience, from scheduling to telemedicine visits and follow-ups, as well as health records management, insurance compliance, administrative automation, and more, according to Ravikumar.
  • Long term, once these platforms have a large user base, stitching together a once-fragmented end of the provider market, there will be opportunities for additional monetization, including group-buying of inputs like medical supplies and equipment, and a system for referrals between practices.

What are some of the potential roadblocks?

  • Doctors and their support staff are wary of changing processes given the already-high overhead load in healthcare. “Anytime you change workflow in medicine it is a challenge, and this is especially true for specialists” who have highly varied ways of interacting with patients and providing care, says Ravikumar. “So the improvement in functionality and revenue resiliency from the platform has to outweigh the cost in productivity from onboarding.”
  • Family and community-based practices, which make up most of the market, are not sophisticated tech buyers,” he adds. Ease of use, analogous to Shopify’s intuitive platform experience, will be crucial for these software products to succeed in winning the long-tail of healthcare providers.


saidbyblock~in a Zoom interview
Vignesh Ravikumar

My belief is that online health care will mirror the real world: it will look localized and specialized. If a patient is receiving primary care it will be within driving distance. If care is non-urgent, patients will want to be able to see their physician and seek follow-up services remotely.

The data shows that most patients don’t go to big providers, but to smaller clinics and community-based practices. Patients trust these providers and they will retain a large share of the market for digitally-enabled healthcare.

This creates an opportunity for companies to help smaller family- and community-based health practices, along with locally-relevant specialists, to provide a modern and online patient experience. Moving operations online not only improves patient experience, it also helps smaller practices and specialists increase revenue resilience and productivity. With telemedicine, physicians can leverage data better, record conversations, and automate note taking. There isn’t anyone in the space offering an all-in-one software platform for this market right now.

The key to the viability of this market is its breadth and depth. A majority of physicians still work at smaller practices of less than 25 doctors, according to the AMA. Community-based and family clinics, along with specialist practices, all have similar needs. Big healthcare providers, by contrast, aren’t an optimal target for this kind of technology, as they will likely create their own platforms in-house.


Q: What's a sustainable framework for sales, as attacking long-tailed markets is famously difficult?

A: "We’ve seen companies taking a few different approaches. One approach that I have liked is to go after employers that are contracting directly with primary-care providers. These buyers are not tied down to insurance and are themselves pushing their primary-care providers to provide better experiences for the employees.

Another interesting approach is going after community health centers, as there are big deals to be had and these centers are facing pressure, both from big health systems and revenue loss during COVID. In general it comes down to going after clients that are big enough — but not the biggest in the market.

Platforms that prioritize seamless integration and show that their software will drive revenue will have the easiest sell to tech-resistant healthcare clinics."

Q: How does software adoption in the long-tail of healthcare providers compare to small retailers’ embrace of Shopify?

A: "The medical field is relatively slow to adapt to newer technologies, but there are many historical parallels between the two trends. Think about early e-commerce as a market — obviously Amazon was the big home-run winner. However, in the early days there were many other e-commerce plays that were being funded. Over time people realized that e-commerce is not a great direct venture investment because you end up funding startups to do customer acquisition. That’s never a good idea in a low-margin business like retail because it encourages a transactional approach, with resources going to optimizing Facebook and search ads. But soon, e-commerce big-box retailers realized that e-commerce is a necessity because it gives you more access to more customers, who are looking for a modern online experience. So did small businesses. The latter is what Shopify tapped into.

Something similar is playing out in healthcare. For the most part, to-date we’ve seen relatively transactional platforms. Most of the direct-to-consumer and telemedicine plays are using venture dollars to acquire users, and then they go out and raise more money. In the long term this doesn’t scale. Covid was a watershed moment as patient expectations changed and practices realized they needed alternatives to in-office visits. Today, your patients want to have a modern online experience. Community clinics and small practices are trying to evolve the way they provide care, and there really isn’t a platform for them yet."

Most of the direct-to-consumer and telemedicine plays are using venture dollars to acquire users, and then they go out and raise more money. In the long term this doesn’t scale. 

Vignesh Ravikumar~quoteblock

Q: What technology-based tailwinds are driving this thesis?

A: "Many practices today are still using fax machines to communicate information, says Ravikumar. But that has started to change: “Within the past five years, a lot of the underlying components needed to create healthcare-provider platforms have been built out. Interoperability issues in healthcare have been addressed with a growing, rich ecosystem of APIs that support video calling, verifying doctor credentials, EHR data exchanges, medication prescription, and more. For example, when patients visit certain healthcare providers like Walgreens and Walmart, these companies use services like Pluto to access patient data without the patient having to do any work. This new layer of infrastructure is enabling next-gen provider platforms to be built on top."


There are additional monetization opportunities besides software-subscription revenue, starting with group buying. “There may be more opportunities to monetize once you have a large number of offices on a platform,” says Ravikumar. “For example, practices already buy from what are called Group Repurchasing Organizations. When a critical mass of providers are on the same platform, referrals can also be much easier than they are currently. Ultimately you will need to have a large customer base to build these features out, but these are examples of other modules you can offer on top of a core platform to deliver care.”

Success will depend on the healthcare sector’s embrace of new tech-led interoperability infrastructure and underlying regulation. “To the extent that these interoperability issues continue to be solved, these companies will benefit,” says Ravikumar.

Watch for adjacent healthcare-provider categories with a big footprint, such as hospice care or physical therapy, to also embrace these new platforms and further expand the market. “I think there are expansion opportunities," he says. “At this point it is not clear how fast everyone in this ecosystem is going to move. What is clear is that all of these healthcare categories are going to want to move online at some point.”


The 2022 EVC List honors the top 50 rising starts in venture capital. Terra Nova’s Thesis Brief series showcases each investor’s insights and category expertise.

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