How Zocdoc pivoted to video and seized the telehealth boom
In just two months, CEO Oliver Kharraz and his team built what other telemedicine companies had needed years to pull off.
One Monday morning, Oliver Kharraz gathered Zocdoc's leadership team in a conference room to lay out his new vision for the future of the company. It was March 2, back when CEOs in Manhattan were still gathering people in conference rooms. But Kharraz had already begun to see what the spreading coronavirus was poised to do to the health care system — and to his business.
Since Kharraz co-founded Zocdoc in 2007, the company has primarily offered a service for booking doctor's appointments online. But by early March, doctors across the country were beginning to tell sick people to stay home. Demand for telemedicine services surged, and companies that specialized in it rushed to seize the moment. Zocdoc had never dabbled in telehealth, believing it was, as Kharraz put it, a "fringe phenomenon." But the company had built a massive, nationwide network of physicians whose offices were about to sit empty, while their services were more needed than ever.
"It was clear we had a unique way to help here," Kharraz said. "We had a lot of hidden supply with all the doctors that typically see patients in-person and are probably underutilized now."
And so that Monday, in a conference room aptly named after Alexander Fleming, the scientist who discovered penicillin, Kharraz laid out a plan to reorient the company toward telemedicine. Now, Zocdoc is debuting the product of that plan: a new video visit service, which allows anyone to schedule an appointment through Zocdoc and meet with their doctor remotely through the platform.
Zocdoc is hardly the only company to make a quick pivot in response to the coronavirus pandemic. But unlike the distilleries brewing up hand sanitizer, Zocdoc's shift to telemedicine stands to benefit both the health care system and its own bottom line long term. In just two months, Zocdoc built what other telemedicine companies needed years to pull off. In doing so, it not only secured its future at a time when its business, which relied on in-person interactions, was under threat, but staked out ground as a player in a market that's growing at lightning speed.
"I don't think in-person visits are going away," Kharraz said, "but I believe most care will be a hybrid."
The Zocdoc staff believed they didn't have much time to spare in getting their telehealth services up and running. Immediately following that March 2 meeting, Kharraz met with members of the product team to discuss new features. The team quickly built and launched a screening tool that could help identify people who might be showing COVID-19 symptoms.
But figuring out how to provide video visits on a platform that had never supported video was trickier. Kharraz said the team considered partnering with an existing telemedicine company but was concerned about scale. According to the most recent data from the Centers for Disease Control and Prevention, there were roughly 3.4 million in-person doctor visits every weekday in 2016. By comparison, in 2019, one top telehealth company, Teladoc, reported hosting just over 4 million visits the whole year — a 57% increase from the year before.
"The existing telemedicine capacity in the country isn't big enough to absorb the volume that usually goes through in-patient," Kharraz said.
Instead, the Zocdoc team took advantage of a momentous move by the Department of Health and Human Services, which relaxed privacy requirements for telehealth in response to the pandemic, allowing doctors to take video visits on platforms like FaceTime and Skype. Within weeks, the company launched a feature that allowed patients to schedule video visits with their doctors, which the doctors would then carry out on the video tool of their choice.
The service exploded, with 3,000 doctors signing up within the first three weeks and hundreds more signing up each day after that.
Elsewhere, the telehealth market was booming. Teladoc announced it powered 2 million visits during the first quarter of 2020, a 92% increase from the same period last year, and increased its 2020 revenue expectation by about $100 million. Meanwhile, Congress' stimulus package set aside $200 million for telehealth, which the Federal Communications Commission promptly began distributing to hospitals and other health care facilities.
The demand was there, that much was clear, and Kharraz felt that Zocdoc could do a lot more than just provide a link to connect with patients on Zoom.
"Telehealth and video is going to be a permanent part of the health care experience going forward, and doctors are [being] asked to reinvent themselves and their practices around that," Kharraz said. "We need to give them a tool that they can rely on that's HIPAA compliant, that's very easy to use — both for the doctor and for the patient — and that doesn't burden the doctor with an additional cost."
The next step came in early April, when the team set out to create a telehealth platform of its own, working with Twilio on the backend video technology and building the user interface for both patients and doctors in-house. The tool, which Zocdoc is offering for free to doctors on and off its platform, allows physicians to send patients a custom link to start a video visit. Or, patients can book a video visit through Zocdoc themselves.
Doctors can see all the patients in their virtual waiting rooms, just as they would in an actual office, and click on them one-by-one to begin a visit. Patients don't need to download any software to use the system.
On April 30, Zocdoc began testing the tool with a small group of physicians. Now, any medical practice can sign up.
Zocdoc certainly has competition in the telehealth space, but it has advantages, too. Mei Kwong, executive director of the Center for Connected Health Policy, a nonprofit focused on expanding telehealth services, said one big challenge for doctors in the COVID-19 crisis has been figuring out new telehealth tools overnight and coaching their patients in how to do the same. Zocdoc's existing relationship with physicians and patients, she said, may make that process easier.
"It sounds like it would be more convenient for the patient since they don't have to use a different platform than when they book," Kwong said. "It sounds like something the doctors would be familiar with that would make it easier on their end, too."
Zocdoc's platform also offers something its competitors can't. While most telehealth services operate like on-demand services, connecting patients to doctors they may have never met, Zocdoc's service enables patients to schedule visits with their own doctors.
Over the last few months, Zocdoc's core business has taken a hit, as in-person visits — particularly in New York, its biggest market — declined precipitously. But Kharraz said that as states open up, the company is already seeing a rebound. In Georgia, for instance, in-person visits have returned to pre-COVID-19 levels.
Yet Zocdoc is still seeing its video visits growing in that state. To Kharraz, that suggests that the shift toward telemedicine — for both the country and his company — isn't going away.