A New Mobile Healthcare Business
A preliminary business plan for a new mobile healthcare company
In an effort to think through prospective ideas, I occasionally go through the exercise of writing a preliminary business plan. The following is a preliminary business plan for a new mobile healthcare business.
Hermes Health
Mission
Develop mobile healthcare units with diverse capabilities to bring healthcare services directly to people in their communities. Increase healthcare access by bringing care closer to patients.
Objectives Over Next Four Months: September 2022 - January 2023
Product. Construct our first mobile laboratory van. Start offering basic blood tests using the Piccolo Xpress and initially operate as a D2C lab testing company. Develop a relationship with local laboratories to run more comprehensive tests.
Development. Define a plan to outfit sprinter vans with laboratory equipment that meet CLIA standards.
People. Assemble a high caliber team of lab technicians, software engineers and hardware engineers to design and outfit lab testing sprinter vans.
Operations. Develop mobile lab operating standards to ensure the accuracy of our tests and the safety of our technicians.
Financing. Raise a $2M seed round to purchase a sprinter van and lab testing equipment as well as hire the requisite staff.
Tentative 2-year Plan
Following the launch in January 2023 we plan to achieve the following objectives:
Product. Develop a fleet of ~10 mobile laboratory vans and a series of X-ray and MRI capable vehicles. Launch our mobile primary care service which provides primary care office visits in our mobile healthcare units.
Partnerships. Strike partnerships with local labs and mail order pharmacies to process rarer lab tests and provide pharmacy services to our patients respectively.
Sales. Target a $5M run rate from our consumer division. Partner with at least one payer and sign deals with at least three self-insured employers to offer Hermes as an employee health benefit.
Operations. Hire a high caliber team of software engineers, sales reps, interior designers, hardware engineers and medical practitioners (doctors, phlebotomists, nurses, etc.). Aim to grow the team to 30 by the end of the first year and 60 by the end of the second year. While our initial team of medical practitioners will be full time employees, we may look to hire additional staff on contract as demand increases.
Financing. Raise a $15M series A round to fund the purchase and development of mobile healthcare units, purchase equipment and hire the requisite staff among other expenditures.
Problem
The healthcare industry faces a large noncompliance issue. It has been reported that 40% of patients do not accurately follow recommendations and when a treatment requires a more complex set of steps, the noncompliance rate can jump to 70%.
There are many barriers to care patients face today which contribute to noncompliance:
53% of low-income adults don’t trust healthcare
20% of patients are put off by high healthcare costs
25% of patients lack proper transportation to and from medical appointments with longer distances correlated with lower healthcare utilization
11% lack proper insurance coverage
Several patients highlight social isolation, racial, language and cultural barriers
As a result of these barriers, several underserved communities rely on mobile healthcare units. While current mobile healthcare infrastructure attempts to serve these patients, the majority of funding for mobile clinics is philanthropy driven which presents an obstacle for scaling these services and keeping them updated with the latest technology.
Product: A Mobile Healthcare Fleet
Mobile healthcare has typically been reserved for the underserved. In addition to operating with the financial support of healthcare systems and philanthropic organizations, mobile healthcare providers deliver care in a manner that is more intimate while creating an environment of trust, inclusivity and cultural acceptance that is often lacking in the traditional healthcare system.
Mobile healthcare has been shown to improve health outcomes and reduce costs. Moreover, data supports the fact that healthcare is coming back to the home regardless of one’s socioeconomic status:
Hospital admissions are trending down across all age cohorts
In-patient services are expensive and hospital stays can be risky with a significant number of preventable hospital deaths
Better and cheaper alternatives to in-patient care exist
Hermes is creating a fleet of mobile healthcare vans which aim to service a variety of specialties in order to drive adoption for mobile healthcare. See Appendix A for an example of a mobile healthcare unit. We believe that the mainstream introduction of mobile healthcare units will increase healthcare access, improve health outcomes and reduce costs as is seen in previous studies.
While we plan to start with mobile lab testing vans, we eventually intend to service mobile primary care, dentistry, optometry, X-ray and MRI services among other specialties. Combined with the fact that healthcare tools are continuously getting smaller (e.g. Butterfly ultrasound, Hyperfine MRI machine), up-scale mobile healthcare units have already shown to be efficacious. For example, Carbon Health and Kindbody have implemented mobile healthcare units to increase access to their services.
Our mobile units will be able to swiftly relocate to different communities with the goal being to place primary and specialty care within walking distance for the majority of the country. Patients will be able to easily book an appointment on their mobile app and find a mobile unit nearby. Hermes mobile units will initially be staffed with phlebotomists who will administer diagnostic tests which patients can order directly through our mobile app or redeem via a referral from their physician. While we plan to start with mobile lab testing, we intend to launch a series of increasingly complex healthcare specialties. The following is a tentative list of our proposed mobile healthcare services in the order we intend to launch them:
Lab testing
Primary care with ultrasound capabilities
X-ray with mammography capabilities
MRI
Optometry
Dentistry
Summary of Key Competitive Advantages
Able to service multiple specialties
Mobile units provide easier access to care and encourage more frequent visits
Market: Mobile Healthcare
According to research by Malone et al. there are an estimated 1500 to 2000 mobile clinics nationwide, servicing 5.2 to 7 million visits each year. Most patients include women (55%) and ethnic minorities (59%) with the majority of patients being either uninsured (41%) or on public insurance (44%). Not surprisingly, the most common service models for mobile healthcare are primary care (41%) and preventive care (47%).
According to Pew Research, ~18% of Americans live more than 10 miles away from a hospital while 24% live between 5 and 10 miles away. Hermes aims to provide primary and specialty care that is within 10 minutes walking distance for the majority of the country which rivals the median distance of 0.9 miles to the nearest food store.
As explained further in the business model section of this plan, Hermes aims to work with payers and employers to provide easily accessible healthcare for their members and employees respectively. Before doing so, we plan to refine our service through a direct to consumer offering which we will further leverage to gather the requisite data to prove the effectiveness of our services. We plan to launch our D2C offering in northern Plains states given that residents of those states have the longest travel time to the nearest hospital (16 minute drive) and aim to target families with small children who would benefit from easier access to healthcare services. Other initial target demographics could include younger millennials with disposable income who wouldn’t mind receiving healthcare on the go as well as seniors who would otherwise skip a trip to the lab or doctor given the traveling involved.
While our goal is to initially target higher paying customers such as private insurance organizations and self-insured employers, we eventually plan to work with Medicaid and local communities to reach the underserved. Doing so will require us to refine our offerings and prove the effectiveness of our mobile units which we plan to accomplish through working with higher revenue generating customers. We aim to target partnerships with organizations such as CityBlock Health in order to reach this $600B + Medicaid market.
Competitors
Several mobile healthcare solutions exist with the most notable competitors being home health agencies. Companies such as Heal and Dispatch Health offer at-home primary care while companies such as Sprinter Health and Luna offer at-home specialty point solutions (at-home labs and physical therapy respectively).
While house calls certainly make it easier for patients to receive healthcare, the service is inefficient from an operations standpoint. It’s easy to understand why having patients report to a centralized facility is more efficient than a doctor, nurse or phlebotomist going door to door. Hermes aims to strike a balance and give patients the benefit of easy to access in person healthcare and also allow healthcare providers to see patients at a higher throughput.
Furthermore, home health companies are limited in regards to the different specialties of care they can offer given the expensive nature of certain pieces of medical equipment. It’s not surprising that house calls for X-rays, dentistry and optometry are few and far between. Hermes plans to outfit mobile healthcare units for a wide range of specialties while achieving similar throughput to brick and mortar clinics.
Business Model
In an effort to service a consistent amount of visits, Hermes plans to do business with employers and health plans. This is similar to One Medical’s business model which focuses on the enterprise market and leverages B2B contracts to ensure a consistent stream of revenue. We plan to charge a monthly out of pocket membership fee in addition to per visit fees which can be covered by insurance. Companies and health plans would either cover the monthly membership fee or subsidize it for their members. The proposed evolution of our business model is as follows:
Launch as a direct to consumer cash pay offering to refine the service and collect the necessary data to prove cost-savings and increased health outcomes
Pivot into the enterprise market and offer Hermes as a health benefit to employers in addition to partnering with health plans to get our services covered by insurance
Expand into the Medicaid market and take on risk based contracting (value based care)
It should be noted that in addition to operating as a traditional tech enabled clinic network, Hermes mobile healthcare units could also serve as an extension of existing telemedicine providers. Telehealth companies interested in extending in person services to their patients could send patients to our mobile units to receive services such as lab work, vaccines and biometric data collection among other services. While this may sound lucrative, adoption of home health services by telehealth providers has been lackluster as can be seen by the recent shutdown of Workpath, an at-home healthcare subsidiary of Ro. Therefore, such business will be approached with caution if at all.
Team
Hermes will require a mix of mechanical engineers, interior designers, software engineers, and a sales team with experience selling to employers and health plans. We plan to target One Medical, Carbon Health, Heal and Forward Health among other next generation primary care startups for an initial talent pool.
Vision
We envision a world where most individuals can easily walk to in-person primary and specialty healthcare. In addition to closing gaps in care and boosting health outcomes, increasing access to care will encourage more frequent interactions with healthcare products and services which will lead to increased health data collection. With the average person in the U.S. visiting their primary care physician once every 1-3 years if at all, one’s healthcare data is more like a snapshot than a movie which comprises thousands of frames. Collecting more data will allow us to predict future health trends far before they happen and stitch together a more complete view of one’s current and future health. Coupled with advances in omics technologies (gene sequencing, microbiome sequencing, biometric monitoring, etc.), we anticipate an explosion in the amount of health data collected for each person in the coming decade and plan to situate ourselves in the middle of this health data revolution.
Anticipated Financial Expenditures September 2022 - January 2023
Salaries ($260,000)
Software engineers (2 people at $12,500 / month + benefits)
Marketing lead ($12,500 / month + benefits)
Interior designer ($12,500 / month + benefits)
Phlebotomists (3 people at $5,000 / month + benefit)
Rented mobile lab van ($6,000 / month)
Rent & Utilities ($20,000)
G & A - including travel and legal ($25,000)
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Total Expenses: $329,000
Appendix A
Source: Forbes
Appendix B
Source: Mobile Health Map