Transforming Healthcare: From Fragmented Systems to Integrated Solutions
An advanced chapter of my upcoming book.
Zoe Morgan drummed her fingers on the glass conference table, watching San Francisco's fog roll between skyscrapers. Her MacBook displayed two different investor pitch decks - each representing a radically different future for the healthcare startup she'd built from her garage three years ago.
“You could build both eventually,” said Henry Adams, her CTO, sliding a tablet across the table. “But Kaiser tried that in the nineties. Burned through billions.”
Zoe pulled up the latest analytics from their pilot program in Sacramento. After helping coordinate care for 5,000 patients, they had proof their technology could cut costs by 30%. But scaling that success meant choosing a path
“Look at these numbers again,” said Dr. Diana Rodriguez, their Chief Medical Officer, tapping the first deck. “If we build our own clinics and handle the insurance piece, we control the whole patient experience. No more fighting with legacy systems.”
“And burn through our Series B funding before we sign a single major contract,”
Henry shot back. “The platform play is cleaner. Build the rails that every healthcare company uses. One integration that fixes scheduling, payments, and coordination for everyone.”
Zoe's phone buzzed with an incoming text from her brother: Dad's heart doctors still can't see each other's notes. Now they want more tests. Mom's furious.
She'd started MediConnect after watching her parents navigate six specialists across four health systems during her father's cardiac problems. Three years of eighty-hour weeks had brought them to this moment. Their technology worked. But which path would let them help the most people?
“The board meets tomorrow,” Zoe said, standing to stretch. “We've got one shot at this. Medicare costs rising 5% annually. Half of the doctors are burning out. Patients lost in the maze.” She walked to the window. “We can't just build another point solution. We have to transform how the system works.”
Henry and Diana exchanged glances. They'd been having this debate for months. Build a full-stack healthcare company that both insures and treats patients? Or build the platform that helps every other healthcare company work better?
Zoe's phone buzzed again: Hospital says insurance denied the claim. Again. Call when you can.
She turned back to her team. “Let's go through both options one more time. From the beginning.”
…
Zoe's story captured the most important challenge facing healthcare today: how to transform both the delivery and financing of care. Like Zoe, you may be a leader of a healthcare organization, a worker in the industry, or simply trying to navigate your own medical care. You've seen firsthand how the current system fails. You understand why technology alone hasn't fixed these deep structural problems. Now it's time to explore concrete solutions.
In this chapter, we consider two possible directions for the new wave: the building of fully integrated healthcare companies that both provide and pay for care, or platforms that help all healthcare organizations work better together. These models represent different ways to fix healthcare's broken promises.
Why We Need New Healthcare Organizations
If you’ve been following my articles, you will most likely have grasped that healthcare is like a giant Jenga tower: expensive, unstable, and one wrong move from complete collapse. Numbers tell a stark story. Americans spend $4 trillion on healthcare annually yet rank last among developed nations in preventing deaths from treatable conditions (Wolf & Pande, 2022). Despite the thousands of digital health startups launched each year, fundamental problems persist.
Traditional healthcare companies seem unable or unwilling to drive real change. Take United Health Group, with its $460 billion in annual revenue (Pifer 2025). For all its heft, control of both insurance and care delivery via Optum, business practices continue to frustrate patients and doctors alike. A patient satisfaction score of 4 out of 10 speaks to the gap between capability and execution.
Major tech companies haven't cracked the code either. Google shut down its health division in 2021. Amazon sold Haven after three years of trying to transform employee healthcare. Apple's health efforts remain focused on consumer devices rather than fixing systemic problems.
The data tells a story-no legacy healthcare company or major tech player has cracked the code on solving healthcare's fundamental problems. But from this cauldron of investment and activity, two interesting models are emerging that could finally bring the transformation required in healthcare. Let's delve into each approach, and what it would take to succeed.
Path 1: The Full-Stack Healthcare Company
The first path forward involves building what Daisy Wolf and Vijay Pande, investing partners at Andreessen Horowitz, describe as a “payvidor model” (Wolf & Pande, 2022). This would be a fully integrated company that combines insurance coverage, care delivery, and modern technology into a seamless experience. Returning to the opening example, the first strategic option for Zoe Morgan in building a full-stack healthcare company falls into this first path that can be taken.
In an ideal world, we could imagine this as a healthcare company with Apple's consumer experience and UnitedHealth's comprehensive services. Patients would access care through sleek apps that actually work. Instead of fumbling through separate systems for primary care, specialists, insurance, and prescriptions, everything would integrate seamlessly.
But truly transforming healthcare requires going beyond these point solutions. A vertical integrator would need:
Consumer-grade technology that delights users
Example:
Mobile apps as intuitive as Instagram
Care delivery capabilities across specialties
Example:
Primary care clinics, specialist networks, virtual care platforms
Insurance operations and risk management expertise
Example:
Claims processing, risk management, member services
Seamless coordination between all services
Example:
Unified scheduling, billing, and medical records
Trust from patients and providers
Example:
Transparent pricing, quality metrics, patient satisfaction programs
Massive capital to build infrastructure
Example:
$2-3 billion minimum to achieve meaningful scale
It's a huge task, but somebody has to rebuild the system from scratch. Building a full-stack healthcare company requires massive resources and flawless execution across many complex domains. But the potential reward-a truly integrated system that finally works for patients-drives entrepreneurs to attempt this ambitious path.
Early Challenges and Improvements of Path 1
The full-stack healthcare model has both dramatic advantages and surmountable hurdles. On the upside, controlling the whole patient experience allows for rapid innovation and aligned incentives. On the downside, huge capital requirements and a high degree of regulatory complexity abound. Key insights from early adopters of this model include important lessons.
Oscar Health demonstrates both the potential and challenges of this approach. Starting as a tech-enabled insurance company, Oscar built a full-stack technology platform focused on member engagement, growing to serve over 529,000 members across 291 counties. The company's vision to “refactor healthcare to make good care cost less” exemplifies how new organizations can combine insurance, care delivery, and technology to transform the patient experience (Oscar Health, 2021).
This is further supported by Amazon's purchase of One Medical for $3.9 billion in 2023. Adding over 200 brick-and-mortar physician offices and a member base that numbers around 815,000 individuals, integrating One Medical into Amazon's existing healthcare assets, along with the need to build up consumers' trust, does not come easily. "The Federal Trade Commission has also continued investigating concerns about Amazon controlling sensitive health information, some of the regulatory hurdles these new healthcare organizations have to try to get through" (American Hospital Association, 2023).
Where the full-stack model tries to solve the problems of healthcare via vertical integration, there's a second way to get to transformation. Instead of building and operating healthcare services themselves, this kind of strategy focuses on building the infrastructure that will ultimately connect-and-enrich the overall system.
Path 2: The Healthcare Platform
Health lacks basic infrastructure that other industries take for granted. Where finance has Visa for payments and consumer goods have Amazon, healthcare runs on fragmented, antiquated systems. That opens up space for a platform that could become the essential infrastructure for the whole industry.
If we return to that opening example once more, we can imagine Zoe and Henry looking at their data center. Screens might reveal thousands of daily transactions flowing between doctors, hospitals, and insurers. But it would be a mess.
Why would this be? Every specialist sends separate bills. Insurance companies process claims differently. Patients get confused statements months later.
This fragmentation highlights the opportunity for this second transformation path: building the platform that connects healthcare's disconnected pieces. Just as Visa processes trillions in payments across millions of merchants, a healthcare platform could become the essential infrastructure everyone uses.
This is important because, right now, healthcare doesn't have a modern operating system: no common language, no universal network. Somebody's got to build the rails everybody runs on, and that is where the platform approach comes in.
The platform approach takes two forms:
The Healthcare MarketplaceThe Healthcare Payment Network• Works like Amazon for healthcare services• Lets patients find and book care easily• Shows real prices and quality ratings• Handles scheduling and coordination• Creates competition and transparency• Functions like Visa for medical transactions• Processes claims and payments instantly• Connects all healthcare participants• Makes costs clear before services• Reduces administrative waste
Early Challenges and Improvements of Path 2
The platform approach has its own set of opportunities and challenges. The pros are its increased scaling speed and lower need for capital reserves. The primary cons are the attainment of network effects and shifting rigid behaviors. Several firms have tested different aspects of this model in various ways.
Zocdoc offers a clear example of both the potential and limitations of the healthcare marketplace approach. Operating since 2007, the platform connects patients with providers through real-time appointment booking and insurance matching. Their shift from a subscription-based model to a pay-per-booking system (charging $35-110 per appointment) demonstrates the ongoing challenge of finding sustainable revenue models in healthcare platforms. While successful in urban markets, Zocdoc faces persistent challenges with provider retention and geographic expansion into rural areas (Oyelabs, 2024).
Another example of challenges in healthcare transformation is Amazon Care's closure in 2022. It had invested heavily in the service, expanding it across all 50 states, only for the ultimate decision that the service wasn't broad enough to sell to large enterprise customers-a result showing even tech giants with deep pockets struggle to build workable healthcare solutions. (Landi, 2022).
Cedar, a healthcare financial platform launched in 2016, also shows both the potential and challenges of the platform approach. This case shows how integrated payment systems can transform the patient billing experience, as the company achieved 90% patient satisfaction rates while helping providers streamline revenue collection. However, even with these successes, it took Cedar six months just to build their initial payment integration, highlighting the technical complexity of healthcare platforms (Stripe, 2025).
These early examples illuminate both the promise and pitfalls of the platform approach. While companies like Cedar demonstrate that healthcare platforms can deliver value, the industry's complexity demands patience, capital, and careful attention to stakeholder needs. Success requires not just technical excellence, but a deep understanding of healthcare's unique challenges.
The question then becomes: how can organizations successfully implement either of these transformation approaches? The next section explores practical strategies for turning these models into reality.
Practical Implementation Strategies
Healthcare organizations looking to drive transformation must approach implementation systematically, balancing ambitious goals with practical realities. Success requires careful attention to six key areas: organizational readiness, stakeholder engagement, technical infrastructure, regulatory compliance, financial sustainability, and implementation flexibility.
Organizational Readiness
Organizations must first assess their readiness for transformation by examining existing capabilities and gaps. This means conducting thorough audits of current systems, workflows, and team competencies. For example, when Kaiser Permanente began its digital transformation, it first spent six months mapping current processes and identifying critical workflow barriers that would impact implementation (Wolf & Pande, 2022).
A proper examination of organizational capabilities lays the ground for transformation. Those that do not take this necessary step are the ones that usually trip over when implementation brings out critical gaps. The next important piece of the transformation jigsaw is stakeholder engagement.
Stakeholder Engagement
Stakeholder engagement proves critical during early implementation phases. Successful organizations typically start with small pilot programs that demonstrate value before attempting broader rollouts. These pilots should target specific use cases where the organization can show clear wins.
Forward Health illustrates the complexity of staged implementation. While the company launched its tech-enabled primary care model in San Francisco with ambitious plans to revolutionize healthcare through AI-powered 'CarePods', it ultimately closed operations in late 2024 despite raising $100 million just a year prior. Their experience demonstrates that even well-funded startups can struggle to make subscription-based healthcare models sustainable without insurance partnerships (Farr, 2024).
Early wins through focused pilots create momentum and support for wider changes. The organization should balance the needs of its stakeholders while forging ahead with transformational change. But getting the technical infrastructure right is equally important to making it work.
Technical Infrastructure
Technical infrastructure needs special attention while implementation. On the other hand, successful organizations lay the core capability first and don't try to build everything. That is, doing the core functions such as secure data exchange, basic payment processing, or appointment scheduling before complex functionality. Organizations must ensure their technology stack can scale effectively, since many healthcare startups fail because of architectures unable to scale with their transaction volumes.
Staged technology development allows the organization to build core capabilities before adding complexity. This is a foundation-first approach that costs more upfront but saves expensive repairs later. Implementation of regulatory compliance requires equal attention.
Regulatory Compliance
Regulatory compliance cannot be an afterthought; smart organizations build it into their implementation plans from day one by building robust frameworks for HIPAA, state regulations, and other requirements. This means detail in the process of documentation, periodic audits, and clear lines of accountability.
Building compliance into systems at the outset prevents expensive retrofitting later. Major setbacks are avoided where regulatory requirements are treated as fundamental design constraints rather than afterthoughts. Financial sustainability requires similarly far-sighted thinking.
Financial Sustainability
Financial sustainability requires careful staging of investments, with clear paths to revenue. Recent industry analysis suggests that healthcare organizations should only anticipate returns on a significant number of years invested in development for any transformation initiatives-basically 2-3 years, by Earley, 2025. In other words, one should have capital runway and timing expectations set appropriately. Successful organizations also identify early revenue opportunities that can be reinvested in funding goals of longer-term transformation.
Clear paths to revenue must balance short-term survival with long-term transformation goals. Organizations need realistic timelines and sufficient capital to reach sustainability. Implementation flexibility completes the framework for successful execution.
Implementation Flexibility
Most importantly, organizations must maintain flexibility in their implementation approach. The healthcare landscape changes rapidly, and rigid plans often fail. Successful transformations build in regular reassessment points and mechanisms for adjusting course based on market feedback and operational learnings.
Training and change management deserve special attention during implementation. Staff at all levels need extensive support to adapt to new systems and workflows.
More than this, the measurement of progress is necessary to reinforce progress and help secure continued support for the transformation effort. To do so, organizations should establish clear metrics along several dimensions, including:
Operational efficiency improvements
Cost reduction achievements
Quality and outcome measures
User satisfaction scores
Financial performance indicators
Continuous tracking of these metrics makes organizations aware at early stages of impediments and supports required adjustments towards implementation methodology. Indeed, the best transformations balance an ambitious aspiration with sustainable progress-possible through the careful, staged implementation of many changes.
Summing it Up
Returning once more to our example, let’s picture Zoe staring at the presentation deck on her screen, the choice ahead both daunting and clear. Like many entrepreneurs trying to transform healthcare, she faced a fundamental decision about how to drive change in a $4 trillion industry resistant to reform.
Health transformation requires new types of organizations, ones built differently from traditional players. In the last decade, two paths have emerged: a vertical integrator that combines insurance and care delivery, and a platform player developing essential infrastructure for the entire industry.
The vertical path requires enormous resources but gives a provider direct control of the patient experience, a path Zoe finally decided on for her company.
Success requires the building or buying of care delivery capabilities, insurance operations, and seamless technology integration-all while keeping enough capital on hand to fund multiple years of growth.
We can't fix healthcare by building another point solution. We have to reimagine the entire system.
Key Findings:
Vertical integrators need $2-3 billion in capital to achieve meaningful scale
Platform players must process 100,000+ transactions monthly to become viable
Both models require 3-5 years to prove their approach works
Regulatory compliance costs consume 15-20% of operating budgets
Consumer trust takes 2+ years to establish in healthcare
Critical success factors across both models include:
Modern technology infrastructure that can scale
Deep understanding of healthcare regulations
Strong provider relationships and trust
Excellent consumer experience design
Sustainable unit economics
Most attempts at transformation will fail. Healthcare's complexity, entrenched interests, and regulatory burden create significant barriers to change. However, the massive scale of healthcare means successful transformation could create the world's largest companies.
The transformation of healthcare appears inevitable. Rising costs, poor experiences, and new technology create unstoppable pressure for change. The only question is which organizations will successfully drive this transformation - and whether they'll build full-stack care delivery operations or the platforms that power everyone else.
References
American Hospital Association. (2023). 5 things to know about Amazon's recent One Medical acquisition. AHA Center for Health Innovation Market Scan. https://www.aha.org/center/data-insights/market-scan/5-things-know-about-amazons-recent-one-medical-acquisition
Earley, S. (2025). ROI of digital transformation: Balancing long-term vision and short-term impact. Earley Information Science. https://www.earley.com/insights/roi-digital-transformation-balancing-long-term-vision-and-short-term-impact
Farr, C. (2024, November 13). What happened at Forward Health? Second Opinion. https://secondopinion.media/posts/what-happened-at-forward-health
Landi, H. (2022, August 24). Amazon Care is shutting down at the end of 2022. Here's why. Fierce Healthcare. https://www.fiercehealthcare.com/health-tech/amazon-shuttering-amazon-care-end-2022
Oscar Health. (2021, April 20). Oscar Health, Inc. launches +Oscar to power the healthcare ecosystem through platform-based partnerships [Press release]. https://www.oscarhealth.com/press/oscar-health-inc-launches-oscar-to-power-the-healthcare-ecosystem-through-platform-based-partnerships
Pifer, R. (2025, January 16). UnitedHealth reaches record revenue in 2024, though profit falls. Healthcare Dive. https://www.healthcaredive.com/news/unitedhealth-unh-2024-record-revenue/737477/
Wolf, D., & Pande, V. (2022, November 11). The biggest company in the world. Andreessen Horowitz. https://a16z.com/2022/11/11/the-biggest-company-in-the-world/
Quote Investigator. (2013, May 28). The secret of change is to focus all of your energy, not on fighting the old, but on building the new. https://quoteinvestigator.com/2013/05/28/socrates-energy/
Christensen, C. M. (1997). The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail. Harvard Business School Press.