The platform economy is about to change health care, and health law attorneys must prepare to change with it.
Undoubtedly, you have noticed the impact of the platform economy on other markets: transportation, hospitality, retail, and entertainment, to name a few.
Now, platforms are coming to health care. A recent article in Becker’s Hospital Review summarizes the major takeaway from the 2019 JP Health Care Conference: the onset of a “major shift” in which health care companies will de-emphasize the buying and building of assets to deliver care, and begin to “leverage the platform and resources they have in place to become a hub for ... health care.”
If the patterns we have watched in other industries are any indication, the successful health care companies of tomorrow will focus less on their individual products and services, and more on their ability to establish platforms on which patients, payers, providers, and other stakeholders will deliver and purchase health care.
Angela Rust, Marquette 2007, is chief legal officer for NOVO Health, Oshkosh, and is Of Counsel to McCarty Law in Appleton, repesenting ambulatory surgery centers and independent health care clinics.
While health care attorneys have grown accustomed to a certain degree of constant change, the shift to the platform economy will be different. As a law review article on the platform economy put it, “Platforms do not enter or expand markets; they replace (and rematerialize) them.”
Rather than merely considering how the latest revisions of the law relate to our clients’ existing health care businesses, this shift to the platform economy calls upon health care attorneys to help clients transition to a whole new business model, and to anticipate how the intersection of traditional health law and the legal issues inherent in the platform economy may interact with one another in that process.
Here are three considerations for attorneys who plan to be proactive.
The Platform Structure May Reshape Legal Analysis
Health law attorneys must consider the ways in which familiar legal analyses may be reshaped when interpreted through the lens of a platform economy.
For example, many health law attorneys have spent quality time with the 1996 Statements of Antitrust Enforcement Policy in Health Care and subsequent case law addressing the existing health care environment. However, the developing body of case law applying antitrust principles to multisided platform models may become important as well.
The U.S. Supreme Court has defined a “transaction platform” as one in which an intermediary provides services to different groups, who in turn depend on the platform to facilitate the transaction between them.1 In so doing, the court recognized that “indirect network effects” arise where the “value of the platform to one group depends on how many members of another group participate.”2
As a result, the court concluded, the rule of reason analysis when applied to a two-sided transactional platform should consider both sides of the platform, not just potential anti-competitive effects on either side.3
What impact might this have on the application of antitrust law to health care companies engaged in the platform model? Will doing business as a platform impact your client’s compliance strategy with other well-established laws governing fraud and abuse, privacy or security? Chances are, it will.
The Platform Most Valuable to Your Client May Not Be Digital – Yet
Your health care client may not be headquartered in Silicon Valley, or have the digital footprint of Facebook or Airbnb, but this is no excuse for ignoring the shift to the platform economy.
While technology is a powerful tool for platforms, the platform most valuable to your client may not be digital – at least not yet. Describing the growth of the platform economy in the technology sector, an article in The New York Times likened the technological platform of a smartphone to the physical structure of the United States highway system.
Just as a smartphone provides a technological infrastructure for the development and sale of applications, networks have historically been developed through physical platforms, such as the manner in which the construction of a national highway system provided critical infrastructure for the development of a transportation network exchanging goods across the country.
Who are the key stakeholders in your client’s ecosystem? How might your client draw from its existing relationships, infrastructure or resources to serve as a hub for the exchange of health care goods and services?
As a trusted advisor, your role may be to help your clients identify the ways in which they might leverage network effects to establish or build upon a platform. Whether, when, and how to establish a digital interface for a platform is an important, but secondary question.
Because the establishment or structure of the platform itself may carry value long before it takes the form of a smartphone app, early discussions about a platform should consider whether any unique properties deserve intellectual property protection. Might the shift from product (or service) to platform signal the time for a new intellectual property portfolio reflecting the value of the platform itself?
You Do Not Have a Template for This
Platforms are inherently contractually driven. Of course, health care attorneys are no strangers to contracts, and undoubtedly you have a well-cultivated databank of professional services agreements, Stark-compliant leases, physician-employment agreements, merger & acquisition templates, and the like. Of course, all of these (and the many others health care attorneys have refined) are important resources.
Still, health care attorneys should prepare to do some good old-fashioned drafting. Connecting stakeholders on a multisided platform demands attention to topics like intermediary liability and third-party standing that may not have been prominent topics in templates for traditional two-party transactions. (Make sure these considerations find their way into your client’s overall risk management strategy as well.)
For a transactional platform, the clarity of the terms and conditions of each transaction on the platform, and the rights and responsibilities of the network participants are critical.
Today’s health care attorneys will have the opportunity to draft innovative, new contracts that consider the complexities of the platform model and create new templates for a new economy.
1 Ohio v. American Express Co. (AmEx), 138 S.Ct. 2274, 2274 (2018)