Forward Health and why space age primary care always fails

So Forward Health is shutting down, quite abruptly. I hate to see any company have to let people go. A company is just a group of people all chasing a similar mission. Every single one of them has rent to pay, a family to feed, etc.. And all companies are insanely hard to build. Every company you see that exists in the world is because multiple stars aligned in some capacity— right place, right time, right idea, right team, right funding vehicle, right luck. So hats off to the founding team to give it a go. That being said, let’s look at why I think they swung and missed.

First, an axiom in healthcare is “if people think something should be covered by insurance, very, very few people will pay out of pocket.” Primary care, even futuristic primary care, feels like healthcare, something people think should be covered. So the target market is shockingly small. One Medical skated around this by charging $200 a year to be a member and then took insurance proving a few hundred thousand people will pay for membership, but not for care outside insurance.

Second, there was a $400M mistake in understanding the demand. This kind of service was something investors would want, but not something those outside the bubble would want. They wanted this for themselves and were willing to spend $400M to make that bet. That’s hard to feel sorry for.

Third, the catchment area for brick and mortar care is a neighborhood, not a city or state. So, say there’s 50k people in a neighborhood and you need to fill a 2,000 patient panel for one PCP. That’s a significant percentage of the city buying into futuristic primary care that doesn’t take insurance. The funnel gets whittled down real quick. And traveling across LA just isn’t worth it when there’s a decent PCP in your neighborhood who takes your insurance.

Fourth, youngish healthy people don’t have a health fire to put out by definition so these kinds of companies are manufacturing a problem to sell. I can’t think of a single company that’s done that successfully in any industry.

Anyway, congrats on giving it a go. Thank you for taking one for the team. Now let’s all learn from this so we don’t continue to make the same mistakes.