ZocDoc Business Model | How Does ZocDoc Make Money?

ZocDoc offers free medical care scheduling by collating doctors’ schedules and medical practices on a centralized database. The company has its headquarters in New York City and Scottsdale, Arizona, and Maharashtra, India.

Zocdoc was launched by Cyrus Massoumi, Nick Ganju, and Oliver Kharraz in 2007 as an online booking platform for medical appointments. The purpose is to connect patients more effectively to doctors. 

The Zocdoc platform is entirely free to use for patients. The company rather charges physicians a subscription fee for getting featured.

ZocDoc business model includes all three criteria in a unique way. Americans can book online doctor appointments to develop relationships with their doctors. These subscribers are the ones who gain profitability from their subscription offerings available online and via mobile apps. 

Employees enjoy working at ZocDoc because the company offers unlimited vacation and Diet Coke.

ZocDoc provides appointment booking services and online check-in, eliminating the need to arrive 20 minutes early at the doctor’s office. ZocDoc is available in over 30 major urban areas across the United States. 

It is home to about half of the United States’ population. The service differs from other scheduling services in that it is not the patients who pay the excessive fees associated with it.

What is ZocDoc?

Zocdoc is an online marketplace that offers patients to schedule medical appointments via the company’s website and mobile applications.

ZocDoc Business Model

Zocdoc earns money by charging both a listing charge and a booking fee. The company operates on a marketplace approach, with doctors providing the supply and patients providing the demand.

Zocdoc was founded in 2007 and has since grown to become the industry leader in the appointment scheduling sector. ZocDoc has raised more than $375 million since its inception.

How Does ZocDoc Work?

ZocDoc provides access to certified doctors and medical professionals so patients seeking health advice can schedule appointments with them.

Patients can access the site to search for local health care providers. Zocdoc collaborates with dentists, dermatologists, psychologists, and eye specialists, among others.

Patients can also find out if their insurance will cover treatment. Many insurers are eligible, including Ambetter, Humana, and Metlife.

Zocdoc’s Patient-Powered Health technology delivers the most relevant and unbiased search results. The platform’s user reviews then add a layer of protection.

Numerous aspects are considered, including the patient’s insurance network, the patient’s location, the reason for the visit, and appointment availability.

A dedicated Zocdoc account management team ensures that all data is kept current after that. Zocdoc is visited by over 6 million people each month.

The company offers access to its platform through its website or mobile application (Android and iOS).

How Does ZocDoc Make Money?

Zocdoc’s service is completely free for patients. A fee is charged to participating healthcare providers to expand their operations, improve their efficiency, and gain access to more patients.

Zocdoc’s pricing varies, but most providers pay a monthly subscription fee or a once-off fee for each new patient booking facilitated by our Marketplace (existing patients or bookings made directly from their websites are always free). 

This booking fee is assessed to the provider when a new patient discovers and books an appointment with them independently through Zocdoc.

Zocdoc earns money by charging both a listing charge and a booking fee. The company operates on a marketplace approach, with doctors providing the supply and patients providing the demand.

ZocDoc Business Model

When the corporation was first starting, it emphasized gradually strengthening its supply chain. The corporation would, for example, appoint a local sales representative and recruit as many physicians as possible before launching in a new city.

Patients would then flock to the platform purely on the strength of word-of-mouth. Occasionally, physicians went so far as to endorse the service to their current patients. 

Zocdoc has also invested heavily in customer service. Chewy and Zappos were frequently mentioned as influences by the company’s leadership.

The initial fee for accessing Zocdoc’s booking platform was $250 per month (later increased to $300 per month). The company announced in 2018 that it was going to switch to a fee-based model.

The change sparked widespread outrage. Numerous physicians said that the fee-for-service approach would severely reduce their earning margins. 

The change was aimed at practices in outlying areas without sufficient traffic to justify a monthly subscription of $300.

The company now charges a $300 annual listing fee to be listed on Zocdoc.

Additionally, practitioners are charged a $35 booking fee for each appointment scheduled through Zocdoc – regardless of whether the customer shows up.

Patients may continue to use the service for no additional charge. In the future, Zocdoc may elect to cross-sell additional services to its patient network. Other health technology startups, such as GoodRx, have followed a similar path.

Who is the Owner of ZocDoc?

The ownership structure of Zocdoc is not required to be disclosed to the public as a private company. Whenever the company decides to go public, its stockholders will be disclosed.

However, it seems likely that the three founders still hold a majority of the shares. Ironically, Massoumi was laid off in 2015; after eight years, he should’ve been able to sell his entire stake. He could have sold some of them, however.

Khosla Ventures, as an institutional investor, would almost certainly hold a sizable portion of the stock. The company led Zocdoc’s Series A investment and participated in the Series B round as well.

When Khosla invested (between 2008 and 2010), companies were frequently needy for capital due to the financial crisis’s cascading repercussions. As a result, Khosla may have negotiated some preferential terms. Massoumi has publicly acknowledged the company’s financial plight before its 2008 funding round.

What is the Funding and Valuation of ZocDoc?

Crunchbase indicates that Zocdoc has raised $375.9 million in venture capital funding over ten rounds.

ZocDoc’s investors include Founders Fund, Manhattan Venture Partners, Atomico, Vast Ventures, and Francisco Partners.

Zocdoc’s valuation was last announced in August 2015 when it raised $130 million in additional funding (Series D). There was an estimated value of $1.8 billion for ZocDoc at the time.

What is the Revenue of ZocDoc?

Zocdoc is not required to reveal revenue figures to the public as a private corporation. If the company ever decides to go public, its revenue statistics will be disclosed in its S-1 filing.

Coinbase Business Model | How Does Coinbase Make Money?

ZocDoc Success Story

Cyrus Massoumi, Oliver Kharraz, and Nick Ganju launched Zocdoc in 2007 in New York City.

Massoumi got his first taste of business at the turn of the century when he launched One Size Too Small, a company that supplied software to e-commerce merchants.

Unfortunately, his customers all went bankrupt when the dot-com bubble burst – and with them, his business. Massoumi returned to school and earned an MBA from Columbia.

He then became an engagement manager at McKinsey, where he met Kharraz.

Kharraz, a native of Germany, earned his medical degree from Munich’s Ludwig-Maximilians University. After two years as a physician, he decided to try something different. He eventually became a consultant for McKinsey, where he advanced to the position of associate principal.

Massoumi and Kharraz met when the latter relocated to New York from Germany. Massoumi ruptured his eardrum one faithful day while flying from Seattle to New York.

Massoumi discussed his search for a good doctor in a 2011 interview with Observer. “Being a type-A personality, I assumed I’d just start calling doctors and see if I could get someone to see me the same day,” he recalled.

He quickly realized that several of those numbers were out of date, while others informed him that he would have to wait weeks for an appointment. “It was incredible. I’m in agony! I’m ready to see a doctor! I am deaf! And no one would be able to see me.”

ZocDoc Business Model

Massoumi met Kharraz for lunch a few weeks later, after he had recovered. Massoumi would publicly lament why, despite the availability of flight and restaurant bookings online, people could not access a doctor online.

They conducted additional research and found that they weren’t the only ones who recognized the problem. 

According to a Merritt Hawkins poll, the average wait time for an appointment in New York is 19 days. This number went as high as 49 days in Boston.

Both Massoumi and Kharraz left McKinsey shortly after that. They hired Ganju as their CTO, whom Massoumi met in the late 1990s while working in sales at Trilogy Software.

The crew visited nearly every medical practice it could in the days and weeks that followed, attempting to encourage doctors to become paying clients. 

They were even escorted by security in certain instances because they refused to go until they struck a bargain. Occasionally, they camped out in waiting rooms until the doctor had time to see them.

Zocdoc originally intended to debut as Doctors.com, but the domain owner requested $4 million, so they chose Zocdoc instead. 

The idea was eventually introduced at TechCrunch 40 – I strongly encourage you to watch the video below; it’s an incredible gem of a throwback pitch!

Initially, Zocdoc was limited to booking dental appointments in the Manhattan area. The founding team adopted a cautious approach to expanding its supply-side since it needed to develop proprietary software to interface to the dozens of scheduling tools used by physicians.

As a result, money was scarce in the early years. Fortunately, the team won $100,000 in 2008 from a startup competition, allowing them to continue. 

They ultimately raised outside finance a few months later, in August 2008, when they raised $3 million from Khosla Ventures, Marc Benioff, and Jeff Bezos.

Despite the funding inflow, Zocdoc remained a lean and scrappy firm. They frequently went above and above the call of duty, such as sending flowers to a patient whose appointment had been canceled minutes before.

Additionally, Zocdoc’s team remained concentrated on appointments and refused to consider growing into other verticals. 

Finally, the sales staff rapidly realized that it made more sense to target small practices rather than larger hospitals, as the latter frequently required far longer lead times to complete.

Zocdoc grew solely through word of mouth due to the high quality and rigorous attention on service. The company spent very little money on advertising, allowing it to devote greater resources to customer assistance.

Zocdoc expanded into its second city a year after its launch (Washington). The team worked to expand the platform across the country while increasing the firm’s capital base.

As a marketplace, it has always made a point of launching with an adequate supply. As a result, it frequently took months and a dedicated local sales staff for Zocdoc to begin in a new city. 

For example, when it opened in Los Angeles in 2011, it already had over 100,000 appointments available. At the time, the service was used by over 700,000 patients per month.

Over the next few years, the squad only increased its reliance on its winning recipe. It established local sales teams, partnered with practitioners, and expanded into other cities: rinse and re-rinse.

The company achieved unicorn status in 2014 when it raised a $152 million round at a $1.6 billion valuation.

Regrettably, not everything went as planned. That same year, an anonymous former female employee accused the corporation of fostering a frat-like culture rife with sexual harassment of women.

Then, a year later (in November 2015), Massoumi was relieved of his duties as CEO and eventually succeeded by Kharraz. 

Finally, the board of directors chose to dismiss Massoumi from his post due to months of sluggish sales. Additionally, Zocdoc was losing money consistently in an attempt to increase its bottom line.

Kharraz’s mission was straightforward: reroute the ship. The company stayed largely out of the public eye for the following three years until it announced in 2018 that it would alter its pricing plan (more on that later).

The proposal caused a passionate debate among medical practitioners, with many stating that they would not accept Zocdoc patients due to the cost.

Nonetheless, Zocdoc implemented the price modifications and began rolling them out countrywide in July 2019.

To compound matters further, its bottom line was severely impacted by the novel coronavirus outbreak. Numerous practices were forced to temporarily close owing to lockdown orders, rendering them unable to accept bookings.

As a result, Zocdoc launched the Zocdoc Video Service, a telehealth service that enables patients to communicate with medical specialists via video chat. Within weeks, the program attracted over 350,000 virtual visitors.

Later that year, in October 2020, Massoumi sued Zocdoc’s senior leadership, alleging that they planned an “extensive, multi-step plot” to oust him as CEO. 

Additionally, Massoumi indicated that he was unaware of these plans and would have purchased additional shares to strengthen his voting power had he been aware.

Regrettably for Massoumi, a New York Supreme Court Judge dismissed his complaint, arguing that it should be handled in Delaware, not New York (where the company is incorporated).

Zocdoc recently raised an additional $150 million in investment. Even more dramatically, the corporation began investing in television ads, a far cry from its humble beginnings.

Today, Zocdoc employs close to 1,000 employees and has offices in New York, Phoenix, and Pune (India).

Candy Crush Business Model | How Does Candy Crush Make Money?

Is the ZocDoc business model a solution to the looming crisis?

There is a possibility that the United States will face a shortage of more than 100,000 doctors by 2025 due to the Patient Protection and Affordable Care Act. 

The population demographics also have been changing during this period as Boomers retire and demand an increase in medical care. When we look into the future, it is clear that medical care needs assistance.

Many people will wait almost 20 days to get an appointment with a doctor, but more than 40% will not show up or cancel at the last minute. 

The result is overcrowded emergency rooms, overcrowded urgent care centers, and primary care physicians wasting their time sitting in their offices doing nothing but twiddling their thumbs.

ZocDoc simplifies scheduling by allowing patients to view real-time updates to a physician’s schedule. If an opening occurs and they require admission to be seen, the cancellation might be filled with a need, benefiting everyone. That is only the beginning of what this business envisions healthcare to be in the future.

They are also exploring the possibility of becoming a digital doctor. Numerous modern-day needs, including routine check-ups, might be addressed via remote consultations rather than in-person visits. 

Consider scheduling a ten-minute consultation with a doctor to treat your sinus pressure issue; this is what healthcare may look like in 2025.

Key Takeaways from ZocDoc Business Model

Zocdoc is a platform that allows doctors and patients to schedule appointments online. Cyrus Massoumi developed the concept after locating a doctor on short notice following an eardrum rupture.

Zocdoc charges physicians a subscription fee in exchange for showing up as a service. The pricing structure was modified in 2018 to make it more affordable for rural and smaller practitioners.

A new patient onboarding fee is also charged by Zocdoc in ten states. Prices for booking a physician range between $35 and $110.

Skillshare Business Model | How Does Skillshare Make Money?

13 Shares:
You May Also Like