The Patient is Paramount:
Jonathan Sudharta of Halodoc
25 September 2020
Welcome back everyone to Episode 17 of Indo Tekno. Selamat datang kembali! My name is Alan Hellawell. I'm founder of startup consulting firm Gizmo Advisors, and I'm also a Venture Partner at Alpha JWC Ventures. Today we examine Indonesia's healthtech scene. Global digital health venture investment saw its highest ever levels in the first quarter of 2020. Total health innovation funding for the first half of 2020 meanwhile hit $9.1 billion, which is up nearly 19% compared to $7.7 billion invested during the same period in 2019, according to StartUp Health. In order to achieve a bird's eye view of the state of healthtech in Indonesia, we're very pleased to have join us today Jonathan Sudharta, cofounder and CEO of Halodoc. Welcome aboard, Jonathan.
JONATHAN SUDHARTA 1:04
Thank you for having me, Alan.
Jonathan, would love to kick things off with an overview of your own personal story, and special request: please do not overlook any stories that might involve say, I don't know, playing in a rock band.
JONATHAN SUDHARTA 1:18
I started my healthcare career 15 years ago as a medical rep, and I grew through the ranks in the healthcare space before starting my Halodoc journey as a Managing Director of one of the health care companies in Indonesia. Before starting in healthcare, I used to play in a rock band. I played as a bass player. The band itself grew into a big production house where we owned our own radio network, newspaper, production house and other different things. Until last year, I was also the captain of the Indonesian ice hockey team.
Fantastic. So that accounts for your profile picture in a full hockey uniform, which I don't often see in Indonesia for some reason.
JONATHAN SUDHARTA 2:02
Jon, I believe the Sudharta family has been involved in pharmaceuticals and healthcare for many years.
JONATHAN SUDHARTA 2:08
How did this background inform your decision to create Halodoc?
JONATHAN SUDHARTA 2:15
My father is the founder of Mensa Group, which is an end-to-end integration healthcare organization: from raw material to pharmaceutical manufacturing, to distribution of medical devices and medicine. Obviously, as I grew up around that organization, from the very start to the very end, it educated me in many ways around the whole value chain of healthcare. It helped me become who I am today. It helped my understanding and my belief in healthcare.
So Jon, if I'm not mistaken, healthcare in Indonesia represents maybe 2.3% of GDP. Many developed countries, meanwhile, have reached up to 20%. So my question, Jon, is where do you see healthcare spending trending in Indonesia over the next several years? And what are the drivers?
JONATHAN SUDHARTA 3:02
Before COVID came, the country agreed, and it's already in a decree, that Indonesia is going to spend 5% of its GDP on health care. But because of COVID today, I think everybody knows that almost every single part of the budget is now being moved to focus on healthcare. So I believe that the new normal will create a different landscape for healthcare in Indonesia. So I think healthcare spending will be enormous in times to come.
That makes eminent sense. Jon, how exactly would you characterize Halodoc's value proposition currently?
JONATHAN SUDHARTA 3:37
The mission of Halodoc is very simple. We try to simplify access to healthcare. So the value proposition for Halodoc is really to build around the patient journey. We want to make the patient's life very simple; from talking to a doctor online or in-person, to getting medicine delivered to their home. Or like in today's world, if they need to get a COVID test, for example, you press a button, you can do a PCR in a drive-thru form, and the result is sent to your phone within just hours. So that's basically us building a way to simplify healthcare access in the whole country of Indonesia.
Wow, that is a striking example of how you guys have woven yourselves into really addressing the ongoing pandemic. Now Jon, what is the current magnitude of Halodoc's coverage, in terms of onboarded patients, doctors, etc?
JONATHAN SUDHARTA 4:26
We have over 20,000 doctors and over 4,000 pharmacies in Indonesia. We have about 18 million monthly active users from the patient side. And we're working with over 50% of hospitals in Indonesia.
Quite a span. Jon, how exactly does Halodoc generate revenues? And will our revenue mix change much over the next couple years?
JONATHAN SUDHARTA 4:50
So Halodoc's primary value proposition is as a connector. We take commission in the way we connect patients with all the parts of the ecosystem, from the doctor's side, from the pharmacy or the hospital, be it paid by the patient directly or paid by the insurance company in this case.
If I think about it from the doctor's perspective, how would you quantify the benefits of Halodoc for the doctor or physician?
JONATHAN SUDHARTA 5:18
Indonesia is a very strange country. And I have to take you through this: we have only three doctors out of 10,000 population. But for the longest time, Indonesia has been in a situation where people are paying from their own pocket for their health care. Because of that, like it or not, the 80/20 principle applies for doctors, in that 20% of doctors are super popular and 80% are less popular. Because of this, 50% of doctors in Indonesia are receiving considerably low income. Because of that, Halodoc actually creates a big opportunity for those 50% of doctors to actually get a better distribution of opportunity, and at the same time, create a better opportunity for patients to get better access to doctors. So to answer your questions, we are creating for many of them significant income now in a very stable way.
And so for a doctor whom you have on-boarded, what kind of appointment boost can he or she achieve? And is it just a simple smartphone that is needed to become a practicing doctor on Halodoc?
JONATHAN SUDHARTA 6:22
Yes, they just need to have their phone with the Halodoc application installed. Of course they need to be on-boarded well by us. What does that mean? We need to verify them, we need to do a digital test on them or a digital interview. Because not every good doctor is actually good in doing telemedicine, and we want to maintain the quality of our brand. Within 24 hours, they are on-boarded. Some of them can get 100, 150 patients a day online once they join Halodoc.
Jon, in preparing for this podcast, I obviously went to the website and various materials. And I'm often coming across the words "patient-centric" in reading of Halodoc's current work. What exactly does that mean?
JONATHAN SUDHARTA 7:04
That's the number one Halodoc guideline. So for every member of Halodoc, it is very clear that we're trying to simplify access to health care. And to simplify access to health care, we need to connect patients, providers and payers. There are so many multiple points that we try to connect. And it's always easy for us to be drawn down to many different aspects of the healthcare pain. Now, if we don't know where our focus is, then it's easy for us to be swamped on different things. But for us, it's very clear that the patient comes first; as in everything that we do, every simplification that we apply, is to make sure patients are comfortable. For example, for the longest time, it was okay for a patient to wait to see a doctor. With Halodoc, it's not okay. You press a button on Halodoc. As a patient, you will talk to a doctor within 15 seconds. That's a normal thing for us. But if you go to a physical clinic, it's normal for you to wait for two hours. And with Halodoc, we try to really focus on the patient first. That's the context of it.
So I assume there are a lot of KPIs that really bring out that focus within the organization, yeah?
JONATHAN SUDHARTA 8:13
As a product, yes. But the number one metric for us as a company is how many patients we help in a day. That's the most important thing. It is very deep in our nature, from the CEO up to the customer service agent, we always think of this patient. So when they don't get the medicine for whatever the reason (maybe the ojek driver got into an accident), we don't think "oh, maybe this patient is trying to cheat us." We think of: what is the patient's situation? I'll send you the medicine right away without even thinking of what is the cost. That's "patient-first".
Jon, what are the two biggest parts of Indonesia's regulatory framework that are most relevant to Halodoc?
JONATHAN SUDHARTA 8:50
Halodoc works very closely with three parties. One would be the Ministry of Health. Two would be the FDA. Three would be the Ministry of Telecommunications. Other than that, there are the other stakeholders like doctors associations and pharmacy associations. If I have to pinpoint two, I think one would be what they call the "PSEF" (Pharmacy's Electronic System Provider), which is the definition of the legitimate digital company allowed to transact medicine as a platform, like Halodoc. Not every platform in Indonesia is allowed to transact medicine or have connectivity to medicine. And we are allowed to do that. And that connects us both to the Ministry of Health, and also the FDA of Indonesia.
And Jon, what have been the three most meaningful forms of impact that the pandemic has brought upon Halodoc?
JONATHAN SUDHARTA 9:38
Yeah, the pandemic has been very interesting for us. The first part of the pandemic in the month of March/April; that was the first point when we and the Minister of Health worked closely together. At that time, there were not enough hospitals in Jakarta. The Ministry of Health requested that we work together to not just do socialization, but actually do treatment at home. I think that's a very meaningful part where we are actually creating an impact for patients at home. The "how" of treating at home is what I think is very meaningful because we actually connect patients with doctors. We have roughly 500 new doctors per week at the time joining Halodoc to help in the war against COVID. And patients basically can just stay at home and talk to doctors. The doctor can tell the patient "go get a test." Now at that time, there were not enough tests. But we are lucky that we were able to provide drive-thru tests for the patient. The patient can just go with their car or their bike, do a swab test or rapid test in a drive-thru form, go home, and a doctor would know whether this patient is positive or negative. The doctors would then prescribe digitally for the patient staying at home, and send the medicine to their home. Now, it sounds very Halodoc, but it's the exact use case that is needed by the government also, because at that time, we didn't have enough hospitals. So I would say it's very meaningful in many ways because it's not just creating an impact for the patient, but it's also safe for doctors, and also helping the government at the same time.
I cannot think of a more powerful example of technology being used to disintermediate and drive greater efficiency, moreover, into such a mission critical issue of the day.
JONATHAN SUDHARTA 11:22
Can you share any Halodoc usage stats since the onset of COVID-19?
JONATHAN SUDHARTA 11:27
We have grown as a company I think over 600% during that period.
JONATHAN SUDHARTA 11:33
The basket size of our healthcare store, or our pharmacy, has grown 40% to 50% on average, because a lot of people are now buying more in that sense. We actually got a significant growth in the type of user that uses telemedicine on the platform. The one example that I like the most was my uncle. My uncle is 70 years old. For the last four years, he had no idea about what I'm doing. He knows that I own a company called Halodoc, but he has no idea what Halodoc is, and never cared. But during the pandemic in the month of April or May, he actually called me and I was surprised. What happened? I was afraid. But he said, "Jon, you know, I've been using Halodoc now already two times this week. I've been talking to my orthopaedic doctors. And I've been talking to my skin specialist. And I get the medicine sent to me. It's so cool." Now I'm just using one example, which is very close to me. But I know many of my wife's friends, some of my friends, who used to be very skeptical about what Halodoc does, now are users of Halodoc, which I think is very significant during this period. So, other than the significant growth of the numbers of transactions and users, is the type of people that now become a user of Halodoc.
Jon, I noticed that the Bill and Melinda Gates Foundation are an investor. How did that come to be?
JONATHAN SUDHARTA 12:46
A lot of things that happen to Halodoc are full of serendipity. Three years ago, I was lucky enough to be invited by Bill Gates for lunch at his place with 20 other young entrepreneurs and executives to hear his thoughts. At that time, I had just started Halodoc, and he heard about me or the company and I was invited there. So they gave an opportunity for us to actually ask questions. I was being shameless. I actually wore a Halodoc t-shirt inside. They had specifically told us to wear something very formal. So I wore a Halodoc t-shirt inside my jacket. And when the time came, I actually opened my jacket and my jumper. So I actually told Bill Gates: "By the way, I'm representing Halodoc. This is what we do." So I was actually pitching in front of this group of people. So Bill at that time was saying" "I think it's very cool what you do. Can you please talk to my director?" This was three years ago, four years ago. Then nothing happened. But last year, the Bill and Melinda Gates Foundation changed their mandate from very vertically focused into bigger impact funds. We were the first company that they called. They said: "Jon, we want to do a start up investment specifically on health care because we believe digital can actually have a meaningful impact, especially for the underserved population." The mission of Halodoc fit perfectly because you don't need to create something just for the Gates Foundation. You have already done what the mandate is. So that's how things started between us and them.
Okay, that is a pretty cool origin story.
JONATHAN SUDHARTA 14:18
Jon, what is the state of competition Indonesian medtech? Are their major players competing ever more increasingly, with every passing day? Or are they instead more diversifying away from each other?
JONATHAN SUDHARTA 14:31
First of all, I want you to know the way I see healthcare, digital healthcare competition, in my perspective, the lens of competition for me. The way I see it, all the players in the healthcare space are trying to simplify, or help give access, to humanity, be it the patient or the providers. So I see those in the same space as me, not as an opponent, but more as friends who are trying to solve the same problem. Obviously, some of them are good. Some of them are less good. Some of them are maybe better. We should not focus on trying to beat each other. But we should take a look internally. How can we improve ourselves to be better than the rest? So that's a very different mindset. That's the way I see it.
Understood. And it seems as though there's so much whitespace Is that correct?
Exactly, exactly. The way I see it is there are a lot of people that do medtech and many of them are very different than what Halodoc does. I think Halodoc is the only one who specifically focused on solving the whole patient pain from end-to-end. I have to give you a perspective: if we take a look at mobility, ride-hailing, for example, they're solving one pain to start with. Getting a person from point A to point B. Now in the healthcare space, if you want to solve for patient needs, companies like Halodoc have to solve multiple different points. From pain number one, which is "what happened to me"? You first go to Google, and you type: "I have a headache - what to do?", or search for a particular type of headache. That's one pain. You don't know what to do. The second part of the pain is "I need to speak to a doctor". Is it in-person? Or can I do it online? That's another pain. After you speak to a doctor, you need to get the medicine procured. Now, in Indonesia, it's different than Singapore. In Singapore, you can get the medicine directly from the doctors. It's dispensed in Indonesia. You have to buy it in a pharmacy. So procurement of the medicine and the right pharmacy to supply you is another pain. If you need to do a blood test, it's another pain. Or if you need to do a diagnostic, like a PCR or a rapid test for COVID, it's another pain. So if you think about it, it's multiple pain points, not to mention the payment aspect when insurance comes into play. The one that actually connects all of those dots and tries to solve it in one go is only Halodoc. The rest of them would come in the form of only one vertical for content, one vertical for insurance, one vertical just for mental health, for example. So I think that's what differentiates us from the other companies.
Jon, how important are partnerships to Halodoc? And are there any that come to mind that are illustrative of how you work partnerships,
JONATHAN SUDHARTA 17:17
Halodoc only exists because we are connecting all the partners in this context. Doctors are our partners. That pharmacy; it's an important partner to Halodoc. The payers, in this case, insurance, is also a very important partner to Halodoc. Hospitals are extremely important partners. All of us actually work hand-in-hand in trying to solve patient needs in this case. As a company, we try to connect all the dots, using technology to solve patient pain. Hence, I cannot pinpoint one particular one because everyone has its role in this team sport of solving patient pain.
Gotcha. So clearly, partnerships are critical to the broader success of Halodoc.
JONATHAN SUDHARTA 17:57
Jon, do you envision most of the major countries in Southeast Asia having their own local healthtech champion? Or do you see Halodoc having a more regional opportunity?
JONATHAN SUDHARTA 18:08
I would not be able to say much about healthtech champions in other countries. I can talk about Halodoc. One thing for sure: healthcare is very local. Just because of the fact that you have digital technology that works in Indonesia does not mean it works perfectly in Singapore. As I mentioned to you just now, the clearest example would be the way medicine is being dispensed. In Singapore is a dispensing system. In Indonesia it's a prescriptive system. So it is very clear that you need to localize your solution for different countries in Southeast Asia or the world. So Halodoc definitely wants to solve the pain in Indonesia. But do we have aspiration to solve pain in other parts of the world? We do. But we want to make sure that we do it properly in our home ground before we actually go to any other parts of the world.
Jon, what is currently keeping you up at night?
JONATHAN SUDHARTA 19:00
It's the patient. Especially during this time of COVID it really reminds us of the importance of our being. As an entrepreneur, I'm sure you understand, with your involvement in many tech startups. We have to think of multiple different problems; from the investment side, business side, supply side employee and technology side, regulation. All of that is in my opinion, second to the importance of how people in the world today are going through this very gruelling period of COVID. This is what really keeps me up at night. How can I make sure people stay safe, people don't get COVID? We have to think about everything from distribution to information to campaigns for helping people get their hand sanitizer or PCR test for drive-thru, or rapid test. That's really what keeps me up at night and drives me every day.
What do you view as attractive future potential directions for Halodoc?
JONATHAN SUDHARTA 20:00
We are connecting many dots in the ecosystem. It is in our interest to make sure that all the providers of healthcare; be it doctors, clinics, hospitals, and also the payers; are elevated. Because today, especially in Indonesia, a lot of the healthcare process is not healthcare. Waiting time is not healthcare. Waiting time for medicine is not healthcare. Processing of documents to get paid by the insurance company is not healthcare. The healthcare itself is when you get MRI tests. When you get a PCR test; that's healthcare. When a doctor actually speaks to you; that's healthcare. Doctors discussing how to do the operation on this patient; that is health care. Halodoc's mission is to basically eliminate and reinvent everything that is not healthcare, around the healthcare itself. I hope that makes sense to you.
Jonathan, this has been truly enlightening. I have really enjoyed listening to all the forms of customer centricity, or patient centricity, that you've gone through. And it's been fascinating to look into a sector of the internet economy with such profound implications for all Indonesians. We really appreciate you joining us today.
JONATHAN SUDHARTA 21:09
Thank you very much, Alan. I feel humbled to be able to share a little bit of what I know about this very nascent space.
The podcast was translated from English to Bahasa Indonesia by Alpha JWC Ventures. Terima kasih untuk mendengarkan. Sampai jumpa lagi!