Breaking Down ZoomCare Unit Economics: All Rides on Gross Margin (GM) & All Must Know It.
Several Zoomers recently reached out about my post, asking, "Dave, why do you say ZoomCare doesn't have meaningful strategies to succeed in the primary care market?”
https://lnkd.in/g2xsRbQj
My response: "If you have them, what are they?" Their basic reply? "Well, that's above my pay grade."
No, it’s not.
If you don't know the strategies, they don’t exist. Any strategy worth having is internalized throughout the entire organization.
So, I asked one more question: "What’s your current Gross Margin?" Their answer? "What do you mean?"
In any urgent or primary care organization, if the team—from top to bottom—isn't aligned on the strategies and unit economics, defined by Gross Margin, that's a sick—or dying—organization.
When ZoomCare was ZoomCare, everyone understood the Gross Margin.
Let’s break down the ZoomCare unit economics:
The ZoomCare Business Equation:
Revenue defined as (Revenue per Visit x Visits per Hour x Hours Open per Month)
- COGS defined as (People + Places + Materials within the 4 Walls)
- Cost of Acquisition
- Central Costs
= EBITDA
ZoomCare is exquisitely sensitive to Gross Margin where:
Revenue - COGS = GP
GP / Revenue = Gross Margin (GM)
If GM > 50%, then ZoomCare should be healthy.
If GM is between 30%-50%, then ZoomCare is in survival mode.
If GM is <30%, then ZoomCare is in a death spiral.
If every person in the organization doesn’t understand this, we’ve effectively turned our "talent" into robotic taskers—and we will certainly fail.
Urgent Care and Primary Care are incredibly challenging businesses with thin margins. Every person inside ZoomCare makes hundreds of decisions daily on behalf of ZoomCare. If those decisions aren’t informed by Gross Margin, then what are they based on?
**Remember, ZoomCare PeaceHealth is a nonprofit charitable organization that exists solely for public benefit. We can all learn from its experiences. The ZoomCare business equation and margin analysis is not proprietary; it’s the same for all four-wall clinic operators in a fee-for-service environment. I haven’t had access to any proprietary ZoomCare information for over five years. What I’m sharing here are timeless fundamentals—not proprietary information.
#GenericCare #ZoomCare #GrossMargin
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Do Not Covet Thy Neighbor’s Customers
I've been saying that ZoomCare has become #GenericCare after shifting its focus from on-demand care to primary care. Some of you have asked what I mean by this. Let me explain.
Watch Jensen Huang's insight:
https://lnkd.in/gGrMtjT4
“Great people and great companies do NOT get up in the morning and say, ‘I’m going to take my neighbor’s customers.’ Instead, they say, ‘I’m going to do something that has never been done before—something incredibly hard that, if successful, will make a great impact on the world.’”
Jensen Huang beautifully articulates a timeless business commandment:
“Do Not Covet Thy Neighbor’s Customers.”
The founders of ZoomCare noticed that our neighbors—like Providence, Legacy, and OHSU—were providing “SlowCare.” This approach worked for some people in our community but left many underserved. We got up in the morning and said, ‘Let’s create ZoomCare for those people who aren’t being served by our neighbors.’ We were successful.
Fourteen years later we sold ZoomCare to PeaceHealth.
Now, PeaceHealth/ZoomCare has decided that, rather than doing something difficult and unique, it will instead become just another primary care operator, aiming to take its neighbors’ customers. This is despite the fact that these neighbors have spent decades and countless resources building primary care practices—with mixed results.
Even more concerning, PeaceHealth/ZoomCare hasn’t offered any reason why they’d be better at this than their neighbors. In fact, they lack the intrinsic capabilities, assets, technology, intellectual property that would give them an edge in primary care.
This is what I mean when I say ZoomCare is now #GenericCare. It’s become just another mediocre operator waking up in the morning, dreaming of taking its neighbors’ customers rather than pursuing an original idea.
Take it from Jensen Huang: “Do Not Covet Your Neighbor’s Customers.”
It will not end well.
Wellness, People and Culture Leader
1moThis is amazing!!! 🤩 rockstar energy Greyson Jones & David Yadegar